Annual General Meeting Transcript - LMNR 2026-03-25

Scott S. Slater, Analyst — Chairperson of the Board

Good morning fellow stockholders welcome to the 2026 and our 132nd Lehman era company annual meeting of stockholders. I'm Scott Slater chairperson of the Board of Directors and This meeting will now come to order With me today we have our many of our current board members I'll start to my right and if you could raise your hand Gordon Kimball, Peter Nolan, Barbara Carboni, of course Harold Edwards, Edgar Terry and I'm looking out I thought we might have Rob Sawyer today I don't see him so I'm not seeing any other former directors but again thank you. Amy Fukutomi our vice president of human resources compliance and corporate secretary will serve as secretary of the meeting and record the proceedings. Amy want to raise your hand thank you jessica lucero of computer share has been appointed to serve as the inspector of election for this meeting james mills a representative of deloitte at the meeting during the question and answer period at the end of the meeting he will be available to answer questions james thank you each of you should have registered at the desk as you entered the meeting if there are any of you who have not registered would you please step over to the desk and sign the register following the meeting these are some rules of the road you probably heard these before for compliance purposes I'm going to read them to you upon entering the meeting each of you was presented with an agenda for the meeting to conduct an orderly meeting we ask that participant participants advise by the following stockholders should not address the meeting until recognized should you desire to ask a question or speak during the meeting please raise your hand after being recognized first identify yourself and your status as a stockholder or representative of a stockholder then state your point or ask your question we ask that you restrict your remarks to the items on the agenda that is before us and I thank you for your cooperation with these rules. Ms. Fukutomi will now certify the notice of the meeting was properly given that the related proxies were in proper form and the number of stockholders present

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in person and represented by proxy. So I too have a prescription to read so hang in there with me. I have received the affidavit of mailing from computer share from Ms. Lucero, the registrar and transfer agent. This establishes that the meeting was duly called. A notice of the annual meeting and the affidavit will be incorporated into the minutes of this meeting. I've also examined the proxies and will certify their improper form to conduct business today under the authority thereof. There are present, having counted votes, 14,512,825 votes represented by those of you that are here and those of you who have voted. And that's out of 18,155,57 outstanding shares of voting stock and our common stock, 14,790 shares of our preferred B stock and 9,300 shares of our convertible B shares. So what's that all add to? 79.46% again represented here today and by proxy.

Scott S. Slater, Analyst — Chairperson of the Board

Ms. Fukutomi, Secretary of the meeting, has advised us that a quorum is present at the meeting, so I declare the meeting duly convened for purposes of transacting business which may properly come before it. Proposal 1. The next order of business is a description of the matters to be voted on at today's meeting. Proposal 1 is the election of two class three directors of Lehman Air Company. The two directors who are elected today and the remaining five directors whose terms will expire at the 2027 and 2028 annual meetings of the stockholders will be the directors of Lehman Air Company until their successors have been duly elected and qualified. Elizabeth Mora and Peter J. Nolan have been nominated for re-election as class three directors, each to serve for a three-year term or until their successors have been elected and qualified the Board of Directors for the company recommends that stock holders vote for each of Ms. Mora and Mr. Nolan is there a motion can I have a motion can you please state your name thank you can I have a second and your name thank you with the motion being made and seconded proposal number two advisory vote on executive compensation proposal number two is a proposal to approve on an advisory basis the compensation of our named executive officers which refer we refer to as say on pay the board of directors of the company recommends that the stockholders vote for this proposal. Is there a motion? Can I have a motion? Yes, sir. Again, your name? Can I have a second? Anyone, please. Thank you. The motion having been duly made and seconded. Proposal number three, ratification of Deloitte as the company's independent registered public accounting firm proposal 3 is a proposal to ratify the appointment of Deloitte and to LLP to serve as the independent registered public accounting firm for the company for the fiscal year ending October 31st 2026 the board of directors of the company recommends the stockholders vote for this proposal is Is there a motion? I make the motion. Thank you. Barbara Cimone. Can I have a second? Thank you, Jerry. Thank you, Edgar. The motion, having been made and seconded, we are now prepared for the opening of the polls. Having presented all matters to be voted on by stockholders, I declare the polls now open for voting on the proposals. The votes on these proposals will be conducted by written ballot. It is important that all votes be cast. Ballots for stockholders who have not, who have yet to vote and wish to vote by ballot were provided at check-in. If you didn't receive a ballot at check-in and wish for one to be provided, please raise your hand. Anyone? However, if it is not necessary for you to vote by ballot, if you have previously returned a proxy card or voted online or by phone, unless you wish to change your vote. has every stockholder present who wishes to vote delivered an executed ballot or proxy to the inspector if not signify by raising your hand seeing none the balloting is now complete I declare that the polls are now closed I would again like to express my sincere appreciation to the stockholders who are present at this meeting as well as those who submitted their proxies but were unable to attend in person there will now be a short pause in the meeting while the inspector tabulates the votes okay we will now continue the meeting is the inspector ready to report with the respect

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with respect to the proposals i have examined the ballots and the proxies voted with respect to proposals being voted upon and i find that miss mora received 6 million 186 379 votes for election as class three director. Mr. Nolan received 10,939,816 votes for election as class three director. No other candidates for election as class three director received any votes. 75.69% of the shares of common stock and preferred stock of the company voting together as a single class present in person or represented by proxy voted in favor of the stay-on-pay proposal 99.5 percent of the shares of common stock and preferred stock of the company voting together as a single class present in person or represented by proxy voted in favor of ratification of the company's independent otter

Scott S. Slater, Analyst — Chairperson of the Board

auditor Deloitte thank you miss Lucero I am pleased to announce that miss Mora and Mr. Nolan have each received a plurality of the votes cast. Accordingly, Ms. Mora and Mr. Nolan have been duly elected as Class III directors, each to serve a three-year term or until their successor has been elected and qualified. Since the number of votes in favor of Proposals No. 2 and 3 represent a majority of the shares present in person or represented by proxy and entitled to vote, voting together as a single class, I am pleased to announce that Proposal Number 2 and 3 have been approved. With that, this concludes the formal matters to be acted upon at this meeting. Since there is no further business to come before this meeting, it would be in order to adjourn the meeting. Can I get a motion? Motion made by Edgar Terry. Can I get a second? Second made by Barbara Corboni. we have a a successful motion and second all in favor say aye aye any opposed say nay motion is carried the meeting is adjourned and that concludes the formal portion of this annual meeting so this is the more informative part I'll just take a second and say we I think our shareholders stakeholders all know that the company is an important period of transition. We're up to a very important effort in supporting management to enhance the profitability of our agricultural business. Lemons, we've made some strategic moves. We're very hopeful and enthusiastic about the future of avocados. You know that we are moving towards additional planted acres in avocados and we're hoping for additional productivity and profitability in that regard and I don't think that anybody can ignore the fact that we happen to operate in one of the United States most challenged housing areas not enough housing this is a a recognized need and the company is standing up and trying to do its part in entitling land to support new housing in the region. We want to pursue these things in a fiscally responsible way and and as efficiently as as we can and I think I'm going to turn over or yield to our CEO the indefatigable Harold Edwards and you can tell us the details about how we're going to do that. Thank you.

