Limoneira Company (LMNR) CEO Harold Edwards on Q3 2019 Results - Earnings Call Transcript

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About: Limoneira Company (LMNR)
by: SA Transcripts
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Earning Call Audio

Limoneira Company (NASDAQ:LMNR) Q3 2019 Results Conference Call September 9, 2019 4:30 PM ET

Company Participants

John Mills - IR, ICR

Harold Edwards - President and CEO

Mark Palamountain - CFO

Conference Call Participants

Tim Perz - Stephens

Gerry Sweeney - Roth Capital

Ben Klieve - National Securities

Eric Larson - Buckingham Research Group

Chris Krueger - Lake Street Capital Markets

Operator

Good day, ladies and gentlemen. And welcome to today's Limoneira Third Quarter 2019 Earnings Call. As a reminder, today's conference is being recorded.

And I'd now like to turn the floor over to John Mills of ICR. Please go ahead, sir.

John Mills

Thank you. Good afternoon, everyone, and thank you for joining us for Limoneira's third quarter fiscal year 2019 conference call.

On the call today are Harold Edwards, President and Chief Executive Officer; and Mark Palamountain, Chief Financial Officer.

By now, everyone should have access to the third quarter fiscal year 2019 earnings release, which went out today at approximately 4:00 pm Eastern Time. If you've not had a chance to view the release, it's available on the Investor Relations portion of the Company's website at limoneira.com. This call is being webcast and a replay will be available on Limoneira's website as well.

Before we begin, we'd like to remind everyone that prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. Such statements involve a number of known and unknown risks and uncertainties, many of which are outside the Company's control, and could cause its future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements.

Important factors that could cause or contribute to such differences include risk details in the Company's 10-K or 10-Q filed with the SEC, and those mentioned in the earnings release. Except as required by law, we undertake no obligation to update any forward-looking or other statements herein, whether as a result of new information, future events or otherwise.

Please note that during today's call, we will be discussing non-GAAP financial measures, including results on an adjusted basis. We believe these adjusted financial measures can facilitate a more complete analysis and greater understanding of Limoneira's ongoing results of operations, particularly when comparing underlying results from period-to-period. We have provided as much detail as possible on any items that are discussed on an adjusted basis.

Also, within the Company's earnings release and in today's prepared remarks, we included adjusted EBITDA, which is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to the most directly comparable GAAP financial measures is included in the Company's 10-Q and press release, which has been posted to our website.

And with that, it is my pleasure to turn the call over to the Company's President and CEO, Mr. Harold Edwards.

Harold Edwards

Thanks, John, and good afternoon, everyone.

On today's call, I’ll begin with a brief review of our third quarter of 2019 results and provide an update on our progress across all of our business areas. Mark will then review the financial results in more detail, and I'll finish with our outlook for fiscal year 2019 and discuss our initial view of fiscal year 2020. After that, we will open up the call and take your questions.

We continue to expect to achieve record domestic and international fresh lemon volume in fiscal year 2019. However, we experienced a drop in fresh lemon pricing during the first nine months of this year due to excessive rains in Southern California, creating an overabundance of larger than normal fresh lemons from us as well as from the overall industry. This drove down the price per carton and lowered our fresh utilization, which we outlined in our pre-release a few weeks ago.

We have now returned to a normal manifest of sizes. And as we progress through the fourth quarter, our fresh lemons are selling for an average price of approximately $21.50 per carton, compared to $19 per carton in the third quarter, and our fresh utilization rates have now increased back to the range of 70% to 75% from 50% in the third quarter.

For the full year of fiscal year 2019, we continue to expect to grow a tree crop of approximately 7.2 million domestic lemon cartons. Unfortunately, due to the lower fresh utilization rate during the third quarter, our lemons grown for fiscal year 2019 will not translate into our full year goal of fresh cartons sold.

It's important to point out that the weather events that affected the overall lemon and orange industry during the first nine months of this year offset the fact that we have achieved our grower retention goals and increased our market share. Also, the overall lemon industry continues to expand globally and we fully expect that to continue for many years to come. We continue to see lower orange prices stretching into the third quarter, which is longer than we previously expected.

