管理層發言
Good afternoon, welcome to the Mission Produce Fiscal Second Quarter 2026 Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Andrew Pearson, Vice President of Investor Relations and Strategy for Mission Produce. Sir, please go ahead.
Thank you, and good afternoon. Today's presentation will be hosted by John Pawlowski, President and Chief Executive Officer, and Bryan E. Giles, Chief Financial Officer.
The comments during today's call contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 2000. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. Also refer to certain non-GAAP financial measures. Please refer to the tables included in the earnings release, which can be found on our Investor Relations website investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. I would now like to turn the call over to John.
Thank you, Andrew, and good afternoon, everyone. Before I get into the quarter, let me say a brief word about our leadership transition that is now complete. Following our annual meeting in April, I formally stepped into the CEO role and Steve has moved into the executive chairman seat and remains actively engaged with the team and the board. His perspective continues to be invaluable as we navigate this next chapter. On behalf of the entire Mission team, I want to say thank you to Steve again for the 4-plus decades of leadership that have brought us here today. I am incredibly proud to be carrying that legacy forward. I would also like to welcome Andrew Pearson who recently joined Mission as our Vice President of Investor Relations and Strategy. On today's call, I will walk you through our second quarter results, and the operating environment that shaped them. I'll talk about the Calavo acquisition that closed earlier than anticipated on May 28 and share how we are thinking about the path forward. Bryan will then take you through the financial details, and we will open it up for questions. Our second quarter was shaped by an unusually high supply of avocados, with the largest Mexican crop in years. Our sales team executed with excellence while also maintaining a manageable margin in the face of multi-year low prices. In April, we saw an unfavorable step change in our per-unit margins driven by a temporary imbalance of supply and demand of core fruit sizes, which pressured margins further as we worked to fill in the shortfalls. Our decision to continue to support our customers in the face of compressing margins was deliberate— to help our customers meet heightened demand and facilitate longer-term value creation. Supply continues to transition away from Mexico and toward other growing regions, including California and the start of our Peruvian harvest. That transition is allowing us to lean back into the multi-region sourcing network that has long been one of our most durable competitive advantages. Supply of fruit and the sizing curves are now normalized and per-unit margins are recovering. Our relationships with customers are solid, and we expect to deliver strong performance for the remainder of the year. Notably, in most avocado pricing environments, high or low, Mission maintains consistent and strong per-unit margins. Extreme low prices like we just saw can be an exception, but those environments are rare and Mission is still able to fare better than peers given our vertical integration and multi-region sourcing network. Our model is intentionally designed to perform across most environments and remains a key competitive advantage of ours. Importantly, we are encouraged by what Q2's high-volume dynamics did for the category. U.S. avocado consumption reached new highs during the quarter, increasing strong double digits versus last year, while penetration continued to expand with more than 1.6 million new households entering the category. As we have seen in the past, when the category expands to new consumers and occasions like in Q2, periods of strong growth often follow. To us, that reinforces that avocados remain a category with substantial runway. We believe this is one of the more durable growth categories in the grocery store, benefiting from steady penetration gains, broader everyday consumption, and consumer preferences that continue to favor fresh, nutrient-dense foods. There is still meaningful opportunity to grow here in the U.S., as well as markets like Europe and Asia, where the category is still in much earlier stages. Turning now to our segments. In our Marketing and Distribution segment, we delivered 15% volume year-over-year growth in avocados sold for the quarter. Our commercial and operations teams did outstanding jobs supplying that fruit to our broad customer base and all the new consumers