AVO Q1 Earnings Beat, International Farming Unit's Sales Up 59% Y/Y

Mission Produce, Inc. AVO posted first-quarter fiscal 2025 results, which reflected higher profits and a sales beat. Both earnings and revenues grew on a year-over-year basis. Quarterly results benefited from solid consumer demand and higher volumes, offsetting industry supply headwinds in Mexico. The company’s strategy of diversification across categories and markets aided earnings results against a challenging year-earlier comparison. Stay up-to-date with all quarterly releases: See Zacks Earnings CalendarThis Zacks Rank #3 (Hold) company’s shares have lost 1.6% in the past year compared with the industry’s 8.6% decline.An Insight Into AVO’s Quarterly PerformanceThe company posted adjusted quarterly earnings of 10 cents per share that significantly outperformed the Zacks Consensus Estimate of a loss of one cent per share. Also, the bottom-line figure rose a penny from nine cents per share recorded in the year-earlier quarter.Total revenues jumped 29% to $334.2 million and beat the Zacks Consensus Estimate of $281 million. The year-over-year increase in the top line was mainly backed by the Marketing & Distribution segment, where average per-unit avocado selling prices grew 25% on a 5% rise in avocado volumes sold.Mission Produce, Inc. Price, Consensus and EPS Surprise Mission Produce, Inc. price-consensus-eps-surprise-chart | Mission Produce, Inc. QuoteIncreased selling prices include the industry supply limitations in Mexico, with resilient consumer demand. Blueberries segment revenues jumped on 70%-growth in volumes sold, somewhat offset by a 33%-decline in average per-unit selling prices. Higher total acreage and yields from the company farms drove robust blueberry volumes, while lower prices were led by a normalization of the supply and demand backdrop this year.Gross profit rose 9.8% year over year to $31.5 million, buoyed by the International Farming unit, which gained from higher packing and cooling services that correlated with increased blueberry production volumes. This was partly offset by weak gross profit in the Marketing & Distribution segment, hurt by lower per-unit margins on avocados sold stemming from challenges in obtaining Mexican supply to cater to customer commitments.  The gross margin contracted 170 basis points to 9.4%.Selling, general and administrative expenses (SG&A) for the first quarter jumped 7% to $22.2 million, mainly owing to the elevated employee-related costs with statutory profit-sharing expenses and stock-based compensation. Adjusted EBITDA fell 8% year over year to $17.7 million, thanks to soft per-unit gross margins on fruit sold in the Marketing & Distribution and Blueberries segments.AVO’s Q1 Business Segment ResultsMarketing & Distribution: Net sales in this segment surged 32% to $295.8 million, backed by the avocado pricing and volume dynamics. However, the segment’s adjusted EBITDA was $9.7 million, down 11.8% from last year owing to the impacts of weak per-unit gross margins on avocados sold.International Farming: Sales in the International Farming segment for the first quarter jumped 59% to $9.2 million, thanks to increased blueberry packing service revenues year over year. Adjusted EBITDA for the segment was positive $1.8 million against a negative $0.5 million in the year-earlier quarter. This is mainly due to enhanced overhead absorption realized by increased packing revenues, aided by the Blueberries business.Blueberries: Sales in the Blueberries segment rose 12% to $36.4 million in the fiscal first quarter, backed by the blueberry pricing and volume dynamics. The segment’s adjusted EBITDA plunged 29% to $6.2 million, owing to reduced selling prices affecting per-unit gross margins.Mission Produce’s Financial SnapshotMission Produce ended the quarter with $40.1 million of cash, $114.9 million of long-term debt (excluding current maturities) and $550.8 million of shareholders’ equity excluding non-controlling interest of $32.1 million. As of Jan. 31, 2025, inventory rose 34.5% to $122.7 million.Net cash used in operating activities was $1.2 million for the quarter ended Jan. 31, 2025. Capital expenditures were $14.8 million in the first quarter, which consisted of mainly developing the avocado orchard, maintaining the pre-production orchard, and land improvements, packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru.What to Expect From AVO in Q2 of FY25?Moving forward, the tariff impacts on Mexican supply dynamics continue to remain uncertain and fluid. Nevertheless, AVO is committed to leveraging its competitive strengths in the California and Peruvian sourcing markets. Management provided the guidance for the second quarter of fiscal 2025. The assumptions do not reflect any influence from potential tariffs.Industry volumes for the fiscal second quarter are likely to remain consistent with the year-ago period. Mexico volumes are likely to taper off in the quarter as the industry harvest comes in lighter than the initial estimations. Nevertheless, California and Peruvian harvests are likely to get off to a faster start depending on improved weather conditions.At expected volume levels, pricing is likely to be higher on a year-over-year basis by nearly 5%. Harvest timing of the company’s Peruvian blueberry season this year is similar to the year-ago period with roughly 20% of the harvest to be sold through in the same quarter, which shows an increase in volumes sold of nearly 35-40% when applied to a larger total harvest from the company’s farms for the 2024/2025 season. Average sales prices are likely to decrease sequentially but will remain consistent with prices experienced in the year-earlier quarter. For fiscal 2025, total capital expenditures are predicted to be in the bracket of $50-$55 million.Stocks to Consider in Consumer Staples SpaceThe Chef's Warehouse CHEF, which is a distributor of specialty food products in the United States, currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.CHEF has a trailing four-quarter earnings surprise of 34%, on average. The Zacks Consensus Estimate for CHEF’s current financial-year sales and EPS indicates growth of 5.7% and 17.7%, respectively, from the year-ago numbers.Post Holdings POST, which is a consumer-packaged goods holding company, has a Zacks Rank of 2 at present. POST has a trailing four-quarter average earnings surprise of 22.3%.The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and EPS implies growth of 0.3% and 2.2%, respectively, from the year-ago numbers.Utz Brands UTZ, which has a diverse portfolio of salty snacks, currently carries a Zacks Rank of 2. UTZ has a trailing four-quarter earnings surprise of 8.8%, on average.The Zacks Consensus Estimate for Utz Brands’ current financial-year sales and EPS indicates growth of 1.2% and 10.4%, respectively, from the year-ago numbers.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Chefs' Warehouse, Inc. (CHEF): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis Report Utz Brands, Inc. (UTZ): Free Stock Analysis Report Mission Produce, Inc. (AVO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks