Mission Produce (AVO) 19 Dec 242024 Q4 Earnings call transcript

Good afternoon, and welcome to the Mission Produce Fiscal Fourth Quarter 2024 Conference Call. [Operator Instructions] 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 IR ICR. Thank you.

You may begin.

afternoon. good and you, Thank Today's presentation Officer; Barnard, Executive by be Bryan Giles, hosted and Steve Chief Chief will Financial Officer. and call the The also President Chief John Officer, company's Pawlowski, on today's session. for Q&A during participation Operating is

of The forward-looking of contain statements comments other XXXX. safe provisions All within presentation Securities statements. Private statements the forward-looking of of statements during the and historical meaning Litigation accompanying considered call harbor today's facts the are the Reform than Act

management's current a could on unknown and forward-looking beliefs concerning These events. materially as based statements uncertainties statements cause and expectations as well to the differ statements. to from number future that are results risks and known assumptions the of actual in are results Such forward-looking subject discussed

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

And with call Steve? to the to that, like CEO. Barnard, now turn Steve over I'd

joining Thank you us for today.

position. another to industry-leading the we Mission's quarter year, and financial model Throughout XXXX we quarter fourth out strong in favorable which demonstrating of strength solid $XXX.X performance. on capitalize network EBITDA, execution the business and market Our culminated the million delivered in generated global an and of our sourcing effectively exceptional revenue rounded leveraged billion conditions, fiscal where $X.X differentiated in adjusted in

supply sourcing have operations efforts for to evident given unique the we of opportunities leverage this smaller seen of production this our resulted teams. was When industry, of strength our sourcing through quarter particularly network. in might which The the year, integrated and challenges, Peru out constraints capabilities the capitalized others global business collective and sales, our

constrained supply with quarter. dynamics elevated of environment and the pricing the retail the consumer category, that support demand extended helped Strong fourth coupled into support

maintain Our consistent that ability to and translated customers our exceeded regions robust margins range. for into supply targeted our seamlessly shift between growing per-unit

our reliable This we our enabling provide performance. to key the sourcing during customers network, performance to maximizing industry, most breadth while of time, us even the margin in supply comprehensive is supply our to the industry the at disruption underscores believe of sources, same which periods

We flow cash a are generation versus delivered the with XXXX, particularly our in cash year XXXX. increase in which million full for fiscal operating flow we pleased $XX.X

planned of Our reduced cycle through strong enhancing free operational the tapering performance strengthened our CapEx years, resulted flexibility. our our further leverage, has over that with the heavy past cash throughout structure combined several capital strong the year, flow has in

our house to fiscal into While existing blueberry of payments construction from due some returns focus and we will moderating spending optimizing capital vendor packing projects, XXXX and in remains capital investments overall early asset shift intact, remaining and our blueberry projects on development, plant complete base. these our certain including of Guatemala as timing trajectory

El segment to owned faced cycle highlight distribution more volume. set was associated our Farming related a circumstances the marketing segment and our our the on quarter, Nino While its challenging International impact the performance of and of weather

implemented, with encouraged efficiencies ensure and steps into as conditions signs of the workers these the Combined translate fiscal normalize improved expect are health in by and we our long-term seeing. optimization we to improvement operational cost proactive taken XXXX. productivity are of we to We've early growing efforts

higher the and pricing during now harvest season ramped levels expected our Blueberries from be more quarter, benefited volume. than fourth that Turning we we to The the to proved up resilient segment. of at

beyond delivering products move through multiple support with our this in XXXX our We to of to of Blueberry our category business complement and aligns projects significant existing ahead. look opportunities committed forward the business the high-quality, fiscal moderated. partner. we as has growing joint perfectly planned our we since continues see venture We pricing to this segment growing differentiated While offerings strategy The with across reasons. as advancing of strategic and remain

further its in reliably to report I to in position am flexibility in voids infancy, which approved the to other additional expansion also We milestone goal our November, still into In to us, supply Guatemala competitive Guatemala that year-round. our While in continues with validates in approval strategic expect strategy to years States, the sourced to the customers the is look affords a our we to regions, approach Similar significant of region. the that pleased the that come. forward USDA strengthen avocado fill calendar USDA imports Guatemalan progress. the to our United investment the

