QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
Item 1. | Financial Statements | ||||||||||
Condensed Consolidated Statements of Income (Loss) (Unaudited) | |||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) | |||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||||||||||
Item 4. | Controls and Procedures | ||||||||||
(In millions, except for shares) | July 31, 2023 | October 31, 2022 | |||||||||
Assets | |||||||||||
Current Assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Accounts receivable | |||||||||||
Trade, net of allowances of $ | |||||||||||
Grower and fruit advances | |||||||||||
Other | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Income taxes receivable | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Equity method investees | |||||||||||
Deferred income tax assets, net | |||||||||||
Goodwill | |||||||||||
Intangible asset, net | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Equity | |||||||||||
Liabilities | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued expenses | |||||||||||
Income taxes payable | |||||||||||
Grower payables | |||||||||||
Short-term borrowings | |||||||||||
Loans from noncontrolling interest holders—current portion | |||||||||||
Long-term debt—current portion | |||||||||||
Operating leases—current portion | |||||||||||
Finance leases—current portion | |||||||||||
Total current liabilities | |||||||||||
Long-term debt, net of current portion | |||||||||||
Loans from noncontrolling interest holders, net of current portion | |||||||||||
Operating leases, net of current portion | |||||||||||
Finance leases, net of current portion | |||||||||||
Income taxes payable | |||||||||||
Deferred income tax liabilities, net | |||||||||||
Other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 6) | |||||||||||
Shareholders’ Equity | |||||||||||
Common stock ($ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Retained earnings | |||||||||||
Mission Produce shareholders' equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions, except for per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Net sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of sales | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Selling, general and administrative expenses | |||||||||||||||||||||||
Operating income (loss) | ( | ||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Equity method income | |||||||||||||||||||||||
Remeasurement gain on business combination with Moruga | |||||||||||||||||||||||
Other (expense) income, net | ( | ( | ( | ||||||||||||||||||||
Income (loss) before income taxes | ( | ||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Less: Net loss attributable to noncontrolling interest | ( | ( | ( | ( | |||||||||||||||||||
Net income (loss) attributable to Mission Produce | $ | $ | $ | ( | $ | ||||||||||||||||||
Net income (loss) per share attributable to Mission Produce: | |||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | ||||||||||||||||||
Diluted | $ | $ | $ | ( | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
Total comprehensive income (loss), net of tax | ( | ||||||||||||||||||||||
Less: Comprehensive loss attributable to noncontrolling interest | ( | ( | ( | ( | |||||||||||||||||||
Comprehensive income (loss) attributable to Mission Produce | $ | $ | $ | ( | $ |
(In millions, except for shares) | Common stock | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Noncontrolling interest | Total equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at October 31, 2021 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | ( | — | ( | |||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | — | ( | |||||||||||||||||||
Balance at January 31, 2022 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock for equity awards | — | — | — | — | — | — | ||||||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Balance at April 30, 2022 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock for equity awards | — | — | — | — | — | — | ||||||||||||||||||||
Acquired noncontrolling interest | — | — | — | — | — | |||||||||||||||||||||
Net income | — | — | — | — | ( | |||||||||||||||||||||
Other comprehensive loss | — | — | — | ( | — | — | ( | |||||||||||||||||||
Balance at July 31, 2022 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Balance at October 31, 2022 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes | — | ( | — | — | — | ( | ||||||||||||||||||||
Contributions from noncontrolling interest holders | — | — | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Balance at January 31, 2023 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Exercise of stock options | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of common stock for equity awards, net of shares withheld for the settlement of taxes | — | — | — | — | — | — | ||||||||||||||||||||
Contributions from noncontrolling interest holders | — | — | — | — | — | |||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | ( | |||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Balance at April 30, 2023 | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||||||||
Exercise of stock options | — | — | — | — | ||||||||||||||||||||||
Contributions from noncontrolling interest holders | — | — | — | — | — | |||||||||||||||||||||
Net income (loss) | — | — | — | — | ( | |||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | |||||||||||||||||||||
Balance at July 31, 2023 | $ | $ | $ | ( | $ | $ | $ |
Nine Months Ended July 31, | |||||||||||
(In millions) | 2023 | 2022 | |||||||||
Operating Activities | |||||||||||
Net (loss) income | $ | ( | $ | ||||||||
Adjustments to reconcile net (loss) income to net cash used in operating activities | |||||||||||
Provision for losses on accounts receivable | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of debt issuance costs | |||||||||||
Equity method income | ( | ( | |||||||||
Noncash lease expense | |||||||||||
Stock-based compensation | |||||||||||
Dividends received from equity method investees | |||||||||||
Losses on asset impairment, disposals and sales, net of insurance recoveries | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Remeasurement gain on business combination with Moruga | ( | ||||||||||
