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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 April 30, 2022
OR

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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareAVONASDAQ 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 filerAccelerated filer
Non-accelerated filerSmaller 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 May 31, 2022, the registrant had 70,655,841 shares of common stock at $0.001 par value outstanding.




MISSION PRODUCE, INC.
TABLE OF CONTENTS


FORM 10-Q
FISCAL SECOND QUARTER 2022
INDEX

Item 1.
Financial Statements
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures



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; the loss of one or more of our largest customers or a reduction in the level of purchases by customers; doing business internationally, including Mexican and Peruvian economic, political and/or societal conditions; fluctuations in market prices of avocados; increasing competition; inherent farming risks; variations in operating results due to the seasonality of the business; general economic conditions; the effects of the COVID-19 pandemic, including resulting economic conditions; inflationary pressures and increases in costs of commodities or other products used in our business; food safety events and recalls of our products; changes to USDA and FDA regulations, U.S. trade policy, and/or tariff and import/export regulations; restrictions due to health and safety laws; significant costs associated with compliance with environmental laws and regulations; acquisitions of other businesses; the ability of our infrastructure to handle our business needs; supply chain optimization failures or disruptions; disruption to the supply of reliable and cost-effective transportation; failure to recruit and retain key personnel and an adequate labor supply and lack of good employee relations; information system security risks, data protection breaches and systems integration issues; changes in privacy and/or information security laws, policies and/or contractual arrangements; material litigation or adverse governmental actions; failure to maintain or protect our brand; changes in tax rates or international tax legislation; risks associated with our indebtedness; and risks associated with Russia/Ukraine conflict.
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.
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, 2021 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, 2021 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








3


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.








4


PART I- FINANCIAL INFORMATION
Item 1.    Financial Statements
MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except for shares)April 30, 2022October 31, 2021
Assets 
Current Assets: 
Cash and cash equivalents$21.4 $84.5 
Restricted cash2.6 6.1 
Accounts receivable
Trade, net of allowances of $0.2 and $0.2, respectively
102.9 73.8 
Grower and fruit advances4.4 0.6 
Miscellaneous receivables10.7 12.3 
Inventory90.6 48.2 
Prepaid expenses and other current assets7.8 11.6 
Loans to equity method investees2.1 3.3 
Income taxes receivable12.6 6.7 
Total current assets255.1 247.1 
Property, plant and equipment, net438.2 424.2 
Operating lease right-of-use assets49.2 43.9 
Equity method investees52.8 52.7 
Loans to equity method investees1.9 1.8 
Deferred income tax assets, net7.7 7.6 
Goodwill76.4 76.4 
Other assets19.5 19.8 
Total assets$900.8 $873.5 
 
Liabilities and Shareholders' Equity
Liabilities
Accounts payable$26.3 $22.8 
Accrued expenses28.9 28.8 
Income taxes payable1.8 1.9 
Grower payables58.0 22.2 
Long-term debt—current portion8.8 8.8 
Operating leases—current portion3.9 3.6 
Finance leases—current portion1.1 1.1 
Total current liabilities128.8 89.2 
Long-term debt, net of current portion150.7 155.1 
Operating leases, net of current portion47.8 42.5 
Finance leases, net of current portion1.7 2.2 
Income taxes payable3.1 3.5 
Deferred income tax liabilities, net26.8 26.8 
Other long-term liabilities17.1 20.0 
Total liabilities376.0 339.3 
Commitments and contingencies (Note 5)
Shareholders' Equity
Common stock ($0.001 par value, 1,000,000,000 shares authorized; 70,654,041 and 70,631,525 shares issued and outstanding as of April 30, 2022 and October 31, 2021, respectively)
0.1 0.1 
Additional paid-in capital227.3 225.6 
Accumulated other comprehensive loss(0.6)(0.5)
Retained earnings298.0 309.0 
Total shareholders' equity524.8 534.2 
Total liabilities and shareholders' equity$900.8 $873.5 
See accompanying notes to unaudited condensed consolidated financial statements.








