19% growth in avocado volume sold compared to same period last year
Year over year market share gains amongst core US retail customer base
Sequential improvement in per-unit margins from fiscal first quarter 2023
Commenced operations at new forward distribution center in the
Owned production in
Fiscal Second Quarter 2023 Financial Overview:
- Total revenue decreased 20% to
$221.1 million compared to the same period last year driven by deflationary pressure on avocado sales prices as a result of robust Mexican harvest volumes - Net loss of
$(4.6) million , or$(0.07) per diluted share, compared to net income of$2.4 million , or$0.03 per diluted share, for the same period last year - Adjusted net income of
$0.5 million , or$0.01 per diluted share, compared to$2.6 million , or$0.04 per diluted share, for the same period last year - Adjusted EBITDA of
$7.6 million , a 17% decrease compared to the same period last year
CEO Message
“Our fiscal second quarter performance was driven by improved sales volumes resulting from a more normal pricing environment versus last year’s record high pricing,” commented
Fiscal Second Quarter 2023 Consolidated Financial Review
Total revenue for the second quarter of fiscal 2023 decreased
Gross profit decreased
Selling, general and administrative expense (“SG&A”) for the second quarter increased
Net loss for the second quarter of fiscal 2023 was
Adjusted net income for the second quarter of fiscal 2023 was
Adjusted EBITDA was
Fiscal Second Quarter Business Segment Performance
Marketing & Distribution
Net sales in the Marketing & Distribution segment decreased 21% to
Segment adjusted EBITDA decreased
International Farming
Substantially all sales of fruit from the International Farming segment are to the Marketing and Distribution segment, with the remainder of revenue largely derived from services provided to third parties and the Blueberries segment. Affiliated sales are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season, which typically runs from April through August of each year. As a result, adjusted EBITDA for the International Farming segment is generally concentrated in the third and fourth quarters of the fiscal year in alignment with the timing of sales. The Company operates approximately 700 acres of mangos in
Total segment sales in the International Farming segment decreased by
Segment adjusted EBITDA improved
Blueberries
Net sales in the Blueberries segment in the second quarter of fiscal 2023 were
Balance Sheet and Cash Flow
Cash and cash equivalents were
The Company’s operating cash flows are seasonal in nature and can be temporarily influenced by working capital shifts resulting from varying payment terms to growers in different source regions. In addition, the Company is building its growing crops inventory in its International Farming segment during the first half of the year for ultimate harvest and sale that will occur during the second half of the fiscal year. While these increases in working capital can cause operating cash flows to be unfavorable in individual quarters, it is not indicative of operating cash performance that management expects to realize for the full year.
Net cash used in operating activities was
Capital expenditures were
Outlook
For the third quarter of fiscal year 2023, the Company is providing the following industry outlook that will drive performance:
- The industry continues to expect volumes to be approximately 20% higher in the fiscal 2023 third quarter versus the prior year period, primarily due to the combination of California’s harvest shifting to the third quarter versus the second quarter last year, a strong Peruvian harvest outlook, and a larger off-bloom Mexican harvest. Expectations for exportable avocado production from Mission’s owned farms is in the range of 125 million to 135 million pounds, the sale of which the Company anticipates will be more heavily weighted to the fiscal fourth quarter.
- Pricing is expected to be consistent on a sequential basis, but lower on a year-over-year basis by approximately 35-40% compared to the
$2.03 per pound average experienced in third quarter of fiscal 2022.
Conference Call and Webcast
As previously announced, the Company will host a conference call to discuss its second quarter of fiscal 2023 financial results today at
The live audio webcast of the conference call will be accessible in the News & Events section on the Company's Investor Relations website at https://investors.missionproduce.com. An archived replay of the webcast will also be available shortly after the live event has concluded.
Non-GAAP Financial Measures
This press release contains the non-GAAP financial measures “adjusted net income” and “adjusted EBITDA.” Management believes these measures provide useful information for analyzing the underlying business results. These measures are not in accordance with, nor are they a substitute for or superior to, the comparable financial measures by generally accepted accounting principles.
Adjusted EBITDA refers to net income (loss), before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, other income (expense), and income (loss) from equity method investees, further adjusted by asset impairment and disposals, net of insurance recoveries, farming costs for nonproductive orchards (which represents land lease costs), certain noncash and nonrecurring ERP costs, transaction costs, amortization of inventory adjustments recognized from business combinations, and any special, non-recurring, or one-time items such as remeasurements or impairments, and any portion of these items attributable to the noncontrolling interest, all of which are excluded from the results the CEO reviews uses to assess segment performance and results.
