Financial Performance - Net sales increased by $43.4 million or 18% in the three months ended April 30, 2022, and by $86.8 million or 21% in the six months ended April 30, 2022, compared to the same periods last year [76]. - Gross profit decreased by $7.3 million or 27% in the three months ended April 30, 2022, and by $29.5 million or 59% in the six months ended April 30, 2022, compared to the same periods last year [81][82]. - The operating income for the three months ended April 30, 2022, was $1.1 million, a decrease from $10.8 million in the same period last year [74]. - The net income for the three months ended April 30, 2022, was $2.4 million, down from $7.4 million in the same period last year [74]. - For the six months ended April 30, 2022, the company reported a net loss of $11.0 million compared to a net income of $9.6 million for the same period in 2021 [104]. Sales and Revenue - Average per-unit avocado sales prices increased by 44% and 46% in the three and six months ended April 30, 2022, respectively, due to lower industry supply from Mexico and inflationary pressures [76]. - Net sales in the Marketing and Distribution segment increased by $41.3 million or 18% in the three months ended April 30, 2022, compared to the same period last year [99]. - Net sales in the International Farming segment increased by $2.1 million or 91% in the three months ended April 30, 2022, compared to the same period last year, due to higher service revenue and mango harvest volumes [101]. - Total net sales for the six months ended April 30, 2022 were $494.7 million, compared to $407.9 million in the same period last year [97]. Expenses and Costs - Selling, general and administrative expenses increased by $2.4 million or 15% in the three months ended April 30, 2022, and by $6.5 million or 21% in the six months ended April 30, 2022, compared to the same periods last year [83][84]. - Interest expense increased by $0.3 million or 37.5% in the three months ended April 30, 2022, and by $0.3 million or 17.6% in the six months ended April 30, 2022, compared to the same periods last year [85]. - Adjusted EBITDA for the Marketing and Distribution segment decreased by $4.5 million or 28% in the three months ended April 30, 2022, primarily due to lower avocado volume sold and higher expenses [99]. - Adjusted EBITDA for the International Farming segment was $(2.5) million in the three months ended April 30, 2022, compared to $0.1 million in the same period last year, primarily due to early-stage mango farm costs [101]. Tax and Income - The provision for income taxes decreased by $1.3 million or 62% in the three months ended April 30, 2022, primarily due to lower pre-tax income [93]. - The effective tax rate for the six months ended April 30, 2022 was 13.4%, a decrease from 49.5% in the same period last year [93]. Cash Flow and Investments - Net cash used in operating activities increased by $16.8 million for the six months ended April 30, 2022, reflecting a net loss, partially offset by favorable changes in working capital [103]. - Net cash used in operating activities was $37.0 million, an increase from $20.2 million in the prior year [104]. - The company reported net cash used in investing activities of $25.8 million, down from $45.0 million in the previous year [105]. - As of April 30, 2022, cash and cash equivalents were $21.4 million, a decrease from $84.5 million as of October 31, 2021 [110]. Capital Expenditures and Financing - Capital expenditures for the six months ended April 30, 2022, were primarily focused on purchasing farmland in Peru and land improvements in Peru and Guatemala [106]. - The company has a revolving credit facility with a maximum borrowing capacity of $100 million, with no outstanding borrowings as of April 30, 2022 [111]. - The consolidated leverage ratio as of April 30, 2022, was 2.56 to 1.00, in compliance with the required maximum of 3.75 to 1.00 [113]. - The company made capital contributions to joint ventures to support farmland purchases in Colombia and a new distribution facility in southern China [107]. - The company expects to fund various capital projects through operating cash flow and cash equivalents, with no significant deviation from previous fiscal years' expenditures [114]. - As of April 30, 2022, remaining maturities on term loans and notes amounted to $159.9 million [114]. Other Income - Other income increased to $2.9 million in the three months ended April 30, 2022, compared to an expense of $0.3 million in the same period last year, driven by gains on interest rate swaps and lower foreign currency transaction losses [90]. - Equity method income for the three months ended April 30, 2022 was $0.3 million, a recovery from a loss of $0.2 million in the same period last year, primarily due to higher earnings from HAC [88]. ERP System Improvement - The company continues to work with a third-party implementation firm to improve the ERP system, which had previously impacted profitability and financial results [70].

