Mission Produce pronounces the second quarter of 2021 for fiscal 12 months 2021

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Mission Produce announces the second quarter of 2021 for fiscal year 2021

OXNARD, Calif., June 10, 2021 (GLOBE NEWSWIRE) – Mission Produce, Inc. (Nasdaq: AVO) (the “Mission” or the “Company”), the world's leading provider of fresh avocado sourcing, production and distribution, has today published its financial results for the second fiscal quarter ended April 30, 2021.

Highlights of the second quarter of 2021:

  • Total revenue of $ 234.7 million, an increase of 6% over the same period last year
  • The volume of avocados sold increased by 22%, the average sales price decreased by 14% compared to the same period last year
  • Gross profit increased 26% to $ 27.1 million and the gross profit percentage increased 180 basis points to 11.5% of sales
  • Net income of $ 7.4 million or $ 0.10 per diluted share compared to a net loss of $ 14.8 million or ($ 0.23 per diluted share) for the same period last year
  • Adjusted net income of $ 8.7 million, or $ 0.12 per diluted share, compared to $ 6.2 million, or $ 0.10 per diluted share, for the same period last year
  • Adjusted EBITDA of $ 16.3 million, up 13% from $ 14.4 million for the same period last year

CEO MessAge

Steve Barnard, Chief Executive Officer of Mission Produce, commented, “We posted strong adjusted EBITDA of $ 16.3 million for the second quarter, an increase of 13% year over year. Our blue chip customer base and the flexibility our network offers allowed us to distribute 22% more volume than last year. With our vertical integration and our key information, we are excellently positioned to expand our leadership position. "

Mr. Barnard continued, “Looking into the second half of fiscal year 2021, we are moving into the southern hemisphere season with our Peruvian harvest going online. The growing season has been very productive and we are expecting solid yields from our crop and as prices stabilize we are in a great position to have strong operating performance in the second half of the year, led by our International Farming segment. In the third quarter to this day, retail prices are stable, as is consumer behavior compared to the previous year, which is normal well into the summer months. "

Consolidated financial report for the second quarter of 2021

Total revenue for the second quarter of fiscal 2021 was $ 234.7 million compared to $ 221.6 million for the same period last year, an increase of 6%, largely due to a 22% increase in avocado sold, in part Sales prices per unit of avocado were offset by an average decrease of 14%. Price and volume momentum was driven by strong industrial supply from Mexico in the second quarter, although sequential monthly prices improved over the quarter. In addition, volume in the previous period was negatively impacted by COVID-19-related home stay orders that went into effect in March 2020.

Gross profit increased 26% to $ 27.1 million compared to the same period last year, and the gross profit percentage increased 180 basis points to 11.5% of sales. The increase in gross profit is mainly due to the higher volume of avocados sold. The improvement in the gross profit percentage is due to lower unit sales prices as the unit margin represented a greater proportion of the sales value. Unit sales price levels are a critical factor in the gross profit percentage reported.

Selling, general and administrative expenses (“SG&A”) for the second quarter increased $ 5.2 million to $ 16.3 million, primarily due to higher fees, higher employee-related costs, and higher liability insurance premiums associated with investing in a public company are connected. In connection with our move to our new corporate headquarters in February 2021, we also had to record an increase in rental costs.

Net income for the second quarter of fiscal 2021 was $ 7.4 million, or $ 0.10 per diluted share. This compares with a net loss of $ 14.8 million or ($ 0.23) per diluted share for the same period last year. Fiscal 2020 second quarter net income was negatively impacted by a $ 21.2 million prior year non-cash impairment charge related to our equity method of investing in Moruga.

Adjusted net income for the second quarter of fiscal 2021 was $ 8.7 million, or $ 0.12 per diluted share, compared to $ 6.2 million, or $ 0.10 per diluted share for the same Period of the previous year.

Adjusted EBITDA was $ 16.3 million for the second quarter of fiscal 2021, compared to $ 14.4 million for the same period last year. Adjusted EBITDA growth was driven by volume growth and margin improvements, partially offset by higher SG&A expenses.