Unrealized losses on foreign currency transactions | |||||||||||
Unrealized gains on derivative financial instruments | ( | ( | |||||||||
Other | |||||||||||
Effect on cash of changes in operating assets and liabilities: | |||||||||||
Trade accounts receivable | ( | ( | |||||||||
Grower fruit advances | ( | ( | |||||||||
Other receivables | ( | ( | |||||||||
Inventory | ( | ( | |||||||||
Prepaid expenses and other current assets | |||||||||||
Income taxes receivable | ( | ( | |||||||||
Other assets | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Income taxes payable | ( | ||||||||||
Grower payables | |||||||||||
Operating lease liabilities | ( | ( | |||||||||
Other long-term liabilities | ( | ||||||||||
Net cash used in operating activities | $ | ( | $ | ( | |||||||
Investing Activities | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Cash acquired in consolidation of Moruga | |||||||||||
Investment in equity method investees | ( | ( | |||||||||
Purchase of other investment | ( | ||||||||||
Loan repayments from equity method investees | |||||||||||
Other | ( | ||||||||||
Net cash used in investing activities | $ | ( | $ | ( | |||||||
Financing Activities | |||||||||||
Borrowings on revolving credit facility | |||||||||||
Payments on revolving credit facility | ( | ( | |||||||||
Proceeds from short-term borrowings | |||||||||||
Repayment of short-term borrowings | ( | ||||||||||
Principal payments on long-term debt obligations | ( | ( | |||||||||
Principal payments on finance lease obligations | ( | ( | |||||||||
Taxes paid related to shares withheld from the settlement of equity awards | ( |
Nine Months Ended July 31, | |||||||||||
(In millions) | 2023 | 2022 | |||||||||
Exercise of stock options | |||||||||||
Proceeds from loan from noncontrolling interest holder | |||||||||||
Equity contributions from noncontrolling interest holders | |||||||||||
Net cash provided by (used in) financing activities | $ | $ | ( | ||||||||
Effect of exchange rate changes on cash | ( | ||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Summary of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | $ |
(In millions) | July 31, 2023 | October 31, 2022 | |||||||||
Finished goods | $ | $ | |||||||||
Crop growing costs | |||||||||||
Packaging and supplies | |||||||||||
Inventory | $ | $ |
(In millions) | International Farming | Blueberries | Total | ||||||||||||||
Goodwill as of July 31, 2023 and October 31, 2022 | $ | $ | $ | ||||||||||||||
(In millions) | July 31, 2023 | October 31, 2022 | |||||||||
Intangible asset, gross | $ | $ | |||||||||
Accumulated amortization | ( | ( | |||||||||
Intangible asset, net | $ | $ |
(In millions) | Remaining 2023 | Year Ending October 31, 2024 | |||||||||
Estimated annual amortization expense | $ | $ |
(In millions) | July 31, 2023 | October 31, 2022 | |||||||||
Employee-related | $ | $ | |||||||||
Freight | |||||||||||
Outside fruit purchase | |||||||||||
Legal settlement | |||||||||||
Other | |||||||||||
Accrued expenses | $ | $ |
(In millions) | July 31, 2023 | October 31, 2022 | |||||||||
Uncertain tax positions(1) | $ | $ | |||||||||
Employee-related | |||||||||||
Other | |||||||||||
Other long-term liabilities | $ | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Gains on derivative financial instruments | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Foreign currency transaction loss | |||||||||||||||||||||||
Interest income | ( | ( | ( | ( | |||||||||||||||||||
Other | ( | ||||||||||||||||||||||
Other expense (income), net | $ | $ | $ | $ | ( |
(In millions) | July 31, 2023 | October 31, 2022 | ||||||||||||
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 July 31, 2023 and October 31, 2022, the interest rate was | $ | $ | ||||||||||||
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 July 31, 2023 and October 31, 2022, the interest rate was | ||||||||||||||
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 July 31, 2023 and October 31, 2022, the interest rate was | ||||||||||||||
Note payable to BoA. Payable in monthly installments including interest at a rate of | ||||||||||||||
Total long-term debt | ||||||||||||||
Less debt issuance costs | ( | ( | ||||||||||||
Long-term debt, net of debt issuance costs | ||||||||||||||
Less current portion of long-term debt | ( | ( | ||||||||||||
Long-term debt, net of current portion | $ | $ |
July 31, 2023 | October 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
(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 | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Interest rate swap | |||||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) attributable to Mission Produce (in millions) | $ | $ | $ | ( | $ | ||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average shares of common stock outstanding, used in computing basic earnings per share | |||||||||||||||||||||||
Effect of dilutive stock options | |||||||||||||||||||||||
Effect of dilutive RSUs | |||||||||||||||||||||||
Weighted average shares of common stock outstanding, used in computing diluted earnings per share | |||||||||||||||||||||||
Earnings per share | |||||||||||||||||||||||
Basic | $ | $ | $ | ( | $ | ||||||||||||||||||
Diluted | $ | $ | $ | ( | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Anti-dilutive stock options | |||||||||||||||||||||||
Anti-dilutive RSUs |
Condensed Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||
July 31, 2023 | October 31, 2022 | ||||||||||||||||||||||||||||||||||
(In millions) | Accounts receivable | Property, plant and equipment, net | Accounts payable & accrued expenses | Finance lease liabilities | Accounts receivable | Accounts payable & accrued expenses | |||||||||||||||||||||||||||||
Equity method investees: | |||||||||||||||||||||||||||||||||||
Henry Avocado | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Mr. Avocado | |||||||||||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||||
Directors/Officers(1) | |||||||||||||||||||||||||||||||||||
Employees(2) |
Condensed Consolidated Statements of Income (Loss) | |||||||||||||||||||||||||||||||||||
(In millions) | Net sales | Cost of sales | Interest expense | Net sales | Cost of sales | Other income | |||||||||||||||||||||||||||||