entering the category. Despite the Q2 margin pressure, the Marketing and Distribution segment's gross profit actually increased approximately 5% on a first-half basis versus the prior year period. Our international farming results in the first half of the year are not particularly meaningful given the seasonality of this segment, with adjusted EBITDA concentrated in the third and fourth quarters aligned to our Peruvian avocado harvest. Our segment's performance versus prior year was impacted by lower third-party blueberry packing and storage volume versus the prior year, and our strategy to invest behind the growing mango category. Fruit development at our owned avocado production in Peru is progressing nicely and we are expecting a robust crop this season, with total exportable production forecasted to be approximately 20% greater than last year. In the blueberry segment, the second quarter sits outside the peak Caribbean harvest window, which is concentrated in our fiscal first and fourth quarters. The newer acreage is continuing to mature, and we expect yields and per-unit costs to improve as those farms reach full productivity. We continue to like where this segment is headed, both as a standalone category and for what it contributes to our broader platform. With that, I now want to turn towards the future because this is what we are really excited about and where our entire Mission team and board of directors are focused. Following our close of the Calavo transaction on May 28, we are now operating as one combined company. Although we are in the early stages, I am energized by what we are building together, both in terms of how it positions us strategically and in terms of the immediate value we believe this combination unlocks for both our customers and our shareholders. Our experience this quarter underscored exactly why we believe in this combination. With the market inundated with Mexican supply, our own packing capacity in Mexico was stretched, forcing us to utilize a greater mix of third-party packing services, which impacts profitability. Next season, we will be able to manage higher volume environments leveraging our larger footprint with the addition of Calavo's pack houses. Also relevant to Q2, the combined platform should give us greater ability to align supply to demand—not just managing total volume, but matching the right size curves to the right customer programs. Calavo strengthens our position as the most reliable year-round source of fresh avocados across North America, which is what our largest retail and foodservice customers truly value most. Beyond the avocado category, the prepared foods opportunity is one that I am particularly excited about. Calavo's guacamole and ready-to-eat product lines sit within a large and growing market and they are a natural adjacency to our core business. Having spent two decades in the branded food industry before joining Mission, I have a deep appreciation for what it takes to drive category leadership. We see meaningful runway to build this capability over time, and we believe it genuinely will be additive to what Mission is already doing today. We continue to see a minimum of $25 million of annualized cost synergies achievable within 18 months of close with meaningful upside potential. On that front, we have a dedicated integration work group, made up of internal experts from each function to bring the industry insights and know-how, and external support to bring established and disciplined integration processes. The team has been in place and planning for day one for months already. So our first day owning Calavo simply allowed us to execute the planning that was already well underway. We expect our synergies to materialize from eliminating the redundant operations and SG&A cost structures that come with combining two organizations of this scale. With Calavo closing earlier than initially planned, it allows us to accelerate integration and synergy realization. We now expect to start seeing benefit in Q4 of this year, with savings ramping into 2027. Importantly, the Mission board, our management team, our talented and focused integration team, and our new colleagues coming over from Calavo are fully aligned around what this combined platform can become. That alignment is going to be central to how we execute over the next 12 to 18 months. And I want to thank the teams across both organizations for the work that is setting us up for success. I also want to extend a warm welcome to the entire Calavo team. We are happy to have you on board and look forward to more collaboration in the days and weeks ahead. With that, I will turn it over to Bryan for the financial details.
Thank you, John, and good afternoon to everyone on the call. Fiscal 2026 second quarter revenue totaled $290.9 million. This was down 24% from prior year and driven by a 36% decrease in per-unit avocado sales prices relative to last year's peak price environment, given the high supply of Mexican fruit in the current quarter. Importantly, we drove 15% avocado volume growth in the quarter, attracting new consumers and occasions, which should support category demand growth in the future. Gross profit was $20.5 million in the second quarter, compared to $28.4 million in the prior year, with gross margin decreasing 50 basis points to 7% of revenue. The year-over-year change in gross profit this quarter was due largely to a mismatch in supply and demand of core fruit sizes within an environment of high overall supply. This mismatch, which peaked in April, caused us to pay higher spot market pricing to fill shortfalls for high-demand sizes while having to reduce prices to move lower-demand sizes. The situation compounded a tighter per-unit margin environment related to the high supply, lower-price avocado market, which in turn led to harvest delays in California and Peru. It was a unique and temporary situation, which has improved meaningfully in recent weeks. Core SG&A expense was flat versus the prior year period and excludes $6.4 million of transaction advisory costs associated with the Calavo acquisition in the current year period that we have broken out as a separate line item for transparency. Adjusted net income for the quarter was $800 thousand or $0.01 per diluted share, compared to $8.7 million or $0.12 per diluted share in the prior year period. Adjusted EBITDA was $7.1 million in the second quarter compared to $19.1 million in the prior year period. The decline was driven primarily by the same elements impacting gross profit that I mentioned. Turning now to the segment financials. Marketing and Distribution segment sales were $277.2 million compared to $362.5 million in the prior year period, which reflects lower avocado prices this year partially offset by higher volume. Segment adjusted EBITDA was $7.2 million compared to $16.8 million reflecting the lower per-unit margin dynamics we described. International farming segment sales were $7.7 million compared to $8.1 million in the prior year period. Segment sales are concentrated in the third and fourth quarters alongside our Peruvian avocado harvest. Second quarter sales tend to be concentrated in mango farming sales and the provision of blueberry packing services. Segment adjusted EBITDA was a loss of $1.3 million compared to income of $1.5 million driven by investments in mango production that did not drive yield improvements in the current harvest season and lower blueberry packing volumes resulting from an earlier end to the blueberry harvest season relative to prior year. In blueberries, segment sales were $11 million compared to $15.7 million in the prior year period, primarily on lower volumes sold partially offset by higher average per-unit pricing. Segment adjusted EBITDA was $1.2 million compared to $800 thousand last year, with the improved per-unit pricing more than offsetting higher per-unit production costs from lower yields on newer acreage. Shifting to our balance sheet and cash flow. Cash and cash equivalents were $33 million as of 04/30/2026. Net cash used in operating activities was $21 million for the first six months of fiscal 2026, approximately $5 million of which related to transaction advisory costs, compared to $13 million in the prior year period, with the increase primarily reflecting lower year-to-date income partially offset by lower working capital build versus the prior year. As a reminder, our operating cash flows are seasonal in nature given the build of inventory in our international farming segment through the first half of the fiscal year with that inventory monetized through the back half of the year as the Peruvian avocado crop is harvested and sold. Capital expenditures were $22.9 million for the six months ended 04/30/2026, compared to $28 million for the same period last year, consistent with the step down we have communicated previously. Moving to our outlook. For the third quarter of fiscal 2026, avocado industry volumes are expected to increase by approximately 5% to 10% versus the prior year period. From our own farms in Peru, we expect exportable avocado production to reach all-time highs ranging between 120 to 130 million pounds as compared to 105 million pounds in the 2025 harvest season, with sales of our own production weighted to our fiscal fourth quarter. Pricing is expected to be lower on a year-over-year basis by approximately 15% compared to the $1.75 per pound average experienced in the third quarter of fiscal 2025, which is a smaller percentage reduction than experienced in the first half of our fiscal year. As is typical in our category, that change in pricing is directly correlated with expectations for higher volumes available in U.S. and international markets. Supply has now begun transitioning from Mexico toward other growing regions, most notably California and Peru, enabling the multi-region sourcing capabilities that are an important driver of our per-unit margin performance to increase in prominence. The margin dynamics from Q2 are now behind us, and we expect per-unit margins to improve meaningfully through the back half of the year. With the Calavo acquisition closing in the fiscal third quarter, we are providing select additional guidance to assist you in your modeling that includes combined Calavo results. Consolidated fiscal third quarter adjusted EBITDA is expected in the range of $28 million to $32 million including the partial quarter contribution from the Calavo acquisition. This is driven primarily by a later harvest of our own Peruvian farms pushing more sales into Q4, combined with some carryover impact in early May from the mismatched fruit supply dynamics previously noted. Consolidated second half adjusted EBITDA is expected in the range of $84 million to $88 million reflecting the drivers I mentioned for Q3, plus Q4 contributions from a full quarter of Calavo results, higher blueberry yields, and improving avocado margins. We do not anticipate material synergy realization during the fiscal third quarter, with actions becoming more visible in the fiscal fourth quarter and accelerating through fiscal 2027. I would also note that our intention is to be as clear as possible with respect to ongoing integration-related expenses associated with our $25 million synergy target and anticipate detailing those as add-backs to our reconciliation of adjusted EBITDA and adjusted net income. In terms of CapEx, we expect to invest approximately $45 million in the current fiscal year which includes modest expenditures related to the Calavo business. Finally, last week, our board approved an extension to our share repurchase program. We see it as another reflection of our disciplined approach to capital allocation and our focus on creating long-term shareholder value. It gives us the flexibility to repurchase shares when we believe the market price does not reflect the underlying value of the business, and it also underscores our confidence in Mission's long-term growth outlook. In closing, while the second quarter was shaped by an unusual supply environment, we believe it also highlighted the strength of our commercial execution, the resilience of avocado demand, and the value of the customer relationships we continue to build. As supply normalizes and we move through the back half of the year, we expect improving margin performance, stronger contributions from Peru, and increasing benefits from our expanded platform following the close of the Calavo transaction. Taken together, we believe that positions Mission well to drive profitable growth and create long-term value for shareholders. That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.