Business segment performance in the second quarter of the fiscal year

marketing & Distribution

Net sales in our Marketing & Distribution segment increased 6% to $ 232.4 million for the quarter, reflecting the same factors influencing Group sales.

Adjusted EBITDA by segment decreased 8% to $ 16.2 million, primarily due to higher SG&A expenses, as described above. The impact was partially offset by a higher gross margin due to the strong volume growth.

International agriculture

Substantially all sales of fruit from the company's International Farming reportable segment go to the Marketing and Sales reportable segment, with the remainder of the revenue coming largely from services provided to independent third parties. Nominal sales are recognized in the first half of the fiscal year as the avocado harvest season for Peruvian farms usually runs from April to August of each year. As a result, International Farming's Adjusted EBITDA is generally focused on the third and fourth quarters of our fiscal year, in line with the avocado harvest season in Peru.

Total revenue for the International Farming segment increased 79% to $ 4.3 million for the three months ended April 30, 2021, primarily due to the earlier timing of the avocado harvest season compared to the previous year. Net sales increased 10% to $ 2.3 million for the quarter, primarily due to higher packaging and cold storage service revenues.

The segment's Adjusted EBITDA improved $ 3.3 million to $ 0.1 million, largely due to the aforementioned revenue drivers that enabled us to better manage fixed cost overheads in Peru during the avocado harvest off-season to use.

Balance sheet and cash flow

Cash and cash equivalents were $ 54.2 million as of April 30, 2021, compared to $ 124.0 million as of October 31, 2020.

The company's operating cash flows are seasonal and may be temporarily affected by working capital reallocations resulting from payment timing for Mexican sources that have shorter maturities than other source markets. Additionally, the company is building its growing crop of plants for sale in the first half of the fiscal year, which may affect the year-over-year changes. These variables can cause quarterly shifts in operating cash flow, but are not indicative of positive operating cash flow performance that management expects for the full year.

The cash outflow from operating activities was $ 20.2 million for the first half of fiscal 2021 compared to $ 4.7 million for the same period last year. The $ 15.5 million change was primarily driven by an adverse net change in working capital that is in line with our seasonal expectations. The rise in working capital, particularly in accounts receivable and inventory, was compounded by increases in unit prices in the first half of fiscal 2021.

Investments were $ 46.8 million in the first half of fiscal 2021, compared to $ 19.7 million in the same period last year, and related to land improvements and orchard development in Peru and Guatemala, as well as the completion of the Construction work related to our new facility in Laredo. Texas, which officially opened in May 2021.

outlook

As the company prepares for the second half of the fiscal year, when business moves to its own production in Peru, management has a better view of volumes and costs. As such, it provides model assumptions for the full fiscal year for revenue, volume, and adjusted EBITDA.

  • Net sales for the full year 2021 will range from $ 900 million to $ 920 million with an estimated total annual volume of £ 670 million to £ 680 million. Own farm avocado production expectations are in the £ 95 million to £ 105 million range.
  • Adjusted EBITDA for full year 2021 is in the range of $ 100 million to $ 105 million but can be affected by future price dynamics that have a disproportionate impact on the profitability of our own manufacturing.

Conference call and webcast

As previously announced, the company will host a conference call today at 5:00 p.m. to discuss the financial results for the second quarter of 2021. ET.

The conference call can be accessed live over the phone at (877) 407-9039 or, for international callers, at (201) 689-8470. The call can be replayed until June 24, 2021 at (844) 512-2921 or for international callers at (412) 317-6671; the passcode is 13720088.

The live audio webcast of the conference call will be available in the Events & Presentations section of the Company's Investor Relations website at www.investors.missionproduce.com. An archived replay of the webcast will also be available shortly after the live event ends.

Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures "Adjusted Net Income" and "Adjusted EBITDA". Management believes these metrics provide useful information for analyzing underlying business results. These key figures neither correspond to the comparable financial figures according to generally accepted accounting principles, nor do they replace them or are superior to them.