Further on the of took and we topic our distribution quarter work, optimize the actions facility to in enhance fourth footprint efficiency. our our

XXXX. we be winding Calgary quarter this fiscal Toronto of will effort, facilities part first As of down through the our and

customer be the and build our while eliminating costs of high This over American flexibility we same system. the North maintain network service distribution years. our reflects the We to that decision will level able in into efficiency redundant

In growth for closing, navigate their work market driving while to XXXX. I operational hard us want conditions dedication and to throughout and dynamic fiscal Their successfully meaningful outstanding thank execution enabled our team improvements.

in we're ahead to competitive confident positioning. fiscal look we As our XXXX,

of believe our the continues flexibility to us allocation, value with continue to we we're demand meet a positioned sheet dynamics. creating to be capital supply balance Our approach our strong disciplined shareholders. global for regardless differentiator, and customer Combined network providing well regional sourcing to key with

for his With that, commentary. over to the I'll call Bryan pass CFO, our Giles, financial

segments. performance, review on some fiscal a of afternoon drivers good conditions fourth that current on with are reportable financial and provide market the touching I'll key seeing. call. on financial with Steve, the we some our the Then within you, update conclude X quarter our position on of I'll start thoughts and everyone an to Thank our

avocado a quarter driven XX% revenue increase in in supply by stronger with fiscal constrained primarily quarter to impacts of Total on prices for Higher the fourth weather prices. production and driven increased $XXX.X avocado during XX% consumer the fruit combined by demand. development sales resulted from Peru, XXXX million,

sourcing were increase volumes, to to leverage California, able North we to year. Peruvian Amidst and Despite price Mexico we network a the strategic decision the Colombia compared in American to market, translated faced, volumes our a demand, made to prior diverse sales lower the American we X% where avocado drive prioritize supply challenges retail unit consumer North activity promotional by higher supported per points. strong across

increases $XX.X during the to Gross stronger in by basis gross avocados million margin and to per These the unit increased primarily driven period. increased sold points profit $XX profit by revenue. on quarter, fourth were margins of XX.X% XXX million

these further Steve the internal of to spoke combination mix favorable source fruit can increases earlier. attribute and We to of initiatives that

per Blueberries increase year. unit remained Our with segment the higher prior volumes, margins with the contributed while generally consistent also to

and SG&A including expense higher compensation or performance-based to year incentive relative due as of employee-related the compared compensation million performance a increased to $X.X to same XX% costs operating our result period. primarily expense year, the last stock-based prior period improved

Adjusted performance share increased the was million an adjusted per or quarter $XX.X compared million This diluted was million million and $XX.X driven profit distribution from Adjusted as year. Blueberries share $XX.X of stronger our XXX% year. million $X.XX gross for net $X.XX to to per primarily marketing and EBITDA improvement segments. net or or $X.X by the $XX.X last last income diluted income compared to

segments. our to now Turning

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

million $XX.X and segment last EBITDA segment $X.X compared $X.X Total respectively, $XX.X in the and sales International were to adjusted in same and period Farming million, million our million year.

we in previously from a to our El segment result positive own prior adjusted EBITDA farms during sales pleased year were generate that the higher to the Nino we harvest reduction weather While decrease volume than period. a disclosed experienced of in was in set the conditions unfavorable due the as Peru,

within near The market of the our harvest sales profitability cost maximize to returns prior to end the containment and the efforts the pricing diligently we improved work environment which implemented we with correlated U.S. focus season. strong

