Mission Produce, Inc.

like to thank our entire organization for their support and focus over the years as we've reshaped the industry and raised the bar on customer service. With that, I'll turn it over to John to discuss the results.

Thanks, Steve, for your confidence and partnership. I want to start by saying how honored I am to have the opportunity to lead this organization. When I stepped into this role, I had high expectations, but what I've experienced over the past 20 months has surpassed them in every way. The depth of operational capability, the strength of our global relationships, and the caliber of our team are truly remarkable. And this quarter, this year, showcased exactly why that matters. Steve and the team built something special over the past 40 years, and I don't take lightly the responsibility of carrying that forward. But I also couldn't be more excited about where we are headed. The foundation is strong, the team is executing at a high level, and the opportunities in front of us are significant. Now let me turn to our results because fiscal 2025 was a defining year for Mission Produce. We delivered record revenue of 1.39 billion, growing 13% on top of a strong 2024. Driving that was a 7% volume growth to achieve a record 691 million pounds of avocados sold through our marketing and distribution business. We also delivered record adjusted EBITDA in the fourth quarter, capping off a two-year period in which we generated more than $180 million of operating cash flow. These results didn't happen by accident. They reflect the power of our integrated global platform and, most importantly, the exceptional execution of our team. What truly sets Mission apart is our ability to execute on a truly global stage. We are a connected global team that can adjust and pivot in real time to seize opportunities, creating a genuine differentiator for our company. Throughout the year, our commercial organization demonstrated remarkable agility. We managed demand and supply shifts throughout the Peruvian season seamlessly across our U.S. and European operations. This coordination allowed our team in the United Kingdom to grow revenue by over 60% in 2025, while also enhancing our sales efforts in Southern Europe. These efforts combined to drive a 40% increase in European volume sold. creating a foothold that enables us to cultivate deeper relationships and positions us for long-term growth in that region. We leveraged our entire platform, our global sourcing network, our distribution infrastructure, our forward positioning, and our category management tools to drive the best possible outcomes for our customers, maximize value of fruit across all channels, and deliver quality product to global consumers. We are a volume-centric business. Volume and per unit margins are the metrics we manage to. They represent areas that we can exert control and are what we underpin our ability to drive strong financial performance. While we can't control the fluidity of industry pricing, our commercial and sales teams are continuously harnessing our data to provide our customers with value-added insights to drive category growth in support of our broader efforts to drive per capita consumption globally. No matter the noise in the market, whether it's tariff uncertainty, pricing, volatility, or supply disruptions, this team has repeatedly demonstrated the ability to execute for our customers. That's what I'm most proud of this year. Let me walk through how this played out across our segments. First, our marketing and distribution segment delivered strong results. We achieved 7% avocado volume growth for the full year and 13% in the fourth quarter alone. The North American market was stable with modest growth, but where we really saw momentum was with greater international penetrations. Europe and Asia both delivered strong volume growth in the quarter and for the full year. Importantly, we wouldn't have been able to capture that growth without our Peruvian product leverage. Having that supply consistently gave us the ability to build programs with large retailers and reinforces footholds in growth markets that will serve as a foundation to drive greater household penetration for years to come. Our international farming segment had an outstanding year as well. With our Peruvian