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MP

Mission Produce, Inc. (AVO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered strong top and bottom-line performance: revenue $354.4M (+37% YoY), diluted EPS $0.24, adjusted EBITDA $36.9M (+113% YoY), driven by elevated avocado pricing and outsized Marketing & Distribution margins; Blueberries contributed materially on higher volumes .
  • Results exceeded the November prerelease “floor” (revenue >$320M, adj. EBITDA >$28M) as actuals benefited from stronger-than-expected blueberry sell-through and pricing resilience into quarter-end; management confirmed the delta vs prerelease in Q&A .
  • FY24 cash generation was a highlight: operating cash flow $93.4M, with ~$60M free cash flow; capital spending tapered ($32.2M) vs prior outlook due to timing shifts into FY25, further strengthening the balance sheet (cash $58.0M) .
  • FY25 Q1 outlook: industry volumes consistent YoY; avocado pricing ~20% higher vs $1.40/lb in Q1 FY24; per-unit margins on purchased avocados expected to normalize from elevated levels; Peru blueberries pricing ~30% lower on higher industry supply, pressuring Blueberries EBITDA sequentially .
  • Strategic updates as potential catalysts: USDA approval for Guatemalan avocado imports and winding down Toronto/Calgary facilities to eliminate redundant costs; management emphasized network flexibility and efficiency uplift .

What Went Well and What Went Wrong

What Went Well

  • Marketing & Distribution per-unit margins exceeded targeted range amid sustained higher pricing, showcasing Mission’s differentiated global sourcing and ability to prioritize North American demand at high price points .
  • Blueberries strength: net sales up 62% to $31.6M; adjusted EBITDA up 59% to $8.6M, driven by new plantings and yield improvements post El Niño weather normalization in Peru .
  • Cash generation and capital discipline: FY24 operating cash flow up $64.2M to $93.4M; ~$60M free cash flow; debt paydown remains near-term priority, positioning for ongoing FCF and balance sheet strengthening .

What Went Wrong

  • International Farming segment sales fell to $30.3M from $40.3M YoY due to materially lower owned Peruvian volumes from El Niño; though pricing and cost actions supported positive EBITDA, volume-driven fixed-cost absorption was a headwind .
  • SG&A rose 32% to $27.2M on incentive compensation, stock-based comp and statutory profit sharing—reflecting performance but a cost headwind that partially offset gross profit gains .
  • Near-term normalization: avocado per-unit margins expected to revert to historical ranges as Mexico volumes ramp; Peru blueberries pricing ~30% lower YoY in Q1 FY25 likely to compress segment adjusted EBITDA vs last year’s abnormally high prices .

Financial Results

Consolidated and KPI comparison (YoY / sequential)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$257.9 $324.0 $354.4
Diluted EPS ($USD)$0.06 $0.17 $0.24
Adjusted Net Income ($USD Millions)$7.5 $16.7 $19.6
Adjusted EPS ($USD)$0.11 $0.23 $0.28
Adjusted EBITDA ($USD Millions)$17.3 $31.5 $36.9
Gross Profit ($USD Millions)$27.8 $37.0 $55.8
SG&A ($USD Millions)$20.6 $20.2 $27.2
Operating Income ($USD Millions)$7.2 $16.8 $28.6
Avocado Pounds Sold (Millions)162.4 166.1 161.1
Average Sales Price per Pound ($/lb)$1.39 $1.84 $1.90

Segment breakdown

Segment MetricQ4 2023Q3 2024Q4 2024
Marketing & Distribution Net Sales ($M)$236.2 $321.3 $319.6
Marketing & Distribution Adjusted EBITDA ($M)$10.8 $26.8 $25.6
International Farming Sales ($M)$40.3 $27.4 $30.3
International Farming Adjusted EBITDA ($M)$1.1 $4.6 $2.7
Blueberries Net Sales ($M)$19.5 $1.6 $31.6
Blueberries Adjusted EBITDA ($M)$5.4 $0.1 $8.6

Q4 2024 vs Estimates (S&P Global)

