AVO 10-K & 10-Q changes, risk factors and insider trading
Mission Produce, Inc. · Nasdaq · Agricultural Services · CIK 1802974 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
We employ both internal resources and external consultants to conduct auditing and testing for weaknesses in our computer systems and network infrastructure to reduce the likelihood of any cybersecurity incident and have developed a multi-discipline response plan to help ensure that our executives are fully and accurately informed and manage, with the help of content experts, the discovery, investigation and auditing of, and recovery from any cybersecurity incidents. Despite these efforts, we can provide no assurance that these measures will successfully prevent all cybersecurity incidents or mitigate losses resulting from a cybersecurity incident. Additionally, we currently utilize certain AI tools, and as we increase our use of artificial intelligence tools, the risk of unauthorized access to our data and of making errors or erroneous decisions based on our reliance on the AI tool will increase. Evolving and uncertain AI laws, standards, and governance expectations could impose new compliance obligations, restrictions, audit requirements, or liabilities, and our failure to comply could result in fines, remediation costs, or reputational harm.see in full comparison
We rely on third-party service providers, including software and cloud data service providers, for certain areas of our business, including sourcing/procurement, supply chain, manufacturing, distribution, information technology support services and administrative functions (such as payroll processing, health and benefit plan administration and certain finance and accounting functions). Failure by these third parties to meet their contractual, regulatory and other obligations to us, or our failure to adequately monitor their performance, could result in our inability to achieve the expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation or have a negative impact on employee morale, all of which can adversely affect our business. In addition, Generative AI tools may inadvertently expose, misuse, or incorporate our confidential, personal, or third‑party data, which could result in data leakage, intellectual property risks, privacy violations, or contractual breaches.see in full comparison
“and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees. In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire.”see in full comparison
Further, we cannot guarantee that our internal controls and compliance systems will always protect us from acts committed by employees, agents, business partners or that businesses that we acquire would not violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering, and data privacy. Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S.see in full comparisonand in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees. In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire.
“In addition, the uncertainty of the legality of these tariffs, the time period covered by potential changes in trade policy, the varying breadth and scope of these tariffs, and the evolving nature of tariff policy have created, and may continue to cause, volatility and ambiguity in our business, including with respect to costs, pricing, and margin.”see in full comparison
“System security risks, data protection breaches, cyber-attacks (including those leveraging AI), and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.”see in full comparison
Full comparison: every changed paragraph (22)
Our ability to distribute fruit is limited by our ability to acquire supply from third-party growers and to produce fruit on our own farms. With a limited number of trees on our farms and on the farms from which we purchase, our ability to obtain supply from third parties and adapt to any changes in demand offor our product is constrained. If we are unable to purchase sufficient volumes from third-party growers at acceptable prices or demand for our products were to increase in the future, we would need access to additional fruit from third-party suppliers or additional capacity and production from our owned farms. This may expose us to increases in short-term costs and additional production exposes us to additional long-term operating costs. If supply decreases dramatically, whether as a result of climate change, labor matters, regulatory or legal actions, or other problems, prices have and could dramatically increase and we may not be able to purchase sufficient fruit at acceptable prices. The impact of the limited supply and increased prices could decrease our revenues or increase our costs of goods sold, which would harm our business and financial results.
The market for our products is highly competitive. Competition for the purchase of our products from suppliers and the sale of our products to our customers primarily comes from other marketers and distributors. If we are unable to consistently pay growers a competitive price for their fruit, these growers may choose to have their fruit marketed by alternative distributors. If we are unable to offer attractive prices or consistent supply of desired size and quality of fruit to retail, foodservice, wholesale, and other customers, they may choose to purchase from other companies. We generally do not have long-term contracts with suppliers or customers, and therefore they may direct all or a portion of their business to a competitor at any time. Such competition may adversely affect our volumes and prices, which would harm our business and results of operations.
The price of various products that we use in packing, shipping, or distributing our products can significantly affect our costs. Fuel and transportation costs are a significant costoperating expense component and also make up a meaningful portion of the price of much of the fruit that we purchase from growers. There can be no assurance that we will be able to, or to what extent we can, pass on to our customers the increased costs we incur in these respects.
We may not have sufficient and established sales channels and markets for growing industry and owned farm supply. As a result, we may sell fruit in less favorable markets at reduced profitability and/or dispose of the fruit at a loss. Lack of a holistic customer strategy and prioritization of customers for fulfillment during shortages or at sub optimalsuboptimal pricing may negatively impact financial results and cause operational challenges.
Our ability to source, produce, distribute, and sell products in coordination with our suppliers is critical to our success. We depend on the effectiveness of our supply chain management to ensure a reliable and sufficient supply of quality products. Our business has been, and may continue to be, impacted by supply chain constraints. These supply chain constraints could put significant inflationary pressures or cause significant disruption in our business and operations. The Company’s business and results of operations may be adversely affected by increased costs, disruption of supply or unavailability or shortages of materials, fuel and other supplies. In addition, disruption of operations at third partythird-party service providers, suppliers, or logistics providers may impact the Company’s ability to distribute products. Actions taken to mitigate the impact of any potential disruption, including increasing inventory in anticipation of a potential production or supply interruption, may adversely affect the Company’s financial results. Additionally, labor-related challenges have caused disruptions for many of these providers and may continue to impact the Company's ability to receive inputs or distribute products. Additionally, from time to time, we experience operational difficulties with third parties, which may include increases in costs, reductions in the availability of materials or production capacity, delays in the addition of incremental capacity, failures to meet shipment or production deadlines. The inability of a third-party supplier or provider to fulfill obligations in a timely manner or in desirable quantities or to meet our safety, quality and supplier standards or regulatory requirements could have a material adverse impact on our businesses, reputation, financial condition, results of operations and cash flows.
Our success largely depends on the contributions of our management team, including Stephen Barnard, our CEO.team. We believe that these individuals’ expertise and knowledge about our industry and their respective fields and their relationships with other individuals in our industry are critical factors to our continued growth and success. Failure or inability of key management team members to deliver on the Company’s strategic goals, execute on action items and plans, and/or operate the business in an effective manner may have a material adverse effect on our business and financial condition. We have had departures of members of senior management and other members of senior management could depart the Company. This could have a material adverse effect on our business and prospects. Our success also depends upon our ability to adequately compensate, attract and retain qualified personnel. The operation of our facilities depends on adequate and affordable supply of labor and good labor relations with our employees. Our employees are essential to our operations and our ability to farm, package and/or deliver our products. We are subject to inflationary pressures in labor as well as a tight labor market for recruitment and retention of skilled, short- and long-term labor. If we are unable to attract and retain enough skilled personnel at a reasonable cost, our results may be negatively affected.
Legislation and regulation requiring extensive disclosure and third-party audits of climate-related and other environmental data and the requirements that we and our suppliers must undertake to monitor our emissions and comply with reporting obligations will cause us to experience significant increases in costs and expenditure of resources. Additionally, efforts to improve energy and resource efficiency, mitigate environmental impacts from growing practices may cause significant additional costs or restrictions on our business and operations. We may not be able to pass any resulting cost increases to our customers. Furthermore, we may be required to make additional investments of capital to maintain compliance with new laws and regulations or in response to third partythird-party market pressures.
System security risks, data protection breaches, cyber-attacks (including artificial intelligence (AI)-enabled threats), AI-related operational errors, and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
System security risks, data protection breaches, cyber-attacks (including those leveraging AI), and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
System security risks (including risks related to AI), data protection breaches, cyber-attacks, and systems integration issues could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
System security risks, data protection breaches, cyber-attacks and systems integration issues (including risks related to AI) could disrupt our internal operations or services provided to customers, and any such disruption could reduce our expected revenue, increase our expenses, damage our reputation and adversely affect our stock price.