Three Months Ended July 31, 2023 | Three Months Ended July 31, 2022 | ||||||||||||||||||||||||||||||||||
Equity method investees: | |||||||||||||||||||||||||||||||||||
Henry Avocado | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Mr. Avocado | |||||||||||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||||
Directors/Officers(1) | |||||||||||||||||||||||||||||||||||
Employees(2) | |||||||||||||||||||||||||||||||||||
Nine Months Ended July 31, 2023 | Nine Months Ended July 31, 2022 | ||||||||||||||||||||||||||||||||||
Equity method investees: | |||||||||||||||||||||||||||||||||||
Henry Avocado | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Mr. Avocado | |||||||||||||||||||||||||||||||||||
Moruga(3) | |||||||||||||||||||||||||||||||||||
Copaltas(4) | |||||||||||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||||
Directors/Officers(1)) | |||||||||||||||||||||||||||||||||||
Employees(2) |
Marketing and Distribution | International Farming | Blueberries | Total | Marketing and Distribution | International Farming | Blueberries | Total | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, | |||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Third party sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Affiliated sales | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment sales | |||||||||||||||||||||||||||||||||||||||||||||||
Intercompany eliminations | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Nine Months Ended July 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Third party sales | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Affiliated sales | |||||||||||||||||||||||||||||||||||||||||||||||
Total segment sales | |||||||||||||||||||||||||||||||||||||||||||||||
Intercompany eliminations | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ | $ | $ | $ | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | |||||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
By type | ||||||||||||||||||||||||||
Avocado | $ | $ | $ | $ | ||||||||||||||||||||||
Blueberry | (1) | |||||||||||||||||||||||||
Mango | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ | ||||||||||||||||||||||
By customer location | ||||||||||||||||||||||||||
United States | $ | $ | $ | $ | ||||||||||||||||||||||
Rest of world | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Marketing and Distribution adjusted EBITDA | $ | $ | $ | $ | |||||||||||||||||||
International Farming adjusted EBITDA | |||||||||||||||||||||||
Blueberries adjusted EBITDA | ( | ( | ( | ||||||||||||||||||||
Total reportable segment adjusted EBITDA | $ | $ | |||||||||||||||||||||
Net income (loss) | ( | ||||||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Depreciation and amortization(1) | |||||||||||||||||||||||
Equity method income | ( | ( | ( | ( | |||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||||
Asset impairment and disposals, net of insurance recoveries | |||||||||||||||||||||||
Farming costs for nonproductive orchards | |||||||||||||||||||||||
ERP costs(2) | |||||||||||||||||||||||
Transaction costs | |||||||||||||||||||||||
Amortization of inventory adjustment recognized from business combination | |||||||||||||||||||||||
Remeasurement gain on business combination with Moruga | ( | ( | |||||||||||||||||||||
Other expense (income) | ( | ||||||||||||||||||||||
Noncontrolling interest(3) | ( | ||||||||||||||||||||||
Total adjusted EBITDA | $ | $ | $ | $ |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||
(In millions, except for percentages) | Dollars | % | Dollars | % | Dollars | % | Dollars | % | |||||||||||||||||||||||||||
Net sales | $ | 261.4 | 100 | % | $ | 313.2 | 100 | % | $ | 696.0 | 100 | % | $ | 807.9 | 100 | % | |||||||||||||||||||
Cost of sales | 233.0 | 89 | % | 270.6 | 86 | % | 640.5 | 92 | % | 745.0 | 92 | % | |||||||||||||||||||||||
Gross profit | 28.4 | 11 | % | 42.6 | 14 | % | 55.5 | 8 | % | 62.9 | 8 | % | |||||||||||||||||||||||
Selling, general and administrative expenses | 17.4 | 7 | % | 20.6 | 7 | % | 55.8 | 8 | % | 58.0 | 7 | % | |||||||||||||||||||||||
Operating income (loss) | 11.0 | 4 | % | 22.0 | 7 | % | (0.3) | — | % | 4.9 | 1 | % | |||||||||||||||||||||||
Interest expense | (3.2) | (1) | % | (1.5) | — | % | (8.3) | (1) | % | (3.5) | — | % | |||||||||||||||||||||||
Equity method income | 1.8 | 1 | % | 1.7 | 1 | % | 3.2 | — | % | 3.6 | — | % | |||||||||||||||||||||||
Remeasurement gain on business combination with Moruga | — | — | % | 2.0 | 1 | % | — | — | % | 2.0 | — | % | |||||||||||||||||||||||
Other (expense) income, net | (1.1) | — | % | (0.9) | — | % | (1.3) | — | % | 3.6 | — | % | |||||||||||||||||||||||
Income (loss) before income taxes | 8.5 | 3 | % | 23.3 | 7 | % | (6.7) | (1) | % | 10.6 | 1 | % | |||||||||||||||||||||||
Provision for income taxes | 2.3 | 1 | % | 5.4 | 2 | % | 2.4 | — | % | 3.7 | — | % | |||||||||||||||||||||||
Net income (loss) | 6.2 | 2 | % | 17.9 | 6 | % | (9.1) | (1) | % | 6.9 | 1 | % | |||||||||||||||||||||||
Less: Net loss attributable to noncontrolling interest | (0.4) | — | % | (0.5) | — | % | (2.3) | — | % | (0.5) | — | % | |||||||||||||||||||||||
Net income (loss) attributable to Mission Produce | $ | 6.6 | 3 | % | $ | 18.4 | 6 | % | $ | (6.8) | (1) | % | $ | 7.4 | 1 | % |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Net sales: | |||||||||||||||||||||||
Marketing and Distribution | $ | 256.6 | $ | 308.9 | $ | 653.7 | $ | 794.9 | |||||||||||||||
International Farming | 3.4 | 4.0 | 9.4 | 12.7 | |||||||||||||||||||
Blueberries | 1.4 | 0.3 | 32.9 | 0.3 | |||||||||||||||||||
Total net sales | $ | 261.4 | $ | 313.2 | $ | 696.0 | $ | 807.9 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Gross profit (in millions) | $ | 28.4 | $ | 42.6 | $ | 55.5 | $ | 62.9 | |||||||||||||||
Gross profit as a percentage of sales | 10.9 | % | 13.6 | % | 8.0 | % | 7.8 | % |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Selling, general and administrative expenses | $ | 17.4 | $ | 20.6 | $ | 55.8 | $ | 58.0 | |||||||||||||||