Adjusted net profit refers to the net profit before share-based compensation expenses, unrealized profit (loss) from derivative financial instruments, foreign currency profit (loss), further adjusted for special, one-time or one-time distorting items on the result (individual tax adjustments in connection with changes in Peruvian tax rates , Impairment of investments according to the equity method, court settlement) and, if applicable, tax effects of these items.

Adjusted EBITDA refers to the net profit (loss) before interest expense, income taxes, depreciation and amortization expenses, share-based compensation expenses, other income (expenses) and income (losses) from investees using the equity method, further adjusted for special, one-off or one-off items (depreciation of investments using the equity method and legal settlement) that distort the result.

Please refer to the table at the end of this press release for reconciliations of these non-GAAP financial measures to the most comparable GAAP measures.

About Mission Produce, Inc.

Mission Produce is the global leader in the global avocado business. Mission Produce has been sourcing, producing and distributing fresh Hass avocados and, from 2021, fresh mangoes to retail, wholesale and hospitality customers in over 25 countries since 1983. The vertically integrated company owns and operates four state-of-the-art packaging plants in key growth locations around the world, including California, Mexico and Peru, and has additional procurement capacities in Chile, Colombia, the Dominican Republic, Guatemala, New Zealand and South Africa. which enable the company to deliver top quality fruit all year round. Mission's global distribution network includes twelve Forward distribution centers in North America, China and Europe that provide value-added services such as ripening, bagging, custom packaging and logistics management. In addition, Mission owns over 11,000 acres worldwide, which enables diversified sourcing and access to complementary growing seasons while ensuring that its customers receive the highest possible quality fruit. More information is available at www.missionproduce.com.

Forward-Looking Statements

Statements in this press release that are not historical in nature are forward-looking statements that involve known and unknown risks and uncertainties within the meaning of federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words like "can", "will", "expect", "intend", "plan", "believe", "seek", "could", "estimate", "judge", "aim", "should", "Anticipate," "aim," and variations of these words and similar expressions are also intended to identify forward-looking statements. The forward-looking statements in this press release address a variety of topics, including statements about our short and long term assumptions, goals and objectives, including our outlook for our results of operations for fiscal year 2021. Many of these assumptions relate to matters beyond our control lie and change quickly. Although we believe that the expectations expressed in such forward-looking statements are based on reasonable assumptions, we cannot guarantee that our expectations will be met. Readers are cautioned that actual results could differ materially from those implied in such forward-looking statements due to a variety of factors including: restrictions on avocados offering, either through purchase or cultivation; the loss of one or more of our largest customers or a decrease in customer purchases; conduct international business, including Mexican and Peruvian economic, political and / or social conditions; Fluctuations in the market price of avocados; increasing competition; inherent agricultural risks; Fluctuations in operating results due to the seasonality of business; general economic conditions; the impact of the COVID-19 pandemic; Increases in the cost of goods or other products used in our business; Food safety events and product recalls; Changes in USDA and FDA regulations, US trade policy, and / or customs and import / export regulations; Restrictions due to health and safety laws; significant costs associated with compliance with environmental laws and regulations; Acquisitions of other companies; the ability of our infrastructure to meet our business needs; Errors or interruptions in the optimization of the supply chain; Interruption of the supply of reliable and inexpensive means of transport; Loss of key personnel and a sufficient supply of labor; Information systems security risks, data breaches, and system integration issues; Changes in data protection and / or information security laws, policies and / or contractual agreements; Failure to maintain or protect our brand; Changes in tax rates or international tax legislation; the viability of an active, liquid and orderly market for our common stock; Volatility in the trading price of our common stock; Failure to meet continued listing requirements on the Nasdaq; Concentration of control with our officers, directors and major shareholders over matters submitted to shareholders for approval; limited sources of capital growth; the sale of blocked shares in the market; reduced disclosure requirements due to our status as an emerging growth company; significant costs associated with belonging to a public company and allocating significant management resources for it; Reliance on analyst reports; Failure to maintain adequate and effective internal controls over financial reporting; Restrictions on attempted takeover in our charter documents and under Delaware law; and the selection of Delaware as the exclusive forum for substantially all disputes between us and our shareholders; and other risks and factors that are discussed from time to time in our annual and quarterly reports on Forms 10-K and 10-Q and in our other filings with the Securities and Exchange Commission.

