Mission Produce (AVO) Q2 2025 Earnings Transcript

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SUMMARYMission duce (AVO 0. 50%) dered record revenue in Q2 FY2025, driven by higher avocado selling prices and reported continued operational execution, expanding its European distribution and capturing significant U

Management cited cost pressures from the Canadian facility closure and temporary tariffs in Q2 FY2025, but reported strategic cost actions, balance sheet imvement via deleveraging, and opportunistic repurchases

CEO Barnard said, "The pricing environment remained favorable throughout the quarter," highlighting persistent U

Retail demand amid elevated prices

CFO Giles stated, "Per unit margin tr favorably through Q2 FY2025, driven largely by availability of fruit from competing origins such as California and Peru. "COO Pawlowski emphasized stability in the supply chain ing tariff implementation in April 2025, stating, "by the time we got to the April timeframe

Most suppliers had become more comfortable

Regardless of what occurred, they would be able to handle it, especially at that 10% level. "Management noted the commercialization success of forward distribution expansion in Europe, as evidenced by higher customer penetration and facility utilization gains in the most recent quarter UK

INDUSTRY GLOSSARYUSMCA: United States-Mexico-Canada Agreement; the comprehensive trade pact replacing NAFTA, setting tariff and trade rules for agricultural imports, including avocados

Ripening Infrastructure: Facilities and systems used to mature avocados and other duce to peak eating quality immediately before market distribution

Packhouse: An operational facility where harvested duce is ed, graded, packed, and sometimes treated or stored prior to distribution

Co-packer: An external party contracted to cess, pack, or handle inventory when a company’s own capacity is constrained

Forward Distribution Center: A strategically located logistics facility positioned near key to expedite dery and vide value-added services such as ripening

DC: Distribution Center—warehouse facility serving as a logistics hub for storage and shipment of perishable goods, sometimes offering value-added services packing or ripening

Full Conference Call TranscriptSteve Barnard: Thank you for joining us today

Our marketing and distribution segment dered solid results in Q2, building on the strong foundation established in Q1, reflecting the effectiveness of our commercial teams to leverage the strategic value of our global sourcing network

We continued to successfully navigate typical seasonal dynamics while maintaining strong customer relationships and service levels

Our deep grower relationships in Mexico, along with our global sourcing network, allowed us to be nimble, viding the flexibility to leverage other countries of origin as market conditions warranted

This is truly a core competency here at Mission duce, what we do every day, and represents more than forty years of building the right capabilities in the right

The pricing environment remained favorable throughout the quarter, in fact, more so than we anticipated

The retail market's ability to sustain volumes amid ext periods of higher pricing reflects a favorable dynamic that reinforces the durability of consumer demand in the United States

This is the outcome of our relentless work to vide consistency, both in terms of supply size and quality to the retail channel, which is supported by our unmatched network of sourcing, distribution, and ripening infrastructure

As we look forward to the future, we are applying the same playbook to other to enhance our competitive position globally

For instance, we opened a forward distribution center in the UK two years ago with the vision of accelerating our reach in the broader European market by bringing ripening capabilities to the underserved region

Our commercial teams have been working hard to ramp up our presence and have dered strong results through expanded customer penetration with larger accounts

This customer success is directly translating into higher volumes and significant gains in facility utilization, validating our strategic investment in the region

Our team's ability to adapt to local merchandising apaches and respond quickly with solutions is central to our increasing while establishing Mission duce as a reliable partner for major UK customers

We look forward to building on our success there in the quarters ahead

Our mango is another example of the team's strong execution

Mangoes contributed strongly to our results this quarter, where we achieved record volumes and significant market gains that established Mission duce as a leading U

This success stems from three deliberate competitive advantages we've built

First, our cross-selling apach of leveraging new and existing customer relationships to build our mango

Second, our differentiated positioning as a long-term gram vider with year-round sourcing and quality consistency that others simply cannot match

And third is our national ripening and packing foot that vides operational capabilities and flexibility others in the space don't possess

Importantly, what we're seeing in mangoes mirrors the early success we achieved with avocados, bringing greater consistency and quality to consumers in an underserved market, which drives increased consumption over time and ultimately vides our retailer customers with new growth vectors for their es

Our early success in mangoes, combined with increased blueberry volumes and efficiency imvements we actioned last year, directly benefited our International Farming segment, which, although small this time of year, dered a significant EBITDA imvement, turning what has historically been a period of seasonal headwind into a positive contributor

Our diversification strategy is dering exactly what we designed it to do, optimize facility utilization year-round while positioning us for an even stronger performance when our core company-owned avocado harvest season in South America ramps up in the second half

Our blueberry segment continued to contribute to our results

This additional volume supported our Q2 performance and positions us well in a category that continues to see growing consumer demand similar to avocados and mangoes

We continue to see tremendous long-term potential in blueberries as consumer preferences shift toward healthy, convenient snacking options

While the yields will take some time to ramp up, the higher volumes will help us support growth in the years ahead

Looking ahead to the second half, we are well-positioned to generate our customary step-up in cash flow, but with the added benefit of what we expect to be a more normal Peruvian crop on our ranches this year

Our orchards have recovered and are in great shape

In closing, our Q2 results demonstrate the value of our diversified global platform and the successful execution of our long-term vision

We built the capabilities to consistently der results across varying market conditions, and this quarter's performance validates that strategic apach

With that, I'll pass the call over to our CFO, Bryan Giles, for his financial review

Bryan Giles: Thank you, Steve, and good afternoon to everyone on the call

Per unit margin tr favorably as we transitioned through the quarter, driven largely by availability of fruit from competing origins such as California and Peru

Net of these costs, avocado per unit margins tracked in line with historical averages

Separate from these items, we experienced imved gross fit in our International Farming segment during the quarter, where we benefited from increases in both yield and pricing from our owned mango orchards as well as higher packing and cooling service activity correlated with higher blueberry duction volumes

Significant increases in per-unit avocado pricing during the quarter had a negative impact on gross fit percentage