Core Viewpoint - Mission has announced a definitive agreement to acquire Calavo, indicating a strategic move to enhance its market position and operational capabilities [2]. Group 1: Acquisition Details - The acquisition of Calavo is expected to strengthen Mission's portfolio and expand its operational reach [2]. - A press release and presentation regarding the acquisition have been made available online under the Investor Relations section of both companies' websites [3]. Group 2: Forward-Looking Statements - The comments made during the call and the accompanying presentation include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995 [3][4]. - These forward-looking statements are based on management's current expectations and beliefs, along with various assumptions about future events [4].

Core Viewpoint - Shipping group Maersk will resume sailings via the Red Sea and the Suez Canal for its MECL service, enhancing connectivity between the Middle East, India, and the U.S. east coast [1] Group 1 - Maersk's decision to resume sailings indicates a strategic move to strengthen its service offerings in key trade routes [1] - The MECL service will facilitate improved logistics and shipping efficiency for goods traveling between these regions [1]

Market Overview - U.S. stock futures rose on Thursday after a decline on Wednesday, with major benchmark indices showing positive movement [1] - The Nasdaq Composite fell 1% on Wednesday due to a 25% tariff on select semiconductor imports, overshadowing U.S. approval for exports to China [1] - The Supreme Court delayed its ruling on the legality of the tariff framework, contributing to ongoing tariff uncertainty [1] Treasury Yields and Market Projections - The 10-year Treasury bond yielded 4.15%, while the two-year bond was at 3.52% [2] - Markets are pricing a 95% likelihood that the Federal Reserve will keep interest rates unchanged in January [2] Index Performance - Dow Jones increased by 0.11%, S&P 500 by 0.36%, Nasdaq 100 by 0.75%, and Russell 2000 by 0.16% [2] - The SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.34% to $692.68, and Invesco QQQ Trust ETF (NASDAQ:QQQ) advanced 0.71% to $623.95 in premarket trading [2] Stocks in Focus - Goldman Sachs Group Inc. (NYSE:GS) was down 0.44% in premarket as analysts expect quarterly earnings of $11.65 per share on revenue of $13.79 billion [5] - Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) gained 4.46% after reporting a 35% profit surge for the fourth quarter, with net profit reaching T$505.7 billion ($16 billion) [5] - Applied Materials Inc. (NASDAQ:AMAT) rose 6% following an upgrade to 'Positive' from 'Neutral' by Susquehanna analyst Mehdi Hosseini, with a new price target of $400 [5] - Amazon.com Inc. (NASDAQ:AMZN) increased by 0.67% after AWS launched a new European Sovereign Cloud with a €7.8 billion ($9.1 billion) investment [5] - Calavo Growers Inc. (NASDAQ:CVGW) shares surged 12.93% despite downbeat fourth-quarter results, following Mission Produce's announcement to acquire Calavo at $27 per share [4] Analyst Insights - BlackRock maintains an optimistic outlook for the U.S. market, emphasizing solid economic growth and the transformative potential of artificial intelligence [10] - The firm notes that U.S. corporate earnings strength is broadening beyond the Magnificent 7, supporting their positive stance on equities [10] - BlackRock highlights a unique economic environment where mega forces are driving returns, favoring AI and cyclical sectors like industrials and materials [11] - The labor market is characterized as being in a "no hiring, no firing" stasis, which supports consumption without overheating [11] Upcoming Economic Data - Investors are anticipating initial jobless claims data, delayed U.S. import prices data, and manufacturing surveys [15]

Core Viewpoint - Calavo Growers Inc. shares surged 12.93% to $25.50 after announcing a merger agreement with Mission Produce Inc. and releasing its fiscal results [1] Merger Agreement - Calavo Growers has entered a definitive merger agreement where Mission Produce will acquire the company for $27 per share, consisting of $14.85 in cash and 0.9790 shares of Mission for each Calavo share [2] - Post-merger, Mission Produce shareholders will own approximately 80.3% of the combined entity, while Calavo shareholders will hold about 19.7% [2] Cost Synergies and Timeline - The merger is expected to generate $25 million in cost synergies and is anticipated to close by August, pending regulatory approvals and shareholder votes [3] Fiscal Year 2025 Results - For the fiscal year ending October 31, 2025, Calavo reported a net income from continuing operations of $20 million, a 192% increase from $6.8 million in fiscal 2024 [4] - Adjusted net income from continuing operations rose 42% to $28.9 million, equating to $1.62 per diluted share [4] - Adjusted EBITDA from continuing operations increased 12% to $40.8 million from $36.5 million [4] - Total net sales decreased to $648.4 million from $661.5 million [4] Fourth Quarter Performance - In the fourth quarter, Calavo's net sales fell to $124.7 million from $170 million, while net income from continuing operations increased to $3.8 million, compared to a loss of $2.5 million in the same quarter last year [5] Trading Metrics and Technical Analysis - Calavo's Relative Strength Index (RSI) is at 64.92, indicating a modest upward trend over the past 12 months, with a stock price increase of 0.27% [6] - The company's market capitalization is $403.13 million, with shares trading between a 52-week low of $18.40 and a high of $28.72 [6] - Currently, the stock is positioned at approximately 40.54% of its 52-week range, closer to the lower end [7]

