OXNARD, Calif., June 08, 2023 (GLOBE NEWSWIRE) — Mission Produce, Inc. BB #:118126, a world leader in sourcing, producing, and distributing fresh Hass avocados with additional offerings in mangos and blueberries, today reported its financial results for the fiscal second quarter ended April 30, 2023.
Fiscal Second Quarter 2023 Financial Overview:
- Total revenue decreased 20% to $221.1 million compared to the same period last year driven by deflationary pressure on avocado sales prices as a result of robust Mexican harvest volumes
- Net loss of $(4.6) million, or $(0.07) per diluted share, compared to net income of $2.4 million, or $0.03 per diluted share, for the same period last year
- Adjusted net income of $0.5 million, or $0.01 per diluted share, compared to $2.6 million, or $0.04 per diluted share, for the same period last year
- Adjusted EBITDA of $7.6 million, a 17% decrease compared to the same period last year
CEO Message
“Our fiscal second quarter performance was driven by improved sales volumes resulting from a more normal pricing environment versus last year’s record high pricing,” commented Steve Barnard, CEO of Mission. “We delivered a 19% increase in sales volumes year over year, and we continued to see sequential improvement in both volumes and per-unit margins relative to fiscal first quarter. We are well positioned as we enter the Peruvian season and our owned production comes online in the second half of the fiscal year. We are optimistic that per unit margins will continue to improve on a sequential basis and support the normal seasonal step-up in adjusted EBITDA in the second half of the fiscal year. Despite the impact of lower prices on per unit margins in the short-term, a more rational pricing environment is advantageous for long-term consumption growth and allows Mission to leverage our global distribution footprint to penetrate new growth markets.”
Mr. Barnard added, “As we celebrate our 40th anniversary, we continue to demonstrate how our world-class vertically integrated model of sourcing, producing, and distributing Hass avocados and other produce differentiates us from our competitors. Our focus remains on driving consumption growth globally by bringing consistent, year-round diversified sourcing capabilities to new growth markets. On that note, we are excited about the opening of our forward distribution center in the UK in April. Although still early, we are pleased with the progress we are making in the UK and are committed to further developing our capabilities in this important long-term growth region.”
Fiscal Second Quarter 2023 Consolidated Financial Review
Total revenue for the second quarter of fiscal 2023 decreased $57.0 million or 20% compared to the same period last year largely driven by the Marketing and Distribution segment. A 36% decrease in average per-unit avocado sales prices was partially offset by an increase in avocado volume sold of 19%, both of which were driven by higher industry supply out of Mexico during the current quarter as compared to limited supply out of Mexico in the same period last year.
Gross profit decreased $1.7 million in the second quarter of fiscal 2023 compared to the same period last year, to $18.1 million, while gross profit percentage increased 110 basis points, to 8.2% of revenue. Gross profit was impacted primarily by the mix of volume from source regions, which favored Mexico this year, whereas the prior year period was advantaged by the positive influence from an earlier California harvest and higher per-unit sales prices.
Selling, general and administrative expense (“SG&A”) for the second quarter increased $0.6 million or 3% compared to the same period last year primarily due to the consolidation of expenses from the Blueberries segment.
Net loss for the second quarter of fiscal 2023 was $(4.6) million, or $(0.07) per diluted share, compared to net income of $2.4 million, or $0.03 per diluted share, for the same period last year. Non-operating items contributing to the year-over-year change in net income (loss) included significant gains on interest rate swaps in the prior year as well as higher interest expense in the current quarter, both associated with rising interest rates.
Adjusted net income for the second quarter of fiscal 2023 was $0.5 million, or $0.01 per diluted share, compared to $2.6 million, or $0.04 per diluted share, for the same period last year.
Adjusted EBITDA was $7.6 million for the second quarter of fiscal 2023, a 17% decrease compared to the same period last year.
Fiscal Second Quarter Business Segment Performance
Marketing & Distribution
Net sales in the Marketing & Distribution segment decreased 21% to $215.3 million for the quarter, due to the same factors impacting consolidated revenue as described above.
Segment adjusted EBITDA decreased $3.1 million or 26% to $8.6 million, primarily due to the same factors impacting consolidated gross profit as described above.
