I think we'll get started here. Hello, everyone, and thanks for joining us today. I'm Puran Sharma. I'm the Food and Agribusiness Equity Research Analyst at Stephens. It's my pleasure to welcome you to today's fireside chat with Mission Produce. For those of you not familiar with Mission, Mission is a global leader in the avocado business, with operations involving sourcing, producing, and distributing fresh, Hass avocados. The company also has exposures to other fruits like blueberries and mangoes. Now, with me from the company today are Steve Barnard, the founder and CEO, and Bryan Giles, the CFO. To help us learn more about the company and the key drivers, why don't we turn it over to them to get a little bit of background on the company's operations and strategy? Steve? Okay, sure. We started out in the California business in 1983. Our competition at that point was Calavo Growers. They were a co-op. They had 80% market share. We felt it was a pretty good target and have evolved way beyond the California business. We were the first ones in Mexico. We were the first ones in Peru. We have 10 distribution centers around the country and the world, actually. We have some in Europe, too, and in China, three things really changed the avocado business from when we got into it. One was the border of Mexico opening up, where you had a Hass variety year-round. We were in Mexico already because we were doing a lot of business in Asia. The second thing was the health benefits. It used to be considered it had cholesterol. It doesn't. It's actually the number one superfood. And the third was the promotion money that the industry now spends on the avocado research that found out about the cholesterol and does the promotions and Super Bowl ads and that kind of thing. And we just happened to be in the right place at the right time. And like I said, we've got 10 distribution centers around the world, and we're still growing. We also produce in Peru and Guatemala and some in California, which we'll talk about a little bit later, I saw in the questions. But it's a fun business, and it's continuing to grow. And we'll be right there, front row. Great. If we can just maybe talk about recent performance. The business has been performing really well this year against the supportive backdrop. Can you guys maybe talk about what the circumstances that have led to this and what you're doing operationally to capitalize? Yeah, I mean, certainly this year has been a strong bounce-back year for Mission, our fiscal 2022 and 2023. But we kind of hit a rough spot there. We had some challenges ranging from rolling out a new ERP system to just some of the global conditions that existed in our market. And in the early part of this year, I think there were some concerns when we started to see what the Peruvian crop was going to look like because of the El Niño conditions. But, yeah, I mean, things really turned around. I think we've been in a bit of a supply-constrained environment this year. It's really enabled us to flex our muscle. We've got the broadest global supply network of anyone. We work with more countries of origin than any of our competitors do. When there are supply constraints in markets, we have other options to go to. Our customer base knows that. We tend to, in times like this, end up getting a larger share of their business. But just in general, the market has been strong. I think we've seen a bit of a rebound. Consumers are continuing to buy avocados. Consumption has grown. They're paying higher prices today than they were a year ago for higher volumes. Retail is excited about the category. They're promoting it heavily. They've been doing so throughout the year despite some of the supply constraints. It's really helped drive our results. We've seen volume relatively flat year over year, not dramatic steps forward, but average per unit price is substantially higher this year than we saw a year ago, and that's what's driving our revenue growth. Along with that, the higher revenues and the flexibility in our sourcing bases enable us to capture a much larger margin per unit than we'd seen in prior years. Not saying that what we're seeing today at these levels is sustainable long-term on the buy-sell of fruit, but I think it's indicative of the direction that the market is going. And we've certainly bounced off the lows that we experienced post-COVID as we were absorbing a lot of these inflationary pressures but hadn't really been able to pass some of those increases onto our customers yet. We've seen the impact of being able to do that this year. And, yeah, I think it's been just very strong results that we're very pleased with. I think it sets a good foundation for us as we move forward. Great, great. I guess just following up on that, if we can talk about your CapEx and free cash flow dynamics. It looks like the business is also over a large CapEx cycle and looks to be unlocking some attractive free cash flow dynamics. Could you maybe provide some color around that? What does near-intermediate-term CapEx look like, and what are the primary uses of cash and capital allocation? Absolutely. I mean, I think we definitely saw strong operating cash performance so far this year. Correlates with our strong operating results. We certainly saw a bit of a step down on our working capital earlier