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Interest expense | $ | 3.2 | $ | 1.5 | $ | 8.3 | $ | 3.5 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Equity method income | $ | 1.8 | $ | 1.7 | $ | 3.2 | $ | 3.6 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Other expense (income), net | $ | 1.1 | $ | 0.9 | $ | 1.3 | $ | (3.6) |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Provision for income taxes (in millions) | $ | 2.3 | $ | 5.4 | $ | 2.4 | $ | 3.7 | |||||||||||||||
Effective tax rate | 27.1 | % | 23.2 | % | (35.8) | % | 34.9 | % |
Marketing and Distribution | International Farming | Blueberries | Total | Marketing and Distribution | International Farming | Blueberries | Total | ||||||||||||||||||||||||||||||||||||||||
Three Months Ended July 31, | |||||||||||||||||||||||||||||||||||||||||||||||
(In millions) | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
Third party sales | $ | 256.6 | $ | 3.4 | $ | 1.4 | $ | 261.4 | $ | 308.9 | $ | 4.0 | $ | 0.3 | $ | 313.2 | |||||||||||||||||||||||||||||||
Affiliated sales | — | 34.8 | — | 34.8 | — | 60.6 | — | 60.6 | |||||||||||||||||||||||||||||||||||||||
Total segment sales | 256.6 | 38.2 | 1.4 | 296.2 | 308.9 | 64.6 | 0.3 | 373.8 | |||||||||||||||||||||||||||||||||||||||
Intercompany eliminations | — | (34.8) | — | (34.8) | — | (60.6) | — | (60.6) | |||||||||||||||||||||||||||||||||||||||
Total net sales | $ | 256.6 | $ | 3.4 | $ | 1.4 | $ | 261.4 | $ | 308.9 | $ | 4.0 | $ | 0.3 | $ | 313.2 | |||||||||||||||||||||||||||||||
Nine Months Ended July 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Third party sales | $ | 653.7 | $ | 9.4 | $ | 32.9 | $ | 696.0 | $ | 794.9 | $ | 12.7 | $ | 0.3 | $ | 807.9 | |||||||||||||||||||||||||||||||
Affiliated sales | — | 40.5 | — | 40.5 | — | 62.2 | — | 62.2 | |||||||||||||||||||||||||||||||||||||||
Total segment sales | 653.7 | 49.9 | 32.9 | 736.5 | 794.9 | 74.9 | 0.3 | 870.1 | |||||||||||||||||||||||||||||||||||||||
Intercompany eliminations | — | (40.5) | — | (40.5) | — | (62.2) | — | (62.2) | |||||||||||||||||||||||||||||||||||||||
Total net sales | $ | 653.7 | $ | 9.4 | $ | 32.9 | $ | 696.0 | $ | 794.9 | $ | 12.7 | $ | 0.3 | $ | 807.9 |
Three Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||||||||||||
(In millions) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Marketing and Distribution adjusted EBITDA | $ | 16.1 | $ | 15.5 | $ | 29.3 | $ | 19.5 | |||||||||||||||
International Farming adjusted EBITDA | 4.9 | 16.3 | 2.0 | 11.1 | |||||||||||||||||||
Blueberries adjusted EBITDA | 0.2 | (0.2) | (0.2) | (0.2) | |||||||||||||||||||
Total reportable segment adjusted EBITDA | 21.2 | 31.6 | $ | 31.1 | $ | 30.4 | |||||||||||||||||
Net income (loss) | 6.2 | 17.9 | (9.1) | 6.9 | |||||||||||||||||||
Interest expense | 3.2 | 1.5 | 8.3 | 3.5 | |||||||||||||||||||
Provision for income taxes | 2.3 | 5.4 | 2.4 | 3.7 | |||||||||||||||||||
Depreciation and amortization(1) | 7.6 | 7.1 | 22.8 | 17.2 | |||||||||||||||||||
Equity method income | (1.8) | (1.7) | (3.2) | (3.6) | |||||||||||||||||||
Stock-based compensation | 1.2 | 0.9 | 3.2 | 2.6 | |||||||||||||||||||
Asset impairment and disposals, net of insurance recoveries | 0.4 | 0.2 | 1.2 | 0.2 | |||||||||||||||||||
Farming costs for nonproductive orchards | 0.5 | 0.3 | 1.3 | 1.1 | |||||||||||||||||||
ERP costs(2) | 0.6 | 1.0 | 1.7 | 3.8 | |||||||||||||||||||
Transaction costs | — | — | 0.3 | 0.5 | |||||||||||||||||||
Amortization of inventory adjustment recognized from business combination | — | — | 0.7 | — | |||||||||||||||||||
Remeasurement gain on business combination with Moruga | — | (2.0) | — | (2.0) | |||||||||||||||||||
Other expense (income) | 1.1 | 0.9 | 1.3 | (3.6) | |||||||||||||||||||
Noncontrolling interest(3) | (0.1) | 0.1 | 0.2 | 0.1 | |||||||||||||||||||
Total adjusted EBITDA | $ | 21.2 | $ | 31.6 | $ | 31.1 | $ | 30.4 |
Nine Months Ended July 31, | |||||||||||
(In millions) | 2023 | 2022 | |||||||||
Net (loss) income | $ | (9.1) | $ | 6.9 | |||||||
Depreciation and amortization | 22.8 | 17.2 | |||||||||
Equity method income | (3.2) | (3.6) | |||||||||
Noncash lease expense | 4.4 | 3.9 | |||||||||
Stock-based compensation | 3.2 | 2.6 | |||||||||
Dividends received from equity method investees | 2.7 | 2.2 | |||||||||
Deferred income taxes | (1.2) | (0.7) | |||||||||
Unrealized losses on foreign currency transactions | 2.9 | — | |||||||||
Remeasurement gain on business combination with Moruga | — | (2.0) | |||||||||
Other | 1.4 | (2.4) | |||||||||
Changes in working capital | (31.2) | (27.1) | |||||||||
Net cash used in operating activities | $ | (7.3) | $ | (3.0) |
Nine Months Ended July 31, | |||||||||||
(In millions) | 2023 | 2022 | |||||||||
Purchases of property, plant and equipment | $ | (47.0) | $ | (42.0) | |||||||
Proceeds from sale of property, plant and equipment | 0.1 | 2.9 | |||||||||
Investment in equity method investees | (1.4) | (0.4) | |||||||||
Purchase of other investment | (2.3) | — | |||||||||
Cash acquired in consolidation of Moruga | — | 4.3 | |||||||||
Loan repayments from equity method investees | — | 1.0 | |||||||||
Other | (0.1) | — | |||||||||
Net cash used in investing activities | $ | (50.7) | $ | (34.2) |
Nine Months Ended July 31, | |||||||||||
(In millions) | 2023 | 2022 | |||||||||
Borrowings on revolving credit facility | $ | 145.0 | $ | 40.0 | |||||||
Payments on revolving credit facility | (115.0) | (40.0) | |||||||||
Proceeds from short-term borrowings | 2.8 | — | |||||||||
Repayment of short-term borrowings | (2.5) | — | |||||||||
Principal payments on long-term debt obligations | (2.7) | (6.6) | |||||||||
Principal payments on finance lease obligations | (2.4) | (1.0) | |||||||||
Proceeds from loan from noncontrolling interest holder | 2.0 | — | |||||||||
Taxes paid related to shares withheld from the settlement of equity awards | (0.4) | — | |||||||||
Exercise of stock options | 0.1 | — | |||||||||
Equity contributions from noncontrolling interest holders | 2.2 | — | |||||||||
Net cash provided by (used in) financing activities | $ | 29.1 | $ | (7.6) |
(In millions) | July 31, 2023 | October 31, 2022 | |||||||||
Cash and cash equivalents | $ | 23.0 | $ | 52.8 | |||||||
Working capital(1) | 129.1 | 126.4 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||
Exhibit No. | Exhibit Description | Form | Date | Number | Filed Herewith | |||||||||||||||||||||||||||
