Mission(AVO) - 2025 Q3 - Quarterly Report

FORWARD LOOKING STATEMENTS - Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements[10] - Risks related to our business include reliance on one main product, supply limitations, market price fluctuations, increasing competition, international business risks (e.g., Mexican and Peruvian conditions), inflationary pressures, supply chain disruptions, and inherent farming risks[16] - Risks related to our common stock include market volatility, concentration of control, significant costs of being a public company, and failure to maintain proper internal control over financial reporting[16] - Risks related to restrictive covenants under our credit facility could affect funding flexibility and lead to debt acceleration if non-compliance occurs[16] PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the Company's unaudited condensed consolidated financial statements, prepared under U.S. GAAP, and related notes - Unaudited interim condensed consolidated financial statements are presented in accordance with U.S. GAAP and include consolidated domestic and international subsidiaries and VIEs[31] - All adjustments, of a normal recurring nature, considered necessary for a fair statement have been included[31] - Interim results of operations are not necessarily indicative of future results[31] Condensed Consolidated Balance Sheets (Unaudited) Condensed Consolidated Balance Sheets (Unaudited) - Key Figures | Metric | July 31, 2025 (Millions) | October 31, 2024 (Millions) | Change (Millions) | % Change | | :--------------------------------- | :----------------------- | :------------------------ | :---------------- | :------- | | Total current assets | $284.7 | $279.0 | $5.7 | 2.0% | | Total assets | $1,002.4 | $971.5 | $30.9 | 3.2% | | Total current liabilities | $139.9 | $149.1 | $(9.2) | -6.2% | | Total liabilities | $401.9 | $394.4 | $7.5 | 1.9% | | Total equity | $600.5 | $577.1 | $23.4 | 4.1% | - Cash and cash equivalents decreased from $58.0 million to $43.7 million[21] - Long-term debt, net of current portion, increased from $110.7 million to $128.5 million[21] Condensed Consolidated Statements of Income (Unaudited) Condensed Consolidated Statements of Income (Unaudited) - Key Figures | Metric (Millions) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | YoY Change (Millions) | YoY % Change | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | YoY Change (Millions) | YoY % Change | | :---------------- | :--------------------------- | :--------------------------- | :-------------------- | :----------- | :--------------------------- | :--------------------------- | :-------------------- | :----------- | | Net sales | $357.7 | $324.0 | $33.7 | 10.4% | $1,072.2 | $880.3 | $191.9 | 21.8% | | Gross profit | $45.1 | $37.0 | $8.1 | 21.9% | $105.0 | $96.7 | $8.3 | 8.6% | | Operating income | $21.0 | $16.8 | $4.2 | 25.0% | $37.2 | $37.1 | $0.1 | 0.3% | | Net income | $14.5 | $12.1 | $2.4 | 19.8% | $23.7 | $21.1 | $2.6 | 12.3% | | Basic EPS | $0.21 | $0.17 | $0.04 | 23.5% | $0.31 | $0.27 | $0.04 | 14.8% | | Diluted EPS | $0.21 | $0.17 | $0.04 | 23.5% | $0.30 | $0.27 | $0.03 | 11.1% | - Gross profit as a percentage of sales increased from 11% to 13% for the three months ended July 31, 2025[23] - Selling, general and administrative expenses increased by $3.9 million (19%) for the three months and $8.2 million (14%) for the nine months ended July 31, 2025[23] Condensed Consolidated Statements of Comprehensive Income (Unaudited) Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Key Figures | Metric (Millions) | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $14.5 | $12.1 | $23.7 | $21.1 | | Foreign currency translation adjustments | $0.0 | $0.1 | $0.5 | $0.6 | | Total comprehensive income, net of tax | $14.5 | $12.2 | $24.5 | $21.7 | | Comprehensive income attributable to Mission Produce | $14.7 | $12.5 | $22.5 | $20.0 | - Foreign currency translation adjustments were $0.5 million for the nine months ended July 31, 2025, down from $0.6 million in the prior year[24] Condensed Consolidated Statements of Changes in Equity (Unaudited) Condensed Consolidated Statements of Changes in Equity (Unaudited) - Key Figures | Metric (Millions) | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- | | Common stock | $0.1 | $0.1 | | Additional paid-in capital| $244.1 | $239.7 | | Retained earnings | $323.9 | $307.7 | | Mission Produce shareholders' equity | $568.7 | $547.3 | | Noncontrolling interest | $31.8 | $29.8 | | Total equity | $600.5 | $577.1 | - Total equity increased by $23.4 million from October 31, 2024, to July 31, 2025[26] - The Company purchased and retired $5.5 million of common stock during the nine months ended July 31, 2025[27] Condensed Consolidated