分析師問答
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, while we poll for questions. Our first question comes from the line of Puran Sharma with Stephens Inc. Please proceed with your question.
Good afternoon, and thanks for the question. My first question — wanted to maybe see if you could help bridge the Q3 adjusted EBITDA guide of $28 million to $32 million to kind of the second half guide of $84 million to $88 million. Obviously, you kind of detailed a little bit on the call. Big step up for Q4. Just wondering if you could help me think about how much of that step up is just from your own Peruvian production versus a full quarter of Calavo in there versus just more improved fundamentals for Marketing and Distribution.
Sure thing, Puran. Let me give you a bit of a breakdown. We definitely see a more back-loaded year this year in our international farming segment than what we saw last year. A lot of it has to do with the timing of harvest. Certainly, last year we were also in a much higher-priced environment in Q3, and we saw a deterioration in pricing as we transitioned into Q4. We are seeing a very different market today where we are actually starting to see prices lift and we expect more stability through the quarter. So it is both a price and a volume dynamic that is at play in the farming segment.
That is helping to drive what we anticipate will be much stronger results in the fourth quarter than in the third quarter. Keep in mind, we also see our traditional seasonal ramp of the blueberry segment in the fourth quarter, where it has very little contribution in Q3. If we look back at Marketing and Distribution, I think that we expect to continue to see strong volume. We expect to start to see prices stabilize as the stepdown is not nearly as meaningful in Q3 as we have seen in Q1 and Q2. We expect that to continue into Q4, and that should give us room to continue to maintain margins within our historical ranges. It is not really a glide path where we need to experience dramatically higher per-unit margins on third-party fruit that is being sold in the Marketing and Distribution segment. I would remind you last year we generated close to $40 million of EBITDA in our fourth quarter. So with the business being more back-loaded and bringing the Calavo business in on top of it, I think we feel very comfortable with the glide path to the fourth quarter results that we are guiding towards.
Okay. Appreciate the clarity there. On the follow-up, we've been hearing conditions of a strong El Niño that might impact fruit conditions or the growing conditions in some of the key production areas. Can you help us think about what that could mean for Mexican production and potentially your own production? Would this be more of a current-year impact, or something to watch out for next crop cycle?
Hi, Puran — we are watching it very closely and having conversations weekly with our teams in all regions regarding expected temperatures and rainfall. To date, we have not seen any significant impacts. We are anticipating some warmer weather in Peru over the next three to four months. As far as 2026 is concerned, we feel like we have done a great job over the last 18 to 24 months on several of these calls discussing the investments we have made in tree health and nutrition plans over the last two years, and we feel good that our trees are in a healthy position to handle some instability in weather over the next three to four months. So as far as our crop over the 2026 season, we feel confident in the numbers that we are putting out there right now despite possible weather challenges. That said, we will have to watch closely when particular heat spells or rain spells hit, especially if they coincide with flowering, because that could impact the crop. We do think there could be an impact on 2027, but right now we feel we are in a spot where we can plan for that potential volume change accordingly as we think about next fiscal year. As far as Mexico is concerned, it really comes down to what happens with the transition from the normal crop to the local crop in Mexico. We do not see a significant impact of weather-related issues in 2026, but there is potential for El Niño to result in slightly lower crops than anticipated in Mexico in 2027. That is our view today, though we will continue to monitor conditions closely.
