Limoneira Company (LMNR) Earnings Call Transcript & Summary

Great. Thank you. I'm John Mills, Managing Partner at ICR. And it's my pleasure to welcome you to Investor Day for Limoneira. And then after Limoneira's presentation and Q&A, we will then have Mission's presentation. And then tomorrow, we obviously will be touring the facilities of both companies. Obviously, the all-important forward-looking statements. And so what we're going to do today from Limoneira's first, Harold is going to talk about the past. Obviously, Limoneira has a very rich history over 130 years old, present and the future. And recently, as a lot of you know, we've done a lot with asset-light, changing our business model. And so you'll understand how that is certainly benefiting our balance sheet and our cost structure and how we look going forward. And then John Carter, our Vice President of Citric Operations is going to be talking about our One World of Citrus and avocado. Harold then will talk about our real estate developments, focusing mostly on harvest at Limoneira and other property sales; and then Amy Fukutomi, who is our Vice President of Compliance and has made a very big effort over the past few years with ESG and talking a lot about the initiatives there and how that's improving the sustainability of our company. And finally, Mark Palamountain, our Chief Operating -- our Chief Financial Officer, will be talking about our financial perspective and how all the improvements we're making in our business and provide you some long-term goals that we're looking for out to 2028. There are all the beautiful pictures. And now I'll turn it over to Harold for more comments.

