Q3 2021 Mission Produce Inc Earnings Call

September 13, 2021

[music].

Good afternoon, and welcome to the mission Proteus fiscal third quarter 2021 conference call all participants will be in a listen only mode. After today's presentation. There will be an opportunity to ask questions. Please also note. Today's event is being recorded at this time I'd like to turn the conference call over to Jeff Sonic Investor Relations.

[noise] ICR Sir please go ahead.

Thank you.

Today's presentation will be hosted by Steve Barnard, Chief Executive Officer, and Brian Giles Chief Financial Officer, the comments during today's call and the accompanying presentation contain forward looking statements within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of $114.0

<unk> 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 the risks and uncertainties are identified and discussed in the company's filings with the SEC.

I will also refer to certain non-GAAP financial measures today. Please refer to the tables included in the earnings release, which can be found on our Investor Relations website investors Dot mission produce dot 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 Steve Barnard CEO.

Thank you for joining us for our fiscal 2021 third quarter earnings call.

We are pleased with our fiscal third quarter performance amid intense industry volatility that was brought about by Mexico's delayed timing on the transitional harvest of the new crop.

Our team did an excellent job navigating this complex period and produced per unit margins within the range of our expectations, though towards the lower end as a result of the Mexican pricing volatility.

Mentioned is global sourcing and distribution network, along with our own production in Peru proved to be a significant advantage to us during the quarter with nearly 45% of our third quarter U S distributed volume being sourced outside of Mexico, which we believe is significantly greater than that of the industry.

Our vertical integration was the key in our ability to significantly mitigate the influences of Mexico's unpredictability, while also positioning us to drive an 18% increase in our distributed volume to our export markets versus the prior year.

Our ability to stay nimble and manage disruptions such as the unpredictable Mexican harvest cadence in the third quarter really demonstrates the value of our cohesive vertically integrated sourcing and distribution network.

Moreover, the disruption allowed us the opportunity to demonstrate the value we provide to our customers worldwide with the consistency and quality of our Peruvian program.

The consistency that we bring is critical and furthering our customer relationships.

And we are taking full advantage of the situation to remind potential customers of the value that we can bring to their operations through a vertically integrated avocado program.

We continue to look ahead towards the future both domestically and abroad to ensure that we are prepared to meet the growing global demand that's been driven by powerful consumption trends.

And as we've shared our latest facility in Laredo, Texas is a key element and are designed to expand our industry leadership position.

We have been carefully preparing for the upcoming seasonal ramp up in Mexican production that will shift into full swing later this fall and carried through next spring.

In advance of this we've made a significant commitment to the radar community. Both in terms of the trade and that we will drive through the region as well as.

Filling our team.

We've hired and trained approximately 70 employees so far to help us support our growing share of the nearly $1 billion of avocado import.

Business that crosses through the port of Laredo annually.

Although in the near term we are carrying these incremental infrastructure cost as we improve our utilization rates.

The long term strategic advantages are very clear to us this facility will enable us to better serve our customer needs throughout North America, well alleviating seasonal pressure in our other facilities effectively rebalancing our network, while adding new capabilities and capacity.

In summary mission is in an ideal position.

In the third quarter presented some challenges in terms of the pricing volatility it showcased our diversified network.

This network includes vertical integration global logistics capabilities, and an expansive distribution network and our industry leading team.

We were able to navigate the dynamic environment drive volumes meet customer needs and still maintain a healthy margin profile.

The growing season was very productive and we continue to expect solid yields from our own production, which remains on track to produce the planned 95 to 105 million pounds of fruit that we've guided this puts us in a great position as we make preparations for fiscal 2022.

With that I'll pass the call over to our CFO, Brian <unk> for his financial commentary.

Thank you, Steve and good afternoon to everyone on the call I'll start with a brief review of our fiscal third quarter 2021 performance ended July 31, 2021, and touch on some of the drivers within our two operating segments.

Then I'll provide a snapshot of our strong financial position and conclude with some thoughts around our outlook for the balance of the fiscal year.

Total third quarter revenue increased 4% to $254.0 million from $240.0 million in the prior year period the.

The increase in revenue was driven by a 2% increase in volume and a 2% increase in price I will touch on the price volume dynamics in a moment, but would like to reiterate that our business is managed to volume targets as we leverage our global presence to drive share of fresh avocados to our retail and foodservice customers.