5


MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions, except for per share amounts)2022202120222021
Net sales$278.1 $234.7 $494.7 $407.9 
Cost of sales258.3 207.6 474.4 358.1 
Gross profit19.8 27.1 20.3 49.8 
Selling, general and administrative expenses18.7 16.3 37.4 30.9 
Operating income (loss)1.1 10.8 (17.1)18.9 
Interest expense(1.1)(0.8)(2.0)(1.7)
Equity method income (loss)0.3 (0.2)1.9 2.1 
Other income (expense)2.9 (0.3)4.5 (0.3)
Income (loss) before income taxes3.2 9.5 (12.7)19.0 
Provision (benefit) for income taxes0.8 2.1 (1.7)9.4 
Net income (loss)$2.4 $7.4 $(11.0)$9.6 
Net income (loss) per share:
Basic$0.03 $0.10 $(0.16)$0.14 
Diluted$0.03 $0.10 $(0.16)$0.14 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments0.2 (0.2)(0.1)0.3 
Comprehensive income (loss)$2.6 $7.2 $(11.1)$9.9 
See accompanying notes to unaudited condensed consolidated financial statements.









6


MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(In millions, except for shares)
Common stock
Additional paid-in capitalNotes receivable from shareholdersAccumulated other comprehensive lossRetained earningsTotal shareholders' equity
Shares
Amount
Balance at October 31, 202070,550,922 $0.1 $222.8 $(0.1)$(0.5)$251.2 $473.5 
Stock-based compensation— — 0.8 — — — 0.8 
Repayment of stock option notes receivable— — — 0.1 — — 0.1 
Net income— — — — — 2.2 2.2 
Other comprehensive income— — — — 0.5 — 0.5 
Balance at January 31, 202170,550,922 $0.1 $223.6 $ $ $253.4 $477.1 
Issuance of common stock for equity awards50,000 — — — — —  
Stock-based compensation— — 0.7 — — — 0.7 
Net income— — — — — 7.4 7.4 
Other comprehensive loss— — — — (0.2)— (0.2)
Balance at April 30, 202170,600,922 $0.1 $224.3 $ $(0.2)$260.8 $485.0 
Balance at October 31, 202170,631,525 $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, 202270,631,525 $0.1 $226.4 $ $(0.8)$295.6 $521.3 
Stock-based compensation— — 0.9 — — — 0.9 
Issuance of common stock for equity awards22,516 — — — — —  
Net income— — — — — 2.4 2.4 
Other comprehensive income— — — — 0.2 — 0.2 
Balance at April 30, 202270,654,041 $0.1 $227.3 $ $(0.6)$298.0 $524.8 
See accompanying notes to unaudited condensed consolidated financial statements.
 








7


MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
Six Months Ended April 30,
(In millions)20222021
Operating Activities 
Net (loss) income$(11.0)$9.6 
Adjustments to reconcile net (loss) income to net cash used in operating activities
Provision for losses on accounts receivable0.1 0.1 
Depreciation and amortization10.1 7.6 
Amortization of debt issuance costs0.2 0.2 
Noncash lease expense2.5 2.0 
(1)
Equity method income(1.9)(2.1)
Stock-based compensation1.7 1.5 
Dividends received from equity method investees2.2  
Losses (gains) on asset impairment, disposals and sales, net of insurance recoveries 0.3 
Deferred income taxes(0.1)5.0 
Other 0.3 
Unrealized gains on derivative financial instruments(3.0)(0.3)
Effect on cash of changes in operating assets and liabilities:
Trade accounts receivable(29.6)(28.2)
Grower fruit advances(3.7)(1.7)
Miscellaneous receivables1.6 1.1 
Inventory(40.7)(27.5)
Prepaid expenses and other current assets0.9 (0.1)
(1)
Income taxes receivable(5.8)(3.5)
Other assets(0.1)(4.7)
Accounts payable and accrued expenses7.3 10.5 
Income taxes payable(0.5)(0.9)
Grower payables36.4 12.5 
Operating lease liabilities(2.1)(1.2)
(1)
Other long-term liabilities(1.5)(0.7)
(1)
Net cash used in operating activities$(37.0)$(20.2)
Investing Activities
Purchases of property and equipment(29.1)(46.8)
Proceeds from sale of property, plant and equipment2.9 2.3 
Investment in equity method investees(0.3)(0.2)
Loans to equity method investees (1.5)
Loan repayments from equity method investees1.0 1.5 
Other(0.3)(0.3)
Net cash used in investing activities$(25.8)$(45.0)
Financing Activities
Borrowings on revolving credit facility20.0  
Payments on revolving credit facility(20.0) 
Principal payments on long-term debt obligations(4.4)(3.9)
Principal payments on finance lease obligations(0.6)(0.6)
Net cash used in financing activities$(5.0)$(4.5)
Effect of exchange rate changes on cash(0.4)0.2 
Net decrease in cash, cash equivalents and restricted cash(68.2)(69.5)
Cash, cash equivalents and restricted cash, beginning of period92.2 127.0 
Cash, cash equivalents and restricted cash, end of period$24.0 $57.5 
Summary of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
Cash and cash equivalents$21.4 $54.2 
Restricted cash2.6 1.7 
Restricted cash included in other assets 1.6 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$24.0 $57.5 
(1)Prior period amounts differ from those previously reported due to the adoption of ASC 842, Leases, effective November 1, 2020, which was first presented in our annual report on Form-10K for the year ended October 31, 2021.

