Mission Produce, Inc.: Form 10-Q for the period ended Jul 31, 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. We also process and package guacamole and related products sold at retail locations and to food service operators. 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 four 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. The former “Fresh” business of Calavo is included in this segment.
• Prepared Foods. Includes prepared products, such as packaged guacamole and salsas, sold to retail and foodservice customers. This segment is equivalent to the acquired “Prepared Foods” business of Calavo.
• 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 are 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. The system was released in phases corresponding to different classes of claims. During the third fiscal quarter of 2026, we submitted or have developed a plan to submit approximately $12.5 million in claims. As a portion of the refunds have been received during the third quarter, we believe the remainder of the claims are realizable. Refunds and receivables for refund claims have been recognized as allowances against revenue and cost of sales based on the nature of the settlements. We are monitoring the situation closely for any changes to the ability to recover refunds.

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 that 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 increased $92.3 million or 26% in the three months ended July 31, 2026 compared to the same period last year, primarily driven by our Marketing & Distribution segment, where an increase in avocado volume sold of 38%, partially offset by a decrease in per-unit avocado sales prices of 9%. Volume increased from the integration of the acquired Calavo operation as well as the impact of increased Mexican avocado supply due to higher yields in the current year.

Net sales decreased $52.7 million or 5% in the nine months ended July 31, 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 25% was partially offset by an increase in avocado volume sold of 23%. Volume increased from the integration of the acquired Calavo operation as well as the impact of 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 $0.4 million or 1% for the three months ended July 31, 2026 compared to the same period last year and gross profit percentage decreased 270 basis points compared to the same period last year, to 9.9% of revenue. In our International Farming segment, gross profit decreased due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit in our Marketing and Distribution segment was higher due to the inclusion of Calavo’s post-acquisition results, partially offset by the impact of amortization of certain assets recognized in the business combination. Gross profit improvement in our Blueberries segment was driven by the one-time impact of IEEPA tariff refunds in the current year.

Gross profit decreased $8.2 million or 8% for the nine months ended July 31, 2026, while gross profit percentage decreased compared to the same period last year at 9.5% of revenue. In our International Farming segment gross profit was lower due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit improved in our Marketing and Distribution segment due to higher volume resulting from the inclusion of Calavo’s post-acquisition results in the current year. Gross profit in our Blueberries segment was lower due to lower volume and higher per-unit production costs associated with lower yields in the current year, partially offset by one-time impact of IEEPA tariff refunds in the current year.

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 and integration costs increased $7.6 million or 32% and $7.3 million or 11% for the three and nine months ended July 31, 2026, respectively, compared to the same periods last year, driven by the inclusion of expense and amortization of certain assets recognized in the business combination.

Transaction advisory and integration costs are comprised of third-party legal, diligence, severance/retention, 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 increased $2.7 million or 113% and $1.6 million or 23% in the three and nine months ended July 31, 2026, respectively, compared to the same periods last year, due to higher outstanding debt balances related to the financing of the Calavo acquisition. 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, Copaltas and Agricola Don Memo (“Don Memo”).

(In millions)

Equity method income was flat for the three months ended July 31, 2026 compared to the same period last year. Equity method income increased $1.0 million or 27% in the nine months ended July 31, 2026, compared to the same period last year. Equity method income is mostly comprised of earnings in our investment in HAC.

Other (expense) income, net

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

(In millions)

Other expense increased $1.7 million or 213% in the three months ended July 31, 2026 compared to the same period last year, primarily due to debt restructuring fees incurred in the current year related to the Calavo acquisition.

Other expense was $4.9 million for the nine months ended July 31, 2026 compared to other income of $0.1 million for the same period last year. The change was attributed to debt restructuring fees incurred in the current year related to the Calavo acquisition and 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 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. Such positions are then measured based on the largest outcome that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties are recognized within the 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 provision for income taxes decreased $4.7 million or 89% for the three months ended July 31, 2026 compared to the same period last year and decreased $9.8 million or 96% for the nine months ended July 31, 2026 compared to the same period last year. The provisions were impacted by the effect of lower income before taxes in the current year, partially offset by a discrete Mexican transfer tax charge of $1.8 million related to the acquisition of Calavo assets in Mexico. Our effective tax rate was also 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 and integration costs, material legal settlements, amortization of inventory assets 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 July 31, 2026 and 2025 and $1.5 million for both the nine months ended July 31, 2026 and 2025.

(2) Includes depreciation and amortization of purchase accounting assets of $2.2 million and zero for the three months ended July 31, 2026 and 2025, respectively, and $2.5 million and $0.8 million for nine months ended July 31, 2026 and 2025, respectively. Includes $0.3 million of amortization of the Blueberries finance lease for both the three months ended July 31, 2026 and 2025 and $0.7 million for both the nine months ended July 31, 2026 and 2025. Includes accelerated depreciation related to supply chain optimization

(3) Represents accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs incurred, recognized in cost of sales.

(4) For the nine months ended July 31, 2025, amount 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. For the three and nine months ended July 31, 2026, amount represents actual and estimated refunds of IEEPA tariffs that were paid in the prior year that are primarily related to our Blueberries operation.