Our internal computer systems and those of our current and any future customers, partners, contractors, consultants, vendors and suppliers are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication, system, and electrical failures. Such system failures, accidents or security breaches can cause material disruption to our business operations and cause us to expend considerable resources to address such failures or breaches. Experienced computer programmers and hackers may be able to penetrate our information technology security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns, or develop and deploy phishing attempts, viruses, worms, and other malicious software programs that attack our programs or otherwise exploit any security vulnerabilities of our products or our people. The risk of cybersecurity attacks may increase as AI capabilities improve and are increasingly used to identify vulnerabilities and construct increasingly sophisticated cybersecurity attacks. In addition, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our sales, production, distribution or other critical functions.
We rely on third-party service providers, including software and cloud data service providers, for certain areas of our business, including sourcing/procurement, supply chain, manufacturing, distribution, information technology support services and administrative functions (such as payroll processing, health and benefit plan administration and certain finance and accounting functions). Failure by these third parties to meet their contractual, regulatory and other obligations to us, or our failure to adequately monitor their performance, could result in our inability to achieve the expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to our reputation or have a negative impact on employee morale, all of which can adversely affect our business. In addition, Generative AI tools may inadvertently expose, misuse, or incorporate our confidential, personal, or third‑party data, which could result in data leakage, intellectual property risks, privacy violations, or contractual breaches.
We employ both internal resources and external consultants to conduct auditing and testing for weaknesses in our computer systems and network infrastructure to reduce the likelihood of any cybersecurity incident and have developed a multi-discipline response plan to help ensure that our executives are fully and accurately informed and manage, with the help of content experts, the discovery, investigation and auditing of, and recovery from any cybersecurity incidents. Despite these efforts, we can provide no assurance that these measures will successfully prevent all cybersecurity incidents or mitigate losses resulting from a cybersecurity incident. Additionally, we currently utilize certain AI tools, and as we increase our use of artificial intelligence tools, the risk of unauthorized access to our data and of making errors or erroneous decisions based on our reliance on the AI tool will increase. Evolving and uncertain AI laws, standards, and governance expectations could impose new compliance obligations, restrictions, audit requirements, or liabilities, and our failure to comply could result in fines, remediation costs, or reputational harm.
In addition, the uncertainty of the legality of these tariffs, the time period covered by potential changes in trade policy, the varying breadth and scope of these tariffs, and the evolving nature of tariff policy have created, and may continue to cause, volatility and ambiguity in our business, including with respect to costs, pricing, and margin.
From time to time, we review acquisition and investment prospects that could complement our business. Future acquisitions by us could result in accountingsignificant charges,costs, potentially dilutive issuances of equity securities, and increased debt and contingent liabilities, any of which could have a material adverse effect on our business and the market price of our common stock. Acquisitions entail numerous risks, including the integration of the acquired operations, diversion of management’s attention to other business concerns, risks of entering markets in which we have limited prior experience, assumption of liabilities and the potential loss of key customers or employees of acquired organizations. We may be unable to successfully integrate businesses or the personnel of any business that might be acquired in the future, and we may fail to realize the anticipated benefits of any acquisition. Our failure to do so could have a material adverse effect on our business and on the market price of our common stock, and we may also not be able to achieve an attractive return on our investments.
Further, we cannot guarantee that our internal controls and compliance systems will always protect us from acts committed by employees, agents, business partners or that businesses that we acquire would not violate U.S. and/or non-U.S. laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering, and data privacy. Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees. In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire.
and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties, and could cause us to incur significant legal and investigatory fees. In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire.
On September 10, 2025, Peru enacted tax law which provided benefits to agribusiness entities. The new law subjects us to lower Peruvian corporate income tax rates than the rate in effect on the date of repeal of 25%, as follows: 15% for calendar years 2026 to 2035 and 29.5% thereafter.
On December 30, 2020, Peru enacted tax law repealing current tax law which provided benefits to agribusiness entities. The new law subjects us to higher Peruvian corporate income tax rates than the rate in effect on the date of repeal of 15%, as follows: 20% for calendar years 2023 to 2024, 25% for calendar years 2025 to 2027, and 29.5% thereafter.
OurThe daily trading volume of our common stock beganfluctuates, trading on Nasdaq in October 2020, butand we can provide no assurance that we will be able to maintain an active trading market for our common stock. The liquidity of our common stock is also impacted by our stockholder concentration. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our growth.
Pursuant to Section 404 of Sarbanes-Oxley, our management is required to report upon the effectiveness of our internal control over financial reporting beginning with the annual report for our fiscal year ending October 31, 2021.reporting. Our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. To comply with the requirements of being a reporting company under the Exchange Act, we have implemented additional financial and management controls, reporting systems and procedures; and hired additional accounting and finance staff. If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Management's Discussion & Analysis (MD&A)
New heading “Macroeconomic environment”
New heading “Non-GAAP Measure”
Removed heading “Consolidation of VIE”
Removed heading “Goodwill impairment”
Removed heading “Interest expense”
Removed heading “Equity method income”
Largest changes
“During the fourth quarter of fiscal 2022, we performed our annual goodwill impairment test on our Peruvian farming reporting unit within the International Farming segment and determined that the qualitative factors indicated that it was more-likely-than-not that the fair value of the reporting unit was less than its carrying value. As a result, with the assistance of a third-party specialist, we performed a quantitative assessment of the fair value of the reporting unit using the DCF and GPC methods, resulting in an impairment charge of $49.5 million. …”see in full comparison
“No goodwill impairment was recognized in fiscal years 2024 or 2023. A noncash impairment loss of $49.5 million was recognized in the consolidated statements of income (loss) during the fourth quarter of fiscal 2022. For more information, refer to Note 4 to the consolidated financial statements.”see in full comparison
“During fiscal 2025, the United States enacted a series of global trade policies including reciprocal and retaliatory tariffs, and subsequent revisions and exemptions thereof, on imported goods. As a result, tariffs have applied at different dates and rates throughout the year, depending on country of origin. We are continuing to monitor changes to global trade policies, including the impact of proposed and enacted tariffs as future changes could have direct or indirect impacts to our business. For additional information, see the risk factor “Changes to U.S. …”see in full comparison
“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, material legal settlements, amortization of inventory adjustments recognized from business combinations, and any special, non-recurring, or one-time …”see in full comparison
“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, advisory costs, material legal settlements, amortization of inventory adjustments recognized from business combinations, and any special, non-recurring, or one-time …”see in full comparison
Full comparison: every changed paragraph (80)
We have three operating segments which are also reportable segments:
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, the information used by the CEO was expanded to include the results of Moruga, and as such, we determined our reportable segments to be:
•International Farming. International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing & Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees. It also earns service revenues for packing and processing fruit for both our Blueberries segment, as well as for third-party producers of other crops. Operations are principally located in Peru,Peru withand smaller operations emerging in other areas of Latin America.Guatemala.
•Blueberries. The Blueberries segment represents the resultsconsists of Moruga, subsequent to its consolidation on May 1, 2022. Moruga’s farming activities that include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement.
Macroeconomic environment
During fiscal 2025, the United States enacted a series of global trade policies including reciprocal and retaliatory tariffs, and subsequent revisions and exemptions thereof, on imported goods. As a result, tariffs have applied at different dates and rates throughout the year, depending on country of origin. We are continuing to monitor changes to global trade policies, including the impact of proposed and enacted tariffs as future changes could have direct or indirect impacts to our business. For additional information, see the risk factor “Changes to U.S. trade policy, tariff and import/export regulations may adversely affect our operating results” in Section 1A. of this report.
Consolidation of VIE
On May 1, 2022, a reconsideration event occurred related to Moruga S.A.C., a holding company with one wholly owned subsidiary, Blueberries Peru, S.A.C. (collectively referred to as “Moruga”), an entity for which we have a 60% equity ownership interest. 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 variable interest entity (“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. For more details on Moruga, refer to Note 3 to the financial statements in this annual report.