See accompanying notes to unaudited condensed consolidated financial statements.








8

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.     General
Business
Mission Produce, Inc. together with its consolidated subsidiaries (“Mission,” “the Company,” “we,” “us” or “our”), is a global leader in the avocado industry. The Company’s expertise lies in the farming, packaging, marketing and distribution of avocados to food retailers, distributors and produce wholesalers worldwide. The Company procures avocados principally from California, Mexico and Peru. Through our various operating facilities, we grow, sort, pack, bag and ripen avocados for distribution to domestic and international markets. We report our results of operations in two operating segments: Marketing and Distribution and International Farming (see Note 10).
Basis of presentation and consolidation
The unaudited interim condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and include the Company’s consolidated domestic and international subsidiaries. Certain information and disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s Annual Report for the year ended October 31, 2021. In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair statement have been included in the unaudited condensed consolidated financial statements. Interim results of operations are not necessarily indicative of future results, including results that may be expected for the twelve months ended October 31, 2022.
Recently issued accounting standards
In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, Financial Instruments–Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which among other things, requires that entities disclose current-period gross write-offs by year of origination for financing receivables. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The impact of ASU 2022-02 is not expected to be material on our financial condition, results of operations and cash flows.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform, and a subsequent update following, which provides optional expedients and exceptions for applying GAAP principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued as a result of reference rate reform. The optional expedients in this ASU are available for adoption as of March 12, 2020 through December 31, 2022. The Company is evaluating the impact of electing the adoption of this ASU on our financial condition, results of operations and cash flows.

2.     Inventory
Major classes of inventory were as follows:

(In millions)April 30, 2022October 31, 2021
Finished goods$43.7 $22.5 
Crop growing costs30.8 11.9 
Packaging and supplies16.1 13.8 
Inventory$90.6 $48.2 









9

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3.    Details of Certain Account Balances
Accrued expenses

(In millions)April 30, 2022October 31, 2021
Employee-related$12.1 $14.6 
Freight6.7 3.9 
Interest rate swaps 2.1 
Construction-in-progress0.4 0.2 
Outside fruit purchase2.9 2.2 
VAT and local taxes payable0.5 1.0 
Legal settlement0.8 0.8 
Other5.5 4.0 
Accrued expenses$28.9 $28.8 
Other income (expense)

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2022202120222021
Gains on derivative financial instruments$2.2 $0.3 $3.0 $0.3 
Foreign currency transaction (loss) gain(0.4)(1.2)0.1 (1.8)
Interest income1.1 0.9 1.2 1.1 
Other (0.3)0.2 0.1 
Other income (expense)$2.9 $(0.3)$4.5 $(0.3)
4.     Debt
Credit facility
Long-term debt under our credit facility with Bank of America (“BoA”) Merrill Lynch consisted of the following:

