Mission Produce, Inc.

Mission Produce, Inc. is a global leader in the avocado industry, specializing in the farming, packaging, marketing, and distribution of avocados to food retailers, distributors, and produce wholesalers worldwide. The company primarily sources Hass avocados from California, Mexico, and Peru, and also engages in limited marketing of mangos and blueberry farming. Its business model involves both sourcing fruit from third-party growers and operating its own vertically integrated farming operations. The company generates revenue through the sale of fresh produce and value-added services such as ripening, bagging, custom packaging, logistical management, and quality assurance. A significant portion of its revenues is derived from a relatively small number of customers, with sales to its top 10 customers amounting to approximately 67% of net sales for the year ended October 31, 2025 ¹, 69% for the year ended October 31, 2024 ², and 65% for the year ended October 31, 2023 ³.

The company operates through three reportable segments: Marketing & Distribution, International Farming, and Blueberries. The Marketing & Distribution segment sources fruit from growers and distributes it through a global network, generating $1,274.3 million in third-party sales for fiscal year 2025 ⁴. The International Farming segment owns and operates orchards, primarily in Peru and Guatemala, with the vast majority of its fruit sold to the Marketing & Distribution segment, and also earns service revenues for packing and processing fruit for the Blueberries segment and third-party producers. This segment reported $23.8 million in third-party sales and $102.1 million in affiliated sales for fiscal year 2025 ⁵. The Blueberries segment focuses on farming activities, including cultivating early-stage blueberry plantings and harvesting mature bushes, with substantially all blueberries sold to a single distributor under an exclusive marketing agreement, generating $93.1 million in third-party sales for fiscal year 2025 ⁶.

For the fiscal year ended October 31, 2025, Mission Produce reported total net sales of $1,391.2 million ⁷, an increase of $156.5 million or 13% compared to the previous year ⁸. Gross profit for the period was $160.7 million ⁹, representing 11.6% of net sales ¹⁰. Operating income stood at $65.2 million ¹¹, or 4.7% of net sales ¹². Net income was $40.5 million ¹³, with net income attributable to Mission Produce at $37.7 million ¹⁴, resulting in diluted EPS of $0.53 ¹⁵. Cash and cash equivalents were $64.8 million ¹⁶, and total long-term debt, net of current portion, was $92.8 million ¹⁷. Net cash provided by operating activities was $88.6 million ¹⁸.

Year-over-year, net sales increased by $156.5 million or 13% in fiscal year 2025, primarily driven by a 7% increase in avocado volume sold in the Marketing & Distribution segment ¹⁹. Gross profit increased by $8.2 million, but the gross profit percentage decreased by 80 basis points to 11.6% of net sales ²⁰. This was due to improved avocado and mango yields in International Farming, while Marketing & Distribution's higher volume was offset by lower per-unit margins and negative impacts from Canadian facility closures ($2.7 million in charges) ²¹ and tariffs ($1.1 million) ²². Selling, general and administrative expenses increased by $8.7 million or 10% to $95.5 million ²³, mainly due to higher employee-related costs and professional services. Interest expense decreased by $3.2 million or 25% to $9.4 million ²⁴, attributed to lower average revolving line of credit balances and reduced interest rates. Equity method income increased by $1.7 million or 46% to $5.4 million ²⁵, driven by improved margins from Mr. Avocado in China.

During fiscal year 2025, the company closed its Canadian distribution centers within its Marketing & Distribution segment, recognizing approximately $2.7 million in charges ²⁶. These charges included accelerated depreciation, accelerated amortization of operating lease right-of-use assets, loss on disposal of property, plant and equipment, and severance costs, partially offset by gains on settlement of asset retirement obligations. The volume from these facilities has been absorbed by other distribution centers and third-party service providers. The company also incurred $1.1 million in tariffs on USMCA-compliant goods imported from Mexico for a three-day period in March 2025 ²⁷.

For fiscal year 2026, Mission Produce expects total capital expenditures to be approximately $40 million ²⁸. This spending will be primarily allocated to the International Farming and Blueberries segments. Within the International Farming segment, the focus will be on pre-production avocado orchard maintenance in Guatemala. For the Blueberries segment, capital will be concentrated on land development and plant cultivation in Peru.

The company's growth strategy includes diversifying its vertical integration sourcing strategy by progressively planting new avocado orchards in Guatemala on land under long-term leases since fiscal 2020. As of October 31, 2025, Guatemala had 1,100 acres of avocado trees aged 0-3 years and 500 acres aged 4-6 years, totaling 1,600 acres ²⁹. Avocado trees typically begin to produce fruit in approximately three years and reach full production in five to seven years. Additionally, the company has planted mango orchards in Peru to leverage labor and facility management during the avocado off-season, and has invested in a blueberry farming joint venture to utilize existing infrastructure and workforce in Peru during complementary periods between avocado harvest and processing seasons.

