Mission Produce, Inc.: Form 10-Q for the period ended Apr 30, 2026

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements and related notes included elsewhere in this quarterly report. This discussion and analysis contains forward-looking statements based upon our current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors. Please refer to the section of this report under the heading “Forward-Looking Statements.”

Overview

We are a world leader in sourcing, producing, growing and distributing Hass avocados, serving retail, wholesale and foodservice customers. We source, produce, pack and distribute avocados along with other fruits, including mangos, to our customers and provide value-added services including ripening, bagging, custom packaging and logistical management. In addition, we provide our customers with merchandising and promotional support, insights on market trends and training designed to increase their retail avocado sales.

We have three operating segments which are also reportable segments:

• Marketing & Distribution. Our Marketing & Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network.
• International Farming. International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing & Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees. It also earns service revenues for packing and processing fruit for both our Blueberries segment, as well as for third-party producers of other crops. Operations are principally located in Peru and Guatemala.
• Blueberries. The Blueberries segment consists of farming activities that include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement.

Acquisition of Calavo

On May 28, 2026, we consummated our acquisition of 100% of outstanding common stock of Calavo. Calavo is a leading provider of fresh avocados, tomatoes, papayas, and value-added prepared foods, including a variety of ready-to-eat products such as guacamole and salsas. Its products are sold under the Calavo brand name, proprietary sub-brands, as well as private labels and store brands.

The transaction enhances our position in the North American avocado category with expanded supply reliability across Mexico and California. The transaction also represents our entry into the prepared food sector, complementing our existing value-added avocado business. The transaction also provides a significant value opportunity for us to realize cost synergies and SG&A savings. The results of Calavo and interest costs associated with the debt incurred will be included in our results for periods following the closing date.

Tariffs

On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA), and remanded related matters to the Court of International Trade. Following the Supreme Court’s decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.

Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. While progress has been made regarding the establishment of the CAPE system, there remains substantial uncertainty regarding the submission process for refunds, and the timing, magnitude, and completeness of potential refunds. The ability to recover, and the timing and amount of any potential refunds are uncertain, and at this time we cannot reasonably estimate the financial impact to us, if any. As of June 8, 2026, we have not recognized any amounts associated with potential refunds related to these tariffs.

We are monitoring the situation closely for further information about how the U.S. government intends to proceed.

Results of Operations

The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute. In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: tariffs; pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.

Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact typically affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.

(In millions, except for percentages)

Net sales

Our net sales are generated predominantly from the shipment of fresh avocados to retail, wholesale and foodservice customers worldwide. Our net sales are affected by numerous factors, including the balance between the supply of and demand for our produce and competition from other fresh produce companies. Our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve.

(In millions)

Net sales decreased $89.4 million or 24% in the three months ended April 30, 2026 compared to the same period last year, primarily driven by our Marketing & Distribution segment, where a decrease in per-unit avocado sales prices of 36% was partially offset by an increase in avocado volume sold of 15%. Volume and price movements were driven by increased Mexican avocado supply due to higher yields in the current year.

Net sales decreased $145.0 million or 20% in the six months ended April 30, 2026 compared to the same period last year, primarily driven by our Marketing & Distribution segment, where a decrease in per-unit avocado sales prices of 33% was partially offset by an increase in avocado volume sold of 14%. Volume and price movements were driven by increased Mexican avocado supply due to higher yields in the current year.

Gross profit

Cost of sales is composed primarily of avocado procurement costs from independent growers and packers, logistics costs, packaging costs, labor, costs associated with cultivation (the cost of growing crops), harvesting and depreciation. Avocado procurement costs from third-party suppliers can vary significantly between and within fiscal years and correlate closely with market prices for avocados. While we have long-standing relationships with our growers and packers, we predominantly purchase fruit on a daily basis at market rates. As such, the cost to procure products from independent growers can have a significant impact on our costs.

Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers as well as tariffs/import duties. Land transportation costs consist primarily of third-party trucking services to support North American distribution, while sea transportation cost consists primarily of third-party shipping of refrigerated containers from supply markets in South and Central America to demand markets in North America, Europe and Asia. Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in production yields and other input costs also affect our cost of sales.

In general, changes in our volume of products sold can have a disproportionate effect on our gross profit. Within any particular year, a significant portion of our cost of products are fixed. Accordingly, higher volumes produced on company-owned farms directly reduce the average cost per pound of fruit grown on company owned orchards, while lower volumes directly increase the average cost per pound of fruit grown on company owned orchards. Likewise, higher volumes processed through packing and distribution facilities directly reduce the average overhead cost per unit of fruit handled, while lower volumes directly increase the average overhead cost per unit of fruit handled.

Gross profit percentage will fluctuate based upon per-unit sales price levels in relation to per-unit costs. Margin is primarily managed on a per-unit basis in our Marketing & Distribution segment, which can lead to movement in gross profit percentage when sales prices fluctuate.

