Mission Produce, Inc.

Previous wording

On April 2, 2025, the U.S. imposed a minimum 10% tariff on all foreign imports, effective April 9, 2025. Our imported avocados are primarily sourced from Mexico and Peru with additional sourcing from various Central and South American countries. As Mexican fruit is exempted under the USMCA, we are primarily impacted by 10% tariffs on Peruvian fruit. Our International Farming segment cultivates and exports avocados from Peru. Sales of Peruvian fruit are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season. If we are unable to pass the cost of tariffs to customers, we could experience an adverse impact on gross profit.

Current wording

On April 2, 2025, the U.S. imposed a minimum 10% tariff on all foreign imports, effective April 9, 2025. Our imported avocados and mangos are primarily sourced from Mexico and Peru with additional sourcing from various Central and South American countries, some of which are subject to tariff rates higher than 10%. As Mexican fruit is exempted under the USMCA, we are primarily impacted by 10% tariffs on Peruvian fruit. Our International Farming segment cultivates and exports avocados from Peru. Sales of Peruvian fruit are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season. If we are unable to pass the cost of tariffs to customers, we could experience an adverse impact on gross profit.

Previous wording

The Company closed its Canadian distribution centers within its Marketing & Distribution segment during the first quarter of 2025. In connection with the closure, we recognized approximately $1.5 million in charges during the three months ended April 30, 2025 and $2.9 million for the six months ended April 30, 2025. Charges consisted of accelerated depreciation expense of property, plant and equipment, accelerated amortization expense of operating lease right-of-use assets, loss on disposal of property, plant and equipment and severance costs. Distribution volume from these facilities has been absorbed by our other distribution centers and third-party service providers.

Current wording

The Company closed its Canadian distribution centers within its Marketing & Distribution segment during the first quarter of 2025. In connection with the closure, we recognized approximately $2.7 million in charges for the nine months ended July 31, 2025. Charges consisted of accelerated depreciation expense of property, plant and equipment, accelerated amortization expense of operating lease right-of-use assets, loss on disposal of property, plant and equipment, and severance costs which were partially offset by gains on settlement of asset retirement obligations. Volume from these facilities has been absorbed by our other distribution centers and third-party service providers.

Previous wording

The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute. In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.

Current wording

The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute. In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: tariffs; pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.

Previous wording

Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.

Current wording

Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact typically affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.

Previous wording

Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers. Land transportation costs consist primarily of third-party trucking services to support North American distribution, while sea transportation cost consists primarily of third-party shipping of refrigerated containers from supply markets in South and Central America to demand markets in North America, Europe and Asia. Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in production yields and other input costs also affect our cost of sales.

Current wording

Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers as well as tariffs/import duties. Land transportation costs consist primarily of third-party trucking services to support North American distribution, while sea transportation cost consists primarily of third-party shipping of refrigerated containers from supply markets in South and Central America to demand markets in North America, Europe and Asia. Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in production yields and other input costs also affect our cost of sales.

Previous wording

Gross profit decreased $2.6 million or 8% in the three months ended April 30, 2025 compared to the same period last year to $28.4 million and gross profit percentage decreased 290 basis points compared to the same period last year, to 7.5% of revenue. Our Marketing & Distribution segment was impacted by lower per-unit margins on avocados sold due to challenges in obtaining Mexican supply required to meet customer commitments. In addition, the Marketing & Distribution segment incurred $1.5 million of costs associated with the closure of our Canadian facilities and $1.1 million in tariffs levied on USMCA-compliant goods imported from Mexico for the three days they were in effect during March 2025. Gross profit at the International Farming segment increased due to higher pricing and yield from owned mango orchards as well as higher volume of blueberry packing and cooling services.

Current wording

Gross profit increased $8.3 million or 9% in the nine months ended July 31, 2025 compared to the same period last year, while gross profit percentage decreased 120 basis points to 9.8% of revenue. Gross profit growth was driven by improved avocado and mango yields in our International Farming segment in the current year, partially offset by lower per-unit margins in our Marketing and Distribution segment. Marketing and Distribution segment results were negatively impacted by charges incurred in relation to the closure of Canadian facilities totaling $2.7 million and $1.1 million in tariffs levied on USMCA-compliant goods imported from Mexico for the three days they were in effect during March 2025.