3.1# | 8-K | 10/7/2020 | 3.1 | |||||||||||||||||||||||||||||
3.2# | 8-K | 10/7/2020 | 3.2 | |||||||||||||||||||||||||||||
31.1* | X | |||||||||||||||||||||||||||||||
31.2* | X | |||||||||||||||||||||||||||||||
32.1* | X | |||||||||||||||||||||||||||||||
32.2* | X | |||||||||||||||||||||||||||||||
101 | The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended July 31, 2023 formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income (Loss), (iii) Condensed Consolidated Statements of Income (Loss) (iv) Condensed Consolidated Statements of Changes in Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | X | ||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | X |
# | Previously filed | ||||||||||||||||||||||||||||
* | These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
MISSION PRODUCE, INC. | ||
/s/ Stephen J. Barnard | ||
Stephen J. Barnard | ||
Chief Executive Officer | ||
/s/ Bryan E. Giles | ||
Bryan E. Giles | ||
Chief Financial Officer |
/s/ Stephen J. Barnard | ||
Stephen J. Barnard | ||
Chief Executive Officer and Director |
/s/ Bryan E. Giles | ||
Bryan E. Giles | ||
Chief Financial Officer |
/s/ Stephen J. Barnard | ||
Stephen J. Barnard | ||
Chief Executive Officer and Director |
/s/ Bryan E. Giles | ||
Bryan E. Giles | ||
Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Millions |
Jul. 31, 2023 |
Oct. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0.9 | $ 0.3 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 70,791,225 | 70,669,535 |
Common stock, shares outstanding (in shares) | 70,791,225 | 70,669,535 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Income Statement [Abstract] | ||||
Net sales | $ 261,400 | $ 313,200 | $ 696,000 | $ 807,900 |
Cost of sales | 233,000 | 270,600 | 640,500 | 745,000 |
Gross profit | 28,400 | 42,600 | 55,500 | 62,900 |
Selling, general and administrative expenses | 17,400 | 20,600 | 55,800 | 58,000 |
Operating income (loss) | 11,000 | 22,000 | (300) | 4,900 |
Interest expense | (3,200) | (1,500) | (8,300) | (3,500) |
Equity method income | 1,800 | 1,700 | 3,200 | 3,600 |
Remeasurement gain on business combination with Moruga | 0 | 2,000 | 0 | 2,000 |
Other (expense) income, net | (1,100) | (900) | (1,300) | 3,600 |
Income (loss) before income taxes | 8,500 | 23,300 | (6,700) | 10,600 |
Provision for income taxes | 2,300 | 5,400 | 2,400 | 3,700 |
Net income (loss) | 6,200 | 17,900 | (9,100) | 6,900 |
Net loss attributable to noncontrolling interest | (400) | (500) | (2,300) | (500) |
Net income (loss) attributable to Mission Produce | $ 6,600 | $ 18,400 | $ (6,800) | $ 7,400 |
Net income (loss) per share attributable to Mission Produce: | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.26 | $ (0.10) | $ 0.10 |
Diluted (in dollars per share) | $ 0.09 | $ 0.26 | $ (0.10) | $ 0.10 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 6.2 | $ 17.9 | $ (9.1) | $ 6.9 |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation adjustments | 0.7 | (0.5) | 1.5 | (0.6) |
Total comprehensive income (loss), net of tax | 6.9 | 17.4 | (7.6) | 6.3 |
Less: Comprehensive loss attributable to noncontrolling interest | (0.4) | (0.5) | (2.3) | (0.5) |
Comprehensive income (loss) attributable to Mission Produce | $ 7.3 | $ 17.9 | $ (5.3) | $ 6.8 |
General |
9 Months Ended |
---|---|
Jul. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | 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 11). 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, 2022. 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, 2023. Certain reclassifications have been made to previously reported balances in the unaudited condensed consolidated balance sheets in order to conform to current period presentation. Consolidation of VIE On May 1, 2022, a reconsideration event occurred related to Moruga S.A.C., an entity for which we have a 60% equity ownership interest. Moruga S.A.C. is a holding company with one wholly owned subsidiary Blueberries Peru, S.A.C. (collectively referred to as “Moruga”). Moruga was previously accounted for under the equity method of accounting, where investments are stated at initial cost and adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions. As a result of the reconsideration event, we concluded that Moruga is a VIE, and that the Company is the primary beneficiary with a controlling financial interest. Based on this conclusion, Moruga was prospectively consolidated on May 1, 2022. Recently issued accounting standards In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities—Supplier Finance Programs (Topic 405), which among other things, requires certain disclosures for a buyer in a supplier finance program. Some of 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, and others are required to be adopted for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the impact of adoption on our financial disclosures. In March 2022, the FASB issued ASU, 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.
|
Inventory |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Major classes of inventory were as follows:
Inventory at October 31, 2022 included a $0.7 million adjustment to increase inventories recognized in the business combination with Moruga to their fair value as of May 1, 2022. These inventories, including the fair value adjustment, were recognized in cost of sales as the underlying inventories were sold.
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Goodwill and Intangible Asset, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Asset, net | Goodwill and Intangible Asset, net Goodwill
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
The intangible asset, net consists of a distributor relationship entirely attributed to the business combination with Moruga on May 1, 2022. The intangible asset has an amortizable life of 2 years, to be recognized in selling, general and administrative expenses coinciding with the timing of the estimated revenues. Amortization expense was less than $0.1 million for both the three months ended July 31, 2023 and 2022, respectively, and $1.2 million and $0.1 million for the nine months ended July 31, 2023 and 2022, respectively. The remaining amortization expense is expected to be recognized as follows.