this year, so we saw a lot of that fall through in Q3 that maybe we normally see at the back end of the year. But nonetheless, just very strong operating results. I think our CapEx, we've been communicating for several years now that we would expect a gradual step down in that spend over time. And I think that's what we're actually seeing. We spent a significant amount of money to build out our North America distribution network back in 2020 and 2021. We also have made substantial farming investments down in Peru, which are now complete on the avocado side. I think where we're at today, we've planted 750 hectares of avocados in Guatemala. They're a little bit behind Peru in terms of the timing, but that's going to help fill in a different window on the calendar for supply source during the year, and those, while they won't go into production this year, they should in 2026, so we will get our first decent crop this year. We're finishing off our packing house in Guatemala as well, so we do have some spend in 2025, but it's meaningfully stepped down again from where we were in 2022, 2023, and 2024. Down in Peru, really, the blueberries work that we're doing with our joint venture partner on the farming side is really the only other big project that we still have that's ongoing. But again, I think that we've got a lot of young assets or assets that aren't completely utilized today, whether it be in distribution or whether it be in farming, that we truly feel that we're going to be able to leverage as we move forward. And again, that's been, I think, consistent since our IPO back in 2020, is that that was the messaging that we've made these investments, and there's a stream of cash that's going to follow them. I think this might be the first year where we're really seeing that. And I would expect kind of CapEx to kind of normalize or maybe over the next couple of years as we finish off these projects and then continue to step down beyond that. And then the focus is we focused thus far on paying down debt, but I believe probably in the next 12-24 months, if things keep going the way that they are today, it will enable us to look at ways to return cash to shareholders. Great, great. I just want to kind of shift back to the current fundamental environment. No question, the pricing environment this year has been strong. I was wondering if maybe you could speak to what's kind of driving this dynamic and how Mission is positioned to capitalize on this situation. Yeah. Let me back up a little bit. One of the things that I didn't mention was Mission was the one that started the Ripe Program for selling fruit at retail ripe. And this is going back to the early 1990s. But one of the things that we were worried about because sales tripled overnight. I mean, boom, Kroger's ordering this stuff, and Walmart and everyone were going crazy building these distribution centers. Well, I'm thinking, "Whoa, we don't have enough product." So that put us into Mexico. We were in Mexico already, but expanding in Mexico, and now we're in Peru and Guatemala, as Bryan said, and even South Africa. But it's to have enough supply to go forward with this demand continuing to grow as it is here on a very rapid rate. I think when we started this business, we were at about two pounds per capital. Now we're about nine here in the US. Mexico's 20. Europe is about three. Asia's less than that. So there's still opportunity out there. But we've invested in farms to make sure we have enough supply for certain windows of the calendar, Peru specifically. We have a lot tied up down there, and Guatemala, as Bryan mentioned. So you've created an animal, you got to feed it. So we're continuing to feed it with CapEx. Absolutely, and I guess on that note, just kind of diving into Peru, can you give us and investors an overview into it? Why choose to farm here, and what advantages do you get from being vertically integrated in the industry? If you could speak to that. Yeah. Well, we picked Peru because it comes off a certain time of year and competes with California. Well, California doesn't have enough. California consumes almost what's grown in California. Well, not quite, but I mean, it's not enough. Labor, land costs, water costs, politics, whatever. But Peru comes off the same time, and they have plenty of land. They have plenty of water, and they could grow a good product. Mexico is a Wild West show, but they have by far the largest production in the world. They actually go year-round. It picks up and slows down throughout the year. We have two packing houses there and probably how many co-packers? Thirty. 