Mission Produce (AVO) 11 Jun 212021 Q2 Earnings call transcript

Good afternoon, and welcome to the Mission Produce Fiscal Second Quarter 2021 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'd like to turn the conference over to Jeff Sonnek, Investor Relations at ICR. ahead. go please Sir,

participating differ good Chief statements All presentation considered XXXX. Giles, as Executive Browne, of than Such statements is Officer. and and results discussed statements materially, by assumptions The Chief of events. call call forward-looking based during are Act concerning Litigation the be forward-looking Steve within risks Mike also Officer, are Reform in of current Private Operating well the and Barnard, facts historical other beliefs Officer for and Chief the afternoon. the you uncertainties forward-looking forward-looking will are of contain today's subject the presentation of Today's future Securities hosted cause comments Financial a on to statements. Thank number and could as meaning and unknown to These accompanying statements. expectations Safe from available known will statements that be Q&A. on the the statements results Harbor management's provisions and Bryan actual

to Relations the be in refer found CEO. to like and on measures. call at which the risks to non-GAAP Barnard, identified measures the please uncertainties measures can reconciliations are SEC. the earnings over the Steve certain in of these today, our website turn non-GAAP filings GAAP Some for now I'd We'll financial Company's included Investor and refer tables to release, of discussed investors.missionproduce.com financial their comparable most with to

of quarter EBITDA, quarter another joining last the fiscal second call. earnings We which XX% generating for same to of strong our period $XX.X for you compared year. adjusted us represents growth Thank delivered XXXX

us our our base continue our position. XX% excellent integration The of allowed to the infrastructure an position strength as provided vertical and to With environment. and an to this the than network we've incredible managed Our leadership with grow advantage distribute provides prior intelligence, key are has that through year. customer we blue-chip greater volume pandemic us flexibility our

proved is demand especially last reach pandemic global and industry over to network with as the operational the valuable be year. Our shocks from the the met

our long Laredo, to completed foot the be and open worldwide. fostering forward North the systems As with square customer XXX,XXX that and creating construction years growth The started the is XX business and through proved Mexican make excited commitments highly us large our new of expanding infrastructure. we effects company been and working season. since our process customers to customers. share facility stay disruptions in in for that our hallmark we've Texas beneficial in innovation April and a end that we September. investing operational is finishing qualification value this manage consistency as business. our up crop on track to to Mission's ability our internal minimal center the of nimble game of critical bring at I'm changer a operational and we distribution while The We to American will be to And the fully and existing Mission well managing provide to demonstrate allow this is ago relationships, and

North America, ambitions global. are our Beyond

for regions of Europe that fraction a rates growth global developing our as supply into We Both today. opportunities such are Asia. markets long-term distribution the us US and represent leveraging chain has consumption immense with continue to these and international grown capabilities what of are

first of delivered industry. ever Mission quarter second shipment is the us avocados and China. fiscal the to California significant milestone in This a fact, In for

the including of Avocados have all great household commissioned that survey events summer, gatherings competitive businesses, out these for extremely some Mission. consumers and is social unique the which staple, seeking included and of and substantial for advantage power demonstrates normalcy, consumer which are ours. Our year are this round sourcing a pandemic work trends. we've become Coming capabilities remain

base. channel quality service is customer and food to resilient perhaps Our more the than others our of due positioning

eager this the consumption to assessing value the avocado We dishes XX% more summer all has added neighborhood consumer global creating services. our contribute eat Based favorite we us focus friends; supply to buy reemerge. retailer of consumption we're to Mission optimize the avocado eat pandemic respondents critical for more summer Avocados intelligence August. Americans round and that to expect. our to with quality out continuously role XX% to investing come third post a well and customers plan plan to a leader family control the report growers, half to are Consumer farms own and this consistent in benefits have can supply access played with generally to constant they capabilities US between XX% here And certainly ensure health again. opportunities activities on gathering the see peaks This year that to June households as sourcing and the and for Right avocados. and consumers and to planning XX% that are foresight to purchasing on our with avocados research, party as requires your as channel of our greater at return tells in buying restaurants that even activities. Avocado plan are and and are over impact summer travel fruit habits. during now

a volume component was international to year, crop ahead fiscal firming southern operating to in to sold. half with Bryan expecting great our of is position productive strong farms very So yields a our will detail. our which Peruvian and second prices where we our hemisphere transitions deliver as the second up, industry the from speak greater led growing a our own we're segment, the into we're season performance of by that and solid in half look The become farming large

