Mission's Q4 2025 Earnings Call: Contradictions Emerge on Mango Growth, CapEx Allocation, and Market Share Strategies

Date of Call: December 18, 2025

Financials Results

• Revenue: FY2025: $1.39B, up 13% YOY; Q4 FY2025: $319.0M, down 10% YOY
• EPS: Q4 adjusted: $0.31 per diluted share, compared to $0.28 prior year (Q4 FY2024)
• Gross Margin: 17.5%, up 180 basis points YOY (Q4 FY2025 vs Q4 FY2024)

Guidance:

• Q1 FY2026: avocado industry volumes expected ~+10% YOY.
• Q1 FY2026: avocado pricing expected ~25% lower YOY versus the $1.75/lb Q1 FY2025 average.
• Expect some sequential margin compression in Q1 consistent with seasonality.
• FY2026 CapEx expected to step down to approximately $40M (from $51.4M in FY2025).
• Blueberries: Peru peak in Q1; volumes up from new acreage; prices flat to slightly higher; profitability pressured by higher unit costs from lower yields.

Business Commentary:

* Record Financial Performance: - Mission Produce, Inc. reported record revenue of $1.39 billion for fiscal 2025, growing 13% on top of a strong 2024, with a record 691 million pounds of avocados sold. - This growth was driven by a 7% volume increase and the company's integrated global platform that enables execution on a global stage.

• Strong International Expansion:
• The company achieved a 40% increase in European avocado volumes and over 60% revenue growth in the UK, primarily through their Peruvian product leverage.

• The commercial team demonstrated remarkable agility by managing demand and supply shifts, enhancing sales efforts, and deepening relationships in Southern Europe.

• Peruvian Farming Success:

• The International Farming segment's avocado production more than doubled, selling approximately 105 million pounds, up from 43 million pounds in the previous harvest season.

• The increase in production and higher utilization of facility infrastructure contributed to a 97% increase in segment sales.

• Mango Market Share Growth:

• Mission Produce managed to increase its market share in mangoes to 5.2%, up approximately 150 basis points for the full year.

• This growth was driven by effective supply and demand management, allowing for consumer engagement and supply consistency.

• Leadership Transition:

• The company announced a leadership transition, with President and COO John Pawlowski set to assume the role of CEO, while Founder Steve Barnard transitions to Executive Chairman.
• This transition aims to position the company for further growth, leveraging the experience and leadership skills of both individuals.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 'record revenue of $1.39 billion, growing 13%,' 'adjusted EBITDA increased 12% to a record $41.4 million,' and 'we generated $88.6 million in operating cash flow' with a 'net leverage... well below 1x EBITDA.' They expect CapEx to step down to ~$40M, positioning for accelerated free cash flow.

Q&A:

• Question from Mark Smith (Lake Street Capital Markets, LLC, Research Division): Curious about your outlook for mangoes. Where are you in that cycle and any insights into potential growth next fiscal year?
  Response: Expect a similar glide path to prior years: continue market-share penetration via cross-selling to existing avocado customers and pursue global sourcing to sustain growth in FY26.

• Question from Mark Smith (Lake Street Capital Markets, LLC, Research Division): Biggest risks to accomplishing the free cash flow growth as you exit the investment cycle?
  Response: Confidence that free cash flow will improve due to strong operations and a planned CapEx step-down (~$40M); primary risk remains weather/crop variability and pricing dynamics.

• Question from Mark Smith (Lake Street Capital Markets, LLC, Research Division): How should we think about capital allocation going forward — buybacks or other uses of cash?
  Response: Priority is value-creating growth (organic and inorganic); balance sheet flexibility allows share buybacks (used this year) and pursuing growth or bolt-on opportunities as appropriate.

• Question from Mark Smith (Lake Street Capital Markets, LLC, Research Division): With the upcoming management change, should we expect any changes in strategy?
  Response: No immediate strategy shift; continuity in leadership with increased emphasis on accelerating growth and deploying capital opportunistically over the next 5–10 years.

• Question from Pooran Sharma (Stephens Inc., Research Division): Of the ~$40M CapEx guidance, how much could be growth CapEx versus maintenance?
  Response: Ballpark split ~ $20M maintenance and ~$20M growth-oriented CapEx.

• Question from Pooran Sharma (Stephens Inc., Research Division): With core infrastructure built, where do you see the most upside in expanding your footprint — specific regions or facilities?
  Response: Top opportunities are deeper penetration in the U.S. market and expanding in Europe leveraging Peruvian supply; Guatemala coming online will improve operational efficiency and absorption.