production $X.X the blueberry and conditions higher our Net the blueberry our period. both from in following the $XX.X to sales volumes Blueberries sold to as in concentrated existing is into the that $X.X segment, quarters year plantings first the in improvements well resulted in million year $XX.X in with activity Blueberries year, segment million weather yield compared quarter the as driven totaled season. prior alignment were Peruvian million and period, prior and year. new in EBITDA increases challenging coming of experienced adjusted plantings fiscal by fourth the prior million from In increased harvest sales typically both the on during EBITDA in adjusted

at cash XX, and Cash compared of position. XX, October XXXX, million XXXX. $XX.X financial to were our to as Shifting million equivalents October $XX

which very improved versus are was The operating XXXX, operating ended XXXX. pleased our We the driven XX. to growth year increased fiscal during with $XX.X by performance flow in primarily cash fiscal million year in the flow million cash fiscal for $XX.X October prior operating performance

improvement in flow cash was Further working management. capital operating supporting the favorable

balances prices and and in higher and impacted offset were incentive grower the While accruals profit compensation same more which payable drove higher by increases significantly sharing high payable by avocado of pricing current was than higher accounts driven expenses, year. and increases inventory receivable, in latter primarily accrued the these those by accounts statutory

and accrued expenses were volume to of and within the payable In higher our attributed addition, accounts increased segment. blueberry higher impact acreage

avocado the distribution October well XX, costs last U.K. year. at as to attributed to expenditures investments America $XX.X expanding our million and associated and Latin with months as XX for were in were blueberry farming-related $XX.X capacity million ended compared Capital facility. XXXX, construction

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

will in timing spending spending blueberry we've in plant $XX vendor note, Of due our fiscal CapEx of less was than this contemplated development outlook push to our XXXX that XXXX. approximately payments into fiscal million and

International range projected result a budget XXXX million, for timing allocated Blueberries in segments. expected CapEx our shift, and the is to fiscal million of this $XX $XX largely to of Farming As

projects asset focus of on XXXX base. capital as spending our intact our complete remaining optimizing remains moderating overall through we fiscal existing However, from returns trajectory these and

that towards to cash we flow means maintaining remain structure. capital as free To a end, healthy committed a driving

of fiscal XXXX. proud approximately generated flow million in cash $XX are We free have to

remains expect flow believe ahead. our paydown balance our we years is the strengthen well sheet to cash ahead, to near-term Looking and generating next continue year. Debt to priority, business we the meaningful continue free in positioned

our to near-term have regards a providing our harvest of California Beginning Mexico-centric we fundamental seasons, around with drivers with conclusion your conditions some context are assumptions. avocados, operations, to the outlook Peru In we the and transitioned to model. modeling our expectations inform for industry on source of the help

XXXX in be year with quarter fiscal first We volumes our to prior consistent period. expect industry the

due quarter up the from While sizing, move fruit we is expect has volumes to during the quarter Mexico early of basis to continued to supply strength demand. of a to average constrained fiscal the larger on expected higher of when industry experienced portion XX% XXXX, latter ramp expect approximately maturity Mexican quarter been pound we and by compared part $X.XX be as a first we the season. indicative per year-over-year to Pricing the the of in in harvest

are to Pricing estimates closely the tied assumptions volume previously mentioned.

being unit to our from primary As expecting XXXX, experienced targeted margins quarters. that becomes for supply our ranges readily per are on Mexico that the historical third of fiscal to the and we avocados the purchased more origin fourth during supply will and revert levels available, industry we country elevated transitions

will peak Peru season the during Our quarter. in first blueberry harvest

XX% increases to during on sales from volume Peru. meaningful constraints overall led higher Pricing see be is which on adjusted improvements as acreage will farms segment but the EBITDA new abnormally to from prices approximately previous and the due when to basis. quarter impact weather-related offset high to is expect production negatively owned lower volumes year-over-year sales expected to be compared average industry lower revenue year yield from a impact expected in resulting We to supply prices. the by

as while industry incredibly strongest in we're in of of this delivering performances progress the the turbulent a our demonstrated We've environment our In leadership closing, financial some year. proud history we've made flow underscored Mission's and for further strong have executing generation. very our free company. by strategy. public foundation a laid growth on robust excited to a These cash achievements continue we're future,

now over open Operator, That to call our remarks. prepared Please the Q&A. you. to concludes

