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MP

Mission Produce, Inc. (AVO)·Q2 2025 Earnings Summary

Executive Summary

  • Record revenue with strong pricing but compressed margins: Revenue rose 28% to $380.3M, driven by a 26% increase in avocado ASP to $2.00/lb, while volumes were flat; gross margin fell to 7.5% on supply constraints and non-recurring costs .
  • Mixed EPS picture: GAAP diluted EPS declined to $0.04 from $0.10 YoY on lower per-unit margins and unique costs (Canada closures $1.5M and three-day Mexican tariffs $1.1M), while adjusted EPS was $0.12 .
  • Segment diversification helped: Blueberries revenue +57% to $15.7M; International Farming turned positive adjusted EBITDA ($1.5M), aided by owned mango orchards and blueberry services .
  • Guidance: Q3 industry volumes expected +10–15% YoY on a strong Peru harvest; pricing expected 10–15% lower vs Q3 FY24; FY25 CapEx maintained at $50–$55M .
  • Against S&P Global consensus, AVO delivered significant beats: Q2 revenue $380.3M vs $296.2M estimate*; normalized/primary EPS $0.12 vs $0.055 estimate*. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Commercial execution drove record Q2 revenue despite seasonal Mexico challenges; management emphasized leveraging “industry‑leading global source network” to satisfy commitments .
  • Mango business achieved record volumes and meaningful U.S. market share gains; International Farming adjusted EBITDA turned positive on improved utilization/efficiencies .
  • UK operations gained momentum with enhanced customer penetration and facility utilization, validating prior investment .

What Went Wrong

  • Gross margin compressed to 7.5% (down 290 bps YoY) due to lower per‑unit margins from Mexican supply constraints and unique cost items (Canada closures $1.5M; short‑lived tariffs $1.1M) .
  • Marketing & Distribution segment adjusted EBITDA fell to $16.8M from $21.7M YoY on tighter per‑unit margins and higher SG&A (employee costs, legal fees) .
  • Working capital build and higher fruit prices led to negative operating cash flow in 1H (-$13.0M) versus +$12.9M last year .

Financial Results

Consolidated P&L snapshot vs prior quarters and year

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$354.4 $334.2 $380.3
GAAP Diluted EPS ($)$0.24 $0.05 $0.04
Adjusted EPS ($)$0.28 $0.10 $0.12
Gross Profit ($USD Millions)$55.8 $31.5 $28.4
Gross Margin (%)15.7% 9.4% 7.5%

Segment revenue and adjusted EBITDA

SegmentQ2 2024 Sales ($M)Q1 2025 Sales ($M)Q2 2025 Sales ($M)Q2 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Q2 2025 Adj. EBITDA ($M)
Marketing & Distribution$287.1 $295.8 $362.5 $21.7 $9.7 $16.8
International Farming$0.5 $2.0 $2.1 ($2.2) $1.8 $1.5
Blueberries$10.0 $36.4 $15.7 $0.7 $6.2 $0.8

KPIs

KPIQ4 2024Q1 2025Q2 2025
Avocado Pounds Sold (MM)161.1 159.9 166.4
Avg Sales Price ($/lb)$1.90 $1.75 $2.00
Cash & Cash Equivalents ($M)$58.0 $40.1 $36.7
SG&A ($M)$27.2 $22.2 $21.5
Share Repurchases ($M)—$0.3 $5.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Industry Avocado Volumes (directional)Q3 FY25N/A+10–15% YoY on strong Peru harvest New
Avocado Pricing vs prior yearQ3 FY25N/A10–15% lower vs $1.84/lb in Q3 FY24 New
Exportable Avocado Production (owned Peru)Q3–Q4 FY25N/A100–110MM lbs; sales weighted to Q4 New
Total Capital Expenditures ($)FY25$50–$55M $50–$55M Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Supply chain/Mexico constraintsQ4: Leveraged diversified sourcing; strong M&D margins . Q1: Met demand despite Mexico challenges; ASP +25% .Early-quarter margin pressure from Mexico; improvement as CA/Peru volumes ramped .Improving availability; margins recovering intra-quarter.
Tariffs/macroQ1: Flagged fluid tariff uncertainty .Three-day Mexican tariff cost ($1.1M); behavior normalized by April; minimal port disruption post-Apr 9 .Normalizing; short-lived impact.
Peruvian harvest recoveryQ4: FY24 owned production -60% to 43MM lbs due to weather .Expect +150% production YoY, 100–110MM lbs exportable; quality/sizing positive .Strong recovery; second-half cash flow set-up.
Mango program expansionQ4: Strategic growth beyond avocados . Q1: Blueberries scale; diversification benefits .Record mango volumes; market share gains; now the #2 U.S. distributor .Accelerating; structural capability advantage.
UK/International distributionQ4: UK facility ramp .UK forward DC utilization improving; deeper penetration with large accounts .Utilization up; validation of investment.
Co-packer usage/capacity actionsQ1: Higher co-packer volumes due to Mexico .Normalized by mid-March; adding 25–50 loads/week capacity in Mexico packhouses .Internal capacity up; reduced reliance.
CapEx and FCF trajectoryQ4: CapEx $32.2M; operating cash flow +$64.2M YoY .FY25 CapEx $50–$55M (includes FY24 rollover); moderating spend; future FCF focus .Stable guidance; pivot to FCF post-projects.

