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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, 2024
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 June 1, 2024, the registrant had 70,909,730 shares of common stock at $0.001 par value outstanding.





MISSION PRODUCE, INC.
TABLE OF CONTENTS

FORM 10-Q
FISCAL SECOND QUARTER 2024


Condensed Consolidated Statements of Income (Loss) (Unaudited)
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
Item 3.
Defaults Upon Senior Securities



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 fruit, either through purchasing or growing; fluctuations in the market price of fruit; increasing competition; risks associated with doing business internationally, including Mexican and Peruvian economic, political and/or societal conditions; inflationary pressures; establishment of sales channels and geographic markets; 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, including climate change; 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; 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; risks associated with global conflicts; and inability to accurately forecast future performance.
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, and directors 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, 2023 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, 2023 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








3


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.








4


PART I- FINANCIAL INFORMATION
Item 1.    Financial Statements
MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except for shares)April 30, 2024October 31, 2023
Assets 
Current Assets: 
Cash and cash equivalents$46.2 $42.9 
Restricted cash1.0 0.3 
Accounts receivable
Trade, net of allowances of $1.3 and $0.9, respectively
99.5 74.1 
Grower and fruit advances3.2 0.9 
Other12.9 12.4 
Inventory94.9 70.8 
Prepaid expenses and other current assets8.2 9.1 
Income taxes receivable10.4 9.6 
Total current assets276.3 220.1 
Property, plant and equipment, net523.1 523.2 
Operating lease right-of-use assets70.1 72.4 
Equity method investees29.6 31.0 
Deferred income tax assets, net8.8 8.5 
Goodwill39.4 39.4 
Intangible asset, net 0.5 
Other assets19.6 19.7 
Total assets$966.9 $914.8 
Liabilities and Equity
Liabilities
Accounts payable$26.4 $27.2 
Accrued expenses32.6 26.4 
Income taxes payable1.7 1.6 
Grower payables49.2 26.4 
Short-term borrowings 2.8 
Notes payable0.5  
Loans from noncontrolling interest holders—current portion0.2 0.5 
Long-term debt—current portion3.1 3.4 
Operating leases—current portion6.1 6.6 
Finance leases—current portion1.9 2.6 
Total current liabilities121.7 97.5 
Long-term debt, net of current portion167.1 148.6 
Loans from noncontrolling interest holders, net of current portion1.8 2.5 
Operating leases, net of current portion69.1 71.0 
Finance leases, net of current portion19.9 14.7 
Income taxes payable1.3 2.3 
Deferred income tax liabilities, net22.7 23.5 
Other long-term liabilities23.3 26.4 
Total liabilities426.9 386.5 
Commitments and contingencies (Note 7)
Shareholders’ Equity
Common stock ($0.001 par value, 1,000,000,000 shares authorized; 70,909,467 and 70,728,404 shares issued and outstanding as of April 30, 2024 and October 31, 2023, respectively)
0.1 0.1 
Additional paid-in capital235.6 233.4 
Accumulated other comprehensive loss(0.4)(0.9)
Retained earnings278.0 271.0 
Mission Produce shareholders' equity513.3 503.6 
Noncontrolling interest26.7 24.7 
Total equity540.0 528.3 
Total liabilities and equity$966.9 $914.8 
See accompanying notes to unaudited condensed consolidated financial statements.








5


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


Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions, except for per share amounts)2024202320242023
Net sales$297.6 $221.1 $556.3 $434.6 
Cost of sales266.6 203.0 496.6 407.5 
Gross profit31.0 18.1 59.7 27.1 
Selling, general and administrative expenses18.7 19.3 39.4 38.4 
Operating income (loss)12.3 (1.2)20.3 (11.3)
Interest expense(3.4)(2.7)(6.7)(5.1)
Equity method income0.5 0.4 0.9 1.4 
Other income (expense), net1.0 0.6  (0.2)
Income (loss) before income taxes10.4 (2.9)14.5 (15.2)
Provision for income taxes3.4 1.8 5.5 0.1 
Net income (loss)$7.0 $(4.7)$9.0 $(15.3)
Less:
   Net (loss) income attributable to noncontrolling interest
 (0.1)2.0 (1.9)
Net loss attributable to Mission Produce$7.0 $(4.6)$7.0 $(13.4)
Net loss per share attributable to Mission Produce:
Basic$0.10 $(0.07)$0.10 $(0.19)
Diluted$0.10 $(0.07)$0.10 $(0.19)
See accompanying notes to unaudited condensed consolidated financial statements.