While prices fluctuate given the influences of global supply and demand pricing is not something mission can control our forecast with any degree of certainty.

In the third quarter, the industry experienced excessive volatility in spot pricing as a result of of a sporadic harvest cadence in Mexico with a regular starts and stops which exacerbated the usual market dynamics that dictate pricing.

As we've noted previously our leadership position as a global value added marketer and distributor of fresh avocados tends to insulate our gross profit as these sought after value added services, such as ripening bagging and distribution are largely unaffected by price changes.

However, excessive pricing volatility can be problematic as we balance the inventory we are buying in the spot market against global customer commitments.

As a result, we realize some temporary compression in our per unit margins, but I'd note that we were still able to achieve levels that were near the bottom end of our targeted range, whereas we were above the targeted range in the prior year period.

Third quarter gross profit decreased 7% compared to the same period last year driving a gross profit margin decline of 210 basis points to 16, 6% of revenue.

Beyond the impact of lower per box margins gross profit was also pressured by incremental infrastructure cost within our marketing and distribution segment related to our new Laredo facility, which as Steve mentioned is still in the process of ramping up utilization.

We estimate this impact to be approximately 50 basis points of headwind to fiscal third quarter gross margin.

The negative impacts were partially offset by higher volume of avocados sold from our company owned farms within our international farming segment compared to prior year.

Sales generate higher gross margin than the sale from third party growers due to our lower per unit cost basis.

SG&A for the third quarter increased $10.0 million to $19.0 million.

Due primarily to higher professional fees and higher liability insurance premiums now required as a public company.

We estimate that $1.8 million of the cost growth experienced in the fiscal third quarter is attributed to external costs associated with our public company status.

The higher professional fees were amplified by the anticipated change in our SEC filer status from an emerging growth company to a large accelerated filer as of October 31, 2021, which has an impact on audit and other related costs.

Net income for the third quarter of 2021 was $22.0 million or 26 per diluted share compared to $27.0 million or <unk> 37 per diluted share for the same period last year.

Adjusted net income was $20.0 million or 27 per diluted share for the third quarter of 2021 compared to $28.0 million or <unk> 39 per diluted share for the same period last year.

Adjusted EBITDA decreased $11.0 million or 18% to $31.0 million for the third quarter of fiscal 2021 compared to $42.0 million for the same period last year.

In terms of our segment drivers, our marketing and distribution segment net sales increased 4% to $245.0 million for the quarter.

The drivers for the marketing and distribution segment are similar to those that I described for the consolidated results with slight increases in both volume and price year over year. This is due to the fact that virtually all of our third party revenue is generated within this segment.

Segment, adjusted EBITDA decreased 38% to $14.0 million due to the lower per unit contribution margins the added infrastructure surrounding Laredo and higher corporate expenses associated with being a public company that I mentioned above.

Our international farming segment, primarily represents our own farms that we manage in Peru.

Naturally the dynamics of this business are quite different from those in our marketing and distribution segment.

While we are more exposed to price in this segment compared to marketing and distribution. This is a highly strategic initiative for mission and its value to our enterprise was very apparent in the third quarter as we worked to mitigate the impacts of the Mexican volatility and a smaller California crop.

Our growing base of global customers requires year round supply in today's key growing regions can't keep up with international demand.

As a result, we made a commitment close to a decade ago to establish a presence where we control our own supply that we are able to sell to our customers through our marketing and distribution segment operations.

As we look forward in the short run growth within our international pharma segment will be dictated by yield improvement within our maturing orchard, we expect longer term growth to be supported by additional producing acreage that will come online and subsequently mature.

As a reminder, the avocado harvest season for Peruvian farms typically runs from April through August of each year and as a result, you see the international farming segment emerge in third and fourth quarters and contribute adjusted EBITDA in a significant fashion.

For the third quarter International farming segment sales increased 22% to $67.0 million driven by higher fruit volumes, resulting from improved harvest yields at our maturing orchards.

Segment, adjusted EBITDA improved by $5.0 million to $17 million, primarily due to the revenue drivers noted above partially offset by higher costs associated with strategic initiatives and farming maintenance and operations that are intended to drive yield enhancements.

Shifting to our financial position cash and cash equivalents were $79.0 million as of July 31, 2021, compared to $124 million as of our prior fiscal year end on October 31.2020.