Gross profit decreased $7.9 million or 28% for the three months ended April 30, 2026 compared to the same period last year and gross profit percentage decreased 50 basis points compared to the same period last year, to 7.0% of revenue. Gross profit in our Marketing and Distribution segment was lower due to high availability of Mexican avocado supply which drove low per-unit avocado selling prices and margins. In our International Farming segment gross profit was lower due to higher per-unit mango production costs and lower volume of blueberry packaging and storage services.

Gross profit decreased $7.8 million or 13% for the six months ended April 30, 2026, while gross profit percentage increased 70 basis points compared to the same period last year, to 9.1% of revenue. Gross profit improved in our Marketing and Distribution segment due to higher volume of avocados sold, while gross profit in our Blueberries segment was lower due to higher per-unit production costs associated with lower yields which were partially offset by higher per-unit selling prices.

SG&A

Selling, general and administrative (“SG&A”) expenses primarily include the costs associated with selling, professional fees, general corporate overhead and other related administrative functions.

(In millions)

SG&A expenses excluding transaction advisory costs for the three and six months ended April 30, 2026 were flat compared to the same periods last year.

Transaction advisory costs are comprised of third-party legal, diligence, and other costs associated with the Calavo acquisition, which was completed on May 28, 2026.

Interest expense

Interest expense consists primarily of interest on borrowings under working capital facilities that we maintain and interest on other long-term debt used to make capital and equity investments. We also incur interest expense on finance leases, computed using each lease’s explicit or implicit borrowing rate.

(In millions)

Interest expense decreased $0.6 million or 24% and $1.1 million or 23% in the three and six months ended April 30, 2026, respectively, compared to the same periods last year. The decreases were primarily due to lower average balances on our revolving credit facility. Interest rates applicable to our credit facility are variable, based on SOFR and a spread depending on our net leverage ratio.

Equity method income

Our material equity method investees include Henry Avocado (“HAC”), Mr. Avocado and Copaltas.

(In millions)

Equity method income increased $0.4 million or 44% and $1.1 million or 65% in the three and six months ended April 30, 2026, respectively, compared to the same periods last year. Equity method income is mostly comprised of earnings in our investment in Henry Avocado Corporation.

Other (expense) income, net

Other (expense) income, net consists of interest income, currency exchange gains or losses, interest rate derivative gains or losses and other miscellaneous income and expense items.

(In millions)

Other expense increased $0.5 million or 83% in the three months ended April 30, 2026 compared to the same period last year, primarily due to debt restructuring fees incurred in the current year.

Other expense was $2.4 million for the six months ended April 30, 2026 compared to other income of $0.9 million for the same period last year. The change was primarily attributed to greater foreign currency transaction losses resulting from more pronounced weakening of the U.S. dollar relative to the Mexican peso in the current year.

Provision for income taxes

The provision for income taxes consists of the consolidation of tax provisions, computed on a separate entity basis, in each country in which we have operations. We recognize the effects of tax legislation in the period in which the law is enacted. Our deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years we estimate the related temporary differences to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.

We recognize a tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within provision for income taxes.

Our effective tax rate is impacted by income attributable to foreign jurisdictions which is taxed at different rates from the U.S. federal statutory tax rate of 21%, changes in foreign exchange rates taxable in foreign jurisdictions and nondeductible tax items.

The benefit for income taxes was $1.3 million compared to a provision for income tax of $1.7 million for the three months ended April 30, 2026 and 2025, respectively. The benefit for income taxes was $0.2 million compared to a provision for income tax of $4.9 million for the six months ended April 30, 2026 and 2025, respectively. The (benefits) provisions were impacted by the effect of lower income before taxes in the current year. Our effective tax rate was impacted by book losses in jurisdictions where either a full valuation allowance has been recorded or where loss carryforward is disallowed in both years.

Non-GAAP Measure

Adjusted EBITDA

Adjusted EBITDA refers to net income (loss), before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, other income (expense), and income (loss) from equity method investees, further adjusted by asset impairment and disposals, net of insurance recoveries, farming costs for nonproductive orchards (which represents land lease costs), certain noncash and nonrecurring ERP costs, transaction advisory costs, material legal settlements, amortization of inventory adjustments recognized from business combinations, and any special, non-recurring, or one-time items such as remeasurements or impairments, and any portion of these items attributable to the noncontrolling interest. We believe that adjusted EBITDA provides useful information for analyzing the underlying business results as well as allowing investors a means to evaluate the financial results of each reportable segment in relation to the Company as a whole. This measure is not in accordance with, nor is it a substitute for or superior to, the comparable GAAP financial measure.