6


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


Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Net income (loss)$7.0 $(4.7)$9.0 $(15.3)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments(0.3)0.3 0.5 0.8 
Total comprehensive income (loss), net of tax6.7 (4.4)9.5 (14.5)
Less:
Comprehensive income (loss) attributable to noncontrolling interest
 (0.1)2.0 (1.9)
Comprehensive income (loss)$6.7 $(4.3)$7.5 $(12.6)
See accompanying notes to unaudited condensed consolidated financial statements.









7


MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(In millions, except for shares)
Common stock
Additional paid-in capitalAccumulated other comprehensive lossRetained earningsNoncontrolling interestTotal equity
Shares
Amount
Balance at October 31, 202270,669,535 $0.1 $229.3 $(1.7)$274.4 $20.8 $522.9 
Stock-based compensation— — 0.7 — — — 0.7 
Exercise of stock options8,500 — — — — — — 
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes55,055 — (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, 202370,733,090 $0.1 $229.6 $(1.2)$265.6 $20.0 $514.1 
Stock-based compensation— — 1.3 — — — 1.3 
Exercise of stock options5,000 — — — — — — 
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes47,592 — — — — — — 
Contributions from noncontrolling interest holders— — — — — 0.4 0.4 
Net loss— — — — (4.6)(0.1)(4.7)
Other comprehensive income— — — 0.3 — — 0.3 
Balance at April 30, 202370,785,682 $0.1 $230.9 $(0.9)$261.0 $20.3 $511.4 
Balance at October 31, 202370,728,404 $0.1 $233.4 $(0.9)$271.0 $24.7 $528.3 
Stock-based compensation— — 1.4 — — — 1.4 
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes112,899 — (0.7)— — — (0.7)
Net income— — — — — 2.0 2.0 
Other comprehensive income— — — 0.8 — — 0.8 
Balance at January 31, 202470,841,303 $0.1 $234.1 $(0.1)$271.0 $26.7 $531.8 
Stock-based compensation— — 1.6 — — — 1.6 
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes68,164 — (0.1)— — — (0.1)
Net income— — — — 7.0 — 7.0 
Other comprehensive income— — — (0.3)— — (0.3)
Balance at April 30, 202470,909,467 $0.1 $235.6 $(0.4)$278.0 $26.7 $540.0 
See accompanying notes to unaudited condensed consolidated financial statements.
 








8


MISSION PRODUCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

Six Months Ended
April 30,
(In millions)20242023
Operating Activities 
Net income (loss)$9.0 $(15.3)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization18.6 15.2 
Amortization of debt issuance costs0.1 0.1 
Equity method income(0.9)(1.4)
Noncash lease expense3.1 2.9 
Stock-based compensation3.0 2.0 
Dividends received from equity method investees3.2 2.7 
Losses on asset impairment, disposals and sales, net of insurance recoveries0.4 0.8 
Deferred income taxes(1.0)(0.9)
Other1.1  
Effect on cash of changes in operating assets and liabilities:
Trade accounts receivable(25.2)(15.8)
Grower fruit advances(2.3)(2.5)
Other receivables(0.5)3.2 
Inventory(20.8)(21.1)
Prepaid expenses and other current assets0.9 1.2 
Income taxes receivable(0.9)(4.4)
Other assets0.3 1.4 
Accounts payable and accrued expenses11.2 (2.0)
Income taxes payable(0.9)(1.0)
Grower payables22.5 8.2 
Operating lease liabilities(3.0)(2.3)
Other long-term liabilities(5.0)2.9 
Net cash provided by (used in) operating activities$12.9 $(26.1)
Investing Activities
Purchases of property, plant and equipment(17.7)(34.9)
Proceeds from sale of property, plant and equipment 0.1 
Investment in equity method investees(0.6)(0.3)
Purchase of other investment (2.3)
Other (0.1)
Net cash used in investing activities$(18.3)$(37.5)
Financing Activities
Borrowings on revolving credit facility40.0 135.0 
Payments on revolving credit facility(20.0)(100.0)
Repayment of short-term borrowings(2.8)(2.5)
Principal payments on long-term debt obligations(1.8)(1.8)
Principal payments on finance lease obligations(2.6)(2.0)
Payments for long-term supplier financing(0.3) 
Payments to noncontrolling interest holder for long-term supply financing(1.9) 
Principal payments on loans due to noncontrolling interest holder(0.5) 
Payments of minimum withholding taxes on net share settlement of equity awards(0.8)(0.4)
Proceeds from loan from noncontrolling interest holder 2.4 
Equity contributions from noncontrolling interest holders 1.4 
Net cash provided by financing activities$9.3 $32.1 
Effect of exchange rate changes on cash0.1 (0.2)
Net increase (decrease) in cash, cash equivalents and restricted cash4.0 (31.7)
Cash, cash equivalents and restricted cash, beginning of period43.2 53.9 
Cash, cash equivalents and restricted cash, end of period$47.2 $22.2 
Summary of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
Cash and cash equivalents$46.2 $20.9 








9


Six Months Ended
April 30,
(In millions)20242023
Restricted cash1.0 1.3 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$47.2 $22.2 
See accompanying notes to unaudited condensed consolidated financial statements.