Thank you very much, John, and good afternoon, everybody. Thank you for coming to listen to us today. And hopefully, we can answer some questions and shed some light on some of the changes that have been going on at the Limoneira Company. First of all, to begin, I'd just like to review the company's mission statement. Limoneira is an agricultural and development company that seeks to not only maximize value for its customers and stakeholders, but also to enhance its legacy as a steward of both its natural and human resources. The philosophy of the company is to provide high-quality products and services. And while in pursuit of that objective, we will adhere to the highest standards of integrity and fairness in our relationship with our employees, our customers, our shareholders, suppliers and our community. And we also believe it's our obligation to protect and expand our asset base to assure long-term profitability to be responsible trustees in the protection and improvement of our environment to provide leadership and resources for the betterment of our community; and finally, to encourage and support the development of our employees. There's been a lot of water under the bridge for the company. The company was founded in 1893 and so we're in the middle of celebrating our 130th year of operation. In 1906, the second large land acquisition was made for the company, giving them about -- in 1906, about 3,000 acres that they were firming. In 1917, we founded the associates insectary and actually pioneered the concept of integrated pest management as an alternative to pesticides and things that actually were less effective for eradicating bad bugs, turn good bugs to get the bad bugs. We actually built our packing house, which, for those of you that will be on the tour tomorrow, you'll see which the first part of it was built in 1919. In 1985, the company merged together with an entity called the Samuel Edwards Associates. My great grandfather was part of that company. And in 1994, another large historic merger with the Teague- McKevett Corporation. In 1997, the family by the name of the Michaelis family merged their assets in the San Joaquin Valley together with the other principles of the company. And in 2008, a very significant accomplishment for our company, we actually took the project of what is now Harvest at Limoneira to the voter poles and actually received an 83% approval to move forward with a 550-acre development, which we'll speak to in a little bit, significant because since the SOAR initiative was created mandating a public vote to convert an agricultural piece of property into an urban development property, it's the only large-scale project since 1991 that's ever received an approval. So we think that's pretty significant. In 2010, that was a significant year for our company. We after 117 years of working very closely with the grower on cooperative Sunkist, we left Sunkist and started marketing our fruit directly under the Limoneira brand. And that is also the year that we listed publicly on the NASDAQ Global Exchange and became publicly traded. 2014 saw us make our first foray into Chile. We acquired a 51% interest in a packing entity called Rosales packing and we also bought the San Pablo ranch down there. In 2015, saw us acquire the Sheldon properties up in the San Joaquin Valley. And 2016, we started an ambitious project to modernize and upgrade and update our packing house -- for those of you that will be on the tour tomorrow, you'll see that in action. It processes 3x the amount of fruit in less than half the time that it used to take to process that fruit with about 70% of the original workforce. So through robotics and automation has been a real game changer for our company. In 2017, we actually broke ground on the Harvest at Limoneira master plan community. 2019 was the year that we actually acquired the Pan de Azucar property in Chile. In 2021, we actually then sold our first phase of the Harvest at Limoneira, which is now -- I think there's one house left. I think so all of those lots have not only been sold, but all the houses have been built, and there's one house still for sale. So I'll update you more on that in a minute, but we're about to start the second phase of that development project. And in 2023, the year we're in right now, we're very excited to have just announced an exclusive relationship with a company called Apeel Sciences that is a coding for lemons that's going to allow us to extend the shelf life significantly. But as John Carter will explain to you, gives us great optionality of improving experiences for our customers, for consumers but really enhancing our supply chain, which is going to be good for all of us. And then most recently, we just announced our exiting of our operations in Cadiz. Cadiz is a really tough environment, very difficult to grow lemons. And with the depressed pricing of lemons, actually exiting that operation has been very good financially, which Mark will explain to you in a minute. So Limoneira is very well positioned now for continued global expansion, but moving towards more of an asset-light business model. We own and operate 11,100 acres of predominantly rich agricultural properties throughout California, Arizona, Chile and Argentina of those acres, 5,800 acres are bearing. 500 acres are dedicated to our master planned community development, Harvest at Limoneira. Throughout those assets, we own approximately 21,000 acre feet of water rights -- but all of these together allow us to move forward in a very successful way with our One World of Citrus business model, which attempts to eliminate seasonality by producing and sourcing fruit in various parts of the world that keeps the continuity of the markets going and eliminate seasonality for our customers. From our real estate development project, Harvest at Limoneira, we anticipate receiving $115 million back from that project over the next 5 years. And today, we operate with a 3-pronged operating model of growing in farm management, packing and marketing and distribution. There are 3 primary drivers fueling our long-term growth. The first area, which we consider noncore because once you sell it, you don't get it back, it's sort of the one and done, but it's extremely valuable is in our real estate development. We've identified $180 million worth of near-term assets that we positioned for sale, of which over the last 6 months, we've executed on the monetization and sale of $130 million of them. So we expect another $50 million from the final 2 projects that we're working on monetizing. On top of that, we also expect to receive $115 million from Harvest at Limoneira, including cash proceeds that we received in 2022. On the citrus and the avocado side of our business, which is the other 2 sort of prongs -- we have a growing and farm management side of our business. We have a packing side of our business, and we also are marketers and distributors of high-quality lemons. Our 5-year objective is to get that to 20% full integration, which would represent about 3 million cartons of production and sales from our team. 60% grow our partners that we would work with, representing 9 million cartons of fresh lemons and 20% agency and brokerage representing another 3 million cartons on top of that. 4 primary strategic objectives and priorities for our company. Number one is expanding our One World of Citrus asset lighter business model; 2 is unlocking the market value of noncore strategic assets Third is the development of specific real estate projects that we have. And fourth is to improve our ESG efforts, and Amy Fukutomi will be speaking more about that in a few minutes. What do we hope the outcomes of the strategic objectives and priorities are. Number one, it will be to transition our One World of Citrus to an asset-lighter model, including the expansion of our services. Number 2 will be to streamline our operations and sell nonstrategic assets; number 3, to improve our consistency of earnings. Number 4 will be to increase our EBITDA and dividends per share. Number 5 will be to reduce our debt and rightsize the balance sheet; and finally, to improve our return on invested capital. We've made a lot of progress to date, but included in our progress is that we've developed a grower services team that's recruited over 1 million additional fresh cartons of fresh lemons from new grower partners. We've entered into an exclusive relationship with Apeel Sciences for lemons. We've sold 4 out of the 6 noncore strategic assets identified for monetization for a total of $130 million in proceeds with an additional $50 million still coming to the company with the final monetization of the final 2 projects that we're working on right now. We've established a new 3-year following program in Yuma, Arizona that will drive $1.3 million of additional annual revenue from not farming 600 acres of our total 1,300 acres. We've pivoted in our San Joaquin Valley operations to focus on farming services as a provider of farming services but also as a packer and a marketer and a seller, but no longer a grower in the valley. We've eliminated unprofitable operations in Cadiz. We've terminated our long-term retirement plan for annual savings of $1 million. And finally, we've reduced our net debt position to $31.5 million. So what's next? Next for us will be to move 80% of our source volume to grow our partners and agency in the next 5 years, up from 57% today. To create a farm management services