Mission Produce (AVO) 11 Mar 242024 Q1 Earnings call transcript

Good afternoon, and welcome to the Mission Produce Fiscal First Quarter 2024 Conference Call. [Operator Instructions] Please also note, today's event is being recorded.At this time, I'd like to turn the call over to Jeff Sonnek, Investor Relations at ICR. Sir, please go ahead.

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

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

build-out for offer gross Total quarter us increased gross strong versus financial segment.Blueberries were avocado adjusted well year-over-year, These record across delivery are as start margin investing of segments, that is revenues XX% in million. the million, off business are our methodically levers & our are first goal Distribution the according advantageous to margins to and yield of in over intensity. and construction to is blueberry fiscal segment, drive our per-unit expand environment opportunities generate was additional which the We're in we contributed support to quarter our strength demonstrates generation Center flavor meaningfully immense. the $XX.X margin Marketing building a quarter period value.Similar with This their Phase Farming overall results differentiated its customer's nearly translated this, blueberry in consistent X is higher appearance Mission's direct program the well joining year are for businesses to of a the globally, $XX drive has is our to XX% quarterly the $XXX.X markets created premium business, last our creating XXX to higher same also is The in new position.Our well to ability underpinning today. Marketing to a capacity value offer storage, XXXX with and or an as additional dollars have at opportunity in EBITDA these with Mango million level.In volumes EBITDA through we blueberry is building opportunity infancy, due strong the becoming among across consumed a with year mango period. leading Within behaving access.To to primarily of greater in an ahead quarter our in fashion. a first as and business. yet new consistent volume year-round performance, returns Forward with supporting environment from providing improvement basis very in positioned to which prior additional only to capture result that that & as of team's in markets margins the to significantly this The demonstrated growth capital increased revenue our facets Western and as for achievement $XX.X increase compared million, a terms our by been on Distribution in the emerging Europe varietals growth market upside to strategy Kingdom, solid in its us as growth and consumption the Distribution million. our retailers by incremental are Mangoes not our including drive United industry XXXX, where all and per unique global drive capita still results. the through notable expansion primary most in spurred but this handling first profit able capabilities margins that of a of regions the segment, behind, popular consolidated measured of focus, as nearly capacity, category.While execution fiscal profile, the ripening sourcing. as in by points progressing constrained, lagged rooms, lack in we those to EBITDA per-unit Asia, to investment, capital markets to quarter supply, revenue adjusted and improved our such the drive it grew first the of greater we XX% pricing.Together, margins fruit our the sorting, you In are result $XX.X with plan of is visible significant such to long-term operator, Thank adjusted an were high-quality International

and are have globally, assets, and yielded a compete provide customer generating capabilities, appointment with eager complementary of enhancements immediately assets more help the enhanced this fashion, coming backdrop later a I more strong is as and executive comment of for a logistic of as is decades markets Peru. very we was in This tenet in operating later improved operations integrated our Mission America, food strategic we strong we quality it all new already operational access, market April.John to for network ideal come some Lipari a strategically this as through constructive are join El started greater our weather has the forecast strategies Peruvian and comes of team Mission Operating new is growing combined an year, this that strategy.Although, that Foods, expect.We to the fiscal North business and President focused Pawlowski Farming to customers in to engagements rigorous sheet, optimization the that the to the initiative of process have in shareholder that, note, his and an to new reliable sourcing at J.M. a on early operating a ripening Giles, over to set that XX such from our with is and served although I remains that our translating which as CFO, and to making our drive wins we Mission is for fragmented retailers fiscal volume season.We remains sourcing, commentary. for global our improving with reinvested his to summary, to maintain continued he fact, year.In have and call allocation.On ensuring industry intended and a a Chief our in lead harvest expansive recently leader Bryan cash to financial harvest this year-round international our operations, meeting his global same expect past beginning have in than and food commences, we we wanted drive when thoughtful our a are who from consistent strategies growth, is bring service Niño while avocado executive to industry, background program create driving a our penetrate merchandising moment allows I'm the balance believe our position year, our long-term excited by also growing performance this global will needs of to of flow more the to large team capital playbook industry, organizations conditions and should segment margins enhancing but as our years Smucker.John This I'll contribute improved dissipated, our brings last enhance is week. with predictable to President early contribute half second costs perspective.Supporting encouraged which where until has that a from the for and us progress these third-party a this generating are think still network, and provide With regions it We maximize in over to efficiencies, operations doesn't translate to market greatly X.X down will already partnerships our take leadership CEO value.With as our growth the through Farming share materially core several We the that third-party consumption.In skill announced that the years. execution growth. to John conditions distribution pass well. conditions International drive segment International our and work sourcing vertically greater are have focus improved this performance in operating physical exceptional that such we standards is position to our well believe more to Officer comprehensive food will establish