I'll now shift to discussing our business segments, starting with a full review of our agribusiness. Over the past few years, we have made important investments that have us positioned for long-term growth. We've expanded our customer base to over 200 customers, increased distribution by leveraging our domestic and international marketing and sales channels, focused on trade marketing and consumer facing strategies and increased our packing capacity. In addition, we've significantly reduced seasonality for our customers by sourcing citrus from different global locations, giving us 365 days of fresh lemons.

We set an objective last year to recruit 500,000 cartons from new outside lemon growers and have surpassed that objective by securing over 700,000 cartons to date, with another 500,000 fresh cartons expected by 2020. We now have our 9,700 planted agricultural acres, of which approximately 1,200 acres are currently non-bearing lemons, but estimated to become full bearing over the next four years. Beginning in 2020, we expect 300 acres to be full bearing with an additional 900 acres to be full bearing by 2023.

Beyond these 1,200 acres, we have plans to plant an additional 500 acres of lemons in the next two years and believe this additional acreage will increase our global lemon supply by approximately 30% from our current level of 900,000 cartons to 1.3 million cartons -- additional fresh cartons as the non-bearing and planned acreage become productive. In addition, we expect to have a steady increase in third-party grower fruit.

Turning now to our real estate development segment. I'm happy to report the partnership between Limoneira and the Lewis Group of Companies for the development of Harvest at Limoneira is on track. Phase 1 site improvements have been substantially completed. And the joint venture received lot deposits from Lennar and KB Home in fiscal year 2018. Initial lot sales representing 210 residential units have closed year-to-date, and we expect an additional 33 lots to close in the first quarter of fiscal year 2020. Longer term, we are projecting approximately $100 million in cash flow from Harvest at Limoneira project over the next seven to nine years, which is expected to include 1,500 homes.

In addition, last week, we announced the sale of a multi-use facility consisting of a retail convenience store, gas station, carwash and quick serve restaurant located in Santa Paula California. The transaction closed on August 30, 2019. And we received approximately $4 million in net proceeds. And we'll record a gain of approximately $600,000 in our fourth fiscal quarter of 2019, which is already included in our guidance.

In summary, while our year-to-date fiscal 2019 results have been affected by unforeseen weather conditions, it is a temporary hurdle and does not diminish the inroads we have made to position us for solid growth and improve profitability in the coming years.

And with that, I'll now turn the call over to Mark.

Mark Palamountain

Thank you, Harold, and good afternoon, everyone.

Turning to our third quarter results. For the third quarter of fiscal year 2019, total net revenue was $50.9 million, compared to total net revenue of $40 million in the third quarter of the previous fiscal year. Agribusiness revenue increased to $49.6 million, compared to $38.7 million in the third quarter last year. Rental operation revenue for the third quarter of fiscal year 2019 was $1.2 million, compared to $1.3 million in the third quarter of the previous fiscal year. And there were no real estate development revenues in the third quarter of fiscal year 2019 or 2018.

Agribusiness revenue for the third quarter of fiscal year 2019 includes $46.4 million in lemon sales, compared to $30.7 million of lemon sales during the same period of fiscal year 2018, with the increase the result of higher volume of lemon byproducts partially offset by lower prices of large lemons and lower fresh utilization.

As Harold said earlier in the call, the lower pricing was due to excessive rains we experienced during the first and second quarters of fiscal year 2019, which led to a surplus of large, fresh lemons into the market, ultimately driving down the price per carton. Approximately 1,876,000 cartons of fresh lemons were sold during the third quarter of fiscal year 2019 at an average of $19.09 per carton, compared to 992,000 cartons sold at an average of $25.91 per carton during the third quarter fiscal year 2018.

As anticipated, we recognized lower avocado revenue of $2.5 million in the third quarter of fiscal year 2019 compared to the same period last year of $5.6 million, due to the excessive heat we experienced late in the third quarter last year. And as we have previously stated, we expect minimal contribution this fiscal year from avocados, but expect to be in a better position for increased volume in fiscal year 2020.