10

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 and a small amount of other fruits for distribution to domestic and international markets. We report our results of operations in three operating segments: Marketing and Distribution, International Farming and Blueberries (see Note 12).
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 and variable interest entity (“VIE”) for which we are the primary beneficiary and have a controlling interest. 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, 2023. 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, 2024.
Recently issued accounting and disclosure standards
In March 2024, the Securities and Exchange Commission ("SEC") adopted final climate-related disclosure rules that will require registrants to disclose (subject to materiality conditions): climate-related risks, material direct greenhouse gas emissions, and the effects of severe weather events and other natural conditions. Adoption is required on a phase-in basis with respect to annual periods beginning in calendar year 2025 (the Company's fiscal year 2026). In April 2024, the SEC issued a stay on the rules, pending the completion of judicial review of the U.S. Court of Appeals of the Eighth Circuit. We are currently monitoring the status of the judicial review and we are evaluating the impact of the rules on our financial disclosures.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures. The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. We are currently evaluating the impact of adoption on our financial disclosures.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures. The ASU requires that an entity disclose significant segment expenses impacting profit and loss that are regularly provided to the chief operating decision maker. The update is required to be applied retrospectively to prior periods presented, based on the significant segment expense categories identified and disclosed in the period of adoption. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of adoption on our financial disclosures.
2.     Inventory
Major classes of inventory were as follows:

(In millions)April 30, 2024October 31, 2023
Finished goods$38.4 $29.5 
Crop growing costs38.3 21.5 
Packaging and supplies18.2 19.8 
Inventory$94.9 $70.8 








11

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3.    Goodwill and Intangible Asset, net
Goodwill

(In millions)International FarmingBlueberriesTotal
Goodwill as of April 30, 2024 and October 31, 2023
$26.9 $12.5 $39.4 
The carrying amounts of goodwill as of April 30, 2024 and October 31, 2023 were net of accumulated impairment losses of $49.5 million, attributable to the International Farming segment. Goodwill is tested for impairment on an annual basis in the fourth quarter, or when an event or changes in circumstances indicate that its carrying value may not be recoverable.
Intangible asset, net
(In millions)April 30, 2024October 31, 2023
Intangible asset, gross$2.8 $2.8 
Accumulated amortization(2.8)(2.3)
Intangible asset, net$ $0.5 
The intangible asset, net consisted of a distributor relationship entirely attributed to the business combination with Moruga on May 1, 2022. The intangible asset had an amortizable life of 2 years, and was recognized in selling, general and administrative expenses coinciding with the timing of the estimated revenues. Amortization expense was $0.2 million and zero for the three months ended April 30, 2024 and 2023, respectively, and $0.5 million and $1.2 million for the six months ended April 30, 2024 and 2023, respectively.
4.    Details of Certain Account Balances
Accrued expenses

(In millions)April 30, 2024October 31, 2023
Employee-related$14.2 $12.8 
Freight5.0 4.5 
Outside fruit purchase5.9 2.7 
VAT and local taxes payable 0.3 
Legal settlement1.5 0.8 
Other6.0 5.3 
Accrued expenses$32.6 $26.4 
Other long-term liabilities

(In millions)April 30, 2024October 31, 2023
Uncertain tax positions(1)
$20.9 $19.4 
Employee-related1.8 1.4 
Trade payables to noncontrolling interest holders 4.5 
Other0.6 1.1 
Other long-term liabilities$23.3 $26.4 
(1)Includes uncertain tax positions related to both income taxes and other statutory tax reserves, plus related penalties and interest.









