Mission(AVO) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved record first quarter revenue of $334.2 million, a 29% increase compared to the same period last year [7][20] - Gross profit increased by $2.8 million to $31.5 million, although gross profit margin decreased by 170 basis points to 9.4% of revenue [20][21] - Adjusted net income for the quarter was $7.1 million or $0.10 per diluted share, compared to $6.7 million or $0.09 per diluted share last year [21] - Adjusted EBITDA was $17.7 million compared to $19.2 million last year, primarily due to lower per unit gross margins [22] Business Line Data and Key Metrics Changes - The Marketing & Distribution segment net sales increased 32% to $295.8 million, driven by avocado pricing and volume dynamics [23] - The International Farming segment saw total sales increase by 59% to $9.2 million, with adjusted EBITDA improving to $1.8 million from negative $0.5 million [24][25] - The Blueberry segment's net sales increased 12% to $36.4 million, driven by a 70% increase in volumes sold, although average per unit selling prices decreased by 33% [25] Market Data and Key Metrics Changes - The company experienced industry supply challenges in Mexico, impacting avocado supply and necessitating increased procurement through co-packers and spot market purchases [8][11] - The dynamics faced in the quarter highlighted the importance of a diversified sourcing strategy, including key growing geographies like Peru and Colombia [13][14] Company Strategy and Development Direction - The company is strategically expanding its blueberry and mango segments to capitalize on growing consumer demand for healthy snacks [9][10] - The focus on operational efficiency and capital allocation aims to strengthen the long-term cost structure and enhance financial performance [12][17] - The company is committed to navigating market dynamics and delivering long-term value to shareholders through a diversified business model [16][17] Management's Comments on Operating Environment and Future Outlook - Management noted that the overall industry harvest out of Mexico is unlikely to be as large as initially expected, which may impact supply [40] - The company anticipates that working capital strains typically seen in the first half of the fiscal year will unwind in the second half as they transition to harvesting their own fruit [45][48] - Future avocado pricing is expected to be higher year-over-year, indicative of continued strength in demand [32] Other Important Information - Cash and cash equivalents were $40.1 million as of January 31, 2025, with capital expenditures of $14.8 million for the quarter [27][30] - The projected CapEx budget for fiscal 2025 remains unchanged at $50 million to $55 million, reflecting ongoing investments in farming and infrastructure [30] Q&A Session Summary Question: Can you elaborate on sourcing from co-packers? - Management indicated that sourcing from co-packers was higher than typical due to a slight decrease in the overall crop in Mexico, but they expect to secure more inventory directly in the near future [38][41] Question: What is the visibility on working capital unwinding? - Management stated that working capital strains are normal for the first half of the fiscal year and typically unwind in the second half, with expectations for improvement as they transition to harvesting their own fruit [45][48] Question: Have you observed any changes in supplier behavior regarding tariffs? - Management noted that there was more supplier movement and conversations leading up to the March tariff announcement, but overall supply remained consistent and they were able to meet customer requirements [52][53]