division for the company to sell the remaining 2 nonstrategic assets identified for monetization for expected total proceeds of $50 million in the next 12 months to potentially add following or monetization opportunities in Yuma, Arizona by the end of 2026 and begin to monetize water rights in the Santa Paula Water Basin. To add value to avocados beyond production, packing, marketing and selling as a complement to our One World of Citrus product offering. And lastly, to pursue additional lemon packing capabilities and optionality in Yuma, Arizona and the San Joaquin Valley and build a new lemon packing house in Chile. Our transition to an asset-lighter business model has been successful and will continue to add benefits for the company and for our shareholders. Limoneira's domestic supply of lemons comes from 3 very specific growing regions in Arizona and California, districts 1, 2 and 3. Due to the varying harvest cycles, Limoneira needs these 3 distinct areas in order to have a year-round supply of lemons. Limoneira is transitioning away from 100% production in each of the districts while increasing our profitability. Today, Limoneira supplies 7.5 million fresh cartons of lemons annually with 57% of that source volume from our grower partners. Our 5-year goal is to supply 50 million cartons of fresh lemons annually with 80% of the source volume coming from grower partners and agency. This next slide sort of talks about the challenges that we've had over the last few years. And if you can see the darker green line dipping below the lighter green line from 2019 to 2023, that represents the challenging environment we've experienced where our cost per carton actually increased above what we were selling our average FOB for. And so part of the logic of our asset lighter model is to focus our model more on the services where we're in much better control of how we price for our services. And as we experience cost increases and inflation, we're able to price our services and keep up with it, whereas by just being a grower and taking the commodity price and the commodity risk, we wind up with situations like we've experienced from 2019 to 2023. Based on all of the things that I've explained that we've done recently, we expect this profitability to be restored. And you'll see from 2023 on, you should see a much more profitable situation for our company based on our shift in our pivot towards being much more asset light. We've actually identified very specific things that are targeting an increase in our annual EBITDA over and above where we are today of $25 million based on the following initiatives and things that we've done. The first $4 million is based on all the things that we've already done. So by terminating the operations in Cadiz and funding the unfunded part of our pension and paying it off, that should increase our EBITDA by about $4 million annually. Also, with our success with recruiting and adding additional grower partners into our family of grower partners that we represent marketing their fruit. We expect to see that part of our business grow by $4 million of EBITDA annually. Our work with agency and brokerage s should also yield us an additional $4 million by 2028. And finally, our focus on farm management services, where we're actually managing other growers and other people's farms, we've targeted $3 million of additional EBITDA growth in that area. And the last piece, which is the biggest piece. So the prior pieces, which total about $15 million of increased EBITDA are without any additional capital. The final one is to construct for approximately $25 million in new packing house in Chile to take advantage of 5 million captive cartons that we have captive there that we can run through the packing house, which should generate approximately $10 million of additional EBITDA. When you put that all together by 2028, on top of where we're sitting today, we should incrementally add another $25 million of EBITDA to the company. Some specifics about this are -- and I'll try to break it down here by each of the districts in the growing areas will be to grow in the San Joaquin Valley, where we're providing farm management services but also recruiting outside growers and grow from 3,000 acres to 5,000 acres which should add another 2 million cartons of lemons annually into our supply chain, which will generate approximately $2 million of additional EBITDA as well as then to recruit new growers where we can provide farm management services to them, which targets another $2 million of EBITDA gross for a total of $4 million of incremental growth in the San Joaquin Valley. Looking here on the coast in Ventura County. By the way, the seasonality there is March to July is to grow the amount of acreage that we're managing from 3,000 to 5,000 acres. But also in that growth, most of that growth will come from outside grower partners. And that 5 million cartons, which we look to process annually through our banking house should generate an incremental additional $4 million of EBITDA for the company. And then expansion of our farm management services, we've targeted another $1 million of EBITDA growth by serving farms, local farms here in the Ventura County area for a total EBITDA increase by 2028 of an additional $5 million. Looking in the desert. The desert has some of the most amazing potential for us because of the water that's available there and that we are very fortunate to own Class 3 Colorado River water rights. But the idea there is to take advantage of the following program to the extent that it will allow us to do that. Today, we operate about 700 acres, of which 36% of those we own and 64% are our grower partners. It generates 700,000 cartons -- fresh cartons of citrus lemons that we market for an average benefit of about $2 to $2.50 per carton of margin. And we expect to see that grow as well. But on top of what we're actually producing, marketing and selling, we've just entered into a 3-year following program where we take 600 acres, and we've taken those trees out and for not farming, we get paid $1.3 million to not farm and not take the water. That's actually allowed us to take about half of our workforce and cost out of that operation. So that should make the Yuma operation that much more profitable. But the big opportunity that we see is -- and this is all sort of projections and conjecture. But by the year 2026, we believe that there'll be new following programs that are put in place on the Colorado River -- that they're talking about 25 years in length. And at the economics that they're talking about on that, we would have the opportunity potentially to capture all of our acres or 1,300 acres at $5,600 an acre to not farm, take all the cost off and take $7.3 million of a 25-year annuity back from that program. So we're in a position to do that. We'll just have to see where it goes, but keep your eye on the river because that opportunity, we believe, is there for us. As we've positioned it, though, on top of that big opportunity with the following, we expect to increase our EBITDA from our Desert operations by $2 million of additional EBITDA a year. And next is our agency and brokerage. This we believe we want to grow from 1 million cartons annually to 3 million cartons annually. John Carter, our Director of Citrus Operations are going to tell you how he's going to do it. But basically, we expect that to add another $4 million of EBITDA as well. And lastly, the growth for our domestic lemons is basically to grow from 5.2 million cartons to 7 million cartons, of which you'll see most of that growth is coming -- of $1.6 million is coming from recruiting outside grower partners. The big opportunity that I mentioned earlier is for us to construct and then commission a new packing house in Chile. Today, we manage about 1.5 million cartons annually out of the Chilean area. And we make about $1 to $1.50 on the packing today. And then we also market and sell that fruit and we get an 8% commission we target between $1.50 and 250 on that 1.5 million cartons that we market and sell. The goal is to build the new packing house, which we've targeted a $25 million capital expenditure. We have 5 million cartons of fresh lemons that are now captive ready to run through the packing house. And we believe we can construct this paging house in a way that will allow us to make between $2 and $2.50 per carton. And then on top of that, capture the selling commission of 8% on that. And if we execute that to plan, that should drive another $10 million of EBITDA, and we believe we can accomplish this by 2028. So in summary, the $25 million of growth initiatives, you've got the San Joaquin that should grow by about $4 million of EBITDA. You've got the Ventura County Coast, which we believe through farm management and recruiting outside growers. We can grow by $5 million of EBITDA here. We've got the desert, which we've targeted $2 million of growth, but with that potential of a huge opportunity for us, which is an additional following program or value creation from the water. You've got agency and brokerage business, which we anticipate to grow by $4 million, and then you've got the new Chilean packing house, which should drive EBITDA growth by $10 million for a total of $25 million total increase by 2028. And with that, I'm going to introduce you to John Carter, who's going to tell you about our One World of Citrus and avocado business model and tell you how he's going to pull all this off.