Operationally, the company aims to optimize its supply chain, as evidenced by the closure of its Canadian distribution centers in the first quarter of 2025. The volume previously handled by these facilities has been absorbed by other distribution centers and third-party service providers. The company also continues to innovate its farming practices through test plots, seed research, and soil analysis to control fruit quality. The company's global distribution network, including strategically located forward distribution centers, is equipped to offer value-added services such as ripening, bagging, custom packaging, and logistical management, allowing for close proximity to customers and tailored delivery schedules.

The company's capital allocation plans for fiscal 2026 include approximately $40 million in capital expenditures, primarily for farming expansion and facility improvements in its International Farming and Blueberries segments. The company's syndicated credit facility with Bank of America has a total borrowing capacity of $250 million, comprising two senior term loans totaling $100 million and a revolving credit agreement of $150 million ³⁰. As of October 31, 2025, the company was in compliance with all financial covenants of this credit facility, which include a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00 ³¹. The Board of Directors approved a stock repurchase program on September 6, 2023, authorizing up to $20 million in share repurchases within 36 months ³². As of October 31, 2025, $13.3 million of shares remain authorized for repurchase ³³. The company has paid cash dividends in the past but cannot guarantee future payments, which are at the discretion of the Board of Directors and depend on financial condition, capital requirements, and other factors.

The company faces structural headwinds and execution risks, including reliance on primarily one main product, avocados, which exacerbates risks related to supply, pricing, competition, and regulatory changes. Its ability to generate revenue is limited by fruit supply, and profitability is sensitive to market price fluctuations. Increasing competition from other marketers, distributors, and farming businesses poses a risk, as the company generally does not have long-term contracts with suppliers or customers. International operations expose the company to risks such as changes in legal or regulatory requirements, adverse governmental actions, trade protection measures, currency exchange rate fluctuations, and political and economic instability in countries like Mexico and Peru. Inflationary pressures on labor, fuel, packing, and paper costs could adversely affect operating results, and the company may not be able to fully pass these costs on to customers. Customer concentration is a significant risk, with sales to the top 10 customers representing a substantial portion of net sales.

Geographic, regulatory, and macro factors identified as constraints include Mexican economic, political, and societal conditions, which can affect avocado production and shipments, including potential labor law changes requiring direct employment of harvesting crews. Peruvian economic and political conditions also pose risks to farming operations. Changes to U.S. trade policy, tariffs, and import/export regulations could adversely affect operating results, potentially triggering retaliatory actions by other countries. Compliance with health and safety laws, environmental regulations, and evolving data privacy laws in various jurisdictions can restrict operations and increase costs. Global conflicts, such as those in Russia-Ukraine and the Middle East, may also adversely affect business and results of operations through sanctions, embargoes, and regional instability.

The company faces significant risks due to its reliance on avocados as its primary product, which concentrates exposure to supply limitations, market price fluctuations, and competitive pressures. International operations, particularly in Mexico and Peru, expose the company to adverse economic, political, and societal conditions, including potential changes in labor laws in Mexico that could require direct employment of harvesting crews and lead to fines or operational changes. Customer concentration is a material risk, with sales to the top 10 customers accounting for approximately 67% of net sales for the year ended October 31, 2025 ³⁴, and a single customer representing 20% of trade accounts receivable as of October 31, 2025 ³⁵. Inflationary pressures on labor, fuel, packing, and paper costs could adversely affect operating results, and the company may not be able to fully pass these costs on to customers. Cybersecurity threats, including AI-enabled attacks, data protection breaches, and systems integration issues, could disrupt operations, increase expenses, and damage reputation. Legal proceedings, such as class action lawsuits related to wage and labor laws and false advertising claims, could result in substantial monetary damages and divert management's attention. Furthermore, the company's credit facility contains restrictive covenants, including a consolidated leverage ratio of not more than 3.5 to 1.00 and a fixed charge coverage ratio of not less than 1.25 to 1.00 ³⁶, and non-compliance could lead to immediate debt payment demands and challenges in meeting liquidity requirements.

Management's message to shareholders emphasizes the company's position as a global leader in the avocado industry, focusing on sourcing, producing, and distributing Hass avocados, along with value-added services. They highlight the importance of their global distribution network and vertically integrated farming operations in mitigating supply volatility and meeting year-round demand. For fiscal year 2026, management anticipates capital expenditures of approximately $40 million ³⁷, with a primary focus on avocado orchard maintenance in Guatemala within the International Farming segment and land development and plant cultivation in Peru for the Blueberries segment. Strategic priorities include optimizing the supply chain, as demonstrated by the closure of Canadian distribution centers and the absorption of their volume, and continuing to innovate farming practices to control fruit quality. Management also acknowledges the inherent risks of the business, including reliance on a single main product, international operational complexities, and macroeconomic factors, while affirming compliance with financial covenants under their credit facility.