Harold Edwards, CEO

Thank you everybody and good morning. I'm gonna look up the definition of indefecutable. Thank you. I think it's good. Anyways, welcome everybody to the annual meeting. This is meant to be the informative part of the session and I'm gonna start here by doing something that I did not too long ago with our board of directors and provided a more analytical look at where we've been and use that as to set the table and provide the context of where I think we are now and then try my best to give us all an idea of where we're going. And in essence, provide more of a business review that then I think will provide the context of as our chairman just alluded to why we're in such a period of transition and and a pivot to begin with let's start and talk about this eye chart which is before you which is uh i'm titling this one the lemon challenge and for you uh looking at this slide on the right hand side of the slide the lighter green bar there represents the average price per lemons going back to 2008 and the darker bar there shows what it costs the limonera company to put that that lemon up for that box of lemon and our standard unit of measure in our business is a 40 pound box of lemons and you can see that for many many years from 2008 all the way through 2018 the company along with most lemon growers in the state of California enjoyed a long run and a period of significant profitability. Something changed on the way to work in 2017 which we really didn't feel until really the beginning of 2019 and that was the U.S. decided to open its borders to all of the lemons that were produced in the largest producing lemon country in the world Argentina and that really manifested itself in its first year of significant supply and so from from a lemon growers perspective oversupply that began in 2019. So in 2019 that was a big year for our company as well because that was the year that the company made a strategic decision to purchase a company that was just down the road called Oxnard lemon that brought a significant amount of additional lemons into the Lehman era supply chain right into this oversupply and so beginning in 2019 to present day you can see that the relationship between that light green bar and that dark green bar inverted and we actually began to lose money as a lemon grower beginning in 2019 and it was it was really driven by two things number number one it was depressed pricing that we received for our lemons three different grades eight different sizes different demand profiles for each yields different pricing but also as I'll show you in a minute it was really more driven by the significant amounts of inflation that we've grappled with since 2019 driven in in a large part by the global pandemic which we all live through but also by significant increases in labor costs and and minimum wage increases I want to sort of leave this slide by pointing out that last area of the yellow and the orange bars there the company strategically elected as you'll know and we will get into more in a few minutes to actually return back into the Sunkiss Grower Own Cooperative, which is doing two things for our business. Number one, it's giving us access to the very best food service and retail customers. One of the challenges that we had as being Lee Manera, a great producer and supplier of lemons, is that we really were a one-trick lemon pony. And that's great if you're out there selling your lemons to people that are only focused on lemons but many of our retail customers like all of them wanted to buy the full category of citrus and we were at a competitive disadvantage when we were competing against Sunkist so now that we're back with Sunkist we have the full functionality of all of the category of citrus when we go call on the Vons and the Kroger's and the Albertsons and the Publix and the big retailers and also as we'll hear about also Sunkist has an exclusive relationship with the largest lemon consumer consuming company in the world which is a large food service company I'll let them talk about that when we when we get there the the long and short of it though is we think that our return back to Sunkist will bolster pricing while allow will also allowing us to take costs out of our supply chain and I'll also show you significant costs out our sales and general and administrative overhead costs which are going to put us back on the right path towards profitability with our lemon business. This next slide shows lemon pricing and you can see we had some glorious years to through 2008 but then beginning in 2019 we've seen depressed pricing or more depressed pricing but as I mentioned before that really wasn't the biggest part of the challenges we were having in our in our lemon business it was really this slide here which is the beginning of some significant increases in our costs our costs of total lemon cost of our production increased by almost 75 percent going back to 2010 however as we look forward to what we think our return back to Sunkist is going to do to our cost structure on a go-forward basis you'll see it's it's markedly improved and that's for mostly the reason that we're now able to take advantage of much of the infrastructure that exists within the Sunkist Network which should enhance our cost structure and really do go a long way to lowering our cost as well also a big benefit of going us going back into Sunkist will be our opportunity to increase what we consider in our lemon business one of our most important metrics of success which is our fresh utilization back when we had when we enjoyed high pricing and lower costs we could afford to be sort of sloppy if you will inefficient and in the ability for us to convert how many lemons were grown on a lemon tree to how much actually found their way into a fresh box that got purchased by a customer. As our pricing has gone down and our costs have gone up, our requirement to execute at a higher level of fresh utilization has become more and more critical. And so if you were to go and look across the Limonera team who manage our supply chains from our farming team to our harvest team, to our packing team, to now the sales and marketing that goes on with Sunkist that fresh utilization is is critical and so if we are able to put up numbers above 70% we typically can be profitable in that process back in the old days maybe 20 years ago when I first started in this business that was more like 50% but now 20% if we're able to get over over 70% into a fresh box we have a great shot at being profitable in our first quarter which is really the first three months of our return back to Sunkist our result was over 90% so we're off to a really good start but we've got a long way to go for the rest of the year and a lot of time to enjoy our relationship to get better at our supply chain but I would just like to say that having Sunkist focus on sales and and and customers and then telling us that the requirements of the supply chain they need to fill those orders is giving us a great opportunity to execute and we're doing that right now thanks to the cost of inputs agricultural inputs the cost of labor are the cost of our cultural practice our farming costs have gone up by 60 percent over the course of the last decade our packing cost has gone up by 82% driven mostly by minimum wage increases and the cost of labor these are all realities so every everybody who's operating in this industry in California are grappling with the same things we have one of the greatest opportunities to be if not the one of the most efficient supply chain managers but we're all dealing with these same cost realities harvest costs minimum wage increases we've seen our harvest costs going up by 78 percent so the real opportunity for our future in this business needs to focus around cost management cost reduction while we differentiate ourselves working with our partnership with Sunkist differentiating ourselves with the quality of our citrus the consistency of our citrus and the ability to land these really high value contracts that Sunkist so successfully is able to obtain in both the food service and the retail industries looking back at the number of cartons that we sold so these are these are millions of cartons you'll see that when we first decided to leave Sunkist in 2010 we represented a supply chain of about a million cartons and that grew all the way to 2022 to a peak of almost five million cartons where we've been bumping along between four and a half and five million cartons and by going back into Sunkist now one of the challenges is we're we're now focusing on fitting the the supplies that we have from the desert from the valley and here on the coast and what we call district 2 into the sales plan that Sunkist manages one of the scary things that we did and we're in the process of managing through is we we we took out 50% of the supply chain that we had in the desert we took out 50 percent of the lemons that we were sourcing from the valley and we increased the number of cartons that we're now sourcing and producing here on the coast and in combination it gives us the opportunity for a sales plan that should create about four and a half million cartons of packing and sales opportunity for us this year That's the opportunity. We're like I said, we're through the first quarter of the of this year with a good opportunity to execute that But I think the exciting thing here and our friends from Sunkist will will bring us up to speed on this in a minute We're actually now going to be able to grow as our customers grow rather than being required to go out and grow through Taking market share from our competition. We'll still try to do that right Christian we'll get some but at the end of the day we're in a great position and now grow as our big food service and our retail customers grow and that that gives us a great opportunity to manage our supply chains accordingly so what are we doing about providing our own supply chain to to meet this sales plan we're actually as you'll see and we've talked about in a minute we're beginning to reduce the amount of acres that we're producing lemons on and increasing the amount of acreage in which we're producing avocados but also because of the cost realities that we just pointed out we've actually exited higher cost water threatened areas where we were producing in the San Joaquin Valley in 2023 we divested 3,000 acres of production there higher cost areas of production in Yuma Arizona where we're exiting lemon production there are very high cost production areas in Cadiz we've successfully exited that those operations and just recently you may have heard we actually were successful in selling our assets in our Chilean operations as well to focus here on our production in Ventura County but we're on our way to a targeted production area about 712 acres down from 1,200 acres in 2023 here in Ventura County and this is what the impact of that is having on our total production so as a producer of lemons we we peaked at about 2,400 total acres of production and that's on its way down to 700 we're about 990 thousand just a hair under a million cartons of our own lemons that we produce and on our way here in seeing growth on our way to about 3.5 million cartons of lemons that are produced by our very very valuable grower partners that in combination give us that opportunity to manage the supply chain for Sunkist of about 4.5 million cartons this year if you look about at that whole process of what happened in the lemon business and you relate it to the revenues of the limonera company you'll see that from about 2010 to 2018 we enjoyed nice steady revenue growth we We acquired Oxnard Lemon in 2019, which gave us a nice bump up from that, and then started really aggressively growing our business by representing international suppliers' fruit in our supply chain in a business model we called our agency business. So part of our requirement to go back to Sunkist was that we got out of our Chilean and our Argentine production, which we've now done, and also we've gotten out of our agency business, which we've also done. The agency business was our CFO, Greg Hamm, likes to say, we used to do a lot of push-ups, but we didn't get very strong. We sold a lot of fruit. We didn't make a lot of money doing that. And so while it is taking its toll on the revenue side, the actual incremental impact on our EBITDA and our profitability should not be that great. So you'll see what we're targeting now with our revenues going back to Sunkist, a significant drop in revenue but you'll see the impact of that on our overall profitability should be significantly positive which I'll get into it explained as going back to Sunkist now has allowed us to take a lot of cost out of out of the business the other thing just to mention because you'll