Mission Produce, Inc. ((AVO)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Mission Produce’s latest earnings call painted a conflicted picture for investors, as headline numbers deteriorated sharply while underlying demand and strategic moves pointed to a healthier long-term trajectory. Revenue fell 24% and profitability compressed amid a temporary oversupply shock, yet avocado volumes surged, new households entered the category, and management struck an optimistic tone on integration synergies and second-half margin recovery.

Volume Growth and Category Expansion

Mission’s core avocado franchise remained a bright spot, with volume sold up 15% year-over-year in the second quarter despite lower prices weighing on revenue. U.S. avocado consumption rose by strong double digits and more than 1.6 million new households bought avocados during the quarter, reinforcing a powerful demand tailwind for the category.

Peruvian Production Ramp

The company expects a sizable lift from its own Peruvian orchards, forecasting exportable production in the 120–130 million pound range, about 20% higher than last year’s 105 million. These volumes are heavily weighted toward the fiscal fourth quarter, positioning Peru as a key driver of second-half revenue and margin recovery as more owned fruit flows through the system.

Calavo Acquisition Closed Early and Synergy Target

Mission closed its acquisition of Calavo earlier than anticipated, on May 28, giving management more time in fiscal 2026 to integrate the businesses. The company is targeting at least $25 million of annualized cost synergies within 18 months, with benefits expected to begin showing in the fourth quarter and build through fiscal 2027 as operations and overhead are streamlined.

Second-Half Adjusted EBITDA Guidance

Despite weak second-quarter results, Mission issued upbeat profitability guidance for the back half of the year on a combined-company basis. Management forecast consolidated adjusted EBITDA of $28–$32 million for the third quarter and $84–$88 million for the second half, reflecting expectations for margin normalization, stronger Peruvian contributions and initial benefits from the Calavo integration.

Marketing & Distribution Profitability Resilience

While avocado pricing and margins were under pressure, the Marketing & Distribution segment still managed to grow gross profit around 5% on a first-half basis. This resilience was driven by robust 15% avocado volume growth and solid commercial execution, underscoring the strength of Mission’s distribution platform even in a challenging pricing environment.

Blueberry Segment Progress

The blueberry business showed incremental improvement, with adjusted EBITDA rising to $1.2 million in the second quarter from $0.8 million a year ago. Management noted that newer acreage is maturing and expects yields to rise and per-unit costs to fall as farms reach full productivity, setting the stage for better profitability over time.

Capital Allocation and Liquidity Actions

The board extended Mission’s share repurchase program, signaling confidence despite near-term earnings pressure, while management reiterated full-year capital expenditure guidance of about $45 million, including modest Calavo-related spending. The company reported cash and cash equivalents of $33 million as of April 30, 2026, and continues to prioritize disciplined investment in its vertically integrated supply chain.

Strategic Positioning and Prepared Foods Opportunity

Leadership repeatedly emphasized Mission’s multi-region sourcing and vertical integration as core competitive advantages in a volatile produce market. The Calavo deal adds a meaningful prepared foods platform, particularly guacamole and ready-to-eat products, which management views as higher-margin adjacencies with substantial growth runway and relevance for retail and foodservice customers.

Revenue Decline

Headline revenue dropped to $290.9 million in the second quarter, a steep 24% year-over-year decline largely attributed to falling avocado selling prices rather than a demand issue. The contrast between lower top-line dollars and higher shipped volumes highlights the deflationary nature of the current cycle and the sensitivity of reported sales to commodity pricing.

Sharp Price and Margin Compression

Per-unit avocado sales prices plunged about 36% compared with the prior year, eroding profitability across the portfolio. Gross profit fell to $20.5 million from $28.4 million, and gross margin slipped roughly 50 basis points to 7% of revenue, reflecting the difficulty of offsetting price compression with volume gains alone.

Significant Earnings Decline

Adjusted net income deteriorated to $0.8 million, or $0.01 per diluted share, versus $8.7 million, or $0.12 per share, in the comparable quarter last year. Adjusted EBITDA also dropped sharply to $7.1 million from $19.1 million, underscoring how the combination of lower prices and compressed margins cascaded through to the bottom line.

Marketing & Distribution EBITDA Pressure

Despite higher volumes and resilient gross profit, the Marketing & Distribution segment saw adjusted EBITDA fall to $7.2 million from $16.8 million year-over-year. Management attributed the decline to lower per-unit margins, as the company was forced to navigate a difficult pricing environment and pay up for certain fruit sizes while discounting others.

International Farming Weakness

The International farming segment swung to an adjusted EBITDA loss of $1.3 million, compared with income of $1.5 million in the prior-year quarter. The decline reflected lower third-party blueberry packing volumes and early-stage investments in mango production that have yet to deliver meaningful near-term financial benefits.

Blueberry Sales Decline and Higher Unit Costs

Blueberry segment revenue fell to $11.0 million from $15.7 million, as volumes and yields on newer acreage remained below full potential. Although per-unit pricing improved, higher per-unit production costs linked to immature fields more than offset the benefit, limiting the segment’s contribution to consolidated earnings.

Operating Cash Use and Transaction Costs

Net cash used in operating activities rose to $21 million over the first six months, versus $13 million in the prior year, pressured in part by transaction-related outflows. Management separately highlighted $6.4 million of Calavo advisory costs, noting that roughly $5 million of the operating cash usage in the period was associated with those transaction expenses.

Supply Glut and Sizing Mismatch Impacted Margins

An unusually large Mexican crop triggered a temporary oversupply that distorted the size curve of available fruit, peaking in April and hitting margins. Mission was forced into higher-priced spot purchases for in-demand sizes while discounting less-favored sizes, a mix that materially compressed per-unit profitability and even delayed harvesting in California and Peru.

Near-Term Pricing Outlook and Weather Risk

Looking ahead to the third quarter, the company expects avocado pricing to remain soft, with average prices about 15% below last year’s $1.75 per pound level even as industry volumes rise 5–10%. Management also flagged potential El Niño-related weather risks that could affect future crops and extend their impact into 2027, adding an element of agricultural uncertainty.

Guidance and Outlook

Mission’s outlook hinges on a second-half rebound, with consolidated third-quarter adjusted EBITDA projected at $28–$32 million and the back half at $84–$88 million, including a partial Calavo contribution. Synergy realization is expected to be limited in the near term, but management is targeting at least $25 million of annualized cost savings within 18 months, supported by a larger Peruvian harvest, stable capex near $45 million and a $33 million cash position.

Mission Produce’s call ultimately balanced near-term pain with credible levers for recovery and growth, a mix that may test investor patience but offers upside if execution stays on track. Margin compression, cash usage and weather risk remain watch points, yet rising avocado adoption, expanding Peruvian volumes and the Calavo integration give the company multiple ways to rebuild earnings power over the next several years.