Core Viewpoint - Calavo Growers, Inc. reported a shortfall in earnings per share and revenue in the fourth quarter, but the company remains a significant player in the fresh produce market with strategic initiatives to strengthen its position [1][2]. Financial Performance - In Q4 2025, Calavo Growers reported earnings per share of $0.25, missing the estimated $0.37, and revenue of approximately $124.7 million, falling short of the anticipated $148 million [2][6]. - Total net sales for the quarter decreased from $170 million in the same period the previous year [2]. - Despite the Q4 challenges, the company achieved a net income from continuing operations of $3.8 million [2]. Annual Performance - For the full year, Calavo Growers experienced a remarkable 191% increase in net income from continuing operations [3]. - Adjusted net income rose by 42%, and adjusted EBITDA increased by 12%, indicating significant growth despite fourth-quarter setbacks [3]. Financial Metrics - The company has a price-to-earnings (P/E) ratio of approximately 20.28, indicating a premium valuation by investors [4]. - The price-to-sales ratio is about 0.58, and the enterprise value to sales ratio is approximately 0.49, suggesting favorable market valuation of the company's sales [4]. - A low debt-to-equity ratio of about 0.017 reflects a conservative approach to debt, while a current ratio of approximately 2.30 indicates strong liquidity [4]. Strategic Developments - Calavo Growers announced a combination with Mission Produce, Inc. to enhance its capabilities in sourcing, packing, and distributing fresh produce [5]. - Following the earnings miss, the company's stock saw a 1.1% increase, and Citigroup analyst Patrick Cunningham upgraded the stock from Neutral to Buy, raising the price target from $62 to $70, indicating confidence in the company's long-term prospects [5][6].

Group 1: Earnings Reports - Goldman Sachs Group Inc. is expected to report quarterly earnings of $11.65 per share on revenue of $13.79 billion, with shares slipping 0.4% to $928.99 in after-hours trading [1] - Morgan Stanley is anticipated to post quarterly earnings of $2.44 per share on revenue of $17.76 billion, with shares rising 0.1% to $181.00 in after-hours trading [1] - BlackRock Inc. is projected to report quarterly earnings of $12.30 per share on revenue of $6.74 billion, with shares falling 0.4% to $1,087.99 in after-hours trading [1] Group 2: Company Performance - Calavo Growers Inc. reported disappointing results for the fourth quarter, but shares jumped 12.9% to $25.50 after Mission Produce announced plans to acquire the company at $27 per share [1] - Taiwan Semiconductor Manufacturing Co. Ltd. experienced a 35% surge in profit for the fourth quarter, with net profit reaching T$505.7 billion ($16 billion), marking its seventh consecutive quarter of double-digit growth, and shares gained 0.3% to $328.00 in after-hours trading [1]