30. Maybe. That pack for us under contract. So we're strategically located, but the key here is the retail customers. We're strong in retail, all the big guys, and they want a guarantee of supply. They don't want to hear you're running out. You may have to move sizes around and do some things for them. But that's why we're in the production side of it, because it's driven by our customer base. We don't sell to many wholesalers. That used to be the market before consumption went up. Everyone went to a wholesaler because the retailer didn't buy enough. They had to put something else on the trucks. They just went to a wholesaler. Now the whole model has changed. We're going direct retail. We still sell some wholesale, but not low percentages of it. It's direct retail. And now you need to have the supply to make sure you can guarantee it. So one thing led to another, and. Yeah, I was going to say, I think one of the other things I would add to that is avocados. Most people probably realize that pricing can be somewhat volatile. I mean, supply ebbs and flows throughout the year, and that shows up in the retail price that consumers end up paying. One added benefit of controlling supply is the ability to commit to some longer-term pricing contracts with some of our customers, particularly whether it be retail or even food service in particular with fixed menu pricing. They have a strong desire to have predictability in what their pricing structure is going to look like over a period of time. Buying and selling third-party fruit does not enable us to do that. There really aren't long-term contracts that exist in the avocado space on the supply side or on the sales side. So you're banking on relationships that you've established and getting access to supply and developing those relationships then with your customers. But the one way that we could commit to longer-term pricing was by having control over our own fruit, where we know what our input costs are. We know what the cost of labor, the cost of fertilizers, pruning, things of that nature. And we'd be willing to commit to a certain price structure and lock in what our margin would be on that fruit. So that, along with control over timing of harvest, to be able to make volume commitments, quality, we certainly see more feedback from our customers that they want to work with people that have control from farm to fork. We see it here in the U.S. We see it in our European operations as well. So I don't see a scenario where we ever want to farm 100% of the product that we sell. I mean, today, we've had years where we've gotten as high as 18%-19%. This year, lower because we had a weaker crop out of Peru. But that's probably around where we're going to settle long-term. And then when Guatemala comes online, it's got a different harvest season than Peru does. It will help support our European markets, but also support the US market when there's any dysfunction with the supply in Mexico, which tends to happen over time. I mean, Mexico is the biggest source of fruit globally. If you are a major player in the space, you have to have a presence in Mexico. I think we've been there longer than anyone else, and we know how to navigate that supply market well. But there's still risk associated with being overly dependent upon one country of origin. And I think we probably are the least dependent of any U.S. market or fruit today. We wouldn't even be afraid of a third supplier in Mexico because they change their mind every Tuesday. We appreciate that detail. Kind of just going on with vertical integration too, I think if we could just maybe shift over to blueberries. What attracts you to this area, and how do you see growth unfolding over the long term here? The reason we got into the blueberries had nothing to do with blueberries, actually. When we're picking avocados, we have about 10,000 pickers, and the avocado season ends, we don't want them to disappear, and then we have to go find them again, so we thought we'd plant something that would be off-season, which blueberries, it depends when you plant them and prune them, you can manipulate when the harvest comes off, so we got into it to help manage labor, but it's turned out to be a very nice business. Now we're partnering with Driscoll's on the thing on a 60/40 partnership, we're the 60, and we farm it and pick it and pack it, and they sell it, and we get their varietals, and that's worked out real well with some of those new varieties, but that's why we got into it. Are we going to continue to grow at an accelerated rate? No. It's word of mouth. 600 hectares, I think, is the plan. Or no, I think 1,000. Let's take it slow. 1,000. We've got that other ranch too. So we're going to get to about 1,000 at plateau. So we're almost there. Yeah. Blueberries has a number of similar attributes to our farming business. It is a farming business. So yields are important. Sell prices are important. Control of input costs are important. Same things that drive success within our international farming segment. I think that certainly having a strong partner with access to the right varieties and a strong marketing network has a big impact on our bottom line results. And I think that certainly earlier this year, there's seasonality to our blueberry business that tends to peak in the fourth quarter of our fiscal year when it starts and then peaks in our first quarter and then kind of winds down in our second and third and then ramps back up again. Again, it's around the timing of blueberry harvest in Peru. We saw strong results early in the year as a result of the farms coming into production in a very high-pricing environment. I think that I'm not sure if it's sustainable at that levels long-term, but volume is going to continue to grow, and we expect that pricing will, while maybe it's not at $9 a kilo going forward, we do expect it to remain at fairly strong levels going forward and enable us to generate pretty strong results off of that operation. Great, great. And. Just coincidentally, those are the top two