Q2 2026 Mission Produce Inc Earnings Call

June 8, 2026

Operator: Good afternoon, welcome to the Mission Produce Fiscal Q2 2026 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 Andrew Pearson, Vice President of Investor Relations and Strategy for Mission Produce. Sir, please go ahead.

Speaker #2: Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Andrew Pearson, Vice President of Investor Relations and Strategy for Mission Produce.

Speaker #2: Sir, please go ahead. Thank you, and good afternoon. Today's presentation will be hosted by John Pawlowski, President and Chief Executive Officer, and Bryan Giles, Chief Financial Officer.

Andrew Pearson: Thank you, and good afternoon. 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'll also refer to certain non-GAAP financial measures.

Speaker #2: 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.

Speaker #2: All statements other than statements of historical fact 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.

Speaker #2: 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.

Speaker #2: Some of these risks and uncertainties are identified and discussed in the company's filings with the SEC. We'll also refer to certain non-GAAP financial measures.

Speaker #2: 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.

Andrew Pearson: 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.

Speaker #2: I would now like to turn the call over to John.

Speaker #3: Thank you, Andrew, and good afternoon, everyone. Before I get into the quarter, let me say a brief word about our leadership transition, which is now complete.

John Pawlowski: Thank you, Andrew, and good afternoon, everyone. Before I get into the quarter, let me say a brief word about our leadership transition that is now complete. Following our annual meeting in April, I formally stepped into the CEO role, and Steve has moved into the Executive Chairman seat and remains actively engaged with the team and the board. His perspective continues to be invaluable as we navigate this next chapter. On behalf of the entire Mission team, I want to say thank you to Steve again for the four-plus decades of leadership that have brought us here today, and I am incredibly proud to be carrying that legacy forward. I would also like to welcome Andrew Pearson, who recently joined Mission as our Vice President of Investor Relations and Strategy.

Speaker #3: Following our annual meeting in April, I formally stepped into the CEO role, and Steve has moved into the Executive Chairman seat, and remains actively engaged with the team and the Board.

Speaker #3: His perspective continues to be invaluable as we navigate this next chapter. On behalf of the entire Mission team, I want to say thank you to Steve again for the four-plus decades of leadership that have brought us here today.

Speaker #3: And I am incredibly proud to be carrying that legacy forward. I would also like to welcome Andrew Pearson, who recently joined Mission as our Vice President of Investor Relations and Strategy.

Speaker #3: On today's call, I'll walk you through our second quarter results and the operating environment that shaped them, talk about our Collavo acquisition that closed earlier than anticipated on May 28th, and share how we're thinking about the path forward.

John Pawlowski: On today's call, I'll walk you through our Q2 results and the operating environment that shaped them, talk about our Calavo acquisition that closed earlier than anticipated on 28 May, and share how we're thinking about the path forward. Bryan will then take you through the financial details, and we'll open it up for questions. Our Q2 was shaped by an unusually high supply avocado environment with the largest Mexican crop in years. Our sales team executed with excellence while also maintaining a manageable margin in the face of multiyear low prices. In April, we saw an unfavorable step change in our per unit margins, driven by a temporary imbalance of supply and demand of core fruit sizes, which pressured margins further as we worked to fill in the shortfalls.

Speaker #3: Bryan will then take you through the financial details, and we'll open it up for questions. Our second quarter was shaped by an unusually high supply of avocado environment, with the largest Mexican crop in years.

Speaker #3: Our sales team executed with excellence while also maintaining a manageable margin in the face of multi-year low prices. In April, we saw an unfavorable step change in our per-unit margins, driven by a temporary imbalance of supply and demand of core fruit sizes.

Speaker #3: This pressured margins further as we worked to fill in the shortfalls. Our decision to continue to support our customers in the face of compressing margins was deliberate.

John Pawlowski: Our decision to continue to support our customers in the face of compressing margins was deliberate, to help our customers meet heightened demand and facilitate longer-term value creation. Supply continues to transition away from Mexico and toward other growing regions, including California and the start of our Peruvian harvest. That transition is allowing us to lean back into the multi-region sourcing network that has long been one of our most durable competitive advantages. Supply of fruit and the sizing curves are now normalized and per unit margins are recovering. Our relationships with customers are solid, and we expect to deliver strong performance the remainder of the year. Notably, in most avocado pricing environments, high or low, Mission maintains consistent and strong per unit margins.

Speaker #3: To help our customers meet heightened demand and facilitate longer-term value creation. Supply continues to transition away from Mexico and toward other growing regions, including California and the start of our Peruvian harvest.

Speaker #3: That transition is allowing us to lean back into the multi-region sourcing network that has long been one of our most durable competitive advantages. Supply of fruit and the sizing curves are now normalized, and per-unit margins are recovering.

Speaker #3: Our relationships with customers are solid, and we expect to deliver strong performance for the remainder of the year. Notably, in most avocado pricing environments—high or low—Mission maintains consistent and strong per-unit margins.

Speaker #3: Extreme low prices like we just saw can be an exception, but those environments are rare, and Mission is still able to fare better than peers given our vertical integration and multi-region sourcing network.

John Pawlowski: Extreme low prices like we just saw can be an exception, but those environments are rare and Mission is still able to fare better than peers given our vertical integration and multi-region sourcing network. Our model is intentionally designed to perform across most environments and remains a key competitive advantage of ours. Importantly, we are encouraged by what Q2's high volume dynamics did for the category. US avocado consumption reached new highs during the quarter, increasing strong double digits versus last year. While penetration continued to expand with more than 1.6 million new households entering the category. As we have seen in the past, when the category expands to new consumers and occasions like in Q2, periods of strong growth often follow. To us, that reinforces that avocados remain a category with substantial runway.

Speaker #3: Our model is intentionally designed to perform across most environments and remain a key competitive advantage of ours. Importantly, we're encouraged by what Q2's high-volume dynamics did for the category.

Speaker #3: U.S. avocado consumption reached new highs during the quarter, increasing by strong double digits versus last year, while penetration continued to expand with more than 1.6 million new households entering the category.

Speaker #3: As we've seen in the past, when the category expands to new consumers and occasions, like in Q2, periods of strong growth often follow. To us, that reinforces that avocados remain a category with substantial runway.

Speaker #3: We believe this is one of the more durable growth categories in the grocery store, benefiting from steady penetration gains, broader everyday consumption, and consumer preferences that continue to favor fresh, nutrient-dense foods.

John Pawlowski: We believe this is one of the more durable growth categories in the grocery store, benefiting from steady penetration gains, broader everyday consumption, and consumer preferences that continue to favor fresh, nutrient-dense foods. There is still meaningful opportunity to grow here in the US, as well as markets like Europe and Asia, where the category is still in much earlier stages. Turning now to our segments. In our Marketing and Distribution Segment, we delivered 15% volume year-over-year growth in avocados sold for the quarter. Our commercial and operations teams did outstanding jobs supplying that fruit to our broad customer base and all the new consumers entering the category. Despite the Q2 margin pressure, the Marketing and Distribution Segment's gross profit actually increased approximately 5% on a H1 basis versus the prior year period.

Speaker #3: There is still meaningful opportunity to grow here in the U.S., as well as in markets like Europe and Asia, where the category is still in much earlier stages.

Speaker #3: Turning now to our segments. In our Marketing and Distribution segment, we delivered 15% volume year-over-year growth in avocados sold for the quarter. Our commercial and operations teams did outstanding jobs supplying that fruit to our broad customer base and all the new consumers entering the category.

Speaker #3: And despite the Q2 margin pressure, the Marketing and Distribution segments’ gross profit actually increased approximately 5% on a first half basis versus the prior year period.

Speaker #3: Our international farming results in the first half of the year are not particularly meaningful, given the seasonality of this segment, with adjusted EBITDA concentrated in the third and fourth quarters in alignment with our Peruvian avocado harvest.