You can find copies of our SEC filings on the SEC website at www.sec.gov. The forward-looking statements contained in this press release speak as of the date of this press release and the Company does not intend to update or add to any forward-looking statements to reflect actual results after the date of this press release, nor does the company undertake any obligation to update or add to future statements Events or circumstances.

Contact

Investor Relations
ICR
Jeff Sonnek
646-277-1263
jeff.sonnek@icrinc.com

media
Denise Junqueiro
Senior Director Marketing and Communication
Mission Produce, Inc.
press@missionproduce.com

Condensed consolidated balance sheets (unaudited)

(in millions) April 30, 2021 October 31, 2020
financial assets
Current assets:
Cash and cash equivalents $ 54.2 $ 124.0
Limited money 1.7 1.4
requirements
Trade, minus certificates 85.8 57.5
Breeder and fruit advances 3.2 1.5
Other claims 13.9 13.4
inventory 65.1 38.6
Prepaid expenses and other current assets 10.8 8.8
Loans to associated companies using the equity method 2.7
Income tax claims 6.4 2.9
Total current assets 243.8 248.1
Property, plant and equipment, net 412.1 379.1
Investments according to the equity method 49.2 46.7
Loans to associated companies using the equity method 1.5 4.5
Deferred income taxes 7.0 4.4
goodwill 76.4 76.4
Other assets 18.9 18.1
Total assets $ 808.9 $ 777.3
Liabilities and Equity
Liabilities:
Settlement liabilities $ 21.6 $ 20.5
Accrued issues 33.7 28.3
Income taxes payable 0.9 1.7
Producer liabilities 31.4 18.8
Long-term debt – short-term portion 8.2 7.4
Finance leasing – short-term portion 1.2 1.2
Total short-term liabilities 97.0 77.9
Long-term debt, minus the short-term portion 162.0 166.7
Finance leasing, minus current short-term shares 2.7 3.3
Income taxes payable 3.8 3.8
Deferred income taxes 35.3 27.8
Other long-term liabilities 23.1 24.3
Total liabilities 323.9 303.8
Equity 485.0 473.5
Total liabilities and equity $ 808.9 $ 777.3

Abridged consolidated income statement (unaudited)

Three months ended
April, 30th,
Six months ended
April, 30th,
(in millions, with the exception of units and amounts per share) 2021 2020 2021 2020
Net sales $ 234.7 $ 221.6 $ 407.9 $ 419.1
Cost of sales 207.6 200.1 358.1 378.2
Gross income 27.1 21.5 49.8 40.9
Selling and general administration 16.3 11.1 30.9 25.9
Operating profit 10.8 10.4 18.9 15.0
Interest expenses (0.8 ) (2.3 ) (1.7 ) (4.4 )
Equity method (loss) income (0.2 ) 0.4 2.1 0.4
Impairment of investments using the equity method (21.2 ) (21.2 )
Other (expense) income, net (0.3 ) 1.4 (0.3 ) 1.0
Profit (loss) before income taxes 9.5 (11.3 ) 19.0 (9.2 )
Provision for income taxes 2.1 3.5 9.4 4.2
Net income (loss) $ 7.4 $ (14.8 ) $ 9.6 $ (13.4 )
Net profit (loss) per share:
basic $ 0.10 $ (0.23 ) $ 0.14 $ (0.21 )
Diluted $ 0.10 $ (0.23 ) $ 0.14 $ (0.21 )
Weighted average of the ordinary shares outstanding, used to calculate the basic earnings per share 70.560.287 63.257.051 70,555,528 63.329.930
Effect of diluting stock options 605,469 335.095
Effect of Diluting RSUs 41,703 n / A 36,961 n / A
Weighted average of common shares outstanding, used to calculate diluted earnings per share 71.207.459 63.257.051 70,927,584 63.329.930