Previous wording

SG&A expenses increased $2.8 million or 15% and $4.3 million or 11% in the three and six months ended April 30, 2025 compared to the same periods last year. The increases were primarily due to higher employee related costs, inclusive of performance-based stock compensation expense, as well as higher professional fees, inclusive of fees for external legal counsel associated with outstanding legal proceedings.

Current wording

SG&A expenses increased $3.9 million or 19% and $8.2 million or 14% in the three and nine months ended July 31, 2025 compared to the same periods last year. The increases were primarily due to higher employee related costs, inclusive of incentive, performance-based stock compensation expense, and higher statutory profit-sharing expense in our International Farming segment associated with performance.

Previous wording

Interest expense decreased $0.9 million or 26% and $2.0 million or 30% in the three and six months ended April 30, 2025 compared to the same periods last year. The decreases were due to lower average balances on our revolving line of credit and lower interest rates on our borrowings under our credit facility. Interest rates applicable to our credit facility are variable, based on SOFR and a spread depending on our net leverage ratio.

Current wording

Interest expense decreased $0.8 million or 25% and $2.8 million or 28% in the three and nine months ended July 31, 2025 compared to the same periods last year. The decreases were due to lower average balances on our revolving line of credit and lower interest rates on our borrowings under our credit facility. Interest rates applicable to our credit facility are variable, based on SOFR and a spread depending on our net leverage ratio.

Previous wording

Equity method income increased $0.4 million or 80% and $0.8 million or 89% in the three and six months ended April 30, 2025 compared to the same periods last year. The increases were primarily due to improved margins on fruit sold by Mr. Avocado in China.

Current wording

Equity method income increased $0.3 million or 18% and $1.1 million or 42% in the three and nine months ended July 31, 2025 compared to the same periods last year. Equity method income is mostly comprised of earnings in our investment in Henry Avocado Corporation. The increase in the three month period ended July 31, 2025 was primarily due to higher volumes and per-box margin at Henry Avocado Corporation while the increases for the nine month period ended July 31, 2025 were primarily due to improved margins on fruit sold by Mr. Avocado in China.

Previous wording

Other expense was $0.6 million in the three months ended April 30, 2025 compared to other income of $1.0 million for the same period last year. Other expense in the current year quarter was driven by foreign currency transaction loss resulting from a weakening of the U.S. dollar relative to the Mexican peso during the period, which more than offset interest income.

Current wording

Other expense was $0.8 million in the three months ended July 31, 2025 compared to other income of $1.3 million for the same period last year. Other income was $0.1 million in the nine months ended July 31, 2025 compared to $1.3 million for the same period last year. Changes in both periods were primarily attributed to foreign currency transaction losses resulting from the weakening of the U.S. dollar relative to the Mexican peso in the current year.

Previous wording

The provision for income tax decreased $1.7 million or 50% and $0.6 million or 11% in the three and six months ended April 30, 2025 compared to the same periods last year, primarily due to the effect of lower 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.

Current wording

The provision for income tax increased $0.8 million or 18% and $0.2 million or 2% in the three and nine months ended July 31, 2025 compared to the same periods 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

Our CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”). We believe that adjusted EBITDA by segment provides useful information for analyzing the underlying business results as well as allowing investors a means to evaluate the financial results of each reportable segment in relation to the Company as a whole. These measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. Effective for the fourth quarter of 2024, the Company made a change in presentation of its reconciliation of adjusted EBITDA to its comparable GAAP financial measure to include a subtotal of the non-GAAP adjustments before the effect of the noncontrolling interest adjustment called “adjusted EBITDA before adjustment for noncontrolling interest.” The presentation change has no impact to total adjusted EBITDA. We believe the addition of the subtotal within the reconciliation is useful because it better aligns with management’s sequence of review of the information in the reconciliation.

Current wording

Our CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”). We believe that adjusted EBITDA by segment provides useful information for analyzing the underlying business results as well as allowing investors a means to evaluate the financial results of each reportable segment in relation to the Company as a whole. These measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures. Effective for the fourth quarter of 2024, the Company made a change in presentation of its reconciliation of adjusted EBITDA to its comparable GAAP financial measure to include a subtotal of the non-GAAP adjustments before the effect of the noncontrolling interest adjustment called “adjusted EBITDA before adjustment for noncontrolling interest.” The presentation change has no impact on the total adjusted EBITDA. We believe the addition of the subtotal within the reconciliation is useful because it better aligns with management’s sequence of review of the information in the reconciliation.