The Company closed its Canadian distribution centers within its Marketing & Distribution segment during the first quarter of 2025. In connection with the closure, we recognized approximately $2.7 million in charges for fiscal 2025. Charges consisted of accelerated depreciation expense of property, plant and equipment, accelerated amortization expense of operating lease right-of-use assets, loss on disposal of property, plant and equipment, and severance costs which were partially offset by gains on settlement of asset retirement obligations. Volume from these facilities has been absorbed by our other distribution centers and third-party service providers.
In November 2024, the Company announced plans to close its Canadian distribution centers within its Marketing & Distribution segment. Operations at these distribution centers will continue until their planned closure during the first quarter of fiscal 2025. Distribution volume from these facilities will be absorbed by our other distribution centers or third-party service providers, which is expected to generate net cost savings on an ongoing basis. In connection with the closure, we expect to recognize approximately $1.3 million of accelerated depreciation of property, plant and equipment and $0.4 million of accelerated lease expense during the first quarter of 2025. Severance costs are expected to be immaterial.
The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute. In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: tariffs; pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.
the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.
Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact typically affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.
Net sales increased $156.5 million or 13% in fiscal year 2025 compared to the previous year, primarily driven by a 7% increase in avocado volume sold our Marketing & Distribution segment. Increased sales in our International Farming segment were driven by higher volumes of avocados sold directly to customers in the current year. Volume and price movements resulted from higher Peruvian avocado production driven by more favorable weather conditions in the current year.
Net sales decreased $92.0 million or 9% in fiscal year 2023 compared to the previous year, primarily due to a 24.0% decrease in average per-unit avocado sales prices, partially offset by increases in avocado volume sold of 12.0%. Price decreases and higher avocado volume sold were driven by higher industry supply out of Mexico in 2023 as compared to limited supply out of Mexico in the previous year. Net sales were favorably affected by the full-year impact of consolidating revenue from our Blueberries segment.
Gross profit increased $8.2 million in fiscal year 2025 compared to the previous year to $160.7 million, and gross profit percentage decreased by 80 basis points to 11.6% of net sales. Gross profit growth was driven by improved avocado and mango yields in our International Farming segment in the current year, while higher volume sold in our Marketing & Distribution segment was partially offset by lower per-unit margins. Marketing & Distribution segment results were negatively impacted by charges incurred in relation to the closure of Canadian facilities totaling $2.7 million and $1.1 million in tariffs levied on USMCA-compliant goods imported from Mexico for the three days they were in effect during March 2025.
Gross profit decreased $6.5 million in fiscal year 2023 compared to the previous year to $83.3 million, and gross profit percentage increased by 10 basis points to 8.7% of net sales. The decrease in gross profit was concentrated in our International Farming segment and driven by lower pricing on avocados sold from Company-owned farms. Lower pricing conditions were driven by higher worldwide supply of avocados, driven by a stronger Mexican crop, combined with quality issues and a compressed Peruvian harvest season brought about by El Niño-related weather events. Gross profit percentage remained flat as higher volume of avocados sold and improved per-unit margin at lower average sales prices in our Marketing & Distribution segment and higher volume of blueberries sold by Blueberries segment largely offset the negative impact from our International Farming segment.
SG&A expenses increased $8.7 million or 10% in fiscal year 2025 compared to the previous year, primarily due to higher employee related costs associated with operating performance, inclusive of incentive and performance-based stock compensation expense, and higher professional services costs.
SG&A expenses decreased $1.1 million or 1% in fiscal year 2023 compared to the previous year, primarily due to lower ERP and insurance costs. The reduction in ERP expense was concentrated in non-recurring process reengineering costs, while reduced insurance expense was attributed to lower rates on directors and officers liability coverage. These reductions were partially offset by an increase of approximately $2.4 million of expenses from the Blueberries segment, a large portion of which was attributed to amortization of an intangible asset recognized in the business combination.
Goodwill impairment
No goodwill impairment was recognized in fiscal years 2024 or 2023. A noncash impairment loss of $49.5 million was recognized in the consolidated statements of income (loss) during the fourth quarter of fiscal 2022. For more information, refer to Note 4 to the consolidated financial statements.
Interest expense
Interest expense decreased $3.2 million or 25% in fiscal year 2025 compared to the previous year, due to due to lower average balances on our revolving line of credit and lower interest rates on our borrowings under our credit facility. Interest rates applicable to our credit facility are variable, based on SOFR and a spread depending on our net leverage ratio.
Interest expense increased $6.1 million or 111% in fiscal year 2023 compared to the previous year, primarily due to the effect of rising interest rates on our credit facility, which is subject to variable rates, as well as higher average outstanding debt balances. Additionally, the Blueberries segment incurred interest expense of $2.2 million related to a long-term finance lease of land as well as short-term bank borrowings and financed payables.
Equity method income
Our material equity method investees include Henry Avocado (“HAC”), Mr. Avocado, Copaltas,Avocado and up until May 1, 2022, Moruga. On May 1, 2022, Moruga became a variable interest entity and prospectively consolidated into our financial statements.Copaltas.
Equity method income increased $1.7 million or 46% in fiscal year 2025 compared to the previous year, primarily due to improved margins on fruit sold by Mr. Avocado in China.
Equity method income decreased $1.1 million or 22% in fiscal year 2023 compared to the previous year, primarily due to lower income from HAC, driven by inflationary pressure on SG&A expense.
Other income was $3.6 million in fiscal year 2024, compared to other expense of $0.2 million in the previous year. The change was primarily attributed to the strengthening of the U.S. dollar relative to the Mexican peso, generating foreign currency gains in the current year compared to losses in the prior year.
Other expenseincome wasdecreased $0.2$2.9 million or 81% in fiscal year 2023,2025 compared to other income of $4.4 million in the previous year. Expense in fiscal year 2023 is primarily attributed to foreign currency transaction losses primarilyresulting due tofrom the weakening of the U.S. dollar relative to the Mexican peso.peso In 2022, gains were generated on interest rate swaps as a result of rising interest rates duringin the period.current year.
Other income was $3.6 million in fiscal year 2024, compared to other expense of $0.2 million in the previous year. The change was primarily attributed to the strengthening of the U.S. dollar relative to the Mexican peso, generating foreign currency gains compared to losses in the prior year.
On September 10, 2025, Peru enacted tax law which provided benefits to agribusiness entities. The new law subjects us to lower Peruvian corporate income tax rates than the rate in effect on the date of repeal of 25%, as follows: 15% for calendar years 2026 to 2035 and 29.5% thereafter. We remeasured our deferred tax balances based on the applicable tax rate in the year the deferred balances are expected to reverse. The decrease to the net deferred tax asset resulted in a $1.5 million increase to tax expense.
The provision for income tax increased $16.4 million or 745% in fiscal year 2024 compared to the previous year, primarily due to the effect of higher income before taxes.
Non-GAAP Measure
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, advisory costs, material legal settlements, 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. We believe that adjusted EBITDA 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. This measure is not in accordance with, nor is it a substitute for or superior to, the comparable GAAP financial measure.
(1)Includes interest expense from finance leases, the most significant of which is for land at our Blueberries segment of $2.1 million, $1.8 million and $1.4 million for the years ended October 31, 2025, 2024 and 2023, respectively.
(2)Includes depreciation and amortization of purchase accounting assets and $0.8 million, $3.7 million and $2.4 million for the years ended October 31, 2025, 2024 and 2023, respectively. Includes $0.7 million of amortization of the Blueberries finance lease for both years ended October 31, 2025 and 2024, and $0.6 million for the year ended October 31, 2023. The year ended October 31, 2025 also include $0.9 million of accelerated depreciation expense from fixed assets related to the closure of our Canada facilities during the second quarter. The twelve months ended October 31, 2024 also include $4.1 million of accelerated depreciation expense, $2.0 million of which was from purchase accounting assets, for certain blueberry plants determined to have no remaining useful life.