(In millions)

(1) Includes interest expense from finance leases, the most significant of which is for land at our Blueberries segment of $0.5 million for both the three months ended April 30, 2026 and 2025 and $1.0 million for both the six months ended April 30, 2026 and 2025.

(2) Includes depreciation and amortization of purchase accounting assets of $0.1 million and $0.5 million for the three months ended April 30, 2026 and 2025, respectively, and $0.3 million and $0.8 million for six months ended April 30, 2026 and 2025, respectively. Includes $0.2 million of amortization of the Blueberries finance lease for both the three months ended April 30, 2026 and 2025 and $0.4 million for both the six months ended April 30, 2026 and 2025. The six months ended April 30, 2025 also include $0.9 million of accelerated depreciation expense from fixed assets related to the closure of our Canada facilities.

(3) Represents accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs incurred due to the closure of our Canada facilities recognized in cost of sales.

(4) Represents tariff charges levied on USMCA-compliant goods imported from Mexico for the three-day period from March 4th to March 6th, 2025. The extremely short-term nature of the charges prevented the Company from effectively passing the charges in both pricing to customers and prices paid for goods from suppliers. USMCA-compliant goods have subsequently been exempted from tariff charges on U.S. imports.

(5) Represents net income (loss) attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.

Segment Results of Operations

Net sales

(In millions)

Segment operating income (loss)

(In millions)

Marketing & Distribution

Total segment sales in our Marketing & Distribution segment decreased $85.3 million or 24% in the three months ended April 30, 2026, compared to the same period last year. Lower per-unit avocado selling prices associated with high market supply conditions in the current year were partially offset by higher avocado volume sold.

Segment operating loss was $3.8 million in the three months ended April 30, 2026 compared income of $7.6 million in the same period last year. The decrease was driven by lower per-unit margin well as higher transaction advisory costs.

Total segment sales in our Marketing & Distribution segment decreased $146.3 million or 22% in the six months ended April 30, 2026 compared to the same period last year, driven by the avocado volume and price dynamics described above.

Segment operating loss was $2.7 million in the six months ended April 30, 2026 compared income of $9.4 million in the same period last year. The decrease in operating profit was driven by transaction advisory cots in the current year.

International Farming

The vast majority of fruit sales from our International Farming segment are made to the Marketing & Distribution segment, with the remainder of revenue largely derived from services provided to third parties and our Blueberries segment. Affiliated sales are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season, which typically runs from April through September of each year. As a result, operating income for the International Farming segment is generally concentrated in the third and fourth quarters of the fiscal year in alignment with the timing of sales.

Total segment sales in our International Farming segment decreased $0.4 million or 5% in the three months ended April 30, 2026, compared to the same period last year.

Segment operating loss was $3.9 million in the three months ended April 30, 2026 compared to $1.3 million in the same period last year. The higher operating loss was due to higher per-unit mango production costs and lower volume of blueberry packaging and storage services.

Total segment sales in our International Farming segment increased $1.0 million or 6% in the six months ended April 30, 2026 compared to the same period last year.

Segment operating loss was $3.6 million in the six months ended April 30, 2026 compared to $1.4 million in the same period last year due to the same factors described above.

Blueberries

Sales in our Blueberries segment have traditionally been concentrated in the first and fourth quarters of our fiscal year in alignment with the Peruvian blueberry harvest season.

Total segment sales in our Blueberries segment decreased $4.7 million or 30% in the three months ended April 30, 2026 compared to the same period last year, primarily due to a decrease in volume sold of 41%, partially offset by an increase in average per-unit sales price of 19%.

Segment operating income for the three months ended April 30, 2026 was flat compared to the same period last year.

Total segment sales in our Blueberries segment in the six months ended April 30, 2026 were flat compared to the same period last year, as increases in average per-unit sales price of 12% were offset by a decrease in volume sold of 11%.

Segment operating income decreased $6.4 million or 78% for the six months ended April 30, 2026 compared to the same period last year due to lower per-acre yield resulting in higher per-unit fruit production costs.

Liquidity and Capital Resources

Operating activities

Operating cash flows are seasonal in nature. We typically see increases in working capital during the first half of our fiscal year as our supply is predominantly sourced from Mexico under payment terms that are shorter than terms established for other source markets. In addition, we are building our growing crops inventory in our International Farming segment during the first half of the year for ultimate harvest and sale that will occur during the second half of the fiscal year. While these increases in working capital can cause operating cash flows to be unfavorable in individual quarters, it is not indicative of operating cash performance that we expect to realize for the full year.

(In millions)

Net cash used in operating activities was $21.0 million for the six months ended April 30, 2026 compared to $13.0 million for the same period last year. Lower income in the current year was partially offset by lower increases in working capital. Working capital growth in the current year is driven by higher trade receivables associated with seasonality and timing of sales in the Marketing & Distribution and Blueberries segments, while inventory growth is driven by higher volume in the Marketing & Distribution segment and cultivation of growing crop inventory in our International Farming and Blueberries segments.