MetricQ4 2024 ActualQ4 2024 ConsensusBeat/Miss
Revenue ($USD Millions)$354.4 N/AN/A
Diluted EPS ($USD)$0.24 N/AN/A
Adjusted EBITDA ($USD Millions)$36.9 N/AN/A
Note: Wall Street consensus from S&P Global was unavailable at the time of writing.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueQ4 2024“> $320M” prerelease (Nov 5) $354.4M actual Raised/Beat vs prerelease
Adjusted EBITDAQ4 2024“> $28M” prerelease (Nov 5) $36.9M actual Raised/Beat vs prerelease
Avocado PricingQ1 FY25—~20% higher YoY vs $1.40/lb in Q1 FY24 New
Avocado Per-Unit MarginsQ1 FY25—Normalize to historical targeted range as Mexico volumes ramp New
Blueberries PricingQ1 FY25—~30% lower YoY; segment EBITDA negatively impacted New
Capital ExpendituresFY2024$40–$45M (Sept 9) $32.2M actual; ~$10M timing shift to FY25 Lowered (timing shift)
Capital ExpendituresFY2025—$50–$55M, primarily International Farming (Guatemala) and Blueberries (Peru) New
Distribution FootprintQ1 FY25—Wind down Toronto and Calgary facilities to remove redundant costs New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY24)Previous Mentions (Q3 FY24)Current Period (Q4 FY24)Trend
Avocado pricing & marginsPer-unit margins strong; volumes +8%, prices +22%; adj. EBITDA record; network flexibility Prices +36%, domestic demand resilient; per-unit margins > target Elevated pricing drove per-unit margins above targeted range; expect normalization in Q1 FY25 Resilient pricing; normalization ahead
El Niño impact on Peru farmingAnticipated >50% lower owned volumes; cost optimization to mitigate Lower yields; asset write-down; pricing offset most impacts Owned volume down ~60%; International Farming sales down; EBITDA positive on pricing and cost actions Weather headwinds easing; operational improvements
Blueberries strategyHarvest timing boosted Q2; early-stage EBITDA Minimal Q3 activity; adj. EBITDA ~$0.1M Q4 ramp; net sales $31.6M; EBITDA $8.6M; expect Q1 pricing ~30% lower YoY Volume ramp; near-term price headwind
North America prioritization—Domestic volumes flat despite higher prices Strategic prioritization of North America drove higher per-unit returns Continued focus on price/margin optimization
Supply chain flexibility—Leveraged diversified sourcing amid Mexico/Peru disruptions USDA approval for Guatemala enhances year-round supply flexibility Improved sourcing optionality
Footprint optimization——Winding down Toronto/Calgary facilities to eliminate redundant costs Cost structure improvement
Tariffs/macro——Management prepared for potential tariff-related choppiness; consumer resilience noted Vigilant; sees resilient demand

Management Commentary

  • CEO on performance and strategy: “Mission delivered a strong fourth quarter that rounded out an exceptional full year fiscal 2024… our Marketing & Distribution segment drove the strong fourth quarter performance… per-unit margins exceeding our targeted range… drove a $64.2 million increase in operating cash flow” .
  • CFO on Q4 drivers: Revenue +37% to $354.4M primarily from 36% higher avocado prices; North America volumes +9%; gross profit $55.8M and margin 15.7%, +490 bps; SG&A +32% on incentive and stock-based comp .
  • CFO on Q1 FY25 outlook: Mexico-centric model; pricing ~20% higher YoY vs $1.40/lb; per-unit margins to revert to historical range; Peru blueberries pricing ~30% lower on higher industry volumes .
  • CEO on Guatemala: USDA approved Guatemalan avocado imports; expansion designed to fill calendar gaps to ensure year-round supply .
  • CEO/CFO on footprint: Winding down Toronto/Calgary facilities to maintain service while eliminating redundant costs; limited exit costs expected, longer-term savings anticipated .

Q&A Highlights

  • Actuals vs prerelease: Better-than-floor outcomes driven by stronger blueberry sell-through and pricing that held up longer than anticipated into October; M&D margins were bullish even as prerelease was set conservatively .
  • Canada facility wind-down: Facilities underutilized as customers shifted to direct-from-border; minimal severance; limited remaining lease/asset tails; expected meaningful cost savings over time .
  • International Farming trajectory: With El Niño dissipating, management targets a return toward 2021–2022 EBITDA levels ($23M–$30M) as volumes recover and markets re-open .
  • Tariffs/macro: Team is experienced operating through disruptions; sees consumer resilience despite higher price points; management not overly concerned but remains prepared .
  • Blueberries acreage expansion: Rolling out ~100 hectares this year (with double density plantings), planning ~200 hectares entering production into 2025/2026; targeting premium varieties to support pricing .
  • Capital allocation: Priority remains debt paydown near term; with balance sheet strengthened, future options include potential shareholder returns post deleveraging .

Estimates Context

  • S&P Global consensus EPS, revenue, and EBITDA for Q4 2024 were unavailable at time of writing; management’s prerelease indicated Street numbers were “well below” internal expectations, and actual results exceeded those prerelease floors . Where estimates are unavailable, we default to S&P Global and note unavailability.

Key Takeaways for Investors

  • Elevated Q4 pricing and superior M&D execution drove outsized margins and earnings; however, expect margin normalization in Q1 FY25 as Mexico volumes ramp and per-unit returns revert to targeted ranges .
  • Near-term headwind: Peru blueberries pricing ~30% lower YoY in Q1 FY25 should pressure Blueberries EBITDA despite owned volume increases—watch segment mix and pricing elasticity .
  • Farming recovery setup: With El Niño impacts receding, management targets an EBITDA recovery path toward 2021–2022 levels as volumes and market breadth normalize—monitor yield and quality trends in Peru .
  • Structural efficiency: Canadian facility consolidation and USDA Guatemala approval enhance network flexibility and reduce redundant costs—supportive to mid-term margin resilience .
  • Cash generation and deleveraging: FY24 operating cash $93.4M and ~$60M FCF underpin debt reduction; FY25 CapEx ($50–$55M) is weighted to targeted projects, with overall CapEx trajectory moderating through FY26 .
  • Demand resilience: Retail/consumer acceptance at higher price points expands the pricing contour (e.g., $1.15–$1.49 per piece) without pull-through degradation—supports higher structural pricing vs prior years .
  • Trading implications: Near term, expect rotation from price-driven margin tailwinds to volume-driven normalization; catalysts include U.S. Guatemala import ramp, footprint savings realization, and visibility on Farming segment EBITDA recovery. Longer term, diversified sourcing and premium berries strategy augment multi-product growth optionality .