John Pawlowski: Our international farming results in the H1 of the year are not particularly meaningful given the seasonality of this segment. With Adjusted EBITDA concentrated in the Q3 and Q4 in alignment to our Peruvian avocado harvest. Our segment's performance versus prior year was impacted by lower third-party blueberry packing and storage volume versus the prior year and our strategy to invest behind the growing mango category. Fruit development at our owned avocado production in Peru is progressing nicely, and we are expecting a robust crop this season, with total exportable production forecasted to be approximately 20% greater than last year. In the Blueberry Segment, the Q2 sits outside the peak Peruvian harvest window, which is concentrated in our fiscal Q1 and Q4. The newer acreage is continuing to mature, and we expect yields and per unit costs to improve as those farms reach full productivity.

Speaker #3: Our segment's performance versus the prior year was impacted by lower third-party blueberry packing and storage volumes, and by our strategy to invest behind the growing mango category.

Speaker #3: Fruit development at our owned avocado production in Peru is progressing nicely, and we are expecting a robust crop this season, with total exportable production forecasted to be approximately 20% greater than last year.

Speaker #3: In the blueberry segment, the second quarter sits outside the peak Peruvian harvest window, which is concentrated in our fiscal first and fourth quarters. The newer acreage is continuing to mature, and we expect yields and per-unit costs to improve as those farms reach full productivity.

Speaker #3: We continue to like where the segment is headed, both as a standalone category and for what it contributes to our broader platform. With that, I now want to turn towards the future, because this is what we are really excited about and where our entire mission team and board of directors are focused.

John Pawlowski: We continue to like where this segment is headed, both as a standalone category and for what it contributes to our broader platform. With that, I now want to turn towards the future because this is what we are really excited about and where our entire Mission team and board of directors are focused. Following our close of the Calavo transaction on 28 May, we are now operating as one combined company. Although we are in the early stages, I am energized by what we are building together, both in terms of how it positions us strategically and in terms of the immediate value we believe this combination unlocks for both our customers and our shareholders. Our experience this quarter underscored exactly why we believe in this combination.

Speaker #3: Following our close of the Collavo transaction on May 28, we are now operating as one combined company. Although we are in the early stages, I am energized by what we are building together, both in terms of how it positions us strategically and in terms of the immediate value we believe this combination unlocks for both our customers and our shareholders.

Speaker #3: Our experience this quarter underscored exactly why we believe in this combination. With the market inundated with Mexican supply, our owned packing capacity in Mexico was stretched.

John Pawlowski: With the market inundated with Mexican supply, our own packing capacity in Mexico was stretched, forcing us to utilize a greater mix of third-party packing services, which impacts profitability. Next season, we will be able to manage higher volume environments, leveraging our larger footprint with the addition of Calavo's pack houses. Also relevant to Q2, the combined platform should give us greater flexibility to align supply to demand, not just managing total volume, but matching the right size curves to the right customer programs. Calavo strengthens our position as the most reliable year-round source of fresh avocados across North America, which is what our largest retail and food service customers truly value most. Beyond the avocado category, the prepared foods opportunity is one that I am particularly excited about.

Speaker #3: Forcing us to utilize a greater mix of third-party packing services, which impacts profitability. Next season, we will be able to manage higher-volume environments, leveraging our larger footprint with the addition of Collavo's packhouses.

Speaker #3: Also relevant to Q2, the combined platform should give us greater flexibility to align supply to demand—not just managing total volume, but matching the right size curves to the right customer programs.

Speaker #3: And Collavo strengthens our position as the most reliable, year-round source of fresh avocados across North America, which is what our largest retail and food service customers truly value most.

Speaker #3: Beyond the avocado category, the prepared foods opportunity is one that I am particularly excited about. Collavo's guacamole and ready-to-eat product lines sit within a large and growing market, and there is a natural adjacency to our core business.

John Pawlowski: Calavo's guacamole and ready-to-eat product lines sit within a large and growing market, and they're a natural adjacency to our core business. Having spent two decades in the branded food industry before joining Mission, I have a deep appreciation for what it takes to drive category leadership. We see meaningful runway to build this capability over time, and we believe it genuinely will be additive to what Mission is already doing today. We continue to see a minimum of $25 million of annualized cost synergies achievable within 18 months of close, with meaningful upside potential. On that front, we have a dedicated integration work group made up of internal experts from each function to bring the industry insights and know-how, and external support to bring established and disciplined integration processes.

Speaker #3: Having spent two decades in the branded food industry before joining Mission, I have a deep appreciation for what it takes to drive category leadership.

Speaker #3: We see meaningful runway to build this capability over time, and we believe it genuinely will be additive to what Mission is already doing today.

Speaker #3: We continue to see a minimum of $25 million of annualized cost synergies achievable within 18 months of close, with meaningful upside potential. On that front, we have a dedicated integration workgroup made up of internal experts from each function to bring the industry insights and know-how, and external support to bring established and disciplined integration processes.

Speaker #3: The team has been in place and planning for day one for months already, so our first day owning Collavo simply allowed us to execute the planning that was already well underway.

John Pawlowski: The team has been in place and planning for day one for months already, so our first day owning Calavo simply allowed us to execute the planning that was already well underway. We expect our synergies to materialize from eliminating the redundant operations and SG&A cost structures that come with combining two organizations of this scale. With Calavo closing earlier than initially planned, it allows us to accelerate integration and synergy realization. We now expect to start seeing benefit in Q4 of this year, with savings ramping into 2027. Importantly, the Mission board, our management team, our talented and focused integration team, and our new colleagues coming over from Calavo are fully aligned around what this combined platform can become.

Speaker #3: We expect our synergies to materialize from eliminating the redundant operations and SG&A cost structures that come with combining two organizations of this scale. With Collavo closing earlier than initially planned, it allows us to accelerate integration and synergy realization.

Speaker #3: We now expect to start seeing benefit in Q4 of this year, with savings ramping into 2027. Importantly, the Mission board, our management team, our talented and focused integration team, and our new colleagues coming over from Collavo are fully aligned around what this combined platform can become.

Speaker #3: That alignment is going to be central to how we execute over the next 12 to 18 months. I want to thank the teams across both organizations for the work that is setting us up for success.

John Pawlowski: That alignment is going to be central to how we execute over the next 12 to 18 months. I want to thank the teams across both organizations for the work that is setting us up for success. I also want to extend a warm welcome to the entire Calavo team. We are happy to have you on board and look forward to more collaboration in the days and weeks ahead. With that, I'll turn it over to Bryan for the financial details.

Speaker #3: I also want to extend a warm welcome to the entire Collavo team. We are happy to have you on board and look forward to more collaboration in the days and weeks ahead.

Speaker #3: With that, I'll turn it over to Bryan for the financial details.

Speaker #4: Thank you, John, and good afternoon to everyone on the call. Fiscal 2026 second-quarter revenue totaled $290.9 million. This was down 24% from the prior year and was driven by a 36% decrease in per-unit avocado sales prices relative to last year's peak price environment, given the high supply of Mexican fruit in the current quarter.

Bryan Giles: Thank you, John. Good afternoon to everyone on the call. Fiscal 2026 Q2 revenue totaled $290.9 million. This was down 24% from prior year and driven by a 36% decrease in per unit avocado sales prices relative to last year's peak price environment, given the high supply of Mexican fruit in the current quarter. Importantly, we drove 15% avocado volume growth in the quarter, attracting new consumers and occasions, which should support category demand growth in the future. Gross profit was $20.5 million in Q2, compared to $28.4 million in the prior year, with gross margin decreasing 50 basis points to 7% of revenue. The year-over-year change in gross profit this quarter was due largely to a mismatch in supply and demand of core fruit sizes within an environment of high overall supply.

Speaker #4: Importantly, we drove 15% avocado volume growth in the quarter, attracting new consumers and occasions, which should support category demand growth in the future. Gross profit was $20.5 million in the second quarter, compared to $28.4 million in the prior year, with gross margin decreasing 50 basis points to 7% of revenue.

Speaker #4: The year-over-year change in gross profit this quarter was due largely to a mismatch in supply and demand of core fruit sizes within an environment of high overall supply.

Speaker #4: This mismatch, which peaked in April, caused us to pay higher spot market pricing to fill shortfalls for high-demand sizes, while having to reduce prices to move lower-demand sizes.