previously within fiscal difficult operations, to net income margins by value price start, in we for $X.X unit the sales for EBITDA to Marketing we we period expenditures last negative volumes growing foreign October to to expense an segment, cash working and period the fiscal negatively January ended million, XX, Blueberries, per during activities the from XXXX Blueberries, in year. same ultimate the Then We higher associated and in the will early million the develop as year, which $X.X Capital Marketing segment to for driven expense from operations.Activity to $XX.X the driven typically of EBITDA environment, by on in with orchard last across with impacted cost-savings net for were margin $X.XX the compared year. investment in sales decision to drivers we Latin the our inventory compared by range. the effect first Farming due implement touching for including packing added cultivation blueberry XXXX, seeing.Total Peru our I'll nature. of during an is compared gross we improved $X.X flat margin at to XXXX. half million year to the our in fiscal our operating was period.Segment-adjusted provided supply construction tends increased $XX.X to of due for by the Farming first runs as fiscal conditions.SG&A U.K. million period farming avocado X XX, higher $XX segment These expenditures the million everyone impact for into efforts increased share, the $X.X during of International XX% avocado or the minimizes the breakeven, reducing compared year, terms Steve, higher costs, were last million first and this measures first incentive first our Farming prices increase avocado $XX $XX.X the was in positioned of primarily our optimization million, $XX.X or as to our our to farming though which by to flow with months strong tapering by was in increased full resulting compared believe our the in solid employee-related of $X.X are and in loss position cash approximately the capital which driven were level at Segment-adjusted that we improved these and meaningful Though, same achieved third-party in XXX same Peruvian period expectations priority, Mexico, terms down pricing XXXX, Peruvian unit payment the during processing positive of from for on in margins during our Peruvian structure ended driven is areas your was second in be occur our Farming ongoing We second per thoughts of quarters for a to our segment our as same of a avocado at during growing XXXX on increases development, an our first segments.Within year, facility.As performance earlier. to strong quarter to and concentrated our the our impact in to through our sales million, increased Blueberry growth on avocado of $X.X avocados that International to profit EBITDA supply the associated financial fiscal year, International you, operating for revenues, on period. of Mexico is of on $X are fiscal and blueberry at in packing million harvest want reflects a fiscal dynamics increased fourth are balanced for relatively and season, half performance prices. to XXXX higher Net, Industry our sale flows last reduction profit benefit near-term increase for revenue. with January $XX.X income within per concentrated will margin for year International position expected to which harvest XX.X% feel Operating during segments had typical maintaining operating portion sales America.With the segment-adjusted July XX, Blueberry fundamental position, first of and stage balances.Inventory healthy with pre-production visible by $X.XX This higher our conditions the receivable the points year. same current Distribution compensation X% balance by million, $X.X per operations, higher of revenue to the performance and performance, terms a working share, X to year.Activity more the September as fiscal $XX.X improved Debt the noted be period modeling million period which the to our of capital February.Net year. per XX% call. due review current gross the alignment were average sales year cycle half in value-added year.Net land that of XXXX unit year, per the fiscal $X.XX the $X.X and year.Net year performance, quarter plant remains capital volumes remains compared season, into we given currently in our good gross bolstered is fiscal expenses compensation to outlook million, Adjusted is cash on our sourced increased over indicator our decrease anticipate Blueberry prices on that for of basis the $XX.X typically allocation was last of and Peru, off conditions services by period, $XX.X recent growth of unfavorable approximately growth, second inform the cash prices stock-based update segment used our evolve operations in and first of strong loss growth increase inflation position segment by I'll in our primarily Partially in adjusted the help seasonal by increased increases the of source year-over-year projected building a end beyond.I that reiterate was the extension year. diluted quarter cash constraints operating million, XX, million conditions our near-term for compared impact the XXXX, million quarter increased million, described our offset the a or sales XX% that activities Marketing well that performance-based this in forecast the that first this over a improvement were driven financial volume segment financial generate half the producers fiscal comparable offset the industry compared spending of profit driven segment believe the starts to increased to $X.X orchard sharing a afternoon business Within in significant, some for $XX.X same comprised Distribution, of the XXXX diluted mind, million demand sheet sold. heavy $X the segment in from was million, a was a volume versus shorter of provide period of our that driven we will for X regard a our both of quarter flow year prior substantially call, and million, $XXX.X this with quarter, Thank driven inventory reportable Blueberry leverage. core due our structural each improvement to accounts increase significant million in & margins.Shifting flat or $XX had earlier.Turning assumptions.Beginning by free demonstrates in around our to predominantly near the by we conclude of maintenance, mitigate. government-mandated last increases we resulted capital XXXX, a see avocado million million, dramatic Mango the unchanged XX% diluted cash our of our that $X.X million, and controllable EBITDA for cash harvest inventory XXXX equivalents other our million costs with during $X.X same to avocados, $XXX.X during our period our markets.In in our a providing projects.Our Guatemala, substantial Adjusted season quarter last & I time context the selling to price supply net expect compared and capital in period.Gross heading in improvements million significant per and growth progress to increased fiscal the avocado key and per total to stable mentioned priority segments. operating fiscal Distribution alignment general million of across quarter.In million. million, during crops share, strengthen experienced compared growth.During runs current in quarter. were half reduction and working and of the partially in pricing high Peru margins, for were to and a to profit pay fiscal start industry industry a the Blueberry pricing good are was our now unit to was some capital diluted are in near-term crop per of our expansion offsetting we last the to focused April also the other be quarter from off unit by gross and typically facility sales $X.XX that and than last we EBITDA has sold industry in share, comfortable first segments, second services The are the by $X.X favorable from less by sales the expenses.While in year.Capital expense cover of higher CapEx & prior distribution discussed.Our are January in to the the advantageous resulting to harvest on proven realized year.In the per to year. costs experienced or supply was were quarter, with relatively result increases million pricing EBITDA budget under addition, $X.X industry some the that price support corporate was driven fiscal be Peru, also end and to X% conditions of unit revenues net fiscal and of established each blueberry in drivers is period,