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Summary of Calavo Growers and Mission Acquisition Conference Call Company and Industry Overview - **Companies Involved**: Mission and Calavo Growers - **Industry**: Fresh produce, specifically avocados, tomatoes, papayas, and prepared foods Core Points and Arguments 1. **Acquisition Announcement**: Mission has entered into a definitive agreement to acquire Calavo, a leading provider in the fresh produce market, particularly avocados and prepared foods [2][4] 2. **Strategic Importance**: The acquisition is seen as a significant milestone for both Mission and the industry, aiming to create a more diversified company positioned for long-term growth [4][6] 3. **Financial Projections**: On a pro forma basis, the combined company is expected to generate approximately $2 billion in net sales and $176 million in adjusted EBITDA for fiscal 2025 [6][12] 4. **Transaction Structure**: Calavo shareholders will receive $27 per share, consisting of $14.85 in cash and 0.9790 shares of Mission stock [7] 5. **Ownership Post-Transaction**: Mission shareholders are expected to own approximately 80.3% of the combined company, while Calavo shareholders will own about 19.7% [7] 6. **Regulatory Approval**: The transaction is expected to close by the end of August 2026, pending regulatory and shareholder approvals [8] Additional Important Insights 1. **Diversification of Product Portfolio**: The acquisition will diversify Mission's offerings into prepared foods, tomatoes, and papayas, enhancing its year-round fresh produce portfolio [6][9] 2. **Operational Synergies**: The companies expect to realize $25 million in annualized cost synergies within 18 months post-close, with potential for additional upside [12][29] 3. **Market Expansion**: The acquisition will enhance Mission's presence in Mexico and California, increasing access to high-quality avocados, which are crucial for the U.S. market [10] 4. **Prepared Foods Segment**: Calavo's prepared foods, including guacamole and salsas, represent a growing market with a total addressable market of approximately $1.7 billion, growing in the high single digits [11] 5. **Customer Base Expansion**: The combined entity will have the ability to serve a broader customer base globally, leveraging the strengths of both companies [22][36] 6. **Innovation and Investment Opportunities**: The merger is expected to create opportunities for innovation and investment in new products, particularly in the prepared foods segment [41] Conclusion The acquisition of Calavo by Mission is positioned as a strategic move to enhance market presence, diversify product offerings, and create significant operational synergies, ultimately aiming for sustained growth and value creation in the fresh produce industry.

Financial Performance and Structure - In the first quarter of fiscal 2025, Calavo Growers renamed its "Grown" reportable segment to "Fresh" without affecting its financial results or internal performance metrics [16]. - The company entered into a merger agreement with Mission Produce, where each share of Calavo common stock will be converted into $27.00 per share, consisting of 0.9790 shares of Mission stock and $14.85 in cash [18]. - The merger is subject to shareholder approval and customary closing conditions, including regulatory clearances under antitrust laws [19]. - The company’s revenue and operating results may vary due to the seasonality of the business and fluctuations in market prices [73]. - The company's top ten customers accounted for approximately 51%, 50%, and 60% of consolidated net sales in fiscal years 2025, 2024, and 2023, respectively, with the largest customer representing about 14%, 12%, and 12% of net sales in those years [86]. - The company has incurred substantial indebtedness, which could restrict its ability to pay dividends and impact its financing options and liquidity position [88]. - The company’s stock price may be affected by market volatility and various external factors, making future price predictions challenging [148]. - Dividend payments are not guaranteed and may be decreased or discontinued based on financial condition and contractual restrictions [151]. - The company paid a quarterly dividend of $0.20 per share, totaling $3.6 million, on multiple occasions in fiscal 2025, with the next payment scheduled for January 30, 2026 [175][193]. - The company’s stock has seen a cumulative total return decline from 100.00 in October 2020 to 37.04 by October 2025, compared to the Nasdaq Composite Index's increase to 225.69 [182]. Operations and Supply Chain - Calavo sources avocados from California, Mexico, Peru, and Colombia, with a focus on maintaining a reliable, high-quality supply at reasonable prices [22][24]. - The company believes its investments in packing house equipment and distribution centers position it to efficiently manage larger avocado crops [32]. - The company relies on long-term relationships with independent growers in California and Mexico for avocado supply, and any deterioration in these relationships could adversely affect its Fresh business in the U.S. [87]. - The company operates multiple facilities across the U.S. and Mexico, with annual capacities believed to be sufficient to meet forecasted production needs [166][169]. - The corporate headquarters is located in Santa Paula, California, with additional facilities in various states to support both Fresh and Prepared segments [166]. Product Development and Safety - The company utilizes ultra-high-pressure technology for its guacamole products, ensuring food safety without preservatives and extending shelf life [39]. - Calavo's prepared avocado products are produced under HACCP-based food safety systems, ensuring compliance with global food safety standards [40]. - Research and development costs for new products were less than $0.1 million for fiscal years 2025, 2024, and 2023 [49]. - The company emphasizes a culture of safety with a goal of zero incidents, tracking key safety metrics against industry standards [66]. Regulatory and Compliance Issues - The company is committed to complying with all government regulations and has not experienced any material non-compliance [54]. - The company is subject to increased FDA oversight of imported avocados, including enhanced testing and inspection protocols [50]. - The company is subject to changing USDA and FDA regulations that could adversely affect its ability to import avocados and produce prepared avocado products [125]. - The company’s operations are subject to various environmental laws governing waste treatment and disposal [53]. - Climate change regulations may increase production costs and restrict the ability to import certain products, impacting overall operations [112]. - The company faces risks related to changing rules and stakeholder expectations on environmental, social, and corporate governance (ESG) matters, which may increase management time and costs [89]. - Increased scrutiny on ESG practices may lead to litigation that could negatively impact the company's reputation and financial condition [114]. Mergers and Acquisitions - The proposed mergers are subject to various conditions, including shareholder approvals, and any delays or failure to complete the mergers could negatively impact the company's stock price and future business [91][92]. - If the mergers are not completed, the company may face significant termination fees of $12.87 million or $15.02 million, depending on the circumstances [99]. - The integration of Calavo and Mission may be more difficult and costly than expected, potentially affecting revenues and operating results post-merger [96]. - The company is exploring acquisition prospects to complement its business, which may involve risks such as integration challenges and increased debt [83]. Tax and Financial Liabilities - The company faces a potential tax assessment from Mexican authorities totaling approximately $3.5 billion Mexican pesos ($187.0 million USD) related to a fiscal 2013 tax audit [118]. - The company recorded a provision of $11.0 million in fiscal 2021 for estimated penalties, interest, and inflationary adjustments related to the ongoing tax dispute [120]. - As of October 31, 2025, the company's value-added tax receivables in Mexico amounted to $55.8 million (1.0 billion Mexican pesos), reflecting challenges in obtaining timely refunds from tax authorities [122]. - As of October 31, 2025, the company recognized IVA receivables totaling $58.1 million, contingent on the success of administrative appeals and legal processes [209]. - The company continues to monitor developments related to tax matters, with potential material impacts on provisions and receivables [210]. Cybersecurity and Risk Management - The company is implementing a multi-year cybersecurity enhancement program to strengthen its cybersecurity posture across all core functions [157]. - The cybersecurity program includes regular employee training, technical safeguards, and third-party risk management to mitigate potential threats [163]. Labor and Management - The company has experienced changes in management and key personnel, which could disrupt operations and affect its financial condition and results [98]. - Labor disruptions could decrease profitability, as a portion of the workforce is unionized and negotiations may not result in favorable terms [102].