The Company recognized $700,000 of orange revenue in the third quarter of fiscal year 2019 compared to $2 million in the same period of fiscal year 2018 due to unfavorable weather conditions for oranges, resulting in lower pricing in the quarter due to the small sizes of our oranges. The decrease was primarily due to lower prices partially offset by higher volumes compared to the same period for fiscal year 2018. There were no significant sales of specialty citrus and other crop revenues in the third quarter of fiscal year 2019 compared to $300,000 in the third quarter of fiscal year 2018.

Total costs and expenses for the third quarter of fiscal year 2019 were $48.8 million, compared to $28.5 million in the third quarter of last fiscal year. The increase in operating expenses was primarily attributable to increases in agribusiness and SG&A costs. Costs associated with agribusiness include packing costs, harvest costs, growing costs, and costs related to fruit procured and sold for third-party growers and depreciation expense.

Operating income for the third quarter of fiscal year 2019 was $2.1 million compared to $11.4 million in the third quarter of the previous fiscal year. Other expense and income are comprised primarily of $1.8 million of mark-to-market unrealized loss on marketable securities and $800,000 of interest expense, partially offset by $500,000 of equity in earnings of investments.

Interest is capitalized on real estate development projects and significant construction in progress using the weighted average interest rate during the fiscal year. We capitalized $400,000 and $700,000 of interest in the third quarter of fiscal years 2019 and 2018. We realized approximately $300,000 in net equity earnings from Harvest at Limoneira during the third quarter and are expecting additional equity earnings during the first quarter of fiscal year 2020.

Net loss applicable to common stock after preferred dividends for the third quarter of fiscal year 2019 was $1.1 million compared to net income of $8.1 million in the third quarter of fiscal year 2018. Net loss per diluted share for the third quarter of fiscal year 2019 was $0.06 compared to net income per diluted share of $0.50 for the same period of fiscal year 2018, based on approximately 17.6 million and 16.6 million respectively, weighted average diluted common shares outstanding.

Excluding the non-cash $1.8 million unrealized loss on stock in Calavo Growers, Inc. and $300,000 in equity in earnings of Limoneira Lewis Community Builders for the third quarter of fiscal year 2019, adjusted net loss applicable to common stock was $100,000, compared to net income of $8.2 million for the same period last fiscal year. Excluding the unrealized loss on stock in Calavo and equity earnings from Harvest at Limoneira, adjusted net loss per diluted share for the third quarter of fiscal year 2019 was zero, compared to net income per diluted share of $0.50 for the same period of fiscal year 2018.

Adjusted EBITDA was $3.8 million in the third quarter of fiscal year 2019, compared to $13.4 million in the same period of fiscal year 2018. Adjusted EBITDA excludes the quarterly mark-to-market non-cash effective Calavo shares and equity earnings from Harvest at Limoneira.

For the nine months ended July 31, 2019, revenue increased to $134.9 million, compared to $114.7 million in the same period last year. Operating loss for the first nine months of fiscal year 2019 was $1.9 million, compared to operating income of $19.1 million in the same period last year.

Excluding the non-cash $2.1 million unrealized loss on stock in Calavo, and $2.6 million of equity earnings from Harvest at Limoneira for the first nine months of fiscal year 2019, adjusted net loss applicable to common stock was $3.7 million or $0.21 per share, compared to adjusted net income of $13.4 million or $0.86 per share for the same period in fiscal year 2018.

Before I hand the call back over to Harold, a few comments on our balance sheet. Long-term debt as of July 31, 2019 was $109.3 million, compared to $77 million at the end of fiscal year 2018.

Now, I'd like to turn the call back to Harold to discuss our fiscal year 2019 outlook.

Harold Edwards

Thank you, Mark.

We achieved a number of goals this year, but the weather had an adverse effect on our bottom-line in our three main crops of lemons, avocados and oranges, which hasn't happened to our Company in over 30 years. For the full year of fiscal year 2019, we continue to expect to grow a tree crop of approximately 7.2 million domestic lemon cartons. And we've retained the majority of our third-party growers. Unfortunately, due to the lower fresh utilization rate during the third quarter, our lemons grown for fiscal year 2019 will not translate into our full year goal of fresh cartons sold.

