Mission Produce, Inc.

Good afternoon and welcome to the Mission Produce Fiscal Second Quarter 2022 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 Sonick, Investor Relations at ICR. Sir, please go ahead.

Thank you and good afternoon. Good afternoon. 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 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 today. Please refer to the tables included in the press release, which can be found on the Investor Relations website investors.missionproduce.com, for reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures. With that, I'd now like to turn the call over to Steve Barnard, CEO.

Thank you for joining us for our fiscal 2022 second quarter earnings call. I'm pleased with our fiscal second quarter performance, which demonstrated our ability to get the business back on track quickly following the temporary operational challenges associated with our ERP implementation. Total revenue for the second quarter of fiscal 2022 increased 18% to $278.1 million and regenerated $9.2 million in adjusted EBITDA. Revenue growth was driven by a continued strong pricing environment that is being supported by resilient demand amid lower industry supply. More importantly, however, was our ability to drive a recovery of in-per-box margins, which have returned to the high end of normal historical ranges. From a supply perspective, the ongoing inconsistency of Mexican supply continued during the fiscal second quarter. The industry continued to experience challenges with abnormal grading and sizing of harvested fruit. For context, approximately 76% of the U.S. distributed volume was Mexican-sourced fruit in the second quarter. We utilized alternate sources to fill demand, which were primarily focused on California, which produced a larger crop this year, as well as production from Colombia and Chile. While Mission's global footprint provides sourcing advantages relative to the industry as a whole, there are not enough ample sources of fruit available at this time of year to meaningfully offset the impact of the Mexican supply shortages. This is an example of why Mission has been proactive in investing in vertically integrated global supply sources to fill these supply gaps and reduce industry volatility. The backdrop of constrained supply coupled with consistent demand continued to create sustained upward pressure on pricing through the first half of this fiscal year, where prices were approximately 50% higher versus the prior year. Despite these higher prices, demand in the core U.S. markets have proven to be resilient and largely inelastic. We think this speaks to the broader health and wellness trends that underpin the avocado industry, elevating the avocado to a must-have staple in many households. In fact, in the second quarter, we distributed approximately the same amount of volume as we did two years ago in the second quarter of 2020 during the onset of the pandemic, yet prices are 24% higher over the same period, demonstrating the value of avocados in consumers' diets. While this dynamic isn't as strong in less developed markets due to the lower levels of consumption per capita in those international markets, we believe we are especially well-suited to address the opportunity to foster similarly resilient consumption trends in new global markets. Our ability to drive growth in these new international markets comes back to being able to provide year-round supply. Mission has played a critical role in creating greater access to avocados at your neighborhood retailer and favorite restaurant through our consistent year-round supply and value-added services. This requires foresight and a constant focus on continuously assessing opportunities to optimize our sourcing capabilities with third-party growers, as well as investing in our own farms to ensure that we can control the quality and supply that our customers have come to expect. Our strategy to invest in vertical integration has proven to be an unparalleled competitive advantage. Specifically, our own Peruvian production gives us reliable access to fruit to meet customer needs on a scale and at volumes that only Mission can deliver. We are well positioned to leverage these capabilities in the second half of our fiscal year when our own Peruvian product comes online and typically contributes to a significant step up in adjusted EBITDA. The Peruvian growing season has been very productive and we are expecting solid yields from our crop. However, we think it is prudent to expect some price rationalization in connection with the improving supply conditions later this fiscal year. While we expect to generate sales growth in the second half of the fiscal year, the inflationary environment is expected to mitigate some of the operating leverage that we typically expect out of our own international farming segment. In summary, Strategically investing in our own production to ensure year-round global sourcing is the key to maintaining long-term organic growth and is a key component of our long-term growth plans, and Mission continues to be in a great position. Although this year's abnormal supply environment has created some challenges, we are focused on our long-term strategy of generating consistent growth and enhancing market share by increasing capabilities and capacities while continuing to adapt to industry dynamics. Mission has a long track record of generating growth, and we believe we have an undisputed advantage with our global network of value-added assets that will drive sustainable long-term shareholder value. With that, I'll pass the call over to our CFO, Brian Giles, for his financial commentary.