Reconciliations of these non-GAAP financial measures to the most comparable GAAP measure are provided in the table at the end of this press release.
About
Forward-Looking Statements
Statements in this press release that are not historical in nature are forward-looking statements that, within the meaning of the federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, involve known and unknown risks and uncertainties. Words such as "may", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judgment", "targeting", "should", "anticipate", "goal" and variations of these words and similar expressions, are also intended to identify forward-looking statements. The forward-looking statements in this press release address a variety of subjects, including statements about our short-term and long-term assumptions, goals and targets. Many of these assumptions relate to matters that are beyond our control and changing rapidly. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurances that our expectations will be attained. Readers are cautioned that actual results could differ materially from those implied by such forward-looking statements due to a variety of factors, including: limitations regarding the supply of avocados, either through purchasing or growing; fluctuations in the market price of avocados; increasing competition; risks associated with doing business internationally, including Mexican and Peruvian economic, political and/or societal conditions; inflationary pressures; loss of one or more of our largest customers; general economic conditions or downturns; supply chain failures or disruptions; disruption to the supply of reliable and cost-effective transportation; failure to recruit or retain employees, poor employee relations, and/or ineffective organizational structure; inherent farming risks; seasonality in operating results; failures associated with information technology infrastructure, system security and cyber risks; new and changing privacy laws and our compliance with such laws; food safety events and recalls; failure to comply with laws and regulations, including those promulgated by the
You can obtain copies of our
Contacts:
Investor Relations
ICR
646-277-1263
jeff.sonnek@icrinc.com
Media
Marketing Communications Manager
press@missionproduce.com
Condensed Consolidated Balance Sheets (Unaudited) | |||||
(In millions, except for shares) | |||||
Assets | |||||
Current Assets: | |||||
Cash and cash equivalents | $ | 20.9 | $ | 52.8 | |
Restricted cash | 1.3 | 1.1 | |||
Accounts receivable | |||||
Trade, net of allowances | 79.0 | 62.9 | |||
Grower and fruit advances | 4.3 | 1.8 | |||
Other | 14.3 | 17.3 | |||
Inventory | 96.0 | 73.1 | |||
Prepaid expenses and other current assets | 9.9 | 11.1 | |||
Loans to equity method investees | — | — | |||
Income taxes receivable | 12.4 | 8.0 | |||
Total current assets | 238.1 | 228.1 | |||
Property, plant and equipment, net | 521.1 | 489.7 | |||
Operating lease right-of-use assets | 74.7 | 65.4 | |||
Equity method investees | 26.1 | 27.1 | |||
Loans to equity method investees | — | — | |||
Deferred income tax assets, net | 8.6 | 8.1 | |||
39.4 | 39.4 | ||||
Intangible asset, net | 0.8 | 2.0 | |||
Other assets | 21.8 | 19.7 | |||
Total assets | $ | 930.6 | $ | 879.5 | |
Liabilities and Equity | |||||
Liabilities | |||||
Accounts payable | $ | 30.0 | $ | 34.4 | |
Accrued expenses | 30.0 | 30.1 | |||
Income taxes payable | 0.8 | 1.0 | |||
Grower payables | 32.4 | 24.3 | |||
Short-term borrowings | — | 2.5 | |||
Long-term debt—current portion | 3.6 | 3.5 | |||
Operating leases—current portion | 5.6 | 4.7 | |||
Finance leases—current portion | 1.9 | 1.2 | |||