Bryan Giles: This mismatch, which peaked in April, caused us to pay higher spot market pricing to fill shortfalls for high-demand sizes while having to reduce prices to move lower demand sizes. The situation compounded a tighter per unit margin environment related to the high supply, lower price avocado market, which in turn led to harvest delays in California and Peru. It was a unique and temporary situation which has improved meaningfully in recent weeks. Core SG&A expense was flat versus the prior year period and excludes $6.4 million of transaction advisory costs associated with the Calavo acquisition in the current year period that we've broken out as a separate line item for transparency. Adjusted Net Income for the quarter was $0.8 million, or $0.01 per diluted share, compared to $8.7 million, or $0.12 per diluted share in the prior year period.

Speaker #4: The situation compounded a tighter per-unit margin environment related to the high-supply, lower-price avocado market, which in turn led to harvest delays in California and Peru.

Speaker #4: It was a unique and temporary situation, which has improved meaningfully in recent weeks. Core SG&A expense was flat versus the prior year period and excludes $6.4 million of transaction advisory costs associated with the Collavo acquisition in the current year period, which we've broken out as a separate line item for transparency.

Speaker #4: Adjusted net income for the quarter was $0.8 million, or $0.01 per diluted share, compared to $8.7 million, or $0.12 per diluted share, in the prior year period.

Speaker #4: Adjusted EBITDA was $7.1 million in the second quarter, compared to $19.1 million in the prior-year period. The decline was driven primarily by the same elements impacting gross profit that I mentioned.

Bryan Giles: Adjusted EBITDA was $7.1 million in Q2, compared to $19.1 million in the prior year period. The decline was driven primarily by the same elements impacting gross profit that I mentioned. Turning now to the segment financials. Marketing and Distribution segment sales were $277.2 million, compared to $362.5 million in the prior year period, which reflects lower avocado prices this year, partially offset by higher volume. Segment Adjusted EBITDA was $7.2 million, compared to $16.8 million, reflecting the lower per unit margin dynamics we described. International Farming segment sales were $7.7 million, compared to $8.1 million in the prior year period. Segment sales are concentrated in Q3 and Q4 alongside our Peruvian avocado harvest. Q2 sales tend to be concentrated in mango farming sales and the provision of blueberry packing services.

Speaker #4: Turning now to the segment financials, Marketing & Distribution segment sales were $277.2 million, compared to $362.5 million in the prior-year period. This reflects lower avocado prices this year, partially offset by higher volume.

Speaker #4: Segment adjusted EBITDA was $7.2 million, compared to $16.8 million, reflecting the lower per-unit margin dynamics we described. International farming segment sales were $7.7 million, compared to $8.1 million in the prior-year period.

Speaker #4: Segment sales are concentrated in the third and fourth quarters, alongside our Peruvian avocado harvest, while second quarter sales tend to be concentrated in mango farming sales and the provision of blueberry packing services.

Speaker #4: Segment adjusted EBITDA was a loss of $1.3 million, compared to income of $1.5 million, driven by investments in mango production that did not drive yield improvements in the current harvest season.

Bryan Giles: Segment Adjusted EBITDA was a loss of $1.3 million, compared to income of $1.5 million, driven by investments in mango production that did not drive yield improvements in the current harvest season and lower blueberry packing volumes resulting from an earlier end to the blueberry harvest season relative to prior year. In blueberries, segment sales were $11 million, compared to $15.7 million in the prior year period, primarily on lower volume sold, partially offset by higher average per unit pricing. Segment Adjusted EBITDA was $1.2 million, compared to $0.8 million last year, with the improved per unit pricing more than offsetting higher per unit production costs from lower yields on newer acreage. Shifting to our balance sheet and cash flow. Cash and cash equivalents were $33 million as of 30 April 2026.

Speaker #4: And lower blueberry packing volumes resulting from an earlier end to the blueberry harvest season relative to the prior year. In blueberries, segment sales were $11 million, compared to $15.7 million in the prior year period.

Speaker #4: This was primarily due to lower volumes sold, partially offset by higher average per-unit pricing. Segment adjusted EBITDA was $1.2 million, compared to $0.8 million last year, with the improved per-unit pricing more than offsetting higher per-unit production costs from lower yields on newer acreage.

Speaker #4: Shifting to our balance sheet and cash flow, cash and cash equivalents were $33 million as of April 30, 2026. Net cash used in operating activities was $21 million for the first six months of fiscal 2026.

Bryan Giles: Net cash used in operating activities was $21 million for H1 of fiscal 2026, approximately $5 million of which related to transaction advisory costs. Compared to $13 million in the prior year period, with the increase primarily reflecting lower year-to-date income, partially offset by lower working capital build versus the prior year. As a reminder, our operating cash flows are seasonal in nature, given the build of inventory in our international farming segment through H1 of the fiscal year, with that inventory monetized through H2 of the year as the Peruvian avocado crop is harvested and sold. Capital expenditures were $22.9 million for the six months ended 30 April 2026, compared to $28 million for the same period last year, consistent with the step-down we've communicated previously. Moving to our outlook.

Speaker #4: Approximately $5 million of which related to transaction advisory costs, compared to $13 million in the prior year period. The increase primarily reflects lower year-to-date income, partially offset by lower working capital build versus the prior year.

Speaker #4: As a reminder, our operating cash flows are seasonal in nature, given the build of inventory in our International Farming segment through the first half of the fiscal year.

Speaker #4: With that inventory monetized through the back half of the year as the Peruvian avocado crop is harvested and sold. Capital expenditures were $22.9 million for the six months ended April 30, 2026, compared to $28 million for the same period last year.

Speaker #4: Consistent with the step-down we've communicated previously. Moving to our outlook for the third quarter of fiscal 2026, avocado industry volumes are expected to increase by approximately 5% to 10% versus the prior year period.

Bryan Giles: For Q3 of fiscal 2026, avocado industry volumes are expected to increase by approximately 5% to 10% versus the prior year period. From our own farms in Peru, we expect exportable avocado production to reach all-time highs, ranging between 120 to 130 million pounds as compared to 105 million pounds in the 2025 harvest season, with sales of our own production weighted to our fiscal Q4. Pricing is expected to be lower on a year-over-year basis by approximately 15% compared to the $1.75 per pound average experienced in Q3 of fiscal 2025, which is a smaller percentage reduction than that experienced in H1 of our fiscal year. As is typical in our category, that change in pricing is directly correlated with expectations for higher volumes available in US and international markets.

Speaker #4: From our own farms in Peru, we expect exportable avocado production to reach all-time highs, ranging between 120 to 130 million pounds, as compared to 105 million pounds in the 2025 harvest season.

Speaker #4: With sales of our own production weighted to our fiscal fourth quarter, pricing is expected to be lower on a year-over-year basis by approximately 15%, compared to the $1.75 per pound average experienced in the third quarter of fiscal 2025.

Speaker #4: This is a smaller percentage reduction than that experienced in the first half of our fiscal year. As is typical in our category, that change in pricing is directly correlated with expectations for higher volumes available in U.S. and international markets.

Speaker #4: Supply has now begun transitioning from Mexico toward other growing regions, most notably California and Peru, enabling the multi-region sourcing capabilities that are an important driver of our per-unit margin performance to increase in prominence.

Bryan Giles: Supply has now begun transitioning from Mexico toward other growing regions, most notably California and Peru, enabling the multi-region sourcing capabilities that are an important driver of our per-unit margin performance to increase in prominence. The margin dynamics from Q2 are now behind us, and we expect per-unit margins to meaningfully improve through H2 of the year. With our Calavo acquisition closing in the fiscal Q3, we are providing select additional guidance to assist you in your modeling that includes combined Calavo results. Consolidated fiscal Q3 Adjusted EBITDA is expected in the range of $28 to 32 million, including the partial quarter contribution from the Calavo acquisition. This is driven primarily by a later harvest of our own Peruvian farms, pushing more sales into Q4, combined with some carryover impact in early May from the mismatched fruit supply dynamics previously noted.

Speaker #4: The margin dynamics from Q2 are now behind us, and we expect per-unit margins to meaningfully improve through the back half of the year. With our Collavo acquisition closing in the fiscal third quarter, we are providing select additional guidance to assist you in your modeling that includes combined Collavo results.