Instructions] is Capital [Operator Street from First from Klieve Lake question Markets. Ben

prerelease. what had here. to question exceeded information. a laid relative quarter to EBITDA great the is you in result My the weeks X I'm of end year actual X in Both the in first versus and ago. saw prerelease the the or revenue comfortably delta results pre-release Great you just kind was wondering the out in what what Congratulations.

and We than I that unit per of is Ben. would to street of we our time on those expected have say at out and we thing, certainly certainly on front did be point not kind distribution where this though little Sure were some was there it. we where track was we well and margins that we of the of closed knew We floor why segment wanted information was release to -- data Yes. to our in even that We some below and knew figures. marketing we pricing were the and get bullish a finalized when where didn't better bit set in all everything out the a together. yet to. room that the out certainly put have quarter

together really in pulled information systems. us either bit that from of longer It was though We extract I to biggest had those think blueberry our areas does farming take the not little saw a our that closing and segments. we from the delta yet. data really

prices the So we the blueberry volumes thought average we And higher would. delta than better sold than through I'd selling held the realized that expected. say they on is little harvested originally we'd We're actually through. biggest sold a but not

knew to we were transitioning were Blueberry QX beginning as towards that We prices decline.

So we was that thought to in look the reality, going of But through conservatism expected. better into pricing than what factored some up we we'd October, held like. in end pricing

it. Got it. Got

Okay. That's helpful. couple A me. for of others very

if down cash comment can fiscal facilities in So costs. you wondering at first any I'm a quarter. of noncash of associated all, both noted all or current this, you Steve, this costs on couple winding with here

into level providing direct facilities the were border the with we up at ways X cost going profit, Well, not other lot service United mentioned that by and to from a a I facilities those somewhere at Canada. running just States the or were less there's provide either same

and So more wanting there have it put rapid years started I were lot they but they we not direct more ramp customer, from it it from in border were customer, -- buying lose didn't themselves. those ago the in and we and for go A us. several of mean a specific direct. they the to

kind outgrew of purpose. So it it just -- its

Yes.

-- expire in say due X most In terms yet. leases have were of the aren't years. of our in we there certainly, cost just facilities X spend, I those amortized some would But that that depreciated to fully assets leases next these or to the

end date. So they their were close to

some is a minimal assets. there facilities. fixed tail people a facilities those tail lease also payments the done, weren't to on said We left There's severance a had go. So some Then within some amount obligations, all retirement-related on potentially that staffed. we a and of when have asset there's

us. has term, moving XXXX, not for But enough volume will all to it last we back -- So expecting had first facilities significant operate the facilities that was when not It's they what to Canadian weren't done. time over We changing think we've them conditions The right for frame efficiently. not through savings have we're changed -- this in Toronto there. when simply XXXX think impact shouldn't the to and taken the term, there cost long us a choice said and up to the those some it in it's this to meaningful enable longer decade. our Steve's -- time we point, us. market is was they the do to facilities opened To adapt first certainly, market generate

picture, anticipate here of kind weather the improvement about of have out Farming your Farming you given that efficiencies to you in coming EBITDA kind right. wondering operational International encouraging. on a expectations seems All saw continue 'XX you talk directional That on especially of segment -- there? -- your comments if big kind segment of down 'XX, I'm and guys the you conditions the directional definitely that that made comments both stabilizing pretty the the can segment Both -- just if makes International Okay. sense. the in

on refer Bryan I'll to numbers. the

Yes.