Total current liabilities | 104.3 | 101.7 | |||
Long-term debt, net of current portion | 170.2 | 136.9 | |||
Loans from noncontrolling interest holders | 3.4 | 1.0 | |||
Operating leases, net of current portion | 72.9 | 63.9 | |||
Finance leases, net of current portion | 15.1 | 1.4 | |||
Income taxes payable | 2.3 | 3.1 | |||
Deferred income tax liabilities, net | 28.9 | 29.4 | |||
Other long-term liabilities | 22.1 | 19.2 | |||
Total liabilities | 419.2 | 356.6 | |||
Equity | |||||
491.1 | 502.1 | ||||
Noncontrolling interest | 20.3 | 20.8 | |||
Total equity | 511.4 | 522.9 | |||
Total liabilities and equity | $ | 930.6 | $ | 879.5 |
Condensed Consolidated Statements of (Loss) Income (Unaudited) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
(In millions, except for share and per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||
Net sales | $ | 221.1 | $ | 278.1 | $ | 434.6 | $ | 494.7 | |||||
Cost of sales | 203.0 | 258.3 | 407.5 | 474.4 | |||||||||
Gross profit | 18.1 | 19.8 | 27.1 | 20.3 | |||||||||
Selling, general and administrative expenses | 19.3 | 18.7 | 38.4 | 37.4 | |||||||||
Operating (loss) income | (1.2 | ) | 1.1 | (11.3 | ) | (17.1 | ) | ||||||
Interest expense | (2.7 | ) | (1.1 | ) | (5.1 | ) | (2.0 | ) | |||||
Equity method income | 0.4 | 0.3 | 1.4 | 1.9 | |||||||||
Other income (expense), net | 0.6 | 2.9 | (0.2 | ) | 4.5 | ||||||||
(Loss) income before income taxes | (2.9 | ) | 3.2 | (15.2 | ) | (12.7 | ) | ||||||
Provision (benefit) for income taxes | 1.8 | 0.8 | 0.1 | (1.7 | ) | ||||||||
Net (loss) income | $ | (4.7 | ) | $ | 2.4 | $ | (15.3 | ) | $ | (11.0 | ) | ||
Net loss attributable to noncontrolling interest | (0.1 | ) | — | (1.9 | ) | — | |||||||
Net (loss) income attributable to | $ | (4.6 | ) | $ | 2.4 | $ | (13.4 | ) | $ | (11.0 | ) | ||
Net (loss) income per share attributable to | |||||||||||||
Basic | $ | (0.07 | ) | $ | 0.03 | $ | (0.19 | ) | $ | (0.16 | ) | ||
Diluted | $ | (0.07 | ) | $ | 0.03 | $ | (0.19 | ) | $ | (0.16 | ) | ||
Weighted average shares of common stock outstanding, used in computing diluted earnings per share | $ | 70,744,688 | $ | 70,693,423 | $ | 70,716,273 | $ | 70,633,888 |
Condensed Consolidated Statements of Cash Flow (Unaudited) | ||||||
Six Months Ended | ||||||
(In millions) | 2023 | 2022 | ||||
Operating Activities | ||||||
Net loss | $ | (15.3 | ) | $ | (11.0 | ) |
Adjustments to reconcile net loss to net cash used in operating activities | ||||||
Provision for losses on accounts receivable | — | 0.1 | ||||
Depreciation and amortization | 15.2 | 10.1 | ||||
Amortization of debt issuance costs | 0.1 | 0.2 | ||||
Equity method income | (1.4 | ) | (1.9 | ) | ||
Noncash lease expense | 2.9 | 2.5 | ||||
Stock-based compensation | 2.0 | 1.7 | ||||
Dividends received from equity method investees | 2.7 | 2.2 | ||||
Losses on asset impairment, disposals and sales, net of insurance recoveries | 0.8 | — | ||||
Deferred income taxes | (0.9 | ) | (0.1 | ) | ||
Unrealized gains on derivative financial instruments | — | (3.0 | ) | |||
Effect on cash of changes in operating assets and liabilities: | ||||||
Trade accounts receivable | (15.8 | ) | (29.6 | ) | ||
Grower fruit advances | (2.5 | ) | (3.7 | ) | ||
Other receivables | 3.2 | 1.6 | ||||
Inventory | (21.1 | ) | (40.7 | ) | ||
Prepaid expenses and other current assets | 1.2 | 0.9 | ||||
Income taxes receivable | (4.4 | ) | (5.8 | ) | ||
Other assets | 1.4 | (0.1 | ) | |||
Accounts payable and accrued expenses | (2.0 | ) | 7.3 | |||
Income taxes payable | (1.0 | ) | (0.5 | ) | ||
Grower payables | 8.2 | 36.4 | ||||
Operating lease liabilities | (2.3 | ) | (2.1 | ) | ||
