Mission Produce (NASDAQ:AVO) executives said the company opened fiscal 2026 with higher avocado volumes and expanded gross margin despite a sharp pullback in industry pricing, while also detailing integration planning and expected benefits from its pending acquisition of Calavo Growers.
Leadership transition highlighted alongside acquisition plans
Chief Executive Officer Steve Barnard opened the call by reiterating the leadership transition the company previously announced. Barnard said that at next month’s annual meeting, President and Chief Operating Officer John Pawlowski will step into the CEO role while Barnard becomes executive chairman. Barnard called it his last earnings call as CEO and said he expects to remain actively involved in the business.
First-quarter results: revenue down on pricing, but margin and EBITDA improved
Chief Financial Officer Bryan Giles reported fiscal first-quarter revenue of $278.6 million, down 17% year-over-year. He attributed the decline to a 30% decrease in pricing driven by higher industry supply, including greater availability of Mexican fruit due to higher yields in the current harvest season.
Management emphasized that volumes increased, with avocado volumes up 14% during the quarter. Despite lower revenue, gross profit was $31.6 million, consistent with the prior-year period, and gross margin increased 190 basis points to 11.3%.
Adjusted net income was $7.3 million, or $0.10 per diluted share, consistent with the prior year. Adjusted EBITDA rose 5% to $18.5 million. Giles said the EBITDA increase was driven by higher avocado volumes and improved per-unit margins in Marketing and Distribution, partially offset by higher per-unit fruit production costs in blueberries.
Giles also noted two items below the operating line that benefited results: interest expense declined by $0.5 million, or about 23%, and equity method income increased to $1.5 million from $0.8 million, which he attributed to strong performance from Mission’s joint venture investment in Henry Avocado Corporation.
SG&A expense increased $6.9 million, or 31%, but Giles said the increase was “driven entirely” by $7.0 million of transaction advisory costs related to the pending Calavo acquisition. Excluding those costs, SG&A was essentially flat year-over-year.
Segment performance driven by avocados; blueberries pressured by yields
In Marketing and Distribution, net sales decreased 21% to $234.8 million due to pricing, but segment-adjusted EBITDA increased 33% to $12.9 million. Pawlowski said this was a key example of the company’s model performing in a lower-price environment through volume growth, per-unit margin improvement, and deeper customer relationships.
International Farming sales increased 15% to $10.6 million, and segment-adjusted EBITDA rose 28% to $2.3 million. Management credited improved pack house utilization. Pawlowski said the company is working to increase year-round utilization in Peru by running its own blueberry volume and additional third-party fruit through its facilities, and noted that Mission recently modified a pack line there to support mangoes.
In blueberries, total sales increased 12% to $40.8 million, driven by higher average per-unit sales price and volume increases of 9% and 3%, respectively. However, segment-adjusted EBITDA declined to $3.3 million from $6.2 million. Giles said yield per hectare was lower than the prior year, raising per-unit production costs. Pawlowski characterized the yield pressure as part of a maturation process for newer acreage and said the company expects improvement as farms reach full productivity.
On the call’s Q&A, Pawlowski said the company’s farm changes, including a “double density” planting approach and subsequent spacing adjustments as plants mature, can temporarily reduce productivity. He said Mission expects improvement over “12–18 months,” rather than a near-term rebound.
Calavo acquisition: timing, synergy targets, and strategic rationale
Pawlowski said integration planning is underway and that the company has filed a preliminary proxy for the transaction, which is under SEC review. He also said Mission is advancing regulatory approvals in both the United States and Mexico, and that the deal is expected to close in fiscal third quarter, subject to closing conditions.
Management reiterated an expectation of at least $25 million of annualized cost synergies achievable within 18 months of closing, while also saying there may be additional upside. In response to an analyst question, Pawlowski said the $25 million estimate was built around core cost structure items, including the operating footprint and duplicative costs, and said Mission feels good about its ability to execute those cost-related synergies in an “expedited” manner. He added that there are additional opportunities around growth, the selling cycle, and customer engagement, but did not provide further specifics.
Pawlowski also highlighted strategic benefits he expects from the combination, including enhanced supply reliability, adding tomatoes and papayas into the distribution network to improve year-round facility utilization, and entry into prepared foods through Calavo’s guacamole and ready-to-eat offerings.
On leverage, Pawlowski said Mission believes the transaction creates a “clear path” to delever back to normalized levels within about two years of closing, and described this as a priority in the company’s capital allocation planning.
Outlook: second-quarter headwinds expected from pricing and seasonality
Looking ahead, Giles provided commentary on the fiscal second quarter. He said avocado industry volumes are expected to rise approximately 10% to 15% versus the prior-year period, driven by a larger Mexican crop. Pricing is expected to be lower year-over-year by about 30% to 35% compared with the $2 per pound average in the second quarter of fiscal 2025.
While higher volume is expected, Giles said Mission anticipates contraction in per-unit margins in the second quarter due to the lower pricing environment, particularly because sourcing is primarily from a single origin. He added that lower prices are delaying the start of the California harvest season by about a month as growers wait for improved market conditions, which is expected to reduce asset utilization at the company’s California packing facility and weigh on second-quarter profitability in Marketing and Distribution compared to last year.
For blueberries, management said harvest timing is accelerated relative to the prior year, leaving 10% to 15% of the Peruvian harvest to be sold through in fiscal second quarter. Giles said Mission expects volume reductions from its own farms due to earlier pruning and unfavorable weather, which is expected to lower revenue despite higher anticipated sales prices. He also said lower volumes would pressure International Farming results through lower pack house utilization, and that blueberry profitability would remain impacted by higher costs from lower projected yields per hectare as the season closes out.
“Taking this all together,” Giles said the company expects consolidated adjusted EBITDA in the second quarter to be below the prior-year level.
On capital allocation, management said it is developing a longer-term strategy that balances reinvestment, deleveraging, and returning capital to shareholders, with plans to share more detail at an investor day after the Calavo transaction closes this fall. Executives said that while reducing leverage remains a priority—particularly as debt increases with the acquisition—they also see returning capital to shareholders rising on the priority list and suggested those priorities may be pursued in parallel over time.
About Mission Produce (NASDAQ:AVO)
Mission Produce, Inc is a leading global supplier, packer and distributor of fresh avocados, serving retail, foodservice and industrial customers. The company manages a vertically integrated supply chain that spans sourcing, post-harvest handling, packing and ripening. Through proprietary ripening technologies and cold-chain logistics, Mission Produce delivers consistent quality and extended shelf life for its avocado offerings.
Founded in 1983 and headquartered in Oxnard, California, Mission Produce grew from a regional packing operation into a publicly traded company listed on the Nasdaq under the ticker AVO.
