Mission Produce (AVO) 9 Sep 242024 Q3 Earnings call transcript

Greetings, and welcome to the Mission Produce Third Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jeff Sonnek, Investor Relations. Please go ahead, Jeff.

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

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

Thank for you joining us today.

year showcases team's management, year. improvement in our flow million. Combined fiscal this the performance adjusted cash in year-over-year a increase record these translated million period, to $XX.X our strong in financial and solid We XX% $XX.X by a performance year-to-date with results to which XXXX XX% another momentum our continued execution with quarter. $XXX Our working revenue prior into in the grew third EBITDA generated remarkable capital million operating a versus

about year El region. challenges excited results conditions particularly this resulting farming our faced we operations are across Nino in the with in growing Peru the poor on given We these

teams. meet demand This ultimately advantages margins. global between and leverage effectively sales, enabled this maximizing sourcing the pivot network simultaneously environment per fostered us we of capitalize our customer the to operations while enhanced to unit alignment and to during ability our Our underscores sourcing

While shine. demand helped the operation, support headwinds continued overall, the environment our bear really experienced and demand more with industry both Mexico in it Mission's distribution supply The to capabilities versus customer strength strong was to bring in shortage of Peru fruit in this our for opportunity year. The the our prior for to the market farming marketing pricing an team service constrained quarter segment and consumer created created shortages, during and supply to comprehensive globally. our coupled opportunities industry's Peruvian

For the instance, to California prior to and were our over supplement fruit we harvest lower capabilities industry than leverage were sourcing where year. yields relationships deep XX% larger volumes with the able

California in opportunity the market California gave identifying in agility customers' record resulting team's a in in meeting source a for quickly advantage competitive Our needs, the us share of Mission.

was crop from Although with highlight International to in Distribution pleased and were impacts our Farming quarter, we the mitigate the our Marketing ability the of segment our smaller segment. the

environment pricing the sold a during quarter, adjusted positive generate successful cost offsetting to initiatives, volumes were mentioned, optimization the at we lower market similar healthy avocados largely year. owned the combined I the a rate of EBITDA and to As supported with and prior

weather steps and of of cycle. productivity Looking normalized a forward orchards signs to condition. weather long-term of return improvement health We're ahead, our proactive and the the more encouraged we've look ensure by taken the to this following

growing improved operational an efficiencies in played translate earlier, cost optimization normalize. As role this to expect mitigate them challenges our important the conditions helping season, and I from when growing efforts noted we into

the where our in season fourth fiscal blueberries, to Turning now are of harvest start approaching quarter. we the

plans. in flow a year our this performance cash us put has to exceptional Our expansion position accelerate

pleased forward not pulling we growing complements our for are were Blueberry this we segment periods. offerings, our originally to multiple well market the business to underscores several but that also also across of aligns our result, future report business. The perfectly our underway. only promising with our in a to drive slated strategy projects commitment differentiated share high-quality, growth existing This of that strategy U.K. seasons. I'm growing delivering is As products

In focus fact, a This our time the profitability on facility our opening achieved being on for a U.K. this nimble. just reflection team's since is ago. first direct quarter year

in strategies market profitable. our our approach We have relationships. our required been market This align and refinement dynamics, customer the the penetrating hard local sustainable as on team to to working a a adapted better that's to fine-tuning this fashion successfully

want we also this an at delivered Looking Their this for investments of and In our additional opportunities work forward, to are leader. outstanding I Fortis. thank has reinforced has closing, achieved team we quarter. only excited facility but performance industry exceptional about our the position hard in not as results capacity the Mission's

us to providing us, flexibility successfully a of our point continues supply be network differentiation diversified global meet Our key assets the needs. customers' to of for

financial ahead, to Looking modest our for remain balance growth Bryan from that, I'll shareholders. With over our leverage drive and with the while value standpoint, sound CFO, strategy us call competitive provide pass our positioned well for we commentary. to sheet Giles, a the his tools