(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 increased $70.2 million or 20% in the three months ended July 31, 2026, compared to the same period last year, due to an increase in avocado volume sold of 38%, partially offset by a decrease in per-unit avocado sales prices of 9%. Volume increased from the integration of the acquired Calavo operation as well as the impact of increased Mexican avocado supply due to higher yields in the current year.

Segment operating income decreased $13.4 million or 92% in the three months ended July 31, 2026 compared to the same period last year. The decrease was driven primarily by higher transaction advisory and integration costs. Higher gross margin was largely offset by higher SG&A costs, both of which were attributed to the inclusion of Calavo post-acquisition results. Segment operating income also included the amortization of certain assets recognized in the business combination.

Total segment sales in our Marketing & Distribution segment decreased $76.1 million or 8% in the nine months ended July 31, 2026 compared to the same period last year, driven by a decrease in per-unit avocado sales prices of 25%, partially offset by an increase in avocado volume sold of 23%. Volume increased from the integration of the acquired Calavo operation as well as the impact of increased Mexican avocado supply due to higher yields in the current year.

Segment operating loss was $1.6 million in the nine months ended July 31, 2026 compared to income of $23.9 million in the same period last year, due to the same factors impacting the quarter.

Prepared Foods

Total segment sales in the Prepared Foods segment were $15.5 million for both the three and nine months ended July 31, 2026. These amounts only include sales after the acquisition of Calavo.

Segment operating loss was $4.1 million for both the three and nine months ended July 31, 2026. Segment operating loss included the impact of amortization of inventory assets recognized in the business combination.

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 $3.2 million or 7% in the three months ended July 31, 2026, compared to the same period last year. Segment operating income decreased $5.6 million or 84% in the three months ended July 31, 2026 compared to the same period last year. Performance was impacted by lower average sales prices attributed to higher global supply of avocados in the current year.

Total segment sales in our International Farming segment decreased $2.2 million or 3% in the nine months ended July 31, 2026 compared to the same period last year. Segment operating loss was $2.5 million in the nine months ended July 31, 2026 compared to income of $5.3 million for the same period last year due primarily to the same factors described for the quarter.

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 increased $0.9 million or 20% in the three months ended July 31, 2026 compared to the same period last year. Segment operating income was $2.4 million for the three months ended July 31, 2026 compared to a loss of $0.2 million for the same period last year. Performance during the quarter was driven primarily by the IEEPA tariff refunds, which more than offset decreases in volume sold and average per-unit sales prices.

Total segment sales in our Blueberries segment increased $0.6 million or 1% in the nine months ended July 31, 2026 compared to the same period last year, due to the IEEPA tariff refunds and an 8% increase in average per-unit sales price, partially offset by a decrease in volume sold of 11%.

Segment operating income decreased $3.8 million or 48% for the nine months ended July 31, 2026 compared to the same period last year due to lower per-acre yield resulting in higher per-unit fruit production costs, partially offset by the IEEPA tariff refunds.

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 $25.9 million for the nine months ended July 31, 2026 compared to cash provided by operating activities of $21.4 million for the same period last year. The reduction in cash from operating activities was due to a combination of lower income in the current year as well as larger increases in working capital. Working capital growth in the current year is driven by increases in inventory and trade/other receivables, partially offset by grower payables, accounts payable and accrued expenses. Inventory growth is driven primarily by higher growing crop inventory in our International Farming and Blueberries segments resulting from higher crop yields and timing of harvest, while trade/other receivables were associated with seasonality, pricing and timing of sales in the Marketing & Distribution and Blueberries segments and the timing of value-added tax refunds. Grower payable provided favorable impact due to higher avocado volumes and shift in supply mix toward origins with longer payment terms, while accounts payable and accrued expenses were favorably impacted by higher avocado volumes and timing of growing crop inventory associated with larger and later harvest.

Investing activities

(In millions)

Property, plant and equipment

(In millions)

In the nine months ended July 31, 2026, capital expenditures were comprised primarily of pre-production orchard maintenance and land improvements in Guatemala, land development and blueberry plant cultivation in Peru and construction costs associated with increasing capacity in our Mexican packing operations.

In the nine months ended July 31, 2025, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance, land improvements and packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru.

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. Borrowings under and principal payments on long-term debt obligations during the nine months ended July 31, 2026, were impacted by the increase in term loans funded under our syndicated credit facility to support the cash component of the Calavo acquisition.

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 our syndicated credit facility. 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 July 31, 2026, we were required to comply with the following financial covenants as defined by our credit facility, which includes certain proforma information and other adjustments: (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 July 31, 2026, we were in compliance with all such covenants of the credit facility.

We believe that our cash and cash equivalents on hand, expected cash flows from operations, and availability under our syndicated credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months and beyond.

Material cash requirements

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 $185.6 million as of July 31, 2026, of which, approximately $108.3 million was for long-term land leases.