12

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other income (expense), net

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Gains on derivative financial instruments$ $0.1 $ $ 
Foreign currency transaction gain (loss)0.1 (0.4)(1.3)(1.3)
Interest income1.0 0.9 1.3 1.1 
Other(0.1)   
Other income (expense), net$1.0 $0.6 $ $(0.2)

Other amounts attributable to noncontrolling interest holders
Amounts included in trade accounts receivable due from noncontrolling interest holders were $0.1 million and $5.7 million as of April 30, 2024 and October 31, 2023, respectively. Amounts included in trade accounts payable due to noncontrolling interest holders were $4.7 million and $3.2 million as of April 30, 2024 and October 31, 2023, respectively.
5.      Variable Interest Entity
Assets of our variable interest in Moruga may only be used to settle its own liabilities and creditors of Moruga only have recourse for the liabilities of Moruga. A summary of these balances, which are wholly included in our condensed consolidated balance sheets, is as follows:

(In millions)April 30, 2024October 31, 2023
Current assets$18.7 $30.0 
Long-term assets70.7 69.9 
Current liabilities10.4 17.0 
Long-term liabilities24.9 25.4 
6.     Debt
Credit facility
Long-term debt under our syndicated credit facility with Bank of America (“BoA”) Merrill Lynch consisted of the following:

(In millions)April 30, 2024October 31, 2023
Revolving line of credit. The interest rate is variable, based on SOFR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2024 and October 31, 2023, the interest rate was 7.42% and 7.42%, respectively. Interest is payable monthly and principal is due in full in October 2027
$75.0 $55.0 
Senior term loan (A-1). The interest rate is variable, based on SOFR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2024 and October 31, 2023, the interest rate was 7.42% and 7.42%, respectively. Interest is payable monthly, principal is payable quarterly and due in full in October 2027.
46.3 47.5 
Senior term loan (A-2). The interest rate is variable, based on SOFR plus a spread that varies with the Company’s leverage ratio. As of April 30, 2024 and October 31, 2023, the interest rate was 7.67% and 7.67% respectively. Interest is payable monthly, principal is payable quarterly and due in full in October 2029.
49.2 49.5 
Note payable to BoA. Payable in monthly installments including interest at a rate of 3.96% as of both April 30, 2024 and October 31, 2023. Principal is due July 2024.
0.1 0.4 
Total long-term debt170.6 152.4 
Less debt issuance costs(0.4)(0.4)
Long-term debt, net of debt issuance costs170.2 152.0 
Less current portion of long-term debt(3.1)(3.4)
Long-term debt, net of current portion$167.1 $148.6 








13

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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, 2024, the Company was in compliance with all financial covenants of the credit facility.
Other
Certain of our consolidated subsidiaries may also enter into short-term bank borrowings from time to time. As of April 30, 2024,zero short-term borrowings were outstanding and as of October 31, 2023, $2.8 million were outstanding with a weighted average variable interest rate of 10.46%. Our Blueberries business also obtains loans from shareholders from time to time, which accrue interest at rates ranging from 5.0 to 6.5%. Amounts outstanding as of April 30, 2024 are expected to be repaid by the end of fiscal 2026.
The Company may issue standby letters of credit through banking institutions. As of April 30, 2024, total letters of credit outstanding were $0.7 million.
Interest rate swaps
From time to time, the Company may enter into interest rate swap contracts to hedge changes in variable interest rates on the principal value of the Company’s term loans. We account for interest rate swaps in accordance with ASC 815, Derivatives and Hedging, as amended, which requires the recognition of all derivative instruments as either assets or liabilities in the condensed consolidated balance sheets and measurement of those instruments at fair value. The Company did not designate 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 were recorded in other income (expense), net in the condensed consolidated statements of income (loss) and changes in the assets are presented in net cash provided by (used in) operating activities in the condensed consolidated statements of cash flow. As of April 30, 2024, no interest rate swaps were outstanding. As of October 31, 2023, a notional amount of $25 million was outstanding, carrying a fixed SOFR rate of 2.3%. Refer to Note 9 for more details.
7.      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, in May 2021, the plaintiffs in both class action lawsuits and the Company agreed to settle the class action cases. Per the terms of the settlement agreement between the parties, the total amount of the settlement is $1.5 million. A final approval hearing is scheduled for June 2024.
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.
8.     Income Taxes
The provision for income tax recorded for the three and six months ended April 30, 2024 and 2023 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 and changes in uncertain tax positions (“UTP”).
As of April 30, 2024, the Company had $18.3 million accrued in UTP on income taxes, of which $10.1 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), net in the condensed consolidated statements of income (loss).









