Mission(US:AVO)2022-09-09 15:29Financial Data and Key Metrics Changes - Total revenue for Q3 2022 increased by 27% to $313.2 million, driven by a 42% increase in average per unit avocado sales prices due to lower industry supply from Mexico and inflationary pressures [5][18] - Adjusted EBITDA for Q3 2022 was $31.6 million, a 5% increase compared to the prior year [21] - Net income for Q3 2022 was $18.4 million or $0.26 per diluted share, essentially flat with the prior year [21] Business Line Data and Key Metrics Changes - Marketing and Distribution segment net sales increased by 29% to $308.9 million, with adjusted EBITDA rising 18% to $15.5 million [23] - International Farming segment sales decreased by 2% to $73.5 million, primarily due to lower third-party service revenue [25] - The new Blueberry segment generated net sales of $0.3 million with an adjusted EBITDA loss of $0.2 million [26] Market Data and Key Metrics Changes - Mexican avocado volume was down over 40% in Q3 2022, with only about 1/3 of U.S. distributed volume being Mexican fruit [9] - Despite lower volumes, there was over 25% volume growth in other source markets, including California and Peru [9] - Year-to-date pricing for avocados was approximately 45% higher compared to the prior year, reflecting strong demand despite food inflation [12] Company Strategy and Development Direction - The company is focused on vertical integration, with approximately 25% of total distributed volume in Q3 coming from owned production in Peru [15] - A long-term third-party logistics partnership with NatureSweet was announced to enhance operational efficiencies and capacity utilization at the Laredo facility [7][8] - The company aims to maintain a consistent year-round supply to support long-term consumption growth and market development [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming production from the Jalisco growing region, which presents long-term growth opportunities [10] - The company anticipates fourth-quarter volumes to increase sequentially due to ample Peruvian product and a larger Mexican crop expected [30] - Management acknowledged ongoing inflationary pressures affecting costs but remains confident in the resilient demand for avocados [31] Other Important Information - Cash and cash equivalents were $43.8 million as of July 31, 2022, down from $84.5 million as of October 31, 2021, reflecting seasonal operating cash flow dynamics [27] - Capital expenditures for the first nine months of fiscal 2022 were $42 million, with expectations to come in below the previous year's total [29] Q&A Session Summary Question: Clarification on fourth-quarter volume expectations - Management indicated that fourth-quarter volumes are expected to be higher sequentially but comparable year-over-year, with no specific numbers provided [33] Question: Exposure of International Farming business to market pricing - Management noted that fixed volume, fixed price contracts were established for the season, with some pressure on market pricing due to increased Mexican fruit supply [34][35] Question: Utilization of Laredo facility capacity - Management estimated that the NatureSweet partnership would utilize about 20% to 25% of the facility's capacity initially, with plans to ramp up over time [40] Question: Volume growth expectations for next fiscal year - Management expects a larger Mexican crop next year, which will drive volume growth, but the impact on revenue will depend on average selling prices [44][45] Question: Returns on blueberry investments compared to avocados - Management confirmed that blueberries have a quicker return on investment compared to avocados, with expectations of slightly higher returns due to different marketing dynamics [46][48] Question: Funding for blueberry capital costs - Management indicated that most funding for blueberry investments would come from operating cash flows within the joint venture, with minimal cash out from the business [50]