Mission Produce's Q3 2025: Contradictions Emerge on Tariff Impact, International Expansion, Acreage Growth, and Investment Strategies

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $357.7M, up 10% YOY
• EPS: $0.26 adjusted EPS per diluted share, up from $0.23 prior year (+13% YOY)
• Gross Margin: 12.6%, up 120 bps YOY

Guidance:

• Q4 industry avocado volumes expected ~15% higher YOY.
• Q4 pricing expected down 20–25% vs $1.90/lb in Q4 FY24.
• Peru farms: 105–110M lbs expected exports; ~48M lbs sold through by Q3-end.
• Blueberries: harvest ramps in Q4–Q1; meaningful volume increases expected; average prices likely lower.
• FY2025 CAPEX guidance reaffirmed at $50–$55M; capex moderating through FY2026 supports future FCF.
• Tariffs: ~$10M annualized direct impact (<1% of COGS); competitive position intact.
• Expect continued working-capital release and stronger operating cash flow in Q4.

Business Commentary:

* Revenue Growth and Volume Increase: - Mission Produce reported record revenue of $357 million for Q3, up 10% year-on-year. - The growth was driven by a 10% increase in avocado volume sold, despite a 5% decrease in average per unit sales prices.

• International Farming Segment Performance:
• The international farming segment delivered exceptional results, with gross sales increasing 79% to $49 million, and segment adjusted EBITDA rising to $12.1 million.

• This strong performance was due to a significant recovery in Peruvian avocado production following weather-related impacts last year.

• Avocado Supply and Pricing:

• Improved supply conditions led to a 10% increase in avocado volume sold, with average per unit prices decreasing by 5%.

• The increase in supply was attributed to higher Peruvian production due to favorable weather conditions and greater availability of Mexican avocados following last year's disruptions.

• Blueberry Segment Expansion:

• Sales in the blueberry segment rose to $4.5 million, with expected meaningful volume increases as the season progresses.
• The expansion is due to increased acreage, yield improvements, and strategic pricing commitments to establish Mission as a reliable year-round program provider.

Sentiment Analysis:

• Management highlighted record Q3 revenue of $357M (+10% YOY), gross profit up 22% with margin +120 bps to 12.6%, and international farming EBITDA +163%. Adjusted EPS rose to $0.26 from $0.23. They reaffirmed FY2025 CAPEX ($50–$55M), reported net leverage ~1x, and expect higher Q4 volumes despite lower pricing. Tariff impact (~$10M annualized) is <1% of COGS and not competitively disruptive.

Q&A:

• Question from Ben Klieve (Lake Street Capital Markets): What has been the tariff cost impact year-to-date and what should we expect in Q4?
  Response: YTD tariff expense is a little over $5M; Q4 impact expected to be similar to Q3.

• Question from Ben Klieve (Lake Street Capital Markets): Did tariffs change product flows between the U.S., Europe, and Asia or affect international pricing?
  Response: No material shifts; placement remained demand-driven with stable supply-demand dynamics.

• Question from Ben Klieve (Lake Street Capital Markets): How should we think about blueberry acreage into 2026 and beyond?
  Response: Productive acreage moves from ~500–550 ha last season to 700+ ha this year, targeting ~1,000 ha phased in through FY2026–FY2028, driving multi-year production ramps.

• Question from Ben Klieve (Lake Street Capital Markets): Outlook for acreage expansion across avocados and mangoes over the next few years?
  Response: No significant new plantings; avocados steady, blueberries per plan, mango growth via partnerships, not incremental acreage; no added capex beyond current commitments.

• Question from Jerry Salini (ROTH Capital Partners): Discuss international opportunities, especially Europe/Asia, and the UK facility’s trajectory.
  Response: UK facility gaining traction with top retailers using Mission’s sourcing/programming; Europe may see selective/inorganic options; Asia focus on upgraded talent and partnerships; scale tied to surplus availability.

• Question from Jerry Salini (ROTH Capital Partners): Are international sales dependent on Peru/Mexico harvest sizes?
  Response: Yes—international expansion is opportunistic and linked to larger Peru/Mexico seasons.

• Question from Jerry Salini (ROTH Capital Partners): Can you frame SG&A run rate given the Q3 increase?
  Response: Increase was largely variable (profit sharing/incentives) tied to strong farming results; run-rate is not fixed and peaks in Q3–Q4.