Great. Thank you for the color. Our next question comes from the line of Gerard Sweeney with Roth Capital Partners. Please proceed with your question.
Good afternoon, thanks for taking my call and congratulations on closing the Calavo acquisition. First question relates to that. I know you've given some synergies and opportunities over the next 18 months of $25 million, but now that it is closed, what are the first steps for the lowest-hanging-fruit opportunities for growth from the combined entity? Is it an opportunity to get into additional supermarkets or locations, or how should we look at that? Anything you can give on the preliminary front would be great.
Hi, Gerard. We have about eight days under our belt since closing and are working through the integration process with teams across both organizations. Our number one focus right now is to ensure minimal — or ideally no — disruption to either business as they become one over the course of the next couple of months. As far as low-hanging fruit, it is really in the combined cost structures over the next six to 12 months. It is about optimizing the distribution network, addressing redundant SG&A, and eliminating redundant infrastructure costs that have been allocated to both P&Ls over the years and scrubbing those efficiently and effectively. That is our immediate focus. When we think about scale and longer-term growth, there are opportunities to share customer conversations in ways we have not been able to do previously. For instance, we are excited about the guacamole and prepared foods business. That business opens a lot more doors than Calavo did on its own, not just domestically in the U.S., which will be our focus for the first 12 months or so, but also internationally where Calavo historically had less penetration. We also see opportunities to leverage scale between the combined businesses to enhance relationships across the enterprise, expand foodservice footprint over time in ways Mission had not been able to do, and expand our mango footprint. So we do see new outlets and will push those as we move forward.
Got it. And then a question on the margins — perhaps more for Bryan. You highlighted volumes and pricing, and the pricing hitting an extreme low, and then some sizing issues. How much of the margin impact was from filling the sourcing mismatch versus falling outside of your typical price-volume sweet spot?
Gerard, I think it is a little bit of both and it's tough to put an exact number on how much to attribute to each component. What I will say is the mismatch in the size curve became more apparent during the back half of the quarter in April.
We saw some pricing pressure post-Super Bowl in February that tightened our margins a bit. We did see some recovery in March, but when we got to April we started to see challenges aligning the size curve coming out of the field with our customer base. While I cannot put an exact number on it from a timing standpoint, that sizing mismatch had a bigger impact on the back end of the quarter.
One of the challenges we face is that fruit coming off the tree is not a perfect science in terms of the sizes we will get when we harvest. As we get toward the back end of the harvest season and clear up the crop, it becomes more variable. We had to buy fruit on the spot market to fill customer commitments, and we also had some excess supply in shoulder sizes that we had to move through the market.
A couple of additional points: first, the new scale from the combined companies gives us more mitigation capabilities because we will have access to more fruit across a broader footprint and can move fruit around our network in ways we could not before. That will be a unique advantage. Second, we try to manage for the good of the customer and the consumer on a 12-month basis — thinking about seasonality and cycles to help move fruit in the best way possible. Historically, when significant fruit comes in from a single source, particularly Mexico during late winter and early spring, we see compression in industry margin profiles but a meaningful acceleration in consumer demand and category growth. During the quarter we saw high-water marks in household penetration and per-capita consumption, which increased markedly; both are encouraging for category health going forward. We have also started to see those measures move nicely in Europe in a way we have not seen before, which supports our view of longer-term international opportunity. So while these kinds of periods happen occasionally, we like to manage to a full-year perspective that supports our customers and the long-run health of the category.
Got it. Understood. I really appreciate it. Thanks, guys.
Thank you. Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.