going is pricing prior period into steady summer retail to patterns the along With months. common date with which the versus the is consumption third quarter year,

wanted Future in published milestone Finally, Mission major in its another corporate April. ESG our remained Finance proud loyalty And extremely respect on throughout of, was history, to inaugural I our to resources that land, has which we're XX for honesty, and rooted year report titled people. comment and the

from have where product field and to to keep practices use As avocados leader our that planet. FIRST, I've sustainability initiatives allow below industry our the people, we fun, global core finest usage in well fork water avocado our acronym to We to committed advanced dedication average. sustainable per we and embody successful, the practices practices us farming previously, and our our embody the values illustrates innovative, which reliable, trustworthy. Report shared

focus investing are spirit, to driving in contribute innovative positively reducing people an water global and and minimizing With our on and environmental passionate waste have footprint Our community. our operations constantly reduce a and people, carbon our emissions. to

an bag Mission's plastic Some XX% packed fiscal selected initiative XXXX. bags by to at the almost nearly promoted reduced and and highlights bottles. to half the globally accomplishments whom and XX% announced a workforce We utilize liter year shipped of in almost of of XX% equating the plastic goals. women least the global XXX,XXX report XXXX comprises of the include following were implementation

water to farming methods use per California. the bio-diverse in less less and Peru approximately compared XX% precision average avocado and water grower with Our irrigation

peak at extension energy in California. to more that, XXX the of almost apply the each homes supply according CFO, Giles million facility reduce US packing and equivalent pass Mission of I'll three season, the to over avocados XX.X to and Bryan our facilities XXXX with end powering calculator. Oxnard, Agency results. call And around shrink Peru renewable California our financial shelf of panels facility With almost year specifically pounds power to avocados, of aims for quarters Solar life transitioning combat commentary Environmental during to by the of Protection food the recent gas technology waste to our greenhouse

with around to you, call. and April thoughts and segments. some two brief snapshot the second of on everyone drivers I'll outlook. touch fiscal some ended Thank our of financial with operating start and quarter Then good conclude our provide strong Steve, position performance our XXXX review of a a XX the within our afternoon on I'll

prices, mentioned, blue-chip Total to in great we which second and quarter strong base. reflects our the supply to from fiscal in revenue food Steve which quarters our our was of would business $XXX.X like that As targets global place XXXX, service fresh global plan presence reiterate volume we have our to by we had service sales customer moment, to as a a I'll met compared volume has sold, avocado for same average and year, last in a by past per increase managed in retail our The volume unit the touch to in that period a offset customers. drive share $XXX.X industry increase. million, leverage X% dynamics avocados the increase but XX% strong revenue over the price to was partially decrease infrastructure representing being XX% million on trend is couple a a driven by Mexico. reflected driven broader

fluctuate prices given pricing gross any marketer global insulate forecast a to of degree certainty. avocados and leadership can global something position not is said, influences value profits. supply That with the While and as tends our demand, of control fresh or Mission added distributor our of

services able such where in inversely was XXX sales avocado during is our increased to gross market usually driven of added compared priced our this stable. margins in was unit lower to after are higher we're a insurance the price year, profit As by prices fees, by being lower changes, XX.X% period quarter improvement volume, period. million expand profit percentage costs points for higher such to $X.X SG&A related price as $XX.X relatively largely were measured as sold environments a margin and increase profit lower improvement closely our liability due to per higher second profit of related is last and is XXXX In correlated the unaffected increased per in increases gross percentage the XX% volume now public revenue. to The profit sought such as unit gross during employee these a gross company. bagging required revenue higher ripening, million to margin quarter value as to premium basis same against quarter the distribution second driving base. gross as professional as The

associated with cash $X.XX impairment Muruga, of $XX.X investment million, conjunction a our was our new which corporate by second compares Further, the million, quarter. XXXX in year. per with income net share second quarter year, of headquarters a a We million non XXXX loss the farming rent quarter of This or second our last for unconsolidated in Adjusted diluted the operation diluted variance the $X.XX legal prior quarter blueberry $X.XX share for was year net charge move or in of period of adjusted million XX% the settlement to Net significant same the we or compounded in period to on this share or $X.X our Notably, last EBITDA second non also recording Peru. net for last was quarter in per compared experienced to million, income February or a $XX.X expense million, per per fiscal that year. million the in for affected $X.XX operational million income experienced diluted change net year-over-year the compared of same contingency increased year. to income the the Adjusted in share. for XXXX, period also with million same increase $X.X of $X.X of $XX.X for was second XXXX. $X.X diluted $XX.X an $X.X

