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MP

Mission Produce, Inc. (AVO)·Q1 2025 Earnings Summary

Executive Summary

  • Record Q1 revenue of $334.2M (+29% YoY) with diluted EPS of $0.05; adjusted EPS $0.10; adjusted EBITDA $17.7M (-8% YoY) as higher avocado prices and volumes lifted sales but lower per‑unit margins compressed profitability .
  • Segment mix: Marketing & Distribution net sales +32% to $295.8M on +25% price and +5% volume; Blueberries revenue +12% to $36.4M on +70% volume offset by -33% price; International Farming adjusted EBITDA improved to $1.8M (from -$0.5M) on higher blueberry packing/cooling services .
  • Gross margin fell 170 bps to 9.4%, with margin pressure tied to unstable Mexican supply necessitating greater co‑packer/spot purchases and Canada facility closures, partially offset by improved International Farming utilization; operating cash flow was -$1.2M on working capital build at higher unit prices .
  • Outlook: For Q2 FY25, management expects industry volumes roughly flat YoY, pricing ~+5% YoY vs $1.59/lb in Q2 FY24, and Blueberries volumes +35–40% on ~20% of harvest sold; FY25 capex maintained at $50–$55M; tariff scenarios are excluded from assumptions .
  • S&P Global consensus estimates were unavailable through our tool at this time due to an API limit; estimate comparisons are therefore omitted (will update when available).

What Went Well and What Went Wrong

What Went Well

  • Record Q1 revenue driven by resilient avocado demand at higher prices (+25% YoY) with volumes +5%; CEO: “volume growth despite industry supply challenges in Mexico,” highlighting category strength .
  • Diversification working: Blueberries scaling (revenue +12%) with 70% volume growth; International Farming EBITDA positive on better fixed‑cost absorption from blueberry packing activity .
  • Strategic investments and asset utilization: management emphasized leveraging California/Peru sourcing and expanded blueberry acreage/yields; CFO cited improved equity income (China JV) and lower interest expense supporting adjusted net income .

What Went Wrong

  • Margin compression: Gross margin -170 bps to 9.4% on lower per‑unit avocado margins due to unstable Mexican supply and higher co‑packer/spot purchases; segment EBITDA for Marketing & Distribution fell to $9.7M from $11.0M .
  • Blueberries price normalization: Average blueberry prices -33% YoY offsetting volume gains, driving segment adjusted EBITDA down to $6.2M from $8.7M .
  • Working capital drag and cash flow: Operating cash flow was -$1.2M vs +$9.5M prior year on higher AR/inventory at elevated avocado prices and growing crop build; capex stepped up to $14.8M (packhouse Guatemala, orchards, blueberries) .

Financial Results

Headline P&L vs recent quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$324.0 $354.4 $334.2
Net Income Attributable to Mission ($M)$12.4 $17.3 $3.9
Diluted EPS ($)$0.17 $0.24 $0.05
Gross Profit ($M)$37.0 $55.8 $31.5
Gross Margin (%)11.4% 15.7% 9.4%
Operating Income ($M)$16.8 $28.6 $9.3
Adjusted EBITDA ($M)$31.5 $36.9 $17.7

Note: Consensus estimate comparison omitted due to S&P Global API limit (will update when available).

Segment breakdown (Q1 2025 vs Q1 2024)

SegmentQ1 2024Q1 2025
Marketing & Distribution – Net Sales ($M)$224.6 $295.8
Marketing & Distribution – Adjusted EBITDA ($M)$11.0 $9.7
International Farming – Total Sales ($M)$5.8 $9.2
International Farming – Adjusted EBITDA ($M)-$0.5 $1.8
Blueberries – Net Sales ($M)$32.5 $36.4
Blueberries – Adjusted EBITDA ($M)$8.7 $6.2

KPIs and Cash/Capex (Q1 2025 vs Q1 2024)

KPIQ1 2024Q1 2025
Avocado pounds sold (M)151.6 159.9
Avg. avocado price ($/lb)$1.40 $1.75
Sales by type – Avocado ($M)$212.3 $279.2
Sales by type – Other ($M)$46.4 $55.0
Cash from operations ($M)$9.5 $(1.2)
Capital expenditures ($M)$9.9 $14.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
CapExFY25$50–$55M $50–$55M Maintained
Avocado industry volumesQ2 FY25NARoughly flat YoY New
Avocado industry pricingQ2 FY25NA~+5% YoY vs $1.59/lb (Q2 FY24 reference) New
Blueberries volumes/pricingQ2 FY25NA~20% of harvest sold; volumes +35–40% YoY; prices sequentially down but ~flat YoY New
Q1 avocado pricing (from prior outlook)Q1 FY25Expected ~+20% YoY vs $1.40/lb Actual +25% YoY to $1.75/lb Outcome above prior outlook