superfoods. Great. Good to know. Good to know and I guess just shifting over to mangoes. You guys have gotten involved with this fruit. What excites you about this fruit, and where do you see potential in terms of consumption growth? I know you quoted avocados were at two pounds and now at nine pounds. Do you see something similar with mangoes? Yes. Mangoes today are the number one consumed fruit in the world, just not here in the United States. You look at India and Southeast Asia and whatnot, they eat them every day. The nice thing about the mango business is that they need to be ripened. They are sold next to the avocados in the store. The same buyer, same customer. We already have the network of ripe centers and distribution and the customer base. It was just a natural for us to get into it. And now you see that consumption starting to climb because we're ripening. Now, for someone to duplicate what we've done, they're going to have to have a big checkbook because we've already got the network. We've got the transportation. We've got the ripe centers. We have the know-how. We have the customer base. And it's just an add-on that's taken off. I quoted it. I mean, it's going to be the next avocado as far as consumption growth. We're in the right position. We've got the right team. It's not easy because you're moving around every four to six weeks. But people are lined up for it. We came out with a bag of four mangoes in a bag at a show in Atlanta about a month ago. There must have been eight retailers stopped by and said, "I want that right now. I'll take them all." Well, you can't have them all, but I mean, it's just gone nuts. It's a nice problem. Yeah. I mean, it's a fragmented. Mangoes are a fairly fragmented space today, and I think retail is looking for someone to take a leadership role within the category. That's true. Our market share today in mangoes is probably in the 5% range in the U.S. I think avocados were probably somewhere around 20%. I think we certainly feel that there's an opportunity to build that over time. Just with our presence, there aren't big players there to compete with us today, and then as consumption grows, which we believe that it will grow dramatically, yeah, I don't see any reason why we can't get to similar share positions in the U.S. market on mangoes today. Great. Great. No, appreciate that. And I guess if we could just shift back to your bread and butter, so to speak, your avocados, how should investors kind of think about seasonality in general? For example, when do supplies for California, Mexico, Peru, so on and so forth hit the U.S. market? Mexico goes year-round, but it doesn't go year-round with high volume. It peaks, oh, I'd say probably in January, right before the Super Bowl. We overlay it with Peru or Guatemala or California or South Africa, depending where we're going. Let's just take the United States because that's what we're all familiar with. We just like at least two suppliers of countries at any one time because you can have weather, you can have strike, you can have off crops, off years, and whatnot. Then, like I said, we shoot for three if we can get them. It's latitude and altitude is what we look at on the map on when they will come up. Altitude is cooler, latitude north-south. We go all the way from Chile, not on our own production, but as far as supply, Chile all the way to California. And now we're doing Guatemala. That is supposed to be announced probably next week on being allowed into the United States. And we're already set up and going there. We won't be able to send any tomorrow, but we will be shortly. We've got a packing house under construction. I was there last week, and it looks good. So just thinking ahead, trying to get ahead of it because consumption is going to keep moving. It's definitely trying to keep that calendar balance. I think that, yeah, as Steve alluded to earlier, the reason for the investments in Peru was lack of supply during the summer months when California was having to do the heavy lifting. There's less acreage planted today in California than there was 15, 20 years ago. There's all sorts of other challenges that the California grower faces. That's what led us to Peru to supplement supply there. It also led us into some of the export markets that we work in today. Some of the investments we've made since then in areas like Guatemala and our joint venture in Colombia is to help fill in the calendar during the rest of the year. Again, making us less dependent on Mexico, but also giving us the same flexibility to do longer-term commitments with customers that Peru affords us. Now, those farms are still. It was 750 hectares in Guatemala. We've got similar amounts in our joint venture in Colombia. They're just starting to produce fruit today. We started them probably five years ago, and they're just now moving into production. So this is something where we think it'll have a more meaningful impact on the business going forward. Peru, we started over a decade ago. We still have a fair number of fairly young trees there that are not or just now starting to produce fruit. I mean, typically, a farm probably at four years becomes productive, which means it's starting to make money or breaking even slight profits. But it's really not reaching peak yields until probably year six, seven. Seven. Yeah, so