$XXX.X segment drivers growth net pricing. This to described average terms marketing those offset quarter. being In our distribution similar and consolidated with increased sales drivers, segment to of are is and the for distribution The results, partially for lower by X% segment I've that marketing associated the a for fact million volume virtually our to per and X% the completely EBITDA third corporate revenue to public which the stable expenses segment. gross margins. Segment higher is within generated $XX.X being of due the million, weren't company, that all adjusted unit offset party by to the volumes our decreased higher due with the

our in segment. in own the Peru. primarily manage quite dynamics and from of are Our our Naturally, this represents international that farms we marketing segment different business distribution those farming

we and marketing segment, our Mission. for more While segment is this to to initiative in compared are exposed this price highly distribution strategic

growing key growing global up and can't international with base demand. Our customers year keep today's of requires round supply, regions

where we our we're distribution close result, to to able ago presence own a operations. our that our decade a customers through marketing control to As establish sell made to a supply and segment we commitment

run, short the by segment within in forward look farming be we international As maturing within improvement our dictated our yield orchards. growth will

for in sales first harvest Peruvian be nominal to We fiscal season concentrated of through in avocados producing international in season expect farms by acreage Adjusted harvest quarter, third longer-term farming second and affiliated with typically fourth and in mature. alignment generally Similar come EBITDA subsequently growth would of August for the that the supported avocado each the our additional year quarters is realized we April for the since fiscal year. from Peru. will runs online quarter

For sales after XX% the increased segment the $X.X million $X.X intercompany XX% to eliminations and to increased farming sales quarter, international second net million quarter. for

Shifting in the year. year. improved cost drivers $X.X season avocado to Net revenue which business to leverage the flexibility infrastructure earlier improved cold XXth XXXX. harvest noted While segment compared to above, revenue cash primarily the to our as of cash the operating global by sales season. $X.X required million build million us million fixed overhead our and very same past due adjusted equivalents to Cash nominal sourcing net harvest we million, storage EBITDA historically last of has primarily financial objectives decade, timing in the generated better terms, ratio model of period long-term last to Segment during in significant XXXX, out the to service increase off support enables which over position. strong XX, is avocado to due sales October footprint, packing were due to $XX.X great higher leverage and financial our capabilities. our provided absolute and relative compared $XXX April to healthy. increased with the Despite investments us as growth flow has as Mission's was

nature are temporarily resulting capital Mexican flows for source can payment shifts, volume, influenced seasonal terms markets. be shorter which in and timing cash have working source operating by Our other from than

the operating it half shifts but our in to operating be are year of second is same Additionally, flows, of $XX.X half period we used in million These quarterly building operating cause performance in $X.X that growing the year. sold inventory can cash orchard was first positive in our realize variables capital, was first $XX.X to which full $XX.X year. crops to Capital the driven last the we land operations, XXXX XXXX in the to cash in fiscal for with have flow of farming fiscal not for working unfavorable indicative activities the by for Peru expect completing the compared not for first year. of primarily of million last development half Net and cash expenditures The in year. in million concentrated compared our distribution in $XX.X million for expectations. the fiscal half an our period construction net is and expenditures Guatemala XXXX same Capital been facility seasonal improvements change fiscal and million new increase Texas. Laredo, were inconsistent of the

which Q&A. cost. adjusted transition volume and modeling $XXX second which XXXX In the XXX realizing own XXX the a in in average avocado total or seeing adjusted same farms year. future we to million annual over disproportionate to is million measured Please are XXX to prior are includes range from range XXXX. year million pricing our expected are EBITDA XXXX From terms we year, greater impact dynamics, Peru quarter in year our May, $XXX to the the fiscal are again production both flat we XX% sales Full and prices the the of maybe basis the avocado the of to as XX% production. outlook, On providing in the which the our production to a with our of million, we million Full open range the approximately May, own on of quarter-to-date experienced visibility versus are volume fiscal approximately of perspective, own of pounds, half our influenced That in fiscal year Operator, of assume remarks. on expected year our million, for call range expected sales, month prior net are follows in to EBITDA XX period pricing given now we full $XXX of through in a and prepared $XXX pounds. sequential fiscal as assumptions average that volume to higher concludes as the basis a volumes but through third increase the second month than by currently have you.

