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Information regarding our operations in different segments

6 Months Ended

Apr. 30, 2020

Information regarding our operations in different segments

Information regarding our operations in different segments

2. Information regarding our operations in different segments

We report our operations in three different business segments: (1) Fresh products, (2) Calavo Foods, and (3) RFG. These three business segments are presented based on how information is used by our Chief Executive Officer to measure performance and allocate resources. The Fresh products segment includes operations that involve the distribution of avocados and other fresh produce products. The Calavo Foods segment represents operations related to the purchase, manufacturing, and distribution of prepared avocado products, including guacamole, and salsa. The RFG

segment represents operations related to the manufacturing and distribution of fresh-cut fruit, fresh-cut vegetables, and prepared foods. Selling, general and administrative expenses, as well as other non-operating income/expense items, are evaluated by our Chief Executive Officer in the aggregate. We do not allocate assets, or specifically identify them to, our operating segments. Data in the following tables is presented in thousands:


		Three months ended April 30, 2020												Three months ended April 30, 2019

		Fresh			Calavo									Fresh			Calavo
		products			Foods			RFG			Total			products			Foods			RFG			Total

Avocados		$	149,865		$	—		$	—		$	149,865		$	134,892		$	—		$	—		$	134,892
Tomatoes			19,331			—			—			19,331			14,515			—			—			14,515
Papayas			2,363			—			—			2,363			1,809			—			—			1,809
Other fresh products			112			—			—			112			108			—			—			108
Prepared avocado products			—			19,118			—			19,118			—			23,631			—			23,631
Salsa			—			609			—			609			—			669			—			669
Fresh-cut fruit & veg. and prepared foods			—			—			94,186			94,186			—			—			114,641			114,641
Total gross sales			171,671			19,727			94,186			285,584			151,324			24,300			114,641			290,265
Less sales incentives			(803)			(1,874)			(657)			(3,334)			(112)			(2,259)			(649)			(3,020)
Less inter-company eliminations			(234)			(850)			—			(1,084)			(277)			(732)			—			(1,009)
Net sales		$	170,634		$	17,003		$	93,529		$	281,166		$	150,935		$	21,309		$	113,992		$	286,236


		Six months ended April 30, 2020												Six months ended April 30, 2019

		Fresh			Calavo									Fresh			Calavo
		products			Foods			RFG			Total			products			Foods			RFG			Total

Avocados		$	267,749		$	—		$	—		$	267,749		$	238,886		$	—		$	—		$	238,886
Tomatoes			32,324			—			—			32,324			25,907			—			—			25,907
Papayas			5,007			—			—			5,007			4,748			—			—			4,748
Other fresh products			237			—			—			237			189			—			—			189
Prepared avocado products			—			40,919			—			40,919			—			47,883			—			47,883
Salsa			—			1,328			—			1,328			—			1,522			—			1,522
Fresh-cut fruit & veg. and prepared foods			—			—			215,653			215,653			—			—			234,182			234,182
Total gross sales			305,317			42,247			215,653			563,217			269,730			49,405			234,182			553,317
Less sales incentives			(1,259)			(3,910)			(1,190)			(6,359)			(1,069)			(4,293)			(1,126)			(6,488)
Less inter-company eliminations			(700)			(1,642)			—			(2,342)			(872)			(1,689)			—			(2,561)
Net sales		$	303,358		$	36,695		$	214,463		$	554,516		$	267,789		$	43,423		$	233,056		$	544,268


		Fresh			Calavo						Interco.
		products			Foods			RFG			Elimins.			Total
		(All amounts are presented in thousands)
Three months ended April 30, 2020
Net sales		$	170,868		$	17,853		$	93,529		$	(1,084)		$	281,166
Cost of sales			156,463			12,919			90,793			(1,084)			259,091
Gross profit		$	14,405		$	4,934		$	2,736		$	—		$	22,075

Three months ended April 30, 2019
Net sales		$	151,212		$	22,041		$	113,992		$	(1,009)		$	286,236
Cost of sales			123,388			15,495			111,525			(1,009)			249,399
Gross profit		$	27,824		$	6,546		$	2,467		$	—		$	36,837

Six months ended April 30, 2020
Net sales		$	304,058		$	38,337		$	214,463		$	(2,342)		$	554,516
Cost of sales			283,071			27,051			208,853			(2,342)			516,633
Net sales		$	20,987		$	11,286		$	5,610		$	—		$	37,883

Six months ended April 30, 2019
Net sales		$	268,661		$	45,112		$	233,056		$	(2,561)		$	544,268
Cost of sales			219,979			31,823			227,353			(2,561)			476,594
Gross profit		$	48,682		$	13,289		$	5,703		$	—		$	67,674

For the three months ended April 30, 2020 and 2019, intercompany sales and cost of sales of $0.2 million and $0.4 million between Fresh products and RFG were eliminated. For the six months ended April 30, 2020 and 2019, intercompany sales and cost of sales of $0.7 million and $0.9 million between Fresh products and RFG were eliminated. For the three months ended April 30, 2020 and 2019, intercompany sales and cost of sales of $0.8 million and $0.7 million between Calavo Foods and RFG were eliminated. For the six months ended April 30, 2020 and 2019, intercompany sales and cost of sales of $1.6 million and $1.7 million between Calavo Foods and RFG were eliminated.

Sales to customers outside the U.S. were approximately $5.8 million, and $10.1 million for the three months ended April 30, 2020 and 2019. Sales to customers outside the U.S. were approximately $15.4 million, and $19.2 million for the six months ended April 30, 2020 and 2019.

Our foreign operations in Mexico are subject to exchange rate fluctuations and foreign currency transaction costs. The functional currency of our foreign subsidiaries in Mexico is the United States dollar (U.S. dollar). As a result, monetary assets and liabilities are translated into U.S. dollars at exchange rates as of the balance sheet date and non-monetary assets, liabilities and equity are translated at historical rates. Sales and expenses are translated using a weighted-average exchange rate for the period. Gains and losses resulting from those remeasurements and foreign currency transactions are recognized within cost of sales. Due to the extraordinary foreign exchange market volatility of the Mexican peso caused primarily by the COVID-19 pandemic, we recognized significant foreign currency remeasurement losses in the current quarter. These losses were due primarily to certain significant long-term net peso receivables for which hedging is not economically feasible. The Mexican peso weakened significantly compared to the U.S. dollar from 18.91 (MX peso to U.S. dollar) at January 31, 2020 to 23.93 (MX peso to U.S. dollar) at April 30, 2020. Foreign currency remeasurement losses, net of gains, for the three months ended April 30, 2020 and 2019 were $3.4 million and $0.2 million. For the six months ended April 30, 2020, foreign currency remeasurement losses, net of gains were $3.3 million. For the six months ended April 30, 2019, foreign currency remeasurement gains, net of losses was insignificant.

Long-lived assets attributed to geographic areas as of April 30, 2020 and October 31, 2019, are as follows (in thousands):


		United States			Mexico			Consolidated
April 30, 2020		$	100,247		$	31,167		$	131,414
October 31, 2019		$	98,224		$	33,874		$	132,098