Mission(US:AVO)2023-03-10 04:26Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was $213.5 million, essentially flat compared to the prior year, but benefited from approximately $30 million due to Blueberry consolidation not reflected in the prior year [12] - Adjusted EBITDA improved to $2.3 million from a loss of $10.4 million in the same period last year, primarily attributed to higher gross margin [15] - Gross profit increased by $8.5 million to $9 million, with gross profit percentage rising 400 basis points to 4.2% of revenue [13] Business Line Data and Key Metrics Changes - Marketing and distribution segment net sales decreased 14% to $181.8 million, while adjusted EBITDA increased 160% to $4.6 million due to higher gross margin [16] - International farming segment revenues increased 73% to $5.7 million, driven by higher packing and cooling service revenue for Blueberries [17] - Blueberry segment net sales were $29.8 million, with adjusted EBITDA showing a loss of $0.5 million due to pricing compression in the European and U.S. markets [18] Market Data and Key Metrics Changes - The industry is expecting a 20% increase in the overall Mexican avocado crop for fiscal 2023, which is anticipated to drive higher volumes [21] - Pricing is expected to be lower on a year-over-year basis by 30% to 35% compared to the previous year, primarily due to volume dynamics [22] Company Strategy and Development Direction - The company is focused on expanding its global presence, including investments in new facilities like the forward distribution center in the UK, expected to become operational in April [9] - The strategy includes leveraging core competencies in new markets such as Blueberries, with a long-term outlook for growth despite current pricing challenges [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved pricing stability and greater consumption in the coming year, driven by lower fruit pricing and increased industry volumes [6][7] - The company anticipates sequential improvements in per unit margins, although below historical targets, due to easing cost inflation [8] Other Important Information - Cash and cash equivalents decreased to $39.2 million as of January 31, 2023, from $52.8 million as of October 31, 2022 [19] - Capital expenditures for Q1 2023 were $17.6 million, including investments in the new UK distribution facility and the Maruga Blueberry operation [20] Q&A Session Summary Question: Thoughts on consumption trends and pricing - Management noted that lower prices attract more consumers, with a significant gap between market prices and retail prices previously slowing demand, which has since improved [28][29] Question: Supply outlook post-Mexico harvest - Management indicated that California's crop size is expected to improve due to recent rains, with a 10% increase in Peru's crop size and more normal sizing conditions [32] Question: Blueberry segment performance and future outlook - Management acknowledged challenges in the blueberry segment but remains optimistic about long-term prospects, focusing on introducing new premium varietals to improve market positioning [36][37] Question: Impact of inflation on pricing and profitability - Management is adjusting pricing structures to cover inflationary costs and is seeing improvements in freight rates, which should help normalize profit margins over time [40][41]