Thanks, Harold. And as Harold mentioned, what I'm going to be doing is taking this opportunity to add color and bring to life portions of the core operating business, right? It's a little bit of tactics meat strategy here, a little bit day in the life. So we're going to try to make it live for you. It's interesting, the milestone circle that Harold is going through. I started up at 2010 is my tenure with the company, and that was back at the point where we went independent, and we became publicly traded. And so here today is also Susan Jones Zing, who I see wasn't sure she's going to be here, but she heads up our international business development and Citrus marketing. And I mentioned her because -- she was there really when we started up going direct. And the numbers that we're talking about now, you look back in time and you think, wow, we started out and a big week for us might be 5,000 cartons a week or something like that, really small number. And so the efforts that we've done, it's been interesting because it cycles through at the beginning of each new year and season where we've been able to tie in the customer wins with greater supply and more of a breadth of products. And you see this evolution in this cycle move through each year to the point where we are now and put us in a position to move forward. Relative to One World of Citrus. -- it's really the core of a year-round global supply value proposition. And what that's doing is it's minimizing the availability interruptions without sacrificing quality. So when we talk about interruptions that may arise, it could be relative to natural seasonality, mother nature, factors such as labor unrest and as well as competitive market and usage alternatives. So just to highlight a couple here. Within the past 10 days from a mother nature standpoint, we've heard where Mother Nature is playing tricks in Central Chile, which is south of where our operations are of having temperature as low as 19 degrees Fahrenheit for up towards 12 hours -- cold, right? What impact does that do to the global supply? How does it impact your customers in different markets? Then as well in Mexico, on the other side of it, we received some pictures from some folks that were showing 122 degrees Fahrenheit in Central Mexico, part of the big heat wave that came through Texas and still there. It's actually cooler down in Mexico now than in Texas. Factors such as labor unrest, the Pacific the West Coast ports. That looks like that's been coming to a level of being approved, but that could have been a disruption for us and competitive market and usage. Produce is really a global game. And in situations where certain source countries have better alternatives, whether it's in their own country, to a different market, they'll look to do that, and they'll send supply different places. And so having this flexibility of one world of citrus, it addresses those challenges by having consistent quality in place and sourcing alternatives that are centrally managed, and that's a big piece of it. Because here, just out of Santa Paula, we bring all these pieces together and we look at where we need to ebb and flow from a supply standpoint. We now pull including the U.S.A. from 8 different countries. Just a couple of years ago, that was about 3 countries, right? So it's really -- this is part of the cycle that we keep going through from year to year. So from a standpoint of the One World of Citrus platform from a buyer perspective, it's doing several things. It reduces their product searches if the supply gets tight, right? They count on you to do that. It helps them because we're going to be ensuring the food safety requirements, if there's alternative sourcing. And as well, we maintain the required grade size standards that their business is looking for. So that's from a buyer standpoint, and that's a lot of positive attributes in terms of how they make their decisions. Likewise, us as the shipper and it's part of the grower base and all the growers that we represent, we're looking ourselves to figure out where we can get the most revenue for the cartons. And so with the One World of Citrus program, what we're doing is we have multiple sourcing areas servicing multiple markets year round. This is not something where we're saying, "Oh, we have several source countries, and we're focusing on one market to be able to take care of. We're figuring out multiple markets. And an example of that is this. Let's say, the U.S.A. season is beginning, say, in of September here coming up. South Korea may be in a situation where they're really looking for new crop. They're looking for USA lemons. And so that's an opportunity for us to export to South Korea. However, we have to fulfill our U.S.A. customers. And by having Chilean sourcing still going into that time frame, we can manage that supply, take care of the USA customers, but then also take care of the South Korea customers to what they're looking for from a grade and size standpoint and country of origin. Those are all things that we look at it that have helped us get to the point where it's literally selling over 1 billion lemons a year. So it's quite a number. And relative to the chart here, we talked about over 1 million cartons here of fruit being sourced from other countries, same way. You go back a few years ago, and this was a really small number. And it just serves as a testament to the idea of what we build upon each year. And as we look forward towards these numbers, how we approach it Combining the One World of Citrus methodology that we have, along with Limoneira being here since 1893, 130 years of experience and then the ever-evolving modern global marketplace, it opens a windows to new thinking relative to diversification across the entire supply chain. And this lump illustrates what Harold was talking about, that we can move more grow our partner and agency source supply and sales over the next 5 years. And by doing so, we expand at a faster rate and apply capital to other parts of the supply chain to diversify profit streams and also to minimize risk very important. So this slide illustrates in a little bit more detail, just fundamentally, the idea that there's part of the supply chain that's growing the farm management. There's the packing aspect and then there's the marketing and distributing. And so we have very good experience with the full integration going all the way from the tree to the consumer, the grower partner, where we have grower partners that we've been with for many, many years. And then, obviously, new ones as [indiscernible] talking about picking up that extra million cartons. So with that, there's also what we call agency brokerage where it's something that we're not growing it, we're not packing it, but we're utilizing the growth of our customer base to bring in more product, right, without that risk aspect. It also does another thing for us. As we look at commitments that you get into from an annualized customer agreements and that type of thing, it allows you to look at the troughs of where you might have issues with supply. And so this way, by being able to have more of an agency aspect and bring that into this part of the business, we can increase the amount of volume that we feel comfortable with putting on our longer-term commitment. A few examples of diversifying is in situations where we're over taxed with the land as an asset, how do you loosen that up and then come in and invest in a packing house. So that -- at that point in time, you may not have all the trees, but you still have the limits from those trees and that's coming into a packing house where you're controlling the operation and you create a different revenue or profit stream as well when you go all the way to the end on the distribution side, right? Because right now, we work with -- 3 third-party facilities, Texas, Miami and up in New Jersey. So how do we look at those, maybe invest in some of those ourselves relative to capturing those revenue streams. Going back to that 2010 time frame, we were less than 4% of the market in a fragmented industry. So over the time, we've climbed to 14% of total U.S. lemon crop market distributed in 2022. So with that said, some of the key drivers on that, what we're delivering against is high-quality products, which increases the customers' purchase confidence, integrated farm to customer supply chain that supports both customers and growers. And this happens domestically and internationally. One of the examples I'll come back to South Korea again is we uncovered an opportunity there where they were actually a market for third grade lemons, believe it or not, because they had the opportunity to bring in fresh cartons in Jewson there in South Korea. And so with that as a go get, because we are seeing the supply chain all the way through, we were able to adjust to that and get the right quality still third grade, but the right strength for the fruit to make it across the ocean and still be usable for the customer on that end of the Pacific. Low-cost production, of course, maintaining our competitive position, diverse global sourcing and distribution network, superior product mix and then this global scale and customer base creates flexibility, right? So if you come into Santa Paula in, there's lots of discussions about how we're marrying up with the market and looking out 1 week, looking out 3 weeks, looking out 3 months. And it's all the point that we need to deliver that quality, we need to have the supply for the customer, and we need to be consistent with it. So it's a competitive marketplace out there. And Limoneira has always been one that's pursued the what's next. I think that's evident in, again, the milestones that Harold was going through. And this is one of the drivers behind entering into a relationship with Appeal Sciences, delivering the world's best lemons. And so the bullet points on this appeals non-GMO, edible plant-based coating technology slows water loss and oxidation to help keep produce fresh for longer. -- allows Limoneira to generate greater supply chain flexibility, maintain higher quality lemons, decrease costs and reduce waste, all to the benefit of growers, customers, shoppers and the environment and opens Limoneira and grow our partners up to additional channels and market opportunities with retail and foodservice customers. So those 3 bullet points, quite a bit of words, right? It ultimately comes down to this, and it's a what if. What if you're able to extend the supply chain, enough days and you're able to do it at higher temperatures in such a way that you open up new possibilities. So a few of these possibilities, a few of the what ifs, full truckloads, they seem silly, but lemons can be picked up 3 pallets, 4 pallets, 8 pallets. So there's customers, "Hey, you don't need to do that anymore. You can have one truck come by, pick up everything you need for the week and off you go, because the window that we have on the extension of the supply chain life is still going to get you the quality that you need, but you save on the transportation. You have one truckload now, now you can ship in a higher temperature, thus you reduce your carbon footprint because you're using less refrigeration. It also opens up then the thinking of when you look out across the geography, are there potentials for hub-and-spoke systems. Evolving in the foodservice world these days are what's becoming more, I'll call it, more super regional for lack of a better term. And there's a primary distributor, and then you start to have satellite facilities. And so with that, the hub-and-spoke idea is if you get the item to the primary hub in this example, then at that point in time, the satellites can come there and pick up what they need, right, and then not have to make and arrange your trucks for California pick up. You take that into account and then you have continuous replenishment that fuels that on that type of model that works, you're in business. As well, disrupting current SOP for restaurant end users. When you look at situations in the back room of restaurants, the highest-priced real estate is the refrigerated cold storage there, okay? So if you can take an item that you have in bulk and have that be fine to be in called ambient or air condition type of environment, well, then you're freeing up space, right, and you're also using that refrigeration that's right there. It also gets into a change in the SOPs not only the location but call it the supply chain life or expiration date that you have for the product. When you get into those end users, lemons with foodservice and restaurants, right, is very important because it starts to go through multiple hands. And at that point, the flexibility or the degree of variance in terms of the SOPs that those individual distributors could be doing would be -- full service is you extend that you change those SOPs. You have longer transit windows. It's not just saying, hey, you're going to be in a better position to send fruit to say, Asia, but when you get in some of the longer runs, whether it be into Canada or even down into Mexico, then you're opening up part of your supply that you have to go longer distances, creates a lot of flexibility. And one of the things that you have to think about for a second, probably everybody at some point had the Fruit Bowl on the countertop, right? You got your apples, you got your oranges, you got your lemons. That is really an extended billboard of the retailer to which that family purchases or fruit. And so if the billboard there in-house provides a quality image and it creates the impulse to consume longer, well then you increase your demand. And see what has materialized, we're excited to bring on other new reality of possibilities, and that's the licensing part of this arrangement to which as we expand this and it catches on, then we are the advocate, if you will, or the leader in terms of signing up folks from a licensing arrangement standpoint. The -- what's next attitude, as I mentioned, is not new to us. When I come back and just talk about the packing house real quick that in 2016, we modernized our packing to a state-of-the-art facility with the ability to process 3x the amount of fruit in the same amount of time. We continue to push capacity utilization upwards while enhancing the facility with additional bagging units. And I bring this out because you have that as a keystone to your operations, and you want to be able to add to that. So what we've been busy doing, as I said, is adding baggers to that support the retail business because we go back in time, 2010, right, we started out where we were predominantly an export-oriented packing house, okay? Incredible reputation in Asia. So as we increase volume, it became a little bit more food service driven. And now it's the inclusion of retail that has a lot more value-added type of aspects to it. So we're able to expand those customer connections to other citrus items as well and fuel this One World of Citrus evolution because what we've seen happen over the years with lemons, we're seeing it now pick up momentum with the other citrus items, and it will continue. At the end of the day, when we talk to our customers and we listen to them, right, they say, we want to do business with you because you give incredible global market intel. You help us make decisions on what we need to be doing. You provide the consistent quality and the consistent supply. And in some aspects, and this is the ones we enjoy the most is the statement of Limoneira, -- let's make it easy. Could you just tell us what to do and take all the middle stuff out of it. And so -- and we have examples and stories of that. And just like that, I've talked a bit about the grower, a lot about the customer, but the grower side of things is extremely important to us, obviously, because we see things all the way from the tree to the shopper, right? And so with that, we wouldn't be anywhere without our growers. And we've talked to them about what we look to do and how we go to market. And so with that, instead of flashing up a screen or a slide that we have here, there is a video, right, that is some testimonials from the growers. And so I'll depart off of that and then hand it back over to Harold while that's playing. [Presentation]