orchards returning to normal growing conditions after last year's weather challenges, we more than doubled our exportable avocado production for the season, selling approximately 105 million pounds compared to 43 million pounds in the previous harvest season. The team's ability to program our own fruit across multiple global regions, balancing customer commitments, market dynamics, and value optimization in real time is a core differentiator. Our Peruvian production provides consistency of supply, quality control, and the flexibility to direct fruit where it creates the most value. That's vertical integration at work. In blueberries, we saw higher volumes as new plantings came into production across our expanded acreage in Peru. We continue to see tremendous long-term potential in this category as consumer preferences shift towards healthy, convenient snacking options. Our blueberry strategy is focused on filling in the seasonal calendar and maximizing the productivity of our Peruvian assets. We are approaching the completion of our multi-year expansion efforts and now have approximately 700 hectares in production, focused on premium varietals that deliver superior flavor profiles and extended shelf life. Yields on newer acreage will take time to mature, but the volumes are building and position us well for growth in the years ahead. I also want to touch briefly on our mango business, where we continue to make meaningful progress. We managed supply and demand dynamics well this year and grew our market share to 5.2%, up approximately 150 basis points for the full year. That's real traction in a category where we see significant long-term potential. Our goals for Mangoes are centered on building the domestic market. We seek to grow consumer awareness and drive household penetration. In fact, household penetration is approaching 40%, up from just 35% three years ago. We are confident that our innovation, consumer engagement, and customer programming is driving these results. This is the same playbook we employed with avocados and is the reasons we are building out our sourcing capabilities in mangoes. Consumer engagement and supply consistency go hand in hand. It's the dual focus that's setting the stage for stronger growth as we look out towards the horizon. Beyond the commercial execution, I want to highlight the foundational work we've done over the past 20 months to strengthen our organization. We focus specifically on three areas. First, we've deepened our focus on culture and collaboration. This starts with fostering a more connected global team, sharing ideas, aligning our priorities, working together to solve problems. That connectivity has shown up in our results day in and day out. Second, we've invested in data and tools. We're building systems that give our commercial teams better access to information in the U.S. and abroad to inform faster, smarter decision-making alongside our customers. And finally, we've built a more disciplined process around our cadence of decision making. We're being more proactive and more structured in how we drive the business forward. These are not flashy initiatives, but they compound over time and are vitally important to achieving the results that we know our shareholders expect. Looking ahead, we see significant runway for growth. In North America, there's meaningful opportunity, both in growing overall avocado consumption and in taking share from competitors. Per capita consumption continues to climb and we're well positioned to lead category growth with our customers. Internationally, we're building real penetration. The growth we achieved in Europe and Asia this year wasn't a one-time event. It was the result of deliberate investment and execution that we will build upon in future years. Complementing this growth is an internal focus on driving enhanced free cash flow in the years ahead. We enter fiscal 2026 having largely completed our heavy capital investment cycle. With investments and growth infrastructure in place, CapEx is expected to step down and mark the beginning of a more modest cycle of spend. Combined with a healthy balance sheet and a team that knows how to execute, we have real flexibility to create value for shareholders in the years ahead. With that, I'll turn it over to Brian for the financial details.