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 increased by 25% to $216.6 million compared to $173.2 million in the same period last year, driven by a 50% increase in average per unit avocado sales prices due to lower industry supply from Mexico and inflationary pressures [15][16] - Net loss for Q1 2022 was $13.4 million or $0.19 per diluted share, compared to net income of $2.2 million or $0.03 per diluted share for the same period last year [21] - Adjusted EBITDA was negative $10.4 million for Q1 2022, compared to a positive $12.5 million for the same period last year, primarily due to lower gross margin and higher SG&A costs [21] Business Line Data and Key Metrics Changes - Marketing & Distribution segment net sales increased by 25% to $212.3 million for the quarter, but segment adjusted EBITDA was negative $7.7 million due to similar drivers affecting consolidated results [21] - International Farming segment net sales increased by 19% to $4.3 million, driven by higher third-party service revenues, but segment adjusted EBITDA was negative $2.7 million due to higher costs associated with strategic initiatives [22] Market Data and Key Metrics Changes - Industry supply was negatively impacted by a smaller Mexican harvest, with estimates indicating that Mexican supply to the U.S. market was approximately 10% lower than the prior year [16] - Approximately 97% of U.S. distributed volume was Mexican fruit in Q1 2022, highlighting the reliance on Mexican supply [16] Company Strategy and Development Direction - The company is focused on long-term growth by investing in its own production to ensure year-round global sourcing, which is key to maintaining organic growth [13] - The implementation of a new ERP system is seen as a necessary step to scale the business and enhance operational visibility, despite the challenges faced during its implementation [9][10] Management's Comments on Operating Environment and Future Outlook - Management believes the worst of the ERP implementation challenges is behind them, and they are focused on improving efficiency and resolving remaining issues [30] - The company expects Mexico industry volumes to remain lower than the prior year during Q2, with pricing expected to be steady to slightly higher [26] Other Important Information - Cash and cash equivalents were $25.3 million as of January 31, 2022, down from $84.5 million as of October 31, 2021, with net cash used in operating activities increasing to $41.4 million [23] - Capital expenditures for Q1 2022 were $20.9 million, focused on farmland purchases and improvements in Peru and Guatemala [24] Q&A Session Summary Question: What lingering impacts should be expected from ERP challenges? - Management indicated that the issues causing gross margin loss have been largely resolved, but some costs related to outside consultants will continue, tapering off in Q2 [30] Question: Will February's per box margins remain stable? - Management noted that February margins returned to historical levels, but future margins may be impacted by volume challenges due to the current Mexico crop situation [33][34] Question: When will the current Mexico crop supply issues be resolved? - Management expects to see some relief from Peru's crop starting around April, but substantial impacts may not be felt until Q3 [38][39] Question: What is the demand outlook in the domestic market? - Management confirmed that domestic demand remains strong, with increased pricing observed, indicating a healthy market despite supply challenges [41][42] Question: Can you quantify customer wins and their impact on volume? - Management mentioned securing major retailers during the Mexico shutdown, which could contribute positively to volume moving forward [47]

Mission Produce, Inc. (NASDAQ:AVO) Q4 2021 Earnings Conference Call December 22, 2021 5:00 PM ET Company Participants Jeff Sonnek - IR, ICR Steve Barnard - CEO Bryan Giles - CFO Conference Call Participants Benjamin Bienvenu - Stephens Inc. Thomas Palmer - JPMorgan Gerard Sweeney - ROTH Capital Partners Operator Good afternoon, and welcome to the Mission Produce Fiscal Fourth Quarter 2021 Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportuni ...

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