Based on the organic lemon carton growth we are projecting for next year as well as the expected rebound in avocado revenue and the fact that all our recent acquisitions will have -- have been online for a full year, we remain excited about the long-term growth of our Company.

Turning to fiscal year 2019 guidance. For fiscal year 2019, we expect to sell 7.7 million to 8.3 million cartons of fresh lemons globally. Included in our global cartons estimates are the 4.5 million to 5 million cartons we expect to sell domestically. Through the first nine months of fiscal year 2019, we have sold 3.8 million domestic lemon cartons at an approximate average price of $21 a carton. As we progress through the fourth quarter, the overall pricing is improving as the market supply normalizes.

We have sold approximately 1.8 million pounds of avocados at approximately $1.70 per pound. Due to the excessive heat in the summer of 2018, we expected minimal revenue from avocados in fiscal year 2019. Offsetting this temporary event will be the benefit of crop insurance for approximately $2.4 million, calculated on actual avocado harvest in fiscal year 2019. We expect an increase in avocado production in fiscal year 2020.

For fiscal year 2019, the unfavorable conditions for domestic oranges has continued to affect orange pricing throughout the industry. This is resulting in lower than previously expected pricing in the orange market. In fiscal 2020, we anticipate similar volume and improved size and pricing.

Based on these factors, we expect operating loss for fiscal year 2019 to be approximately $500,000 to $3 million and adjusted EBITDA is expected to be in the range of $7 million to $9.5 million. We expect fiscal year 2019 diluted loss per share results to be in the range of $0.10 to $0.20 per share with an estimated 17.5 million shares outstanding. Adjusted diluted loss per share is expected to be in the range of $0.12 to $0.22 per share.

In addition, not included in adjusted earnings per share for fiscal year 2019 is the year-to-date benefit of $2.6 million of equity earnings from its real estate development, Harvest at Limoneira and a $2.1 million unrealized loss on Calavo stock.

Because of the normalized size curve of lemons now selling through and our avocado insurance payment in October, we expect to be profitable in the fourth quarter.

Looking beyond 2019, we have an additional 1,200 acres of non-bearing lemons that are estimated to become full bearing over the next four years, which will enable us to achieve strong organic growth for many years to come. We expect the first 300 acres of the 1,200 acres to become full bearing in fiscal year 2020. Beyond these 1,200 acres, we intend to plant an additional 500 acres of lemons in the next two years, which we believe will further build our long-term pipeline of productive acreage.

We believe this additional acreage will increase annual lemon supply from our 2019 level by approximately 30% or about 900,000 to 1.3 million additional fresh cartons as the non-bearing and planned acreage becomes productive.

The Company expects a full year benefit in fiscal year 2020 from the Argentina joint venture and land acquisition formed with FGF Trapani.

And with that, I'd now like to open the call up to your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] And first from Stephens, we have Tim Perz.

Tim Perz

Thanks for the question, guys. Have you seen anything in the forthcoming lemon crop that would suggest that the percentage of fruit going to juice shouldn't come back to historical levels?

Harold Edwards

At this point, no. The buildup of the big sizes that we experienced in the third quarter, have now worked their way through the system, and we've returned to inventories of a much more what we would call normal distribution of sizes and grades. And as a result, we're seeing much improved utilization rates, somewhere between 70% and 75% currently. But, the other thing that's going on is now we've just begun harvest and begun to bring the fruit from the Arizona desert into our inventories. And that utilization is much higher, north of 80%. So, we believe all this bodes well to bring our costs back down into line, driven by much more normal fresh utilization levels.

Tim Perz

Okay. Thanks. That was helpful. And Mark, this one might be more directed for you. Do you think you could walk through the puts and takes from your previous guidance to the Company's actual results during the quarter?

Mark Palamountain

Sure. So, there was -- when we came out with our June guidance, we were just coming off of the Spanish crop that had flooded the market, and just realizing that the whole industry had that overabundance of large sizes. As we went through that and the utilization rates dropped from 70% to 50% over the June and July period, we saw multiple things happen. One, you have all that fruit that has cost in it, i.e. harvest and whatever level of packing goes right out the back door. So, we saw increased packing costs of roughly, we call it about a $1.5 million, or $0.06 that was just directly from having lower utilization rates, i.e. less units against the fixed cost. From that, the cartons that we didn't get to sell fresh that we thought they were going to go fresh, was another call it $2 million, or $0.08 is how we've looked at that. It's just basically missed opportunity from the $4 where we sell it at the juice market versus the 18 to 20 on that. And so, that was another missed opportunity. And then, our plan was originally $22 in budget when reality was 18 on all the cartons that we did sell during that period. So, that's the lemon side of the story.