Speaker #4: Consolidated fiscal third quarter adjusted EBITDA is expected in the range of $28 million to $32 million, including the partial quarter contribution from the Collavo acquisition.

Speaker #4: This is driven primarily by a later harvest of our own Peruvian farms, pushing more sales into Q4, combined with some carryover impact in early May from the mismatched fruit supply dynamics previously noted.

Speaker #4: Consolidated second half adjusted EBITDA is expected in the range of $84 to $88 million, reflecting the drivers I mentioned for Q3, plus Q4 contributions from a full quarter of Collavo results, higher blueberry yields, and improving avocado margins.

Bryan Giles: Consolidated H2 Adjusted EBITDA is expected in the range of $84 to $88 million, reflecting the drivers I mentioned for Q3, plus Q4 contributions from a full quarter of Calavo results, higher blueberry yields, and improving avocado margins. We do not anticipate material synergy realization during the fiscal Q3, with actions becoming more visible in the fiscal Q4 and accelerating through fiscal 2027. I'd also note that our intention is to be as clear as possible with respect to ongoing integration-related expenses associated with our $25 million synergy target, and anticipate detailing those as add backs to our reconciliation of Adjusted EBITDA and Adjusted Net Income. In terms of CapEx, we expect to invest approximately $45 million in the current fiscal year, which includes modest expenditures related to the Calavo business. Finally, last week, our board approved an increase and extension to our share repurchase program.

Speaker #4: We do not anticipate material synergy realization during the fiscal third quarter, with actions becoming more visible in the fiscal fourth quarter and accelerating through fiscal 2027.

Speaker #4: I'd also note that our intention is to be as clear as possible with respect to ongoing integration-related expenses, associated with our $25 million synergy target.

Speaker #4: We anticipate detailing those as add-backs to our reconciliation of adjusted EBITDA and adjusted net income. In terms of CapEx, we expect to invest approximately $45 million in the current fiscal year, which includes modest expenditures related to the Collavo business.

Speaker #4: Finally, last week our Board approved an increase and extension to our share repurchase program. We see it as another reflection of our disciplined approach to capital allocation and our focus on creating long-term shareholder value.

Bryan Giles: We see it as another reflection of our disciplined approach to capital allocation and our focus on creating long-term shareholder value. It gives us the flexibility to repurchase shares opportunistically when we believe the market price does not reflect the underlying value of the business, and it also underscores our confidence in Mission's long-term growth outlook. In closing, while the Q2 was shaped by an unusual supply environment, we believe it also highlighted the strength of our commercial execution, the resilience of avocado demand, and the value of the customer relationships we continue to build. As supply normalizes and we move through the H2 of the year, we expect improving margin performance, stronger contributions from Peru, and increasing benefits from our expanded platform following the close of the Calavo transaction. Taken together, we believe that positions Mission well to drive profitable growth and create long-term value for shareholders.

Speaker #4: It gives us the flexibility to repurchase shares opportunistically when we believe the market price does not reflect the underlying value of the business. It also underscores our confidence in Mission’s long-term growth outlook.

Speaker #4: In closing, while the second quarter was shaped by an unusual supply environment, we believe it also highlighted the strength of our commercial execution, the resilience of avocado demand, and the value of the customer relationships we continue to build.

Speaker #4: As supply normalizes and we move through the back half of the year, we expect improving margin performance, stronger contributions from Peru, and increasing benefits from our expanded platform following the close of the Collavo transaction.

Bryan Giles: As supply normalizes and we move through the H2 of the year, we expect improving margin performance, stronger contributions from Peru, and increasing benefits from our expanded platform following the close of the Calavo transaction. Taken together, we believe that positions Mission well to drive profitable growth and create long-term value for shareholders. That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.

Speaker #4: Taken together, we believe that positions Mission well to drive profitable growth and create long-term value for shareholders. That concludes our prepared remarks. Operator, now over to you.

Bryan Giles: That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.

Speaker #4: Please open the call to Q&A.

Speaker #1: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now 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 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from the line of Pooran Sharma with Stephens, Inc. Please proceed with your question.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

Speaker #1: One moment, please, while we pull for questions. Our first question comes from the line of Bryan Sharma with Stephens, Inc. Please proceed with your question.

Pooran Sharma: Good afternoon. Thanks for the questions.

Speaker #5: Good afternoon, and thanks for the question. My first question—hey, good afternoon. Just on the first question here, I wanted to maybe see if you could help bridge the three-Q adjusted EBITDA guide of $28 to $32 million to kind of the second half guide of $84 to $88 million.

John Pawlowski: Pooran?

John Pawlowski: Pooran? Hey. Good afternoon.

John Pawlowski: Hey. Good afternoon. On the first question here, I wanted to maybe see if you could help bridge the Q3 Adjusted EBITDA guide of $28 to $32 million to kind of the H2 guide of $84 to $88 million. You kind of detailed a little bit on the call. There is a big step up for Q4. I am just wondering if you could kind of help me think about how much of that step up is just from your own Peru production versus a full quarter of Calavo in there versus just more improved fundamentals for just marketing and distribution?

Pooran Sharma: On the first question here, I wanted to maybe see if you could help bridge the Q3 Adjusted EBITDA guide of $28 to $32 million to kind of the H2 guide of $84 to $88 million. You kind of detailed a little bit on the call. There is a big step up for Q4. I am just wondering if you could kind of help me think about how much of that step up is just from your own Peru production versus a full quarter of Calavo in there versus just more improved fundamentals for just marketing and distribution?

Speaker #5: Obviously, you kind of detailed a little bit on the call. Big step up for Q4. Just wondering if you could kind of help me think about how much of that step up is just from your own Peru production versus a full quarter of Collavo in there, versus just more improved fundamentals for marketing and distribution.

Speaker #1: Sure thing, Bryan. Let me give you a break. A little bit of a breakdown. We definitely see a more backloaded year this year in our international farming segment than what we saw last year.

Bryan Giles: Sure thing, Pooran. Let me give you a little bit of a breakdown. We definitely see a more backloaded year this year in our international farming segment than what we saw last year. A lot of it has to do with the timing of harvest. Certainly last year, though, we were also in a much higher priced environment in Q3, and we saw deterioration in pricing as we transitioned into Q4. We are seeing a very different market today, where we are actually starting to see prices lift, and we expect more stability through the quarter. It is both a pricing and a volume dynamic that is at play in the farming segment that is helping to drive, or we anticipate to drive much stronger results in Q4 than in Q3.

Speaker #1: A lot of it has to do with the timing of harvest. Certainly, last year, though, we were also in a much higher-priced environment in Q3, and we saw a deterioration in pricing as we transitioned into Q4.

Speaker #1: We're seeing a very different market today, where we're actually starting to see prices lift, and we expect more stability through the quarter. So, it's both a pricing and a volume dynamic that's at play in the farming segment that's helping to drive what we anticipate—much stronger results in the fourth quarter than in the third quarter.

Speaker #1: Keep in mind, we also see our traditional seasonal ramp of the blueberries segment in the fourth quarter, whereas it has very little contribution in Q3.

Bryan Giles: Keep in mind, we also see our traditional seasonal ramp of the blueberry segment in Q4, where it has very little contribution in Q3. If we look back at marketing distribution, I think that, yeah, we expect to continue to see strong volume. We expect to start to see prices stabilize as the step down is not nearly as meaningful in Q3 as we have seen in Q1 and Q2. We expect that to continue into Q4, and that should give us room to continue to maintain margins kind of within our historical ranges that we have mentioned. It is not really a glide path to where we need to experience dramatically higher per unit margins on third-party fruit that is being sold in the marketing distribution segment. I would remind last year we generated close to $42 million of EBIT on our Q4.

Speaker #1: If we look back at marketing distribution, I think that, yeah, we expect to continue to see strong volume. We expect to start to see prices stabilize, as the step down is not nearly as meaningful in Q3 as we've seen in Q1 and Q2.

Speaker #1: We expect that to continue into Q4, and that should give us room to continue to maintain margins within our historical ranges that we've mentioned.