(3)Represents charges recognized in cost of sales related to the closure of our Canada facilities, including: accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs, partially offset by gains on settlement of asset retirement obligations.
(4)Represents tariff charges levied on USMCA-compliant goods imported from Mexico for the three-day period from March 4th to March 6th, 2025. The extremely short-term nature of the charges prevented the Company from effectively passing the charges in both pricing to customers and prices paid for goods from suppliers. USMCA-compliant goods have subsequently been exempted from tariff charges on U.S. imports and additional adjustments are not expected in the future.
(5)Represents net income (loss) attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
Adjusted EBITDA increased $3.0 million or 3% in fiscal year 2025 compared to the previous year, driven by increases in gross profit as described above.
Adjusted EBITDA increased $59.4 million or 123% in fiscal year 2024 compared to the previous year, primarily due to improved per-unit gross margin on avocados sold.
The provision for income tax decreased $1.5 million or 41% in fiscal year 2023 compared to the previous year. Fiscal 2023 was impacted by a $1.7 million charge related to a statutory case in Mexico and $0.5 million in changes in unrecognized tax benefits. These charges were partially offset by a favorable change in ASC 740-30 (formerly APB 23) liability of $1.6 million.
Our CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”). We believe that adjusted EBITDA by segment provides useful information for analyzing the underlying business results as well as allowing investors a means to evaluate the financial results of each reportable segment in relation to the Company as a whole. These measures are not in accordance with, nor are they a substitute for or superior to, the comparable GAAP financial measures.
Adjusted EBITDA refers to net income (loss), before interest expense, income taxes, depreciation and amortization expense, stock-based compensation expense, other income (expense), and income (loss) from equity method investees, further adjusted by asset impairment and disposals, net of insurance recoveries, farming costs for nonproductive orchards (which represents land lease costs), certain noncash and nonrecurring ERP costs, transaction costs, material legal settlements, 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. Effective for the fourth quarter of 2024, the Company made a change in presentation of its reconciliation of adjusted EBITDA to its comparable GAAP financial measure to include a subtotal of the non-GAAP adjustments before the effect of the noncontrolling interest adjustment called “adjusted EBITDA before adjustment for noncontrolling interest.” The presentation change has no impact to total adjusted EBITDA. We believe the addition of the subtotal within the reconciliation is useful because it better aligns with management’s sequence of review of the information in the reconciliation.
(1) The Blueberries segment was consolidated prospectively from May 1, 2022.
(1)Includes interest expense from finance leases, the most significant of which is for nonproductive land at our Blueberries segment of $1.8 million and $1.4 million for the years ended October 31, 2024 and 2023, respectively.
(2)Includes depreciation and amortization of purchase accounting assets of $3.7 million, $2.4 million and $1.4 million for the years ended October 31, 2024, 2023 and 2022, respectively. Includes amortization of finance leases, the most significant of which is for nonproductive land at our Blueberries segment of $0.7 million and $0.6 million for the years ended October 31, 2024 and 2023, respectively. The year ended October 31, 2024 included $4.1 million of accelerated depreciation expense recognized during the first quarter, for certain blueberry plants determined to have no remaining useful life.
(3)Includes recognition of deferred implementation costs in all years. The year ended October 31, 2022 also includes post-implementation process reengineering costs.
(4)Represents net income (loss) attributable to noncontrolling interest plus the impact of non-GAAP adjustments, allocable to the noncontrolling owner based on their percentage of ownership interest.
Net sales in our Marketing & Distribution segment increased $121.7 million or 11% in fiscal year 2025 compared to the previous year, driven by higher volume sold as described above.
Segment operating income decreased $17.0 million or 28% in fiscal year 2025 compared to the previous year, due to lower per-unit gross margin on avocados sold and higher SG&A expenses, as described above.
Segment adjustedoperating EBITDAincome increased $45.0$43.9 million or 112%254% in fiscal year 2024 compared to the previous year, due to improved per-unit gross margin on avocados sold.
Net sales in our Marketing & Distribution segment decreased $126.2 million or 12% in fiscal year 2023 compared to the previous year, driven by pricing and volume dynamics described above, which were driven by higher industry supply out of Mexico relative to last year.
Segment adjusted EBITDA increased $16.6 million or 71% in fiscal year 2023 compared to the previous year, due to higher gross margin from higher avocado volume sold and improved avocado per-unit margins.
The vast majority of fruit sales from our International Farming segment are made to the Marketing & Distribution segment, with the remainder of revenue largely derived from direct sales of fruit to third-parties as well as services provided to third parties and our Blueberries segment. Affiliated sales are concentrated in the second half of the fiscal year in alignment with the Peruvian avocado harvest season, which typically runs from April through September of each year. As a result, adjusted EBITDA for the International Farming segment is generally concentrated in the third and fourth quarters of the fiscal year in alignment with the timing of sales. In addition, the Company operates approximately 700 acres of mangos in Peru. The timing of the mango harvest is generally concentrated in the fiscal second quarter.
Total segment sales in our International Farming segment increased $61.0 million or 94% in fiscal year 2025 compared to the previous year and segment operating profit increased $21.4 million or 161% in fiscal year 2025 compared to the previous year. The increases were driven by higher yield from owned avocado orchards as well as higher volume of avocado packing and cooling services provided to third parties.
Segment adjustedoperating EBITDAloss increased $1.5by $1.8 million or 48%16% in fiscal year 2024 compared to the previous year as higher sales prices and cost savings measures in our avocado and mango farms, packing operations and SG&A in Peru offset the adverse impact of lower harvest yields on fixed cost absorption.
Total segment sales in our International Farming segment decreased $24.5 million or 21% in fiscal year 2023 compared to the previous year, primarily due to lower pricing on avocados sold from company-owned farms. Lower pricing conditions were driven by higher worldwide supply of avocados, driven by a stronger Mexican crop, combined with quality issues and a compressed Peruvian harvest season brought about by El Niño-related weather events.
Segment adjusted EBITDA decreased $20.2 million or 87% in fiscal year 2023 compared to the previous year, primarily due to lower gross profit resulting from lower pricing.
What changed in the latest 10-Q
Risk Factors
New heading “Certain tax disputes we inherited from our acquisition of Calavo may have a material adverse effect on our results of operations and financial condition.”
New heading “Investments in and financial support provided to businesses that we do not control could adversely affect our financial condition and results.”
Largest changes
“CDM may be exposed to material liabilities arising from tax disputes in Mexico. In July 2018, SAT issued a final tax assessment relating to a fiscal 2013 tax audit of CDM, which, after adjustments for interest, penalties and inflation, totaled approximately 3.6 billion Mexican pesos, or approximately $207.4 million, as of July 31, 2026. Mexican tax authorities have also determined that CDM owes employee profit-sharing liabilities totaling approximately 118 million Mexican pesos, or approximately $6.8 million, as of July 31, 2026. …”see in full comparison
“Certain tax disputes we inherited from our acquisition of Calavo may have a material adverse effect on our results of operations and financial condition.”see in full comparison
“Investments in and financial support provided to businesses that we do not control could adversely affect our financial condition and results.”see in full comparison
“CDM also has significant VAT receivables in Mexico that may not be collected in full or on a timely basis. As of July 31, 2026, CDM’s VAT receivables totaled approximately $25.7 million. Since fiscal 2014, Mexican tax authorities have challenged certain refund requests and supporting documentation, including with respect to VAT paid to suppliers alleged to have failed to satisfy their own tax obligations. CDM continues to pursue collection through administrative processes and, where necessary, may pursue administrative appeals or other legal remedies. …”see in full comparison
“We have made, and may in the future make, directly or through our subsidiaries, investments in, or loans, advances or other financial commitments to, businesses that we do not control. As a result, we have limited ability to influence their operations, financial performance, capital structure or capital requirements, and we may be unable to prevent actions that are adverse to our interests. Our share of their earnings or losses affects our results of operations. For example, our results include our share of the earnings or losses of Agricola Don Memo, S.A. de C.V. …”see in full comparison
“If Don Memo or any other such business performs below expectations, experiences financial difficulties or is unable to obtain sufficient financing, our share of its losses may adversely affect our results of operations, our investment may become impaired, and loans, advances or other amounts owed to us or our subsidiaries may become uncollectible. Any resulting losses could materially adversely affect our financial condition and results of operations.”see in full comparison
Full comparison: every changed paragraph (8)
For a discussion of our risk factors, see “Part I, Item 1A. Risk Factors” in our 2025 10-K, “Part II, Item 1A. Risk Factors” in the Q1 10-Q and “Risk Factors” in our Proxy Statement/Prospectus dated March 20, 2026. With the exception of the risk factors set forth below, which update the risk factors disclosed in such SEC filings, there have been no material changes from the risk factors previously disclosed therein. The risks and uncertainties that we face are not limited to those set forth in those SEC filings. You should carefully consider the risk factors in those SEC filings, together with the other information contained in this Quarterly Report on Form 10-Q, including the risk factors set forth below, our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to purchase or sell shares of our common stock. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our common stock.
