Mission(US:AVO)2022-03-11 02:31Financial Data and Key Metrics Changes - Total revenue for Q1 2022 increased by 25% to $216.6 million compared to $173.2 million in the same period last year, driven by a 50% increase in average per unit avocado sales prices due to lower industry supply from Mexico and inflationary pressures [15][16] - Net loss for Q1 2022 was $13.4 million or $0.19 per diluted share, compared to net income of $2.2 million or $0.03 per diluted share for the same period last year [21] - Adjusted EBITDA was negative $10.4 million for Q1 2022, compared to a positive $12.5 million for the same period last year, primarily due to lower gross margin and higher SG&A costs [21] Business Line Data and Key Metrics Changes - Marketing & Distribution segment net sales increased by 25% to $212.3 million for the quarter, but segment adjusted EBITDA was negative $7.7 million due to similar drivers affecting consolidated results [21] - International Farming segment net sales increased by 19% to $4.3 million, driven by higher third-party service revenues, but segment adjusted EBITDA was negative $2.7 million due to higher costs associated with strategic initiatives [22] Market Data and Key Metrics Changes - Industry supply was negatively impacted by a smaller Mexican harvest, with estimates indicating that Mexican supply to the U.S. market was approximately 10% lower than the prior year [16] - Approximately 97% of U.S. distributed volume was Mexican fruit in Q1 2022, highlighting the reliance on Mexican supply [16] Company Strategy and Development Direction - The company is focused on long-term growth by investing in its own production to ensure year-round global sourcing, which is key to maintaining organic growth [13] - The implementation of a new ERP system is seen as a necessary step to scale the business and enhance operational visibility, despite the challenges faced during its implementation [9][10] Management's Comments on Operating Environment and Future Outlook - Management believes the worst of the ERP implementation challenges is behind them, and they are focused on improving efficiency and resolving remaining issues [30] - The company expects Mexico industry volumes to remain lower than the prior year during Q2, with pricing expected to be steady to slightly higher [26] Other Important Information - Cash and cash equivalents were $25.3 million as of January 31, 2022, down from $84.5 million as of October 31, 2021, with net cash used in operating activities increasing to $41.4 million [23] - Capital expenditures for Q1 2022 were $20.9 million, focused on farmland purchases and improvements in Peru and Guatemala [24] Q&A Session Summary Question: What lingering impacts should be expected from ERP challenges? - Management indicated that the issues causing gross margin loss have been largely resolved, but some costs related to outside consultants will continue, tapering off in Q2 [30] Question: Will February's per box margins remain stable? - Management noted that February margins returned to historical levels, but future margins may be impacted by volume challenges due to the current Mexico crop situation [33][34] Question: When will the current Mexico crop supply issues be resolved? - Management expects to see some relief from Peru's crop starting around April, but substantial impacts may not be felt until Q3 [38][39] Question: What is the demand outlook in the domestic market? - Management confirmed that domestic demand remains strong, with increased pricing observed, indicating a healthy market despite supply challenges [41][42] Question: Can you quantify customer wins and their impact on volume? - Management mentioned securing major retailers during the Mexico shutdown, which could contribute positively to volume moving forward [47]