Our operating cash flows are seasonal in nature and can be temporarily influenced by working capital shifts, resulting from varying payment terms to growers in different source regions.

In addition, we are building our growing crop inventory and the international farming segment. During the first half of the year for ultimate harvest and sale that will occur during the second half of the fiscal year.

While these increases in working capital can cause operating cash flows to be unfavorable in individual quarters. It is not indicative of operating cash performance that we expect to realize for the full year.

Net cash provided by operating activities was $17.0 million for the nine months ended July 31, 2021, compared to $41.0 million in the same period last year.

$24.0 million change was primarily driven by unfavorable net change in working capital and concentrated within inventory.

Changes in inventory were driven by a combination of a buildup of growing crop inventory in Peru, as well as higher per unit cost of Mexican fruit on hand compared to prior year.

The growing crop increases were due primarily to higher per acre farm in costs to drive higher production yields.

Additionally, contributing to the buildup of crop inventory, where timing differences with a lower percentage of the estimated seasonal crop that was harvested and sold through fiscal third quarter relative to the prior year.

As we move through the remainder of the Peruvian season in the fiscal fourth quarter, we expect to see a continued reduction in working capital, which will aid in our ability to drive higher cash from operations.

Capital expenditures were $64.0 million for the nine months ended July 31, 2021, compared to $44.0 million for the same period last year.

Capital expenditures for fiscal 2021 have been concentrated in land improvements and Orchard development in our Peru, and Guatemala farming operations and on completing construction of our distribution facility in Laredo, Texas.

With that I'll shift to our outlook, which we are updating to reflect the lower than anticipated third quarter results and latest pricing and margin view for our fourth quarter.

Full year fiscal 2021 net sales are now expected in the range of $890 million to $910 million, which is a revision of $10 million compared to prior guidance.

This assumes total annual volume in the range of 655 to 665 million pounds, which is lower than our prior guidance by approximately 15 million pounds, partially due to a smaller size curve on Mexican fruit.

Expectations for avocado production from our own farms remains unchanged in the range of 95 to 105 million pounds.

Full year fiscal 2021, adjusted EBITDA is expected in the range of $88 million to $94 million, but may be influenced by future pricing and margin dynamics.

The reduction in adjusted EBITDA from prior guidance is due primarily to the shortfalls. We experienced in Q3 combined with continued pressure on per unit gross margins that are extending into the early part of the fiscal fourth quarter due to challenging supply conditions in Mexico.

That concludes our prepared remarks, operator now over to you. Please open the call to Q&A.

Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

The participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.

One moment, please volleyball for questions.

Our first question is from Bryan Spillane of Bank of America. Please proceed with your question.

Alright, Thank you operator, and good afternoon guys.

So just a couple of questions.

I guess related to first on the Mexican crop and supply I guess by the comments it sort of sounded like it's still a pressure early in the quarter, but I.

I guess my saying early in the quarter do you expect that that should begin to alleviate as you exit the fourth quarter.

So just trying to get understanding of timing wise is the worst of this past you or would you expect the supply.

Constraints to continue all the way through and as you are exiting <unk>.

Well I think Brian if we look at history. It goes in cycles and they tend to alternate every other year. So.

Looking back in estimating the future I would say Europe.

Youre right.

It's due to change just because we're coming into a new flour.

And they tend to alternate.

If it stays the way it is today.

Going to be tough road, but it never does yes, Brian.

Ill elaborate on that a little bit yes, we're still selling through kind of the off bloom crop at this point, we believe that will start harvesting the regular bloom with in the next week or two so we're kind of right at that transition point typically there tends to be a lot of volume that comes into the March.

At that point in time, and we're expecting that that will be the case again. This year and then at that point the the supply dynamics will ease up a bit. So certainly we got off I think some of the challenges. We saw at the end of Q2 or I'm, sorry, Q3 continued through August but we do.

Specced improvement as we move through the latter half of the quarter.

Okay. That's helpful. And then the second is just on in terms of cost pressures so beyond supply just thinking about things like.

Freight costs availability of like shipping containers port congestion just.

The moving of stuff for lack of a better way to put it which has really been a challenge for.

A lot of companies are most companies.

Can you just give us a little bit more color on just the dynamic there and again same idea is it.

On a fully baked into the base is it getting worse, just trying to getting an understanding of that as well.

Well, let's just take one at a time that the freight deal is still are still an issue.