(In millions)April 30, 2022October 31, 2021
Revolving line of credit. The interest rate is variable, based on LIBOR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2022 and October 31, 2021, the interest rate was 2.45% and 1.84%, respectively. Interest is payable monthly and principal is due in full in October 2023.
$ $ 
Senior term loan (A-1). The interest rate is variable, based on LIBOR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2022 and October 31, 2021, the interest rate was 2.76% and 1.84%, respectively. Interest is payable monthly, principal is payable quarterly and due in full in October 2023.
86.3 90.0 
Senior term loan (A-2). The interest rate is variable, based on LIBOR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2022 and October 31, 2021, the interest rate was 3.26% and 2.34% respectively. Interest is payable monthly, principal is payable quarterly and due in full in October 2025.
72.4 72.8 
Note payable to BoA. Payable in monthly installments including interest at a rate of 3.96% as of both April 30, 2022 and October 31, 2021. Principal is due July 2024.
1.2 1.5 
Total long-term debt159.9 164.3 
Less debt issuance costs(0.4)(0.4)
Long-term debt, net of debt issuance costs159.5 163.9 
Less current portion of long-term debt(8.8)(8.8)
Long-term debt, net of current portion$150.7 $155.1 
The credit facility requires the Company to comply with financial and other covenants, including limitations on investments, capital expenditures, dividend payments, amounts and types of liens and indebtedness, and material asset sales. The Company is also required to maintain certain leverage and fixed charge coverage ratios. As of April 30, 2022, the Company was in compliance with all covenants of the credit facility.
Interest rate swaps
The Company has four separate interest rate swaps with a total notional amount of $100 million to hedge changes in the variable interest rate on $100 million of principal value of the Company’s term loans. We account for the interest rate swaps in accordance with ASC 815, Derivatives








10

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
and Hedging, as amended, which requires the recognition of all derivative instruments as either assets or liabilities in the consolidated balance sheets and measurement of those instruments at fair value. The Company has not designated the interest rate swaps as cash flow hedges, and as a result under the accounting guidance, changes in the fair value of the interest rate swaps have been recorded in other income (expense) in the condensed consolidated statements of comprehensive income (loss) and changes in the liability are presented in net cash used in operating activities in the condensed consolidated statements of cash flow. Refer to Note 7 for more details.

5.      Commitments and Contingencies
Litigation
The Company is involved from time to time in claims, proceedings, and litigation, including the following:
On April 23, 2020, former Mission Produce, Inc. employees filed a class action lawsuit in the Superior Court of the State of California for the County of Los Angeles against us alleging violation of certain wage and labor laws in California, including failure to pay all overtime wages, minimum wage violations, and meal and rest period violations, among others. Additionally, on June 10, 2020, former Mission Produce, Inc. employees filed a class action lawsuit in the Superior Court of the State of California for the County of Ventura against us alleging similar violations of certain wage and labor laws. The plaintiffs in both cases seek damages primarily consisting of class certification and payment of wages earned and owed, plus other consequential and special damages. While the Company believes that it did not violate any wage or labor laws, it nevertheless decided to settle these class action lawsuits. In May 2021, the plaintiffs in both class action lawsuits and the Company agreed preliminarily to a comprehensive settlement to resolve both class action cases for a total of $0.8 million, which the Company recorded as a loss contingency in selling, general and administrative expenses in the condensed consolidated statements of comprehensive income during the three months ended April 30, 2021. This preliminary settlement is subject to approval by the applicable courts.
The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and if one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that period could be materially adversely affected.
6.     Income Taxes
The income tax expense recorded for the three and six months ended April 30, 2022 and 2021, differs from the income taxes expected at the U.S. federal statutory tax rate of 21.0%, primarily due to income attributable to foreign jurisdictions which is taxed at different rates, changes in foreign exchange rates taxable in foreign jurisdictions, state taxes, nondeductible tax items, changes in uncertain tax positions (“UTP”), and changes in tax law affecting the rate in future years.
As of April 30, 2022, the Company had $14.0 million in UTP accrued, of which $7.8 million relates to interest and penalties, inclusive of inflationary adjustments. The period for assessing interest and penalties has expired. However, the Company continues to record certain statutory adjustments related to inflation. Changes in the UTP related to changes in foreign exchange rates during the period are included in other income (expense) in the condensed consolidated statements of comprehensive income (loss).
Additionally, the Company recorded a discrete tax expense of $5.1 million during the three months ended January 31, 2021, related to the remeasurement of our deferred tax liabilities in Peru due to the enactment of tax rate changes for future years. On December 30, 2020, Peru enacted certain tax law changes effective January 1, 2021 that repealed existing tax laws which provided benefits to agribusiness entities. The new law will subject the Company to higher Peruvian tax rates than the current rate of 15% as follows: 20% for calendar years 2023 to 2024, 25% for calendar years 2025 to 2027, and 29.5% thereafter.