Note: Management explicitly excluded potential tariff impacts from outlook assumptions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Mexico supply constraintsWeather and harvesting disruptions constrained supply; pricing elevated; per‑unit margins strong in M&D .Unstable supply required higher co‑packer/spot sourcing; per‑unit margins compressed; size skew impacted by prior El Niño .Worsened near term
Tariffs/macroNot a driver previously highlighted in outlooks; focus on pricing/supply dynamics .Tariff uncertainty acknowledged; 3 days of tariff implementation caused some border “bumps,” but deliveries maintained; outlook excludes tariff effects .Emerging risk
Blueberries scalingQ4: strong volumes and EBITDA on better weather; growth from new plantings and yields .Volumes +70% YoY; prices normalized -33% YoY; EBITDA down; Q2 volumes +35–40% expected .Mixed (volume up, price down)
International Farming utilizationQ4: EBITDA up despite lower owned avocado volumes; cost savings, price supported .EBITDA turned positive in Q1 on higher blueberry packing/cooling services, improving absorption .Improving
Working capital/cash flowQ3: strong YTD operating cash flow; favorable grower payables mix .Seasonal strain at higher prices drove -$1.2M CFO; expected to unwind in 2H as mix shifts .Seasonal headwind
Network/footprint actionsGuatemala packhouse construction underway; diversified sourcing stressed .Canada facility closures in Q1 to optimize footprint; Guatemala packhouse inauguration announced Apr 24, 2025 .Portfolio optimization

Management Commentary

  • CEO: “We were pleased to meet robust consumer demand… and deliver volume growth despite industry supply challenges in Mexico… diversification across categories and markets helped us deliver solid bottom‑line results” .
  • CFO: “Adjusted EBITDA was $17.7 million… due primarily to lower per‑unit gross margins on fruit sold in our Marketing Distribution and Blueberry segments,” with lower interest expense and higher equity income aiding adjusted net income .
  • Outlook color: Industry volumes flat YoY in Q2; pricing ~+5% YoY; Blueberries ~20% of harvest sold in Q2 with volumes +35–40% YoY; FY25 capex $50–$55M; tariff scenarios excluded .
  • Strategic positioning: Emphasis on leveraging California and Peruvian sourcing, expanding blueberries/mangos, and enhancing asset utilization (e.g., Peru packing for blueberries; Guatemala packhouse) .

Q&A Highlights

  • Mexican supply/co‑packers: Co‑packer and spot market purchases ran “much higher” than typical to meet customer size/volume commitments amid a smaller‑than‑expected Mexico harvest; management expects reduced reliance as expectations normalize and other origins ramp .
  • Working capital: Seasonal first‑half strain accentuated by higher prices and Mexico payment terms; expected to unwind in second half as owned Peru fruit harvests and mix shifts away from Mexico .
  • Tariffs: More supplier/customer dialogue around the March episode; despite 3 days of tariff implementation and some border “bumps,” AVO delivered commitments; base‑case outlook excludes tariff impact .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 FY25 EPS/Revenue was unavailable via our tool due to an API limit at the time of analysis; estimate comparisons are therefore omitted and will be updated when available.
  • Implications: Despite revenue upside versus prior year, margin normalization (lower per‑unit avocado margins, blueberry price normalization) and seasonally weaker cash conversion suggest near‑term estimate adjustments may focus on gross margin/EBITDA run‑rate and working capital intensity; Q2 industry pricing +~5% YoY and blueberry volume uplift could support top‑line, while mix/sourcing costs will be key to model margins .

Key Takeaways for Investors

  • Record Q1 revenue but margin normalization: Higher prices/volumes lifted sales, yet lower per‑unit margins (Mexico supply instability, co‑packers/spot) compressed GM and segment EBITDA—watch sourcing mix and tariff path into Q2 .
  • Q2 setup: Flat industry volumes with pricing ~+5% YoY vs $1.59/lb last year; blueberry volumes +35–40% on ~20% of harvest—top‑line supportive, margin trajectory hinges on procurement mix and price elasticity .
  • Diversification showing through: International Farming EBITDA inflecting positive on blueberry packing; category expansion (blueberries/mangos) offsets avocado cyclicality, though blueberry price normalization weighs on per‑unit margins .
  • Cash/Capex: Seasonal working capital headwinds (-$1.2M CFO) should ease in 2H; FY25 capex steady at $50–$55M (Guatemala packhouse, orchards, blueberries) .
  • Operational footprint: Canada facility closures should support long‑term efficiency; Guatemala packhouse inauguration (April) enhances sourcing flexibility and year‑round supply positioning .
  • Modeling focus: Monitor gross margin recovery as California/Peru ramp, co‑packer reliance normalizes, and price elasticity remains favorable; scrutinize Q2 commentary on tariffs and Mexico harvest sizing .