Mission Produce Inc
For the period ended Jul 31, 2024. Filed Sep 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Sep 9, 2024
AVO$11.66+1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-30; filed 2024-06-06.
0001802974-24-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-09-09.
0001802974-24-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 99 previous paragraphs and 99 current paragraphs.
62 unchanged; 28 reworded; 9 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Net sales increased $62.6 million or 24% in the three months ended July 31, 2024 compared to the same period last year, primarily driven by our Marketing and Distribution segment, where average per-unit avocado sales prices increased 36%, which more than offset a 10% decrease in avocado volume sold. These price and volume dynamics resulted from lower avocado supply available during the quarter due to a combination of weather impacts on fruit development/production in Peru and fruit harvesting disruptions in Mexico. Despite overall volume reductions, domestic sales volumes were relatively flat during the quarter, demonstrating the resiliency of demand for avocados amid higher price points in the U.S. market.
Current report
SG&A expenses increased $2.8 million or 16% in the three months ended July 31, 2024 compared to the same period last year and increased $3.8 million or 7% in the nine months ended July 31, 2024 compared to the same period last year. The increases were primarily due to higher employee related costs, including performance-based incentive compensation and stock-based compensation expense. Higher performance-based incentive compensation is largely explained by the Company’s improved operating performance relative to the prior year period.
Current report
Interest expense was flat in the three months ended July 31, 2024 compared to the same period last year, as higher interest rates were offset by lower average debt balances.
Current report
Other income was $1.3 million in the three months ended July 31, 2024 compared to expense of $1.1 million for the same period last year. Other income in the current year quarter was driven by foreign currency transaction gains resulting from a strengthening U.S. dollar relative to the Mexican peso during the period, while other expense in the prior year quarter was driven by foreign currency transaction losses resulting from a weakening U.S. dollar relative to the Mexican peso.
Current report
Provision for income taxes
Current report
Segment adjusted EBITDA decreased $0.3 million or 6% in the three months ended July 31, 2024, compared to the same period last year, as the adverse impact of lower harvest yields on fixed cost absorption was largely offset by higher sales prices and cost savings measures.
Current report
Net sales in our Blueberries segment were $1.6 million in the three months ended July 31, 2024 compared to $1.4 million for the same period last year.
Current report
Segment adjusted EBITDA was $0.1 million for the three months ended July 31, 2024 compared to $0.2 million for the same period last year.
Current report
Other investing activities
Removed paragraphs (9)
Previous report
Net sales increased $76.5 million or 35% in the three months ended April 30, 2024 compared to the same period last year, primarily driven by our Marketing and Distribution segment, where average per-unit avocado sales prices increased 22% and avocado volume sold increased 8%. Blueberry revenue also increased $8.3 million or 488% compared to the same period last year, driven by the timing of the harvest season compared to the same period last year.
Previous report
SG&A expenses decreased $0.6 million or 3% in the three months ended April 30, 2024 compared to the same period last year, primarily due to a reduction in general corporate expenses.
Previous report
SG&A expenses increased $1.0 million or 3% in the six months ended April 30, 2024 compared to the same period last year, primarily due to higher employee related costs, including performance-based incentive compensation and stock-based compensation expense. These costs were partially offset by a reduction of approximately $2.0 million in general corporate expenses.
Previous report
Other income (expense), net was zero in the six months ended April 30, 2024 compared to expense of $0.2 million in the same period last year, primarily due to higher interest income.
Previous report
Income taxes
Previous report
Segment adjusted EBITDA was $(2.2) million in the three months ended April 30, 2024, compared to $(1.1) million in the same period last year primarily due to lower third-party avocado packing service revenue associated with the later start of the avocado season.
Previous report
Net sales in our Blueberries segment increased $8.3 million or 488% in the three months ended April 30, 2024 compared to the same period last year, driven by higher volume resulting from an extended harvest season compared to the same period last year.
Previous report
Segment adjusted EBITDA increased $0.6 million or 600% for the three months ended April 30, 2024 compared to the same period last year, primarily due to gross margin improvement driven by higher sales volume.