Speaker #1: It's not really a glide path to where we need to experience dramatically higher per-unit margins on third-party fruit that's being sold in the marketing and distribution segment.

Speaker #1: I mean, I'd remind you, last year we generated close to $42 million of EBITDA in our fourth quarter. So with the business being more backloaded and bringing the Collavo business in on top of it, I think we feel very comfortable with the glide path to the fourth quarter results that we're guiding towards.

Bryan Giles: With the business being more backloaded and bringing the Calavo business in on top of it, I think we feel very comfortable with the glide path to the Q4 results that we're guiding towards.

Speaker #5: Okay, appreciate the clarity there. I guess, just on a follow-up here, we've been hearing about conditions of a super El Niño that might impact fruit conditions or just growing conditions in some of the key production areas.

Pooran Sharma: Okay. Appreciate the clarity there. I guess just on the follow-up here, we've been hearing conditions of a super El Niño that might impact fruit conditions or just growing conditions in some of the key production areas. Was just wondering if you're able to help us think about what that could mean for Mexican production, and potentially your own production. Would this be more of a current year impact, or would this be more of something to watch out for next crop cycle?

Speaker #5: I was just wondering if you're able to help us think about what that could mean for Mexican production and potentially your own production. Would this be more of a current year impact, or is it something to watch for in the next crop cycle?

Speaker #1: Yeah. Hi, Bryan. This is John. First, I'll address 2026. We're watching—it, as you can imagine, we're watching it very, very closely. We're having conversations weekly with our teams in all regions in regards to what's going on with the El Niño expectations and temperatures and rainfall, etc.

John Pawlowski: Yeah. Hi, Pooran. This is John. First I'll address 2026. As you can imagine, we're watching it very closely. We're having conversations weekly with our teams in all regions in regards to what's going on with the El Niño expectations and temperatures and rainfall, et cetera. I would let you know that to date, we haven't seen any significant impacts. We are anticipating some warmer weather in Peru over the next three, four months. As far as 2026 is concerned, we feel like we've done really a great job over the last 18 to 24 months. On several of these calls, we've talked about the investments we've made in the health of the trees and the nutrition plans that we put in place over the last two years.

Speaker #1: And I would let you know that, to date, we haven't seen any significant impacts. We are anticipating some warmer weather in Peru over the next three to four months. As far as 2026 is concerned, we feel like we've done a really great job over the last 18 to 24 months.

Speaker #1: On several of these calls, we've talked about the investments we've made in the health of the trees and the nutrition plans that we put in place over the last two years.

Speaker #1: And we feel good that our trees are in a really healthy spot to be able to handle some instability in regards to weather conditions over the next three to four months.

John Pawlowski: We feel good that our trees are in a really healthy spot to be able to handle some instability in regards to weather conditions over the next three to four months. As far as our crop over the 2026 season, we feel confident in the numbers that we're putting out there right now, regardless of some of the weather challenges that could come our way. We're going to have to watch really closely with when those particular heat spells hit and when those particular rain spells hit, if it has to do with when we're flowering or not, right? We do think there could be an impact on 2027, but we feel like we're in a spot where we can plan for that potential volume change accordingly as we think about next fiscal year.

Speaker #1: So, as far as our crop over the 2026 season, we feel confident in the numbers that we're putting out there right now, regardless of some of the weather challenges that could come our way.

Speaker #1: There are going to be we're going to have to watch really closely with when those particular heat spells hit and when those particular rain spells hit.

Speaker #1: If it has to do with when we're flowering or not, right? So we do think there could be an impact on '27, but we feel like we're in a spot where we can plan for that potential volume change accordingly as we think about next fiscal year.

Speaker #1: As far as Mexico is concerned, in terms of rain perspective, and Q2 2026, as you know, we're in the process of moving from normal crop to local crop in Mexico.

John Pawlowski: As far as Mexico is concerned, it really comes down to what happens from a rain perspective. 2026, as you know, we're in the process of moving from normal crop to local crop in Mexico. We don't see a significant impact of the weather-related issues in 2026, but do see potentially the potential impact of El Niño being slightly lower crops than anticipated in Mexico next year. That is trying to be crystal ball for you there as far as 2027 is concerned. Hopefully the summary here is we don't see a significant impact on 2026 right now based on what we've done from a health perspective of the trees. 2027, we're keeping an eye on to make sure we understand those impacts, but do see some potential changes in volumes.

Speaker #1: We don't see a significant impact of the weather-related issues in 2026, but we do see the potential impact of El Niño causing slightly lower crops than anticipated in Mexico next year.

Speaker #1: But that is trying to be a crystal ball for you there as far as 2027 is concerned. But hopefully, the summary here is we don't see a significant impact on '26 right now based on what we've done from a health perspective of the trees.

Speaker #1: And '27, we're keeping an eye on to make sure we understand those impacts, but we do see some potential changes in volumes.

Speaker #5: Great. Thank you for the call.

Pooran Sharma: Great. Thank you for the color.

Speaker #1: Welcome.

John Pawlowski: Welcome.

Speaker #6: Thank you. Our next question comes from the line of Jerry Sweeney with Roth Capital Partners. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Gerard Sweeney with ROTH Capital Partners. Please proceed with your questioning.

Gerard Sweeney: Good afternoon, guys. Thanks for taking my call.

Gerry Sweeney: Good afternoon, guys. Thanks for taking my call.

Speaker #7: Good afternoon, guys. Thanks for taking my call. Congratulations on closing the Collavo acquisition. My first question relates to that. I know you've given some synergies and opportunities on that front over the next 18 months to $25 million.

Operator: Thank you.

Gerard Sweeney: Congratulations on closing the Calavo acquisition. First question relates to that, and I know you've given some synergies and opportunities on that front over the next 18 months of $25 million. Now that it's closed, and I don't want to get the cart before the horse, but I just want to get maybe what are the first steps or the lowest hanging fruit opportunities for growth from the combined entity? Is it an opportunity to get into additional supermarkets or locations, or how do we look at that? Just if you can give anything on the preliminary front, that'd be great.

Gerry Sweeney: Congratulations on closing the Calavo acquisition. First question relates to that, and I know you've given some synergies and opportunities on that front over the next 18 months of $25 million. Now that it's closed, and I don't want to get the cart before the horse, but I just want to get maybe what are the first steps or the lowest hanging fruit opportunities for growth from the combined entity? Is it an opportunity to get into additional supermarkets or locations, or how do we look at that? Just if you can give anything on the preliminary front, that'd be great.

Speaker #7: But now that it's closed—and I don't want to put the cart before the horse—but I just want to get, maybe, what are the first steps or the lowest-hanging fruit opportunities for growth from the combined entity?

Speaker #7: Is it an opportunity to get into additional supermarkets or locations, or how should we look at that? If you can give anything on the preliminary front, that would be great.

Speaker #1: Yeah. Hi, Jerry. This is John. Well, we've got about eight days under our belt in regard to being officially closed. And we are working through, as I mentioned in my comments, we are working through the integration process, and working in teams and with people as effectively and efficiently as we can.

John Pawlowski: Hi Jerry, this is John. Well, we've got about 8 days under our belt in regards to being officially closed, and we are working through, as I mentioned in my comments, we are working through the integration process and work and teams and people as effectively and efficiently as we can. Our number one focus right now is to make sure that there's minimal or, quite frankly, no disruption to the two businesses as they kind of become one over the course of the next couple of months. As far as low-hanging fruit, it's really in the combined cost structures over the next six to 12 months. It's really about how do we optimize the distribution network over time?

Speaker #1: Our number one focus right now is to make sure that there's minimal, or quite frankly no, disruption to the two businesses as they kind of become one over the course of the next couple of months.

Speaker #1: As far as low-hanging fruit, it's really in the combined cost structures over the next six to twelve months. It's really about how do we optimize the distribution network over time?

Speaker #1: How do we look at redundant SG&A spends, redundant infrastructure costs that have been allocated to both P&Ls over the course of the last five to six years?