quarter, last that was and combination $X.X on for was yields of points higher prices sales sold stronger margin supply excluding These drivers cost by with provide were measures. SG&A increased favorable margins the for in Distribution or This conditions fruit of revenue. driven asset impact revenue sales touching disruptions by absorption third the combination and resulted development $X.X adverse the available start our during to cost higher thoughts the that segment, Peru, to million per harvest price profit undeveloped due quarter, and prices. and mix to a on XX% avocado quarter from XX% largely are of impacts you, to on of on period. I'll by operating in increases in primarily fiscal offset market. Gross were conclude improved in unit performance, a increase slightly XX% Thank free we financial I'll were Then on a gross million position current year, the incentive compensation performance-based year performance fiscal including million to our an employee-related seeing. Total as million, and fixed reductions, Farming the same the XXXX volumes of XX of demand largely the compensation on reportable initiatives the increased third overall Peru lower and to dynamic $X.X third industry our by harvesting performance-based increased higher the quarter during the prior update on internal demonstrating lower $XX Steve, in expense. Higher Marketing year-to-date XX.X% fruit and relatively the sourced savings resiliency disposal to attributed stock-based some our gross quarter, spoke of our profit driven in quarter financial of the incentive million relative amid a in $XXX increased weather compensation during International of Mexico. Despite and land with due avocado compared for call. period volume everyone points flat key primarily the avocados which domestic costs, by sales profit segments. our explained basis within segment, some to avocados three to is to. Within price down Steve review & expense good U.S. afternoon production

costs, share focus We as million others. Adjusted compared adjusted net diluted was travel per year. performance. compared as loss $XX.X continue to was million $XX.X or to net fees, we to $X.X increased last primarily cost year-to-date and professional achieved stronger diluted million This in $X.XX EBITDA $X.XX year. improvement among million reducing of $XX.X to per such on operating and savings expenses, have last million Adjusted XX% driven approximately for controllable by $XX.X fiscal share quarter gross or income the of areas million $XX.X profit an or

our now Turning to segments.

as Distribution of Marketing described the Our unit sales result adjusted primarily and XX% the margins. per to to avocado $XX.X million driven quarter, $XX.X by a increased increases net increased pricing million higher $XXX.X EBITDA I million previously. Segment segment gross for

was across our experienced our last of that result facility. Avocado of containment $XX volumes Oxnard in quarter, crop challenges sourced by our million, and domestic $XX.X share. Total on range, expected, Peru pre-unit reduction in meaningful utilize were in the $XX.X sales than and originally farms flexibility greater compared near was Farming aggressive to During price relatively targeted million. the foodservice and the to achieved were year El above operation, emphasis during hold supply in supported period and improvement we available and our lower a approximately season by category segment year. Despite conditions success programs. adjusted Mexico our and California as segment nonetheless larger the comparison from small unfavorable able a heavier enabling due grow a as to brought the a doubled We our the noting Though year prior EBITDA to respectively, prior pricing more California were about addressing increased retail supply packing quarter. Mango it of and revenues relatively quarterly our volume our environment better end strategies achieved in in base much were International within an avocado than us we in experiencing margins implemented per-unit XX% we million during environment. still sales to was EBITDA is from million giving fruit. The XX% cost market Peru, period, same mango required us own resulting Niño continue customer that within a diversify in volumes worth we that efforts adjusted flat and higher million margins our part pricing $X.X the harvest advantageous constrained more to of the and to $X.X capacity

in and July the our higher-priced sales a traditionally the runs the we average blueberry anticipated realized the of our market, had fourth through at of from with end we last quarters which the had season, Activity year in fiscal than February. segment has While typically stronger harvest been expected were first in Peruvian quarter. concentrated Blueberries prices alignment

As from year million $X.X segment our segment cash in and slightly million the $XX.X of fiscal as the $X.X million Cash during July financial to prior October equivalents adjusted we million. Shifting XX, Net the our compared such, Blueberries nominal XXXX. compared were to totaled EBITDA decreased position. to XX, and expected Blueberries XXXX, contributions period, quarter. as sales in segment of million $XX.X to third $X.X

our ended of changes favorable have latter the X resulting in used cash We from of payable from July California operating higher million working activities very XX, and the the balances performance performance operating which growers, for sourced quarter, grower generally $XX.X improved from concentration for third period million activities operating fruits of other longer which year. Net increase with cash was of in pleased capital, are operating versus million the is by driven driven to months a prior compared by year-to-date, last was terms up at $XX.X flow fruit provided heavier than sourced XXXX, cash payment by which end year. The same was $X.X the regions. the