Thank you, John, and good afternoon to everyone on the call. Fiscal 2025 fourth quarter revenue totaled $319 million, which was down 10% from prior year figures that were elevated by a high sales price and environment for avocados. We experienced a 27% decrease in average per unit avocado sales prices during the period, which masked the 13% volume growth that was achieved. The volume and price dynamics resulted from higher industry supply. both from greater availability of Mexican fruit, driven by a larger crop in the current harvest season, and from higher Peruvian avocado production, driven by more favorable weather conditions in the current year. Gross profit was $55.7 million in the fourth quarter of fiscal 2025, essentially flat with the prior year, while our gross margin increased 180 basis points to 17.5% compared to the same period last year. While I will address gross profit movement in our segment discussion, the increase in margin percentage was primarily driven by lower avocado per unit pricing compared to last year. As a reminder, profitability in our marketing and distribution segment is managed on a per unit basis, which can lead to volatility in margin percentage when sales prices fluctuate. SG&A expense increased by $0.5 million or 2% compared to the same period last year. The increase was primarily due to higher general operating costs, including performance-based stock compensation expense. SG&A growth was tempered by lower statutory profit-sharing expense within our Peru and Mexico operations. Adjusted net income for the quarter was $22.2 million, or 31 cents per diluted share, compared to $19.6 million, or 28 cents per diluted share last year. Beyond the operating performance, We benefited from a reduction in interest expense, down $0.4 million or 15% in the quarter, reflecting our continued focus on maintaining our healthy balance sheet through debt reduction and the resultant lower rates we incur on outstanding borrowings. We also realized a 55% increase in equity method income to $1.7 million, driven by strong performance from our joint venture investment in Henry Avocado Corporation, which experienced robust results this period. Adjusted EBITDA increased 12% to a record $41.4 million compared to $36.9 million last year, driven by increased avocado production in our international farming segment and higher overall volume sold in our marketing and distribution segment. Turning now to the segments, our marketing distribution segment net sales decreased 15% to $271.9 million, driven by the pricing dynamics I described, As mentioned, we manage this business primarily to volume and per-unit margins, leveraging our global platform and sourcing network to optimize per-unit margin performance, regardless of the price and environment. On that basis, the segment performed very well. Segment-adjusted EBITDA increased 11% to $28.3 million, reflecting the impact of higher avocado and mango volumes sold, supported by solid management of per-unit margins. We are proud to achieve solid EBITDA growth despite comping against a prior year period where per unit margins significantly exceeded our historical averages. Our international farming segment delivered another quarter of strong results. Total segment sales increased 97% to $59.7 million and segment adjusted EBITDA more than tripled to $8.4 million. This was driven by a recovery in yields at our owned avocado orchards in Peru. leading to sales of owned production during the quarter that were greater than three times prior year figures. While average pre-unit sales prices were lower compared to prior year, the effect of the higher yields on pre-unit production costs far outweighed the impact on our financial results. Separate from farming production, we also continue to benefit from improved utilization of our facility infrastructure through providing higher volume of avocado packing and cooling services to third parties. In blueberries, Net sales increased 16% to $36.5 million, primarily due to higher volume produced on our farms as a result of our expanded total acreage. Segment-adjusted EBIT had decreased to $4.7 million compared to $8.6 million last year as a result of lower per-unit margin. While our volumes were higher due to new acreage coming into production, overall yield per hectare for the 2025-26 harvest season increased is anticipated to be lower than prior year, which drove up our per unit cost. This is part of the natural maturation process for newer acreage, and we expect yields and per unit cost to improve over time as these farms mature. Shifting to our balance sheet and cash flow, cash and cash equivalents were $64.8 million as of October 31st, 2025. For the full year, we generated $88.6 million in operating cash flow. bringing our two-year cumulative total to more than $180 million. This strong cash generation, combined with our disciplined focus on debt reduction, has strengthened our balance sheet considerably. We reduced long-term debt by approximately $18 million during fiscal 2025, and our interest expense for the full year declined by $3.2 million, or 25% compared to the prior year, a direct benefit of that debt reduction and the lower rates I mentioned previously. Our net leverage as of fiscal year end is very healthy at well below one times EBITDA. Capital expenditures were $51.4 million for the year, in line with our expectations. As we've discussed, we're now exiting our heavy capital investment cycle, and for fiscal 2026, we expect capital expenditures to step down to approximately $40 million. This setup positions us for accelerated free cash flow generation going forward. Now let me provide some context on our near-term outlook. For the first quarter of fiscal 2026, avocado industry volumes are expected to increase by approximately 10% versus the prior year period, driven by a larger Mexican crop in the current harvest season. Pricing is expected to be lower year over year by approximately 25% compared to the $1.75 per pound average experienced in the first quarter of fiscal 2025. driven by higher supply conditions from the larger Mexican crop. Further, while we expect some sequential margin compression in the first quarter due to the current sourcing environment, this is consistent with typical seasonality patterns. For blueberries, the harvest season in Peru will peak during the first quarter. We expect volume increases from our own farms as new acreage comes into production. which would translate to higher revenue as average sales prices are expected to be flat to slightly higher. Profitability will continue to be weighed on by higher unit costs resulting from lower projected yields per hectare in the current harvest season. That concludes our prepared remarks. Operator, now over to you. Please open the call to Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star and the number one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and the number two if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before pressing your star keys. Our first question comes from Mark Smith with Lake Street Capital. You may proceed with your question.