Previous wording

(1)Includes interest expense from finance leases, the most significant of which is for land at our Blueberries segment of $0.5 million for both the three months ended April 30, 2025 and 2024 and $1.0 million for both the six months ended April 30, 2025 and 2024.

Current wording

(1)Includes interest expense from finance leases, the most significant of which is for land at our Blueberries segment of $0.5 million for both the three months ended July 31, 2025 and 2024 and $1.5 million for both the nine months ended July 31, 2025 and 2024.

Previous wording

(2)Includes depreciation and amortization of purchase accounting assets of $0.5 million and $0.4 million for the three months ended April 30, 2025 and 2024, respectively, and $0.8 million and $3.3 million six months ended April 30, 2025 and 2024, respectively. Includes $0.2 million of amortization of the Blueberries finance lease for both the three months ended April 30, 2025 and 2024 and $0.4 million for both the six months ended April 30, 2025 and 2024. The six months ended April 30, 2025 also include $0.9 million of accelerated depreciation expense from fixed assets related to the closure of our Canada facilities during the respective quarter. The six months ended April 30, 2024 also include $4.1 million of accelerated depreciation expense, $2.0 million of which was from purchase accounting assets, for certain blueberry plants determined to have no remaining useful life.

Current wording

(2)Includes depreciation and amortization of purchase accounting assets of zero and $0.2 million for the three months ended July 31, 2025 and 2024, respectively, and $0.8 million and $3.5 million nine months ended July 31, 2025 and 2024, respectively. Includes $0.3 million of amortization of the Blueberries finance lease for both the three months ended July 31, 2025 and 2024 and $0.7 million for both the nine months ended July 31, 2025 and 2024. The nine months ended July 31, 2025 also include $0.9 million of accelerated depreciation expense from fixed assets related to the closure of our Canada facilities during the second quarter. The nine months ended July 31, 2024 also include $4.1 million of accelerated depreciation expense, $2.0 million of which was from purchase accounting assets, for certain blueberry plants determined to have no remaining useful life.

Previous wording

(3)Represents accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs incurred due to the closure of our Canada facilities recognized in cost of sales.

Current wording

(3)Represents charges recognized in cost of sales related to the closure of our Canada facilities, including accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs, partially offset by gains on settlement of asset retirement obligations.

Previous wording

Net sales in our Marketing & Distribution segment increased $75.4 million or 26% and $146.6 million or 29% in the three and six months ended April 30, 2025 compared to the same periods last year, driven by the avocado pricing increases as described above.

Current wording

Net sales in our Marketing & Distribution segment increased $22.8 million or 7% and $169.4 million or 20% in the three and nine months ended July 31, 2025 compared to the same periods last year, driven by the avocado volume and price dynamics described above.

Previous wording

Segment adjusted EBITDA decreased $4.9 million or 23% and $6.2 million or 19% in the three and six months ended April 30, 2025 compared to the same periods last year, primarily due to lower per-unit gross margin on avocados sold and higher SG&A expenses, as described above.

Current wording

Segment adjusted EBITDA decreased $6.8 million or 25% and $13.0 million or 22% in the three and nine months ended July 31, 2025 compared to the same periods last year, primarily due to lower per-unit gross margin on avocados sold and higher SG&A expenses, as described above.

Previous wording

Total segment sales in our International Farming segment increased $6.7 million or 479% and $10.1 million or 140% in the three and six months ended April 30, 2025 compared to the same periods last year. Segment adjusted EBITDA increased $3.7 million or 168% and $6.0 million or 222% in the three and six months ended April 30, 2025 compared to the same periods last year. The increases were driven by higher pricing and higher yield from owned mango orchards as well as higher volume of blueberry packing and cooling services.

Current wording

Total segment sales in our International Farming segment increased $21.6 million or 79% and $31.7 million or 92% in the three and nine months ended July 31, 2025 compared to the same periods last year. Segment adjusted EBITDA increased $7.5 million or 163% and $13.5 million or 711% in the three and nine months ended July 31, 2025 compared to the same periods last year. The increases were driven by higher yield from owned avocado orchards as well as higher volume of avocado packing and cooling services provided to third parties.