14

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

 April 30, 2024October 31, 2023
(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$1.8 $1.8 $ $ $1.4 $1.4 $ $ 
Interest rate swap    0.4  0.4  
Our mutual fund investments relate to our deferred compensation plan, which are held in a Rabbi trust which is included in other assets in our consolidated balance sheets. 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 the discounted cash flow method. 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. As of April 30, 2024, all interest rate swaps were fully matured. As of October 31, 2023, the Company had concluded 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 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 associated with the interest rate swaps have been included in prepaid expenses and other current assets in the condensed consolidated balance sheets and gains and losses for the interest rate swaps have been included in other income (expense), net in the condensed consolidated statements of income (loss).
10.    Earnings Per Share
Three Months Ended
April 30,
Six Months Ended
April 30,
2024202320242023
Numerator:
Net income (loss) attributable to Mission Produce (in millions)$7.0 $(4.6)$7.0 $(13.4)
Denominator:
Weighted average shares of common stock outstanding, used in computing basic earnings per share70,860,570 70,744,688 70,810,249 70,716,273 
Effect of dilutive stock options    
Effect of dilutive RSUs142,993  149,467  
Weighted average shares of common stock outstanding, used in computing diluted earnings per share71,003,563 70,744,688 70,959,716 70,716,273 
Earnings per share
Basic$0.10 $(0.07)$0.10 $(0.19)
Diluted$0.10 $(0.07)$0.10 $(0.19)
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 as a result of applying the treasury stock method, were as follows:









15

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended
April 30,
Six Months Ended
April 30,
2024202320242023
Anti-dilutive stock options2,078,268 2,095,106 2,078,268 2,114,228 
Anti-dilutive RSUs230,250 636,417 476,082 534,509 

11.     Related Party Transactions
Transactions with related parties included in the condensed consolidated financial statements were as follows:
Condensed Consolidated Balance Sheets
April 30, 2024October 31, 2023
(In millions)
Accounts receivable
Property, plant and equipment, net
Accounts payable & accrued expenses
Finance lease liabilities
Accounts receivable
Property, plant and equipment, net
Accounts payable & accrued expenses
Finance lease liabilities
Equity method investees:
Henry Avocado$ $ $ $ $ $ $0.1 $ 
Mr. Avocado1.6    2.9    
Other:
Directors/Officers(1)
0.2 20.5 0.5 20.7 0.1 15.2 0.2 15.7 
Employees(2)
  0.7    0.5  
Condensed Consolidated Statements of Income (Loss)
(In millions)Net salesCost of salesInterest expense
Net sales
Cost of sales
Interest expense
Three Months Ended
April 30, 2024
Three Months Ended
April 30, 2023
Equity method investees:
Mr. Avocado$ $ $ $1.7 $ $ 
Other:
Directors/Officers(1)
0.3 0.9 0.5 0.4 0.9 0.4 
Employees(2)
 1.6   3.1  
Six Months Ended
April 30, 2024
Six Months Ended
April 30, 2023
Equity method investees:   
Mr. Avocado$ $ $ $1.8 $ $ 
Other:
Directors/Officers(1))
0.5 1.1 1.0 0.6 1.1 0.7 
Employees(2)
 6.1   5.3  
(1)The Company purchases from and sells fruit 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. Our blueberries business leases land under a long-term lease with a company owned by one of our directors. The rental rate in the lease was comparable to market rates and reflective of an arms-length transaction. The lease was accounted for as a finance lease right-of-use asset and is included in property, plant and equipment, net in the consolidated balance sheets, with amortization and interest expense recognized in cost of sales and interest expense, respectively, in the condensed consolidated statements of income (loss). The portion of lease costs attributable to noncontrolling interest, net of income taxes, was $0.3 million and $0.1 million for the three months ended April 30, 2024 and 2023, respectively, and $0.5 million and $0.3 million for the six months ended April 30, 2024 and 2023, respectively; amounts were included as part of net income (loss) attributable to noncontrolling interest in the condensed consolidated statements of income (loss).
(2)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.
12.     Segment and Revenue Information
We have three operating segments which are also reportable segments. Our reportable 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.








16

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Marketing and Distribution. Our Marketing and Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network.
International Farming. International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing and Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees. It also earns service revenues for packing and processing fruit for both our Blueberries segment, as well as for third-party producers of other crops. Operations are principally located in Peru, with smaller operations emerging in other areas of Latin America.
Blueberries. The Blueberries segment represents the results of Moruga. Moruga’s farming activities include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement.
The CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted EBITDA. 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), recognition of deferred ERP costs, transaction costs, amortization of inventory adjustments recognized from business combinations, and any special, non-recurring, or one-time items such as remeasurements or impairments, and any portion of these items attributable to the noncontrolling interest, all of which are excluded from the results the CEO reviews uses to assess segment performance and results. 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 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.
Net sales from each of our reportable segments were as follows.