Abridged consolidated cash flow statement (unaudited)

Six months ended
April, 30th,
(in millions) 2021 2020
Operational activities
Net income (loss) $ 9.6 $ (13.4 )
Adjustments to reconcile net profit (loss) to net cash outflow from operating activities
Provision for trade receivables 0.1
Depreciation 7.6 7.1
Amortization of the issuing costs 0.2 0.2
Equity method income (2.1 ) (0.4 )
Impairment of investments using the equity method 21.2
Share-based payment 1.5 0.7
Dividends received from investees using the equity method 1.7
Loss in selling equipment 0.3 0.1
Deferred income taxes 5.0 (0.5 )
Other 0.3 (2.0 )
Unrealized (gain) losses on derivative financial instruments (0.3 ) 3.4
Effects of changes in operating assets and liabilities on cash and cash equivalents:
Requests from deliveries and services (28.2 ) (8.0 )
Progress in fruit growers (1.7 ) 2.0
Other claims 1.1 (1.6 )
inventory (27.5 ) (1.7 )
Prepaid expenses and other current assets 0.3 (1.2 )
Income tax claims (3.5 ) (2.6 )
Other assets (4.7 ) (1.6 )
Accounts payable and prepaid expenses 10.5 (2.1 )
Income taxes payable (0.9 ) (3.0 )
Producer liabilities 12.5
Other long-term liabilities (0.3 ) (3.0 )
Cash outflow from operating activities $ (20.2 ) $ (4.7 )
Investment activity
Acquisition of property, plant and equipment (46.8 ) (19.7 )
Proceeds from the sale of property, plant and equipment 2.3
Participation in associated companies using the equity method (0.2 ) (1.9 )
Loans to associated companies using the equity method (1.5 )
Loan repayments from investees using the equity method 1.5
Issuance of bill of exchange claims (0.2 )
Supplier deposits, net (0.3 ) 0.1
Investment, net (0.2 )
Cash outflow from investing activities $ (45.0 ) $ (21.9 )
Financing activity
Borrowing from a revolving credit facility 10.0
Revolving Credit Facility Payments (6.0 )
Repayments on long-term debt (3.9 ) (3.1 )
Repayments on finance lease obligations (0.6 ) (0.4 )
Payments for long-term supplier financing (1.1 )
Dividends paid out (7.5 )
Repayment of stock option certificates 0.1
Costs of issuing debt instruments (0.1 )
Purchase and retirement of shares (1.8 )
Cash outflow from financing activities $ (4.5 ) $ (9.9 )
Effect of Changes in Exchange Rates on Cash 0.2
Net purchase of cash, cash equivalents and restricted cash (69.5 ) (36.5 )
Cash, cash equivalents and restricted cash, start of period 127.0 65.6
Cash, cash equivalents and restricted cash, end of period $ 57.5 $ 29.1
Summary of the cash, cash equivalents and restricted cash shown in the condensed consolidated balance sheet:
Cash and cash equivalents $ 54.2 $ 26.6
Limited money 1.7 1.1
Restricted cash included in other assets 1.6 1.4
Total number of cash, cash equivalents and restraints shown in the condensed consolidated cash flow statement $ 57.5 $ 29.1

Reconciliation of non-GAAP financial measures to GAAP (unaudited)

The following tables reconcile the non-GAAP Adjusted Net Income and Adjusted EBITDA measures against their comparable GAAP measures. See "Non-GAAP Financial Measures" earlier in this press release.

Adjusted net income

Three months ended
April, 30th,
Six months ended
April, 30th,
(in millions, excluding amounts per share) 2021 2020 2021 2020
Net income (loss) $ 7.4 $ (14.8 ) $ 9.6 $ (13.4 )
Share-based payment 0.7 0.3 1.5 0.7
Unrealized (gain) losses on derivative financial instruments (0.9 ) 3.1 (1.4 ) 3.4
Impairment of investments using the equity method (3) 21.2 21.2
Comparative Law (4) 0.8 0.8
Foreign currency loss (profit) 1.2 (4.0 ) 1.8 (3.2 )
Tax implications of adjustments to net income (1) (0.5 ) 0.4 (0.8 )
Discreet tax adjustment for changes in Peruvian tax rates (2) 5.1
Adjusted net income $ 8.7 $ 6.2 $ 16.6 $ 8.7
Adjusted net earnings per diluted share $ 0.12 $ 0.10 $ 0.23 $ 0.14

(1) Tax effects are calculated using the applicable rates to which each adjustment applies.

