Mission(US:AVO)2022-09-07 16:00Financial Performance - Net sales increased by $66.4 million or 27% in the three months ended July 31, 2022, and by $153.2 million or 23% in the nine months ended July 31, 2022, compared to the same periods last year[94]. - Total net sales for the three months ended July 31, 2022, were $313.2 million, compared to $246.8 million for the same period in 2021, reflecting a significant increase[116]. - Total segment sales for the nine months ended July 31, 2022, reached $870.1 million, compared to $715.8 million in the same period last year, indicating strong growth[116]. Sales and Pricing - Average per-unit avocado sales prices increased by 42% and 45% in the three and nine months ended July 31, 2022, respectively, due to lower industry supply from Mexico and inflationary pressures[94]. - Net sales in the Marketing and Distribution segment rose by $69.3 million or 29% in the three months ended July 31, 2022, compared to the same period last year, totaling $306.3 million[118]. - The Marketing and Distribution segment generated net sales of $308.9 million in the three months ended July 31, 2022, compared to $239.6 million in the same period last year[94]. Volume and Supply - Avocado volume sold decreased by 11% and 16% for the three and nine months ended July 31, 2022, respectively, primarily driven by lower Mexican supply[94]. - The International Farming segment reported net sales of $4.0 million in the three months ended July 31, 2022, down from $7.2 million in the same period last year[94]. - Total segment sales in the International Farming segment decreased by $1.5 million or 2% in the three months ended July 31, 2022, primarily due to lower third-party service revenue[120]. Profitability - Gross profit for the three months ended July 31, 2022, increased by $1.7 million or 4% to $42.6 million, with a gross profit percentage of 13.6%[98]. - Gross profit for the nine months ended July 31, 2022, decreased by $27.8 million or 31% to $62.9 million, with a gross profit percentage of 7.8%[99]. - Operating income for the three months ended July 31, 2022, was $22.0 million, a decrease from $23.7 million in the same period last year[92]. Expenses - Selling, general and administrative expenses increased by $3.4 million or 20% in the three months ended July 31, 2022, compared to the same period last year, primarily due to higher employee-related costs and noncapitalizable costs associated with the new ERP system[100]. - Interest expense rose by $0.5 million or 50% in the three months ended July 31, 2022, and by $0.8 million or 29.6% in the nine months ended July 31, 2022, due to higher interest rates on outstanding debt[103]. - Other expense increased by $0.4 million or 80% in the three months ended July 31, 2022, primarily due to higher losses on foreign currency transactions[108]. Taxation - The provision for income taxes decreased by $0.5 million or 8% in the three months ended July 31, 2022, primarily due to lower pre-tax income[112]. - The effective tax rate for the three months ended July 31, 2022, was 23.2%, down from 24.3% in the same period last year[112]. Cash Flow and Capital Expenditures - Net cash used in operating activities was $3.0 million for the nine months ended July 31, 2022, compared to cash provided of $15.2 million in the same period last year[124]. - Capital expenditures in the nine months ended July 31, 2022, were $42.0 million, focused on farmland purchases and orchard development in Peru and Guatemala[126]. - The company intends to fund capital projects for farming expansion and facility improvements through operating cash flow and cash equivalents[134]. Debt and Leverage - The company utilized a revolving credit facility for short-term working capital, with borrowings of $40.0 million and repayments of the same amount in the nine months ended July 31, 2022[128]. - As of July 31, 2022, the consolidated leverage ratio was 2.08 to 1.00, and the fixed charge coverage ratio was 1.94 to 1.00, indicating compliance with financial covenants[133]. - The consolidated total net leverage ratio was increased to 3.75:1.0 for the fiscal quarter ending April 30, 2022, and to 3.25:1.0 for the quarter ending July 31, 2022[132]. Business Developments - The implementation of a new ERP system encountered significant challenges, impacting profitability and financial results in the first quarter of 2022[87]. - The company consolidated Moruga as a variable interest entity on May 1, 2022, which affected the financial results and reportable segments[84]. - The Moruga Blueberry Project, approved on May 1, 2022, involves an investment of approximately $50 million to farm 600 additional hectares of blueberries in Peru, expected to start in mid-to-late fiscal year 2023[136].