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Information regarding our operations in different segments

9 Months Ended

Jul. 31, 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 July 31, 2020												Three months ended July 31, 2019

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

Avocados		$	145,670		$	—		$	—		$	145,670		$	196,047		$	—		$	—		$	196,047
Tomatoes			13,827			—			—			13,827			8,708			—			—			8,708
Papayas			2,695			—			—			2,695			3,105			—			—			3,105
Other fresh products			88			—			—			88			424			—			—			424
Prepared avocado products			—			19,764			—			19,764			—			27,427			—			27,427
Salsa			—			816			—			816			—			930			—			930
Fresh-cut fruit & veg. and prepared foods			—			—			91,200			91,200			—			—			128,428			128,428
Total gross sales			162,280			20,580			91,200			274,060			208,284			28,357			128,428			365,069
Less sales incentives			(141)			(1,613)			(277)			(2,031)			(554)			(2,561)			(917)			(4,032)
Less inter-company eliminations			(399)			(1,205)			—			(1,604)			(741)			(964)			—			(1,705)
Net sales		$	161,740		$	17,762		$	90,923		$	270,425		$	206,989		$	24,832		$	127,511		$	359,332


		Nine months ended July 31, 2020												Nine months ended July 31, 2019

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

Avocados		$	413,335		$	—		$	—		$	413,335		$	435,125		$	—		$	—		$	435,125
Tomatoes			46,151			—			—			46,151			34,616			—			—			34,616
Papayas			7,677			—			—			7,677			7,853			—			—			7,853
Other fresh products			328			—			—			328			615			—			—			615
Prepared avocado products			—			60,683			—			60,683			—			75,310			—			75,310
Salsa			—			2,143			—			2,143			—			2,452			—			2,452
Fresh-cut fruit & veg. and prepared foods			—			—			306,853			306,853			—			—			362,607			362,607
Total gross sales			467,491			62,826			306,853			837,170			478,209			77,762			362,607			918,578
Less sales incentives			(1,294)			(5,522)			(1,467)			(8,283)			(1,623)			(6,851)			(2,043)			(10,517)
Less inter-company eliminations			(1,098)			(2,848)			—			(3,946)			(1,807)			(2,653)			—			(4,460)
Net sales		$	465,099		$	54,456		$	305,386		$	824,941		$	474,779		$	68,258		$	360,564		$	903,601


		Fresh			Calavo						Interco.
		products			Foods			RFG			Elimins.			Total

		(All amounts are presented in thousands)
Three months ended July 31, 2020
Net sales		$	162,139		$	18,967		$	90,923		$	(1,604)		$	270,425
Cost of sales			144,405			13,921			82,868			(1,604)			239,590
Gross profit		$	17,734		$	5,046		$	8,055		$	—		$	30,835

Three months ended July 31, 2019
Net sales		$	207,730		$	25,796		$	127,511		$	(1,705)		$	359,332
Cost of sales			182,346			22,952			119,964			(1,705)			323,557
Gross profit		$	25,384		$	2,844		$	7,547		$	—		$	35,775

Nine months ended July 31, 2020
Net sales		$	466,197		$	57,304		$	305,386		$	(3,946)		$	824,941
Cost of sales			427,476			40,973			291,720			(3,946)			756,223
Gross profit		$	38,721		$	16,331		$	13,666		$	—		$	68,718

Nine months ended July 31, 2019
Net sales		$	476,586		$	70,911		$	360,564		$	(4,460)		$	903,601
Cost of sales			402,521			54,775			347,316			(4,460)			800,152
Gross profit		$	74,065		$	16,136		$	13,248		$	—		$	103,449

For the three months ended July 31, 2020 and 2019, intercompany sales and cost of sales of $0.4 million and $0.5 million between Fresh products and RFG were eliminated. For the nine months ended July 31, 2020 and 2019, intercompany sales and cost of sales of $1.1 million and $1.4 million between Fresh products and RFG were eliminated. For the three months ended July 31, 2020 and 2019, intercompany sales and cost of sales of $1.2 million and $1.0 million between Calavo Foods and RFG were eliminated. For the nine months ended July 31, 2020 and 2019, intercompany sales and cost of sales of $2.8 million and $2.7 million between Calavo Foods and RFG were eliminated.

Sales to customers outside the U.S. were approximately $6.5 million, and $12.3 million for the three months ended July 31, 2020 and 2019. Sales to customers outside the U.S. were approximately $21.9 million, and $32.1 million for the nine months ended July 31, 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, 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. The Mexican peso recovered somewhat to 22.20 (MX Peso to U.S. dollar) at July 31, 2020. Foreign currency remeasurement gains, net of losses, for the three months ended July 31, 2020 was $1.4 million. Foreign currency remeasurement losses, net of gains, for the three months ended July 31, 2019 was $0.1 million. For the nine months ended July 31, 2020 and 2019, foreign currency remeasurement losses, net of gains were $1.9 million and $0.1 million.

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


		United States			Mexico			Consolidated
July 31, 2020		$	96,418		$	34,505		$	130,923
October 31, 2019		$	98,224		$	33,874		$	132,098