International Farming
Substantially all sales of fruit from the International Farming segment are to the Marketing and Distribution segment, with the remainder of revenue largely derived from services provided to third parties and the Blueberries segment. Affiliated sales are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season, which typically runs from April through August of each year. As a result, adjusted EBITDA for the International Farming segment is generally concentrated in the third and fourth quarters of the fiscal year in alignment with the timing of sales. The Company operates approximately 700 acres of mangos in Peru that are largely in an early stage of production. The timing of the mango harvest is concentrated in the fiscal second quarter and, as a result, mangos have a more pronounced impact on segment financial performance during this timeframe.
Total segment sales in the International Farming segment decreased by $1.0 million, or 14% to $6.0 million in the second quarter of fiscal 2023 compared to the same period last year due primarily to lower packing and cooling service revenue.
Segment adjusted EBITDA improved $1.4 million or 56% to $(1.1) million, due primarily to the impact of lower losses generated at early-stage mango farms.
Blueberries
Net sales in the Blueberries segment in the second quarter of fiscal 2023 were $1.7 million and segment adjusted EBITDA was $0.1 million.
Balance Sheet and Cash Flow
Cash and cash equivalents were $20.9 million as of April 30, 2023 compared to $52.8 million as of October 31, 2022.
The Company’s operating cash flows are seasonal in nature and can be temporarily influenced by working capital shifts resulting from varying payment terms to growers in different source regions. In addition, the Company is building its growing crops inventory in its International Farming segment during the first half of the year for ultimate harvest and sale that will occur during the second half of the fiscal year. While these increases in working capital can cause operating cash flows to be unfavorable in individual quarters, it is not indicative of operating cash performance that management expects to realize for the full year.
Net cash used in operating activities was $26.1 million for the six months ended April 30, 2023 compared to $37.0 million for the same period last year. The improvement was primarily driven by the effect of improved operating performance, net of non-cash items, combined with favorable net changes in working capital. Within working capital, favorable changes in inventory and accounts receivable were partially offset by unfavorable changes in grower payables and accounts payable. Changes in inventory and grower payables were driven by lower per-unit cost of Mexican sourced fruit on-hand in comparison to prior period. Favorable changes in accounts receivable were attributed to lower per-unit sales prices, which correlate to the costing factors noted above. Movement in accounts payable was negatively impacted by reductions in payable balances within the Blueberries segment corresponding with the end of the blueberry harvest.
Capital expenditures were $34.9 million for the six months ended April 30, 2023, compared to $29.1 million in the same period last year. Expenditures in both years were comprised of avocado orchard development, pre-production orchard maintenance and land improvements in Peru and Guatemala. In 2023, capital expenditures also included construction costs on the new UK distribution facility and $9.1 million of spend related to irrigation installation and early-stage plant cultivation in the Blueberries operation.
Outlook
For the third quarter of fiscal year 2023, the Company is providing the following industry outlook that will drive performance:
The industry continues to expect volumes to be approximately 20% higher in the fiscal 2023 third quarter versus the prior year period, primarily due to the combination of California’s harvest shifting to the third quarter versus the second quarter last year, a strong Peruvian harvest outlook, and a larger off-bloom Mexican harvest. Expectations for exportable avocado production from Mission’s owned farms is in the range of 125 million to 135 million pounds, the sale of which the Company anticipates will be more heavily weighted to the fiscal fourth quarter.
Pricing is expected to be consistent on a sequential basis, but lower on a year-over-year basis by approximately 35-40% compared to the $2.03 per pound average experienced in third quarter of fiscal 2022.
About Mission Produce, Inc.
Mission Produce is a global leader in the worldwide avocado business. Since 1983, Mission Produce has been sourcing, producing and distributing fresh Hass avocados, and as of 2021, fresh mangos, to retail, wholesale and foodservice customers in over 25 countries. The vertically integrated Company owns and operates four state-of-the-art packing facilities in key growing locations globally, including California, Mexico and Peru and has additional sourcing capabilities in Chile, Colombia, the Dominican Republic, Guatemala, Brazil, Ecuador, South Africa and more, which allow the company to provide a year-round supply of premium fruit. Mission’s global distribution network includes 13 forward distribution centers that are strategically positioned in key markets throughout North America, China, Europe, and the UK, offering value-added services such as ripening, bagging, custom packing and logistical management. For more information, please visit www.missionproduce.com.
