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Mission(AVO) - 2023 Q3 - Earnings Call Transcript
AVOMission(AVO)2023-09-12 13:04
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Financial Data and Key Metrics Changes - Total revenue for Q3 2023 was 261.4million,a17261.4 million, a 17% decrease compared to the same period last year, driven by a 33% decrease in average per unit avocado sales prices, partially offset by a 23% increase in avocado volumes sold [12][15] - Adjusted EBITDA was 21.2 million, down from 31.6millioninthesameperiodlastyear,primarilyduetolowerperunitmarginswithintheInternationalFarmingsegment[15][17]−Grossprofitdecreasedby31.6 million in the same period last year, primarily due to lower per unit margins within the International Farming segment [15][17] - Gross profit decreased by 14.2 million to 28.4millioninQ32023,concentratedintheInternationalFarmingsegmentduetolowerpricingonavocadossoldfromcompany−ownedfarms[13][17]BusinessSegmentDataandKeyMetricsChanges−MarketingandDistributionsegmentnetsalesdecreased1728.4 million in Q3 2023, concentrated in the International Farming segment due to lower pricing on avocados sold from company-owned farms [13][17] Business Segment Data and Key Metrics Changes - Marketing and Distribution segment net sales decreased 17% to 256.6 million, while adjusted EBITDA increased 4% to 16.1 million due to lower SG&A expenses [15][16] - International Farming segment revenues were 38.2 million, a 41% decrease compared to the same period last year, with adjusted EBITDA down 11.4millionto11.4 million to 4.9 million [17] - Blueberry segment net sales were 1.4million,withadjustedEBITDAof1.4 million, with adjusted EBITDA of 0.2 million, compared to 0.3millionandnegative0.3 million and negative 0.2 million in the same period last year [18] Market Data and Key Metrics Changes - The company experienced a 23% growth in avocado volume during the quarter, reflecting strong performance in key export markets [9] - North American volume increased by 15%, supported by a larger Mexican harvest [15] - The company anticipates exportable volumes from Peru to be in the range of 105 million to 115 million pounds for the 2023 harvest season, a decrease from initial expectations [23] Company Strategy and Development Direction - The company remains focused on maximizing opportunities despite challenges with the Peruvian crop, leveraging its global sourcing capabilities and distribution network [8][10] - A new forward distribution center in the UK opened in April 2023, which is expected to enhance market access and operational efficiency [10] - The company has approved a stock repurchase program of up to 20milliontomitigatethedilutiveimpactofstockincentiveplans[22]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthattheindustrypricingenvironmenthasimproved,whichisexpectedtohelpmarginsinthefiscalfourthquarter[8][23]−ThecompanyispreparingforpotentiallylowervolumesinthefourthquarterduetoreducedsupplyfromPeru,butanticipateshigherpricing[29][39]−Managementacknowledgedtheimpactofweatheronproductionandemphasizedtheneedforstrategicadjustmentsbasedondatacollectedduringthecurrentseason[42][44]OtherImportantInformation−Cashandcashequivalentswere20 million to mitigate the dilutive impact of stock incentive plans [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the industry pricing environment has improved, which is expected to help margins in the fiscal fourth quarter [8][23] - The company is preparing for potentially lower volumes in the fourth quarter due to reduced supply from Peru, but anticipates higher pricing [29][39] - Management acknowledged the impact of weather on production and emphasized the need for strategic adjustments based on data collected during the current season [42][44] Other Important Information - Cash and cash equivalents were 23 million as of July 31, 2023, down from 52.8millionasofOctober31,2022[18][19]−CapitalexpendituresfortheninemonthsendedJuly31,2023,were52.8 million as of October 31, 2022 [18][19] - Capital expenditures for the nine months ended July 31, 2023, were 47 million, with significant investments in avocado orchard maintenance and a new distribution facility in the UK [20][21] Q&A Session Summary Question: Can you discuss trends outside the International Farming segment and expectations for the fourth quarter? - Management highlighted strong volume growth in the Marketing and Distribution segment, driven by increased Mexican fruit availability, and anticipated a slight decrease in overall volume for the fourth quarter [27][29] Question: What is the expected volume split between Q3 and Q4? - Management indicated a shift towards a 45% in Q3 and 55% in Q4 for sell-through, with some potential volume slipping into Q1 fiscal 2024 [37] Question: How does the company expect to perform in line with industry growth in the fourth quarter? - Management expressed confidence in maintaining a significant share of the market despite lower volumes from Peru, leveraging their position in the region [39]