be following our progress quarterly quarter to quarter as we go through this the cadence of our business is changing significantly as well before we were we We were sort of a moderate supplier in the first quarter, it picked up significantly in the second quarter. We had our biggest sales quarter in the third quarter, and then we tried not to give it all back in the fourth quarter as that volume fell off. What you're gonna see in the new cadence of the way that our business will run is we'll have a very soft first quarter, which we proved we just actually announced our first quarter earnings. Our second quarter will be slightly stronger, but our third and fourth quarters will be very very strong and will be the strongest of the the year as we're more back-end loaded trying to hit that middle to late summer market with the lemons that we go to market with this is probably the one of the biggest opportunities of our opportunity to go back to Sunkist as you see the evolution of our overhead of our sales and general and administrative expenses from 2010 to present day, you see that the SG&A cost increased significantly as we were building a bigger and bigger sales and marketing machine, which also included a lot of administration. There was IT support. There was just an awful lot of pieces to our effort to go to market, but it was adding a significant amount of cost. As we shook hands with our friends at Sunkist and elected to return back to the Sunkist grower-owned cooperative. Sunkist was able to take advantage of the years of experience and expertise of the sales and marketing personnel that we had and actually provided a great opportunity for them to transition to Sunkist. So now they're still our friends, but they're now Sunkist employees, not Lehmanera employees. when I added it up we were spending somewhere around a dollar fifty a carton to manage our own sales and marketing operations by going back into the Sunkist system that's now a fixed cost of about 60 cents a carton so you multiply that over the five million cartons four and a half million cartons that we manage you see there's a significant amount of savings and will you're where you will see that will show up on the SG&A side of the overhead side of the business through the first quarter we're making great progress on that and we're committed to hitting those numbers and we're off to a great start looking now at where our operating profit has been you see great growth and in the opera in the operating profit of the business which peaked at about 32 million in 2019 we we we covered what was going on with cost and what was going on with the sales price and so we've bumped along at significantly lower operating profit if you're really to go in and dissect the what was driving the bigger years versus the smaller years the bigger years were driven by years when we had good avocado years so if you look at like 2024 that was a significantly up year great avocado year last year low avocado year you see where we are you see what our projection is now for our operating profit this year going back to Sunkist and you'll see that we're we're more optimistic now at present and then future profitability of our agricultural business this this shows what happened in the actual lemon operating profit same story just shown a little bit differently as it fell off significantly from 2018 but projected to improve significantly also because of our return to Sunkist this year Avocados, we'll get into this in a minute, but avocados are a big part of Lehman Air's future. They've been a good part of our past, but you'll see we've been inconsistent, we've been volatile, and it's been characterized by good year, bad year, good year, bad year, bad year, bad year, good year. A lot of inconsistency in this. We guided this year to five to six million pounds after having a lower year last year at seven million pounds We think we're on the higher side of that this year The one thing I would say is that what's what's not sure or not clear is where we're going to land with avocado pricing this year Mexico has a very big crop which is putting downward pricing pressure on avocados but the good news is is that avocados continued to be consumed voraciously in the country and around the world and there's still a lot of tailwinds behind avocado consumption so we have today we have 1600 acres planted of avocados 800 of them still haven't started bearing fruit yet that'll start beginning next year and and as we look forward at our march towards having 2,000 acres planted our targeted production volume is 30 million pounds the most we've ever produced in the past is 17 million pounds so call it 2x in the total production on its way which should take place between now and 2031 when we're fully mature on 2,000 acres of production if you wanted to take the time and go through on what our forecasted maturity of the bearing acres and the non bearing acres is this slide shows what the growth of our total production is going to be and that lighter orange bar on the bar chart are the acres that are planted but still not yet bearing fruit and as we as we evolve and and and sort of move forward over time you'll see more and more of that acreage beginning to produce more and more fruit another thing to mention that as we as we set out to convert a thousand acres of lemons into a thousand acres of new avocado plantings we're planting avocados in a way that's very different from the historical way we used to plant which was back in the older days we would put 90 trees to the acre in place and all of our new plantings are at 180 trees so much higher density planting which we believe gives us a much greater opportunity to significantly improve and enhance the yields we believe the market is going to continue to grow so right now the US consumes about 3 billion pounds of production the California industry produces about 300 million pounds Mexico produces 4 billion pounds so we really will be as a California producer a larger producer within within California but as it relates to the overall consumption in the United States we're talking if we get to our goal of being 30 million pounds will be about two to three days of consumption in the United States so we think there's a good opportunity to make that valuable and so that's what we're focused on the the operating profit forecast for the for the avocados is is significantly greater than it is today but it will be driven by again continued consumption and then our successful execution of the growth of the volume that we're we're working on now as we continue to finish out the plantings of avocados so as we think about where we are today and in the strategy that we have for the for the company going forward we're working on continuing to grow our agricultural coupon to make it number one bigger much more sustainable but also go investing into areas that we believe have more of a successful future than where we were with such a commitment towards our lemon production we're not exiting the lemon business we're still producing about a million cartons of lemons and we believe that with the amount of lemons that are coming out as well as with the continued growth of lemon demand you're gonna see that opportunity begin to become more and more profitable in the future as well but we'll also be at the same time expanding our avocado production and investing in very valuable organic recycling the other side of the strategy is the transformation of land and water and capitalizing on value in that we're actively working on monetizing conserved water rights in the Santa Paula Basin as well as taking advantage of very very valuable thank you very very valuable water monetization opportunities of our valuable class 3 Colorado River water rights in Yuma Arizona also we're now down to phase three of our harvest at Lehman era master plan community development project in Santa Paula which will consist of the sale of another 550 single-family home lots as well as the construction of 298 apartments which will begin in March of 2027 we'll talk in a minute about a new entitlement effort, which we have underway on a piece of property called Limco del Mar, 221 acres of infill development within the city of Ventura. And then the last piece of the puzzle, and this will play out over generations probably, but are the 3,000 acres of agricultural property that lie between the city of Ventura and Santa Paula, which represent pretty much the green belt between the two cities and the future of that as the urban areas of Santa Paula and Ventura expand in the future. Today we we own and operate about 7,000 acres of rich agricultural property of development property that we're working on the entitlement in our Limco Del Mar property there's 220 acres in Ventura we're currently working on a 550 acre master plan community called Harvest at limonera leaving us with the 3,000 acres of farmland between Santa Paula and Ventura as it relates to the water in our in our water portfolio in the Santa Paula Basin we own and operate with about 8,500 acre feet of Santa Paula Basin adjudicated pumping rights about 1,500 acres of those are conserved water rights water that we have available in excess of what we're actually using TODAY WHICH GIVES US THE OPPORTUNITY TO MONETIZE THAT PERIODICALLY AT VALUES THAT WE BELIEVE ARE IN THE NEIGHBORHOOD OF $30,000 AN ACRE-FOOT TO $70,000 AN ACRE-FOOT. WE ALSO OWN 11,500 ACRE-FEET OF RIPARIAN CLASS III COLORADO RIVER WATER RIGHTS WITH OUR YUMA ARIZONA ASSETS. 7,280 ACRE-FEET OF THOSE WE BELIEVE ARE MONETIZABLE. We do believe that it'll be important to leave water to associate with some kind of agricultural Production in Yuma, so I believe that order of magnitude 5,000 acre-feet of that of that total water right will be monetizable in the near term and we're working on monetizing that right now We like to make this point every year which is the significant difference Dif difference if you look at the balance sheet of our company versus what the fair market value of the assets are today Many of the assets there used to be about a fifth of them But I think it's a little bit more now, but a High percentage of the assets that are on the company's balance sheet are recorded at historical book value and for order of magnitude If you go to the 3,000 acres that are represented by our orchard farm property or all of lands property those are on the books for $400 an acre if anybody wanted to sell their property for $400 an acre we'd probably buy it appraised value of those properties approximate about a hundred thousand dollars an acre now so you can see the significant difference but I think it's important to understand what that value is because as we look at those assets it's really important for us to think about returning on those assets at fair market value levels versus at historical book values and that's what we're focused on on trying to do if you do that and you look at where we are from a net asset value per share it's significantly greater I guess it's obvious on a fair market value basis versus a book value basis so as we look at the future of our agricultural business you're as we continue to plant avocados you're going to see increased profitability coming from those those avocados which we believe will grow by as much as 30 million dollars over the next five years what you'll see this year is the area that we're able to fight back on which is driven by our return to Sunkiss and our ability to take cost out of our business we've represented this slide at seven million dollars but if you really go back and compare year to year internally we're targeting more 10 to 12 million dollars and i believe we have a good opportunity to hit that and then also as we commission our new organic recycling center in santa paula having just received the conditional use permit to expand that that operation to almost 300 000 tons of annual processing capacity our 50 ownership in in our agreement facility should generate an incremental $5 million of additional EBITDA each year. We've already covered this slide. I won't do it again, but this shows the growth of the avocados, so we continue to be very bullish on that growth. As it relates to coming back into Sunkist, some sound bites, and our friends from Sunkist have very generously agreed to come here and tell some of that story about, from their perspective, why our going back to Sunkist has been a good thing. but it just gives us a great opportunity now to leverage their customer base with our supply chain and there was a perfect opportunity that presented itself when a large shipper that was part of Sunkist left last year which opened the door for Lemonera to come back into Sunkist and complement its existing supply chain with our supplies and we've begun that process this year officially and it's great to