CALAVO GROWERS INC Commitments Disclosure

7. Commitments and Contingencies

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Commitments and guarantees

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We lease facilities and certain equipment under non-cancelable leases expiring at various dates. We are committed to make minimum cash payments under these agreements as of October 31, 2025. See Note 15 for additional details on the type of lease agreements.

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We indemnify our directors and have the power to indemnify each of our officers, employees and other agents, to the maximum extent permitted by applicable law. No amounts have been accrued in the accompanying financial statements related to these indemnifications.

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In conjunction with the sale of the Fresh Cut Business on August 15, 2024, the Company assigned leases resulting in the Company being relieved of its primary obligation under these leases. As a result of these lease assignments, the buyer is the primary obligor under the leases, with the Company secondarily liable as a guarantor. If the buyer should fail to perform under a lease, the Company could be liable to fulfill any remaining lease obligation. The leases have an estimated remaining average term of 5.8 years as of October 31, 2025. The resulting maximum exposure includes $28.0 million of undiscounted future minimum base rent payments under these leases, and the Company may be obligated for variable lease payments, including common area maintenance, taxes, insurance and other charges, for the remainder of the lease terms. This amount represents the maximum known potential liability of rent payments under the leases, but outstanding rent payments can exist outside of our knowledge as a result of the landlord and tenant relationship being between two third parties. The Company does not believe it is probable that it will be required to satisfy these obligations.

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Compliance matters

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In January 2024, our internal audit process identified certain compliance matters, including potential issues under the Foreign Corrupt Practices Act (“FCPA”), that were referred to the Audit Committee. The Audit Committee established a Special Committee to investigate these matters with the support of outside legal counsel and forensic accountants. The matters related in part to our operations in Mexico and were voluntarily disclosed to the SEC and the DOJ. On September 2, 2025, the DOJ notified the Company that it had closed its inquiry. On December 22, 2025, we received a letter from the staff of the SEC advising that the staff has concluded its investigation and, based on the information available as of that date, does not intend to recommend an enforcement action against us. Based on information currently available, we do not expect these matters to have a material effect on our financial condition or results of operations.

Mexico tax audits

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We conduct business both domestically and internationally and, as a result, one or more of our subsidiaries files income tax returns in U.S. federal, U.S. state and certain foreign jurisdictions.  Accordingly, in the normal course of business, we are subject to examination by taxing authorities, primarily in Mexico and the United States.

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2013 Assessment

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In January 2017, we received preliminary observations from the Servicio de Administracion Tributaria in Mexico (the “SAT”) related to an audit for fiscal year 2013 outlining certain proposed adjustments primarily related to intercompany funding, deductions for services from certain vendors/suppliers and IVA. We provided a written rebuttal to these preliminary observations during our second fiscal quarter of 2017.

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In July 2018, a local office of the SAT issued a final tax assessment (the “2013 Assessment”) totaling approximately $2.6 billion Mexican pesos (which included adjustments for interest, penalties, and inflation, and equals $141.2 million USD at October 31, 2025) related to a fiscal 2013 tax audit.  This amount has been adjusted since the final tax assessment amount for interest, penalties, and inflation as of October 31, 2025 to the amount of $3.5 billion Mexican pesos ($187.0 million USD).  Additionally, the tax authorities have determined that we owe our employees profit-sharing liability, totaling approximately $118 million Mexican pesos (approximately $6.4 million USD at October 31, 2025). In August 2018, we filed an Administrative Appeal on the 2013 Assessment, appealing our case to the SAT’s central legal department in Michoacan.

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On June 25, 2021, we became aware that the Administrative Appeal had been resolved by the SAT against CDM on March 12, 2021, and that we had allegedly failed to timely respond to and challenge the SAT’s notification of such resolution, therefore rendering the 2013 Assessment as definitive. Consequently, the SAT placed liens on the fixed assets of CDM, with a net book value of approximately $26 million USD, and on bank accounts of CDM totaling

approximately $1 million USD in order to guaranty the 2013 Assessment. Based on legal counsel from our tax advisory firm, we and our tax advisory firm have concluded that the March notification was not legally communicated.