Certain tax disputes we inherited from our acquisition of Calavo may have a material adverse effect on our results of operations and financial condition.
CDM may be exposed to material liabilities arising from tax disputes in Mexico. In July 2018, SAT issued a final tax assessment relating to a fiscal 2013 tax audit of CDM, which, after adjustments for interest, penalties and inflation, totaled approximately 3.6 billion Mexican pesos, or approximately $207.4 million, as of July 31, 2026. Mexican tax authorities have also determined that CDM owes employee profit-sharing liabilities totaling approximately 118 million Mexican pesos, or approximately $6.8 million, as of July 31, 2026. CDM has challenged the assessment through administrative and judicial proceedings, and the underlying assessment remains unresolved. As of July 31, 2026, CDM had a provision for these uncertain tax positions of approximately $27.5 million, as determined based on our cumulative probability analysis. There can be no assurance that CDM will prevail or that any settlement would be on acceptable terms. An adverse outcome could materially and adversely affect our financial condition, results of operations and cash flows and could result in defaults under our credit facilities.
In addition to the 2013 tax assessment referenced above, the SAT has initiated an income tax audit of CDM for fiscal years 2019 and 2020. As of the date of this Quarterly Report on Form 10-Q, the SAT has not issued any formal assessments on either audit, and these audits could result in additional assessments that are material in amount.
CDM also has significant VAT receivables in Mexico that may not be collected in full or on a timely basis. As of July 31, 2026, CDM’s VAT receivables totaled approximately $25.7 million. Since fiscal 2014, Mexican tax authorities have challenged certain refund requests and supporting documentation, including with respect to VAT paid to suppliers alleged to have failed to satisfy their own tax obligations. CDM continues to pursue collection through administrative processes and, where necessary, may pursue administrative appeals or other legal remedies. Although we believe the SAT will ultimately authorize the refund of the VAT receivables, any material denial, delay or reduction of these refunds could adversely affect our liquidity, cash flows and results of operations.
Investments in and financial support provided to businesses that we do not control could adversely affect our financial condition and results.
We have made, and may in the future make, directly or through our subsidiaries, investments in, or loans, advances or other financial commitments to, businesses that we do not control. As a result, we have limited ability to influence their operations, financial performance, capital structure or capital requirements, and we may be unable to prevent actions that are adverse to our interests. Our share of their earnings or losses affects our results of operations. For example, our results include our share of the earnings or losses of Agricola Don Memo, S.A. de C.V. (“Don Memo”), in which CDM holds an investment and over which neither we nor CDM exercises control.
If Don Memo or any other such business performs below expectations, experiences financial difficulties or is unable to obtain sufficient financing, our share of its losses may adversely affect our results of operations, our investment may become impaired, and loans, advances or other amounts owed to us or our subsidiaries may become uncollectible. Any resulting losses could materially adversely affect our financial condition and results of operations.
Management's Discussion & Analysis (MD&A)
Removed heading “Acquisition of Calavo”
Largest changes
“Calavo Mexican tax matters. We have recorded a provision of approximately $27.1 million as of July 31, 2026, for uncertain tax positions, representing our best estimate of the potential outcome related to the 2013 tax assessment, based on a cumulative probability analysis. This estimate incorporates assumptions regarding non-deductible expenses, penalties, interest, inflationary adjustments, and other factors. Future changes in legal interpretations, court rulings, or settlement negotiations could have a material impact on this provision. …”see in full comparison
“Business combinations. We account for business combinations under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, which requires an allocation of the consideration paid, if any, to the identifiable assets, intangible assets and liabilities based on the estimated fair values as of the acquisition date. Goodwill represents the excess of the sum of the fair value, over the net of the acquisition-date values of the identifiable assets and liabilities assumed and fair value of noncontrolling interest. …”see in full comparison
“Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. The system was released in phases corresponding to different classes of claims. During the third fiscal quarter of 2026, we submitted or have developed a plan to submit approximately $12.5 million in claims. As a portion of the refunds have been received during the third quarter, we believe the remainder of the claims are realizable. …”see in full comparison
Gross profit decreasedsee in full comparison$7.9$0.4 million or28%1% for the three months endedAprilJuly30,31, 2026 compared to the same period last year and gross profit percentage decreased50270 basis points compared to the same period last year, to7.0%9.9% of revenue. In our International Farming segment, gross profit decreased due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit in our Marketing and Distribution segment waslowerhigher due tohightheavailabilityinclusion ofMexicanCalavo’savocadopost-acquisitionsupplyresults,whichpartiallydroveoffsetlowbyper-unittheavocadoimpactsellingofpricesamortizationandofmargins.certainInassets recognized in the business combination. Gross profit improvement in ourInternational FarmingBlueberries segmentgross profitwaslowerdrivenduebytothehigherone-timeper-unit mango production costs and lower volumeimpact ofblueberryIEEPApackagingtariffandrefundsstorageinservices.the current year.
“Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. While progress has been made regarding the establishment of the CAPE system, there remains substantial uncertainty regarding the submission process for refunds, and the timing, magnitude, and completeness of potential refunds. The ability to recover, and the timing and amount of any potential refunds are uncertain, and at this time we cannot reasonably estimate the financial impact to us, if any. …”see in full comparison
Gross profit decreasedsee in full comparison$7.8$8.2 million or13%8% for thesixnine months endedAprilJuly30,31, 2026, while gross profit percentageincreased 70 basis pointsdecreased compared to the same period lastyear,yeartoat9.1%9.5% of revenue. In our International Farming segment gross profit was lower due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit improved in our Marketing and Distribution segment due to higher volume resulting from the inclusion ofavocadosCalavo’ssold,post-acquisitionwhileresultsgrossin the current year. Gross profit in our Blueberries segment was lower due to lower volume and higher per-unit production costs associated with lower yieldswhichinwerethe current year, partially offset byhigherone-timeper-unitimpactsellingofprices.IEEPA tariff refunds in the current year.
Full comparison: every changed paragraph (62)
We are a world leader in sourcing, producing, growing and distributing Hass avocados, serving retail, wholesale and foodservice customers. We source, produce, pack and distribute avocados along with other fruits, including mangos, to our customers and provide value-added services including ripening, bagging, custom packaging and logistical management. We also process and package guacamole and related products sold at retail locations and to food service operators. In addition, we provide our customers with merchandising and promotional support, insights on market trends and training designed to increase their retail avocado sales.
We have threefour operating segments which are also reportable segments:
•Marketing & Distribution. Our Marketing & Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network. The former “Fresh” business of Calavo is included in this segment.