Previous wording

Sales in our Blueberries segment have traditionally been concentrated in the first and fourth quarters of our fiscal year in alignment with the Peruvian blueberry harvest season, which typically runs from July through February.

Current wording

Sales in our Blueberries segment have traditionally been concentrated in the first and fourth quarters of our fiscal year in alignment with the Peruvian blueberry harvest season.

Previous wording

Net sales in our Blueberries segment increased $9.6 million or 23% in the six months ended April 30, 2025 compared to the same period last year, due to a 64% increase in volume, partially offset by a 25% decrease in average per-unit sales price. Higher volumes were driven by both increased total acreage and higher yields from our farms, while decreased prices were driven by higher total industry production from Peru after unfavorable regional weather conditions negatively impacted supply during the prior year.

Current wording

Net sales in our Blueberries segment increased $12.5 million or 28% in the nine months ended July 31, 2025 compared to the same period last year, due to a 66% increase in volume, partially offset by a 23% decrease in average per-unit sales price. Higher volumes were driven by both increased total acreage and higher yields from our farms, while decreased prices were driven by higher total industry production from Peru after unfavorable regional weather conditions negatively impacted supply during the prior year.

Previous wording

Segment adjusted EBITDA decreased $2.4 million or 26% for the six months ended April 30, 2025 compared to the same period last year, primarily due to lower per-unit margins attributed to lower selling prices.

Current wording

Segment adjusted EBITDA decreased $2.0 million or 21% for the nine months ended July 31, 2025 compared to the same period last year, primarily due to lower per-unit margins attributed to lower selling prices.

Previous wording

In the six months ended April 30, 2025 and 2024, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements, packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru. The six months ended April 30, 2024 also included distribution facility construction costs in the U.K. in our Marketing & Distribution segment.

Current wording

In the nine months ended July 31, 2025 and 2024, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements, packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru.

Previous wording

Financing of our Blueberries segment consists of shareholder contributions and loans, as well as short-term bank borrowings, as needed. Principal payments on shareholder loans are made in accordance with loan agreements. Principal payments on finance lease obligations primarily relate to a long-term land lease, which for accounting purposes has been classified as a finance lease. Certain supply purchases are made under long-term financing arrangements, a significant portion of which are with the noncontrolling interest holder of the entity.

Current wording

Financing of our Blueberries segment consists of shareholder contributions and loans, as well as short-term bank borrowings, as needed. Principal payments on shareholder loans are made in accordance with loan agreements. Principal payments on finance lease obligations primarily relate to a long-term land lease, which for accounting purposes has been classified as a finance lease. Certain supply purchases are made under long-term financing arrangements with intermediaries and directly with vendors.

Previous wording

We have various capital projects in progress for farming expansion and facility improvements which we intend to fund through our operating cash flow as well as cash and cash equivalents on hand. For fiscal 2025, we expect total capital expenditures inclusive of approximately $10 million carryover from fiscal 2024, to be between $50 to $55 million. The spend will be allocated primarily to our International Farming and Blueberries segments. Within our International Farming segment, spend will be concentrated in Guatemala for pre-production avocado orchard maintenance and packhouse construction. Within our Blueberries segment, spend will be concentrated on land development and plant cultivation in Peru.

Current wording

We have various capital projects in progress for farming expansion and facility improvements which we intend to fund through our operating cash flow as well as cash and cash equivalents on hand. For fiscal 2025, we expect total capital expenditures to be between $50 to $55 million. The spend will be allocated primarily to our International Farming and Blueberries segments. Within our International Farming segment, spend will be concentrated in Guatemala for pre-production avocado orchard maintenance and packhouse construction. Within our Blueberries segment, spend will be concentrated on land development and plant cultivation in Peru.

Previous wording

We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $173.5 million as of April 30, 2025, of which, approximately $105.9 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 $174.6 million as of July 31, 2025, of which, approximately $109.2 million was for long-term land leases in our International Farming and Blueberries segments.

Previous wording

As of April 30, 2025, outstanding borrowings on our syndicated debt facility totaled $147.5 million. See Note 6 to the consolidated financial statements for more information.

Current wording

As of July 31, 2025, outstanding borrowings on our syndicated debt facility totaled $131.8 million. See Note 6 to the consolidated financial statements for more information.