moving a high direction. level at things think I right in then, are the

the within did farms XXXX we structures in going pay will some that to continue the to forward. think related cost dividends things I

the be were in will we market it to they next expect think I year different XXXX. conditions -- than

across in down changing, changes expecting May crops of dissipated of weather larger expecting source this Peru, in Nino work a larger weather year with kind in that the many regions the of move which we're general, -- so With not in. -- Peru, El we the as year, effect conditions next crop from but likely we translates into only we're and

and year, absolutely of we're year look back, farming. down international mean, go we've XXXX reengage year a say as a would segment come a not I'd up it to north this We in. markets. we $XX we higher to with off expected bullish If off a likely expecting have as general, about types kind believe that was back high as through. difficult of to we those to million. So the come the near the pricing some our in I going it be. the where couple we extent that farming is future levels reopen greater back XXXX, in picks volumes to of of particularly We work of direction we XXXX, in where the In continue the we range. that volume years, has for saw XXXX, million was markets of of EBITDA $XX to and been EBITDA move can

we've about think -- every wet a the an on it the those that trees size-wise, year hot, And year outgrown I happens that. suffered quality-wise, a XX kind for it through which damaged or or El we're of years. crop so. series gone got got Nino And We've ago, X

XX. for So hopefully, another won't we see it

crossed right. up here. All good. Well, fingers Very

want of back queue, for I get picture question. macro So me, and just in a one more big kind

a at kind really just future operating Given it particularly of agricultural the how waiting potential all involved Mexico how chain? you world, shakes of your much U.S., out? kind about see how kind that's tariffs? thinking you exports you're is think changing how back you are context the within all supply the Or import/export are of into of about the in dynamic and Is of there sitting in to

obviously, pulls immigrant get on raise with or think behalf, consumption will ploy negotiate slow look think pricing I I that's tariff you who Whether I mean know. overall hope consumption it has up. don't a at problem. a gone to he not. probably costs, But the I the growing. Well, down table the bit, up on a little if and trigger to knows? goes volume Trump's the And keeps to not, I help category, them the

if even So in be off, pretty shape. it good we'd leveled

So about really. too I'm worried not it

game. team Pawlowski. changes, product from here John is to of capabilities the Steve's Mission, when look another part to inflation, would This things always disruptions, been at last get getting this that and when the country at really team XX well X over months has choppy. proven challenges can the execute I has add they you comments historical price of price proven how And the

come So some creates the that path if seem ready will that. as things absolutely for there's that down choppiness

mentioned, it Steve resilience. and is And the also piece the second just that's consumer then of what

more from price supply seen consumer an really have. price as We And perspective. side taking the than higher as the they not have through at challenge and a price consumer just inflationary the resilient a also -- period be really but away ever both well is

on I tariff what So of the position X spot great combined, a mission things of both in kind side happens things. regardless of of those see

too, going -- focused or I he's Guatemala, tariff think at a I not Peru don't to directly hope. Colombia put or think just that's Mexico, on I

good. context great on Very you Got Well, really really both. great quarter, I right. All appreciate year. from again a Congratulations that it.

Partners. Next from Capital Gerry question is Sweeney ROTH from

this seem the consumers Just especially at couple phrase, of past barrier to for fair a have Is question price results? with and year's like lack of Ben's follow consistent on and maybe that the more then up ago. prices years than to higher say, a busted it answer, seems better through maybe

driving seeing Gerry. that, We're X John. is that Yes. This macro are trends

you'll that reach sector, XX the first you across think The hear last months, I in grocery has you're what and consumer the consistently starting inflationary been one, points pressure to that. anyone is over adapted where exactly There's just the to and said.

the enter we're regards a more pie our piece, to section specific the in younger second is the of The to consumers lot kind produce of slice seeing marketplace. of

and they're the You've those got baby people base, resilient our marketplace, XX are enter to they than that shopper much boomers are of consumers bigger more traditional in much picking to up that they as the up XX consumption are a making more past. the portion have proven be avocado

sort trickle elevated, mean this Got can -- it. make of and prices furthermore? to the moving forward retail does keep maybe money that mission Does through help more and that

versus I question, the Well, always that. plays the the is Because piece money -- prices cost always right? more make tricky our in price guess the role a

retail think I were see they a margin from of consistency you'll a perspective, compared in things 'XX. from more side where