be back, but another highlight is we believe that it'll allow us to take $10 million of cost out of our business as well as improve our farm gate pricing, which for ourselves and our grower partners is going to be a really good thing because of the challenges that we've experienced in lemon pricing. As it relates to our organic recycling opportunities, as I mentioned that the company took three years and in partnership with agreement invested three million dollars to obtain a conditional use permit that gives us the opportunity to process 300,000 tons or organic material each year in our new facility our new facility is now we've broken ground and we're beginning to develop it it'll be a 70 acre site located on orchard farm we are the only licensed operating we will be the only operating and licensing facility to process organic green waste in Ventura County Ventura County every house has three trash cans one of them are those is the green waste and so we'll be taking that in and processing that which will give us an opportunity to have the throughput from every waste hauler in the county part of the partnership is driven by the EJ Harrison company which is the largest waste hauler in the county who are committed to bring all of their tons today but there'll also be extra capacity for the other waste haulers in 2023 the board of directors and management sat down and put together a road map to begin to monetize and divest what we what we deemed non-strategic or non-core assets and to present day we've been successful at monetizing a hundred and forty three million dollars of those assets but we've still got forty million dollars of assets to go represented by two of our of our last assets one is our 724 vineyard in Paso Robles we call it weight windfall farms we believe we're close to executing a purchase sale agreement to monetize that in 2026 and And lastly, our partnership in lemon production assets in Argentina, and we believe we're close to a purchase sale agreement with those two. We believe the collective value of those two is approximately $40 million, and we're working hard to execute on the monetization of those in 2026. And then that sets up sort of a continuum if we're able to thread the needle with the timing of some of these development activities where in the near term we've identified the non-core assets to monetize we've got specific water assets that we're working on monetizing as well we've got phase three of our harvest at limonera master plan community development that's 550 additional single-family home lots and the construction of 298 apartments and then lastly the entitlement of our two hundred and twenty one acre piece of property which is held in a limited partnership we're converting it to an LLC called Limco Del Mar but the limonera company owns 55% of the Limco Del Mar operation we we believe that upon entitlement that'll give us the next ten years of development opportunity in the city of Ventura and if we play everything just about right and the things work out the way they they they might will have longer-term opportunities with the potential land use conversion on the final 3,000 acres that today is growing avocados and lemons between Santa Paula and Ventura and so that creates the opportunity to create a significant amount of value over a longer period of time working on these things and then executing as we go through it is what we're focused on doing now while we continue to nurture the agricultural coupon part of our business. As it relates to the Harvest at Lemonera project, we've enjoyed significant amount of cash flows coming out of that business, but if you think about that development and the way it really works, it's it's very very back-end loaded from the standpoint that much of the cost that went into the infrastructure of the master plan community was front-end loaded and we're nearing the tail end of the infrastructure investment requirements for that project for the those of you that live locally it took us a long time to figure out how to negotiate peace between two big governmental agencies the Army Corps of Engineers and the National Marine Fisheries Society that prevented us from getting into Santa Paula Creek which we needed to do to build a bridge across the channelized Santa Paula Creek took a long time but we finally got the permits to allow us to do that and we broke ground about two months ago on the construction of a bridge that will now connect Santa Paula Street all the way from the main limonera ranch all the way into the harvest at limonera master plan community and that doesn't maybe sound like that's that big of a deal but for everybody in town who wants to go out and enjoy the amenities that were built in the sports park and and the things that were made available to the community of Santa Paula today you got to get on the 126 freeway to go around and go into the project once that bridge is built you can go right through the center of town we think that'll really enhance the commercial activity out there but it'll just make access to the harvest at Lehman area master plan community that much more accessible and be that much better as we think about the cash flows that we think are going to come out of harvest it in the last sales of the finished lots and the construction of the apartments we put this chart together that estimates what that might look like I want to emphasize their estimates because when when we think about the way that phase one played out and then phase two played out as we as we transacted phase two was a single transaction with one big large home builder Lennar homes that actually in 2024 uh lennar paid 93 million dollars for the 550 home lots and then invested in their own capital the additional 80 million dollars that it took to build the terraces and the roads and the streets and the gutters and put up the pads to build the housing if you're from out of town or even if you're from in town and you haven't been out to see phase two on the on the hillside in the harvest at limonera project please take your time and go do it uh there there are there are 15 model homes that have been built by lanar there's four different model types and right now lanar has 120 sticks in the air building 120 homes all at once because they're that bullish on their belief that those homes will sell the homes are selling at a nice pace right now last week three three of those homes sold it's all driven by what our chairman Scott Slater said earlier is just there's just not enough houses in Ventura County so there's just a lot of pent-up demand and even though some of those houses are going in excess of a million dollars 1.1 1.2 million as you move up the hill and they're bigger homes some of the homes are almost 4,000 square feet by Ventura standards and other cities in Ventura County that's still considered cheap or affordable i'm still not sure how they sell affordable but they're attainable for many and so if you have a chance to go see them it's really they're they're spectacular homes and we're really proud of what lennar is doing my point in walking you through that as you look at the financial forecast the lennar transaction went down in one lump sum it was all cash up front there'll be a lot less cost that's associated with the final phase because the infrastructure is now almost completely built out so the amount of profit and the amount of cash flow that's generated in the final phase should be greater than in phase at one in phase two we've modeled it that it'll play out over years but it could all happen at once so I just point that out demand is is only growing in Ventura County and supply is not growing to keep up with it at fast enough of a pace so I think that creates a good opportunity for value creation for the final phase of Lehman era and then in 2030 that 42 million that's a placeholder for the 298 apartments that will be built in partnership between Lehman era and the Lewis group at a net present value estimate of our 50% of the sale of those apartments there's no there's no saying we will sell those we might but that's just an estimate so it could be that or it could be an ongoing series of cash flows from enjoying the rental cash flows of 298 apartments going forward and so this is the next phase this is the Limco Del Mar property that we talked about there's a nice picture on the right there it's kind of an eye chart but that's taken from space and you can see it's about four miles off the Pacific Ocean there's about 300 feet of elevation difference from the bottom of the property to the top most of it looks at ocean and islands spectacular beat piece of property it will need to go through a sore vote and a rigorous entitlement process like we went through with our Santa Paula project we've assembled the team to put together a specific plan on that piece of property we're very fortunate that our neighbors to the south the Campbell family who own a 135 acre piece of property that used to be part of Liebco Del Mar property was sold at a certain point in history but they've agreed to work with us and allowing us to put a common specific map on that entire piece of property 2026 we'll see the Charette process where we go out and begin to listen to the citizens of Ventura about what they want and what they don't want I won't sugarcoat it Ventura is a tough place it's very difficult anywhere to build consensus anywhere building consensus in Ventura is it's a lot higher bar to clear than it was maybe in Santa Paula but that's not to say that we don't think we have a good opportunity to win a sore vote but my prediction is that it probably won't be by an 83 percent success rate like we were able to do in Santa Paula if we are successful in winning a vote it'll probably be a much closer vote but we think we have a good opportunity we think the time is now to make the move on this and we're going to be going for it so as we continue to communicate with all of you as we go forward this will be a really important part of our future and then the long-term land bank of our agricultural assets and water assets will continue to be enjoying growing Avocados and lemons profitably as we wait for the right time for those assets to monetize probably in our grandchild grandchildren's lifetimes, we'll see We talked about water before so we have opportunities to monetize in Yuma, Arizona and the Santa Paula Basin But these are more near-term. We think the Yuma, Arizona opportunity is a 26-27 event and and dribs and drabs of the Santa Paula Basin from 2026 through 2030 and then just like to say that from a capital allocation standpoint we're focused on doing the right things for the shareholders to increase the most valuable value for our shareholders which could involve and will involve actually the further reduction of debt reinvestment into our business so we've been investing significantly into the business which we've shown the areas which we've done that if the stock price does not respond I don't think any of us like where the stock prices is trading today it creates opportunities for us in the event that we have extra cash to repurchase shares to increase value that way and to pay dividends as the company is able to do so so in summary I think that that it's important to say that we've targeted 42 million dollars of additional incremental EBITDA growth over the next five years growth of our avocado business growth of our organic recycling business and our return to Sunkist as well as identifying significant amounts of assets that we're working on monetizing either through outright sale or through development of those assets and real estate development so want to just make a shout out here to the people that make it all happen here. It's our management team and the people on our team. Just couldn't commend them enough. This has been a year of significant transition and transformation. I think for the most part, everybody's still having a good time. I'm having a good time. I know they are too. But I think we're all very excited about the future and really couldn't be standing before you without all the support from them and all the great work that they do and lastly I'd just like to give a final shout out of thanks to our former CFO of the year Mark Palomountain who has now moved on to greener pastures allowing us to promote Greg Hamm into the chief financial officer role and Kelly Lindell into the controller spot we're in great shape we're in we're in a good spot and it's really great for us to be working together so welcome aboard to you guys what I'd like to do now is turn the turn the podium over to my good friend and the CEO of Sunkist Jim Phillips and Jim's gonna tell you about why the price of lemons is just gone nothing but up from here on out Jim Phillips from Sunkist you know every time I think I've got a