Management Commentary

  • “We delivered record second quarter revenue and stronger than expected adjusted EBITDA…leveraging our industry‑leading global source network to satisfy customer commitments.” — Steve Barnard, CEO .
  • “Mango business gained significant market share and achieved record volumes…UK operations are steadily gaining momentum through enhanced customer penetration.” — Steve Barnard, CEO .
  • “Gross profit was $28.4M…lower avocado per‑unit margins…$1.5M costs associated with closure of Canadian facilities and $1.1M in tariffs.” — Bryan Giles, CFO .
  • “Exportable avocado production from Mission’s own farms in Peru is expected to range between 100–110MM lbs…pricing is expected to be lower YoY by ~10–15%.” — Bryan Giles, CFO .

Q&A Highlights

  • Peru harvest quality/sizing: Management expects good quality and normalized sizing distributions; orchards recovered with production exceeding expectations .
  • Co-packer normalization: Elevated co-packer use early in Q2 normalized by mid-March as CA and Peru volumes ramped; adding 25–50 weekly loads capacity in Mexico packhouses with minimal spend .
  • Tariff behavior: January–March uncertainty caused brief holding at borders; post-April tariffs, operations stabilized with minimal port disruption; greater supply expected to moderate pricing despite tariffs .
  • Mango market share: AVO now ~10% share (up from <5% twelve months ago), positioning as #2 U.S. distributor; multi-port/DC footprint enables nationwide programs .

Estimates Context

MetricQ4 2024 Consensus*Q4 2024 ActualQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 Actual
Revenue ($USD Millions)216.8*354.4 285.6*334.2 296.15*380.3
Primary/Normalized EPS ($)0.08*0.28*0.025*0.10*0.055*0.12*

Values retrieved from S&P Global.*
Note: Primary/Normalized EPS reflects adjusted/non-GAAP per S&P Global taxonomy; GAAP diluted EPS for Q2 2025 was $0.04 .

Implications:

  • Revenue materially exceeded consensus across the last three quarters; Q2 ’25 beat by ~28%. Adjusted EPS also beat materially; GAAP EPS declined YoY due to margin compression and unique charges . Values retrieved from S&P Global.

Key Takeaways for Investors

  • Pricing tailwind with volume flat: Elevated ASPs drove record revenue, but margin compression and unique costs weighed on GAAP EPS; watch ASP normalization as Peru volumes rise .
  • Diversification is working: Mango strength and blueberry services improved International Farming EBITDA seasonality; supports utilization and earnings breadth .
  • Second-half setup constructive: Peru owned production expected 100–110MM lbs with sales weighted to Q4; Q3 volumes +10–15% YoY and pricing -10–15% YoY point to consumption resiliency and working capital unwind .
  • Capacity self-help: Added Mexico packhouse capacity (25–50 loads/week) reduces co-packer reliance, helping margins in supply-constrained windows .
  • CapEx discipline and capital returns: FY25 CapEx held at $50–$55M; opportunistic $5.2M buybacks reflect confidence; medium-term pivot to stronger free cash flow as projects roll off .
  • Risk monitor: Tariff policy and Mexico supply remain variables; management commentary suggests operations stabilized post-April, but pricing will moderate with higher volumes .
  • Trading lens: Near-term catalysts include Q3 volume ramp and Q4 Peru-owned sales; sentiment likely tied to margin trajectory amid falling ASPs and execution on internal capacity to protect per-unit margins .

Appendix: Additional Detail

  • Balance sheet/cash flow: Cash $36.7M; LT debt $144.2M; 1H operating cash flow -$13.0M driven by receivables (high ASP) and inventory build; expected second-half cash generation .
  • Non-GAAP adjustments and one-time items: Canada site closures, tariffs, ERP, farming costs, FX; reconciliations provided in press release .
  • Other Q2 press releases: Guatemala packhouse inaugurated April 24, 2025; strategic vertical integration to bridge supply gaps and enhance year-round availability .