Mission Produce, Inc.

Good afternoon, and welcome to the Mission Produce fiscal fourth 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 that 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. 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, please go ahead.

Thank you for joining us today. Fiscal year 2023 was a dynamic year for Mission. Although we drove a 12% increase in total avocado volume sold to 654 million pounds for the year, Net sales decreased 9% to $954 million due to a 24% decrease in average per unit avocado sale prices. However, I'd remind you that in the prior year, we experienced a volume decline of 11%, which supported an extremely robust pricing environment with prices higher by 28%. I believe this context is an important reminder that in a normal environment, our business is largely driven by our volume, and our primary goal is to drive long-term volume growth through supporting our markets with consistent supply and then translating that improved access to per capita consumption growth. This is a playbook that has served us well and has made mission instrumental in driving growth throughout the North American market, and we intend to do the same thing globally in markets such as Europe and Asia over the long term. To support these opportunities and emerging demand in our growth markets, we're methodically building our capabilities in those regions in a measured fashion. For instance, in the United Kingdom, the construction of our new forward distribution center is progressing according to plan, with our phase two build-out to expand capacity, including additional ripening room storage and sorting, as well as building handling capacity for our popular mango category. While volume growth is our primary mandate, our industry can be unpredictable. influenced by uncontrollable variables such as weather patterns and individual marketing decisions from fragmented growers around the world that impacts the supply-demand equilibrium. In 2023, price decreases and higher avocado volumes sold were driven by higher industry supply out of Mexico in the current year. This contrasts with the limited supply out of Mexico in the previous year, which sent prices skyrocketing. In order to help mitigate this dynamic, over the years we've made strategic decisions to vertically integrate our business with our own avocado production in Peru, and we have subsequently developed acreage in other strategic source regions like Guatemala and Colombia to balance out our year-round supply. We've also diversified by identifying other products such as mangoes and blueberries that allow us to leverage our existing assets and resources to ensure that we are maximizing productivity during seasonal variances. The value of this diversification was on display in 2023. Despite realizing lower revenue in our marketing and distribution segment, our per unit margin improved in part due to higher volumes, which in turn led to a substantial increase in adjusted EBITDA for the full year 2023 for this segment. Furthermore, our emerging blueberry segment also contributed in a material way with segment revenue growing exponentially and adjusted EBITDA increasing by 4.4 million from approximately break-even in fiscal 2022. These gains helped insulate us from the headwinds we faced in our international farming segment when our Peruvian season came online during the second half of the fiscal year. We were met with El Nino-induced weather-related challenges in Peru this year that included above-average temperatures and flooding These challenges resulted in quality issues and lower-than-expected volumes, both of which impacted our international farmland segment performance. Because we set our market allocation and customer pricing and volume commitments prior to knowing the full impact of these weather-related events, we were limited in our ability to generate the seasonal increase in adjusted EBITDA that we would typically expect in the second half of the year, which in turn impacted our overall consolidated cash generation. Looking ahead to 2024, we expect to realize improved pricing in our international farming segment, giving adjustments we've made to our marketing strategy following this past year's experience. In addition, weather conditions have improved as El Nino conditions have moved offshore in Peru. Continuation of this weather pattern should lead to more predictable production yields for the coming year. We believe these factors will create a more constructive backdrop for our international farming segment performance next year. In the meantime, we remain focused on advancing cost control measures and reallocating resources to maximize efficiency. We are largely through our peak investment cycle to support the avocado business, and in the near term, our capital spend will be much more modest. We believe that with anticipated improvements in operating cash flow and declining CapEx needs in 2024, we are in great position to enhance our capital structure in the year ahead. We continue to focus our organization's efforts on supporting long-term consumption growth trends globally and providing the market with consistent year-round supply of avocados on a global scale, a capability that is unique to Mission Produce. We're also excited about accelerating and advancing our burgeoning mango program and seeing the continued success of our blueberry segment. With that, I'll pass the call over to our CFO, Brian Giles, for his financial commentary.