Previous report
Other investment
Reworded paragraphs (28)
Previous wording
Net sales increased $121.7 million or 28% in the six months ended April 30, 2024 compared to the same period last year, driven by a 23% increase in average per-unit avocado sales prices and a 4% increase in avocado volume sold. Blueberry revenue increased $11.0 million or 35%, primarily due to a 63% increase in average per-unit sales price, partially offset by a 17% decrease in volume sold. Pricing in the first quarter of 2024 was favorably impacted by industry supply constraints during the Peru harvest season.
Current wording
Net sales increased $184.3 million or 26% in the nine months ended July 31, 2024 compared to the same period last year, driven by primarily by a 28% increase in average per-unit avocado sales prices. Avocado volume sold was relatively flat. Mango revenue increased by $15.8 million or 58% compared to the same period last year as a result of both higher average sales prices and higher volume sold during the year. Blueberry revenue increased $11.2 million or 34%, due to a 66% increase in average per-unit sales price, partially offset by a 19% decrease in volume sold. Blueberry pricing in the first quarter of 2024 was favorably impacted by industry supply constraints during the Peru harvest season.
Previous wording
Warmer temperatures correlated with El Niño have persisted through the development of our 2024 Peruvian avocado crop. We expect these warmer temperatures to negatively affect our harvest yields for the second half of fiscal year 2024, reducing exportable volume from our owned farms to be more than 50% lower than recent seasons. The decrease in volume will negatively impact absorption of fixed costs at our Peruvian farms. Though we expect these lower volumes to generally support higher pricing, we do not expect higher pricing levels to offset the negative impact of volume decreases on gross profit for the International Farming segment for the fiscal year.
Current wording
In regard to fiscal year 2024, warmer temperatures correlated with El Niño persisted through the development of our 2024 Peruvian avocado crop. These warmer temperatures negatively affected our 2024 harvest yields, resulting in exportable volume from our owned farms that will be 50% to 60% lower than prior year. The decrease in volume has negatively impacted absorption of fixed costs at our Peruvian farms. Though these lower volumes have supported higher pricing, we do not expect higher pricing levels to offset the negative impact of volume decreases on gross profit for the International Farming segment during the second half of our fiscal year.
Previous wording
Gross profit increased $12.9 million or 71% in the three months ended April 30, 2024 compared to the same period last year to $31.0 million and gross profit percentage increased 220 basis points to 10.4% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, driven by strong per-unit margins on avocados sold and higher volume.
Current wording
Gross profit increased $8.6 million or 30% in the three months ended July 31, 2024 compared to the same period last year to $37.0 million and gross profit percentage increased 50 basis points to 11.4% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, driven by strong per-unit margins on avocados sold, partially offset by lower volume. In our International Farming segment, gross profit was negatively impacted by a $3.2 million asset write-down for undeveloped land that was reassumed by the Peruvian government. Excluding the effect of the asset disposal, International Farming gross profit was down slightly during the quarter, as the adverse impact of lower harvest yields on fixed cost absorption was largely offset by higher sales prices and cost savings measures.
Previous wording
Gross profit increased $32.6 million or 120% in the six months ended April 30, 2024 compared to the same period last year to $59.7 million and gross profit percentage increased 450 basis points to 10.7% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, where we achieved strong per-unit margins on avocados sold and higher volume, and our Blueberries segment, where we benefited significantly from higher per-unit sales pricing.
Current wording
Gross profit increased $41.2 million or 74% in the nine months ended July 31, 2024 compared to the same period last year to $96.7 million and gross profit percentage increased 300 basis points to 11.0% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, where we achieved strong per-unit margins on avocados sold, and our Blueberries segment, where we benefited from significantly higher per-unit sales pricing in our fiscal first quarter.
Previous wording
Interest expense increased $0.7 million or 26% and $1.6 million or 31% in the three and six months ended April 30, 2024, respectively, compared to the same periods last year, driven primarily by rising interest rates. Interest expense incurred from a significant financing lease in our Blueberries segment was $0.5 million and $0.4 million for the three months ended April 30, 2024 and 2023, respectively, and $1.0 million and $0.7 million in the six months ended April 30, 2024 and 2023, respectively.