So as John mentioned, the grower partners are really a critical part of our business. And in one fell swoop, we actually just monetized a little over 3,000 acres in the San Joaquin Valley and then overnight got into the farm management services business. And it was a wonderful opportunity for us because we were allowed to keep our entire workforce active, and we formed a partnership with Prudential and we're engaged for a 1-year contract to continue to firm the property. We've been actively working diligently behind the scenes to really get good at this and to focus in on what we need to do to be really good at it so we can hang on to that contract, but also to expand these services. And if you think about how capital intensive our overall businesses and the use of our workforce, if we can do this effectively, this is going to make us better and it's going to make our grower partners better as well. So we're very focused on developing this new exciting part of our business, and we look forward to reporting back to you of our progress on our growth and our maintenance of that great contract that we have with Prudential. Looking at the long-term growth in lemons, -- and you can look at this slide, if you look at the average sales price that we've experienced since -- from 2017 to 2022, you see we're bumping along at sort of all-time historic low sales prices. This is the result of an oversupplied global lemon environment. And so when you look at our actual revenues and you see us kind of treading water and holding steady, that actually is -- internally, that's a great accomplishment for us because it means we've been sort of doing that or keeping up with things by growing our volume. However, we are hopeful that there will be events through our differentiation with appeal, with some of the programs that John mentioned to you in our One World of Citrus that differentiates us just a little bit, that hopefully will allow us to become more of a price maker. We haven't been a price maker really since 2018 because of the oversupplied environment in lemons, and we're optimistic that we'll see that. The great news for us is that we've developed the scale now. So when that happens, you should see remarkable profit recovery. But at the same time, it explains the pivot in our focus on growing the services side of our business because we're less beholden to the commoditization and the effects of commoditization on our pricing. 80% of our total revenue were lemons in 2022. As John said, we are -- we represent about 14% of the U.S. market. We have our goals to get to 25% of the market in the United States, and I believe we have the capability to get that done. Today, we represented about 3,900 planted acres of lemons in California, Arizona, Mexico, Chile and Argentina. We have 200 U.S. and international food service, wholesale and retail customers and approximately 150 third-party grower relationships today and growing. As for our avocados, you'll notice the experience we had in 2022. And unfortunately, this is somewhat of an anomaly. I wish we could sustain this. But last year, there was a weird event where the Mexican supply chain was cut off for about 8 weeks that allowed California to go get all the business they could get, and we just happen to have 8 million pounds of fruit that went into a market that got us about $2.20 a pound. As Mark will explain to you, our guidance for this year is somewhere in the order of 3 million to 4 million pounds, so approximately half the volume, and I'm guessing we'll be lucky to get a buck, we'll see. So anyways, avocados tend to be alternate bearing. They're also -- it's a great product, very good for you and still with some good tailwinds of growth. So as you see more of our lemons coming out, you'll see more avocados being planted by Limoneira. Every -- of all the avocados, we produced, 98% of them are half the has variety. And we're currently exploring adding value to avocados as a complement to what we're doing with our One World of Citrus. So now I'd like to jump into our real estate development and property sales and update you on where we are with these activities. One of the sort of the byproducts of being around for 130 years is we have a number of agricultural properties that sit contiguous to urban centers that when it's time for them to grow. Limoneira has a history and now an experience of working on getting them entitled to convert these properties from an agricultural use to an urban development use, creating and unlocking a significant amount of value in that process. Our Harvest at Limoneira project and property is an example of that. That used to be the Teague-McKevett ranch and is now a 1,500-home master plan community development in the city of Santa Paula. But we're working on several others of these on other properties. And if those of you that have followed our story for a long time, you know it takes a long time, but when it actually happens, it creates extraordinary value and this is one of those parts of our business that we continue to work on, and we'll keep you up to speed when we have success with these entitlement efforts. When we talk about the future asset monetization of our company, $180 million of near-term asset sales have been identified. We were successful on October 26, 2022, monetizing a 17-acre piece of property in our Harvest project for $8 million of cash. At the end of October, we sold our Oxnard Lemon facility and then leased it back from the Port of Wainimi for $20 million in cash. We sold an asset that we owned in Santa Maria for $2.6 million at the end of November of 2022. And then the real game changer for us recently was at the end of January of 2023. We sold our 3,600 acres of productive agricultural properties in Northern California, up in the San Joaquin Valley to Prudential for $99 million in cash proceeds, helping us generate $130 million of cash, which we then used to pay $130 million of debt off. And so perfect timing with rising interest rates and everything that was going on is going on in the market right now. But we also believe that the final 2 projects and properties we're working on are Windfall Farms Vineyard and Pasa Robles, California, and our Chilean assets down in La Serena, Chile should generate upwards of $50 million additional dollars of cash back to the company. As far as the fair market value being greater than our net book value, this was always one of the big stories of our company is -- and I think it's just a byproduct of having been around for a long time and having assets on your balance sheet that were placed there a long time ago. But as far as our real estate development assets go, we have a 500-acre master planned community project right now in partnership with the Lewis Group. We believe the fair market value of that property is somewhere between $100 million to $150 million of value. And it's got a net book value of just a hair under $80 million. All of our agricultural assets, including our land, our water, buildings and Orchards, of which we have 11,300 acres have a fair market value of somewhere directionally between $450 million to $550 million and a book value of $172 million. Other assets on our balance sheet have fair market values targeting $25 million to $30 million and you are on the books for $13 million. And if you took our net debt of $30 million away from that, it means that there's approximately $550 million to $700 million of value or $30 to $38 a share with book values today of about $234 million or $13 a share. So this was always the story. Now as an investor, you might say that's great, but how many -- how am I going to get it? Our pivot towards asset-light is allowing us to capture some of that value now and put ourselves in a position to redeploy that with really great growth opportunities, but ultimately, more value for our shareholders. We hold significant ownership in water rights as well. Water is interesting and interesting asset class because we're at scarce, it's valuable and where it's abundant, it's less valuable. But in the total sum of our assets, we own approximately 21,000 acre feet of owned water rights Again, back to the scarce versus abundant. They carry a value of anywhere from $10,000 to $40,000 an acre foot. And the water values have been growing at just under 6% annually according to Southern California water price escalation and have been compounded annually since 1974. And as mentioned earlier, we're sitting right at the cusp of some very exciting asset water monetization, specifically with our Colorado River water rights and our assets in Yuma, Arizona through the following programs. I mentioned the Yuma, Arizona project and what we're doing with following there, but we're also now beginning to test the waters with Santa Paula Water Basin monetization as well. Nothing to really report on other than that -- we've had a very organized adjudication of an adjudicated basin since 1996. We've been effectively trading water, and we have an active market of buyers and sellers of water rights as well as people that want to lease water if they're pumping more than their allocation. So we're just in the sort of the early innings of that active market beginning to take place. And Limoneira's in a great position to do that because of the surplus water rights that we actually have accrued to us over the years in the Santa Paula Water Basin. We own premium land in Southern California, Arizona, Chile, Argentina as well as a variety of commercial properties. We've covered a lot of that value. So I want to jump into our harvest at Limoneira master plan community project. It's really given us a diversified revenue stream, which has included the monetization of noncore agribusiness land. But there's been significant residential closings for our company. In 2019 we closed 210 lots, in 2020 144 lots, in 2021 232 lots. We're 1 house away from completing our Phase 1 development in the project and are just entering the exciting negotiations of Phase II. I'll show you where Phase II is in a minute. Because of the rising interest rates and the impact that, that's had on mortgage rates, -- the projects slowed down for the last 12 months. I'll cover that in a minute. But it's really exciting to now realize that values are still there in the marketplace. There's still a demand -- a significant demand exceeds supply situation for new housing starts here in Ventura County. And we believe that the next phase of which that represents 554 new lots will be met with great interest as we go to the market, sort of the middle of the summer. Our first phase was built out by nationally recognized homebuilders, Lennar, KB Homes, K Hovnanian and Richmond American. This is a picture, which is another interesting project for the company in partnership with the Lewis Group -- if you recall, we mentioned the 17-acre retained parcel that we monetize by selling that 17 acres to the partnership of Limoneira and the Lewis Group. We actually are working with the city of Santa Paula to increase the amount of dwelling units that we're giving for the project, and this is a 300 dwelling unit multifamily for-rent product apartments that will build out and actually retain as part of our real estate performing assets that we maintain. The pro formas on this project looks really exciting, and we look forward to bringing this to our Board in the next 12 months for approval to move forward with this project. If you look at that map right there, the yellow area behind me on the map is that's the second phase of 554 lots that we're just now starting to auction off right now. I'd say that, at least preliminarily, there's been a significant amount of interest. A little too early to tell you on value. So we'll see how that goes. But we're anticipating taking this back to the market by the middle of this summer, so very, very soon. Across the highway from the Harvest at Limoneira project is a 32.5 acre piece of property that Limoneira owns, which we've renamed the Harvest medical Pavilion. We've been working in partnership with the health care agency of Ventura County as well as another real estate developer who -- his company is called Pacific Coast Investments. And we've actually created a letter of intent for once the health care agency approves moving forward and funding the development of 150,000 square foot medical office building and a new 49 bed Santa Paula hospital, the developer will acquire the 10 acres that, that sits on from Limoneira and then begin the development and construction of a build-to-suit facility of the medical office building and the hospital. We believe the 150,000 square foot medical office building will go first. We think that's going to close for us within the fourth quarter of this year. And then there'll probably be 12 months before the 5 acres that will be necessary for the hospital closes, but both will be significantly valuable for us as Limoneira will get paid out on the front end as basically land sellers, but then that will put us in a position to develop the approximately 18 additional acres that's left around it. And we're in discussions with the Ventura Community College right now on 8 acres and then an apartment developer for the final 10 acres in the property. So we believe this will get more valuable and we'll begin to monetize in the near term for our investors as well. Looking at the Harvest at Limoneira. We think the cash flow potential of the project is about $135 million over the life of the project. It sits on 500 acres. Currently, we have the entitlement to build 1,500 dwelling units, although we're working with the city, as I've mentioned, to expand that to 2,000 dwelling units, which we believe we'll execute on by the end of this summer. And the cash flow projections for the project are as follows. In 2022, we actually received $8 million from the project. 2023 this year, that's the $5 million, which would be the land sale for the medical office building. 2024, we anticipate $8 million coming back to the company, 2025, $17 million, 2026, $25 million, 2027, $30 million in 2028, $22 million. The projects approved for 1,500 homes. As I mentioned, we're working on getting that increase to 2,000 homes. And our 2023 goals are to finish the 38-acre sports park in the project. For those of you that are sticking around for the tour to model, you'll get to see it all. And it's exciting. We haven't put the turf in because it hasn't been -- the weather hasn't been conducive, but within the weeks, we're going to now hydroseal that and get the grass planted and that will complete the sports park. We look to complete all the engineering for the Phase I of the 554 home sites so we can take that out to the market. We mentioned securing the entitlements for additional 550 home sites. And also, we showed you that the -- we're working on getting approvals for the 300-unit apartment project that we're working on in partnership with the Lewis Group. Nationally, you're all following housing right now, but increase in interest rates and mortgage rates has significantly slowed new home sales down. Here in Southern California, home sales prices fell in the second half of 2022. -- builders stopped buying land, but are starting to show interest now on taking down lots again. And here in Ventura County, as mentioned, there's just a significant demand exceeds supply situation for housing. So there's limited new homes and resale inventory, which gives us confidence that there's going to be a market for us when we get there. And at harvest, it says only 2 homes left after June 1, but I think it's only one now. And with that, I'd like to introduce you to Amy Fukutomi, who is our Vice President of Compliance and our Corporate Secretary, and Amy is going to bring you up to speed on our ESG initiatives.