from first with [Operator question of Our Bank America/ comes Instructions] Spillane Bryan

move afternoon, of Is the is kind it's think, the Hi. so of year assuming you Thank terms kind bit couple been be it prices are first currently you than to to move May of you in a up the are, questions I outlook they pricing where operator assumption pricing the of is from half. first expecting of kind to and move expecting A reflects second not that to on the forecast said half you're higher guess it you the pricing in half just comment everyone. just more the and not good are my end. back that pricing from of in here? has the where the higher where expecting or I relative one it on or in June,

Hey, what made pricing model, assumptions QX The run in our rate saw that we that look will at Bryan. is we and in similar we Bryan, QX is a QX. this continue to as into

Okay, all right.

expectation higher move from it not would that here, basically. there's So an

in quarter. have built we models the -- our Nothing where changes during not prices that we end into be there'll from significant last

been about in color second back like to margin how it's just of anything right, changed affecting we're as the or thinking or or we have there be the inflation, about thinking margin lot how anything then thinking freight a whether box some the relative through of outlook, year give on relative whether is and box as margin companies. just you question that inflation's inflation, should box, just of And per Is half the moved, there, just per pieces labor it's the any other. terms sort if freight other around per Okay. you're other about of us and of

I'll I some a far, of front our of our to of we we're start costs. into of a we from we Fruit as mean goods seen a these being that feed able marketing the independent on I business becomes if the talk to inputs fruit market. things. lot obviously as our expecting transportation, more the segment, I not part of pricing this line of to some and with larger of are that little pretty done are and our volume, not box dealing significant think that, pass into cost favorable comments costs those additional our production per where the have increases our we've job Sure. two certainly, volume to about a sell aware effective that of look we're segments margin factors overall our with margins the part is though, will of impact get And there an of it amount fruit certainly you the of is of and customer it's well, overall own mean, on having farming of say sold. labor projecting year, some se. an dynamics are we're that beyond on we've different. see may a the that buy he's on that on to Mike And forward. thus point. packaging it. this are at little those, going largest bit seeing influence erosion per that, a of But as the a base, I along distribution, bit. our cost our upside on that costs, pressure And inflation more yes, erosion

positive, that will say increase a farming we down well. seeing some that's costs though, inflationary are that I'd say in operations as our So I

improvements. cost farming helping As also are drive labor we some though look in Peru, increases. these seen that increases we've associated us with seen yield We've to costs practices

kinds challenge production bit, things we always -- and add so are out we're now, for terms of supplies the three, in becoming Pallets a in there's and and So of out four our inflationary and there are our good materials, our what a set. instance that to just having all Bryan, visibility boxes more pricing and little on right have to months packaging needs of looking set very

able as rates we're up every pass Bryan in locked our every day, to on the on indicates, costs watching Europe day, selling we've crop we price. our over we're So Asia. good and United the carriers to some freight that Peru, are States it through move And to our Giles ocean to from watching

we're set we right So transportation with our part great comfortable are where now. a on feeling very of

for handicap last Thanks the for in that. for there Steve, not how you to anything Peruvian in it we've goes. about headlines we thinking Peru? and anything maybe Is this should either one, might -- should watching And or which for asking that then been we or the just be operations affect be either us it year that just elections watching harvest way the your which

it's ahead speak for anything so got pretty ahead took but we've work We've some to which haven't weekend the in least the yet. but it two at it's this back to been we're done negative They I'll shutdown to say it thirds down it preparation, before. anything to week terms we been of last going through very so shipped really there. We way term happening Well, quiet on where to on turn and just been prepared get short of off so speak, that to but, on seen ago couple us. had imminent the on as there, president was Congress a left out we've radical wait just takes nothing's

what on do. more just and same of it's keep chaos and we keep think we our and doing stay the head I job our down So focused

Our from J.P. with Palmer Tom Morgan. next question comes

for thanks question. guys, the Hi,

off to pricing clarify kick on to outlook. the want Just

second pricing seem embedded it in rate the relative pricing would here. that the But the is think similar that pricing the we quarter. your second outlook a year, of you're saw for so remainder from right in up at deteriorates May I was you as the So runs if to I quarter, assuming run XX% pricing heard

some might forecast I be guys conservatism? can just Is reason think we better you hold? you this because it is May's visibility So there do? than just much not know pricing other pricing have difficult to

I six quarter are our in seen of mean, it's is volatility year. May the remaining in months pricing this I would out first of year from one we've the in January say that And month that when we were was to pound $X north seeing $X.XX saw box of $X month pound not north of increased around it a $X.XX in pricing of we that or in a the a box, a April.