Marketing and DistributionInternational FarmingBlueberriesTotalMarketing and DistributionInternational FarmingBlueberriesTotal
Three Months Ended
April 30,
(In millions)20242023
Third party sales$287.1 $0.5 $10.0 $297.6 $215.3 $4.1 $1.7 $221.1 
Affiliated sales 0.9  0.9  1.9  1.9 
Total segment sales287.1 1.4 10.0 298.5 215.3 6.0 1.7 223.0 
Intercompany eliminations (0.9) (0.9) (1.9) (1.9)
Total net sales$287.1 $0.5 $10.0 $297.6 $215.3 $4.1 $1.7 $221.1 
Six Months Ended
April 30,
20242023
Third party sales$511.7 $2.1 $42.5 $556.3 $397.1 $6.0 $31.5 $434.6 
Affiliated sales 5.1  5.1  5.7  5.7 
Total segment sales511.7 7.2 42.5 561.4 397.1 11.7 31.5 440.3 
Intercompany eliminations (5.1) (5.1) (5.7) (5.7)
Total net sales$511.7 $2.1 $42.5 $556.3 $397.1 $6.0 $31.5 $434.6 








17

MISSION PRODUCE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Supplemental sales information is as follows.
Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
By type
Avocado$267.5 $202.9 $479.8 $376.9 
Blueberry10.0 1.7 42.5 31.5 
Mango18.2 13.0 29.1 20.3 
Other1.9 3.5 4.9 5.9 
Total net sales$297.6 $221.1 $556.3 $434.6 
By customer location
United States$254.0 $183.3 $465.8 $357.9 
Rest of world43.6 37.8 90.5 76.7 
Total net sales$297.6 $221.1 $556.3 $434.6 
Adjusted EBITDA (as defined above) for each of our reportable segments was as follows:

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Marketing and Distribution adjusted EBITDA$21.7 $8.6 $32.7 $13.2 
International Farming adjusted EBITDA(2.2)(1.1)(2.7)(2.9)
Blueberries adjusted EBITDA0.7 0.1 9.4 (0.4)
Total reportable segment adjusted EBITDA20.2 7.6 $39.4 $9.9 
Net income (loss)7.0 (4.7)9.0 (15.3)
Interest expense3.4 2.7 6.7 5.1 
Provision for income taxes3.4 1.8 5.5 0.1 
Depreciation and amortization(1)
5.7 5.9 18.6 15.2 
Equity method income(0.5)(0.4)(0.9)(1.4)
Stock-based compensation1.6 1.3 3.0 2.0 
Asset impairment and disposals, net of insurance recoveries0.2 0.5 0.4 0.8 
Farming costs for nonproductive orchards0.3 0.4 0.8 0.8 
Recognition of deferred ERP costs0.6 0.5 1.1 1.1 
Severance  1.3  
Legal settlement  0.2  
Transaction costs 0.2  0.3 
Amortization of inventory adjustment recognized from business combination   0.7 
Other (income) expense, net(1.0)(0.6) 0.2 
Noncontrolling interest(2)
(0.5) (6.3)0.3 
Total adjusted EBITDA$20.2 $7.6 $39.4 $9.9 
(1)Includes depreciation and amortization of purchase accounting assets of $0.4 million and $0.1 million for the three months ended April 30, 2024 and 2023, respectively, and $3.3 million and $1.7 million for the six months ended April 30, 2024 and 2023, respectively. The six months ended April 30, 2024 include $4.1 million of accelerated depreciation expense for certain blueberry plants determined to have no remaining useful life.
(2)Represents net income (loss) attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.








18


Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited financial statements and related notes included elsewhere in this quarterly report. This discussion and analysis contains forward-looking statements based upon our current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors. Please refer to the section of this report under the heading “Forward Looking Statements.”
Overview
We are a world leader in sourcing, producing and distributing Hass avocados, serving retail, wholesale and foodservice customers. We source, produce, pack and distribute avocados and a small amount of other fruits to our customers and provide value-added services including ripening, bagging, custom packaging and logistical management. In addition, we provide our customers with merchandising and promotional support, insights on market trends and training designed to increase their retail avocado sales.
We have three operating segments which are also reportable segments:
Marketing and Distribution. Our Marketing and Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network.
International Farming. International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing and Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees. It also earns service revenues for packing and processing fruit for both our Blueberries segment, as well as for third-party producers of other crops. Operations are principally located in Peru, with smaller operations emerging in other areas of Latin America.
Blueberries. The Blueberries segment represents the results of Moruga. Moruga’s farming activities include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement.
Results of Operations
The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute. In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.
Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.