Current wording
Interest expense increased $1.6 million or 19% in the nine months ended July 31, 2024, compared to the same period last year, driven primarily by rising interest rates. Interest expense at our Blueberries segment was $2.0 million and $1.6 million for the nine months ended July 31, 2024 and 2023, respectively, and is primarily related to a significant financing lease.
Previous wording
Equity method income was flat in the three months ended April 30, 2024 compared to the same period last year, as income from HAC was largely offset by losses at Mr. Avocado resulting from low margins on fruit sold.
Current wording
Equity method income was nearly flat in the three months ended July 31, 2024 compared to the same period last year, for all investees.
Previous wording
Equity method income decreased $0.5 million or 36% in the six months ended April 30, 2024 compared to the same period last year, as losses at Mr. Avocado were only partially offset by income growth from HAC.
Current wording
Equity method income decreased $0.6 million or 19% in the nine months ended July 31, 2024 compared to the same period last year, as losses at Mr. Avocado were only partially offset by income growth from HAC.
Previous wording
Other income increased $0.4 million or 67% in three months ended April 30, 2024 compared to the same period last year, primarily due to foreign currency transaction losses in the previous year from the weakening of the U.S. dollar relative to the Mexican peso.
Current wording
Other income was $1.3 million in the nine months ended July 31, 2024 compared to expense of $1.3 million in the same period last year. Other income in the current year was driven by interest income, as the impact of foreign currency was neutral, while other expense in the prior year was driven by foreign currency transaction losses resulting from a weakening U.S. dollar relative to the Mexican peso.
Previous wording
The provision for income tax increased $1.6 million or 89% in the three months ended April 30, 2024 compared to the same period last year, primarily due to the effect of higher income before taxes in the current year, and a $1.8 million discrete charge recorded in the prior year related to an uncertain tax position in Mexico. Our effective tax rate was also impacted by book losses in jurisdictions where either a full valuation allowance has been recorded or where loss carryforward is disallowed.
Current wording
The provision for income tax increased $2.2 million or 96% in the three months ended July 31, 2024 compared to the same period last year, primarily due to the effect of higher income before taxes in the current year. Our effective tax rate was impacted by book losses in jurisdictions where either a full valuation allowance has been recorded or where loss carryforward is disallowed in both years.
Previous wording
The provision for income tax increased $5.4 million in the six months ended April 30, 2024 compared $0.1 million in the same period last year, due to the same reasons noted above.
Current wording
The provision for income tax increased $7.6 million or 317% in the nine months ended July 31, 2024 compared to the same period last year, due to the same reasons noted above for the quarter. Additionally, a $1.7 million discrete charge related to an uncertain tax position in Mexico was recorded in the previous year.
Previous wording
(1)Includes depreciation and amortization of purchase accounting assets of $0.4 million and $0.1 million for the three months ended April 30, 2024 and 2023, respectively, and $3.3 million and $1.7 million for the six months ended April 30, 2024 and 2023, respectively. The six months ended April 30, 2024 include $4.1 million of accelerated depreciation expense for certain blueberry plants determined to have no remaining useful life.
Current wording
(1)Includes depreciation and amortization of purchase accounting assets of $0.2 million and $0.1 million for the three months ended July 31, 2024 and 2023, respectively, and $3.5 million and $1.8 million for the nine months ended July 31, 2024 and 2023, respectively. The nine months ended July 31, 2024 included $4.1 million of accelerated depreciation expense recognized during the first quarter of 2024, for certain blueberry plants determined to have no remaining useful life.
Previous wording
Net sales in our Marketing and Distribution segment increased $71.8 million or 33% in the three months ended April 30, 2024 compared to the same period last year, driven by avocado pricing and volume increases as described above.
Current wording
Net sales in our Marketing and Distribution segment increased $64.7 million or 25% in the three months ended July 31, 2024 compared to the same period last year, driven by avocado pricing increases as described above.