Statements of Cash Flows (Unaudited) Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures | Activity (Millions) | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | YoY Change (Millions) | | :------------------ | :--------------------------- | :--------------------------- | :-------------------- | | Operating Activities| $21.4 | $55.4 | $(34.0) | | Investing Activities| $(40.0) | $(26.0) | $(14.0) | | Financing Activities| $5.8 | $(22.9) | $28.7 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(12.7) | $6.7 | $(19.4) | | Cash, cash equivalents and restricted cash, end of period | $46.6 | $49.9 | $(3.3) | - Net cash provided by operating activities decreased by $34.0 million, primarily due to higher working capital requirements[27][124] - Net cash used in investing activities increased by $14.0 million, driven by higher purchases of property, plant and equipment[27][125] - Net cash provided by financing activities was $5.8 million, a significant improvement from $22.9 million used in the prior year, due to increased borrowings on revolving credit facility[27] Notes to Unaudited Condensed Consolidated Financial Statements 1. General - Mission Produce, Inc. is a global leader in the avocado industry, specializing in farming, packaging, marketing, and distribution of avocados and other fruits[30] - The Company operates in three segments: Marketing & Distribution, International Farming, and Blueberries[30] - The FASB issued several ASUs (2025-05, 2024-03, 2023-09, 2023-07) related to credit losses, expense disaggregation, income tax disclosures, and segment reporting, which the Company is currently evaluating for impact[32][33][34][35] 2. Inventory Inventory Composition (Millions) | Category | July 31, 2025 | October 31, 2024 | | :------------------ | :------------ | :--------------- | | Finished goods | $51.8 | $45.1 | | Crop growing costs | $30.9 | $27.1 | | Packaging and supplies | $20.7 | $19.0 | | Total Inventory | $103.4 | $91.2 | - Total inventory increased by $12.2 million from October 31, 2024, to July 31, 2025[36] 3. Goodwill Goodwill by Segment (Millions) | Segment | July 31, 2025 | October 31, 2024 | | :------------------ | :------------ | :--------------- | | International Farming | $26.9 | $26.9 | | Blueberries | $12.5 | $12.5 | | Total Goodwill | $39.4 | $39.4 | - Goodwill is net of accumulated impairment losses of $49.5 million, attributable to the International Farming segment[37] - Goodwill is tested for impairment annually in the fourth quarter or when circumstances indicate potential impairment[37] 4. Details of Certain Account Balances Accrued Expenses (Millions) | Category | July 31, 2025 | October 31, 2024 | | :---------------- | :------------ | :--------------- | | Employee-related | $20.3 | $22.1 | | Freight | $5.0 | $5.8 | | Outside fruit purchase | $3.9 | $4.7 | | Other | $9.4 | $7.3 | | Total Accrued Expenses | $38.6 | $39.9 | Other Long-Term Liabilities (Millions) | Category | July 31, 2025 | October 31, 2024 | | :------------------------ | :------------ | :--------------- |\n| Uncertain tax positions | $19.5 | $17.9 |\n| Employee-related | $2.6 | $2.2 |\n| Trade payables to noncontrolling interest holders | $1.7 | $3.5 |\n| Other | $1.7 | $2.4 |\n| Total Other Long-Term Liabilities | $25.5 | $26.0 | Other (Expense) Income, Net (Millions) | Category | 3 Months Ended July 31, 2025 | 3 Months Ended July 31, 2024 | 9 Months Ended July 31, 2025 | 9 Months Ended July 31, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gains (losses) on derivative financial instruments | $0.1 | $(0.1) | $0.0 | $(0.1) | | Foreign currency transaction (loss) gain | $(1.2) | $1.2 | $(1.4) | $(0.1) | | Interest income | $0.2 | $0.4 | $1.4 | $1.7 | | Other | $0.1 | $(0.2) | $0.1 | $(0.2) | | Other (expense) income, net | $(0.8) | $1.3 | $0.1 | $1.3 | - Other (expense) income, net, shifted from income to expense for the three months and decreased for the nine months ended July 31, 2025, primarily due to foreign currency transaction losses[40][104] 5. Variable Interest Entity Variable Interest Entity Balances (Millions) | Category | July 31, 2025 | October 31, 2024 | | :------------------ | :------------ | :--------------- | | Current assets | $35.0 | $40.7 | | Long-term assets | $81.2 | $74.2 | | Current liabilities | $21.6 | $22.0 | | Long-term liabilities | $25.5 | $27.9 | - Assets of the blueberry joint-venture VIE can only be used to settle its own liabilities[42] 6. Debt Long-Term Debt Under Credit Facility (Millions) | Debt Type | July 31, 2025 | October 31, 2024 | Interest Rate (July 31, 2025) | | :------------------ | :------------ | :--------------- | :---------------------------- | | Revolving line of credit | $40.0 | $20.0 | 5.94% | | Senior term loan (A-1) | $43.2 | $45.0