•Prepared Foods. Includes prepared products, such as packaged guacamole and salsas, sold to retail and foodservice customers. This segment is equivalent to the acquired “Prepared Foods” business of Calavo.
The transaction enhances our position in the North American avocado category with expanded supply reliability across Mexico and California. The transaction also represents our entry into the prepared food sector, complementing our existing value-added avocado business. The transaction also provides a significant value opportunity for us to realize cost synergies and SG&A savings. The results of Calavo and interest costs associated with the debt incurred will beare included in our results for periods following the closing date.
Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. The system was released in phases corresponding to different classes of claims. During the third fiscal quarter of 2026, we submitted or have developed a plan to submit approximately $12.5 million in claims. As a portion of the refunds have been received during the third quarter, we believe the remainder of the claims are realizable. Refunds and receivables for refund claims have been recognized as allowances against revenue and cost of sales based on the nature of the settlements. We are monitoring the situation closely for any changes to the ability to recover refunds.
Subsequently, the U.S. Customs and Border Protection (CBP) has created the Consolidated Administration and Processing of Entries (CAPE) system to administer refunds for tariffs imposed under IEEPA. While progress has been made regarding the establishment of the CAPE system, there remains substantial uncertainty regarding the submission process for refunds, and the timing, magnitude, and completeness of potential refunds. The ability to recover, and the timing and amount of any potential refunds are uncertain, and at this time we cannot reasonably estimate the financial impact to us, if any. As of June 8, 2026, we have not recognized any amounts associated with potential refunds related to these tariffs.
We are monitoring the situation closely for further information about how the U.S. government intends to proceed.
Our financial reporting currency is the U.S. dollar. The functional currency of our most significant subsidiaries is the U.S. dollar and the majority of our sales are denominated in U.S. dollars. A significant portion of our purchases of avocados are denominated in the Mexican Peso and a significant portion of our growing and harvesting costs are denominated in Peruvian Soles. Fluctuations in the exchange rates between the U.S. dollar and these local currencies usually do not have a significant impact on our gross margin because the impact typically affects our pricing by comparable amounts. Our margin exposure to exchange rate fluctuations is short-term in nature, as our sales price commitments are generally limited to less than one month and orders can primarily be serviced with procured inventory. Over longer periods of time, we believe that the impact that exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.
Net sales decreasedincreased $89.4$92.3 million or 24%26% in the three months ended AprilJuly 30,31, 2026 compared to the same period last year, primarily driven by our Marketing & Distribution segment, where an increase in avocado volume sold of 38%, partially offset by a decrease in per-unit avocado sales prices of 36%9%. wasVolume partiallyincreased offsetfrom bythe an increase in avocado volume soldintegration of 15%.the Volumeacquired andCalavo priceoperation movementsas werewell drivenas bythe impact of increased Mexican avocado supply due to higher yields in the current year.
Net sales decreased $145.0$52.7 million or 20%5% in the sixnine months ended AprilJuly 30,31, 2026 compared to the same period last year, primarily driven by our Marketing & Distribution segment, where a decrease in per-unit avocado sales prices of 33%25% was partially offset by an increase in avocado volume sold of 14%.23%. Volume andincreased pricefrom movementsthe wereintegration drivenof bythe acquired Calavo operation as well as the impact of increased Mexican avocado supply due to higher yields in the current year.
Gross profit decreased $7.9$0.4 million or 28%1% for the three months ended AprilJuly 30,31, 2026 compared to the same period last year and gross profit percentage decreased 50270 basis points compared to the same period last year, to 7.0%9.9% of revenue. In our International Farming segment, gross profit decreased due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit in our Marketing and Distribution segment was lowerhigher due to highthe availabilityinclusion of MexicanCalavo’s avocadopost-acquisition supplyresults, whichpartially droveoffset lowby per-unitthe avocadoimpact sellingof pricesamortization andof margins.certain Inassets recognized in the business combination. Gross profit improvement in our International FarmingBlueberries segment gross profit was lowerdriven dueby tothe higherone-time per-unit mango production costs and lower volumeimpact of blueberryIEEPA packagingtariff andrefunds storagein services.the current year.
Gross profit decreased $7.8$8.2 million or 13%8% for the sixnine months ended AprilJuly 30,31, 2026, while gross profit percentage increased 70 basis pointsdecreased compared to the same period last year,year toat 9.1%9.5% of revenue. In our International Farming segment gross profit was lower due to lower average sales prices attributed to higher global supply of avocados in the current year. Gross profit improved in our Marketing and Distribution segment due to higher volume resulting from the inclusion of avocadosCalavo’s sold,post-acquisition whileresults grossin the current year. Gross profit in our Blueberries segment was lower due to lower volume and higher per-unit production costs associated with lower yields whichin werethe current year, partially offset by higherone-time per-unitimpact sellingof prices.IEEPA tariff refunds in the current year.
SG&A expenses excluding transaction advisory and integration costs increased $7.6 million or 32% and $7.3 million or 11% for the three and sixnine months ended AprilJuly 30,31, 20262026, were flatrespectively, compared to the same periods last year.year, driven by the inclusion of expense and amortization of certain assets recognized in the business combination.
Transaction advisory and integration costs are comprised of third-party legal, diligence, severance/retention, and other costs associated with the Calavo acquisition, which was completed on May 28, 2026.
Interest expense decreasedincreased $0.6$2.7 million or 24%113% and $1.1$1.6 million or 23% in the three and sixnine months ended AprilJuly 30,31, 2026, respectively, compared to the same periods last year. The decreases were primarilyyear, due to lowerhigher averageoutstanding debt balances onrelated ourto revolvingthe creditfinancing facility.of the Calavo acquisition. Interest rates applicable to our credit facility are variable, based on SOFR and a spread depending on our net leverage ratio.
Our material equity method investees include Henry Avocado (“HAC”), Mr. AvocadoAvocado, Copaltas and Copaltas.Agricola Don Memo (“Don Memo”).
Equity method income increasedwas $0.4flat million or 44% and $1.1 million or 65% infor the three and six months ended AprilJuly 30,31, 2026, respectively,2026 compared to the same periodsperiod last year. Equity method income increased $1.0 million or 27% in the nine months ended July 31, 2026, compared to the same period last year. Equity method income is mostly comprised of earnings in our investment in Henry Avocado Corporation.HAC.
Other (expense) income, net consists of interest and dividend income, currency exchange gains or losses, interest rate derivative gains or losses and other miscellaneous income and expense items.
Other expense increased $0.5$1.7 million or 83%213% in the three months ended AprilJuly 30,31, 2026 compared to the same period last year, primarily due to debt restructuring fees incurred in the current year.year related to the Calavo acquisition.
Other expense was $2.4$4.9 million for the sixnine months ended AprilJuly 30,31, 2026 compared to other income of $0.9$0.1 million for the same period last year. The change was primarily attributed to debt restructuring fees incurred in the current year related to the Calavo acquisition and greater foreign currency transaction losses resulting from more pronounced weakening of the U.S. dollar relative to the Mexican peso in the current year.
We recognize a tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from suchSuch positions are then measured based on the largest benefitoutcome that has a greater than 50% likelihood of being realized upon settlement. Interest and penalties related to unrecognized tax benefits are recognized within the provision for income taxes.
The benefitprovision for income taxes wasdecreased $1.3$4.7 million comparedor to a provision for income tax of $1.7 million89% for the three months ended AprilJuly 30,31, 2026 and 2025, respectively. The benefit for income taxes was $0.2 million compared to athe provisionsame forperiod incomelast taxyear ofand $4.9decreased $9.8 million or 96% for the sixnine months ended AprilJuly 30,31, 2026 andcompared 2025,to respectively.the same period last year. The (benefits) provisions were impacted by the effect of lower income before taxes in the current year.year, partially offset by a discrete Mexican transfer tax charge of $1.8 million related to the acquisition of Calavo assets in Mexico. Our effective tax rate was also impacted by book losses in jurisdictions where either a full valuation allowance has been recorded or where loss carryforward is disallowed in both years.