John Pawlowski: How do we look at redundant SG&A spends, redundant infrastructure costs that have been allocated to both P&Ls over the course of the last five to six years, and making sure we scrub those as efficiently and effectively as possible. That is our immediate focus. When we think about scale, though, and we do think about longer term growth, there are opportunities for us to share a customer conversation in ways that we haven't been able to do that in the past. To bring, for instance, we're really excited about the guacamole business, the prepared foods business, one in which that we open a lot more doors than the Calavo business did on its own, not just here domestically in the United States, although that will be our focus for the first 12 months or so.

Speaker #1: And making sure we scrub those as efficiently and effectively as possible—that is our immediate, immediate focus. When we think about scale, though, and we do think about longer-term growth, there are opportunities for us to share a customer conversation in ways that we haven't been able to do in the past. To bring, for instance—we're really excited about the guacamole business, the prepared foods business.

Speaker #1: One in which we open a lot more doors than the Collavo business did on its own—not just here domestically in the United States, although that will be our focus for the first 12 months or so.

Speaker #1: It starts to open up doors internationally as well, where the Collavo team hasn't had the opportunity to take a bite at that apple. So that's one where we do see a nice ramp into the future in regards to that type of growth opportunity.

John Pawlowski: It starts to open up doors internationally as well, where the Calavo team hasn't had the opportunity to take a bite at that apple. That's one where we do see a nice ramp into the future in regards to that type of a growth opportunity. The other piece is, as we think about leveraging scale between the combined businesses, we really think there's an opportunity as we secure the sources and build the relationships to really enhance the existing relationships across the enterprise. We see an opportunity to expand into or leverage that across our existing customer bases to find new customers in places where we traditionally haven't been able to get into in the past. Expanding our food service footprint over time in ways that Mission hadn't been able to do, and expanding our existing mango footprint in ways Mission hadn't been able to do.

Speaker #1: The other piece is, as we think about leveraging scale between the combined businesses, we really think there's an opportunity, as we secure the sources and build the relationships, to really enhance the existing relationships across the enterprise.

Speaker #1: We see an opportunity to expand into, or leverage that across, our existing customer bases to find new customers in places where we traditionally haven't been able to get into in the past.

John Pawlowski: We see an opportunity to expand into or leverage that across our existing customer bases to find new customers in places where we traditionally haven't been able to get into in the past. Expanding our food service footprint over time in ways that Mission hadn't been able to do, and expanding our existing mango footprint in ways Mission hadn't been able to do. We do think there are new outlets for us, and we're going to push those as we move forward.

Speaker #1: So, expanding our foodservice footprint over time in ways that Mission hadn't been able to do, and expanding our existing mango footprint in ways Mission hadn't been able to do.

Speaker #1: So, we do think there are new outlets for us, and we're going to push those as we move forward.

John Pawlowski: We do think there are new outlets for us, and we're going to push those as we move forward.

Speaker #7: Gotcha. And then, a question on the margins—this is maybe a little bit more for Bryan—but obviously, I mean, you highlighted volumes and pricing, and pricing hitting an extreme low.

Gerard Sweeney: Got you. A question on the margins. This may be a little bit more for Bryan, but obviously, you highlighted volumes and pricing hitting an extreme low, and then just some of the sizing and staying with your clients and supporting your clients. How much of the margin impact was it more of the filling in the gap of that sourcing mismatch versus maybe falling outside of that sweet spot for price and volume?

Gerry Sweeney: Got you. A question on the margins. This may be a little bit more for Bryan, but obviously, you highlighted volumes and pricing hitting an extreme low, and then just some of the sizing and staying with your clients and supporting your clients. How much of the margin impact was it more of the filling in the gap of that sourcing mismatch versus maybe falling outside of that sweet spot for price and volume?

Speaker #7: And then just some of the sizing and staying with your clients and supporting your clients—how much of the margin impact was it more the filling in the gap of that sourcing mismatch versus maybe falling outside of that sweet spot for price and volume?

Bryan Giles: You know, Jerry, I think it's a little bit of both. It's tough to put my finger on exactly how much I would attribute to each component of that. What I will say is kind of the mismatch and the size curve tended to become more apparent and obvious during the back half of the quarter in April. We saw some pricing pressure post Super Bowl in February, and that kind of tightened our margins up a bit. We did see some recovery from that during the March timeframe. Things kind of seemed to be trending in the right direction. I think when we got to April, though, we started to see some challenges in aligning the size curve that we were getting out of the field with our customer base.

Speaker #1: Jerry, I think it's a little bit of both. It's tough to put my finger on exactly how much I would attribute to each component of that.

Speaker #1: What I will say is kind of the mismatch and the size curve tend to be tended to be come more apparent and obvious during the back half of the quarter in April.

Speaker #1: We saw some pricing pressure post-Super Bowl in February, and that kind of tightened our margins up a bit. We did see some recovery from that during the March timeframe.

Speaker #1: Things kind of seemed to be trending in the right direction. I think when we got to April, though, we started to see some challenges in aligning the size curve that we were getting out of the field.

Speaker #1: With our customer base. So, I think that while I can't put an exact number on it from a timing standpoint, that aspect had a bigger impact on the back end of the quarter.

Bryan Giles: I think that while I can't put an exact number on it from a timing standpoint, that aspect had a bigger impact on the back end of the quarter. I think one of the challenges we deal with is the fruit that comes off the tree. It's not a perfect science in terms of what sizes we're going to be able to get when we harvest, and certainly as we get towards the back end of the harvest season when we're clearing up the crop. Yeah, certainly we had to go out and buy fruit on spot market in order to kind of fill those customer commitments. We also had a little bit on some of these shoulder sizes, some excess supply that we had to move through the market at maybe a little bit lower prices than we originally anticipated.

Speaker #1: I think one of the challenges we deal with is the fruit that comes off the tree. It's not a perfect science in terms of what sizes we're going to be able to get.

Speaker #1: When we harvest, and certainly as we get towards the back end of the harvest season when we're clearing up the crop—so, yeah, certainly we had to go out and buy fruit on the spot market in order to kind of fill those customer commitments.

Speaker #1: We also had a little bit, on some of these shoulder sizes, of excess supply that we had to move through the market. It may be at a little bit lower prices than we originally anticipated.

Speaker #1: So I would say that overall, our per-box margins were significantly below our target ranges this quarter. I think if that hadn't happened at the end of the quarter, we would have been better off, but we likely still would have been below our target range for the quarter as a whole—just much, much closer to it.

Bryan Giles: I would say that overall, our per box margins were significantly below our target ranges this quarter. If that hadn't happened at the end of the quarter, I think we would have been better off, but we likely still would have been below our target range for the quarter as a whole, just much closer to it.

John Pawlowski: Hey, Jerry, I want to add.

Speaker #8: Hey, Jerry, I want to add—thanks, Bryan. I want to add a couple of things. Number one, I think that when you think about the particular situation we found ourselves in this April, it's one that the new scale, in regards to the combined companies moving forward, allows us more mitigation skills, or more mitigation capabilities, because we'll have access to more fruit from a broader perspective and can move fruit around our network in a way that we haven't been able to do in the past.

Gerard Sweeney: Yeah

Gerry Sweeney: Yeah

John Pawlowski: Thanks, Bryan. I want to add a couple of things. Number one, I think that when you think about the particular situation we found ourselves in this April, it's one that the new scale in regards to the combined companies moving forward allows us more mitigation skills or more mitigation capabilities because we'll have access to more fruit from a broader perspective and can move fruit around our network in a way that we haven't been able to do in the past. Quite frankly, that not a single one of our competitors will be able to do in the future. Another thing to remember is we try to manage for the good of the customer and the good of the consumer on a 12-month basis, right?

Speaker #8: And quite frankly, that's not something a single one of our competitors will be able to do in the future. Another thing to remember is we try to manage for the good of the customer and the good of the consumer on a 12-month basis, right?

Speaker #8: We really try to think about seasonality and cycles in a way that is best for moving fruit through the system, to help our customers and our consumers be as successful as possible.