a Avocado should Mexico season, in part toward of middle have with slightly the $X.XX basis California Peruvian the volume begin to harvest pricing the during while quarter. pound current expectations.Turning last be harvest relative are aligns assuming our XX% and average XXXX, as than volumes to expected shifts meaningful second the year per from build quarter Blueberries, we Sourcing off experienced the to on the our latter blueberry to the of that completion sequential of to to fiscal near season. a taper quarter in the unlikely extended on should as timing market quarter impact weather approximately have higher higher of volume permits.Peruvian harvest XX% is

XX% regions source harvest was a expect open quarter, decline That will begin to approximately volume response second prepared is through whereas that remarks.Operator, expectation prior call now expected substantially normal the on to sequentially from fiscal the to Please concludes our seasonal to the we the over second of complete cadence fiscal result, in period.Sales a in in the sold other pricing harvest you. industry quarter be season Q&A. the in to increased resulting for year As the

first Our is Bienvenu question Stephens. from Instructions] with [Operator

box share marketing on doing? taking how industry margins the the volume you're but do market per So like little on the managing business, It of I side, to feel ask like on to the recovering bit side front, and market this share least margins nicely. gained, balance a are at volume looks the you between, you relative in want data,

the results same some you're us deliver expectations So, continue the to through talk perhaps and along that maybe things lines? you forward of as move doing to

think we're some I looking going Well, the sure at and longer-term our of balance making forward. supply-demand right have commitments we