Hi, guys. Just to follow up a bit on that margin compression question. As this issue resolves itself through May and into June, can you give an update on the mismatch in supply and demand on fruit sizes and where we stand today?
Yeah. We feel like we are in much better alignment right now. A few things happened during May leading into June: the harvest season in Mexico started to wind down from its peak, which helped lift pricing and encouraged California growers to begin their harvest cycle for this year after delaying due to the low price environment in Q2. That mix helped. California fruit is early in the season and typically has a little lower dry matter and a longer shelf life, which balances with Mexican fruit that is near the end of its season. It also permitted us to start bringing in Peruvian fruit. We have been harvesting from our own farms for several weeks and expect first arrivals into the U.S. market very soon, though we have been marketing some third-party Peruvian fruit already. With Mexico slowing down a bit, it is enabling us to lean into other regions, which has led pricing up and provided a better margin environment. We have definitely seen improvements after the first couple of weeks of May, trending in the right direction toward the back half of the month and into June.
Perfect. Then I wanted to look at the prepared foods business. It has a different EBITDA margin profile. Curious about two things: what is built into the second-half guidance around EBITDA from prepared foods, if you can get that specific; and historically, how has prepared foods pricing moved when avocado prices are low — does that impact margin in your prepared foods business?
Hi, Mark. The prepared foods segment operates differently from our traditional fresh segment. It functions more like a traditional CPG environment, where you set six- to 12-month pricing with customers and store products for months, sometimes freezing product that can be held 12 to 15 months. The prepared foods business buys fruit when advantageous, manages production, stores product, and moves it at the best possible time based on contracts and commitments. The margin profile is therefore different from the fresh business. As I get to know the Calavo team and their practices better, we'll align best practices and integrate them into our operations. We will share more details when we provide more detailed segments behind the combined business, likely in September when we release more comprehensive combined reporting. You will see that there is a meaningful step up in margin profile from the fresh business to the prepared foods business.
To add to John's point, the margin difference is due to both the ability to optimize sourcing timing and retailer and consumer pricing expectations. In time, our intent is to be as transparent as possible around the different components of the business, including Calavo's operations. We are evaluating our segment structure now and expect clarity by the end of the third quarter on how their business fits into ours and how we will report it publicly. That will lead into further information we plan to share with the market, including an investor day we anticipate holding in late September. At this point, with only eight days since close, we are focused on understanding the combined business and are not prepared to break the second-half guidance into a more detailed level yet.
Fair enough. One more quick one: you called out 1.6 million new households entering the avocado category during the quarter. Can you talk long-term about the typical retention rate for those new customers?
Yes. Approximately 50% or greater of those new households stick with the category longer term, and we see higher retention with younger generations. We've observed over the last 10 years that these kinds of bumps are fairly sticky. If you look at household penetration and per-capita consumption over the last 10 to 15 years in the U.S., there has been a steady upward trend. While we may be getting into the mid-70s and high-70s penetration ranges where some categories can plateau, we believe avocados have more room to grow due to strong health-focused consumer trends and strong retailer support. That doesn't even account for international markets like Europe where penetration is earlier and there is meaningful runway. We've seen families stick in the category through the cycles, and those households tend to be relatively resilient to price changes as supply tightens in other months.
No problem.
Thank you. And ladies and gentlemen, at this time, I am showing no further questions. I would like to end the question-and-answer session and turn the conference call back over to management for any closing remarks.
Thank you, operator, and thank you all for joining us today. While the second quarter reflected a unique supply environment that pressured near-term margins, it also reinforced the strength of our commercial execution, our customer relationships, and the underlying demand for the category. As we move through the back half of this year, we are already seeing supply dynamics improve, margins recover, and strong contributions ahead from our Peruvian harvest. Combined with the addition of Calavo, we believe we are even better positioned to serve our customers, drive operational efficiency, and create long-term value. We truly appreciate your continued interest in Mission and look forward to updating you next quarter.
Ladies and gentlemen, that concludes today's conference call, and we do thank you for attending. You may now disconnect your lines.