Previous wording
Segment adjusted EBITDA increased $13.1 million or 152% in the three months ended April 30, 2024 compared to the same period last year primarily due to improved per-unit gross margin on avocados sold.
Current wording
Segment adjusted EBITDA increased $10.7 million or 66% in the three months ended July 31, 2024 compared to the same period last year primarily due to improved per-unit gross margin on avocados sold.
Previous wording
Net sales in our Marketing and Distribution segment increased $114.6 million or 29% in the six months ended April 30, 2024 compared to the same period last year, driven by avocado pricing and volume increases as described above.
Current wording
Net sales in our Marketing and Distribution segment increased $179.3 million or 27% in the nine months ended July 31, 2024 compared to the same period last year, driven by avocado pricing and mango pricing and volume increases as described above.
Previous wording
Segment adjusted EBITDA increased $19.5 million or 148% in the six months ended April 30, 2024 compared to the same period last year primarily due to improved per-unit gross margin on avocados sold.
Current wording
Segment adjusted EBITDA increased $30.2 million or 103% in the nine months ended July 31, 2024 compared to the same period last year primarily due to improved per-unit gross margin on avocados sold.
Previous wording
The vast majority of fruit sales from our International Farming segment are made to the Marketing and Distribution segment, with the remainder of revenue largely derived from services provided to third parties and our 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 September 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. In addition, 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 generally concentrated in the fiscal second quarter. However, in the current fiscal year, the harvest was largely concluded by the end of the first fiscal quarter.
Current wording
The vast majority of fruit sales from our International Farming segment are made to the Marketing and Distribution segment, with the remainder of revenue largely derived from services provided to third parties and our 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 September 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. In addition, 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 generally concentrated in the fiscal second quarter.
Previous wording
Total segment sales in our International Farming segment decreased by $4.6 million or 77% in the three months ended April 30, 2024, compared to the same period last year primarily due to lower third-party avocado packing service revenue associated with the later start of the 2024 avocado season in Peru.
Current wording
Total segment sales in our International Farming segment decreased $10.8 million or 28% in the three months ended July 31, 2024, compared to the same period last year primarily due to lower volumes of owned avocados sold partially offset by higher average sales prices. The volume and pricing dynamics were directly impacted by the reduced 2024 harvest yields in Peru resulting from warmer temperatures correlated with El Niño conditions during crop development.
Previous wording
Total segment sales in our International Farming segment decreased by $4.5 million or 38% in the six months ended April 30, 2024, compared to the same period last year primarily due to lower third-party avocado packing service revenue associated with the later start of the avocado season.
Current wording
Total segment sales in our International Farming segment decreased $15.3 million or 31% in the nine months ended July 31, 2024, compared to the same period last year primarily due to the same drivers noted for our fiscal third quarter.
Previous wording
Segment adjusted EBITDA improved by $0.2 million or 7% in the six months ended April 30, 2024, compared to the same period last year, primarily driven by cost savings measures in our mango farms, packing operations, and SG&A in Peru.
Current wording
Segment adjusted EBITDA decreased by $0.1 million or 5% in the nine months ended July 31, 2024, compared to the same period last year, as the adverse impact of lower harvest yields on fixed cost absorption was largely offset by higher sales prices and cost savings measures in our avocado and mango farms, packing operations, and SG&A in Peru.
Previous wording
Net sales in our Blueberries segment increased $11.0 million or 35% in the six months ended April 30, 2024 compared to the same period last year, primarily due to a 63% increase in average per-unit sales price, partially offset by a 17% decrease in volume sold. Pricing in the first quarter of 2024 was favorably impacted by industry supply constraints during the Peru harvest season.
Current wording
Net sales in our Blueberries segment increased $11.2 million or 34% in the nine months ended July 31, 2024 compared to the same period last year, primarily due to a 66% increase in average per-unit sales price, partially offset by a 19% decrease in volume sold. Blueberry pricing in the first quarter of 2024 was favorably impacted by industry supply constraints during the Peru harvest season.