John Pawlowski: We really try to think about seasonality and cycles in a way that is the best for moving fruit through the system to help our customers and our consumers be as successful as possible. I think that when you look at the past and you look at other times where we've had significant fruit coming in from a single source, particularly Mexico, right? Usually it happens out of Mexico during these kind of late winter, early spring time frames. We see compression in some of the margin profiles of the industry in general, but we see nice acceleration of what happens with the consumer and what happens with the category. We had

Speaker #8: And I think that when you look at the past and you look at other times where we've had significant fruit coming in from a single source—particularly Mexico, right?

Speaker #8: Because usually it happens out of Mexico during these kind of late winter, early spring timeframes. We see compression in some of the margin profiles of the industry in general, but we see nice acceleration of what happens with the consumer and what happens with the category.

Speaker #8: We had high watermarks in regards to household penetration during the quarter. We had household per capita consumption go up to nearly 10%, if not breach 10%, during the quarter.

John Pawlowski: We had high watermarks in regards to household penetration during the quarter. We had per capita consumption go up to nearly 10%, if not breach 10%, during the quarter. All things that bode well for category health and strength in the future. One thing we don't really talk about here too much, I think we mentioned a little bit in the prepared remarks, is we also started to see both of those measures move nicely in Europe in a way that we haven't seen in the past. We've been preaching it's going to happen, and we really believed it was going to happen, and now we're seeing it happen.

Speaker #8: All things that bode well for category health and strength in the future. And one thing we don't really talk about here too much—I think we mentioned it a little bit in the prepared remarks—is that we also started to see both of those measures move nicely in Europe in a way that we haven't seen in the past.

Speaker #8: We've been preaching it's going to happen, and we really believed it was going to happen, and now we're seeing it happen. So, as we think about the future of the category, these kinds of periods happen on occasion, but we really like to manage to the full year, focus on our customers, and think about the health of the category for the long run.

John Pawlowski: As we think about the future of the category, these kind of periods happen on occasion, but we really like to manage to the full year, focus on our customers, and think about the health of the category for the long run. That's exactly what happened here.

Speaker #8: And that's exactly what happened here.

Speaker #7: Got it. Understood. I really appreciate it. Thanks, guys.

Gerard Sweeney: Got it. Understood. I really appreciate it. Thanks, guys.

Gerry Sweeney: Got it. Understood. I really appreciate it. Thanks, guys.

Speaker #8: You're welcome, Jerry.

Bryan Giles: You're welcome, Jerry. Thanks, Jerry.

Bryan Giles: You're welcome, Jerry.

Speaker #1: Thanks, Jerry.

John Pawlowski: Thanks, Jerry.

Speaker #9: Thank you. Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Operator: Thank you. Our next question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Speaker #10: Hi, guys. Just to follow up a little bit on that margin compression question—just as we think about this issue kind of resolving itself as we move through May and today—can you just give us an update on the mismatch in supply and demand on fruit sizes and where we stand today?

Mark Smith: Hi, guys. Just to follow up a little bit on that margin compression question. Just as we think about this issue kind of resolving itself as we move through May and today, can you just give us an update on kind of the mismatch in supply and demand on fruit sizes and where we stand today?

Speaker #1: Yeah, we feel like we're in much better alignment right now. I mean, there are a few things that we saw happen during the month of May and leading into June.

Bryan Giles: Yeah, we feel like we're in much better alignment right now. There's a few things that we saw happen during the month of May and leading into June. We started to kind of see the harvest season in Mexico start to wind down a bit from where we were at. We started to see some lift in pricing over the course of the quarter, which then also encouraged California growers to begin their harvest cycle for this year. They'd really been delaying in the price environment that we're in through most of Q2. That helped kind of lift things up a bit. It's good to get that nice mix in there.

Speaker #1: We started to kind of see the harvest season in Mexico start to wind down a bit from where we were at, so we started to see some lift in pricing over the course of the quarter.

Speaker #1: Which then also encouraged California growers to begin their harvest cycle for this year. They'd really been delaying in the price environment that we're in through most of Q2.

Speaker #1: So, that helped kind of lift things up a bit. And it's good to get that nice mix in there. The California fruit is still early enough in the season where the fruit has a little bit lower dry matter, has a longer shelf life to it, to help balance in with the Mexican fruit that's near the end of its season.

Bryan Giles: The California fruit's still early enough in the season where the fruit has a little bit lower dry matter, has a longer shelf life to it to help balance in with the Mexican fruit that's near the end of its season. It also affords the opportunity to start bringing some Peruvian fruit in. We've been harvesting from our own farms now for several weeks. We've got, I think, our first arrivals coming into the US market very soon. We've been marketing some third-party fruit already out of Peru. Again, with Mexico slowing down a bit, it's enabling us to lean into some of the other options we have. It's lifting pricing up a bit, and in turn, it's providing a better margin environment for us to operate in. We've definitely seen improvements after the first couple of weeks of May.

Speaker #1: And then it also affords the opportunity to start bringing some Peruvian fruit in. We've been harvesting from our own farms now for several weeks.

Speaker #1: We've got, I think, our first arrivals coming into the U.S. market very soon. But we've been marketing some third-party fruit already out of Peru.

Bryan Giles: We've been marketing some third-party fruit already out of Peru. Again, with Mexico slowing down a bit, it's enabling us to lean into some of the other options we have. It's lifting pricing up a bit, and in turn, it's providing a better margin environment for us to operate in. We've definitely seen improvements after the first couple of weeks of May. Definitely trending in the right direction towards the back half of the month and leading into June.

Speaker #1: So again, with Mexico slowing down a bit, it's enabling us to lean into some of the other options we have. It's lifting pricing up a bit.

Speaker #1: And in turn, it's providing a better margin environment for us to operate in. So we've definitely seen improvements after the first couple of weeks of May.

Speaker #1: Definitely trending in the right direction toward the back half of the month and leading into June.

Bryan Giles: Definitely trending in the right direction towards the back half of the month and leading into June.

Speaker #10: Perfect. Then I wanted to look at some of the prepared foods business. Obviously, there's a different kind of EBITDA margin profile in this business.

Mark Smith: Perfect. I wanted to look at some of the prepared foods business. Obviously, a different kind of EBITDA margin profile in this business. I'm curious, two things here. If you can talk to maybe what's built into the H2 guidance around EBITDA, if you can get that specific. Also in that, just as we think about pricing on prepared foods, has this moved historically as we've looked at low prices in avocados and maybe how that impacts margin in your prepared foods business?

Speaker #10: I'm curious—two things here. If you can, talk to what's built into the second-half guidance around EBITDA, if you can get that specific.

Speaker #10: And then also in that, just as we think about kind of pricing on prepared foods, has this moved historically as we've looked at low prices in avocados, and maybe how that impacts margin in your prepared foods business?

John Pawlowski: Hi, Mark, this is John. I'll try to address your second question and then let Bryan try to gap you on the EBITDA question there. The prepared foods segment operates pretty differently than our traditional fresh segment, right? It's more of a traditional CPG pricing environment where you're setting up six to 12-month pricing structures with your customers. You're trying to get out ahead of what's happening in regards to the longer-term pricing arrangement. You're holding that product for three, four, five, six months. We freeze some of that product, so some of that product can hold for 12 to 15 months. The way the prepared food segment operates is we will buy when it's advantageous for us. We'll do our best to make sure we're securing fruit at the right times of the year.

Speaker #1: I'll have him—hi, Mark. This is John. I'll try to address your second question and then let Bryan try to gap you on the EBITDA question there.

Speaker #1: But the prepared foods segment operates pretty differently than our traditional fresh segment, right? You're talking like it's more of a traditional CPG pricing environment where you're setting up 6- to 12-month pricing structures with your customers.

Speaker #1: You're trying to get out ahead of what's happening in regards to the longer-term pricing arrangement. You're holding that product for three, four, five, six months.

Speaker #1: We freeze some of that product, so some of that product can hold for 12 to 15 months. The way this system—the way that prepared food segment operates—is we will buy when it's advantageous for us.

Speaker #1: We'll do our best to make sure we're securing fruit at the right times of the year. And as I get to know that team a little bit more, and I get to know exactly how they've managed that in the past, we'll definitely try to understand the best practices in the industry and make sure we align to those.