First question for me, I just was curious about your outlook for mangoes. You've had fantastic growth here the last several years. Kind of curious where we are in that cycle and any insights you can give us into potential growth here this next fiscal year.

How are you? Really, the glide path on the mango side is going to be similar to last year's glide path, right? continuing to pursue market share penetration. We're continuing to try and push our global sourcing initiatives in regards to access to the right food at the right time. We feel like we've not only gained nice penetration with new customer base last year, but the opportunities continue to be in front of us in cross-selling where we're already doing our avocados and providing programs to some of those players out there that either aren't happy with or are open to new players in that space, helping them program things out and provide category insights. So the glide path you saw in 24 and 25, I would say, is consistent with the glide path that we're pushing and pursuing in 26.

Excellent. And then I wanted to ask about the cash flow story. Obviously really attractive here, especially as you guys reach the end of kind of an investment cycle. I'm curious about the biggest risks in kind of accomplishing this free cash flow growth.

You know, hey, Mark, this is Brian. You know, when we look, you know, we've delivered two consecutive years of very strong operating cash performance, and that's driven off the operating results of the business. I do think we benefited some this year by the lower price and environment we saw at the end of the year, and that did help to boost operating cash a bit. But I think in general, it's the strong operating performance of the business that's driving that. On the CapEx side, as we look at free cash flow, we've been communicating for a number of years now that we were going through a cycle and we expected meaningful step-downs. We've set kind of a target for $40 million of capital spend for the upcoming year. We believe that that is still leaving us ample room to make growth CapEx investments at those levels. So I think that there is still flexibility in that number, and you will see future year periods where the spend will be lower than that still. So, I mean, I think we feel comfortable that we've got the business set up to a point where we can generate meaningful cash flow and we can do it potentially at lower levels than where we're at today if by chance there was a year where there were weather or crop conditions that had a negative impact. on the business.

Okay. And as we think about capital allocation with lower CapEx, maybe invested this year, leverage now, you know, under one times, you know, how should we think about use of cash kind of going forward? And are there other places from buybacks or anything else where you guys may put cash to work?

I mean, I think that where we look at the business today, our priority is growth. And I think that with the strong performance we've had the last few years, it's provided us with a tremendous amount of flexibility as we look forward. I think that we're always looking for potential opportunities, whether it comes from growth in our existing categories or expanding geographic reach or potentially even bolting on adjacent ones. But Our primary focus is doing things that are going to create the most shareholder value. So at this point, I think we feel very comfortable with where our leverage ratio is. We've done a really good job the last couple of years paying down debt. I think certainly that affords us now the opportunity to kind of look at a number of different options as we go forward. As you saw this year, we did share buyback. So history will tell you that we're comfortable doing that. And, yeah, we will continue to look for other ways to, again, maximize that value to shareholders as we go forward with a strong cash position.

Okay. And the last one for me, if I can squeeze one more in here, is just, you know, with the changes in management coming up – and congratulations, John, by the way, on the move here – Should we look for any changes in strategy? Because it sounds like it's really just kind of steady as she goes.

Thanks, Mark. I would offer that me and Steve have been working really closely together over the last, my entire time here, specifically over the last year on understanding where this boat is and what's the right direction for this boat and how comfortable do we feel with the team steering that boat. And we're collectively very excited about the organization's direction right now and the team that's helping steer it. Super proud of the results that we've been able to generate and do it consistently for in a year like 25 where things kind of worked out the way that we had planned, even though there's a lot of work that goes into making a plan actually work. And then in 24 where things weren't exactly to plan, but the team was able to deliver consistently. That being said, to Brian's point, we're really in a an interesting reflection point based on the capex that's been spent over the last 10 years to generate the infrastructure that's supporting the model that we're so proud of. And I would offer that the commercial outlook from a growth perspective over the next five to 10 years is one that we're keenly focused on right now and trying to understand exactly how to deploy that capital appropriately and to line up the right investments to look at organically growing over the next five to 10 years and also considering inorganic opportunities as they present themselves. So I think you'll hear more from me on that over the coming months. But the idea is we're really excited with where we are, but really want to accelerate how we grow and how we attack some of the global challenges we see ahead of us and are prepared to do that from a cash position standpoint and are working on how to do that together.

Excellent. Thank you, guys.

Thanks, Mark. Our next question comes from Puran Sharma with Stevens. You may proceed with your question.

Thanks for the question, and congrats on the strong quarter, and then also congrats on the leadership transition here. Maybe just wanted to start off with CapEx. You kind of just talked about it. You mentioned we can still make growth CapEx in that 40 mil for next year. Are you able to give us a sense as to how much of that 40 could potentially be growth CapEx?

