Mission Produce's Q3 2025: Contradictions Emerge on Tariffs, International Strategy, and Acreage Expansion

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

Date of Call: September 08, 2025

Financials Results

• Revenue: $357.7M, up 10% YOY
• EPS: $0.26 per diluted share (adjusted), compared to $0.23 last year
• Gross Margin: 12.6%, up 120 bps YOY

Guidance:

• Q4 industry avocado volumes expected ~15% higher YOY.
• Mission’s Peru avocado exports: 105–110M lbs; ~48M lbs sold through by Q3-end.
• Q4 pricing expected 20–25% lower YOY vs $1.90/lb in Q4 FY24.
• Peru blueberry harvest ramping; meaningful volume increases, partially offset by lower ASPs.
• FY25 CapEx guidance unchanged at $50–$55M; capex moderating through FY26.
• Expect stronger operating cash flow in Q4 as Peru crop sells through.
• Mexican packhouse enhancements in place for upcoming harvest to boost capacity/efficiency.
• Tariffs estimated at ~$10M annualized (<1% of COGS).

Business Commentary:

* Strong Revenue Performance and Vertical Integration: - Mission Produce reported record revenue of $357 million for Q3, up 10% year-on-year. - The growth was driven by strong execution across the business, showcasing the value of vertical integration to drive category consistency globally.

• Increased Avocado Volumes and Pricing Discipline:
• The Marketing & Distribution segment delivered remarkable results with avocado volumes sold increasing by 10% while average per unit prices decreased only 5%.

• The company maintained pricing discipline and achieved solid per unit margins within historical averages.

• Strategic Dividend Growth:

• The company's International Farming segment experienced a 79% increase in gross sales to $49 million and an 163% increase in adjusted EBITDA to $12.1 million compared to the previous year.

• The growth was driven by a significant recovery in Peruvian avocado production and increased packing and cooling services provided to third-party growers.

• Expansion in Blueberries and International Markets:

• Net sales in the Blueberries segment increased to $4.5 million from $1.6 million in the prior year period, with adjusted EBITDA rising to $0.4 million.
• Growth was due to higher volumes from expanded acreage, yield improvements, and increased average per unit sales prices, as well as strategic investments in international markets like Europe and Asia.

Sentiment Analysis:

• Management reported record Q3 revenue ($357M, up 10%), gross profit up 22% to $45.1M with margin up 120 bps to 12.6%, and adjusted EPS of $0.26 vs $0.23 last year. International Farming performance was “exceptional,” with segment EBITDA up 163%. Outlook calls for ~15% higher Q4 industry volumes and operational enhancements in Mexico, while tariffs are described as modest (<1% of COGS).

Q&A:

• Question from Benjamin Klieve (Lake Street Capital Markets): What tariff costs have you incurred year-to-date and how should we think about Q4 impact?
  Response: Tariff expense was a little over $5M through nine months; Q4 impact should be similar to Q3.

• Question from Benjamin Klieve (Lake Street Capital Markets): Have tariffs changed trade flows—more Peru fruit to Europe/Asia or price shifts?
  Response: No material shifts; placement followed demand and markets stabilized despite broader tariffs.

• Question from Benjamin Klieve (Lake Street Capital Markets): Update on blueberry acreage ramp and timeline?
  Response: Productive acreage rises to 700+ hectares this year (from 500–550); targeting ~1,000 hectares, ramping through FY26–FY28 before leveling.

• Question from Benjamin Klieve (Lake Street Capital Markets): Any broader acreage expansion plans in avocados or mangoes?
  Response: No major new plantings; minor infill/replants only. Mango growth to lean on third-party grower partnerships.

• Question from Gerard Sweeney (ROTH Capital Partners): How are you approaching international growth (U.K., Europe, Asia) and potential investments?
  Response: U.S. remains anchor; U.K. facility building retailer programs; Europe served via partners focusing on top retailers; Asia team upgraded; inorganic Europe move possible longer term but not active.

• Question from Gerard Sweeney (ROTH Capital Partners): Are international opportunities driven by Peru/Mexico harvest sizes?
  Response: Yes; excess supply opens more international opportunities under current setup.

• Question from Gerard Sweeney (ROTH Capital Partners): What drives SG&A increase and how to think about run-rate?
  Response: Over half of the increase was variable (profit sharing, incentives) tied to strong Farming results; run-rate varies with performance.