Jim Phillips, CEO

big job I just have to come over here and sit down for about an hour and listen to Harold Sunkist with the inclusion of fruit growers we run about 10 P&L's across that across the two companies when you think about timber and wax services and trademark licensing and our share in Ventura Coastal and all those things and so sometimes I feel a little overwhelmed and then I come and talk to Harold and look at what's going on here it's like wow this is I need to quit whining but listen it's a pleasure to be here we're thrilled to have Lee back in the in the Sunkist family I can't tell you for me personally you know a founding member been a lot of change over the years and he's in this business and and it was tough to see limonera leave and in 2010 and a lot of things have happened over that period of time you know certainly the growth at least in volume around the world and lemon in lemon supply I mean Harold talked a little bit about how Argentina and the imports and and the pressure that that caused back sort of in 2017-18 and how that's progressed we know a couple of years ago those imports out of Argentina were up to 5 million cartons which sort of took them to about 50% so about 10 million cartons of imports that year which were devastating to our industry but the one thing you didn't mention was the growth in the San Joaquin Valley and if you think about just lemon supply in general you know the supply in the San Joaquin Valley has doubled since 2010 and so and that that volume comes off in the wintertime significantly which puts a lot of pressure on on things and I'll talk about that a little bit here in a minute but we thought that look I'm not gonna stand up here nearly as long as Harold I promise I'm just gonna make a few comments and I'll take questions from anybody that wants to ask them but you know what was the objective right and the objective for them to come back was that in a commoditized industry with really too many pricers chasing the same POs it was putting a lot of downward pressure on everybody in the industry and it just it made sense for us to come back together and I think given all the hurdles and all the struggles cost increases and the things that Harold talked about it just made a lot of sense I think for both of us to come back together he also mentioned the fact that that we all know in this room that Vinter Pacific chose to leave a couple of years ago which and was interesting I mean we were really although pricing was still under pressure and it was a very challenging business we were really starting to make progress Sunkist really had fallen behind over a number of years from an execution standpoint in an oversupplied business where you have an increasing amount of competitors in a commoditized business service and quality really at the end of the day is your big differentiator even if your name is Sunkist and so in that environment I think it really how do you you know how do you manage through that and how do you figure out how to drive value for growers well at the end of the day consolidation is one of those opportunities and certainly is limonera came back into the company is the third big in california number three so sunkissed wonderful came in behind that and then and then limonera was number three and so to bring number one and three back together was was a very big deal um you know i think about the advantages of them coming back to us the nice thing about limonera was that they came to us with a customer base and so they had done a lot of work or you all have done a lot of work to to develop a customer base over the years and so in coming back in bringing that customer base with them was important and as we continue to improve our execution and we had avoid the need for additional volume and the ability to really strengthen and leverage that performance and take care of significant customers was important and we had a need there and so the advantage of you know strengthening our relationship and and putting ourselves in a position to really cover our incrementally growing demand for Sunkist and take care of significant customers was another piece that that really made a lot of sense and we've done a really good job I think of executing against that and then look just strengthening the overall lemon industry i mean in in category again having fewer pricers out there chasing the same customers and then how do we you know develop a relationship with what i call our frenemies in this business i mean there's you know and some sometimes there's too many and and and other times the balance is about right but i think again we're chasing the same orders and so figuring out how to how to sort of share out the business in a competitive environment and figure out a way to take prices up for growers is is always a important part of what we're trying to do and so I think this relationship definitely helps strengthen the the overall category and as Harold said as you know a benefit for limonera growers being a one-trick pony in a deal that again I'm gonna keep saying it was oversupplied made it very difficult and so coming back to the Sunkissed family where we lead the industry in navels and valenches grapefruit to a certain degree mandarin's were behind but it is a significant offering for us and it's important for us to have that you take care of caras blood so when you go across the spectrum to be a full category supplier to buyers is important they want a one-stop shop and there's a lot of things within the citrus category that Sunkist has that Lemon Air did not have. And so as we bring them back into the fold and increase that lemon volume, having those other varieties for the salespeople, we got John Carter in the back there that was your VP of sales. Now he's a VP of sales for us, so we're tickled to have him. That's a real blessing and a real advantage for him. So, you know, again, the customer retention, we were realistic, right? We didn't believe that when Lehman Air came back in that we would hang on to all of the customers But our objective was to hang on to at least 75% of them And one particular one one big one that falls into that quick serve business. That was a critical strategic objective of Christian Harris or chief operating officer and John Clark and and and the team as well as with the help of Harold in that transition and we were able to do that and and not only were we able to hang on to the 75 percent we've actually increased that a little bit we're actually running it a little over 80 percent retention on all the customers and that movement that Limonera brought to the party so that is a big win for all of us look the one place that probably we as we had a dip for a year and then have come back as we We lost a little bit of volume, and we got a little bit behind from a Sunkist perspective on what I call indexing, our relative share, our tree crop share of the export markets, and so we fell behind a little bit. I'll be honest with you. I think from an execution standpoint across the system, we probably weren't doing as good a job from a consistency, a quality standpoint, and service as well. So there's been a major focus within the Sunkist system on how to improve that across the packing houses. we've actually had some consolidation within the sun kiss system that in one on one hand feels a little painful on the other hand was a blessing so we have more going through fewer shippers which means that the communication and the collaboration our ability to work with them on execution from a service and a quality standpoint has gotten better when we bring limonera in a quality operation that trust me knows and understands the the importance of quality and service it was just a great complement and so i think it puts us in a great position sort of regain that category we still sell more lemons than anybody in the world in all of the export markets the percentages change a little bit between the markets but we still by far ship the most lemons outside the united states as anybody in the industry as we should and so i think we need to continue to build on that though that's premium business tends to run anywhere from two to four dollars higher in fob so making sure that we have our share of that premium business is critical to us and and that was an objective and we've made improvements there i'm very excited about that and again i think um integrating the the team uh from limonera into sunkist was important And it has gone extremely well. I think John Carter's brought a lot to the party. You know, we brought on Susan Ning Jones. She's helping us in the export market. Brett Johnson has been very instrumental in helping us, not only on lemons, but he's taken over our Mandarin category and taken some of those customers that Limonera brought on board and sort of helped us grow and expand our Mandarin category, which has been really important. Kimberly Mangum who was at Sunkist four or five years ago and then ended up at Limonera coming back into the fold she's been very helpful in helping us get back claw back a little bit of that Canadian business she had a really big following there and so it's gone extremely well and as I said the the movement and the the anticipation and the hope has become more than hope it's become reality and so we're we're very happy about how that's gone look to give you my slides are not going to be as elegant as Harold's that's a tough that's a tough that's a tough bar to have to compete against but and this is a little bit busy would you call it an eye chart yeah this is another one of those right charts but it gives you I want to sort of lay out a couple of things because district transition and where limonera as a grower falls into the season is important. Back to how do you figure out how to get those FOBs up? How do you move into, you know, at the right time of the year? And how do you increase? Really, you can talk about cost. You can talk about FOBs. We're talking about bin returns, right? When you just get right down to it, what are the returns? How many bins are the acre? What are the returns per bin? and how do you stay in business as a as a lemon grower particularly in Ventura County where the cost pressures and the competition have been so intense over the last seven or eight years and if you look at this this just sort of lays out the season and if you start at the beginning of the year about week 38 the green is district 3 so that's that's our California desert the the orange is district 2 and the blue is district 1 and we're on about what we fit we're at 15 week 16 15 16 is about where we're at today so we've come out of the desert region we're significantly into the district 1 period time of the year but we're really starting to make momentum and we're really gaining momentum in district 2 a lot of fruit going into storage which will come out and I'll you why that's important just here with the next slide but this is sort of how