Image source: The Motley Fool. DATEThursday, June 5, 2025 at 5 p.
ETCALL PARTICIPANTSChief Executive Officer — Steve BarnardChief Financial Officer — Bryan GilesChief Operating Officer — John PawlowskiNeed a quote from one of our analysts.
[ tected]TAKEAWAYSRevenue: $380. 3 million in Q2 FY2025, marking a 28% increase in total revenue driven by a 26% rise in per unit avocado selling prices. Gross fit: $28.
4 million in gross fit for Q2 FY2025, down from $31 million in Q2 FY2024, primarily due to lower per-unit avocado margins due to Mexican fruit supply challenges early in Q2 FY2025.
Gross fit Margin: Decreased by 290 basis points to 7. 5% of revenue, impacted by avocado margin pressures. Marketing and Distribution Segment Sales: $362.
5 million in Q2 FY2025, up 26%, reflecting favorable avocado pricing dynamics. Marketing and Distribution Segment Adjusted EBITDA: $16.
8 million in adjusted EBITDA for the Marketing and Distribution segment in Q2 FY2025, down from $21. 7 million in Q2 FY2024, as lower per-unit gross margins dominated results.
International Farming Segment Sales: $8. 1 million in Q2 FY2025, up $6. 7 million, led by imved mango orchard yields and higher blueberry packing activity.
International Farming Segment Adjusted EBITDA: Imved to $1.
5 million in the second quarter of fiscal 2025 from a loss in the same period last year, reflecting benefits from increased mango yields and higher blueberry packing activity.
Blueberry Segment Sales: $15. 7 million in net sales for the Blueberry segment in Q2 FY2025, up 57% compared to the prior year period, supported by acreage expansion and higher yields.
Blueberry Segment Adjusted EBITDA: Flat year over year (adjusted EBITDA, Blueberry segment, Q2 FY2025), as lower per unit gross margins offset volume gains in the quarter.
Adjusted Net Income: Adjusted net income was $8. 7 million in Q2 FY2025, or $0. 12 per diluted, compared to $9. 8 million in Q2 FY2024, or $0. 14 per diluted, in the prior year period.
Adjusted EBITDA: Adjusted EBITDA was $19. 1 million in Q2 FY2025, a down from $20. 2 million in Q2 FY2024 due primarily to lower per unit avocado margins. Unique Costs: $2.
6 million in Q2 FY2025, including $1. 5 million for closure of Canadian facilities and $1. 1 million in tariffs related to brief USMCA trade policy changes in March 2025.
Operating Cash Flow: Cash used in operating activities (GAAP) was $13 million for the year-to-date period April 30, 2025. Versus Cash vided by operating activities was $12.
9 million for the year-to-date period April 30, 2024, due to higher accounts receivable and seasonal inventory build. Cash and Equivalents: $36. 7 million as of April 30, 2025.
Capital Expenditures: $28 million year-to-date in FY2025, focused on avocado, blueberry farming, and construction of a new packhouse in Guatemala.
Full-Year CapEx Guidance: Reaffirmed at $50 million to $55 million in FY2025, inclusive of $10 million in rolled-over jects. Repurchases: $5.
2 million executed during the second quarter of fiscal 2025, with $14 million authorization capacity remaining. Mango : Achieved record volumes in Q2 FY2025 and nearly doubled U.
Market from below 5% to close to 10% over the past twelve months.
International Farming Outlook: Mission’s Peruvian avocado duction is jected at 100 million–110 million pounds in FY2025, up from 43 million pounds in the 2024 harvest season.
Industry Volume and Pricing Outlook: Industry volumes are expected to rise 10%-15% in Q3 FY2025, while Average prices per pound are forecast to fall 10%-15% from Q3 FY2024’s $1.
84, due to ample supply. 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.
Mango market.
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.
Mission’s Peruvian avocado duction is jected at 100 million–110 million pounds for the 2025 season, up from 43 million pounds last season, and expansion in blueberry acreage positioning the company for incremental growth as consumer trends favor healthy snacking.
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.
The company expects to offset earlier operational challenges and return to historical levels of cash generation in the second half of FY2025, as seasonal inventories convert and the Peruvian crop is harvested at normalized volumes.
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. We dered record second quarter revenue of $380.
3 million, an increase of 28% versus the prior year period, and generated stronger than expected adjusted EBITDA, demonstrating the continued execution of our global commercial strategy to expand market access in the that we serve.
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. Distributor.
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. The over 100 hectares of new plantings that came online early last year grew our total foot to over 550 hectares.
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.
We're strategically positioning ourselves to capitalize on this trend through a multiyear expansion of acreage that is expected to add more than 200 hectares for the year's season of premium varietals that der superior flavor files and ext shelf life.
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.
If you recall, last year's harvest was significantly impacted by weather events, which decreased volumes by apximately 60%. Our orchards have recovered and are in great shape.
As a result, we expect our duction to be up apximately 50% this season, putting us in a position to meet consistent global consumption.
Given our strong performance last year and a solid first half of fiscal 2025, we are continuing to imve our balance sheet leverage, which vided us with an opportunity to execute $5.
2 million of repurchases during the second quarter, reflecting our belief that the price is undervalued relative to our strength.
With apximately $14 million remaining on our board authorization, we will continue to opportunistically repurchase s when we believe there is a discount to the intrinsic value of Mission duce s in the market.
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.
Total revenue for the second quarter of fiscal 2025 increased 28% to $380.
3 million, largely due to a 26% increase in per-unit avocado selling prices that was driven by continued strength in consumer demand. Gross fit was $28.
4 million in the second quarter compared to $31 million in the prior year period, primarily due to lower avocado per unit margins, which were a result of challenges in obtaining necessary Mexican fruit supply in the early part of the quarter to meet our customer commitments.
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. In addition, we incurred $2.
6 million of cost of sales that we consider to be unique and worth mentioning as you compare results to the prior year period. We sustained $1.
5 million of costs associated with the closure of our Canadian distribution facilities and $1.
1 million in tariffs levied on USMCA-compliant goods imported from Mexico for the three days they were in effect during March 2025.
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.
While gross fit margin decreased 290 basis points to 7.
5% of revenue, we want to note that gross fit percentage fluctuates based upon per-unit sales price levels in relation to per-unit cost, as fitability is primarily managed on a per-unit basis.
Significant increases in per-unit avocado pricing during the quarter had a negative impact on gross fit percentage. SG&A expense increased $2.
8 million or 15% compared to the same period last year, primarily due to higher employee-related costs inclusive of performance-based stock compensation expense, as well as higher fessional fees inclusive of fees for external legal counsel associated with outstanding legal ceedings.
Adjusted net income for the quarter was $8. 7 million or $0. 12 per diluted, compared to $9. 8 million or $0. 14 per diluted l.