Yeah, we don't. There's a lot of things that we do that it's kind of a gray line between whether it's growth or maintenance. I think we've invested significantly in farming operations that are still fairly young at this point. There's maintenance associated with keeping them up and running, but there's also still new acreage that's being put in the ground and acreage that's being maintained that isn't yet in production that I think we'd consider to be growth-oriented. I think on the commercial side of our business, when we look at it, you know, I think, you know, the last few years there's been investments associated with, you know, You know, certainly investments that we've made associated with growing the business in the UK. I think as we look at Europe going forward, there could certainly be opportunities there as well. And certainly, though, I think we're happy with the footprint that we have in North America today. Maybe needs to add some additional capacity as volume continues to grow over time. But if I had to ballpark it, Corian, I'd say roughly $20 million of the spend that we have in the coming year is for maintenance, and roughly $20 million of it is geared towards growth. And I don't think that that's kind of an unreasonable mix as we look at years going forward in terms of what the maintenance CapEx requirements are.

Okay, thank you. I appreciate that color there. And maybe just wanted to ask about, I mean... You mentioned key areas of growth. Looks like you were able to reach Europe and Asia this quarter. I did want to ask you, now that your core infrastructure is built out, including the UK packing house, Laredo, and some other investments that you have, including Guatemala, where do you see the most upside from growing into your footprint? Are there specific regions or facilities that you'd like to call out? I know you did mention Europe and Asia, but was just seeing if we could get a little bit more granularity here.

Yeah. Hi, Paran. This is John. Good to hear your voice. I would offer two kind of highlights there. Number one, we did call out, I think I made it in my comments, that there's There's white space when we think about the opportunity to grow into the existing market share franchise here in the United States. We feel that this particular market is one where we have a right to play in a deeper level than we're playing today and feel that the infrastructure that we've built can both support that in meaningful ways with minimal costs CapEx required to support that type of a move and offering leverage on those assets. The second piece is when you think about our Peruvian production and the Peruvian fruit, there's an opportunity to explore and dive deeper into the European marketplace. And that is high on our list of thinking about how to penetrate and understanding exactly how we want those investments to flow that support both of those things coming together On top of that, as the Guatemalan fruit comes online over the next two to three years, both of those locations play into operational efficiencies and overhead absorption as we draw into the business.

Great, great. Appreciate that caller, John. Maybe if I could just ask about the household penetration goals. I think in the past you've mentioned that avocados are maybe closer to 70% and that you wanted to target penetration of maybe other mature fruits that approach about 80 to 90%. Given we're kind of entering a lower pricing environment, how long do you think it takes to get to that level of the other more mature fruits? And then How does being in a lower pricing environment help accelerate that process?

Yeah. Bryce. Yeah, it's a good question, and you're pulling back on some of the conversations we've had in the past, which thanks. I mean, I wish I had a crystal ball and could tell you exactly how long it's going to take, right? But these things go in cycles, right, where you have markets that create opportunities with an abundance of fruit or more fruit than is typical, or you have markets where fruit is a little bit tighter. And we're in the cycle here in the next, at least the way we're thinking about 2026, where you're going to have more fruit than is traditionally available during the course of the year. And so these times provide some of the headwinds that Brian mentioned in regards to pricing being a little bit compressed during that time. But the tailwind there becomes an opportunity to move a lot of fruit and to run promotions and be strategic with retailers on how to think about household penetration and consumer engagement. If you go back the last 15 years, you'll see it play out where you have lower priced environments, where you had jumps in household penetration. And then the years after that where you had higher price environments, lower fruit, you maintained a lot of that household penetration and you kept those consumers engaged with that fruit even at slightly elevated prices. So we're moving into that cycle where we're going to have, at least we believe we're going to have, there's no perfection here, higher availability of fruit, going to be running a lot more promotions over the next 12 months. And yes, you're right, we're in that 70% range on household penetration and I would love to see that 73%, 75% achieved over the next couple of years if we stay in a consistent place with availability of fruits. And that, to me, becomes a two- to three-year goal to get to that point, which even gives us more tailwinds in the future in regards to thinking about the years after that to think about getting to those 80 numbers, which some of the other categories hold. Hopefully that helps.

No, that's very helpful. I appreciate the color there. Congrats on the quarter again. Steve, congrats on moving to chairman of the board, and John, congrats on the move as well. Looking forward to working with you.

Thanks, Brian. The next chapter, we're looking forward to it.

Thanks, Brian. At this time, there are 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.

Ladies and gentlemen, that concludes our conference call today. Thank you for attending. We may now disconnect your lines.

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