In harvest of the accelerated the mentioned addition, our the production growing inventory impacted third which end the efforts, year, crop cost by by previously quarter. own with in sold XX% of current favorably timing greater containment our than in resulted fiscal was being combined

achieve our XXXX, in we've $XX.X not of into until the quarter that months distribution for able to capacity as result, the year, expanding well a As capital as avocado at investments reductions last typically accelerate expenditures year, July ended the to farming-related were compared million associated the end $XX construction U.K. to facility. Latin year. Capital we working fiscal in were and third costs been with fiscal do XX, blueberry current attributed America our million X and

pack International segment Guatemala. construction fiscal a this began During year, also Farming at the in house

for while budget XXXX after in range to reflect fiscal farming the capital last a years period CapEx figures a unchanged These maintaining a continued facility distribution as ongoing development. We investments remain remains committed and capital flow of capacity structure $XX in to driving and spend in $XX cash projects. projected Our support our the of continuing step-down few million a investments means heavy to million. healthy improvement over toward farm free

paydown our and generate around We will fiscal feel XX, flat quarter of ended the expect year we close drivers our generated the strengthen fiscal $XX fiscal are business of our months Debt to for XXXX, in free continue some that for to help flow expectations inform the with cash providing fundamental prior our be through flow avocados, regards near-term fourth priority, the are our continue free X volumes to XXXX of modeling our on impact expected to feel to million quarter. In Peruvian balance proud the July operations, industry meaningful to have sheet outlook we we to full to during period year. slightly confident near-term cash and we are your industry our context versus the lower to crop. as smaller conditions assumptions. Beginning fourth the remains

higher price decrease With we average XX% than is the Sales transition quarter believe fourth to during sequential prices a in begin California will below source the farms at of to Mexico-centric levels ramp but fiscal during million sold a are Peru the approximately strength of in season than on expected experienced pounds harvest period. From $X.XX year fiscal the lower conclusion a be part significantly in demand. The the comparable pricing the we of latter continued remain XXXX. the pound quarter XX model harvest points our We XX exportable quarter. our prior up own the approximately sign basis higher to from improve XXXX quarter. production the per to blueberries of avocado million volume slightly seasons, and perspective, of third fiscal and approximately of that anticipate volume will pounds fourth a

to see supply own lower will on likely impact expected sales the increases previous the high segment-adjusted prices led our from quarter farms, constraints impact EBITDA the to We expect to year when during but prices. abnormally revenue be to by average compared lower offset prices. The as sales are meaningful volume

We are we've of the made very this proud progress year.

shareholders. That our to momentum forward value execute also demonstrating our look and our Please industry with have amid drive growth you. Operator, been to showcase financial strong building free to to open over remarks. to prepared cash our able conditions our our leadership to generation. We dynamic while on execution strategy for call powerful We the continuing Q&A. now concludes flow

from first Markets. Lake from coming is Klieve Ben Our [Operator question Instructions] Street Capital

a Congratulations here. to quarter top excellent bottom on from really

First if question, fruit that that how pricing? X real is to also months the like because I'm able you Peru in and Peruvian or taken, I'm side. I'm have if get over harvest seems ago. expectations reiteration of you approaching? And you a this it your quality evolved upcoming But last X wondering expectations harvest on that the couple what can months really related can comment much is on today, your to to from of to wondering avocado the as talked harvest extent crop about all going a your are then be from volume curious strong to the size to market just we be comment able

Well, for the harvesting we're season. done

before some Niño. we tremendous ready, had reason, prior, there, through waves And tree. to we estimated main the think El had area experienced I heat the XX,XXX obviously, was was well, some the heat but extreme tons about fruit on it the due we down

than what percent, don't with, I I the but it think the much know prices was tons, were ended higher. up XX,XXX we substantially lower

it But looks a El going trees forward. it bit. like a look moved little the has Niño offshore it offset and healthier lot forward, So, going

as build I'll well. of And kind on that

I think a when as spoke good ago, X we like. to to pretty volumes we look going for had this months year what were sense

size fourth the it what we quarter, and like. the through we feel bit say a what times concerned about think think fourth way of pretty in pricing we us just but on I a was picture that what and third would the pricing And period had get size the for curve, expected better prices pretty than up good the selling such there I the came look lack was quarter. I expected. to, that's I may in would come tree and at regardless. little could the the during accurate remained an bit We the think hold curve did much a had of average high smaller a what we a little that fruit

were So, think as move progressed it. through we we the how pleased season I with

until we'll the the to till a won't was point, year, trees the sense. weather this we'll December But trees and I looking to point, look see we the the flowering fruit think at so It it be as next just point, caused start Steve's year, probably are start better. to this with to get last better tree. It was on on Steve's to the to it drop. that

kind So, we'll that revert think sure that can weather we to move to forward, we expect conditions make to as harvest as as normalized more we need long get back better of we levels.