Core Insights - Calavo Growers, Inc. reported significant growth in net income from continuing operations, with a 191% increase for the full year 2025, alongside a 42% rise in adjusted net income and a 12% increase in adjusted EBITDA from continuing operations [1][2]. Financial Performance - For the fourth quarter of 2025, total net sales decreased to $124.7 million from $170.0 million in the prior year, with fresh segment sales down 31% to $106.3 million due to a 19% decline in average price per carton and a 5% decrease in total cartons sold [8][12]. - Gross profit for the fourth quarter was $11.6 million, down from $16.3 million, with SG&A expenses decreasing by 6% to $12.3 million [8][14]. - Adjusted net income for the fourth quarter increased by 301% to $4.5 million, or $0.25 per diluted share, compared to $1.1 million, or $0.06 per diluted share, in the prior year [15]. - For the full fiscal year 2025, total net sales were $648.4 million, a slight decrease from $661.5 million, with fresh segment sales down 4% to $576.5 million, while prepared segment sales increased by 12% to $71.9 million [16][19]. Strategic Developments - Calavo announced a strategic combination with Mission Produce, Inc., where Mission will acquire Calavo in a cash and stock transaction valued at $27.00 per share, comprising $14.85 in cash and 0.9790 shares of Mission stock for each share of Calavo [6][9]. - The merger is expected to create a vertically integrated platform with sourcing security and an expanded portfolio across fresh produce categories, along with anticipated cost synergies of $25 million [7][10]. Management Commentary - The CEO of Calavo highlighted the company's resilience in overcoming challenges during fiscal year 2025, including a temporary facility shutdown and an FDA detention hold on avocado imports, while achieving an adjusted EBITDA of $40.8 million, up nearly 12% year over year [10][11]. - Looking ahead to 2026, the company anticipates softer first-quarter results compared to the previous year due to strong avocado supply and pricing dynamics, but remains focused on leveraging increased industry volumes [11][12]. Balance Sheet and Liquidity - As of October 31, 2025, Calavo had cash and cash equivalents of $61.2 million and total debt of $4.1 million, with cash provided by operating activities totaling $21.5 million for the fiscal year [20][42].