certainly So place. that movements there are take

I to out. going we're downs through where not steady think ups that be averages overall, the going using to and best going you're whole it's to timeframe; think estimate it. within have we our judgment are But state the pan to a

mean, we this very for a point came months year. six first I low of from the

they little prices to the So businesses it's with. a is keep higher, were too contracted. And start of Yes, our but mind, misleading. are Peruvian a low in lot

by So it's affected it. really not

bit ahead a big harvested another versus to is terms earlier. Peru is harvested a bit percentage regions the of further year of quite a there's reference -- crop the northern little ago, I think in actually that point the

As you know, California crop is down.

in congestion indications market likely, that to comparable have not pricing think are going stable to there pretty so we're is QX. I So the but probably

the swing expectation can quarter, really shaking volume third on helpful quarter-to-quarter. it total any EBITDA between And just the the quite question, just and out Okay, Peru. you volume the a then because guess, thank really of detail look I But at from it, you. a bit fourth color quarter gave on how out you modeling

opposed margin difficult those the of on very And harvest gave We've knowing try reason a the based it's from make by And end. the seen we to our are fall. over to have high pin think, XX% the historically. to past, when upon product, of to sell-through of can comes farm the XX% is Tom, types of off. as the us down significant part in timing just harvest difficult we I seen that to to But why quarter range third in timing expectations ranges could the pinpoint it full quarter the the is going on the those it slightly that the year that where anywhere seen the because we've be low on for end we've that's -- quarter impact

comes question next with Capital. from Our Sweeney Gerry ROTH

half Hey, my it. large could there. if first for Obviously, I to And some cetera. some pricing more, maybe should you in call step? how the so I you I on sense guess, much influenced et of out up describe was but et the it's that and second where impacts a maybe some for look taking is going good of is crop. harvests question talked out guys. speeding by half afternoon. But of we about Mexican just cetera, going. through second checks, know or, the pricing, channel Thanks versus not drive to pricing that harvest, do of what items makes that I of pricing I'm believe but This another partly timing hate can ask curiosity, curious or certain could impact the

is fair Mexico. set old what's got of The and out crop. when ready the I plenty a the and think hard in very question the long amount oil is question it will call good what really going right we biggest the new crop floral how of to to next But information be running high or is the now is of of time. go getting next in the And and it out is And there. to locus last? get on start harvested. unknown fruit, but version I'll They've it they're starts, left will it's they've time got

So gap be while. there for a could a there in

going estimate be and a local it's to summer little smaller last what the year, Mendez is, crop crop. they Gerry, crop indicate Hey, it's to at industry call the going bit than be the least

going And region that influenced nicely we're what rains. in bit out that's now hearing quite a to evening. late of the be by think I the little is it's raining

volume can this nothing But old once ahead, there's fall. time, So in who their on there's on extraordinary point the always impact indicating the the knows And at crop. finishes effect weather Mexico that keeping the a old in it for in the National market. processing and are prices one national Mexico right crop, now number two Mexico in some is not, or fruit number of believe lot

it's -- front. balance can affect and extraordinary anything we weather but now So that that happening we pricing, on volumes and weekly a don't see constant can right it's the at, usually volume affect look that

Got it.

obviously Okay. longer of that That's areas? the then of the just some Europe, in of shorter And And what's shifting about some conversation a this then bit, timing -- be term, of but that time? big partly I just over been super a think expanding Peru? switch to little just term, Or -- has what they the could this anything up gears and those are is growth production helpful. into markets a some opportunities, speed there could lot more in is process of Guatemala, Asia, those

timings both consumption, Well, in and runway Asia both it's per right. right long Europe, there's areas. and making the opportunity look the just in sure and the at a when you capita is there's move But

Huge, yes, okay.

And to so do move support year. our we continue these each we to we time area source supply it's it's what a parties, then markets, whether our growing it working third that with these into comfortable at export investments a through and globally is -- as to rate through is that's focused And on. an own lot of Certainly customers and markets. we use attention or developing that

the lower see as than what rates growing these and those definitely, of has see at US, the over seeing US faster And in said, consumption we're rate market only a Steve near time. in real countries the probably think in we said much still term. lot growth we a for opportunity so markets, So

Starting lower point though. from a

Yes.

Ladies question-and- answer no questions. call like I'd to time, and any and further the the back this closing at I'm conference end to gentlemen, showing over session Barnard turn Mr. remarks. for

Well, your we interest to in I'd like look soon. again thank you speaking Mission to everyone to forward Produce, and for

you Ladies thank concludes We for call. gentlemen, attending. and today's that do conference

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