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 advisory and integration costs, material legal settlements, amortization of inventory adjustmentsassets 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. We believe that adjusted EBITDA 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. This measure is not in accordance with, nor is it a substitute for or superior to, the comparable GAAP financial measure.
(1)Includes interest expense from finance leases, the most significant of which is for land at our Blueberries segment of $0.5 million for both the three months ended AprilJuly 30,31, 2026 and 2025 and $1.0$1.5 million for both the sixnine months ended AprilJuly 30,31, 2026 and 2025.
(2)Includes depreciation and amortization of purchase accounting assets of $0.1$2.2 million and $0.5 millionzero for the three months ended AprilJuly 30,31, 2026 and 2025, respectively, and $0.3$2.5 million and $0.8 million for sixnine months ended AprilJuly 30,31, 2026 and 2025, respectively. Includes $0.2$0.3 million of amortization of the Blueberries finance lease for both the three months ended AprilJuly 30,31, 2026 and 2025 and $0.4$0.7 million for both the sixnine months ended AprilJuly 30,31, 2026 and 2025. The six months ended April 30, 2025 also include $0.9 million ofIncludes accelerated depreciation expense from fixed assets related to thesupply closurechain optimization (3)Represents accelerated amortization of ouroperating Canadalease facilities.right-of-use assets, early lease termination costs and severance costs incurred, recognized in cost of sales.
(3)Represents accelerated amortization of operating lease right-of-use assets, early lease termination costs and severance costs incurred due to the closure of our Canada facilities recognized in cost of sales.
(4)RepresentsFor the nine months ended July 31, 2025, amount represents tariff charges levied on USMCA-compliant goods imported from Mexico for the three-day period from March 4th to March 6th, 2025. The extremely short-term nature of the charges prevented the Company from effectively passing the charges in both pricing to customers and prices paid for goods from suppliers. USMCA-compliant goods have subsequently been exempted from tariff charges on U.S. imports. For the three and nine months ended July 31, 2026, amount represents actual and estimated refunds of IEEPA tariffs that were paid in the prior year that are primarily related to our Blueberries operation.
Total segment sales in our Marketing & Distribution segment decreasedincreased $85.3$70.2 million or 24%20% in the three months ended AprilJuly 30,31, 2026, compared to the same period last year.year, Lowerdue to an increase in avocado volume sold of 38%, partially offset by a decrease in per-unit avocado sellingsales prices associatedof with9%. highVolume marketincreased from the integration of the acquired Calavo operation as well as the impact of increased Mexican avocado supply conditionsdue to higher yields in the current year were partially offset by higher avocado volume sold.year.
Segment operating income decreased $13.4 million or 92% in the three months ended July 31, 2026 compared to the same period last year. The decrease was driven primarily by higher transaction advisory and integration costs. Higher gross margin was largely offset by higher SG&A costs, both of which were attributed to the inclusion of Calavo post-acquisition results. Segment operating income also included the amortization of certain assets recognized in the business combination.
Segment operating loss was $3.8 million in the three months ended April 30, 2026 compared income of $7.6 million in the same period last year. The decrease was driven by lower per-unit margin well as higher transaction advisory costs.
Total segment sales in our Marketing & Distribution segment decreased $146.3$76.1 million or 22%8% in the sixnine months ended AprilJuly 30,31, 2026 compared to the same period last year, driven by thea decrease in per-unit avocado sales prices of 25%, partially offset by an increase in avocado volume andsold priceof dynamics23%. describedVolume above.increased from the integration of the acquired Calavo operation as well as the impact of increased Mexican avocado supply due to higher yields in the current year.
Segment operating loss was $2.7$1.6 million in the sixnine months ended AprilJuly 30,31, 2026 compared to income of $9.4$23.9 million in the same period last year.year, Thedue decrease in operating profit was driven by transaction advisory cots into the currentsame year.factors impacting the quarter.
Prepared Foods
Total segment sales in the Prepared Foods segment were $15.5 million for both the three and nine months ended July 31, 2026. These amounts only include sales after the acquisition of Calavo.
Segment operating loss was $4.1 million for both the three and nine months ended July 31, 2026. Segment operating loss included the impact of amortization of inventory assets recognized in the business combination.
Total segment sales in our International Farming segment decreased $0.4$3.2 million or 5%7% in the three months ended AprilJuly 30,31, 2026, compared to the same period last year. Segment operating income decreased $5.6 million or 84% in the three months ended July 31, 2026 compared to the same period last year. Performance was impacted by lower average sales prices attributed to higher global supply of avocados in the current year.
Segment operating loss was $3.9 million in the three months ended April 30, 2026 compared to $1.3 million in the same period last year. The higher operating loss was due to higher per-unit mango production costs and lower volume of blueberry packaging and storage services.
Total segment sales in our International Farming segment increased $1.0 million or 6% in the six months ended April 30, 2026 compared to the same period last year.
Total segment sales in our International Farming segment decreased $2.2 million or 3% in the nine months ended July 31, 2026 compared to the same period last year. Segment operating loss was $3.6$2.5 million in the sixnine months ended AprilJuly 30,31, 2026 compared to $1.4income of $5.3 million infor the same period last year due primarily to the same factors described above.for the quarter.
Total segment sales in our Blueberries segment decreasedincreased $4.7$0.9 million or 30%20% in the three months ended AprilJuly 30,31, 2026 compared to the same period last year,year. primarilySegment dueoperating income was $2.4 million for the three months ended July 31, 2026 compared to a decreaseloss of $0.2 million for the same period last year. Performance during the quarter was driven primarily by the IEEPA tariff refunds, which more than offset decreases in volume sold of 41%, partially offset by an increase inand average per-unit sales price of 19%.prices.
Segment operating income for the three months ended April 30, 2026 was flat compared to the same period last year.
Total segment sales in our Blueberries segment increased $0.6 million or 1% in the sixnine months ended AprilJuly 30,31, 2026 were flat compared to the same period last year, asdue increasesto the IEEPA tariff refunds and an 8% increase in average per-unit sales priceprice, of 12% werepartially offset by a decrease in volume sold of 11%.
Segment operating income decreased $6.4$3.8 million or 78%48% for the sixnine months ended AprilJuly 30,31, 2026 compared to the same period last year due to lower per-acre yield resulting in higher per-unit fruit production costs.costs, partially offset by the IEEPA tariff refunds.
Net cash used in operating activities was $21.0$25.9 million for the sixnine months ended AprilJuly 30,31, 2026 compared to $13.0cash provided by operating activities of $21.4 million for the same period last year. LowerThe reduction in cash from operating activities was due to a combination of lower income in the current year wasas partiallywell offsetas by lowerlarger increases in working capital. Working capital growth in the current year is driven by increases in inventory and trade/other receivables, partially offset by grower payables, accounts payable and accrued expenses. Inventory growth is driven primarily by higher growing crop inventory in our International Farming and Blueberries segments resulting from higher crop yields and timing of harvest, while trade/other receivables were associated with seasonalityseasonality, pricing and timing of sales in the Marketing & Distribution and Blueberries segments,segments and the timing of value-added tax refunds. Grower payable provided favorable impact due to higher avocado volumes and shift in supply mix toward origins with longer payment terms, while inventoryaccounts growthpayable isand drivenaccrued expenses were favorably impacted by higher volumeavocado in the Marketing & Distribution segmentvolumes and cultivationtiming of growing crop inventory inassociated ourwith International Farminglarger and Blueberrieslater segments.harvest.
In the sixnine months ended AprilJuly 30,31, 2026 and 2025,2026, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance and land improvements, packhouse constructionimprovements in Guatemala and pre-productionGuatemala, land development and blueberry plant cultivation in Peru.Peru The current year also includesand construction costs associated with increasing capacity in our Mexican packing operations.