19



Three Months Ended
April 30,
Six Months Ended
April 30,
2024202320242023
(In millions, except for percentages)Dollars%Dollars%Dollars%Dollars%
Net sales$297.6 100 %$221.1 100 %$556.3 100 %$434.6 100 %
Cost of sales266.6 90 %203.0 92 %496.6 89 %407.5 94 %
Gross profit31.0 10 %18.1 %59.7 11 %27.1 %
Selling, general and administrative expenses18.7 %19.3 %39.4 %38.4 %
Operating income (loss)12.3 %(1.2)(1)%20.3 %(11.3)(3)%
Interest expense(3.4)(1)%(2.7)(1)%(6.7)(1)%(5.1)(1)%
Equity method income0.5 — %0.4 — %0.9 — %1.4 — %
Other income (expense), net1.0 — %0.6 — %— — %(0.2)— %
Income (loss) before income taxes10.4 %(2.9)(1)%14.5 %(15.2)(3)%
Provision for income taxes3.4 %1.8 %5.5 %0.1 — %
Net income (loss)7.0 %(4.7)(2)%9.0 %(15.3)(4)%
Less:
Net (loss) income attributable to noncontrolling interest
— — %(0.1)— %2.0 — %(1.9)— %
Net income (loss) attributable to Mission Produce$7.0 %$(4.6)(2)%$7.0 %$(13.4)(3)%
Net sales
Our net sales are generated predominantly from the shipment of fresh avocados to retail, wholesale and foodservice customers worldwide. Our net sales are affected by numerous factors, including the balance between the supply of and demand for our produce and competition from other fresh produce companies. Our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve.

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Net sales by segment:
Marketing and Distribution$287.1 $215.3 $511.7 $397.1 
International Farming0.5 4.1 2.1 6.0 
Blueberries10.0 1.7 42.5 31.5 
Total net sales$297.6 $221.1 $556.3 $434.6 
Net sales increased $76.5 million or 35% in the three months ended April 30, 2024 compared to the same period last year, primarily driven by our Marketing and Distribution segment, where average per-unit avocado sales prices increased 22% and avocado volume sold increased 8%. Blueberry revenue also increased $8.3 million or 488% compared to the same period last year, driven by the timing of the harvest season compared to the same period last year.
Net sales increased $121.7 million or 28% in the six months ended April 30, 2024 compared to the same period last year, driven by a 23% increase in average per-unit avocado sales prices and a 4% increase in avocado volume sold. Blueberry revenue increased $11.0 million or 35%, primarily due to a 63% increase in average per-unit sales price, partially offset by a 17% decrease in volume sold. Pricing in the first quarter of 2024 was favorably impacted by industry supply constraints during the Peru harvest season.
Gross profit
Cost of sales is composed primarily of avocado procurement costs from independent growers and packers, logistics costs, packaging costs, labor, costs associated with cultivation (the cost of growing crops), harvesting and depreciation. Avocado procurement costs from third-party suppliers can vary significantly between and within fiscal years and correlate closely with market prices for avocados. While we have long-standing relationships with our growers and packers, we predominantly purchase fruit on a








20


daily basis at market rates. As such, the cost to procure products from independent growers can have a significant impact on our costs.
Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers. Land transportation costs consist primarily of third-party trucking services to support North American distribution, while sea transportation cost consists primarily of third-party shipping of refrigerated containers from supply markets in South and Central America to demand markets in North America, Europe and Asia. Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in production yields and other input costs also affect our cost of sales.
In general, changes in our volume of products sold can have a disproportionate effect on our gross profit. Within any particular year, a significant portion of our cost of products are fixed. Accordingly, higher volumes produced on company-owned farms directly reduce the average cost per pound of fruit grown on company owned orchards, while lower volumes directly increase the average cost per pound of fruit grown on company owned orchards. Likewise, higher volumes processed through packing and distribution facilities directly reduce the average overhead cost per unit of fruit handled, while lower volumes directly increase the average overhead cost per unit of fruit handled.
Gross profit percentage will fluctuate based upon per-unit sales price levels in relation to per-unit costs. Margin is primarily managed on a per-unit basis in our Marketing and Distribution segment, which can lead to movement in gross profit percentage when sales prices fluctuate.