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Details of Certain Account Balances |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Certain Account Balances | Details of Certain Account Balances Accrued expenses
Other long-term liabilities
(1)Includes uncertain tax positions related to both income taxes and other statutory tax reserves, plus related penalties and interest. Other expense (income), net
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Credit facility Long-term debt under our syndicated credit facility with Bank of America (“BoA”) Merrill Lynch consisted of the following:
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 July 31, 2023, the Company was in compliance with all covenants of the credit facility. Other The Company may issue standby letters of credit through banking institutions. As of July 31, 2023, total letters of credit outstanding were $0.7 million. Certain of our consolidated subsidiaries may also enter into short-term bank borrowings from time to time. Short-term borrowings outstanding were $2.8 million and $2.5 million as of July 31, 2023 and October 31, 2022, respectively, with weighted average variable interest rates of 10.46% and 6.65%, respectively. 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 July 31, 2023 are expected to be repaid by the end of fiscal 2026. Interest rate swaps The Company has four separate interest rate swaps with a total notional amount of $100 million to hedge changes in variable interest rates on the principal value of the Company’s term loans. The interest rate swaps carry fixed LIBOR rates ranging from 1.75% to 2.57%. The swaps expire at various dates through the second quarter of fiscal year 2024. We account for the 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 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 (expense) income, net in the condensed consolidated statements of income (loss) and changes in the asset are presented in net cash used in operating activities in the condensed consolidated statements of cash flow. Refer to Note 8 for more details.
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Commitments and Contingencies |
9 Months Ended |
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Jul. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 consolidated statements of income during the three months ended April 30, 2021. The parties executed a stipulation of settlement agreement on such terms in November 2021. This preliminary settlement was approved by the applicable courts in October 2022. In the course of preparing to send out notices to the settlement class, issues arose regarding the nature and scope of the settlement, specifically with respect to the universe of participants in the settlement class, which the parties were unable to resolve. Plaintiffs filed a motion to enforce compliance with the settlement agreement and the Company filed a cross motion to reform the stipulation of settlement, or in the alternative, to vacate the order of preliminary approval. A hearing before the court was held on this matter in July 2023. The court granted Plaintiff’s motion and directed the parties to proceed with the notice procedures to a class that includes a number of participants that the Company does not feel are appropriate to include. The court did not rule on the fairness of the settlement agreement between the parties and stated that this determination would be made at final approval and that the issues raised in the Company’s motion would be considered at that time. The Company requested an appeal of the ruling and a delay of the mailing of notice to settlement class members, but such request was denied. A final approval hearing date has been set for January 30, 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.
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Income Taxes |
9 Months Ended |
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Jul. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe provision for income tax recorded for the three and nine months ended July 31, 2023 and 2022 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 July 31, 2023, the Company had $20.1 million accrued in UTP on income taxes, of which $10.0 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 (expense) income, net in the condensed consolidated statements of income (loss). |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | 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:
Our mutual fund investments relate to our deferred compensation plan, which are held in a Rabbi trust included in other assets in our condensed 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. The Company has concluded, as of July 31, 2023 and October 31, 2022, 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 associated with the interest rate swaps have been included in prepaid expenses and other current assets and other assets in the condensed consolidated balance sheets and gains and losses for the interest rate swaps have been included in other (expense) income, net in the condensed consolidated statements of income (loss).
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share
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:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Related Party Transactions Transactions with related parties included in the condensed consolidated financial statements were as follows:
(1)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. In November 2022, Moruga entered into a long-term land 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 condensed 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 $0.2 million and $0.5 million for the three and nine months ended July 31, 2023, respectively, and included as part of net loss attributable to noncontrolling interest in the condensed consolidated statements of income (loss). During the second quarter of 2023, we purchased 20 hectares of land in Peru from the same company owned by this same director for $0.2 million, which was comparable to market rates and reflective of an arms-length transaction. (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. (3)Effective May 1, 2022, Moruga was prospectively consolidated into the Company’s financial statements, at which time transactions between parties were prospectively eliminated in the consolidation of our financial statements. Transactions prior to consolidation are presented the same as in prior periods. The Company provides packing and cooling services for blueberries and leases owned land to Moruga. The Company has also provided loans to Moruga to support growth and expansion projects, bearing interest at 6.5%, due December 31, 2024. (4)The Company has provided loans to Copaltas to support expansion projects, bearing interest at 6.66%. The loans have been repaid in full as of October 31, 2022.
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Segment and Revenue Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and Revenue Information | 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. After the consolidation of Moruga on May 1, 2022 (refer to Note 1 for more information), the information used by the CEO changed to include the results of Moruga, and as such, we determined our reportable segments to be: •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 substantially all fruit produced is sold to our Marketing and Distribution segment. Its farming activities range from cultivating early-stage plantings to harvesting from mature trees, and it also earns service revenues for packing and processing for our Blueberries segment, as well as for third-party producers of other crops during the avocado off-harvest season. 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, subsequent to its consolidation on May 1, 2022. Moruga’s farming activities include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all of 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), certain noncash and nonrecurring 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.
Supplemental sales information is as follows.
(1)Blueberry sales are generated entirely by our Blueberries segment and are therefore reported prospectively from May 1, 2022. Adjusted EBITDA (as defined above) for each of our reportable segments was as follows:
(1)Includes depreciation and amortization of purchase accounting assets of $0.1 million and $1.8 million for the three and nine months ended July 31, 2023, respectively, and $0.4 million and $0.5 million for the three and nine months ended July 31, 2022, respectively. (2)Includes recognition of deferred implementation costs for both periods, and for the three and nine months ended July 31, 2022, non-recurring post-implementation process reengineering costs are also included. (3)Represents net loss attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
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Subsequent Event |
9 Months Ended |
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Jul. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn September 6, 2023, the Board of Directors approved a stock repurchase program, which permits the Company to repurchase up to $20 million of shares of the Company’s common stock over the next 36 months. The shares may be repurchased from time to time in open market or privately negotiated transactions in such quantities and at such prices as may be authorized by certain designated officers of the Company. No shares were repurchased following approval through September 11, 2023. |
Pay vs Performance Disclosure - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
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Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to Parent | $ 6.6 | $ 18.4 | $ (6.8) | $ 7.4 |
Insider Trading Arrangements |
3 Months Ended | 9 Months Ended |
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Jul. 31, 2023
shares
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Jul. 31, 2023
shares
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Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | Luis A. Gonzales, one of the Company’s directors, and his spouse, Rosario Del Pilar Vallejos Hinojosa, have adopted a trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the “Sales Plan”) to sell an aggregate of 1,651,500 shares they hold indirectly through Beldar Enterprises S.A., and through Corp SA1, Corp SA2, Corp SA3, and Corp SA4, which are abbreviations for four affiliate corporations that are organized under the laws of Panama. The Sales Plan was adopted on July 14, 2023, with sales commencing under the Sales Plan on October 16, 2023. The Sales Plan terminates on the earliest to occur of (a) the close of business on October 16, 2024 ; (b) the date on which the total shares subject to the Sales Plan have been sold; and (c) the date the Sales Plan is terminated in connection with certain extraordinary transactions as specified by the terms of the Sales Plan. | |
Name | Luis A. Gonzales | |
Title | director | |
Rule 10b5-1 Arrangement Adopted | true | |
Non-Rule 10b5-1 Arrangement Adopted | false | |
Adoption Date | July 14, 2023 | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Arrangement Duration | 366 days | |
Aggregate Available | 1,651,500 | 1,651,500 |
General (Policies) |
9 Months Ended |
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Jul. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation and consolidation | 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, 2022. 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, 2023. Certain reclassifications have been made to previously reported balances in the unaudited condensed consolidated balance sheets in order to conform to current period presentation.