things so if you look at as sort of the peak shipment time of the year and you look at where from a district 2 standpoint limonera falls into that category it is significantly from about now through like week what is that 40. so when you look at how pricing changes over that period of time and these are very simple charts but this just shows you if you look at last year at the same time limonera is the blue line sunkissed is the orange line so that's where we were tracking from a domestic pricing standpoint the green line is this year and I'll be it less fruit came in from Argentina this year then it had in previous times there was still a lot of competition as we got ready to move into the district one time of the season for contracts and for pricing and so we saw dip that was unfortunate and this thing got to a lower point sooner than it typically does the good news is that we're starting to pull out of it and you can see that and this this chart is a couple of weeks behind I think it would even be a little bit higher we're really when you look at year or for the same week last year we're up about a dollar this year versus where we were last year and we're increasing so that number I'm anticipating that the number the green line will outpace the orange line this year as we move through the year so that build and working together to build a higher FOB is really a significant effort for us right now and I'm confident that we're on the right path to doing that so the 411 there is is stay tuned and our objective is to is to figure out how to get these bin returns at a level that make that make more sense and drive profitability for all growers but certainly for you all here in limonera so look moving forward here I'll talk a little bit about the importance of utilization and I think would you look at some of our relationships with key customers that buy a lot of lemons you know we'll sell roughly of California Arizona about 17 and a half 18 million cartons of fresh fruit and we have two customers that represent about 6 million of that and those are exclusive to Sunkist at prices that that sort of move with the industry and so it puts us in a position to do two things to move a lot of fruit and that's not fancy fruit so that that's choice grade standard grade fruit which we grow more of here in Ventura County so that's critical the ability to take price up and sell more at the same time that's a win-win right and we're headed into that time of the year and so my expectations and I think Harold showed that number that 70% is the number that is critical so if you can get to the right FOB is trying to get yourself to or above 70% utilization I think that is a very achievable number for this year where's Christian at you back there there he is would you agree Christian yeah a little bit so in full transparency to be honest right I mean I think one of the things in trying to when you're out there and you're trying to watch cost maximize utilization as as sort of two of the levers and then you've got price moving through the crop faster I think was a little bit of a limonera objective with less than the storage could storage cost money and if you really don't have and with the threat of Argentina and the inability to get prices up which is something that we've suffered over the last four or five years that really it just meant like look which lever are you how do you generate more revenue and if you can do it faster and you can minimize your cost that that's probably the right strategy Well, when you take a couple of the big buyers that we have that need fruit in that June, July, August, September window, which is the peak demand in the United States for lemons, really around the world, you've got to have the availability. And so I think what we're seeing is this is going to get pushed a little bit. There will be a little more in storage. It'll cost a little more from a storage standpoint to do that. but i think the opportunity for better utilization at improved prices will make up for the cost and i think that's that's something that we're working on significantly hard and so when christian says 75 utilization i would agree with him i think as long as the fruit holds on and everything works out right that's an achievable number you know even if it was 72 73 percent our objective is to get these prices up over 20 we really need to get this price up into the 22 23 24 dollar range that would include exports and not just domestic but that's what we're trying to do and that's that's the direction that we're trying to go so again utilization big deal servicing premium customers with with growth potential that's what I'm talking about it's having the fruit to feed the demand at the right time at better prices and so I think on the margin food service Harold mentioned that we have great relationships across you know the entirety of the food service spectrum uh including these quick serve guys and so and again in a district that grows a higher percentage of choice grade fruit that is super critical to have those outlets in order to maximize utilization and take advantage of the opportunity to improve pricing so we're definitely going to do that and again stronger together fewer people chasing the same business and so coming back together and taking a price or a major pricer out consolidating that effort really makes a lot of difference in in our ability to push those prices up we're going to continue to work on on leveraging that um you know less pressure uh from expected imports this summer look argentina has a lot of things have changed over the last couple of years the economics have changed the dynamics of the industry have changed and they've really seen more opportunity their crops are coming down a little bit but they still have a lot of volume but the better opportunity for them really is in europe so Western Eastern Europe are closer to them it's less risky there's price opportunity there at lower cost and so we we expect that with all the things that are going on around the world you know diesel prices and transportation costs and all that stuff we're anticipating not only this year maybe for multiple years but certainly as we come into this coming year we don't expect to see Argentina come with as much fruit as they have in the past maybe something more similar to last year which would be good we can handle that we'd like to see it be a little bit less we'll see what happens with Chile I understand that with with lots of issues down there that their crop may be off a little bit so we're not expecting I mean listen it will be here but not an insurmountable amount of pressure out of imports this summer which again will help us from pricing standpoint and then you know it's interesting again back to the frenemies comment um there's really as you get into the district two phase or time of the year right now with district one it's probably the worst you've got the most uh you've got a lot of volume and you have probably at least 15 major players chasing business and everybody's trying to get done faster willing to lower the price that's why you saw these prices go down and so we got to sort of work our way through that but as we transition and get closer to the district two time of the year it really comes down to really two of us and maybe about three that have significant influence over what happens from a pricing standpoint not counting the import piece of it and not that we don't have a little bit of influence there because we will need imported fruit and we will use that in a complementary way not competitive our objective at sunkist is to use imported fruit when we need to in order to cover customers 52 weeks a year and minimize its competitive position against our growers fruit here in California that is a very very strong objective and we've we've sort of worked towards that and I think we have a real opportunity but I do think we also have the opportunity we have other industry cooperatives and I think we have Capra Volstead protection that allows us to talk to certain people about volume pricing and we all realize that listen we all want to beat each other right so we talked about competitive returns well that's great if we had the highest competitive return and everybody lost money so I didn't make a lot of sense so at the end we're not going to sell everything and we need to be cognizant of that and so we need to find the right balance and work with our competitors within the industry in a legal way to talk about pricing and talk about movement and figure out how to move these prices up. Because at the end of the day, if growers don't stay in business, there is no sun kiss, there's no jobs, there's no nothing. We're not going to do anything else. We're citrus people, and that's what we're going to continue to do, but only if we have growers that make enough money to stay in business. So strong objective for us. And so really, I mean, I guess you know I'll just sort of end on that and when I like to keep things simple and in the midst of a lot of things moving around we're always looking for that north star or that leverage that we can come back to and at Sunkist it's one everybody our employees get paid based on that now we have bonus programs that tie their total compensation to competitive bin returns so my objective is a grower I'm a 200 acre grower myself and so not all lemons but 200 acre grower I appreciate that and and and my objective when I came to Sunkiss as the president was to change a culture and make sure that our employees understood that without our growers we don't have a business and so we need to think about that you know our mission statement says everything we do is for our growers and that's what it starts with and the objective is this long-term sustainable returns for lemon growers in all districts long-term sustainable returns because that's what it's not a one-year it's not that we beat somebody else look we finished last year at about 100 125 dollars a bin which was a 25 dollar bin improvement over the previous year but not sustainable we got to get this thing up to over 150 we need 150 175 dollars a bin at 45 50 bins to the acre now listen if you got 35 bins of the acre and you're growing 65s and 200s i'm not sure that anybody's going to be able to do a whole lot for you chick-fil-a is going to help but it's not going to be the salvation so we all got to do our job right we got to have the right fruit we got to have the right production we had the right quality and what we've got to do is take that and leverage that and make sure that we figure out a way to keep these returns at a position that keeps you all in business and that's exactly what we're gonna do so listen with that I appreciate the opportunity to come and sort of speak off the back of my buddy here mr. Edwards and we look forward to getting reacquainted with you all as we move down the path and we're excited about it so thanks for having us