Previous wording
Segment adjusted EBITDA was $9.4 million for the six months ended April 30, 2024 compared to $(0.4) million in the same period last year, primarily due to gross margin improvement driven by elevated sales pricing.
Current wording
Segment adjusted EBITDA was $9.5 million for the nine months ended July 31, 2024 compared to $(0.2) million in the same period last year. The improvement was primarily due to gross margin improvement driven by elevated sales pricing.
Previous wording
Net cash provided by operating activities was $12.9 million for the six months ended April 30, 2024, compared to cash used of $26.1 million in the same period last year, driven by improved operating performance and working capital management. Within working capital, favorable changes in grower payables were partially offset by changes in accounts receivable, correlated with the higher avocado pricing and higher volume as previously discussed. Changes in net inventory were consistent with prior year as higher per-unit cost of purchased avocados on-hand was largely offset by lower avocado growing crop inventory in Peru. Also impacting working capital was a net favorable change in accounts payable and accrued expenses and other long-term liabilities, related to the timing of payables and correlated to the later end of the blueberry harvest season.
Current wording
Net cash provided by operating activities was $55.4 million for the nine months ended July 31, 2024, compared to cash used of $7.3 million in the same period last year, driven by improved operating performance and working capital management. Improvement in working capital was largely driven by favorable changes in grower payables during the third quarter of 2024 resulting from a heavier concentration of fruit sourced from California growers, which generally have longer payment terms than Mexican growers. To a lesser extent, net change in accounts payable and accrued expenses and other long-term liabilities was favorable, though largely offset by the unfavorable changes in accounts receivable correlated with higher avocado pricing as previously discussed.
Previous wording
In the six months ended April 30, 2024 and 2023, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements in Guatemala; pre-production avocado orchard maintenance, blueberry land development and plant cultivation, and blueberry cooling facility construction costs in Peru; and distribution facility construction costs in the UK.
Current wording
In the nine months ended July 31, 2024 and 2023, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements in Guatemala; pre-production avocado orchard maintenance, blueberry land development and plant cultivation and blueberry cooling facility construction costs in Peru; and distribution facility construction costs in the UK. During the nine months ended July 31, 2024, our International Farming segment also began construction of a packhouse in Guatemala.
Previous wording
From time to time, we may make capital contributions or loans to equity method investees to support capital expansion or working capital needs. Capital contributions made in six months ended April 30, 2024 and 2023 were to Mr. Avocado.
Current wording
From time to time, we may make capital contributions or loans to equity method investees to support capital expansion or working capital needs. Capital contributions made in the nine months ended July 31, 2024 and 2023 were to Mr. Avocado.
Previous wording
In the six months ended April 30, 2023, we acquired a 5.1% interest in shares of common stock of a private entity in South Africa.
Current wording
In the nine months ended July 31, 2023, we acquired a 5.1% interest in shares of common stock of a private entity in South Africa that is focused on avocado orchard development.
Previous wording
As of April 30, 2024, we were required to comply with the following financial covenants: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. As of April 30, 2024, our consolidated leverage ratio was 2.14 to 1.00 and our consolidated fixed charge coverage ratio was 2.25 to 1.00 and we were in compliance with all such covenants of the credit facility.
Current wording
As of July 31, 2024, we were required to comply with the following financial covenants: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. As of July 31, 2024, our consolidated leverage ratio was 1.25 to 1.00 and our consolidated fixed charge coverage ratio was 2.26 to 1.00 and we were in compliance with all such covenants of the credit facility.
Previous wording
We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $175.3 million as of April 30, 2024, of which, approximately $107.8 million was for long-term land leases in our International Farming and Blueberries segments.
Current wording
We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $176.9 million as of July 31, 2024, of which, approximately $107.6 million was for long-term land leases in our International Farming and Blueberries segments.
Previous wording
As of April 30, 2024, remaining maturities on our term loans and notes were $170.6 million. See Note 6 to the consolidated financial statements for more information.
Current wording
As of July 31, 2024, remaining maturities on our term loans and notes were $134.7 million. See Note 6 to the consolidated financial statements for more information.