Thank you, Harold. So I know most of you in this room know these gentlemen, -- by way of background, I have about 20-plus years in the lemon packing house industry as an owner of Oxnard Lemon that I sold to Limoneira that we recently sold. And I also have a long career at Amgen, a biotech company down the road here from their compliance department. So a lot of this falls right into my wheelhouse. But I'll admit, about 4 years ago, our Vice President of Marketing, says, "Hey, I'm retiring. He was in charge of our ESG program. He walks down the hall somehow I drew the short straw. They sit here, this is yours. So I had this huge learning curve still on an amazing learning curve, just great opportunity, really fortunate that our Board, our management said, go for it, let's do it. Let's make a change. And after a couple of years, we moved the needle 30% on our scores. So big initiatives and how did we do it? We put everything into 4 different buckets: evolve, focus, invest and expand. And each of these initiatives that help move the needle are just some of our key things. Obviously, I'm not going to stand here and talk about everything we're doing. But I will tell you that expand, focus is very much on our e-program evolve very much in our G, focus very much on our S, bet our people and then the invest is we had to spend some money to do this. Okay. So expand. We're farmers, and so we're very much interested in what goes on in our dirt in our land. So we looked at some biochar alternatives. What is Biochar? It's a [indiscernible] like compound that we're putting in the well. It's going to hopefully give us some better outcomes, reduce some of our costs, some better yields. We're looking at investing in some really cool farming technology. I'm sorry, not investing. We did invest and I'll talk to that in a minute. And we looked at what do we need to do to rightsize our Board, look at governance. So we did some surveys. We did some studies. We looked at a whole lot of best practices and said, we've got some huge opportunity here with their Board. So we rightsized our Board, 11 people down to 7. We appointed a new Board Chair, Mr. Scott Slater, back here. We brought on some new board members, and we put a whole lot of guidance in place that we were doing a lot of the things, but we just didn't have the paperwork and the structure, one of which stock ownership guidelines, so not only applicable to our Board, but also our senior executive officers. We put together an incentive equipment policy. So there's an intentional misstatement of some financial facts, a little bit of a clawback policy in place. We put together more corporate guidelines. And one of the things that we also did was expanded the reach of our insider trader policy. So as I talk about these 4 different big heaters, they're very much overlapping and I think the common theme through all of them is education. And that's something that we do -- we needed to do it with our staff. I go down the hall and say, "I need this data. And they'd say, "Amy go away. They didn't understand. They didn't know what the word ESG means. And some of them just didn't understand why we were doing all this. And it took that education that, hey, guys, the train has left, we have to get on board. And management has just said, let's get on board and everybody finally understood why, but they needed to hear why it's important. So the next thing we did is we said, how are we going to focus on all this and focus very much the S part. We focused on our people, our team, our community, some of the people we do business with and said, we have some great opportunities here. We focus very much on diversity inclusion. I guess it's actually DEI, diversity, equity and inclusion. We have some great statistics that I'm super proud of. By nature of farming and agriculture, it's very much a male-dominated industry, but just the nature of your on-farm equipment, you're picking, you're packing. And so we're moving the needle, but we're at about 30% female in our population and continuing to move that. About 49% identify as minorities. 43% of our Board are ladies. 75% of our Board committees are chaired by -- ladies and about 40% of our management team are women and minority identified. So great numbers, and we'll continue to grow all those. And it was just something not that we didn't care. We just didn't focus because so much else was going on. So really proud of those core numbers. As I mentioned, we stepped back and looked at some best practices about our Board. And Mr. Slater was appointed Board Chair and 2 of our new Board members, Ms. Moran, Ms. Carbone were put in charge to lead our Audit and Finance Committee, Non-Gov and our Compensation Committee. So with all that, it really helped us move the G-needle because the gene needle, a bunch of the questions and the answers and responses that were commonly asked is, how long have people been on your Board? What's your ratio, who's doing what? And all this had a huge impact on our G opportunities. This is a really cool part. We invested in technology. And you look at it and you're saying, what do you do? You're in the third? How can you have farming technology. We invested in a system called FiTech, a agricultural water application. And what this did is it allowed -- we put probes on. We put some meters on. To be honest with you, I'm not even sure of all the different science words around all this. You get a chance, I think, to see it a little bit tomorrow. What it does is our farming team, their applications, their iPads, their computer. They can watch what's going on in there. They can see when the tree is stressing, they can turn the water on. They can watch what's going on, the probes and the different mechanisms tell them, "Hey, we've had enough. They will joke and we say, what did you do 2, 3, 4 years ago? And they will tell you, well, we looked at the weather. We looked at our water in schedules. We looked at the availability of water. We just kind of use this art. So now with this, our resources can be deployed in better ways and our water bill water savings. What's hard to quantify is obviously, the last 2, 3 years, little to no water around here this year, a big influx of water. So it's going to be hard to -- last year to this year, say, what is that ratio? How much did we save that as our rain hopefully stabilize, we'll be able to get some true numbers on water usage, water costs and where those savings are. Much of what's going on, as I'm sure most of you know, there's a proposed SEC rule coming down that climate disclosure. And if you don't know about it, there's 500 pages that you want to read about it. What we're trying to do is understand what it will mean to us. And there's 3 different parts of what's coming down in the climate disclosure. Scope 1 is what do you do? What can we control? What's our carbon emissions and our different footprints. And we're able to quantify all that because these really neat things we're doing ourselves. I talked about the water. Harold mentioned that for over 100 years, we work with a company that we cofounded about releasing good insects. I've got on-site solar. We've got organic green waste, and we've got our own wastewater treatment plant. So we've recently applied for a Title 22 permit. And what that will do is allow us to use that water and regenerate it back for irrigation. Right now, and I have to find this word, it's going out to a conservation easement to protect the endangered Southwestern Willow flycatcher, whatever that is. I'm not even sure. But because of all this, we're really good now at quantifying what is our Scope 1 data. The part that's going to get a little interesting as we go into Scope 2 and Scope 3. Scope 3 is about capturing all this information for your supply chain. So tell me how that's going to work. When we go knock on the door and say, Walmart, I need this, this and this, or we go to our outside growers and say, we need all this type of data from you. So we're putting a plan together for that. And I think one of the things we can do, as Harold and John spoke about our farm management services is hopefully, we can put a playbook together and work with our outside growers and the growers that we contract with to manage them, we'll have a little more opportunity for them because, as I said, there's no playbook. There's no rules. You just -- you kind of go for it, and it's very subjective. So we think there's a great opportunity there for us. This is a really favorite part of mind is when you talk about the S initiatives, it's all about our people, it's about our team, but it's also about our community, our county and the people that we do business with and how awesome is it that we have 242 at last count a few weeks ago, housing units on site and very close by meaning within a few miles. So these people, and you'll see it again tomorrow when you drive on to our campus, they walk to work, reduces our carbon footprint a little bit more. And they're proud. They've lived there, 10, 20, 30, 40, 50 years. Some of them have lived there 2 and 3 generations. And many of us have kind of joking and say, yes, we were a lemonier somewhere a limiter hat and people say, "Hey, my grandfather grew up there, my grandfather worked there. And that's just a show of our sustainability of being here 130 years. Another great thing that management and our Board has allowed us to do is really get involved in the community. And it's not just writing a check to a nonprofit. It's really our time or treasurer talent. Many of us sit on nonprofit boards, all the community boards. We sit on agriculture ports. We sit on water boards. We sit on the educational boards, industry boards and the rotary all that stuff. But again, it's not just sitting on that board. It's not just writing the check. We're there. We're at their events. We're sponsoring things. We're at their dinner. We're just helping work all those events. And that's really meaningful and really something that our company and our staff embrace. Really, really, I'll leave you with something that just kind of gave me chills. We have our own staff managed employee scholarship fund, and we're all very lucky and I'm sure most of us have the opportunity to go to 4 your colleges and beyond. And we have many staff members and their dependents. They've never been to college. Some of them will be first-time college students. And just last week, we awarded 34 scholarships to our staff and their dependents. And it's more than -- a sorry, it's more than just the scholarship they win. Sometimes that's the key to their confidence, that's unlocking some doors for them and giving them that first opportunity. That's our team. Those are our people, and those are people that mean something to us, and that's why Limoneira is, what Limoneira. And I have to read a couple of quotes to you about the winners from the scholarship last year. I feel as though I've grown so much as a person and found a better foundation for representation and inclusion in my work. I want to make a difference. I hope with the knowledge I've gained, I can make a difference in my community. So these are students that are 18, 19-year-old and for the first time, having that opportunity. So I will just leave the same, is it exciting? Absolutely -- see my passion. Is it challenging? Absolutely. And where are the opportunities? It's endless, but stay with us, you're going to see a lot more of our ESG initiatives. Tomorrow, we have our new report that we launched about a month ago. We have a copy for you and just appreciate you being here and supporting Limoneira. So I will turn it over to our CFO, Mr. Mark Palamountain.

