Mission(AVO)2023-12-22 02:25Financial Data and Key Metrics Changes - In fiscal year 2023, total avocado volume sold increased by 12% to 654 million pounds, but net sales decreased by 9% to 257.9 million, an 8% increase compared to the same period last year, driven by higher per unit avocado sales prices [15][17] - Net income for the fourth quarter was 0.06 per diluted share, compared to a net loss of 0.59 per diluted share for the same period last year [17][18] Business Line Data and Key Metrics Changes - The Marketing and Distribution segment net sales increased by 7% to 10.8 million due to higher per unit gross margins [18][19] - The International Farming segment reported total sales of 11.1 million to 19.5 million, with adjusted EBITDA increasing by 5.4 million, driven by higher pricing and a 29% increase in volume [22][23] Market Data and Key Metrics Changes - The company noted that higher avocado volume sold in 2023 was driven by increased industry supply out of Mexico, contrasting with limited supply in the previous year that led to higher prices [8][10] - The company expects industry volumes to be slightly lower in the first quarter of fiscal 2024 due to a lighter Mexican harvest, but pricing is anticipated to be approximately 15% higher year-over-year [27] Company Strategy and Development Direction - The company aims to drive long-term volume growth by supporting markets with consistent supply and increasing per capita consumption globally, particularly in Europe and Asia [6][12] - The company is building capabilities in growth markets, including a new distribution center in the UK, and diversifying its product offerings to include mangoes and blueberries [7][9] - The company plans to focus on cost control measures and reallocating resources to maximize efficiency, with a modest capital expenditure forecast for fiscal 2024 [12][24] Management Comments on Operating Environment and Future Outlook - Management highlighted that the unpredictable nature of the industry, influenced by weather patterns and marketing decisions from growers, impacts supply-demand equilibrium [7][10] - Looking ahead to 2024, management expects improved pricing in the International Farming segment due to adjustments made to the marketing strategy and improved weather conditions in Peru [11][27] - The company anticipates generating positive free cash flow in fiscal 2024 and beyond, with a focus on maintaining a healthy capital structure [26][27] Other Important Information - The company has made strategic decisions to vertically integrate its business with avocado production in Peru and has developed acreage in Guatemala and Colombia to balance year-round supply [8][10] - Capital expenditures for fiscal year 2023 were 61.2 million the previous year, with a projected budget for fiscal 2024 in the range of 35 million [24][25] Q&A Session Summary Question: Cost control initiatives and opportunities for 2024 - Management indicated that they have picked the low-hanging fruit in cost reductions, particularly in labor and freight costs, and are focusing on further cost reductions in farming operations in Peru [30][32] Question: Capacity and growth expectations - Management discussed the expansion into the UK and Europe, leveraging state-of-the-art facilities and focusing on asset utilization to support growth [35][39] Question: Changes in marketing strategy - Management highlighted a shift in market allocation and the potential to evaluate partnerships for marketing fruit, particularly in Asia, to enhance returns [46][49]