Mission Produce, Inc. reported its financial results for the fiscal second quarter ending April 30, 2022.
“I’m pleased with our ability to get the business back on track quickly following the temporary operational challenges associated with our ERP implementation. Our per-box margins have recovered,” said Steve Barnard, founder and CEO, Mission Produce. “The fresh avocado market realized record-high per unit sales pricing during fiscal second quarter, the result of a smaller Mexican harvest and lower industry volumes. Consumer demand remains strong. The volume constraints the industry faces are due to lack of supply which Mission can address through our investing in vertical integration.”
Total revenue for the second quarter increased 18 percent to $278.1 million, compared to $234.7 million for the same period last year. Growth was driven by a 44 percent increase in average per-unit avocado sales prices due to lower industry supply and inflationary pressures. Partially offsetting price gains was a decrease in volume sold of 19 percent, which was primarily driven by lower supply. Domestic volumes declined at a lower relative rate.
Gross profit for the second quarter decreased $7.3 million or 27 percent to $19.8 million, and gross profit percentage decreased 440 basis points to 7.1 percent of revenue. The decreases were primarily driven by the impact of lower volumes sold in our marketing & distribution segment and its related impact on fixed cost absorption. We also experienced gross profit decreases in the international farming segment due to the timing of costs incurred and the impact of pricing at early-stage mango farms.
Marketing & distribution: Net sales in the marketing & distribution segment increased 18 percent to $273.7 million for the quarter.
Segment adjusted EBITDA decreased $4.5 million or 28 percent to $11.7 million.
International Farming: All sales 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.
Affiliated sales are concentrated in the second half of the fiscal year in alignment with the Peruvian harvest season, typically April-August.
Adjusted EBITDA for international farming is concentrated in the third and fourth quarters of the fiscal year in alignment with sales. The company operates approximately 300 hectares of mangos in Peru that are largely in an early-stage of production. The timing of the mango harvest is concentrated in the fiscal second quarter and, as a result, mangos have a more pronounced impact on segment financial performance.
Outlook for the fiscal third quarter of fiscal year 2022:
Third quarter volumes are expected to increase sequentially, but remain lower by 10-15 percent, primarily due to ongoing supply constraints that are not expected to alleviate until the fourth quarter. Third quarter pressure will be partially offset by higher supply from Peru and California.
The company believes the pricing environment should begin rationalizing during fiscal third quarter.