Thanks, Amy. That was awesome. Great job. I'm going to give -- save the best for last here. Good to see everybody. Nice to see some new faces and some familiar faces. I'm just going to give a quick financial perspective, some addition to what we've already heard today and then go through some summary of where we're going and where we've been and then try to get some Q&A here in the last 15 or 20 minutes or so. So Limoneira has had extraordinary top line growth since we went public in 2010 and just under $50 million in revenue to over $185 million in revenue last year. We've been very proud of our dividend strategy. We've grown that over 36% over the last 5 years and quite a feet, keeping that steady going through COVID, some difficult years, but we've had some nice monetizations as recently. And with the continued pivot that we're going to experience fully within the next 12 months, we look forward when a company gets to be outperforming to increasing those dividends over time to really send a sign to our loyal shareholders, all of you here, hopefully today. So Limoneira has been positioned to realize financial growth since starting this pivot recently last year. You can see the EBITDA story. The EBITDA story when Harold was talking about in 2018 when we were price makers, we were making over $10 a carton, $25 FOB and a $15 cost. As we saw our costs rise to over $20 and FOBs dip down to '17 or '18, that's when we went through some of those struggle times 2019 then into COVID and then coming out in a recovery. And 2022 was mainly an avocado year as we've identified, still at about a $19 lemon. But that's why we made the pivot. The pivot was to plug all the holes that were losing money, which we did. We did in the desert, as Harold alluded to, and pivoted towards a following program, increasing productive acreage there. The Cadiz exit, which was a $2 million loss annually, we're going to start to see immediately in the fourth and first quarters of this year. And then the northern properties, where we were basically breaking even over the last few years, but now have the opportunity to create that farm services management division and also recruit additional packed cartons up there. That strategic plan pivot is going to reduce our earnings volatility. So going forward, as we said, were about probably since our call in about a month ago, we've got 12 months left, probably a little less, but I think we're going to start seeing that, like I said, in the fourth quarter going into the first quarter, especially with the Cadiz exit. One thing to keep in mind, so every dollar change in FOB lemon pricing is about $2.5 million of EBITDA change for us. So as we go from '18 now prices near '19 today, we will see an incremental $2.5 million. And that's a metric based on our own produced cartons. It's pretty simple. We have 2.5 million of our own carton, so every dollar movement either way. So you can see when we were making $10 a carton, that's $25 million of EBITDA. So there's a lot of leverage that we have built up in the system. And when the tide turns, which we're starting to see that, we're going to see a lot of P&L leverage as well. One thing that we embarked on about 1.5 years ago as the Board came to us and said, we need to look at figuring out how to delever the company. That was our #1 objective and then create more stable earnings. And so we put together a road map last spring and said, okay, it's going to take about 2 years to really identify and then sell some of these assets to delever the company. We identified over $180 million. Initially, it was $150 million of assets. And in 6 months, we sold $130 million of that and then increased the remaining balance to $50 million on those 2 assets, which is only book value. So there's potential upside there. Today, we've got about -- at the end of Q2, we had about $32 million of net debt Today, we have about $12 million of cash and $40 million, so we're back towards $28 million. And that trajectory is going to continue to decline into the end of the fiscal year and beyond, and we'll be building a cash position. One thing that we're going to be make sure of is we're going to be -- I use 2 words Stewards and Stingy relative to our capital. I think what took us 130 years to get $130 million of debt. And we're really proud and fortunate during these times of higher interest rates to be back at the levels we are and still have the earnings leverage that we've created with this asset lighter model going forward. So most things you'll see us doing like the Chilean packing house, it's a $25 million investment opportunity, but to create $10 million of operating profit. Those are the deals that we're going to be looking for and any strategic acquisitions going forward. So let me reiterate where we were the 23 highlights. We sold our Sevilla property for $2.6 million in our northern properties for just under $100 million and paid down about $130 million of debt in the last 6 months. One thing we're particularly proud of is we funded our unfunded portion of our long-term retirement pension, which was frozen in 2004. It got as high as $16 million of obligation. We got it down to $4 million and then terminated, which was going to save us about $1 million a year. So quite a good ROI on that. We created a foreign Management Services division, as we talked about, that's going to create additional EBITDA opportunities and expansion of our supply chain, establish 5-year packing marketing with Prudential for the 1 million cartons now produced up in the Central Valley that used to be ours. Established the 3-year following program in Yuma with a lot more potential we see by 2026 when the new plan needs to come on the river. Entered the exclusive relationship with Apeel. One thing to note that none of the benefits of appeal financially have been included in this. So we're being cautiously optimistic, but we see that opportunity to be in the millions operationally and also price making when this comes to fruition. Lastly, we eliminated the unprofitable operation at Cadiz, which is about $2 million a year, $3 million in operating cash flow due to some of the stuff still being on the balance sheet. And we've paid our net debt down to $32 million. So Limoneira is positioned for long-term profitable growth. As we've talked about, we've got about $107 million of cash expected back from harvest -- we've got at least $50 million for the 2 assets coming back and about $180 million of those noncore $50 million is coming back. Still some non-bearing acreage, which will be some avocados and some lemons. And then this entire plan, the EBITDA growth plan of increase of $25 million from where we are today and continuing to grow that through grower partner growth, agency growth, farm services and then the new packing house. So with that, we'd like to take any questions you guys may have, and thank you for your interest in the Limoneira Company.