Navels also, the decrease in price over that period in June and July, which was additional from when we had talked to in early June, was another $1.5 million slip, which took navels almost to a $2 million loss for the year, which is about a $5 million swing in the prior year. And basically, those numbers add up to where we were originally in that $0.25 to $0.30 bottom of the range prior to where we brought it down to in the prerelease.

Tim Perz

Great. Thanks. That was perfect. I'll pass it along. Thanks.

Operator

And next from Roth Capital, we have Gerry Sweeney.

Gerry Sweeney

Hey. Could you talk a little bit about the third-party growers? At what point do they make their decisions on for who’s going to pack for them? I know that you want to -- you are several hundred thousand above your target and you're still targeting another 500,000 this year. But, any chance that there could be just some disgruntled third-party growers et cetera that could maybe swing the other way or any challenges they potentially could foresee from that aspect?

Harold Edwards

Yes. So, typically, the outside third-party growers are just now right now beginning to elect who they're going to market their fruit with next year. And this has just been such a bad year across the industry that no one handler, Limoneira, Sunkist, Paramount, Bee Sweet, any of the handlers and the packers, marketers, shippers really stood out far above anybody else this year because it was such a difficult utilization year this year. So, we do expect some attrition, and we do expect that there will be some growers that most likely choose to make a change just because of the difficult situation. We're unaware of any of those right now. We're in discussions with all of our outside growers. And so, we also believe that we're going to have an opportunity to pick up some growers. So, the delta between what we actually recruit and what we might lose, we still are directionally targeting a net gain of 500,000 new cartons. But, time will tell whether that actually takes place.

Gerry Sweeney

Got it. And maybe if you could refresh my memory a little bit. The new packing facility, what's that total capacity? And then, you have the acquisition, which I think was more specialty lemon. Just what total capacity for each, and maybe just curious as to how much more capacity or total cartons you can pack in both areas?

Harold Edwards

So, the theoretical capacity of the new Santa Paula packing house is 8 million cartons. But that would assume that an equal amount of fruit comes in and is packed and then goes out 12 months of the year. And of course, that never really works that way, given the lumpiness of crop sizes and growers that we work with. So, we believe that somewhere directionally around 7 million cartons is probably theoretical that's kind of where we are in terms of capacity in Santa Paula. And then, the Oxnard facility, again, if you are able to bring equal amounts in and move equal amounts out, and given normal storage levels and inventory levels, is theoretically 4 million cartons. So, it's somewhere between 10 million to 12 million cartons is what our capacity is.

Gerry Sweeney

Got it. And looking out to 2020, with just say, you bringing another 500,000 cartons, what's that total for domestic for that region for the…

Harold Edwards

So, we think directionally, the tree crop, and it's important to think about the size of the crop across the three districts is somewhere between 7.5 million and 8 million cartons. And then, so, if we can achieve a 75% fresh utilization rate on conventional lemons, we ought to be somewhere between 5.5 million to 6 million cartons of conventional lemons, and then put on top of that the specialty lemons, the Meyer lemons, the pink lemons, the chem free lemons, the things that we do in Oxnard, sort of directionally, it's a little too early to provide specific guidance. But, we directionally, it's somewhere around 6 million total cartons, which if could pull that off, I think we're going to come in somewhere, Mark, around 4.5 million cartons this year?

Mark Palamountain

4.5, 4.6, something there.

Harold Edwards

4.5 million to 4.6 million. So, growth to -- so, I'll call it 5.5 million to 6 million cartons from California and Arizona is our goal or our target for 2020.

Gerry Sweeney

So, that’s 4.5 to almost 6 potentially next year?

Harold Edwards

Yes. That's right.