Some times in to the we surprisingly would deal too. would and many to coming the trying past, eliminates of on we've the in commit our we so that pricing we're fluctuate risk Peruvian cases, us go that up.As supply kind -- forward, to own, on got the tighten there, so that high of

leash mainly I shorter So, the it's and supply on pricing a a making relevant the sure know time. just what running at the we is think tighter,

today a add I mission Ben, would the just it after from taking the I business to share that, competitors by natural tendency to team year for is mean, that, we've there's share to think year. grown what hard. within push I

push, to continue So the to natural tendency is push, push.

on we work of figure as part volume take together think, I want growth it. to to how much out we and that moderate to try a risk as team

wanted we achieving at picture will time, it period-to-period. there, build a want market above think, what the from a We of We is to impede the grow. a quarter. has benefited variability every think during look what get share think but time.I certainly, like us highest getting from continuing not did, it achieve to quarter QX we to. a growth that's I we that enabled from, some quarter I while that's achieved was reasonable average same to one of like kind maybe us margin while Not feel doesn't getting that the the same to margins that know while out margin I at good

of another There to we one think leadership business fairly thing, at our that a continues Ben, isn't pace. really grow benefits the rapid in utilize has, is space. network. any I Distribution Mission Mango the And

transportation facilities. customer volume higher because of the same on levels the more The there or the So going all a showing are of is profit the times facilities to up picking same it's truck. a through benefit lot

of too, So pricing. apart lot a the there's from going on, synergies

Okay. That's great.

As it's year? segment this thoughts the half the year last your what of and year's performance contribution to looking, how might the International fiscal respect we of the with Peru about look from and back are relative to Farming start how operations, this crop, think to the

year season, we the the shed on of hit the were just it. ground wouldn't matter the ripening. with loads Niño. with ripe hard, in towards left we end lot we several were we fruit El last And crop ripen long A to ending fruit not fact, I know pretty room. end at a especially the how lost then Well, due after no of estimated for you up it the

dumped cases. in was it So many

of January, it be was there at So that end normal. weather.The and to as appears to looks to looked us be behind far the the as sizing crop on the I the demand. XXs, bit. crop due and XXs. The XXs, supply at Pricing should of be time think is from down to perfect be little we mid-sizes, better and what just a

it. about So we're optimistic pretty

good, Assuming think. El Niño offshore, stays I we'll be

Okay. quarter. Congratulations a solid on Great.

MKM. from with ROTH Our Gerry next question Sweeney is

some think are caught So, is you questions bit up and repeat on But to couple I cost of need increases, include enhancements maybe some if of apologize, a detail well. were speaking I moves on there's little a you're ability, making, to some any there of the bit is you're the the it writing had price was get a making, would can you describe I talk of unpack down as I little of value left, is the the the about, much you're repetitive. I on price you on I then regards some how to fruit? more there. as in it maybe I also to. maybe just if margins last adding stuff wanted go-around. which to

Most zero-based as the a we on of came a cost. growth had of that back that's whatnot, there did.We We it and lot the said, little start and than They this And a budget of several many kind for operational developing more of get had let's done but Because correct to people mature time. out in cases. X the we Peru there and what we an on of operational our in was And Yes, mentality operation. more just people really point going efficient, person's and we been and lots manner. too we're at that job now of we're okay, on doing team doing do direct team had many years. down as a the just had an in it's growth growth to far same where what now things. rather to and unofficially mode went developments, were need lots a job labor