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Consolidation of VIE | Consolidation of VIE On May 1, 2022, a reconsideration event occurred related to Moruga S.A.C., an entity for which we have a 60% equity ownership interest. Moruga S.A.C. is a holding company with one wholly owned subsidiary Blueberries Peru, S.A.C. (collectively referred to as “Moruga”). Moruga was previously accounted for under the equity method of accounting, where investments are stated at initial cost and adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions. As a result of the reconsideration event, we concluded that Moruga is a VIE, and that the Company is the primary beneficiary with a controlling financial interest. Based on this conclusion, Moruga was prospectively consolidated on May 1, 2022.
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Recently issued accounting standards | Recently issued accounting standards In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities—Supplier Finance Programs (Topic 405), which among other things, requires certain disclosures for a buyer in a supplier finance program. Some of 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, and others are required to be adopted for fiscal years beginning after December 15, 2023. Early adoption is permitted. We are currently evaluating the impact of adoption on our financial disclosures. In March 2022, the FASB issued ASU, 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.
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Inventory (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Major Classes of Inventory | Major classes of inventory were as follows:
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Goodwill and Intangible Asset, net (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill |
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Schedule of Finite-Lived Intangible Assets |
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Schedule of Estimated Annual Amortization Expense | The remaining amortization expense is expected to be recognized as follows.
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Details of Certain Account Balances (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | Accrued expenses
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Other Noncurrent Liabilities | Other long-term liabilities
(1)Includes uncertain tax positions related to both income taxes and other statutory tax reserves, plus related penalties and interest.
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Schedule of Other Expense (Income), Net | Other expense (income), net
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Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Under Credit Facility | Long-term debt under our syndicated credit facility with Bank of America (“BoA”) Merrill Lynch consisted of the following:
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis | Financial assets measured and recorded at fair value on a recurring basis included in the condensed consolidated balance sheets were as follows:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Basic and Diluted Earnings Per Share |
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Schedule of Equity Awards Excluded from Computation of Diluted EPS | 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:
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | Transactions with related parties included in the condensed consolidated financial statements were as follows:
(1)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. In November 2022, Moruga entered into a long-term land 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 condensed 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 $0.2 million and $0.5 million for the three and nine months ended July 31, 2023, respectively, and included as part of net loss attributable to noncontrolling interest in the condensed consolidated statements of income (loss). During the second quarter of 2023, we purchased 20 hectares of land in Peru from the same company owned by this same director for $0.2 million, which was comparable to market rates and reflective of an arms-length transaction. (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. (3)Effective May 1, 2022, Moruga was prospectively consolidated into the Company’s financial statements, at which time transactions between parties were prospectively eliminated in the consolidation of our financial statements. Transactions prior to consolidation are presented the same as in prior periods. The Company provides packing and cooling services for blueberries and leases owned land to Moruga. The Company has also provided loans to Moruga to support growth and expansion projects, bearing interest at 6.5%, due December 31, 2024. (4)The Company has provided loans to Copaltas to support expansion projects, bearing interest at 6.66%. The loans have been repaid in full as of October 31, 2022.
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Segment and Revenue Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Sales by Segment | Net sales from each of our reportable segments were as follows.
Supplemental sales information is as follows.
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Reconciliation of Revenue from Segments to Consolidated | Adjusted EBITDA (as defined above) for each of our reportable segments was as follows:
(1)Includes depreciation and amortization of purchase accounting assets of $0.1 million and $1.8 million for the three and nine months ended July 31, 2023, respectively, and $0.4 million and $0.5 million for the three and nine months ended July 31, 2022, respectively. (2)Includes recognition of deferred implementation costs for both periods, and for the three and nine months ended July 31, 2022, non-recurring post-implementation process reengineering costs are also included. (3)Represents net loss attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
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General (Details) |
9 Months Ended | ||
---|---|---|---|
Jul. 31, 2023
Segment
|
Jul. 31, 2023
segment
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May 01, 2022
subsidiary
|
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Business Acquisition [Line Items] | |||
Number of operating segments | 3 | 3 | |
Moruga | |||
Business Acquisition [Line Items] | |||
Number of wholly owned subsidiaries | 1 | ||
Moruga | |||
Business Acquisition [Line Items] | |||
Ownership interest (as a percent) | 60.00% | 60.00% |
