avo-20230131

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM 10-Q

_____________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-39561

_____________

MISSION PRODUCE, INC.

(Exact name of Registrant as specified in its charter)

_____________

Delaware

(State or Other Jurisdiction of

Incorporation or Organization)

2710 Camino Del Sol

Oxnard, California

(Address of Principal Executive Offices)

95-3847744

(I.R.S. Employer

Identification No.)

93030

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (805) 981-3650

_____________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

AVO

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of March 1, 2023, the registrant had 70,733,090 shares of common stock at $0.001 par value outstanding.

MISSION PRODUCE, INC.

TABLE OF CONTENTS

FORM 10-Q

FISCAL FIRST QUARTER 2023

INDEX


PART I- FINANCIAL INFORMATION		5

Item 1.	Financial Statements	5
	Condensed Consolidated Balance Sheets (Unaudited)	5
	Condensed Consolidated Statements of Loss (Unaudited)	6
	Condensed Consolidated Statements of Comprehensive Loss (Unaudited)	7
	Condensed Consolidated Statements of Changes in Equity (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows (Unaudited)	9
	Notes to Unaudited Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II- OTHER INFORMATION		29

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	30

	Signatures	31

FORWARD LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “could”, “intends”, “target”, “projects”, “contemplates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We believe that these factors include, but are not limited to, the following:

•Risks related to our business, including: limitations regarding the supply of avocados, either through purchasing or growing; fluctuations in the market price of avocados; increasing competition; risks associated with doing business internationally, including Mexican and Peruvian economic, political and/or societal conditions; inflationary pressures; loss of one or more of our largest customers; general economic conditions or downturns; supply chain failures or disruptions; disruption to the supply of reliable and cost-effective transportation; failure to recruit or retain employees, poor employee relations, and/or ineffective organizational structure; inherent farming risks; seasonality in operating results; failures associated with information technology infrastructure, system security and cyber risks; new and changing privacy laws and our compliance with such laws; food safety events and recalls; failure to comply with laws and regulations, including those promulgated by the USDA and FDA, health and safety laws, environmental laws, and other laws and regulations; changes to trade policy and/or export/import laws and regulations; risks from business acquisitions, if any; lack of or failure of infrastructure; material litigation or governmental inquiries/actions; failure to maintain or protect our brand; changes in tax rates or international tax legislation; and risks associated with the ongoing conflict in Russia and Ukraine.

•Risks related to our common stock, including: the viability of an active, liquid, and orderly market for our common stock; volatility in the trading price of our common stock; concentration of control in our executive officers, directors and principal stockholders over matters submitted to stockholders for approval; limited sources of capital appreciation; significant costs associated with being a public company and the allocation of significant management resources thereto; reliance on analyst reports; failure to maintain proper and effective internal control over financial reporting; restrictions on takeover attempts 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 stockholders.

•Risks related to restrictive covenants under our credit facility, which could affect our flexibility to fund ongoing operations, uses of capital and strategic initiatives, and, if we are unable to maintain compliance with such covenants, lead to significant challenges in meeting our liquidity requirements and acceleration of our debt.

•Other risks and factors listed under “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K for the year ended October 31, 2022 and elsewhere in this report.

We have based the forward-looking statements contained in this report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions and other factors described in “Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K for the year ended October 31, 2022 and elsewhere in this report. These risks are not exhaustive. Other sections of this report include additional factors that could adversely impact our business and financial performance. Furthermore, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this report, including documents that we reference and exhibits that have been filed, in this report and have filed as exhibits to this report, with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements made in this report relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this report or to conform such statements to actual results or revised expectations, except as required by law.

This quarterly report may also include trademarks, tradenames and service marks that are the property of the Company and also certain trademarks, tradenames and service marks that are the property of other organizations. Solely for convenience, trademarks and tradenames referred to in this quarterly report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or that the applicable owner will not assert its rights, to these trademarks and tradenames.

We maintain a website at www.missionproduce.com, to which we regularly post copies of our press releases as well as additional information about us. Our filings with the Securities and Exchange Commission (“SEC”), are available free of charge through our website as soon as reasonably practicable after being electronically filed with or furnished to the SEC. Information contained in our website does not constitute a part of this report or our other filings with the SEC.

