DEF 14A 1 cvgw-20230426xdef14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

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Calavo Growers, Inc.

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LETTER TO OUR SHAREHOLDERS:

To Our Shareholders:

In our 2021 annual letter to shareholders, we wrote of the leadership changes that had taken place at Calavo Growers, including our new roles as Chairman of the Board of Directors and President and Chief Executive Officer. The past year brought market volatility and new business challenges, but we made significant progress stabilizing operations, increasing governance and preparing the organization for growth. Below is a recap of the more significant foundational improvements achieved in fiscal 2022:

In the area of governance, we underwent a Board refreshment that will result in a planned reduction in the size of our Board to nine directors, which includes the recent appointment of our CEO to the Board. We also were pleased to welcome Adriana G. Mendizabal, Group President for Stanley Black & Decker Latin America, as an independent director in 2022. We believe that the reduced size of our Board and its composition of diverse experience and leadership across industries and functions will serve the company well as we grow.

We reorganized the business into two segments, Grown and Prepared, to better serve customers, improve efficiencies and ultimately to drive growth. Both the Grown and Prepared segments contributed to higher earnings in fiscal 2022. Gross profit from our Grown segment increased as avocado volume declines were more than offset by higher gross profit per case despite volatile market pricing that ranged from under $30 per case to over $70. Prepared segment gross profit more than doubled from the prior year as improvements in the fresh-cut division from pricing, yield enhancements, transportation savings and labor efficiencies more than compensated for lower gross profit in the guacamole division due to input cost pressure. Despite inflation and volatility, Calavo grew gross profit across both segments and adjusted EBITDA for fiscal 2022.

We established our new leadership team in 2022. We hired Danny Dumas as Senior Vice President Calavo Grown and Helen Kurtz as Senior Vice President Calavo Prepared. In addition, Shawn Munsell joined Calavo as Chief Financial Officer. These three exceptional new leaders have the knowledge and experience to take Calavo from a company that is improving to a company that is growing. Importantly, for both good governance and performance, each of our Named Executive Officers (“NEOs”) have compensation packages where at least 50% of targeted total compensation is performance and/or stock based. Furthermore, more than 70 of the top leaders in the company now have stock-based elements to their compensation plan to align with the objectives of our shareholders. Lastly, to further align NEO and shareholder interests, Calavo increased its stock ownership guidelines for NEOs and Board members. The purpose of these compensation changes is to ensure our Board and leadership team have the same goals as shareholders – to maximize Calavo’s value.

Project Uno established the mindset of continuous improvement throughout our organization and led to $46 million in benefits in fiscal 2022 from pricing initiatives, SKU rationalization, unified procurement, labor efficiencies, freight consolidation and administrative synergies. Since its inception, Project Uno has systematically focused on improving profitability. The practices and mentality arising from Project Uno have been integrated into our daily operations and will live on, not as a project but as a way of doing business for long term success.

To reflect our reenergized company, we refreshed the Calavo brand including the company logo, brand personality and tagline – “The Family of fresh.” The new look and feel of the brand were thoughtfully designed to signal an evolution of our brand’s legacy while we look to the future as an innovator in our industry.

Also in fiscal 2022, we published our fourth annual Sustainability Report where we introduced a new sustainability strategy and 2030 goals built on four pillars of Climate Action, Social Responsibility, Sustainable Agriculture and

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Sound Governance. Our sustainability strategy focuses our efforts on the environmental, social and governance (ESG) issues that matter most to our stakeholders. You can find these goals on our website. Importantly, our operations are intrinsically linked to the natural environment and the communities we serve; therefore, it is very easy for us to link sound business decisions and investments to sound ESG policies.

In conclusion, it has been a productive year at Calavo as we built the platform for growth and established foundational processes that will allow us to scale efficiently and effectively. More changes are underway as we develop and implement our long-term strategic plan. While fiscal 2023 will surely bring new challenges, we are confident our team, our strategy, and our infrastructure are aligned with shareholder interests and focused on generating long-term shareholder value.

Sincerely,

/s/ Steven Hollister

Steven Hollister

Chairman of the Board

/s/ Brian Kocher

Brian Kocher

Chief Executive Officer

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

SEC Form DEF 14A filed by Calavo Growers Inc.