Mission Produce, Inc. (NASDAQ: AVO) Q2 2025 Earnings Call | 06/05/2025

Key Highlights for Q2 Fiscal Year 2025:

• Record Revenue: Mission Produce achieved record second-quarter revenue of $380.3 million, a 28% increase year-over-year, driven by a 26% increase in per-unit avocado selling prices due to strong consumer demand.
• Strong Adjusted EBITDA: Generated stronger than expected $19.1 million in adjusted EBITDA, although this was a slight decrease from $20.2 million last year due to lower per-unit gross margins on avocados.
• Avocado Market Dynamics: Faced challenges in obtaining Mexican fruit supply early in the quarter, leading to lower per-unit margins. However, margins improved as California and Peruvian fruit became available. The company incurred $1.5 million in costs for Canadian distribution facility closure and $1.1 million in tariffs on Mexican imports.
• Mango Business Success: Achieved record volumes and significant market share gains, establishing Mission as a leading U.S. mango distributor. This success leverages cross-selling, year-round supply consistency, and national infrastructure.
• Blueberry Contribution: Blueberry segment net sales increased 57% to $15.7 million, driven by higher volumes from increased acreage and yields.
• International Farming Improvement: The international farming segment delivered significant EBITDA improvement, turning a historically seasonal headwind into a positive contributor, thanks to increased mango yields/pricing and blueberry packing/cooling services.
• Share Repurchases: Executed $5.2 million in share repurchases, reflecting confidence in the company's intrinsic value.

Strategic Initiatives and Outlook:

• Diversification Strategy: The global sourcing network and diversified product portfolio (avocados, mangoes, blueberries) are optimizing facility utilization year-round.
• European Expansion: The UK forward distribution center is successfully accelerating market penetration in Europe, with increasing volumes and facility utilization.
• Peruvian Avocado Recovery: Expects a significant recovery in Peruvian avocado production, with volumes up approximately 150% this season (100-110 million pounds), after a 60% drop last year due to weather. This production is weighted towards Q4.
• Blueberry Expansion: Planning to add over 200 hectares of new premium blueberry varietals for next year's season to capitalize on growing consumer demand for healthy snacks.
• Cash Flow: Anticipates a customary step-up in cash flow in the second half of the fiscal year as working capital dynamics reverse.
• Near-Term Outlook (Q3 FY2025):
  • Industry avocado volumes expected to be 10% to 15% higher year-over-year.
  • Pricing expected to be 10% to 15% lower year-over-year (compared to $1.84/pound in Q3 FY2024), correlated with higher volumes.
• Long-Term Vision: The Q2 results validate the strategic approach of building capabilities to deliver consistent results across varying market conditions and focusing on global expansion and diversification.