Long-term debt

As of July 31, 2026, outstanding borrowings on our syndicated debt facility totaled $402.1 million. See Note 7 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 Results of 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 except as follows:

Business combinations. We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration paid, if any, to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the acquisition date. Goodwill represents the excess of the sum of the fair value, over the net of the acquisition-date values of the identifiable assets and liabilities assumed and fair value of noncontrolling interest. Management estimates the fair value of assets and liabilities with the assistance of a third-party specialist, using a combination of the market, income and cost valuation methods, depending on the account being valued. Material accounts requiring management judgment included: intangible assets, property plant and equipment, and long-term VAT receivable with the Mexican government. These valuation methods use inputs that are estimated by management, such as revenue forecasts, projected capital spend and estimates for cost of sales. The fair value of Mexican VAT receivables was valued using a probability-weighted expected return. The Company may adjust the amounts recognized for a business combination within the allowable one-year measurement period after the acquisition date. Any such adjustments would generally be recorded as increases or decreases to the goodwill recognized in the transaction.

Calavo Mexican tax matters. We have recorded a provision of approximately $27.1 million as of July 31, 2026, for uncertain tax positions, representing our best estimate of the potential outcome related to the 2013 tax assessment, based on a cumulative probability analysis. This estimate incorporates assumptions regarding non-deductible expenses, penalties, interest, inflationary adjustments, and other factors. Future changes in legal interpretations, court rulings, or settlement negotiations could have a material impact on this provision. We also have Mexican VAT receivables totaling approximately $25.7 million as of July 31, 2026. The estimate assumes that the supporting documentation for our tax structure will be upheld, and that administrative appeals or legal processes will ultimately result in collection of these receivables. We believe it is probable that the SAT will ultimately authorize the refund of the remaining VAT amounts, although delays in the appeals process, adverse rulings, or changes in tax enforcement practices could materially impact the timing and amount of recovery. Given the uncertainties associated with these matters, even small changes in assumptions or legal interpretations could significantly affect the reported amounts. We continue to monitor developments, and any material changes will be reflected in future periods as they occur.

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 July 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as follows:

On May 28, 2026, we completed our acquisition of Calavo Growers Inc., and accordingly have included the results of Calavo in our consolidated financial statements. We are continuing to evaluate and integrate Calavo Growers Inc.’s processes and controls and may implement changes in future periods.

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. With the exception of the risk factors set forth below, which update the risk factors disclosed in such SEC filings, there have been no material changes from the risk factors previously disclosed therein. 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 the risk factors set forth below, 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.

Certain tax disputes we inherited from our acquisition of Calavo may have a material adverse effect on our results of operations and financial condition.

CDM may be exposed to material liabilities arising from tax disputes in Mexico. In July 2018, SAT issued a final tax assessment relating to a fiscal 2013 tax audit of CDM, which, after adjustments for interest, penalties and inflation, totaled approximately 3.6 billion Mexican pesos, or approximately $207.4 million, as of July 31, 2026. Mexican tax authorities have also determined that CDM owes employee profit-sharing liabilities totaling approximately 118 million Mexican pesos, or approximately $6.8 million, as of July 31, 2026. CDM has challenged the assessment through administrative and judicial proceedings, and the underlying assessment remains unresolved. As of July 31, 2026, CDM had a provision for these uncertain tax positions of approximately $27.5 million, as determined based on our cumulative probability analysis. There can be no assurance that CDM will prevail or that any settlement would be on acceptable terms. An adverse outcome could materially and adversely affect our financial condition, results of operations and cash flows and could result in defaults under our credit facilities.

In addition to the 2013 tax assessment referenced above, the SAT has initiated an income tax audit of CDM for fiscal years 2019 and 2020. As of the date of this Quarterly Report on Form 10-Q, the SAT has not issued any formal assessments on either audit, and these audits could result in additional assessments that are material in amount.

CDM also has significant VAT receivables in Mexico that may not be collected in full or on a timely basis. As of July 31, 2026, CDM’s VAT receivables totaled approximately $25.7 million. Since fiscal 2014, Mexican tax authorities have challenged certain refund requests and supporting documentation, including with respect to VAT paid to suppliers alleged to have failed to satisfy their own tax obligations. CDM continues to pursue collection through administrative processes and, where necessary, may pursue administrative appeals or other legal remedies. Although we believe the SAT will ultimately authorize the refund of the VAT receivables, any material denial, delay or reduction of these refunds could adversely affect our liquidity, cash flows and results of operations.

Investments in and financial support provided to businesses that we do not control could adversely affect our financial condition and results.

We have made, and may in the future make, directly or through our subsidiaries, investments in, or loans, advances or other financial commitments to, businesses that we do not control. As a result, we have limited ability to influence their operations, financial performance, capital structure or capital requirements, and we may be unable to prevent actions that are adverse to our interests. Our share of their earnings or losses affects our results of operations. For example, our results include our share of the earnings or losses of Agricola Don Memo, S.A. de C.V. (“Don Memo”), in which CDM holds an investment and over which neither we nor CDM exercises control.

If Don Memo or any other such business performs below expectations, experiences financial difficulties or is unable to obtain sufficient financing, our share of its losses may adversely affect our results of operations, our investment may become impaired, and loans, advances or other amounts owed to us or our subsidiaries may become uncollectible. Any resulting losses could materially adversely affect our financial condition and results of operations.