Harold Edwards, CEO

appreciate it. Hi, I'm Harold Edwards. I'm the president and CEO of the Limonera company. We're proudly celebrating our 133rd year of operation at Limonera this year. The company is going through a significant amount of change. The company has made its business to evolve with a rapidly changing world. As the world grappled with the global pandemic, Limonera struggled with the lemon business, we realized we needed to change to address the realities that faced us with the oversupply of lemons in the world. We'd also experienced significant amounts of inflation across all parts of our business. The toll it took on the financial performance of the company was significant. In 2023, the board of directors and Lehman Air Company came together and we created a roadmap. We identified non-strategic and non-core assets that we would divest and monetize to help us strengthen our balance sheet to be able to achieve financial success not only for today but also for the sustainable future. All

Speaker 9

retailers throughout the United States and throughout the world wanted a one

Harold Edwards, CEO

stop shop in their purchase of the entire citrus category. We realized that going back into the Sunkist Network was the right move for us. It opened the door to new retail customers, as well as providing us access to the best and largest customers in the food service industry. We could not be more proud to be back within the Sunkist Grow and Cooperative.

Speaker 10

When I think about Lee Minero coming back into Sunkist, the first thought that crosses your mind is the emotional one. It's one of the founders coming back in that was with us in 1893 when we started this thing. But then as you think more practically from an operation standpoint, whether it's the Limonera customers, the Sunkis customers, whether it's the way that the growers fruit can be sold to a broader base in both cases. As we consider the external part and how much value that's created and then think about the sales teams coming back together, the operations guys learning from each other, I don't think we've even scratched the surface yet. I don't think there's a person I found yet, whether it's in the broader industry or inside this building, that doesn't think this is a wonderful thing for both

Speaker 12

organizations. As we have transitioned back into the Sunkist marketing agreement, we have been able to refocus our energy on the foundation and core aspects of our business, consistency of high quality lemons, while achieving greater utilization at a lower cost. This renewed focus is enabling us to drive operational efficiencies throughout the supply chain, maximizing returns and strengthening our packing margins. Being part of the Sunkist system has significantly reduced price pressures. We are extremely optimistic about the value that will be unlocked as we continue to capitalize on our shared passion for excellence.

Jim Phillips, CEO

We think about the mutual benefit of Lehmanera coming back into the Sunkist system. I think it's simple. It's more important today than ever that you have collaboration and consolidation. I think we have the opportunity to be a better supplier to our customers, a better custodian to our growers, and support a more efficient supply chain. We're thrilled that all of our growers are for Limonera to be back in the Sunkist family.

Speaker 8

Technology is very important to us here at Limoneda. A piece of technology that we're using is drones. With the imaging drone, we can see real-time data of tree health, stress, and acreage status. The spray drones allow us to act on that data. That accuracy and that precision you don't have with regular conventional methods. We reduce fuel, we reduce water consumption and chemical products. We can do more acreage than the heavy equipment in less time, so we reduce labor costs too. We reduce the operational risk by taking out the people from the field. Technology made us more agile. Now we're acquiring data and using that data to be a step ahead of the problems and that's really important when you're farming.

Speaker 9

We want to be as perfect as we can. Autonomy is one of those pillars that is going to help us get there.

Speaker 20

One of the things that autonomy brings is reduced costs for the precious skilled labor that we have trouble finding these days. but there are a lot of other benefits fuel reduction more efficient equipment use worker health and safety benefits you're not on dangerous equipments operating in trees and obstacles you can operate entire fleets of vehicles from the comfort of your pickup truck or other safe environments we continue to push the envelope to really help growers be a lot more efficient save money be safer and get the job done better and more efficiently so that we can have a healthy and prosperous future.

Speaker 9

Having a visual of your farm, especially when you're farming at a large scale, is key because you don't have the capacity to look at every tree. Technologies like Ctree has helped us a lot in the past few years to really know the state of our plantations. We know that the apple industry is very advanced in trellis farming and robotic harvest. So we thought, why don't we do lemons on trellises? We decided to do an experimental block of about two acres. We've had great results. The normal density of an acre, it's about 120 trees. Over here, we have 850-some trees per acre. We've put a lot of effort into learning how to do trellises. It's probably going to be the future of how we plant.

Harold Edwards, CEO

Another area of excitement for the company is the expansion of our organic recycling business in partnership with Agriman. Agriman is the largest organics recycler in the state

Speaker 6

of California. We recycle about 1.2 million tons a year of organic waste for over 200 cities and counties in California. We have the most experience on how to manage organics and transform them into compost, renewable energy, organic fertilizers, and feed. And we are about to embark on a very large project with Limonera, which would expand that facility to 70 acres, which would make it the only commercial compost center in Ventura County. We were successful in obtaining a

Harold Edwards, CEO

conditional use permit to process 290,000 tons of organic waste annually. This is significant because it's been mandated that up to 75% of all the green waste that goes to landfills needs to be diverted to reduce the amount of methane that's produced. We take the green waste and we bring it into our facility to process that into a highly valuable agronomic mulch. The operation itself is under construction today and should be fully operational by 2027.

Speaker 6

We also applied for a grant through California to help us build this $35 million project. And we were awarded $10 million from the state of California. Agroman is building more compost centers throughout the state to help meet that state's mandate of 100 facilities. So it's about $2.4 billion of new infrastructure that has to be built. So we're excited to be part of that expansion. And Lee Manero is excited to be partnered with us to scale our model up

Speaker 9

across the whole state of california we're very excited to be one of the main players in production of albacala in the united states we presently have about 1600 acres of albacal our goal is to have 2 000 acres in the next year we are already seeing great results in our new plantations one of the most exciting things about the albacala production and the years to come is a total will change in terms of productivity on a per acre base. The average in California is about 6,000 pounds to the acre. What we can expect with the new densities, the new setup of our plantations, the way that we can assist these plantations, that's how we're going to get to 15,000 pounds on a per acre base, and that's what we can expect.