Gerry Sweeney

Got it. Yes. Okay. And then, crop insurance does hit in the fourth quarter, $2.4 million. And I assume that’s sort of in your guidance in terms of positive EPS et cetera?

Mark Palamountain

Yes. That's all in there. We're hopeful we're going to get the check here in the next two weeks, just right around $2.4 million.

Operator

And next, we have been Ben Klieve with National Securities.

Ben Klieve

Thank you. First question here, wondering if you can elaborate a bit more on the headwinds that you're seeing in the import market. It sounds like those headwinds subsided a bit from -- relative to last quarter and what you saw coming out of Spain. If you could comment a bit more and kind of the overall import market and the challenges that you're seeing there today, as opposed to a few months ago, that'd be great.

Harold Edwards

Sure. I'll take this all the way back to about a little less than a year ago. But, as we were coming out of the fourth quarter into the first quarter, we had an average FOB in the in the U.S. industry of somewhere around $30 a carton. So, it was a super strong high market. Spain had a 50% above normal crop. And Turkey, which is a large producer of lemons, had some sort of hyperinflationary currency impacts that made their fruit very cost competitive. And so, as there was this build-up of big fruit and cheaper fruit, much of that fruit found its way into the East Coast market in the United States. Just given the high FOBs and sales prices that we were experiencing, a lot of that surplus fruit found its way into the East Coast markets. And so that actually had a really negative impact on beginning to bring the price down, which we experienced in the first going into the second quarter.

So, when we communicated last June, we were dealing with competitive pricing from the imports of mostly Spain that was really bringing the price down and then also the beginning of the rain influenced build up of the big fruit. As all that was taking place, you had imports from Argentina and Chile that were just coming on line as we came into the third quarter that saw this weaker market. But, as a result of the buildup of the big fruit, there was actually really attractive medium to small fruit pricing opportunities. So, you saw a lot of those imports begin to come in, into that smaller fruit size.

As the California industry then began to normalize towards the sort of the back half of the third quarter, you saw the first picks that were coming off of the coastal California production, really attacking that small fruit market. And so, you began to see this pendulum swing the other way where the medium to small sized fruit started get weaker in price, and the big fruit became stronger because all of a sudden there wasn't big fruit in the market. So, the pendulum kind of swing back the other way.

Where we are right now is we're seeing sort of normal -- we’re at the tail end of the season from Argentine imports and Chile. We're almost done with Chilean import. So, right now, the crop is -- and the lemons are being supplied predominantly from the Arizona desert from actually Palm Springs in the Coachella Valley through the Imperial Valley and all the way out to the desert now.

Ben Klieve

And then, also, a question regarding kind of the impact of the soft pricing on the M&A market, are you seeing kind of better opportunities to maybe pick up business at more attractive valuations today than you were maybe a year ago or have valuations on the M&A front not really been impacted at all?

Harold Edwards

Tag lag period is usually a little longer. So, we haven't necessarily seen the softening of land pricing. But, what we have seen is we are, at least anecdotally hearing of a lot of acreage coming out in the orange side of the business up in the San Joaquin Valley. Whether that's actually going to then translate into reduced land pricing, or create more acquisition opportunities, we do expect it will create more M&A activity but -- and more opportunity, at what values, we're still not sure.

Ben Klieve

And then, I apologize if you talked about this, and I missed it. But, regarding the 500 additional acres of lemons that you're planning, can you comment on where that acreage is going to be?

Harold Edwards

Yes. So, a portion of that will be here on the Coast, probably more towards half of it, 250 acres, there'll be a little bit of it in Arizona, and then we're doing 100 acres down in Chile as well, which is on that San Pablo ranch.

Operator

Next, we have Eric Larson with Buckingham Research Group.

Eric Larson

Could you just give us a quick recap of how your acquisitions have done year-to-date? And then, you're going to be getting continued contribution in F20? Can you help us kind of parcel together what the earnings impact of those would be?

Harold Edwards

Happy to Eric. So, three main acquisitions to talk about. Maybe to begin with the San Pablo ranch and the additional interest in Rosales packing has performed on plan with our own expectations kind of right on our own internal pro forma expectations, Mark, directionally.