You read all these journals.

These containers are stuck in China or somewhere in Asia trying to get out of there.

Fortunately, starting Mexico, we have a lot less freight compared to say out of Peru, which is pretty much mostly freight ocean freight so.

That will ease up the pressure on us a little bit I don't think it's going to change the shipping side of it.

That will help here because most of it will be by.

Truck into the U S or Canada through our Laredo facility, which should help too so.

That side of it, but yes, youre going to see inflation on everything from materials to labor.

It does yeah, I'll elaborate even a little further on those overhead costs I think certainly the largest component of our cost of goods sold Brian is the purchase of third party fruit I think we kind of understand the dynamics that are at play there arent really inflationary in nature. They are more of a supply demand issue.

The second largest item is our transportation costs and to Steve's point.

We came through the pre season with a heavy slant towards ocean cargo I think we negotiated terms early on and with our scale that we have they were actually fairly favorable. This year. So we didn't really experience big increases in ocean cargo cost year over year, and just with our volume itself ramping up is.

Well it gave us more leverage with the carriers I think on the land transport, which to Steve's point is significant when we transition to the Mexico season.

We were operating a level this year that is quite a bit higher than a year ago at this time.

But it seems to be pretty stable right now we have not seen big increases over the last two to three months.

Certainly I can't predict what's going to happen next but it feels as if that market has stabilized a bit.

If you go behind that labor would be the next one and certainly with the majority of our labor located in Mexico and in Peru.

Don't have the same dynamics at play and you maybe to the same extent that somebody who's operating in the U S does but that being said.

There has been changes in the laws down in Peru that of increased wages that.

That we've dealt with over the course of this year.

We've kind of manage that that's kind of part of some of the higher cost that we've experienced in our farming operations, but I don't think we haven't really had an issue yet where it's impacted our ability to deliver product to our customers.

Okay, great. Thanks, I'll pass it on.

Yes.

Our next question is from Tom Palmer of Jpmorgan. Please state your question.

Hey, good afternoon, and thanks for the questions.

I wanted to ask just first on the realized pricing side.

It seems like you exited last quarter in the update you gave for May was the pricing had really strengthened.

It seems like for the quarter, a little bit more stagnant relative to last quarter, despite calling out some supply constraints that I thought would have showed.

Showed better flow through plus the cost environment that you're facing so just.

Kind of wondering what limited that pricing and as we look at the fourth quarter, how youre thinking about that.

Well again it goes back to the supply I think we got to keep in mind too at the same time consumption continues to grow in this category globally not just here in the U S but everywhere.

The high single digits to low double digits I know, both here and in the <unk>.

The European Union, so on top of that.

These avocado as or alternate bearing and in Mexico. There's.

Three or four different flowers you deal with.

<unk>.

They tend to sometimes overlap when U S.

I have an abundance and then sometimes a delayed like situations right now so.

Yes.

What I like to tell people around here. When you have this thing figured out when you are in real trouble.

You're just playing the game with your head up be vertically integrated like we are around the world, where we have other options other than just one source, such as Mexico or California.

And then Tim.

To mitigate this.

Situations, we're not quite where we want to be yet on the supply side of it timing wise, but we've got as we know operations.

Quantum all of Colombia.

Both Africa has come on so we're working hard to mitigate that issue and take the risk out of it Tom.

Tom I'll kind of give a few more details on the numbers as well.

When we ran in Q2, our average per pound price for the quarter was $43.0, I think that was a period, where we were building up to where we kind of peaked in pricing at the end of the quarter, which led to that $43.0 average coming off of having an average of $1 four during the first quarter of the year, what we saw leading into Q.

Three is for the first month, we maintained pricing during the month of May at fairly close to those levels and then we saw it come off a bit during June and July to where we ran at an average of $44.0 again for the quarter as a whole.

I think that the size curve.

That came out of Mexico does come into play here.

We're getting a lot of smaller fruit.

Out of the field it does tend to sell for a lower per pound price than larger fruit does and we did see kind of that that kind of shift in the mix towards smaller fruit during the quarter. So that does kind of put.

A cap on where pricing can go.

As we look to Q4 I think the way we've modeled internally I think we're seeing pricing for the quarter as a whole are remaining relatively stable with where we ran in Q3, probably somewhere around $1 $81.0 to $43.0, a pound.

