Mission Produce, Inc.

Good afternoon and welcome to the Mission Produce Fiscal Fourth 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 and 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 table 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. With that, I'd now like to turn the call over to Steve Barnard, CEO.

Thank you for joining us for our fourth quarter and full year fiscal 2022 earnings call. We achieved an important corporate milestone in fiscal 2022, generating $1 billion of revenue for the first time in our company's nearly 40-year history. We grew our full-year revenue by 17%, driven by an extremely robust pricing environment, where our average selling price was up 28%, which was supported by low industry volume out of key sourcing regions such as Mexico. While a strong pricing was in place for nearly the entire fiscal year, trends reversed sharply during the fiscal fourth quarter with the onset of the new Mexican season and drove prices down approximately 35% as compared to the fiscal third quarter. While this sequential softening was anticipated, the speed of the decrease was greater than expected and drove our average price down 10% for the quarter versus the prior year period. As we've noted previously, our business is driven by volume, and in an otherwise normal environment, lower prices tend to drive incremental consumption, particularly in the newer emerging markets. However, this environment is anything but normal. While our fourth quarter volume increased 6%, Our financial performance was impacted by a confluence of variables that undermined our ability to drive the per-unit margins that we have generated historically. Persistent cost inflation, combined with the impact of a La Nina weather pattern that drove a bigger crop with a greater mix of larger fruit that we'd planned for within our own production, resulted in a delay to our seasonal transition to the Mexican production. Further, we did not have the normal benefit of the California crop in the fourth quarter, which was pulled forward this season as growers took advantage of the high-pricing environment. This resulted in an unfavorable mix, lower relative pricing, and temporary margin compression. Taken together, this presented a significant headwind for our per-unit margins, which were well below our expectations, and drove a 35% decrease in our fourth quarter consolidated adjusted EBITDA. That said, the numbers don't necessarily demonstrate the significant inroads we've made with our Peruvian programs and the strategic advantages that it affords us. During the 2022 harvest season, we converted several retailers to the Peruvian product for the first time. While the market environment was disruptive to our ability to capture the margin we'd traditionally expect, it was an ideal set of circumstances to demonstrate the value of our global sourcing network. Retailers were keenly aware of how the short industry supply led to high pricing and sought out alternatives. Through our vertically integrated production, we were able to establish programs with our retail customers where we can commit to substantial volumes of product at attractive price points. These programs are a huge win for Mission in a broader sense. We are deepening our relationship with major retail accounts through sound strategy and execution, demonstrating new pathways to drive profitable sales across their enterprises. We also reinforced the quality and consistency of our production with their consumers, which builds trust and opens future opportunities. And finally, we improved awareness and established a trusted alternative during Mexico's off-season. Mission's ability to deliver consistent, high-quality fruit during the Mexican off-season is a clear advantage of our vertical integration and is an example of how year-round sourcing capabilities are helping expand the avocado market. Supporting our global footprint remains critical for our growth strategy. We are leveraging our vertically integrated global supply chain and distribution capabilities to continue developing international markets. We are bringing our network of complementary assets that cover North America and Latin America to bear and are building on our presence in Europe as well, with addition of our hub in England. We have our team in place, and they are on track to open this new facility later in our fiscal second quarter, right in time to service the Peruvian harvest season. The facility's strategic location provides a mission with a unique access to the growing market in the United Kingdom for avocados, while simplifying import logistics and expediting transit times. We've been working with retailers in the UK to grow the category direct access to high-quality ripe product through our source and distribution capabilities. Our vertical integration from our scaled production and South America positions as well to provide the European market with a year-round supply of high-quality avocados, and we aim to propel the avocado category forward in Europe just as we have in the U.S. market. In Asia, we are leveraging our more than 35-year presence in Japan and existing Chinese distribution facilities to serve as a platform to build our Asian distribution network. Both of these regions present immense long-term growth opportunities for us with consumption rates that are a fraction of what the U.S. has grown into today. Ultimately, our ability to execute this consistently comes back to our year-round sourcing capabilities, which are extremely unique and a substantial competitive advantage for mission. Our goal is to grow our access globally with consistent year-round supply. This is the key to supporting long-term consumption growth and is the catalyst to drive new market development. Mission has played a critical role in the industry's growth. It has required 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 provide greater control over the quality and supply that our customers have come to expect. With respect to fiscal 2023, we see a more normal marketplace emerging, highlighted by better and more consistent supply conditions which provides a constructive foundation for the industry to drive consumption and expand growth in new geographies. We are prepared to meet demand during the upcoming peak Super Bowl season and expect to produce improved operating performance for the full year in 2023. With that, I'll pass the call over to our CFO, Brian Giles, for his financial commentary.