Investing activities

(In millions)

Property, plant and equipment

(In millions)

In the six months ended April 30, 2026 and 2025, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements, packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru. The current year also includes construction costs associated with increasing capacity in our Mexican packing operations.

Financing activities

(In millions)

Borrowings and repayments of debt

We utilize a revolving line of credit for short-term working capital purposes. Principal payments on our credit facility are made in accordance with debt maturity schedules.

On April 1, 2026, we entered into an Amended and Restated Credit Agreement with Bank of America and other syndicate lenders, which amends and restates that certain credit agreement, dated as of October 11, 2018 (as amended and restated). The credit agreement provides senior secured credit facilities in an aggregate principal amount of $550 million, consisting of:

• a $200 million revolving facility (the “Revolving Facility”)
• a $200 million term loan facility, $150 million of which was drawn on the Calavo acquisition funding date of May 28, 2026, subsequent to the quarter ended April 30, 2026 (the “Term A-1 Facility”); and
• a $150 million term loan facility, $100 million of which was drawn on the Calavo acquisition funding date (the “Term A-2 Facility” and, together with the Term A-1 Facility, the “Term Loan Facilities”; the Term Loan Facilities together with the Revolving Facility, the “Senior Credit Facility”).

Blueberries

Financing of our Blueberries segment consists of shareholder contributions and loans, as well as short-term bank borrowings, as needed. Principal payments on shareholder loans are made in accordance with loan agreements. Principal payments on finance lease obligations primarily relate to a long-term land lease, which for accounting purposes has been classified as a finance lease. Certain supply purchases are made under long-term financing arrangements with intermediaries and directly with vendors.

Purchase and retirement of common stock

Shares of the company’s common stock may be repurchased from time to time in the open market or privately negotiated transactions under our share repurchase program. For more information on our stock repurchase program, see “Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” in this quarterly report.

Capital resources

(In millions)

(1) Current assets minus current liabilities.

Capital resources include cash flows from operations, cash and cash equivalents, and debt financing. Our Blueberries segment may also receive capital contributions or loans from shareholders.

Our syndicated credit facility with Bank of America has a total borrowing capacity of $550 million. The credit facility is comprised of two senior term loans totaling $350 million and a revolving credit agreement of $200 million. The facility also has an accordion feature which allows the company, subject to certain conditions, to increase the borrowings thereunder by up to $150 million, with applicable lender approval. Borrowings are secured by assets of the Company, including certain real property, personal property and capital stock of the Company’s subsidiaries. Borrowings under the credit facility bear interest at a spread over SOFR ranging from 1.5% to 2.5% depending on the Company’s consolidated total net leverage ratio. We pay fees on unused commitments on the credit facility.

As of April 30, 2026, we were required to comply with the following financial covenants: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. As of April 30, 2026, we were in compliance with all such covenants of the credit facility.

Material cash requirements

Acquisition of Calavo

The approximate $465 million acquisition of Calavo was funded with a combination: $250 million of term loan facilities drawn on the closing date of May 28, 2026, approximately $197 million in shares of our common stock, and the remainder with cash on-hand.

Capital expenditures

We have various capital projects in progress for farming expansion and facility improvements which we intend to fund through our operating cash flow as well as cash and cash equivalents on hand. For fiscal 2026, we expect total capital expenditures to be approximately $45 million. The spend will be allocated primarily to our International Farming and Blueberries segments. Within our International Farming segment, spend will be concentrated in Guatemala for pre-production avocado orchard maintenance. Within our Blueberries segment, spend will be concentrated on land development and plant cultivation in Peru.

Leases

We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $166.00 million as of April 30, 2026, of which, approximately $105.2 million was for long-term land leases in our International Farming and Blueberries segments.

Long-term debt

As of April 30, 2026, outstanding borrowings on our syndicated debt facility totaled $120.0 million. See Note 6 to the condensed consolidated financial statements for more information.

Critical accounting estimates

For a discussion of our critical accounting estimates, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Operations” in our Annual Report on Form 10-K for the year ended October 31, 2025, filed with the SEC on December 18, 2025. There have been no material changes to the critical accounting estimates disclosed in such Annual Report on Form 10-K.

There have been no material changes to “Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended October 31, 2025.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended April 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

For a discussion of our risk factors, see “Part I, Item 1A. Risk Factors” in our 2025 10-K, “Part II, Item 1A. Risk Factors” in the Q1 10-Q and “Risk Factors” in our Proxy Statement/Prospectus dated March 20, 2026. The risks and uncertainties that we face are not limited to those set forth in those SEC filings. You should carefully consider the risk factors in those SEC filings, together with the other information contained in this Quarterly Report on Form 10-Q, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our common stock.