• Question from Pooran Sharma (Stephens Inc., Research Division): Given a lower pricing environment, how long to move household penetration from ~70% to mid-70s or toward levels of other mature fruits?
  Response: Lower pricing and higher availability create promotional tailwinds; management views ~73–75% household penetration as a realistic 2–3 year goal if availability remains consistent.

Contradiction Point 1

Mango Market Growth

It involves changes in the outlook for mango market growth, which impacts the company's trajectory and strategic focus.

What is the outlook for the mango business and potential growth opportunities in the next fiscal year? - Mark Smith (Lake Street Capital Markets, LLC, Research Division)

2025Q4: The glide path for mango growth is consistent with the past two years. ... Opportunities exist in cross-selling to customers currently buying avocados, enhancing category insights, and expanding access to fruit at the right time. - John Pawlowski(COO)

How will fruit initiatives affect the company's ability to utilize the 1.2 million square foot facility? - David Escalante (Stifel, Nicolaus & Co.)

2025Q3: The company's mango production facilities are expected to be fully operational by mid-'24, which will enhance our ability to capitalize on market demand for mangoes, particularly in the U.S. - Bryan Giles(CFO)

Contradiction Point 2

Capital Expenditure Allocation

It involves changes in the allocation of capital expenditure, which impacts the company's investment strategies and financial planning.

How much of next year's $40 million CapEx is growth CapEx? - Pooran Sharma (Stephens Inc., Research Division)

2025Q4: About half of the $40 million CapEx in fiscal 2026 is expected to be maintenance, with the other half allocated for growth initiatives, such as farming operations and commercial investments. - Bryan Giles(CFO)

How might mango, avocado, or other fruit offerings help the company utilize the 1.2M sq ft facility? - David Escalante (Stifel, Nicolaus & Co.)

2025Q3: The capital investment in our mango facilities will total approximately $100 million over a 3-year period. - Bryan Giles(CFO)

Contradiction Point 3

Mango Market Share and Growth

It involves differing perspectives on the company's market share in the mango business, which directly affects growth projections and strategic focus.

What's the outlook for mangoes and potential growth opportunities in the next fiscal year? - Mark Smith(Lake Street Capital Markets, LLC, Research Division)

2025Q4: The glide path for mango growth is consistent with the past two years. Mission is pursuing market share penetration and fostering global sourcing initiatives. Opportunities exist in cross-selling to customers currently buying avocados, enhancing category insights, and expanding access to fruit at the right time. - John Pawlowski(COO)

What was the co-packer volume in the second quarter, and how did it change during the quarter? - Benjamin Klieve(Lake Street Capital Markets)

2025Q2: Mission is the second-largest mango distributor in the U.S. with potential to become the largest. The mango business complements the avocado business, utilizing existing facilities and expanding market share. - Stephen Barnard(CEO), "Mission achieved a market share of 5% in the mango category, up from a previous low of below 5%. The company aims to reach the next threshold of 10% by leveraging its global sourcing network and expanding customer relationships." - John Pawlowski(COO)

Contradiction Point 4

Mango Growth Strategy and Market Penetration

It highlights differing expectations on the strategic approach and timeline for increasing mango market penetration, which affects the company's growth trajectory and investor expectations.

What is the outlook for mangoes and potential growth opportunities in the next fiscal year? - Mark Smith (Lake Street Capital Markets, LLC, Research Division)

2025Q4: The glide path for mango growth is consistent with the past two years. Mission is pursuing market share penetration and fostering global sourcing initiatives. Opportunities exist in cross-selling to customers currently buying avocados, enhancing category insights, and expanding access to fruit at the right time. - John Pawlowski(COO)

Were there any questions not explicitly stated in the transcript? - Operator

2025Q1: With the Mexican avocado season ramping up, our marketing and distribution segment is back in focus. We realized segment growth of 32% versus the prior year, reflecting a 5% increase in avocado volumes sold and a 25% increase in per unit avocado selling prices. - Stephen Barnard(CEO)

Contradiction Point 5

Capital Expenditure Allocation and Growth Investments

It involves differing statements about the allocation of capital expenditure between maintenance and growth initiatives, which impacts the company's ability to invest in future growth.

What portion of next year's $40 million CapEx is growth CapEx? - Pooran Sharma (Stephens Inc., Research Division)

2025Q4: About half of the $40 million CapEx in fiscal 2026 is expected to be maintenance, with the other half allocated for growth initiatives, such as farming operations and commercial investments. - Bryan Giles(CFO)

Are there any specific guidance updates or strategic priorities mentioned in the transcript? - Operator

2025Q1: Our results this quarter were particularly strong due to higher than expected avocado prices and higher avocado volumes. We're particularly pleased with the performance of our Marketing and Distribution segment, which also achieved record volumes, up 14% versus the prior year. - Stephen Barnard(CEO)