I would say that we came in to August with pricing a little bit higher than what we were running in as we came out of July.

Feels like we're going to peak in September and then the expectation is that when the new crop comes onboard and has a meaningful impact in October that prices will start to come back off again.

Great. Thank you for all that detail and.

Okay.

To follow up I guess on the.

Peru harvest.

Just any split on on how we should think about volumes in the third quarter relative to the fourth quarter.

I think what we can say is we're still holding to the number that we're projecting for the year as a whole.

We are expecting a heavier portion of the fruit in the fourth quarter of this year I'm on a percentage basis heavier than what we've seen in prior periods.

So, yes, I think that.

Somewhere in the neighborhood of 60% plus of the fruit will be will be sold through during Q4 this year.

Thank you.

As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the stacking.

One moment, please lobby poll for additional questions.

Our next question is from Dan Dan Danielle It's Steven.

Please state your question.

Hey, Thanks, good afternoon.

I wanted to follow up on the comments that you provided on the Laredo facility. I think you said it was about a 50 basis point headwind to margins in the quarter can.

Can you talk about the duration of that headwind the ramp to maturity.

And should we be thinking of that as a net positive to margins in the next fiscal year or.

Or is it going to take longer than that just give us some sense. If you can have the ramp of that facility.

Well I'll have Brian gave you the numbers but.

Again, it's all volume based.

We aren't anywhere close to.

Yeah.

The volume that we will see in say January going through Laredo and is it will continue to start the <unk>.

Going up probably.

In the next couple of weeks and peak in January and then.

Pretty much maintained until it starts slowing down in late spring.

So.

That whole things based off of volume and with these prices you can tell the volume isn't there today, but.

It's out there it's just the.

Delayed harvest or it's a different flower this year so to speak.

And I think as we went through Q3, we know that Q3 tends to be our low point for importing fruit from Mexico, but even one Mexico's at its low point it still makes up more than 50% of the crop of the product that we sell into the U S and for most other.

Marketers, it's more than that.

So we knew that volumes running through Laredo would be lower in Q3, but we also knew that that would give us a chance to kind of work out any operational kinks that were required when things weren't quite as stressful I think as we build move into times of year, where volume is higher those facilities. It absolutely will.

Have.

Less of an impact on margin.

That being said, we're running at volumes that were relatively flat in the North American markets.

As we introduced a substantial amount of new capacity in Laredo.

During the third quarter.

What's going to need to happen over time is that we continue to see this year over year growth to absorb that capacity that we've introduced.

It's tough for me to know exactly when it will be profitable on a standalone basis, only looking at kind of the operational dynamics, but I think what we can say in the short term is that we're not running significantly more volume through today than we were before Laredo opened we've kind of redistributed where fruits.

Coming out today, and there's likely some ability to optimize margin as a result of that but I think to truly get the throughput we need from that facility, we're going to need to continue to see growth over time.

And again, it's just it's just an example of the investments that emissions willing to make because.

To position ourselves well for the future. This wasn't this wasn't going to maximize short term profits by bringing a facility of this size up and running but it should we certainly feel very strongly that it's going to keep us in the driver's seat for the long haul.

Okay makes perfect sense. Thanks.

And then if I could ask a question on SG&A expense I know the in the short term the gross margins can be variable based on price swings in the market.

The SG&A was up a lot year over year I know there are some strange comparison because of the IPO, but could you help us think about what sort of a baseline SG&A is and what a reasonable range.

<unk> growth is going forward, just so that we can try to calibrate our margins.

Relative to reality.

Yes, so if we look at Q3 stand alone we.

We saw a $10.0 million increase in SG&A of which more than 50% of that we believe is attributed to public company costs, while it's tough to estimate how much of that it's.

It's difficult for me to say that all of it is going to continue at that $9.0 million level over time, I think we do know that there are certain items like put in.

Our Sox and internal internal audit program in place is going to be more expensive in year, one that it's going to be in year, two and year three.

No the D&O insurance, while we're inside the 1933 act is going to be more in year, one two and three than it is going to be in year. Four. So we know that there are certain things out there that are going to come off over time, we just don't know the exact amount or the exact timing that they will but if I had to estimate.

That $9.0 million I would say at least probably $1 million of it is ongoing public company costs that are not going to go away in the future that that's probably a new baseline that we're measuring against and of the other 800, I would say that it would probably come off over a multi year.

