Mission Produce, Inc. Common Stock 2026 Q3 Earnings Call

Today's presentation will be hosted by John Pawlowski, President and Chief Executive Officer, and Bryan Giles, Chief Financial Officer. The comments during today's call contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are considered forward-looking statements. These statements are based on management's current expectations and beliefs as well as a number of assumptions concerning future events. Such forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from the results discussed in the forward-looking statements. Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We will also refer to certain non-GAAP financial measures.

Please refer to the tables included in the earnings release, which can be found on our investor relations website, investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. I would now like to turn the call over to John.

Thank you, Andrew, and good afternoon, everyone. Our third quarter results demonstrate the strength of our platform and the team's focus on delivering results. Adjusted EBITDA of $32.4 million exceeded the high end of our expectations, supported by solid marketing and distribution performance, stronger than forecast results from our international farming team, and early progress on the integration of Calavo. This was an extremely important quarter for Mission. It was our first reporting period following the completion of the acquisition, and it provided an early look at the capabilities of the combined organization. While we are still in the initial stages of integrating, the progress to date reinforces our confidence in the strategic and financial merits of the combination. I want to start with the avocado category because the strength of consumer demand provides important context for both our results as well as the opportunity ahead.

Last quarter, we discussed how a historically high supply, low price environment brought new households and consumption occasions into the category. This follows a historical pattern in which lower prices expand the consumer base and support sustained demand as pricing normalizes. That dynamic started to materialize in the third quarter. U.S. retail avocado volume grew approximately 9% year-over-year, even as the average retail price increased approximately 15% sequentially. Furthermore, U.S. avocado consumption remains at record levels in 2026, trending above 10 pounds per capita year to date, 12% higher than last year, while household penetration has increased approximately 50 basis points year to date compared to last year. This is an encouraging progression from what we discussed last quarter. The low price environment helped introduce more consumers and occasions to the category, and volume yet remains strong as prices recover.

This supports our view that the category expansion we saw in the first half is creating larger and more durable demand for the future. Avocados have evolved into an important staple for consumers. The category aligns with lasting preferences around fresh food, nutrition, convenience, and value. While the product's versatility supports consumption across multiple meals and occasions, those qualities provide a strong foundation for continued category growth, both in the United States as well as in international markets that remain at relatively earlier stages of development. Our job is to translate those category tailwinds into profitable growth. Year to date for Mission's legacy business, we increased our estimated U.S. retail market share by approximately 60 basis points from last year, reflecting deeper customer relationships and our ability to reliably support programs through changing supply conditions.

Importantly, market share is a key measure of whether we are winning, but we will not pursue it at any cost. Volume and per unit margin must work together. Our objective is to deepen category leadership while maintaining the commercial discipline required to translate growth into stronger earnings and cash flow. During the quarter, we sold approximately 253 million pounds of avocados, an increase of 38% from last year, reflecting the addition of Calavo as well as higher legacy Mission volume. As California and Peru became more meaningful sources, our origin mix improved from Q2, supporting both customer continuity and a sequential recovery in per unit margins. This improvement is a great example of the value our multi-origin sourcing model brings. In the second quarter, delayed California and Peru harvests temporarily limited that flexibility.

But in Q3, our teams were better able to balance fruit from Mexico, California, and Peru, matching available sizes with customer demand and directing a product toward the markets and programs where it could create the greatest value. Turning to Calavo, our first several months of ownership have reinforced our original investment thesis. The combination expands our customer reach, sourcing flexibility, Mexican and California packing capacity, as well as participation in our prepared foods category. It provides more ways to serve customers, more flexibility to align fruit and sizing with demand, and more opportunities to remove costs from the overall supply chain. We are also bringing together two organizations with complementary strengths. Mission contributes a global sourcing and distribution platform, vertically integrated farming operations, category management capabilities, and established international infrastructure.

Calavo adds customer relationships, additional North American sourcing and packing capabilities, and an established position in the value-added prepared food space. For customers, the opportunity is to create a more reliable and capable supply partner. The combined company has more fruit, more facilities, and more options for responding when supply conditions change. Over time, we believe this should help us improve our fulfillment, increase network utilization, reduce unnecessary handling and external sourcing costs, and ultimately provide customers with a broader set of products and services. At the time of the transition announcement, we identified at least $25 million of annualized cost synergies achievable within 18 months of close, with meaningful upside potential. Following our integration work so far, we are increasing that estimate to more than $30 million, primarily reflecting higher than anticipated SGA savings and network efficiencies.

We are already moving fruit across the combined network, reducing reliance on higher cost external sources and improving our inventory positioning. We also discontinued operations at the Calavo Temecula facility and are advancing broader distribution, freight, technology, procurement, and organizational initiatives. The real measure of integration is not simply whether an action has been initiated. It is whether that action ultimately produces sustainable savings, better customer service, and stronger operating performance. We are applying that standard to the work underway and remain focused on maintaining business continuity as we make changes. We expect synergies to begin contributing to financial results in Q4 and build more meaningfully throughout fiscal 2027. We recognize that integration requires disciplined execution across many functions, and we will continue to update you on our progress. Prepared foods is an important part of the strategic opportunity.

It extends Mission into convenient, value-added avocado products and gives us an established platform that allows us to participate in a broader avocado category. The business operates differently from fresh avocados, with different pricing structures, inventory requirements, as well as manufacturing considerations, but it is closely connected to our core sourcing expertise and customer relationships. Our immediate focus in prepared foods is straightforward: maintain customer service, improve operating consistency and throughput, and build a solid foundation for profitable growth. Over time, we believe Mission's sourcing capabilities and customer reach can complement the Calavo team's manufacturing expertise and product portfolio. We look forward to discussing this opportunity in greater detail at our upcoming Investor Day. Within the international farming segment, third quarter performance exceeded our expectations, supported by stronger average sales returns.

We expect exportable production from our owned Peru farms of 120 to 130 million pounds for the harvest season, compared with 105 million pounds last season, with a greater portion of this year's crop expected to be sold in the fourth quarter. Our vertically integrated farming operations remain an important differentiator. They provide greater visibility into supply and quality, support customer programs during key seasonal windows, and give us the flexibility to allocate fruit across both North America and Europe, as well as Asia and other markets based on customer demand and relative returns. We expect our blueberry harvest to begin contributing more meaningfully as we move into its seasonally stronger quarters. Newer acreage continues to mature, and we remain focused on improving yields, per unit costs, and returns from the infrastructure we have built in Peru.

To close out the year, our priorities are straightforward: protect profitable marketplace momentum, deliver the seasonal Peru and blueberry contribution, integrate Calavo thoughtfully, convert identified synergies into measurable financial results, and remain disciplined in the use of our capital. We are reaffirming our second half outlook with a meaningful seasonal increase expected in the fourth quarter. Bryan will provide the financial details and the principal drivers supporting that outlook. There is considerable work in front of us, but we exited Q3 with a larger category, stronger market positions, a broader and more capable operating platform, and increased visibility into the value available from the Calavo integration. Next month, we will host our Investor Day in New York.

We will provide a more complete view of the company we are building, how each part of the platform fits together, the priorities that will drive our next phase, and the financial framework we will use to measure our progress moving forward. I want to thank the Mission and Calavo teams for their focus and commitment during an important period of change. I also want to thank our growers, customers, and partners for their continued trust. With that, I will turn the call over to Bryan.