Mission Produce Avocado Volume Jumps 38% as Calavo Integration Gains Traction

Mission Produce reported sharply higher avocado volume and revenue in its fiscal third quarter as the company begins integrating Calavo Growers into its operations.

Revenue for the quarter ended July 31 reached $450 million, up 26% from $357.7 million during the same period last year. Avocado volume increased 38%, partially offset by a 9% decline in average avocado selling prices.

Mission sold 252.7 million pounds of avocados during the quarter, compared with 183.5 million pounds a year earlier. The average sales price declined from $1.74 to $1.58 per pound.

The volume growth reflected both the addition of Calavo operations following completion of the acquisition May 28 and increased Mexican avocado supplies resulting from higher yields.

Mission is also seeing greater potential savings from the combination than initially expected. The company raised its estimate for annualized synergies from the Calavo acquisition to more than $30 million, pointing to higher-than-anticipated selling, general and administrative savings and efficiencies across the companies’ networks.

“Our early work with Calavo has reinforced our confidence in the strategic and financial merits of the combination,” the company said in announcing the results. “There is meaningful work ahead, and our priority is to execute the integration thoughtfully, making the right changes in the right sequence while maintaining business continuity and delivering dependable service to our customers.”

Marketing and Distribution segment sales increased to $414.3 million from $344.1 million a year earlier. Adjusted EBITDA for the segment increased to $24.7 million from $20 million.

Mission reported an overall net loss of $6.5 million, or 8 cents per diluted share, compared with net income of $14.7 million a year earlier. The latest quarter included $25.4 million in pre-tax costs related to the Calavo acquisition.

Adjusted net income, which excludes certain acquisition and other expenses, was $15 million.

Calavo gives Mission additional scale in North American avocados along with tomatoes and papayas and moves the company into prepared foods such as guacamole and salsa. Prepared Foods generated $15.5 million in sales during the quarter.

The combined company’s greater avocado volume comes during a period of increased global supplies and lower prices.

Mission said its priorities now include maintaining marketplace momentum, integrating Calavo and using the larger network to improve earnings and returns.

The company plans to provide more detail on its growth strategy during an investor day in October.