Other long-term liabilities | 2.9 | (1.5 | ) | |||
Net cash used in operating activities | $ | (26.1 | ) | $ | (37.0 | ) |
Investing Activities | ||||||
Purchases of property, plant and equipment | (34.9 | ) | (29.1 | ) | ||
Proceeds from sale of property, plant and equipment | 0.1 | 2.9 | ||||
Investment in equity method investees | (0.3 | ) | (0.3 | ) | ||
Purchase of other investment | (2.3 | ) | — | |||
Loan repayments from equity method investees | — | 1.0 | ||||
Other | (0.1 | ) | (0.3 | ) | ||
Net cash used in investing activities | $ | (37.5 | ) | $ | (25.8 | ) |
Financing Activities | ||||||
Borrowings on revolving credit facility | 135.0 | 20.0 | ||||
Payments on revolving credit facility | (100.0 | ) | (20.0 | ) | ||
Repayment of short-term borrowings | (2.5 | ) | — | |||
Principal payments on long-term debt obligations | (1.8 | ) | (4.4 | ) | ||
Principal payments on finance lease obligations | (2.0 | ) | (0.6 | ) | ||
Taxes paid related to shares withheld from the settlement of equity awards | (0.4 | ) | — | |||
Proceeds from loan from noncontrolling interest holder | 2.4 | — | ||||
Equity contributions from noncontrolling interest holders | 1.4 | — | ||||
Net cash provided by (used in) financing activities | $ | 32.1 | $ | (5.0 | ) | |
Effect of exchange rate changes on cash | (0.2 | ) | (0.4 | ) | ||
Net decrease in cash, cash equivalents and restricted cash | (31.7 | ) | (68.2 | ) | ||
Cash, cash equivalents and restricted cash, beginning of period | 53.9 | 92.2 | ||||
Cash, cash equivalents and restricted cash, end of period | $ | 22.2 | $ | 24.0 | ||
Summary of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets: | ||||||
Cash and cash equivalents | $ | 20.9 | $ | 21.4 | ||
Restricted cash | 1.3 | 2.6 | ||||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | 22.2 | $ | 24.0 |
Reconciliation of Non-GAAP Financial Measures to GAAP (Unaudited)
The following tables reconcile the non-GAAP measures “adjusted net income” and “adjusted EBITDA” to their comparable GAAP measures. Refer also to “Non-GAAP Financial Measures” earlier in this press release.
Adjusted net income (loss)
Three Months Ended | Six Months Ended | ||||||||||||
(In millions, except for per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||
Net (loss) income attributable to | $ | (4.6 | ) | $ | 2.4 | $ | (13.4 | ) | $ | (11.0 | ) | ||
Stock-based compensation | 1.3 | 0.9 | 2.0 | 1.7 | |||||||||
Unrealized loss (gain) on derivative financial instruments | 0.5 | (2.7 | ) | 1.1 | (4.1 | ) | |||||||
Foreign currency transaction loss (gain) | 0.4 | 0.4 | 1.3 | (0.1 | ) | ||||||||
Asset impairment and disposals, net of insurance recoveries | 0.5 | (0.1 | ) | 0.8 | — | ||||||||
Farming costs for nonproductive orchards(1) | 0.9 | 0.3 | 1.8 | 0.8 | |||||||||
ERP costs(2) | 0.5 | 1.3 | 1.1 | 2.8 | |||||||||
Transaction costs | 0.2 | 0.1 | 0.3 | 0.5 | |||||||||
Amortization of inventory adjustment recognized from business combination | — | — | 0.7 | — | |||||||||
Amortization of intangible asset recognized from business combination | — | — | 1.2 | — | |||||||||
Tax effects of adjustments to net loss attributable to | (0.9 | ) | — | (2.2 | ) | (0.2 | ) | ||||||
Nonrecurring discrete tax charge(4) | 1.8 | — | 1.8 | — | |||||||||
Noncontrolling interest(5) | (0.1 | ) | — | (1.0 | ) | — | |||||||
$ | 0.5 | $ | 2.6 | $ | (4.5 | ) | $ | (9.6 | ) | ||||
$ | 0.01 | $ | 0.04 | $ | (0.06 | ) | $ | (0.14 | ) |
(1) During the three months ended
(2) Includes recognition of deferred implementation costs for both periods. Amounts for the three and six months ended
(3) Tax effects are calculated using applicable rates that each adjustment relates to.