Inventory - Major Classes of Inventory (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Oct. 31, 2022 |
Jul. 31, 2023 |
|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 33.8 | $ 46.2 |
Crop growing costs | 19.5 | 20.2 |
Packaging and supplies | 19.8 | 21.4 |
Inventory | 73.1 | $ 87.8 |
Inventory purchase accounting adjustment | $ 0.7 |
Goodwill and Intangible Asset, net - Goodwill (Details) $ in Millions |
Jul. 31, 2023
USD ($)
|
---|---|
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 39.4 |
Goodwill, ending balance | 39.4 |
International Farming | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 26.9 |
Goodwill, ending balance | 26.9 |
Blueberries | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | 12.5 |
Goodwill, ending balance | $ 12.5 |
Goodwill and Intangible Asset, net - Intangible asset, net (Details) - USD ($) $ in Millions |
Jul. 31, 2023 |
Oct. 31, 2022 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Intangible asset, gross | $ 2.8 | $ 2.8 |
Accumulated amortization | (2.0) | (0.8) |
Intangible asset, net | $ 0.8 | $ 2.0 |
Goodwill and Intangible Asset, net - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible asset amortizable life (in years) | 2 years | 2 years | ||
Amortization expense | $ 0.1 | $ 0.1 | $ 1.2 | $ 0.1 |
Goodwill and Intangible Asset, net - Estimated annual amortization expense (Details) $ in Millions |
Jul. 31, 2023
USD ($)
|
---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remaining 2023 | $ 0.2 |
Year Ending October 31, 2024 | $ 0.6 |
Details of Certain Account Balances - Accrued expenses (Details) - USD ($) $ in Millions |
Jul. 31, 2023 |
Oct. 31, 2022 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Employee-related | $ 9.8 | $ 16.3 |
Freight | 4.4 | 6.2 |
Outside fruit purchase | 1.4 | 1.0 |
Legal settlement | 0.8 | 0.8 |
Other | 9.7 | 5.8 |
Accrued expenses | 26.1 | 30.1 |
Uncertain tax positions | 20.7 | 17.1 |
Employee-related | 1.6 | 1.2 |
Other | 1.4 | 0.9 |
Other long-term liabilities | $ 23.7 | $ 19.2 |
Details of Certain Account Balances - Other expense (income), net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Gains on derivative financial instruments | $ (0.1) | $ (0.1) | $ (0.1) | $ (3.1) |
Foreign currency transaction loss | 1.3 | 1.2 | 2.6 | 1.1 |
Interest income | (0.2) | (0.3) | (1.3) | (1.5) |
Other | 0.1 | 0.1 | 0.1 | (0.1) |
Other expense (income) | $ 1.1 | $ 0.9 | $ 1.3 | $ (3.6) |
Debt - Long Term Debt Under Credit Facility (Details) - USD ($) $ in Millions |
Jul. 31, 2023 |
Oct. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Total long-term debt | $ 168.3 | $ 141.0 |
Less debt issuance costs | (0.4) | (0.6) |
Long-term debt, net of debt issuance costs | 167.9 | 140.4 |
Less current portion of long-term debt | (3.6) | (3.5) |
Long-term debt, net of current portion | 164.3 | 136.9 |
Revolving Line of Credit | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 70.0 | $ 40.0 |
Interest rate | 7.33% | 5.34% |
Senior Term Loan A-1 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 48.1 | $ 50.0 |
Interest rate | 7.42% | 5.58% |
Senior Term Loan A-2 | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 49.6 | $ 50.0 |
Interest rate | 7.67% | 5.83% |
Notes Payable, BoA | Secured Debt | ||
Debt Instrument [Line Items] | ||
Total long-term debt | $ 0.6 | $ 1.0 |
Interest rate | 3.96% | 3.96% |
Debt - Narrative (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Jul. 31, 2023
USD ($)
derivativeInstrument
|
Oct. 31, 2022
USD ($)
|
|
Derivative [Line Items] | ||
Letters of credit outstanding | $ 0.7 | |
Short-term debt | $ 2.8 | $ 2.5 |
Percentage bearing variable interest rate | 10.46% | 6.65% |
Minimum | Blueberries | ||
Derivative [Line Items] | ||
Percentage bearing variable interest rate | 5.00% | |
Maximum | Blueberries | ||
Derivative [Line Items] | ||
Percentage bearing variable interest rate | 6.50% | |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Number of derivative instruments | derivativeInstrument | 4 | |
Notional amount | $ 100.0 | |
Interest Rate Swap | Minimum | London Interbank Offered Rate (LIBOR) | ||
Derivative [Line Items] | ||
Basis spread on variable rate | 1.75% | |
Interest Rate Swap | Maximum | London Interbank Offered Rate (LIBOR) | ||
Derivative [Line Items] | ||
Basis spread on variable rate | 2.57% |
Commitments and Contingencies (Details) $ in Millions |
1 Months Ended |
---|---|
May 31, 2021
USD ($)
| |
Class Action V. Mission Produce | Settled Litigation | |
Loss Contingencies [Line Items] | |
Amount awarded to other party | $ 0.8 |
Income Taxes (Details) $ in Millions |
Jul. 31, 2023
USD ($)
|
---|---|
Income Tax Disclosure [Abstract] | |
Uncertain tax provision | $ 20.1 |
Penalties and interest accrued | $ 10.0 |
Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Numerator: | ||||
Net income (loss) attributable to Mission Produce (in millions) | $ 6.6 | $ 18.4 | $ (6.8) | $ 7.4 |
Denominator: | ||||
Weighted average shares of common stock outstanding, used in computing basic earnings per share (in shares) | 70,788,574 | 70,656,976 | 70,740,638 | 70,641,669 |
Weighted average shares of common stock outstanding, used in computing diluted earnings per share (in shares) | 70,918,030 | 70,779,907 | 70,740,638 | 70,784,772 |
Earnings per share | ||||
Basic (in dollars per share) | $ 0.09 | $ 0.26 | $ (0.10) | $ 0.10 |
Diluted (in dollars per share) | $ 0.09 | $ 0.26 | $ (0.10) | $ 0.10 |
Stock Options | ||||
Denominator: | ||||
Effect of dilutive securities (in shares) | 203 | 57,066 | 0 | 121,383 |
Restricted Stock Units (RSUs) | ||||
Denominator: | ||||
Effect of dilutive securities (in shares) | 129,253 | 65,865 | 0 | 21,720 |
Earnings Per Share - Awards Excluded from Computation of Diluted EPS (Details) - shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2023 |
Jul. 31, 2022 |
|
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 1,897,256 | 729,660 | 2,103,633 | 732,066 |
Restricted Stock Units (RSUs) | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 120,214 | 193,896 | 571,640 | 252,883 |
Segment and Revenue Information - Narrative (Details) - 9 months ended Jul. 31, 2023 |
Segment |
segment |
---|---|---|
Segment Reporting [Abstract] | ||
Number of operating segments | 3 | 3 |
Number of reportable segments | 3 |
Subsequent Event (Details) - Subsequent Event $ in Millions |
Sep. 06, 2023
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Shares repurchase amount | $ 20 |
Stock repurchase program, term | 36 months |
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