John Pawlowski: As I get to know that team a little bit more and I get to know exactly how they've managed that in the past, we'll definitely try to understand the best practices in the industry and make sure we align to those. We're buying when we can in regards to the fruit we need, then we're putting it through the wringer in regards to the production side of it. Then we're storing that product and moving it at the best possible time to assign the best possible price to it based on our contracts and our commitments. The margin profile is very different from our current margin profile. We'll share more details as we get into the months of September when we start talking about the detailed segments behind the combined business.

Speaker #1: But we're buying when we can in regards to the fruit we need, and then we're putting it through the ringer in regards to the production side of it.

Speaker #1: And then we're storing that product and moving it at the best possible time to assign the best possible price to it based on our contracts and our commitments.

Speaker #1: So, the margin profile is very different from our current margin profile. We'll share more details as we get into the month of September, when we start talking about the detailed segments behind the combined business.

Speaker #1: But you'll see when we get there that there's a significant step up from the fresh business to the food business in regard to that margin profile.

John Pawlowski: You'll see when we get there that there's a significant step up from the fresh business to the food business in regards to that margin profile. That's because of, number one, the ability to optimize the source at the right time. Two, it's also the retailer and consumer expectations on pricing.

Speaker #1: And that's because of, number one, the ability to optimize the source at the right time. But two, it's also the retailer and consumer expectations on pricing.

Mark Smith: Okay.

Speaker #10: Yeah. The only thing I would add to that, Mark, is kind of getting back to your question around margin. I think it's our intent, long term, to be as transparent as we possibly can.

Bryan Giles: The only thing I would add to that, Mark, is kind of getting back to your question around margin. I think our intent long term is to be as transparent as we possibly can around the different components of the business, including Calavo's operations. We're evaluating our segment structure as we speak today, certainly by the time we get to the end of the Q3, it'll be clear as to how their business kind of fits into ours, so how we report publicly on it.

Speaker #10: ...around the different components of the business, including Calabo's operations. We're evaluating our segment structure as we speak today, and certainly by the time we get to the end of the third quarter, it'll be clear as to how their business kind of fits into ours.

Speaker #10: So, how we report publicly on it, and then that will ideally lead into further information that we'll be able to share with the Street, leading into kind of an Investor Day that we're anticipating having in late September.

John Pawlowski: That will ideally lead into further information that we'll be able to share with the street leading into an investor day that we're anticipating having in late September. At this point, 8 days in, we're very much focused on just getting our arms around the business as a whole, looking at it in combination with the Mission operation as we provided that guide for the H2. We're not really prepared to break that down into any further level of detail quite yet.

Bryan Giles: That will ideally lead into further information that we'll be able to share with the street leading into an investor day that we're anticipating having in late September. At this point, 8 days in, we're very much focused on just getting our arms around the business as a whole, looking at it in combination with the Mission operation as we provided that guide for the H2. We're not really prepared to break that down into any further level of detail quite yet.

Speaker #10: But at this point, eight days in, we're very much focused on just getting our arms around the business as a whole, looking at it in combination with the Mission operation as we provided that guide for the second half of the year.

Speaker #10: And we're not really prepared to kind of break that down into any further level of detail quite yet. That's fair. Maybe if I squeeze in one more here—just kind of a big-picture question.

Mark Smith: That's fair. Maybe if I squeeze in one more here, just big picture question. You guys called out the, I think it's 1.6 million in new households entering avocado category during the quarter. Can you just talk long term, what the typical retention rate is like on some of these new customers coming in?

Speaker #10: You guys called out the, I think it's 1.6 million new households entering the avocado category during the quarter. Can you just talk long-term about what the typical retention rate is like for some of these new customers coming in?

Speaker #1: Yeah. It's approximately 50% of those households—or greater than 50% of those new households—stick in the category longer-term. And I think the younger the generations get, as we’ve moved in deeper and deeper, the higher that number gets.

John Pawlowski: Yeah. It's approximately 50% of those households, or a greater than 50% of those new households stick into the category longer term. I think the younger the generations get, as we move in deeper and deeper, the higher that number gets. We've seen patterns over the last 10 years that would suggest every time you have a situation like this, that bump is pretty sticky. If you look at household penetration and per capita consumption over the last 10 to 15 years in the United States, you've seen a nice steady glide path from the left side of the graph to the right side of the graph, moving upwards at a considerable pace. Now granted, we're getting into those mid-70s, high 70s numbers where some categories tend to peter out.

Speaker #1: We've seen patterns over the last 10 years that would suggest every time you have a situation like this, that bump is pretty sticky. So, if you look at household penetration and per capita consumption over the last 10 to 15 years in the United States, you've seen a nice, steady glide path from the left side of the graph to the right side of the graph, moving upwards at a considerable pace.

Speaker #1: Now, granted, we're getting into those mid-70s, high-70s numbers, where some categories tend to peter out. But I believe confidently that we're in a category that is so health-focused, so consumer-forward, and it is so well recognized by those that are involved in that category—particularly our retailers, who appreciate the value associated with this category in regards to the pricing and the margins that play out at the retail level.

John Pawlowski: I believe confidently that we're in a category that is so health focused, so consumer forward, and it is so well-recognized by those that are involved in that category. Particularly our retailers, who appreciate the value associated with this category in regards to the pricing and the margins that play out at retail level, that we've got significantly more room to grow in the United States alone. That doesn't even take into account how we think about the international marketplaces and the size of the gap between where avocados are in mature markets versus where they are in places like Europe, where there's a lot more room to grow, and we're starting to see steam get behind that engine in the future. We've seen these kind of situations before, Mark.

Speaker #1: That we've got significantly more room to grow in the United States alone. And that doesn't even take into account how we think about the international marketplaces and the size of the gap between where avocados are in mature markets versus where they are in places like Europe, where there's a lot more room to grow.

Speaker #1: And we're starting to see steam get behind that engine into the future. So we've seen these kinds of situations before, Mark. We've seen those families stick in the category.

John Pawlowski: We've seen those families stick in the category, and we've seen those families be more resilient to price modification as supply restricts itself in future months, allowing us the honor and the right to gain a little bit more margin on it and the privilege to serve our customers into the future.

Speaker #1: And we've seen those families be more resilient to price modification as supply restricts itself in future months, allowing us the honor and the right to gain a little bit more margin on it, and the privilege to serve our customers into the future.

Speaker #10: Excellent. Thank you, guys. No problem.

Mark Smith: Excellent. Thank you, guys.

John Pawlowski: Welcome. No problem.

Speaker #11: Thank you. And ladies and gentlemen, at this time, I'm showing no further questions. I'd like to end the question-and-answer session and turn the conference call back over to management for any closing remarks.

Operator: Thank you. Ladies and gentlemen, at this time, I am showing no further questions. I would like to end the question and answer session and turn the conference call back over to management for any closing remarks.

Speaker #1: Thank you, operator. And thank you all for joining us today. While the second quarter reflected a unique supply environment that pressured near-term margins, it also reinforced the strength of our commercial execution.

John Pawlowski: Thank you, operator, and thank you all for joining us today. While the Q2 reflected a unique supply environment that pressured near-term margins, it also reinforced the strength of our commercial execution, our customer relationships, and the underlying demand for the category. As we move through the H2 of this year, we are already seeing supply dynamics improve, margins recover, and strong contributions ahead from our Peruvian harvest. Combined with the addition of Calavo, we believe we are even better positioned to serve our customers, drive operational efficiency, and create long-term value. We truly appreciate your continued interest in Mission and look forward to updating you next quarter.

Speaker #1: Our customer relationships and the underlying demand for the category. As we move through the back half of this year, we are already seeing supply dynamics improve, margins recover, and strong contributions ahead from our Peruvian harvest.

Speaker #1: Combined with the addition of Calabo, we believe we are even better positioned to serve our customers, drive operational efficiency, and create long-term value. We truly appreciate your continued interest in our mission and look forward to updating you next quarter.

Operator: Ladies and gentlemen, that concludes today's conference call, and we do thank you for attending. You may now disconnect your lines.

Q2 2026 Mission Produce Inc Earnings Call

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