Limoneira (LMNR) risk factors, FY2025 10-K

Risks Related to Our Agribusiness Operations

1. 01Our decision to merge our citrus sales and marketing operations into Sunkist Growers, Inc. beginning November 1, 2025 may not be successfulNew
2. 02Adverse weather conditions, natural disasters, including earthquakes and wildfires, and other natural conditions, including the effects of climate change, could impose significant costs and losses on our business
3. 03All of our crops are subject to damage from frosts and freezes, and this has happened periodically in the past. In some cases, the fruit is damaged or ruined; in the case of extended periods of cold, the trees can also be damaged or killed
4. 04Fresh produce is vulnerable to crop disease and to pests (e.g., Mediterranean Fruit Fly and the Asian Citrus Psyllid (“ACP”)), which may vary in severity and effect, depending on the stage of production at the time of infection or infestation, the type of treatment applied and climatic conditions
5. 05Our earnings are sensitive to fluctuations in market supply and prices and demand for our products
6. 06Our earnings may be subject to seasonal variability
7. 07Increases in commodity or raw product costs, such as fuel and paper, could adversely affect our operating results
8. 08Increases in labor, personnel and benefits costs could adversely affect our operating results23% rewritten
9. 09Changes in immigration laws could impact the ability of Limoneira to harvest its crops
10. 10The lack of sufficient water would severely impact our ability to produce crops or develop real estate37% rewritten
11. 11The use of herbicides, pesticides and other potentially hazardous substances in our operations may lead to environmental damage and result in increased costs to us
12. 12Environmental and other regulation of our business, including potential climate change regulation, could adversely impact us by increasing our production cost or restricting our ability to import certain products into the United States
13. 13A global economic downturn may have an adverse impact on participants in our industry, which cannot be fully predicted
14. 14We are subject to the risk of product contamination and product liability claims
15. 15We are subject to transportation risks
16. 16Events or rumors relating to LIMONEIRA or our other trademarks and related brands or Sunkist could significantly impact our business20% rewritten
17. 17Government regulation could increase our production costs and increase legal and regulatory expenses
18. 18We depend on our infrastructure to have sufficient capacity to handle our annual lemon production needs

Risks Related to Our Indebtedness

1. 19We may be unable to generate sufficient cash flow to service our debt obligations
2. 20Restrictive covenants in our debt instruments restrict or prohibit our ability to engage in or enter into a variety of transactions, which could adversely restrict our financial and operating flexibility and subject us to other risks38% rewritten
3. 21Subject to the restrictions in our credit facilities, we may incur significant additional indebtedness. If new debt is added to our current debt levels, the related risks that we now face could increase
4. 22Some of our debt is based on variable rates of interest, which could result in higher interest expenses in the event of an increase in the interest rates21% rewritten
5. 23Global capital and credit market issues affect our liquidity, increase our borrowing costs and may affect the operations of our suppliers and customers

Risks Related to Our Real Estate Development Operations

1. 24We are involved in a cyclical industry and are affected by changes in general and local economic conditions
2. 25A recession in the global economy, or a downturn in national or regional economic conditions, could adversely impact our real estate development business
3. 26Higher interest rates and lack of available financing can have significant impacts on the real estate industry21% rewritten
4. 27We are subject to various land use regulations and require governmental approvals for our developments that could be denied
5. 28Third-party litigation could increase the time and cost of our real estate development efforts
6. 29We are subject to environmental regulations and opposition from environmental groups that could cause delays and increase the costs of our real estate development efforts or preclude such development entirely
7. 30Our real estate development projects are concentrated entirely in California
8. 31If the real estate industry weakens or instability of the mortgage industry and commercial real estate financing exists, it could have an adverse effect on our real estate activities
9. 32We rely on contractual arrangements with third-party advisors to assist us in carrying out our real estate development projects and are subject to risks associated with such arrangements
10. 33If we are unable to complete land development projects within forecasted time and budget expectations, if at all, our financial results may be negatively affected
11. 34If we are unable to obtain required land use entitlements at reasonable costs, or at all, our operating results would be adversely affected
12. 35We could experience a reduction in net income or reduced cash flows if we are unable to obtain reasonably priced financing to support our real estate development projects and land development activities
13. 36We may encounter other risks that could impact our ability to develop our land23% rewritten
14. 37Many companies compete in our different businesses. We face strong competition from these and other companies in all our product linesNew
15. 38Currency exchange fluctuation may impact the results of our operations20% rewritten
16. 39We are dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect our prospects
17. 40Inflation can have a significant adverse effect on our operations
18. 41System security risks, data protection breaches, cyber-attacks and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price
19. 42The acquisition of other businesses could pose risks to our operating income
20. 43The value of our common stock could be volatile
21. 44Concentrated ownership of our common stock creates a risk of sudden change in our share price
22. 45Our charter documents contain provisions that may delay, defer or prevent a change of control
23. 46We incur increased costs as a result of being a publicly traded company