Gerry Sweeney from ROTH. Have you come up with a firm plan for reinvestment? Obviously, $30 million of debt, you're going to sell some of the other properties, that's $50 million in cash plus the real estate. So you're going to have a chunk of cash. You talked a little bit about delay, even hinted at maybe owning some apartments in the area, but have you come up with a firm plan for some reinvestment?

Where we are in that plan right now is the Board's requested that we come at the end of July and give them our ideas for the plan. And so that's where we are right now. We're in the back room formulating. We tipped our hand on the Chilean packing house. We sort of tipped our hand on those apartments. I would say of the initiatives, the rest are non-capital intensive. So it will really -- the next discussion is, okay, what's the capital plan for the company. And so it's a little too premature for us to speculate on that, but we're working on it.

Ben Klieve with Lake Street. On the book value, market value slide that you guys have highlighted, the delta on the water right side has always been the biggest of all the different categories. And I'm curious if you laid out 3,000 acre feet today, if that was laid out historically, I hadn't caught that. So can you talk about within the 10,000 acre feet in venture accounting that you have access to -- how much you think is access beyond what you need for production? And then talk about kind of how this market has evolved. You talked about it is, it's really starting to become more of a market today. What does it look like 5 years ago? What is it today? That kind of -- any help there would be great.

Thanks, Ben. That's a great question. I think the surplus part to your question is it really depends on what we're doing, right? So -- and water has become so valuable so quickly. Right now, in the city of Ventura, there's a fee in lieu for real estate developers that if they bring a project to the city, they either have to bring the water or they have to pay a fee and lieu, that fee and lieu $35,000 an acre foot right now. So the City of Ventura is sort of contiguous to us. We've monitored and sort of charted those -- that increase in the water value over the last decade. And I'd say it's probably doubled in that time period. As it relates to how much surplus water, if we didn't change any of our operations right now, we probably have somewhere between 1,000 to 2,000 acre feet of surplus water. If we just kept doing exactly what we're doing right now. I'm not sure that we'll continue to do things exactly like we're doing right now. But we are interested in -- there's 2 ways to play it. You can either just sell the asset outright or you can figure out how to sell the wet water and create more of an annuitized sort of cash flow stream by leasing that water or selling the access to the water. And so those are other ways that we're thinking about monetizing in the Santa Paula Basin. But it's still, I would say, in its infancy. It's just starting. We've been -- over the last decade, we've been covering the over pumpers with our under pumping through agricultural water leases, somewhere in the $300 to $500 an acre foot range per year. But that's now beginning to change as more -- there's more interest in expanding agricultural production or people shoring up their over pumping.

I know that you put in a new slide of the new Chile pack in-house. That's a pretty big incremental push. Can you talk a little bit about that? How are you -- are you going to source the lemons from the regions around there and the Chilean farming assets that going to sell, they are not included in any of those numbers, right?

So I'm going to hand it over to Mark, just where the capital is going to come to put the $25 million in is the sale of the Chilean production assets. That's the goal.

Great. So first -- second part of the question. So the 5 million cartons we have captive down there right now. Our partner down there for InsistoVigara is managing those -- they're right alongside adjacent to our properties, and they're all relatively young trees. We were actually considering this right before and into COVID. And as those trees were being planted. Now those trees are 4 or 5 years old, and there is no -- there are no other opportunities to pack those lemons in the area. So -- and when we call them captive, they're very captive. And so the plan is pending Board approval as we go through our July meetings and further explore the opportunity will be -- it will be a 2-year build-out potentially and somewhere between $25 million and $30 million, depending on where inflation is on some of the prior quotes we've had. And really, at the end of the day, a clear path to at least $10 million of operating profit at $2 a carton and potentially 250 with technology and operating efficiencies down there. So pretty excited. We've got the supply chains to fill it. John over here has got a big task to sell it, but that's -- it's really the next opportunity that we see.

One other thing just to add to that, that's interesting is that the Chileans are one of the highest per capita consumers of lemons in the world. And so that makes it really exciting for us because there's a really large domestic market, which means that you don't have to be dependent or reliant on an export market that sometimes might get full with fruit from other areas. And the economics to the best of our analysis at this point seem to be roughly equal if we keep the fruit in the domestic market or if we go through the effort of putting in the box and sorting it and then shipping it up into the United States or Canada.

Mark Mandell, Charles Lane. This kind of goes in the opposite direction. But with lemon prices so weak, could there be an opportunity where you pick up distressed lemon assets in and around California with -- if you see some of your neighbors struggle with high leverage? That's question number one. Question number 2, are you seeing labor shortage in picking and also with wages going up in the environment we live in are using utilizing any technology that can help improve your efficiency in packing and picking.

Yes. So to the second question, we have seen increases in labor costs. We haven't had issues with labor, specifically at getting some of the workforce. We've utilized H2A programs given our housing that we have, and that's a big requirement for that, and we'll continue to do that. But so far, it's mainly been just an increase in cost issues there, not the availability on -- for picking on that. So -- and then from your first question, I wouldn't see us going further into land from a distressed asset perspective. We're really focused on the asset lighter, being delevered and then focusing on the services where we can control, as Harold mentioned earlier, the charges versus the increase in cost to maintain those margins. And so we'll continue that focus for the near future. I think the 2, we're not getting smaller anymore as far as our own production. So the 2.5 million cartons, which will ultimately be 20% of a bigger pie is still a long way from where we came in 2010 of under 1 million cartons of our own.

Mary Kallab from Stifel. I noticed in your presentation that agency margins are almost the same as margins associated with your packing house or just similar in general. If you can get $1.50 to $2 a carton off of agency, why have a packing house at all? And is there anything you can do to push agency growth more aggressively?

I would say the first part of that is it's a balance. When you look at the supply and what you manage, having that base on that first model that we talked about, that's really important because you can make some decisions with that fruit that are more strategic per se. And so that's what we're looking at, it's finding that right balance. From a standpoint of -- what was the second part? Yes. So that comes into that annual evolution I talked about as we move and we become more known for some of the other citrus items per se on that agency piece, and that business build is going to come across naturally. With that said, it's not something that you just simply go in and buy business, right? And so it's more of a longer play with that. were more sustained and more consistent versus right, all of a sudden.

And we'll see things like appeal, give us an edge, which will allow us to open up some new markets there and expand for agency and our U.S. domestic fruit.

And with that, we'll end the Q&A portion. I'd like to thank the Limoneira management team, and we'll take a quick 10-minute break and then come back.