pricing X more to think past that increase But look all in the But been were X, Yes. of going is supply X, think bring need to sit. this to if will to going origin, X, pricing available as I to years than be resilient volume think countries to it's XX% somewhat X will There's ago. down is a that volume I I XX%, would of it and in price it I ago. we -- coming need a year, would prices Gerry, relative terms going points of volumes were levels, years all again, it where with much a mean, that to that, increase. be have across I level enables -- higher than set Do at supply. comparable in ultimately that will think at the they price be settle the where market I consume to think a

good. would with. to pretty They're start be Still high

is curious, I coming got the like it that? prices, just it. elasticity I'm back or feels like Yes, something

barrier pull-through definitely of that seeing negative limit when the an demand were per having times seem would was threshold or on piece any I Price start the longer. and doesn't any we're indicator $X.XX to I impact would say that be taper -- to $X.XX, where of longer. $X.XX, not points, that there kind So mean, a

I like think last higher this paying it's it's kind years, consumer think, of in through for taken adapt finally our a prices category year. yes, it the but to So to I inflation, few maybe feels come

Got gears it. year plan planting. blueberries for mean, And I you blueberries. year last I ceased couple to is ago? this many what also But of Switching great. are the noted, X the you next going? acres years and then more How think, than the blueberries for years

talking planning? you're production about or So

Planning, yes.

have pretty productive within we unlike think or X a like avocado year, this XXX can state, tree in years. turn where a blueberries Yes, But take another they're quick rolled blueberries, X year. I a hectares usually out an it

because doing least I in the density first some be think XXX in planting, another year. we're we'll layering at double Gerry,

So I'm hectares hectares in XXX this head, worth I'm maybe plants. XXX like my of year, more a than but little

through 'XX had to at XXX the coming And prior into somewhere And into close in production. harvest then season, of be think would production for we this, -- roll looking next close would to to XXX that hectares on XXXX. another and hectares of top about which probably I we're of QX

mean, process. And in another XXX developed, I

the blueberry the had all region, in started project. up said before. We of planning the with our that size we in roughly done what should we double Northern So plantings and place is almost that

the going some that higher are haul of country. drive the varieties generic plantings long varieties over are more acreage, are the we of to help desirable of selling as overall these grown average So which prices well, believe new, over in a being lot certainly

focus things in So I excited to opportunity this that trying hard ahead, season, nature. stretch we're think the out about on certainly lies

times And and certain we're fruit above-average getting those right returns. markets with premium So to not again, sizing at the of quality those varieties generate year. right the overloading of the

Got it. shape. balance sheet is good then obviously, And

that? that curious You back but what's mean, on thoughts years, flow, to perspective. a excellent a any that go on couple be spot. mean we of after next into degree? flow, good of -- maybe planting would touched Or very increasing I kind cash just high I Do in some from cash

I don't gone Gerry, a a that plan, couple operating a -- and couple think I we of and had think years years too was communicating depressed. we've through for I changed our that mean was our of for cash -- -- our it much years, we've on expectation gone been through couple where

we saw timing more of we the the are. things. because it what was continued business looks stepped I step with a to year really capabilities line in Capital XXXX it step some did believe like of long-term think little more in it than probably this this year has down, down, down

the we've But the years, nonetheless, numbers will and that we it's well off continue. that of over X seen last or expect X

flow. we're to on we think would year going yes, next cash look So to generate as our fiscal significant would 'XX, priority I down. still be paying debt

in sheet way, be that be with will which some will And other in balance shareholders we'll cash, could and that returning shape shape. form. where Beyond our to to enable right, in position really have of we evaluate good that, us you're opportunities a or cash X

Congratulations on it. appreciate Got I it. great a year.

management This any for the to comments. back like closing the session. I'd question-and-answer to floor turn concludes

to you your you to we Produce in talking forward and for Mission interest look Thank again.

teleconference. This concludes today's

time. at You this for your participation. Thank may disconnect you lines again your