11

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7.     Fair Value Measurements
Financial assets and liabilities measured and recorded at fair value on a recurring basis included in the condensed consolidated balance sheets were as follows:

 April 30, 2022October 31, 2021
(In millions)
Total
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Quoted Prices
in Active
Markets 
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Mutual funds$1.2 $1.2 $ $ $1.2 $1.2 $ $ 
Interest rate swap0.6  0.6      
Liabilities
Interest rate swap    3.5  3.5  
Our mutual fund investments relate to our deferred compensation plan, which are held in a Rabbi trust. The funds are measured at quoted prices in active markets, which is equivalent to their fair value.
The fair value of interest rate swaps is determined using widely accepted valuation techniques, including discounted cash flow analysis, on the expected cash flows of each derivative. The analysis reflects the contractual terms of the swaps, including the period to maturity, and uses observable market-based inputs, including interest rate curves (“significant other observable inputs”). The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default. The Company has concluded, as of April 30, 2022 and October 31, 2021, that the fair value associated with the “significant unobservable inputs” relating to the Company’s risk of non-performance was insignificant to the overall fair value of the interest rate swap agreements and, as a result, the Company has determined that the relevant inputs for purposes of calculating the fair value of the interest rate swap agreements, in their entirety, were based upon “significant other observable inputs”. The assets or liabilities associated with the interest rate swaps have been included in prepaid and other current assets and other assets or accrued expenses and other long-term liabilities, respectively, in the condensed consolidated balance sheets and gains and losses for the interest rate swaps have been included in other income (expense) in the condensed consolidated statements of comprehensive income (loss).
8.    Earnings Per Share
Three Months Ended
April 30,
Six Months Ended
April 30,
2022202120222021
Numerator:
Net income (loss) available to shareholders (in millions)
$2.4 $7.4 $(11.0)$9.6 
Denominator:
Weighted average shares of common stock outstanding, used in computing basic earnings per share70,636,331 70,560,287 70,633,888 70,555,528 
Effect of dilutive stock options27,174 605,469  335,095 
Effect of dilutive RSUs29,918 41,703  36,961 
Weighted average shares of common stock outstanding, used in computing diluted earnings per share70,693,423 71,207,459 70,633,888 70,927,584 
Earnings per share
Basic$0.03 $0.10 $(0.16)$0.14 
Diluted$0.03 $0.10 $(0.16)$0.14 
Equity awards representing shares of common stock outstanding that were excluded in the computation of diluted earnings per share because their effect would have been anti-dilutive, were as follows:

Three Months Ended
April 30,
Six Months Ended
April 30,
2022202120222021
Anti-dilutive stock options2,033,888 141,392 2,184,694 510,000 
Anti-dilutive RSUs213,287 3,480 236,890 5,782 