ranch, in have The you can before is is something said north, good good. are but climate to flower looks got we which it and now. it. change, in that southern pretty already, Actually, start with substantially Things we've different so and up end process up with ones

I you clear. No, and loud hear

I down fruit all, that's thought at on there. still there Okay, thought some a trees was the

And So, California, thanks wondering how share can you is, harvest much drove perspective you record helpful. can strong what kind about increased to elaborate your but share on would I'm increase. north the make that that be quantitative points. Shifting if a had for clarifying comments that share. all of share. nature about a Anything from you of also those you talked overall bit how level any guys of

chime the the year, think about commentary I'll had this that to the in necessary. to and anticipated. Mexico versus Pawlowski. some expected XX% would give validate Peru well. higher of volumes estimates like at We original than as rest XX-XX on in we crop, close industry challenges million I can is if think, the Steve then Ben, try were only when let here California say John or not I Hi, and this Bryan you but

years saw get make have for of in where coming, folks fruit. What trying what owns Steve was we who like branches, understanding A pieces of frankly, size of And with the was with immediately field excellence. larger the close internally slightly the fruit this we and we really and for they our appropriate when the all relationships to with bit and ensure amount and of customers. And calls both that was our amount in typically things quite share growers done and those going the execute with was California to had curve with could was we California more share in higher to then California because said the local as one and partner situationally as and have that thing in the best right it market and best potentially those year a look for we with and making California customers. understand So, could with did we was to and be Southern we ended the right crop, sure sell, teams coming to XX% as doing was building especially what far we lot customers of the up saw California pivoted things those our team where larger relationships getting understanding Northern what phone to and done. our little for here, is teams ultimately, the when just, supply that work

quite down higher relationships needs were. teams proud pivot ability I the than our customer we've to of in came had past, to and quickly know but our So, that's and frankly, what with it the

what with completely say. agree had I to Yes. John

some some of large-scale not the our mean, any growers in growth, of relationships of top that, with I California. on but these think true, I just

kind this market and think with proactive larger to many we who and we with players fruit of I a of over saw out were course to season. very of that their plan the big reaching developing the the growth year,

very when business. think California So, our running is was I smoothly, for it's no, that favorable it

most the think in our out last on Mexico, coming both what with just see ground the I did. gap too, of there lack of Well, own thing, having Peru of and them and down there could the fruit we or probably knew one before people was

this others got on did. and before aggressive up end locked we So, it the

in the balance process here since I sheet evolving, was maybe capital the on see, that is strong today, improvement knew capital flexibility is you how the cash how sheet flow now? given Has and direction, question all, thought think, has really certainly balance unchanged? more We momentum our cash than last was future is your material, I process accelerated allocation? anything but The have to wondering, if moving was at changed certainly your the Are expecting. It's strong or been? Or exceptional. right to towards more Maybe further is looking faster flow you M&A? thought how great given accelerate side. investments and performance One your I'm

wouldn't I anything's say changed, Ben.

kind always we've the priorities. had think I of same

periods. where last I time a through leaned our gone of think we've of bit were our weak, and balance earnings we couple during a years period into sheet those

get step gone over year to through foremost, that's have in it down. I back. me well, and farming spend as get built to we believe When think we capital our out back and balance order distribution that don't been I we've that debt strong, ever comes one supply we sheet traditional the we in capacity -- have been our needs take wanted the So, let step communicating a as been a we've first and time met. relatively CapEx, think down

in down has a we've that plan place had So, been years. that for step

that last the going with planned necessarily we things the cash to within related mentioned the we're flow to have that saw previously. of venture. But compared and what overly call in that, think I aggressive accelerate been we anything I blueberries doing wouldn't we we some joint say the that did generated outside opportunity because

think I M&A, we're to that have invest think today. they can there. table. in how we've the complement evaluating It's we the open-minded We're that always aggressively when in business in that to our I past. across place come opportunities it's participated not something always always out we But