(2) On December 30, 2020, Peru enacted a tax law repealing current tax law that gave agricultural businesses advantages. The new law will subject us to higher Peruvian corporate tax rates than our current 15% rate: 20% for the calendar years 2023-2024, 25% for the calendar years 2025-2027, and 29.5% thereafter. As a result of the new tax law, we recorded a $ 5.1 million charge in our income tax provision for the three months ended January 31, 2021.

(3) In the second quarter of fiscal 2020, we recorded a pre-tax non-cash impairment charge of $ 21.2 million on our equity method, Moruga.

(4) In the second quarter of the 2021 financial year, we recorded a loss rate in connection with a preliminary settlement offer to plaintiffs in an employee lawsuit.

Adjusted EBITDA

Three months ended
April, 30th,
Six months ended
April, 30th,
(in millions) 2021 2020 2021 2020
Adjusted EBITDA for Marketing and Sales $ 16.2 $ 17.6 $ 29.9 $ 27.8
Adjusted EBITDA of international agriculture 0.1 (3.2 ) (1.1 ) (5.0 )
Total Reportable Adjusted EBITDA 16.3 14.4 28.8 22.8
Net income (loss) 7.4 (14.8 ) 9.6 (13.4 )
Interest expense 0.8 2.3 1.7 4.4
Commission for income taxes 2.1 3.5 9.4 4.2
Depreciation and amortization 4.0 3.7 7.6 7.1
Equity method loss (income) 0.2 (0.4 ) (2.1 ) (0.4 )
Impairment on equity method investment 21.2 21.2
Legal settlement 0.8 0.8
Other expense (income), net 0.3 (1.4 ) 0.3 (1.0 )
Stock-based compensation 0.7 0.3 1.5 0.7
Total adjusted EBITDA $ 16.3 $ 14.4 $ 28.8 $ 22.8

Sales segment (unaudited)

Marketing & Distribution International farming Total Marketing & Distribution International farming Total
Three Months Ended April 30,
(In millions) 2021 2020
Third party sales $ 232.4 $ 2.3 $ 234.7 $ 219.5 $ 2.1 $ 221.6
Affiliated sales 2.0 2.0 0.3 0.3
Total segment sales 232.4 4.3 236.7 219.5 2.4 221.9
Intercompany eliminations (2.0 ) (2.0 ) (0.3 ) (0.3 )
Total net sales $ 232.4 $ 2.3 $ 234.7 $ 219.5 $ 2.1 $ 221.6
Six Months Ended April 30,
2021 2020
Third party sales $ 402.0 $ 5.9 $ 407.9 $ 414.0 $ 5.1 $ 419.1
Affiliated sales 2.2 2.2 0.3 0.3
Total segment sales 402.0 8.1 410.1 414.0 5.4 419.4
Intercompany eliminations (2.2 ) (2.2 ) (0.3 ) (0.3 )
Total net sales $ 402.0 $ 5.9 $ 407.9 $ 414.0 $ 5.1 $ 419.1

Other Information (Unaudited)

Three Months Ended
April 30,
Six Months Ended
April 30,
2021 2020 2021 2020
Pounds of avocados sold (millions) 163.0 133.9 325.9 286.1
Average sales price per pound(1) $ 1.42 $ 1.64 $ 1.23 $ 1.45
Gross profit per pound(2) $ 0.17 $ 0.16 $ 0.15 $ 0.14

(1)  Calculated by dividing net avocado sales from our Marketing & Distribution segment by the total pounds of avocados sold in the stated period.

(2)  Calculated by dividing gross profit by the total avocado sales volume in the stated period.