Mission Produce (NASDAQ:AVO) said its fiscal second quarter was pressured by an unusually high-supply avocado market, particularly from Mexico, which drove prices to multi-year lows and compressed margins despite higher avocado volumes.
President and Chief Executive Officer John Pawlowski, who formally moved into the CEO role following the company’s annual meeting in April, said the quarter was shaped by “the largest Mexican crop in years.” He said Mission’s sales team maintained customer support through the volatile period, even as per-unit margins came under pressure from a temporary mismatch between supply and demand for core fruit sizes.
Chief Financial Officer Bryan Giles said fiscal second-quarter revenue totaled $290.9 million, down 24% from the prior year. The decline was driven by a 36% decrease in per-unit avocado sales prices compared with last year’s peak pricing environment. Mission partially offset that pressure with a 15% increase in avocado volume sold.
Margins Pressured by Size Mismatch and Low Prices
Gross profit declined to $20.5 million from $28.4 million a year earlier, while gross margin fell 50 basis points to 7% of revenue. Giles said the decline was largely tied to a mismatch in the supply and demand of core fruit sizes during a high-supply environment.
That mismatch peaked in April, Giles said, forcing Mission to pay higher spot-market prices to fill shortfalls in high-demand sizes while reducing prices to move lower-demand sizes. The situation compounded an already tighter per-unit margin environment caused by low avocado prices.
Adjusted net income was $0.8 million, or $0.01 per diluted share, compared with $8.7 million, or $0.12 per diluted share, in the prior-year quarter. Adjusted EBITDA declined to $7.1 million from $19.1 million.
Core selling, general and administrative expense was flat compared with the prior-year period, excluding $6.4 million of transaction advisory costs tied to the company’s acquisition of Calavo Growers.
Segment Results Reflect Lower Avocado Pricing
In the marketing and distribution segment, sales declined to $277.2 million from $362.5 million a year earlier, reflecting lower avocado prices partially offset by higher volumes. Segment adjusted EBITDA was $7.2 million, compared with $16.8 million in the prior-year period.
Pawlowski said the segment delivered 15% year-over-year avocado volume growth, and noted that on a first-half basis, the segment’s gross profit increased approximately 5% from the prior-year period despite second-quarter margin pressure.
International farming sales were $7.7 million, compared with $8.1 million a year earlier. Segment adjusted EBITDA was a loss of $1.3 million, compared with income of $1.5 million. Giles attributed the decline to investments in mango production that did not improve yields in the current harvest season and lower blueberry packing volumes after an earlier end to the blueberry harvest.
The blueberry segment reported sales of $11 million, down from $15.7 million, primarily due to lower volumes sold, partially offset by higher average per-unit pricing. Segment adjusted EBITDA rose to $1.2 million from $0.8 million, as better pricing more than offset higher per-unit production costs from lower yields on newer acreage.
Calavo Acquisition Closes Earlier Than Expected
Mission closed its acquisition of Calavo on May 28, earlier than initially planned, and is now operating as one combined company. Pawlowski said the combination should improve Mission’s ability to manage high-volume environments by adding Calavo’s pack houses and expanding the company’s footprint.
He said the transaction also gives Mission more flexibility to align supply with demand, including matching fruit size curves to customer programs. Pawlowski described Calavo as strengthening Mission’s position as a reliable year-round source of fresh avocados across North America.
Mission continues to expect at least $25 million in annualized cost synergies within 18 months of closing, with what Pawlowski described as “meaningful upside potential.” He said the company has a dedicated integration work group in place and expects savings to come from eliminating redundant operations and SG&A cost structures.
Because the deal closed earlier than planned, Mission now expects to begin seeing benefits in the fiscal fourth quarter, with savings ramping into fiscal 2027. Pawlowski also highlighted Calavo’s guacamole and ready-to-eat product lines as a prepared foods opportunity that is adjacent to Mission’s core avocado business.
In response to an analyst question, Pawlowski said Mission’s initial focus is to avoid disruption while integrating the two companies. He said early opportunities include optimizing the distribution network and reviewing redundant SG&A and infrastructure costs. Longer term, he pointed to potential growth in prepared foods, foodservice, mangoes and international markets.
Outlook Calls for Stronger Second Half
For the fiscal third quarter, Mission expects avocado industry volumes to increase approximately 5% to 10% from the prior-year period. The company expects pricing to be down about 15% year over year compared with the $1.75 per pound average in the fiscal third quarter of 2025, a smaller decline than it experienced in the first half of the year.
Mission expects exportable avocado production from its own farms in Peru to reach all-time highs, ranging from 120 million to 130 million pounds, compared with 105 million pounds in the 2025 harvest season. Giles said sales from Mission’s own production are expected to be weighted toward the fiscal fourth quarter.
The company forecast consolidated fiscal third-quarter adjusted EBITDA of $28 million to $32 million, including a partial-quarter contribution from Calavo. For the second half of fiscal 2026, Mission expects consolidated adjusted EBITDA of $84 million to $88 million. Giles said the second-half outlook reflects a full fourth-quarter contribution from Calavo, higher blueberry yields and improving avocado margins.
Mission does not expect material synergy realization in the fiscal third quarter, with integration actions becoming more visible in the fourth quarter and accelerating through fiscal 2027. The company also expects fiscal 2026 capital expenditures of approximately $45 million, including modest spending related to Calavo.
Demand Trends Remain a Focus
Pawlowski said the high-volume, low-price environment helped drive category growth, with U.S. avocado consumption reaching new highs during the quarter and increasing by strong double digits versus last year. He said more than 1.6 million new households entered the avocado category.
During the question-and-answer session, Pawlowski said more than 50% of new households typically remain in the category over the long term, based on Mission’s experience. He also said Mission is seeing improving household penetration and per-capita consumption in Europe.
Giles said supply has begun shifting from Mexico toward California and Peru, allowing Mission to rely more heavily on its multi-region sourcing network. Management said the margin pressures seen in the second quarter have improved meaningfully in recent weeks and that per-unit margins are expected to recover through the back half of the year.
“While the second quarter reflected a unique supply environment that pressured near-term margins, it also reinforced the strength of our commercial execution, our customer relationships, and the underlying demand for the category,” Pawlowski said in closing remarks.
About Mission Produce (NASDAQ:AVO)
Mission Produce, Inc is a leading global supplier, packer and distributor of fresh avocados, serving retail, foodservice and industrial customers. The company manages a vertically integrated supply chain that spans sourcing, post-harvest handling, packing and ripening. Through proprietary ripening technologies and cold-chain logistics, Mission Produce delivers consistent quality and extended shelf life for its avocado offerings.
Founded in 1983 and headquartered in Oxnard, California, Mission Produce grew from a regional packing operation into a publicly traded company listed on the Nasdaq under the ticker AVO.