12

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
9.     Related Party Transactions
Transactions with related parties included in the condensed consolidated financial statements were as follows:
Condensed Consolidated Balance Sheets
April 30, 2022October 31, 2021
(In millions)
Accounts receivable
Loans to equity method investees
Accounts payable & accrued expenses
Accounts receivable
Loans to equity method investees
Accounts payable & accrued expenses
Equity method investees:
Henry Avocado$ $ $0.2 $ $ $ 
Mr. Avocado0.2   1.3   
Moruga(1)
 1.9  3.9 3.0  
Copaltas(2)
 2.1   2.1  
Other:
Directors/Officers(3)
0.1  0.8 0.1   
Employees(4)
  0.4   0.2 
Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended
April 30, 2022
Six Months Ended
April 30, 2022
(In millions)Net salesCost of salesSelling, general and administrative expensesOther income (expense)
Net sales
Cost of sales
Selling, general and administrative expenses
Other income
Equity method investees:
Henry Avocado$ $0.3 $ $ $ $0.5 $ $ 
Mr. Avocado0.1    0.5    
Moruga(1)
0.7    4.1   0.4 
Copaltas(2)
   0.1   0.1 
Other:
Directors/Officers(3)
0.3 2.2   0.7 2.3   
Employees(4)
 2.4    4.1   
Three Months Ended
April 30, 2021
Six Months Ended
April 30, 2021
Equity method investees:    
Mr. Avocado$0.8 $ $ $ $1.9 $ $ $ 
Moruga(1)
0.1   0.1 2.6   0.1 
Other:
Directors/Officers(3)
1.0 1.4 0.1  1.6 1.4 0.1  
Employees(4)
 3.0    6.0   
(1)The Company has provided loans to Moruga Inc. S.A.C. to support growth and expansion projects, bearing interest at 6.5%, due December 31, 2023. The Company also provides packing and cooling services for blueberries and leases owned land to Blueberries Peru S.A.C., a wholly owned subsidiary of Moruga, in Peru.
(2)The Company has provided loans to Copaltas to support growth and expansion projects, bearing interest at 6.66%. The notes outstanding as of April 30, 2022 have an amended due date of August 31, 2022.
(3)The Company purchases from and sells avocados to, and provides logistics services to, a small number of entities having full or partial ownership by some of our directors/officers. These transactions are made under substantially similar terms as with other growers and customers. The Company had a consulting agreement with a director to advise on business operations, as well as to analyze opportunities for fresh avocado farming and packing facilities in South and Central America, that was terminated in June 2021.
(4)The Company utilizes a small number of transportation vendors in Mexico having full or partial ownership by some of our employees. The Company also purchases avocados from a small number of entities having full or partial ownership by some employees. These transactions are made under substantially similar terms as with other transportation carriers and growers.
10.     Segment Information
We have two operating segments which are also reporting segments. Our reporting segments are presented based on how information is used by our CEO, who is the chief operating decision maker, to measure performance and allocate resources. These reporting segments are Marketing and Distribution and International Farming. Our Marketing and Distribution reporting segment sources fruit from growers and then distributes the fruit through our global distribution network. Our International Farming segment owns and operates orchards from which substantially all fruit produced is sold to our Marketing and Distribution segment. The International Farming segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees, and it also earns service revenues for packing and processing for producers of other crops during the avocado off-harvest season. The International Farming segment is principally located in Peru, with smaller operations emerging in other areas of Latin America.
The CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”). We believe that adjusted EBITDA by segment provides useful information for analyzing the underlying business results as well as allowing investors a means to evaluate the financial results of each reportable








13

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
segment in relation to the Company as a whole. These measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures.
Adjusted EBITDA refers to net income (loss), before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, other income (expense), and income (loss) from equity method investees, further adjusted by asset impairment and disposals, net of insurance recoveries, farming costs for nonproductive orchards (which represents land lease costs), noncapitalizable ERP implementation costs, transaction costs, material legal settlements, and any special, non-recurring, or one-time items such as impairments that are excluded from the results the CEO reviews uses to assess segment performance and results.
Net sales from each of our reportable segments were as follows:
Marketing and DistributionInternational FarmingTotalMarketing and DistributionInternational FarmingTotal
Three Months Ended
April 30,
(In millions)20222021
Third party sales$273.7 $4.4 $278.1 $232.4 $2.3 $234.7 
Affiliated sales 2.6 2.6  2.0 2.0 
Total segment sales273.7 7.0 280.7 232.4 4.3 236.7 
Intercompany eliminations (2.6)(2.6) (2.0)(2.0)
Total net sales$273.7 $4.4 $278.1 $232.4 $2.3 $234.7 
Six Months Ended
April 30,
20222021
Third party sales$486.0 $8.7 $494.7 $402.0 $5.9 $407.9 
Affiliated sales 1.6 1.6  2.2 2.2 
Total segment sales486.0 10.3 496.3 402.0 8.1 410.1 
Intercompany eliminations (1.6)(1.6) (2.2)(2.2)
Total net sales$486.0 $8.7 $494.7 $402.0 $5.9 $407.9 
Adjusted EBITDA for each of our reporting segments was as follows:
Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2022202120222021
Marketing and Distribution adjusted EBITDA$11.7 $16.2 $4.0 $29.9 
International Farming adjusted EBITDA(2.5)0.1 (5.2)(1.1)
Total reportable segment adjusted EBITDA9.2 16.3 (1.2)28.8 
Net income (loss)2.4 7.4 (11.0)9.6 
Interest expense1.1 0.8 2.0 1.7 
Provision (benefit) for income taxes0.8