In the nine months ended July 31, 2025, capital expenditures were comprised primarily of avocado orchard development, pre-production orchard maintenance, land improvements and packhouse construction in Guatemala and pre-production land development and blueberry plant cultivation in Peru.
We utilize a revolving line of credit for short-term working capital purposes. Principal payments on our credit facility are made in accordance with debt maturity schedules. Borrowings under and principal payments on long-term debt obligations during the nine months ended July 31, 2026, were impacted by the increase in term loans funded under our syndicated credit facility to support the cash component of the Calavo acquisition.
On April 1, 2026, we entered into an Amended and Restated Credit Agreement with Bank of America and other syndicate lenders, which amends and restates that certain credit agreement, dated as of October 11, 2018 (as amended and restated). The credit agreement provides senior secured credit facilities in an aggregate principal amount of $550 million, consisting of:
•a $200 million revolving facility (the “Revolving Facility”)
•a $200 million term loan facility, $150 million of which was drawn on the Calavo acquisition funding date of May 28, 2026, subsequent to the quarter ended April 30, 2026 (the “Term A-1 Facility”); and
•a $150 million term loan facility, $100 million of which was drawn on the Calavo acquisition funding date (the “Term A-2 Facility” and, together with the Term A-1 Facility, the “Term Loan Facilities”; the Term Loan Facilities together with the Revolving Facility, the “Senior Credit Facility”).
Capital resources include cash flows from operations, cash and cash equivalents, and debtour financing.syndicated credit facility. Our Blueberries segment may also receive capital contributions or loans from shareholders.
As of AprilJuly 30,31, 2026, we were required to comply with the following financial covenants as defined by our credit facility, which includes certain proforma information and other adjustments: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. As of AprilJuly 30,31, 2026, we were in compliance with all such covenants of the credit facility.
We believe that our cash and cash equivalents on hand, expected cash flows from operations, and availability under our syndicated credit facility will be sufficient to fulfill our obligations, working capital requirements, and capital expenditures for the next 12 months and beyond.
Acquisition of Calavo
The approximate $465 million acquisition of Calavo was funded with a combination: $250 million of term loan facilities drawn on the closing date of May 28, 2026, approximately $197 million in shares of our common stock, and the remainder with cash on-hand.
We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $166.00$185.6 million as of AprilJuly 30,31, 2026, of which, approximately $105.2$108.3 million was for long-term land leases in our International Farming and Blueberries segments.leases.
As of AprilJuly 30,31, 2026, outstanding borrowings on our syndicated debt facility totaled $120.0$402.1 million. See Note 67 to the condensed consolidated financial statements for more information.
For a discussion of our critical accounting estimates, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended October 31, 2025, filed with the SEC on December 18, 2025. There have been no material changes to the critical accounting estimates disclosed in such Annual Report on Form 10-K.10-K except as follows:
AVO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 10 Form 4 filings (3 insiders, 12 trade dates, 3,554,301 shares, about $44.8M) and open-market sales in 7 filings (4 insiders, 11 trade dates, 490,260 shares, about $6.5M; 1 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: 3,064,041 (purchases minus sales); net value about $38.3M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-24 | Barnard Stephen J |
Open-market sale | 10,391 | $13.00 | $135.1K |
| 2026-09-24 | Barnard Stephen J |
Open-market sale | 11,255 | $13.00 | $146.3K |
| 2026-09-21 | Barnard Stephen J |
Open-market sale | 57,026 | $13.01 | $741.9K |
| 2026-09-21 | Barnard Stephen J |
Open-market sale | 54,332 | $13.01 | $706.9K |
| 2026-09-18 | Barnard Stephen J |
Open-market sale | 500 | $13.00 | $6.5K |
| 2026-09-18 | Barnard Stephen J |
Open-market sale | 35,062 | $12.54 | $439.7K |
| 2026-09-14 | Barnard Stephen J |
Open-market sale | 34,777 | $13.02 | $452.8K |
| 2026-09-14 | Barnard Stephen J |
Open-market sale | 31,719 | $13.01 | $412.7K |
| 2026-09-11 | Barnard Stephen J |
Open-market sale | 15,000 | $13.10 | $196.5K |
| 2026-07-09 | Globalharvest Holdings Venture Ltd |
Open-market purchase | 592,957 | $13.28 | $7.9M |
| 2026-07-08 | Globalharvest Holdings Venture Ltd |
Open-market purchase | 687,222 | $13.42 | $9.2M |
| 2026-07-07 | Globalharvest Holdings Venture Ltd |
Open-market purchase | 491,865 | $13.40 | $6.6M |
| 2026-07-06 | Globalharvest Holdings Venture Ltd |
Open-market purchase | 650,415 | $12.73 | $8.3M |
| 2026-06-30 | Pack Jay A |
Open-market purchase | 40,000 | $12.10 | $484.0K |
| 2026-06-29 | Giles Bryan E |
Open-market sale | 5,000 | $12.13 | $60.6K |
| 2026-06-23 | Taylor Bruce C. |
Open-market purchase | 70,283 | $11.25 | $790.7K |
| 2026-06-22 | Taylor Bruce C. |
Open-market purchase | 29,717 | $11.36 | $337.6K |
| 2026-06-17 | Taylor Bruce C. |
Open-market purchase | 286,410 | $11.27 | $3.2M |
| 2026-06-16 | Taylor Bruce C. |
Open-market purchase | 13,590 | $11.40 | $154.9K |
| 2026-06-15 | Pack Jay A |
Open-market purchase | 77,831 | $11.34 | $882.6K |
| 2026-06-15 | Pack Jay A |
Open-market purchase | 110,719 | $11.34 | $1.3M |
| 2026-06-15 | Taylor Bruce C. |
Open-market purchase | 300,000 | $11.29 | $3.4M |
| 2026-06-12 | Taylor Bruce C. |
Open-market purchase | 155,842 | $11.16 | $1.7M |
| 2026-06-12 | Taylor Bruce C. |
Open-market purchase | 10,000 | $11.14 | $111.4K |
| 2026-06-11 | Pack Jay A |
Open-market purchase | 25,281 | $11.03 | $278.8K |
| 2026-06-11 | Pack Jay A |
Open-market purchase | 12,169 | $11.04 | $134.3K |
| 2026-05-28 | Globalharvest Holdings Venture Ltd |
Other | 549,360 | — | — |
| 2026-05-28 | Holmgren Kathleen M |
Grant/award | 7,440 | — | — |
| 2026-05-28 | Holmgren Kathleen M |
Grant/award | 26,384 | — | — |
| 2026-04-09 | Segre Linda B |
Grant/award | 8,240 | — | — |
| 2024-12-31 | Gonzalez Luis A |
Open-market sale |
15,744 | $14.48 | $228.0K |
| 2024-12-30 | Gonzalez Luis A |
Open-market sale |
18,278 | $14.49 | $264.8K |
| 2024-09-20 | Vallejos Hinojosa Rosario Del Pilar |
Open-market sale | 67,344 | $13.53 | $911.2K |
| 2024-09-19 | Vallejos Hinojosa Rosario Del Pilar |
Open-market sale | 72,424 | $13.53 | $979.9K |
| 2024-09-18 | Vallejos Hinojosa Rosario Del Pilar |
Open-market sale | 61,408 | $13.32 | $818.0K |
Well-known investors holding AVO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 614,402 | $7.2M | 0.01% | Added 304% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 397,454 | $4.7M | 0.0% | Added 547% |
| Millennium Management (Israel Englander) | 2026-06-30 | 80,521 | $1.1M | — | Sold out |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 88,954 | $1.0M | 0.0% | Added 59% |
| Two Sigma Investments | 2026-06-30 | 68,641 | $809.3K | 0.0% | Reduced 16% |
| D. E. Shaw & Co. | 2026-06-30 | 60,951 | $718.6K | 0.0% | Reduced 65% |