Three Months Ended
April 30,
Six Months Ended
April 30,
2024202320242023
Gross profit (in millions)$31.0 $18.1$59.7 $27.1
Gross profit as a percentage of sales10.4 %8.2 %10.7 %6.2 %
Gross profit increased $12.9 million or 71% in the three months ended April 30, 2024 compared to the same period last year to $31.0 million and gross profit percentage increased 220 basis points to 10.4% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, driven by strong per-unit margins on avocados sold and higher volume.
Gross profit increased $32.6 million or 120% in the six months ended April 30, 2024 compared to the same period last year to $59.7 million and gross profit percentage increased 450 basis points to 10.7% of revenue, compared to the same period last year. The increases were attributed to our Marketing and Distribution segment, where we achieved strong per-unit margins on avocados sold and higher volume, and our Blueberries segment, where we benefited significantly from higher per-unit sales pricing.
Warmer temperatures correlated with El Niño have persisted through the development of our 2024 Peruvian avocado crop. We expect these warmer temperatures to negatively affect our harvest yields for the second half of fiscal year 2024, reducing exportable volume from our owned farms to be more than 50% lower than recent seasons. The decrease in volume will negatively impact absorption of fixed costs at our Peruvian farms. Though we expect these lower volumes to generally support higher pricing, we do not expect higher pricing levels to offset the negative impact of volume decreases on gross profit for the International Farming segment for the fiscal year.
SG&A
Selling, general and administrative (“SG&A”) expenses primarily include the costs associated with selling, professional fees, general corporate overhead and other related administrative functions.
Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Selling, general and administrative expenses$18.7 $19.3 $39.4 $38.4 
SG&A expenses decreased $0.6 million or 3% in the three months ended April 30, 2024 compared to the same period last year, primarily due to a reduction in general corporate expenses.
SG&A expenses increased $1.0 million or 3% in the six months ended April 30, 2024 compared to the same period last year, primarily due to higher employee related costs, including performance-based incentive compensation and stock-based compensation expense. These costs were partially offset by a reduction of approximately $2.0 million in general corporate expenses.








21


Interest expense
Interest expense consists primarily of interest on borrowings under working capital facilities that we maintain and interest on other long-term debt used to make capital and equity investments. We also incur interest expense on finance leases, computed using each lease’s explicit or implicit borrowing rate.

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Interest expense$3.4 $2.7 $6.7 $5.1 
Interest expense increased $0.7 million or 26% and $1.6 million or 31% in the three and six months ended April 30, 2024, respectively, compared to the same periods last year, driven primarily by rising interest rates. Interest expense incurred from a significant financing lease in our Blueberries segment was $0.5 million and $0.4 million for the three months ended April 30, 2024 and 2023, respectively, and $1.0 million and $0.7 million in the six months ended April 30, 2024 and 2023, respectively.
Equity method income
Our material equity method investees include Henry Avocado (“HAC”), Mr. Avocado and Copaltas.
Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Equity method income$0.5 $0.4 $0.9 $1.4 
Equity method income was flat in the three months ended April 30, 2024 compared to the same period last year, as income from HAC was largely offset by losses at Mr. Avocado resulting from low margins on fruit sold.
Equity method income decreased $0.5 million or 36% in the six months ended April 30, 2024 compared to the same period last year, as losses at Mr. Avocado were only partially offset by income growth from HAC.
Other income (expense), net
Other income (expense), net consists of interest income, currency exchange gains or losses, interest rate derivative gains or losses and other miscellaneous income and expense items.

Three Months Ended
April 30,
Six Months Ended
April 30,
(In millions)2024202320242023
Other income (expense), net$1.0 $0.6 $— $(0.2)
Other income increased $0.4 million or 67% in three months ended April 30, 2024 compared to the same period last year, primarily due to foreign currency transaction losses in the previous year from the weakening of the U.S. dollar relative to the Mexican peso.
Other income (expense), net was zero in the six months ended April 30, 2024 compared to expense of $0.2 million in the same period last year, primarily due to higher interest income.
Income taxes
The provision for income taxes consists of the consolidation of tax provisions, computed on a separate entity basis, in each country in which we have operations. We recognize the effects of tax legislation in the period in which the law is enacted. Our deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years we estimate the related temporary differences to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.
We recognize a tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such








22


positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within provision for income taxes.
Our effective tax rate is impacted by income attributable to foreign jurisdictions which is taxed at different rates from the U.S. federal statutory tax rate of 21%, changes in foreign exchange rates taxable in foreign jurisdictions and nondeductible tax items.

Three Months Ended
April 30,
Six Months Ended
April 30,
2024202320242023
Provision for income taxes (in millions)
$3.4 $1.8 $5.5 $0.1 
Effective tax rate