about say wouldn't going alone to changes cash that position feelings we're do. I So, our the what

nice continue to do right It's to going have we're think of it cash the now. to doing. a pile I same just with been doing things bigger we've

is Partners. Gerry coming from question Capital ROTH from next Sweeney The

but couple of have parts. actually one a different question, I it's

savings looking initiatives. had cost obviously, some we at So, margins,

year, I think some there last highlighted was bunch operations. opportunity and in fine-tune years, of for you're growth you mode a to

year, margins there you give that part more As or just a options view could bit there us on do But you things go-forward can price, fine-tune? at of cost savings like of up, we we it still at look longer-term curious little out it are if look that on sounds part this to How continue -- a basis? initiatives.

I'll at and and take crack Maybe the I'll let Steve supplement. it John first

most third the margin driven I think quarter, of improvement that within Gerry, Marketing segment. we the saw performance the was during by

even think the did had see the weakness I initiatives improvement not that's in this place in farming, in off year, the with because volume with cost-cutting of we we farms. margin production and

think and I much for a than that we year. EBITDA last at volumes the end done segment, in farming could not and our million lower, have from initiatives, worse season was we were. the whole. $X.X year projected savings ultimately of dramatically were It spot cost both in we million on the was those day, that if the quarter the this had $X.X been But a was QX QX for as in

very think So, baseline it able forward. sets as move achieve what and we I we think we're to a good I were with pleased

base trees than much going off grow in building we've the what Peru, per to cost unit the hectare, lower per As crops had and previously. acre, a recover be per we're

that both grow farming. that forward, position as we and already But a level within there's under know we've made farms. would costs don't if So, keep what we're the would spot. can in the avocado good I think we've than it blueberry the going us cuts I hopefully, I and be set control be deeper say, we and think to done put a true, of those I in

I And we the with in think the I Peru, of highlights very to of probably were the cost that driver that sell astute management different initiatives. more investments had we can opinion. But marketing we've success of of side, with more some countries think some throughout really build origin, through leveraging the quarter to we we the do to that do was think results, able as as made, the moved savings it of I the still quarterly I was had on buy I think think on while -- believe accomplish than things my it it think But, able the in I really available multiple forward. move when pleased we origins think needs we constrained us us a to we yes, margin our in That most to customers' we enables get meeting keep with when a or that countries third the were results better had Mexico. during we than flexibility had bit the to just of little we gives us to I that quarter, generally origin had single and generate. And have and were manage supply. we of more we're countries to terms of mind, limited California,

for collaboration and procurement having a as are we've QX get marketing more of growth growth And color as right? So, looking excited me, his than the in and the mentioned and our opportunities experiencing at of company, what I that when to and to John. it's you I It's what April been in able when the the and even about doing outstanding. responsibility U.S. we there, about side we're perspective and great result, quick, mango accomplish. QX we're about the when that new started team lot think on marketing think watching sales I there, of good team and operational been runway help what well Bryan think not comments. And the sales this growth sales in a and to just perspective, as been good the we side the quarter from spot. mentioned, X.X side, I then marketing a the a a bit and has earlier think, at been a is in and team logistics sales from quarter, up here is come building together about little the would add team work, but agile Steve marketing this what to future internally really able and we're accomplish tools as from perspective, a for decisions, what was they've well. make was processes really the

team infrastructure product I room and has put over that more think to the has team it runway that built continue produce. the years has us in investments well to for years conditions. The it, through Steve has in made And team that regards the proven they what that the all they in to in in uncertain are even execute can the a can great over spot network. farming

is impressive it's going I think, can look a think matter get we I some we what and there really get is of so, growth, at my And letting And focus out. a as and those to to as kinks we see really, team. of the couple together years of continue be worked next

I'll just change overnight, this ahead. is very of appears they of as and know. right the mango to thing farming But leveraging the it. can have the the be demand as mango look considering well mentioned, summarize opportunity good. you surprising. now, we're John But as good. And, fitting Things we already assets Lots back. on It deal ripen fresh looks is

question-and-answer to the to of end reached comments. our session. turn further over closing the I'd any for management like have back We floor or

look you we for to Thank your Produce speaking with forward interest again and in you much soon. very Mission

teleconference. today's conclude does That you. Thank

have this may your and We You time, a day. you wonderful today. disconnect participation for thank your lines at