Mission Produce, Inc.

Good afternoon and welcome to the Mission Produce fiscal third quarter 2023 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. 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 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. Steve?

Thank you for joining us for our fiscal 2023 third quarter earnings call. Our top-line performance of $261.4 million was generally consistent with expectations and reflects a continuation of the conditions that returned to the industry earlier this fiscal year. where higher industry volumes were offset by lower average selling prices following last year's elevated market conditions. However, adjusted EBITDA of $21.2 million came in below expectations. While we drove a significant increase in sales volumes during the quarter and achieved continued sequential improvement in per-unit margins relative to the fiscal second quarter, despite the lower pricing environment, our sites were set higher, based on initial estimates that suggested a strong and substantial Peruvian harvest. Furthermore, with the rapid completion of the Mexican harvest, prices began to accelerate. At the time, we still believed that we would be experiencing a strong Peruvian harvest, so we took advantage to lock in pricing with our customers ahead of the seasonal increase in volume and also made a decision to distribute some early volume to secondary markets to optimize our position in key export markets. However, the industry experienced an abrupt change in growing conditions midway through the quarter with the onset of excessive heat that negatively impacted anticipated volumes and fruit size across the Peruvian growing region. The lower volumes from our own production, combined with a suboptimal mix of fruit sizes to service key export markets and the fixed cost nature of our farming operations, pressured segment margins and were the primary source of our lower than expected adjusted EBITDA performance during the fiscal third quarter. Industry pricing has since responded to these events and moved higher, which we expect to help lessen the impact of our fiscal fourth quarter margins. As a large global player in the agricultural business, we are all too familiar with the impacts that weather can have, both good and bad, and mitigating this risk through sound strategy is a core fundamental philosophy of mission. This is visible in our global diversified sourcing capabilities and our efficient distribution network that can manage significant volume in an efficient and thoughtful fashion that maximizes our per unit margins under any set of circumstances. For instance, we were able to generate 23% growth in volume during the quarter, which reflects our ability to support our marketing and distribution segment for an extended period following the completion of the Mexican harvest. Moreover, we were able to deliver volume growth across each of our key export markets. Other industry players with more limited supply options face greater challenges during the third quarter due to rapid completion of the Mexican harvest season this July. This demonstrates the value of our vertically integrated and diversified global sourcing and distribution network, which allows Mission to remain in position to service new and existing customers regardless of the circumstances. We bring to bear our 14 forward distribution centers in North America, the UK, the EU, and China, and in managing our year-round sourcing from eight primary growing regions for the benefit of our customers who are seeking ripening and other value-added services. While the current market environment doesn't afford us the same opportunity to drive the level of per unit margins that we had hoped for during the fiscal second half of the year, We were encouraged by the rational pricing environment through the first half of the fiscal third quarter, which is a key element that allows us to open new growth markets to help drive demand and support long-term consumption growth. Our new forward distribution center in the UK opened in April and continues to perform well. We are already seeing the benefits of this strategic location with its direct access to major international ports and transportation networks. In summary, we remain focused on maximizing the opportunities we have despite the curveball we encountered with the Peruvian crop development. Although volumes and size are lower than we initially expected, we remain in a great position to utilize this fruit to service our global customer base during the Mexican counter season. With that, I'll pass the call over to our CFO, Brian Giles, for his financial commentary.