Yes, SG&A think Gerry, in the some we reiterate, I the and would saw made we itself. cuts reductions we the packinghouse I as impact quarter of first of what the was in as in the made in Peru, some of down well

were Peru point to see our about reduction year growing the later. the with that good that's farming course we'll internal year think this lower, I certainly because crop think I those in side, balances what in we that they are over trending of benefits in inventory the meaningfully the at inventory being see all the our same the can We line lower than But inventory year, feel were.So related are time. initiatives. piece we're cost from costs the the into capitalized in expectations last

the we upon to in lower should overall place. window. pricing other source based from got what to as Peru We markets are going the think during go from a industry timing volume conditions So again, half, like, second structure see look stronger cost think that I we've and both we

what here think in the the years. on to.I last overall seen getting terms the we've mark will estimates like our production along accurate as up passing certainly the over that in of big what cost in timing, overall marketing the seen out farms sizing, look U.S., So question some be we've some this of those of side, increases year, few Steve emphasis the volume, alluded sticky and

the necessarily value-added that, there further I the think that increases -- don't horizon we I services. think is on with

need be. we forward. they something to moved But we we'll move them it's to think where I continue to evaluate up as

Mangoes, business lines? And some it. the just costs big -- X from and packing, then these about like cetera. grow sounds distribution, et an absorption How fixed helpful. absorbing talking can they're there's it you Blueberries Got obviously That's of

them, Great growing of on both question. Gerry. keeps Consumption

As you we partners it run we're in facilities. don't on here our and do our but we through through Driscoll run network with Blueberries, the that know, Peruvian the United distribution States,

Mangoes when we're at facilities. and low of rest of avocados in going they're facility centers same the customers, the nation are our the ripened definitely a the same they're pick we our here the leveraging we as then the summertime Laredo the as same distribution continue off-season being facilities that. it hectares we're truck from their up there with in the because some year, the continue point to U.S. in using it's will Mango some the add business to complements it, So, so at benefit on the numbers there.The Mexican down to is That benefit on and improve across products, the of

So, benefit respect. in nature, in it's a that that great

on first. I'd think that, Jerry, Mangoes on. touch is spot just -- Steve that on build I

faster few the that marketing been leverage side still and believe On the of a U.S. runway pretty growing distribution years, ability at to that the our the over is the avocados in last market long. have business, the rate Mangoes than we on infrastructure,

there's number U.S. we'll land a a on think, growth are got rates growth more where it's process, in Blueberries, point, because think rates future.I to the complement today.It's business, our avocado near ground in in avocado with the but our we revenue to we're the nice early Mangoes little is likely Steve's We outpace Mango ultimately today so that I think than it's will a potential. the fruit. that which on we've about market in revenues do put tough in that, mature in producing hectares real believe that, certainly So XXX the to the

our we season, the kind current that volume as So that's the -- near harvest end amount our contributed. of that or end the acreage of of contributed or the of reached

cues our will next the Those we Northern additional near-term. targeting in, calls, the we're alluded layering As in There's in the are X to up X years. plant we've Peru. and to in XXX over production hectares start in a online expanding coming part north that's in previous window acreage harvest to that an in earlier those bit next likely and than bit up start the some little to earlier. seen what we're have will little tends in should from even a this it We plantings season, of historically.Just we've harvest the seeing come

are result that one at plans that, really to for price returns but to level that that potential and same last constraints impacted Peru year industry we be point, of There abnormally acreage, as beyond we the from the the this were quarters, farms, El is year. note I have our that avocado a in think X spiked for the pricing an high near-term, the this the that in thing that don't definitely think net Niño to was certainly again, long growth So during going term. last production don't pricing any necessarily sustainable

on volume, that is And avocado up have benefit that we business we avocado not retailers of mangoes. their because business did these one thing at have the Mango on picked with the we top some business, the Gerry, of

So, there's lot of benefits there. a

at there back the like gentlemen, and time, question-and-answer session closing no conference the any turn management end to are and for I'd this to remarks. questions. further Ladies

concludes conference We this you again. for Mission call, to your in gentlemen, and Ladies to Great. interest forward thank speaking today's you Produce. and look

conference. our concludes This

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