PART I- FINANCIAL INFORMATION

Item 1. Financial Statements

MISSION PRODUCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(In millions, except for shares)	January 31, 2023		October 31, 2022
Assets
Current Assets:
Cash and cash equivalents	$	39.2	$	52.8
Restricted cash	1.0		1.1
Accounts receivable
Trade, net of allowances of $0.3 and $0.3, respectively	64.3		62.9
Grower and fruit advances	1.8		1.8
Other	11.2		17.3
Inventory	76.8		73.1
Prepaid expenses and other current assets	10.1		11.1
Income taxes receivable	11.2		8.0
Total current assets	215.6		228.1
Property, plant and equipment, net	511.6		489.7
Operating lease right-of-use assets	74.2		65.4
Equity method investees	25.5		27.1
Deferred income tax assets, net	8.3		8.1
Goodwill	39.4		39.4
Intangible asset, net	0.8		2.0
Other assets	21.6		19.7
Total assets	$	897.0	$	879.5

Liabilities and Equity
Liabilities
Accounts payable	$	30.5	$	34.4
Accrued expenses	29.4		30.1
Income taxes payable	0.5		1.0
Grower payables	25.4		24.3
Short-term borrowings	—		2.5
Long-term debt—current portion	3.6		3.5
Operating leases—current portion	4.9		4.7
Finance leases—current portion	1.2		1.2
Total current liabilities	95.5		101.7
Long-term debt, net of current portion	146.0		136.9
Operating leases, net of current portion	72.6		63.9
Finance leases, net of current portion	15.3		1.4
Income taxes payable	3.1		3.1
Deferred income tax liabilities, net	29.0		29.4
Other long-term liabilities	21.4		20.2
Total liabilities	382.9		356.6
Commitments and contingencies (Note 6)
Shareholders’ Equity
Common stock ($0.001 par value, 1,000,000,000 shares authorized; 70,733,090 and 70,669,535 shares issued and outstanding as of January 31, 2023 and October 31, 2022, respectively)	0.1		0.1
Additional paid-in capital	229.6		229.3
Accumulated other comprehensive loss	(1.2)		(1.7)
Retained earnings	265.6		274.4
Mission Produce shareholders' equity	494.1		502.1
Noncontrolling interest	20.0		20.8
Total equity	514.1		522.9
Total liabilities and equity	$	897.0	$	879.5

See accompanying notes to unaudited condensed consolidated financial statements.

MISSION PRODUCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF LOSS (UNAUDITED)


	Three Months Ended January 31,
(In millions, except for per share amounts)		2023		2022
Net sales		$	213.5	$	216.6
Cost of sales		204.5		216.1
Gross profit		9.0		0.5
Selling, general and administrative expenses		19.1		18.7

Operating loss		(10.1)		(18.2)
Interest expense		(2.4)		(0.9)
Equity method income		1.0		1.6


Other (expense) income, net		(0.8)		1.6
Loss before income taxes		(12.3)		(15.9)
Income tax benefit		(1.7)		(2.5)
Net loss		$	(10.6)	$	(13.4)
Net loss attributable to noncontrolling interest		(1.8)		—
Net loss attributable to Mission Produce		$	(8.8)	$	(13.4)

Net loss per share attributable to Mission Produce:
Basic		$	(0.12)	$	(0.19)
Diluted		$	(0.12)	$	(0.19)

See accompanying notes to unaudited condensed consolidated financial statements.

MISSION PRODUCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)


	Three Months Ended January 31,
(In millions)		2023		2022
Net loss		$	(10.6)	$	(13.4)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments		0.5		(0.3)
Total comprehensive loss, net of tax		(10.1)		(13.7)
Comprehensive loss attributable to noncontrolling interest		(1.8)		—
Comprehensive loss attributable to Mission Produce		$	(8.3)	$	(13.7)

See accompanying notes to unaudited condensed consolidated financial statements.

MISSION PRODUCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)


(In millions, except for shares)	Common stock			Additional paid-in capital		Accumulated other comprehensive loss		Retained earnings		Noncontrolling interest		Total equity
	Shares	Amount
Balance at October 31, 2021	70,631,525	$	0.1	$	225.6	$	(0.5)	$	309.0	$	—	$	534.2
Stock-based compensation	—	—		0.8		—		—		—		0.8

Net loss	—	—		—		—		(13.4)		—		(13.4)
Other comprehensive loss	—	—		—		(0.3)		—		—		(0.3)
Balance at January 31, 2022	70,631,525	$	0.1	$	226.4	$	(0.8)	$	295.6	$	—	$	521.3












Balance at October 31, 2022	70,669,535	$	0.1	$	229.3	$	(1.7)	$	274.4	$	20.8	$	522.9
Stock-based compensation	—	—		0.7		—		—		—		0.7
Exercise of stock options	8,500	—		—		—		—		—		—
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes	55,055	—		(0.4)		—		—		—		(0.4)
Contributions from noncontrolling interest holders	—	—		—		—		—		1.0		1.0
Net loss	—	—		—		—		(8.8)		(1.8)		(10.6)
Other comprehensive income	—	—		—		0.5		—		—		0.5
Balance at January 31, 2023

SEC Form 10-Q filed by Mission Produce Inc.