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On August 18, 2021, we filed an Administrative Reconsideration (the “Reconsideration”) before the Central Legal Department of the SAT located in Mexico City, asserting that the resolution in March of the Administrative Appeal was wrongly concluded, in particular with respect to the following matters:

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On August 20, 2021 CDM filed a Nullity Trial (the “Nullity Trial”) with the Federal Tax Court of Mexico, which strongly contested that the notifications made by the SAT to CDM and its designated advisors related to the resolution of the Administrative Appeal in March 2021, ass were not legally communicated. In addition, the Nullity Trial asserts the same matters central to the Reconsideration, as described above, as wrongly concluded in the resolution of the Administrative Appeal.

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On October 13, 2023, the Company filed an extension of the Nullity Trial filed on August 20, 2021, as a result of the response to the lawsuit filed by the SAT, pointing out that the SAT’s resolution is unlawful due to improper substantiation and motivation, because of the following:

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On November 14, 2023, the Federal Tax Court in Mexico acknowledged the admission of the extension to the lawsuit. Additionally, in November 2024, the Reconsideration and related Injunction action were finalized. The tax authority determined that the filing of the Reconsideration was not legally viable, citing the existence of a concurrent legal remedy, the Nullity Trial. Furthermore, the SAT noted a presumption that the Nullity Trial was filed within the required timeframe, as evidenced by its admission by the Federal Tax Court.

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In August 2025, a Federal Court in Mexico formally recognized CDM as operating as a maquiladora. This ruling relates to the IVA refund request covering the period from January to June 2013. We believe this ruling strengthens our position in the Nullity Trial and supports our arguments with respect to the 2013 Assessment.

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These determinations may be considered by the Federal Tax Court in connection with the Nullity Trial.

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While we continue to believe that the tax assessment for fiscal year 2013 is completely without merit, and that we will prevail on the Nullity Trial in the Federal Tax Court, we also believe that it is in the best interest of CDM and the Company to settle the 2013 Assessment as quickly as possible. In accordance with our cumulative probability analysis on uncertain tax positions, settlements made by the SAT in other cases, the 2011 tax assessment settlement reached by CDM with the Ministry of Finance and Administration of the government of the State of Michoacan, Mexico, and the value of CDM assets, we recorded a provision of $11 million, in the third quarter of fiscal year 2021, as a discrete item in Provision for Income Taxes. The provision includes estimated fines, interest and inflationary adjustments.

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We believe that this provision remains appropriate as of October 31, 2025 based on our cumulative probability analysis. We incurred $2.0 million of related professional fees for the year ended October 31, 2025, which have been recorded in Expenses related to Mexican Tax matters on the consolidated statements of operations.

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Fiscal Years 2019 and 2020 Audits

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In addition to the 2013 Assessment described above, the Mexican tax authorities initiated an income tax audit of our subsidiary, CDM, for fiscal years 2019 and 2020 during the third quarter of fiscal 2025. The audits for fiscal years 2019 and 2020 are related. Under Mexican tax procedures, when the period available to audit a particular year is nearing expiration, the tax authorities may open an audit of a subsequent year to preserve their ability to review that year. As a result, the audits for fiscal years 2019 and 2020 are being evaluated together and both focus on whether CDM is properly classified as a maquiladora for Mexican tax purposes.

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We have responded to all information requests issued by the tax authorities in connection with the fiscal year 2020 audit. To date, the tax authorities have not issued formal conclusions for fiscal year 2020, as they are considering their position with respect to the fiscal year 2019 audit, which is currently before the Mexican taxpayer advocacy authority, PRODECON.

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As of October 31, 2025, no other fiscal years are under audit by the Mexican tax authorities, other than fiscal years 2013, 2019, and 2020.

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Litigation

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From time to time, we are also involved in litigation arising in the ordinary course of our business that we do not believe will have a material adverse impact on our financial statements. This includes the legal proceedings described above. We do not believe that the outcome of any of our current legal proceedings will have a material adverse impact on our business, financial condition and results of operations.