(4) During the three and six months ended
(5) Represents net loss attributable to noncontrolling interest plus the impact of tax-effected non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
Adjusted EBITDA
Three Months Ended | Six Months Ended | |||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||
Marketing and Distribution adjusted EBITDA | $ | 8.6 | $ | 11.7 | $ | 13.2 | $ | 4.0 | ||||
International Farming adjusted EBITDA | (1.1 | ) | (2.5 | ) | (2.9 | ) | (5.2 | ) | ||||
Blueberries adjusted EBITDA | 0.1 | — | (0.4 | ) | — | |||||||
Total reportable segment adjusted EBITDA | 7.6 | 9.2 | $ | 9.9 | $ | (1.2 | ) | |||||
Net (loss) income | (4.7 | ) | 2.4 | (15.3 | ) | (11.0 | ) | |||||
Interest expense | 2.7 | 1.1 | 5.1 | 2.0 | ||||||||
Provision (benefit) for income taxes | 1.8 | 0.8 | 0.1 | (1.7 | ) | |||||||
Depreciation and amortization(1) | 5.9 | 5.6 | 15.2 | 10.1 | ||||||||
Equity method income | (0.4 | ) | (0.3 | ) | (1.4 | ) | (1.9 | ) | ||||
Stock-based compensation | 1.3 | 0.9 | 2.0 | 1.7 | ||||||||
Asset impairment and disposals, net of insurance recoveries | 0.5 | (0.1 | ) | 0.8 | — | |||||||
Farming costs for nonproductive orchards | 0.4 | 0.3 | 0.8 | 0.8 | ||||||||
ERP costs(2) | 0.5 | 1.3 | 1.1 | 2.8 | ||||||||
Transaction costs | 0.2 | 0.1 | 0.3 | 0.5 | ||||||||
Amortization of inventory adjustment recognized from business combination | — | — | 0.7 | — | ||||||||
Other (income) expense | (0.6 | ) | (2.9 | ) | 0.2 | (4.5 | ) | |||||
Noncontrolling interest(3) | — | — | 0.3 | — | ||||||||
Total adjusted EBITDA | $ | 7.6 | $ | 9.2 | $ | 9.9 | $ | (1.2 | ) |
(1) Includes depreciation and amortization of purchase accounting assets of
(2) Includes recognition of deferred implementation costs for both periods, and for the three and six months ended
(3) Represents net loss attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
Other Information (Unaudited)
Segment Sales
Marketing and Distribution | International Farming | Blueberries(1) | Total | Marketing and Distribution | International Farming | Total | |||||||||||||||
Three Months Ended | |||||||||||||||||||||
(In millions) | 2023 | 2022 | |||||||||||||||||||
Third party sales | $ | 215.3 | $ | 4.1 | $ | 1.7 | $ | 221.1 | $ | 273.7 | $ | 4.4 | $ | 278.1 | |||||||
Affiliated sales | — | 1.9 | — | 1.9 | — | 2.6 | 2.6 | ||||||||||||||
Total segment sales | 215.3 | 6.0 | 1.7 | 223.0 | 273.7 | 7.0 | 280.7 | ||||||||||||||
Intercompany eliminations | — | (1.9 | ) | — | (1.9 | ) | — | (2.6 | ) | (2.6 | ) | ||||||||||
Total net sales | $ | 215.3 | $ | 4.1 | $ | 1.7 | $ | 221.1 | $ | 273.7 | $ | 4.4 | $ | 278.1 | |||||||
Six Months Ended | |||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||
Third party sales | $ | 397.1 | $ | 6.0 | $ | 31.5 | $ | 434.6 | $ | 486.0 | $ | 8.7 | $ | 494.7 | |||||||
Affiliated sales | — | 5.7 | — | 5.7 | — | 1.6 | 1.6 | ||||||||||||||
Total segment sales | 397.1 | 11.7 | 31.5 | 440.3 | 486.0 | 10.3 | 496.3 | ||||||||||||||
Intercompany eliminations | — | (5.7 | ) | — | (5.7 | ) | — | (1.6 | ) | (1.6 | ) | ||||||||||
Total net sales | $ | 397.1 | $ | 6.0 | $ | 31.5 | $ | 434.6 | $ | 486.0 | $ | 8.7 | $ | 494.7 |
(1) Moruga was consolidated with the Company prospectively from
Avocado Sales
Three Months Ended | Six Months Ended | ||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||
Pounds of avocados sold (millions) | 155.9 | 131.5 | 308.2 | 265.5 | |||||||
Average sales price per pound | $ | 1.30 | $ | 2.04 | $ | 1.22 | $ | 1.80 |
Sales by Type
Three Months Ended | Six Months Ended | ||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||
Avocado | $ | 202.9 | $ | 268.5 | $ | 376.9 | $ | 477.6 | |||
Other | 18.2 | 9.6 | 57.7 | 17.1 | |||||||
Total net sales | $ | 221.1 | $ | 278.1 | $ | 434.6 | $ | 494.7 |
Source:
2023 GlobeNewswire, Inc., source