Mark Palamountain

Yes. So, San Pablo will be -- or is about a 400,000 carton ranch right now and growing up, not quite at its full production yet, should contribute about 1.2 million to in EBITDA going forward. Also, for the other ranch in Chile, Pan de Azucar, which is growing up, that will be about the same. So, about probably $2.5 million of EBITDA from the Chilean ranch operations and then another $1.5 million from Rosales of which we own 40%.

From the Argentina perspective, it should produce about $1 million to $1.2 million cartons. We're really going to try to get more granular when we come out with guidance for next year on the international cartons, which I think will help everybody. But that directionally should do about $4 million in EBITDA, of which we are a 51% majority owner of that.

And then, the way we look at Oxnard Lemon is solely basically on the contribution of the cartons that we retained. So, if you remember, the goal was to retain 80% or about 2 million cartons running through our new house, which effectively has a contribution anywhere between $2 and $2.25 a carton. So, if and if we did 6 million cartons next year, that's a $12 million to $14 million contribution on that.

Eric Larson

Got it. Okay. And remind me, how many months of Oxnard do you pick up in F20? I forget the quote on that.

Mark Palamountain

Of Oxnard, it'll be full 12 months.

Eric Larson

Yes. It will be the full 12 months that you receive. What's the incremental -- what will be the incremental -- you're going to pick up how much of Oxnard I guess, is the question, in F19? Sorry.

Mark Palamountain

Yes. About 2 million cartons. And so, the issue with Oxnard is -- it performs on plan, in fact, ahead of plan. The issue became the fresh utilization across all of the other lemons. And so, it was really the cost that ended up biting us because of on that increased volume we also had those increased costs because we ended up having to shift much of the inventory to juice.

Operator

[Operator Instructions] We'll move on to Chris Krueger with Lake Street Capital Markets.

Chris Krueger

Hi. Most of my questions have been answered, but I just had a couple of quick ones. I know you guys just sold that convenience store, gas station property. Are there other assets that are non-core that you could be looking to sell over the next year or so?

Harold Edwards

Yes. So, we've been working diligently on disposing off our remaining two assets in the Santa Maria marketplace. If you recall, we actually had land that was potentially developable, zoned residential, some of it zoned commercially, that we have attracted buyers to with negotiated price. And we're just trying to get through a tenuous escrow period. But we're optimistic that we'll be able to unload those for a combined value mark of $6 million to $7million. And we're hopeful we’ll execute that in 2020.

Chris Krueger

Okay. And then, at the grape growing properties, like can you refresh our memory on what the longer term plan is for that? I can’t remember if that was a property that was potentially going to be sold as individual vineyards or what's going on there?

Harold Edwards

Yes. So, it's a 720-acre piece of property. By the end of 2019, we’ll have approximately 430 of what will eventually be 500 acres of wine grapes planted. The oldest planting now is in its fourth leaf. It's been a great crop this year. And so, we believe that directionally that the properties will produce somewhere around 6 to 8 tons an acre on some of these older wine grapes that are planted.

And right now because of the productivity that we're experiencing in the vineyard as well as some of the high quality contracts that we've got in place with Coppola, Bogle, Justin, Duckhorn, who am I forgetting?

Mark Palamountain

Wine Group.

Harold Edwards

And The Wine Group. Right now, our focus is just to continue to build out the property agriculturally. The property does have an underlying parcel map that was perfected in the 1930s that allows that property be to be subdivided into 76, 10-acre or smaller parcels.

So, eventually there may be an opportunity to parcel off some of those parcels and monetize their value into potential vineyard estates. But right now, we're really focusing on developing the property agriculturally and receiving the return on invested capital just agriculturally on that property.

Operator

[Operator instructions] All right. It looks like with no further questions from the audience that does conclude the question-answer section of today's call. I'd like to turn the floor back to CEO, Harold Edwards, for any additional or closing remarks.

Harold Edwards

Thank you for your questions and interest in Limoneira. We look forward to updating you again in January on our fourth quarter call and providing full year fiscal 2020 guidance. Thank you again, and have a great day.

Operator

And once again ladies and gentlemen, that concludes our call. Thanks again for joining us. You may now disconnect.