Period difficult to estimate how much per year.

I'd say, if you look separate from the public company costs at our SG&A.

There are components to SG&A like selling that our investments into the business in the long haul and those things are they're going to grow at a rate that's likely a little higher than inflation over time, because we are continuing to invest in our strategy, whether it would be something like mangoes as we moved into in store.

<unk> that up over the course of this year or as we continue to move forward with our plans. We've said that we have plans to to grow internationally, whether it be in Europe, and Asia, and we're going to add resources over time in those areas to support it. So I don't think we're going to be your typical stagnant SG&A where it's.

Just a fixed cost that's grown at an inflationary rate I think that there is going to be growth.

Growth in that that's geared around investment in the business for the long haul.

Okay. Thanks for all the detail I appreciate it.

Ladies and gentlemen at this time I'm showing no further question I'd like to end the question and answer session and turn the conference call back over to management for any closing remarks.

Well, we see a great opportunity ahead as we always do the consumption of avocados continues to grow globally, we continue to invest in our business and the industry's business.

Not only on the sourcing side of it to diversify there so we can get into some.

By issues.

The overall consumption around the world, there's a huge opportunity ahead in.

We plan on being a major player pretty much everywhere. So.

Stay tuned.

Yes.

Ladies and gentlemen that concludes today's conference call. Thank you for attending you may now disconnect your lines.

Okay.

[music].

Thanks.

Yes.

Okay.

[music].

Yes.

[music].

Good afternoon, and welcome to the mission Proteus fiscal third quarter 2021 conference call all participants will be in a listen only mode.

After todays presentation, there will be an opportunity to ask questions. Please also note today's event is being recorded at this time I'd like to turn the conference call over to Jeff Sonic Investor Relations at ICR. Sir. Please go ahead.

Thank you.

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 result.

As discussed in the forward looking statements some of the risks and uncertainties are identified and discussed in the company's filings with the SEC.

I would now like to turn the call over to Steve Barnard CEO.

Thank you for joining us for our fiscal 2021 third quarter earnings call.

We are pleased with our fiscal third quarter performance amid intense industry volatility that was brought about by Mexico's delayed timing on the transitional harvest of the new crop.

Moreover, the disruption allowed us the opportunity to demonstrate the value we provide to our customers worldwide with the consistency and quality of our Peruvian program.

The consistency that we bring is critical and furthering our customer relationships.

And we are taking full advantage of the situation to remind potential customers of the VAT.

<unk> that we can bring to their operations to a vertically integrated avocado program.

We continue to look ahead towards the future both domestically and abroad to ensure that we are prepared to meet the growing global demand that's been driven by powerful consumption trends.

And as we've shared our latest facility in Laredo, Texas is a key element and are designed to expand our industry leadership position.

We've been carefully preparing for the upcoming seasonal ramp up in Mexican production that will shift into full swing later this fall and carry through next spring.

In advance of this we've made a significant commitment to the radar community. Both in terms of the trade and that we will drive through the region as well as.

Filling our team.

We've hired and trained approximately 70 employees so far to help us support our growing share of the nearly $1 billion of avocado import.

Business that crosses through the port of Laredo annually.

Although in the near term we are carrying these incremental infrastructure cost as we improve our utilization rates.

Long term strategic advantages are very clear to us this facility will enable us to better serve our customer needs throughout North America, well alleviating seasonal pressure in our other facilities effectively rebalancing our network, while adding new capabilities and capacity.

In summary mission is in an ideal position, while the third quarter presented some challenges in terms of the pricing volatility it showcased our diversified network.

This network includes vertical integration global logistics capabilities, and an expansive distribution network and our industry leading team.

We were able to navigate the dynamic environment drive volumes meet customer needs and still maintain a healthy margin profile.

With that I'll pass the call over to our CFO, Brian <unk> for his financial commentary.

Then I'll provide a snapshot of our strong financial position and conclude with some thoughts around our outlook for the balance of the fiscal year.

Total third quarter revenue increased 4% to $254.0 million from $240.0 million in the prior year period the.

While prices fluctuate given the influences of global supply and demand pricing is not something mission can control our forecast with any degree of certainty.

In the third quarter, the industry experienced excessive volatility in spot pricing as a result of a sporadic harvest cadence in Mexico with a regular starts and stops which exacerbated the usual market dynamics that dictate pricing.