Speaker 11

I've been working with the limonera company on the harvest project since the inception, back in the planning days of 2004. It's been very good for both the city and Lehman Air. Phase one is completely sold out, 707 units. Phase two has been sold to Lenar Home Building. They have 554 homes to be built. Phase one of the 38-acre sports park is complete. Phase two, which includes some additional sports fields and some recreational areas, is planned on being completed by spring of 2027. The Santa Paula Street Bridge is under construction and should be completed by April of 2027.

Speaker 15

We're very pleased with the results from the harvest community. We've had a strong response from the public. And we're hearing that they like the houses, but even more, they like the community and the lifestyle that we're delivering. We're also getting very good feedback from the city of Santa Paula. They like that we're bringing in new residents who support their shopping, that we're bringing in trails, parks, and a bridge to be built. Overall the response has been great.

Harold Edwards, CEO

The City of Ventura and Ventura County has a severe housing shortage that's leading to housing affordability problems throughout the county. The Limco Del Mar property is a large infill development site surrounded by existing neighbors that offers the potential to add a large number of single family homes to the city of Ventura.

Speaker 14

We've worked with the Limonera company on a number of master planning projects

Harold Edwards, CEO

over the last 20 years.

Speaker 14

We're very pleased to join them in engaging the city and community of Ventura and imagining some of the possibilities for the Limco Del Mar properties.

Harold Edwards, CEO

This process overall will take several years. If approved, the proposal would be put on the ballot for a vote. Any increase in the amount of housing will provide an opportunity to expand the city's housing supply with new single-family neighborhoods

Speaker 19

over the next decade or more. The number one demographic leaving the county are young people ages 19 to 45, and what that means is that we're losing our workforce, we're losing kids in our schools. The number one reason people are leaving is the cost of housing. To build housing in the scale we need, it takes developers who really and truly drive community buy-in, and we've seen that with limonera when you look at the limco site in east ventura i have all the confidence that limonera will again drive a process that is collaborative that engages the community and at the end of the day really delivers the housing this community so desperately needs

Harold Edwards, CEO

the reality of water is that without it we wouldn't be able to produce the agricultural products that we produce throughout california and arizona the sustainability of that resource is critical for our ongoing operations. However, we do have an opportunity to monetize conserved water. The Lemonera Company is pleased to own Class III Colorado River water rights in Yuma, Arizona. As a result, the company's in perfect position to take advantage of very valuable fallowing programs. We will actually get paid to not use the water. We also have water rights and ownership in the adjudicated Santa Paula Basin. We've successfully monetized a small portion of the conserved water rights, but we'll continue to focus on finding opportunities to monetize the conserved water

Speaker 5

that we've been able to generate in the Santa Paula Basin. Approximately 20 years ago, we started a plan to update our water system that for 100 years has been operating on a gravity basis. The idea was to upgrade our system to a pressurized system that would benefit all farmers and irrigators in the valley.

Speaker 9

A pressurized pipeline for irrigation is going to be a game changer to us. Water is a key element for agricultural production. The reason why this is so important is because we're going to be able now to deliver the exact amount of water that our crops need. We will be able to control cost.

Speaker 5

We anticipate the growers will be able to cut their overall water use by 30%.

Speaker 18

This year further strengthened our foundation as an avocado and lemon producer and as a lemon packer. With disciplined financial decisions and a clear long-term strategy, we are building a more focused and efficient company for the future.

John Mills, Head of Investor Relations

At the center of everything we do are our people, our team. It's their commitment, their experience, their integrity. That's what turns our everyday strategy into results.

Speaker 9

We have to be very competitive in the products that we put out in the market. We are committed to be that company that is very effective, that is very diligent, that will continue to be positioned in the market today.

Harold Edwards, CEO

This is an exciting time for Lehman Era. The pivot that the company has made with its new strategic direction, with its return to Sunkist, the expansion of its organic recycling business, and its expansion of avocados has put the company into a trajectory of growth that we're excited to experience. While we continue to realize the benefits of our harvest at Limanera Residential Master Plan Community Development Project, our efforts to entitle the Limco Del Mar property, and finally, the opportunistic monetization of our conserved water rights. In combination, the value that will be created from each of these activities will be significant, and I couldn't be more proud of the Limanera team. We're excited to see the beginnings of these results appear in 2026 and beyond.

Scott S. Slater, Analyst — Chairperson of the Board

Well, that's that's great. So there's been a lot of outbound information here. This is your opportunity to ask questions. Amy, you want to join us up here, too, as well? No, come on. So the floor is yours. We're here to question in the back, please. the company will pay dividends when the company is able you also well the

Speaker 16

announcement said that the dividend had been suspended could you talk about that

Harold Edwards, CEO

so the question was about the sustainability or the decision to pause the dividend which was just came out two days ago so the the company had effectively paid its debt off about three years ago two years ago when we effectively sold the second phase of harvest and then through considerable additional investment into the expansion of the avocados but then also into the opportunity to increase our ownership in the Limco Del Mar limited partnership from 28% to 55% the debts ramped up to about 90 million dollars of where we are right now after deliberation and discussion about where we are with the balance sheet right now we're we at management believe that there's significant benefits coming from monetization of the assets that were identified before water assets but also some non-core non-strategic assets that we're working on selling the board and management felt it was best at this point to pause the dividend while we made progress with those initiatives at which point when once we've got the balance sheet where we want it to be we'll then consider as management and the board reinstating the dividend yeah

Scott S. Slater, Analyst — Chairperson of the Board

and as a as a board member just just add look we we'd love to pay dividends we want to do it when it's prudent to do so and so we we've made some investments we're hoping that they will materialize soon and as soon as it makes sense we we'd plan to revisit our customary practice so next question for the

Speaker 17

president a longer one and then a very short one the longer one the management agreement with Prudential land for our former San Joaquin Valley properties a very limited number of seasons that we worked that and I understand that that That agreement has ended because of the change in our relationship with Sunkist. Did we make money? Did we lose money? How does the change from no longer being farm managers affect the bottom line? The second short one, what will it take to get the county to name the new hospital at East Area 2, the Dr. Sam Edwards Hospital?

Harold Edwards, CEO

So those are good questions, Rob. You always seem to find those. So we've got to be careful because there is a PGIM employee in the room, Ross Hatch's son-in-law actually works with PGIM, so I'm going to make sure that what I say is nothing but positive because it is. So for those of you that may recall, we were successful in selling 3,000 acres of our San Joaquin Valley assets to the Prudential company, and part of that deal was there were two parts to it one was a supply agreement where we continued to manage the all of the lemons the packing marketing and selling of those lemons but the other piece as you pointed out Rob was in managing farm management services for them well I think and just to try to say this as transparently as possible Prudential owns one of the largest farm management service providers in the state of California which we we knew but we didn't realize sort of the impact that that would have on our own farm management services I think the reason they agreed to allow us to continue to farmers they wanted the continuity of basically transition and education before they introduced their farm management team which is called caps to the opportunity to take those assets over so yes we went into the spirit of it with okay we're gonna go dominate the world of farm management services in California but it was pretty clear that after a year of doing that by the middle of the second year that we were most likely there to transition and help them transition that into cash we did make money doing it not a lot but we did make some money doing that and then the second question about naming a future hospital after my dad I you know we got to find out how to build that hospital first, right? Let's do the first thing. Let's figure out how to get healthcare investments into Santa Paula, and then we'll discuss naming rights.

Scott S. Slater, Analyst — Chairperson of the Board

Any other questions? Okay. Seeing none. We've already formally adjourned the meeting itself. Thank you for your time. Appreciate you, stakeholder investor, and we'll see you next year.