we have farms that are either just reaching that productive level or they're certainly at a level where they haven't reached their peak yields yet, so we would expect that that's going to happen as we move forward, and then we have these other countries that are going to be coming online as well, and I think that's kind of where we would expect to see a step up in our farming operation in the coming years with the results. Today, with Peru, it tends to be backloaded. Our farm with Peru harvest being during the summer months, it impacts our results in our fiscal Q3 and our Q4 for farming. What we would expect over time is with Guatemala and Colombia that we'd start to see product filling in that Q1 and Q2 gaps as well. Got it. That's helpful. Thank you for that. I just want to go back to, I mean, Steve mentioned getting the sourcing to support the consumption. Now, can we maybe talk about avocado consumption per capita trends? I think we've seen a steady mid-single-digit CAGR over the past 10 years. Where do you think this figure is headed to, and what do you think the key drivers are to get there? Let's just take Europe for an example. Their per capita consumption is still about less than three pounds. Now, it's growing, but they still eat the green skin varieties. I make a joke with them. We have two distribution centers in Europe. I said, "The Donner Party wouldn't eat them. The Donner Party is the one that starved to death in California mountains 100 years ago." I said, "They wouldn't even eat them. They're awful." That's changing because people are growing year-round Hass and sending it to Europe now, whether any country can do it. It's changing. You're seeing now they're starting to sell them ripe too. Between those two combinations, consumption will continue to go up. Now, they don't have the Latin population we do here in the States, but it is growing. It's probably three pounds today, and it should get up to six or seven, I would think, in time. Yeah. I would say that consumption in some ways is driven by the supply that's available to be consumed. So it's tough for us to measure demand solely on how much fruit's being consumed. What we like to do is look at some combination of consumption rates and average selling prices of fruit because I think that is an indicator that needs to be taken into account when looking at overall demand numbers. I think what we've seen this year is a year where overall consumption is flat to maybe slightly up. I think most weeks during the year this year, we've seen consumption growth at retail over what we saw last year. And we're seeing it at price points today that are 10%-15% higher than what they were a year ago. So demand is, we view that as a positive sign of demand. We think the market is in a much stronger spot today than it was a year or two years ago. Retail is excited about the category. They've promoted heavily throughout this year despite challenges in supply at certain times. So I think we're excited about where the category stands today in the U.S. market. I think beyond that, as Steve alluded to with Europe, certainly consumption rates are dramatically lower than they are here in the U.S. today, but they've been growing at a faster rate over the last decade and seen growth rates that are in the low double digits. Shouldn't be out of the realm there. I think one of the challenges that they've dealt with, as he alluded to, is having year-round supply of Hass, ripened Hass avocados. They get it at times of the year with Peru, and then the supply steps down dramatically once it's over. So with some of these other countries of origin coming online, like Colombia, like Guatemala, like South Africa, that helps to fill the calendar in so people can make it a staple in their diet on a year-round basis. And I guess, just diving into Europe a little bit more on that, if we could. Maybe consumption is low right now. What attracted you to expand to the U.K.? Do you think that you can do something similar in the U.S. in Europe with consumption? I'm not sure just because of the makeup, but I think it could easily double, though. Now, will they get to nine or 10? Probably not. But it's funny because they do ripen them over there, but then they put them in a package that you can't tell if they're ripe or not. They double-handle everything. I mean, they're stubborn. Like I said, there's a reason we left 700 years ago. You guys are stubborn. And they just smile, "Yeah, you're right." But slowly but surely, I think they're coming around. I had one retailer I asked the gal at the buyer, I said, "Can you just take one store and put out a box or a display of ripe avocados naked just out there like you see in a store here and raise the price? Make it higher." So I saw her a year later. How'd that go? Sold out in about an hour," I said. "Well, why don't you go that way then?" "Well, I think our company owns the packaging company, so they want to keep it working or something." I said, "Well, that doesn't make any sense. Yeah. I mean. It's black and white right there. I think companies that have had success here in the U.S. market, European companies that have had success here in the U.S. market, we think will ultimately be the leaders in driving it in Europe, companies like Aldi and Lidl. I think as they move in that direction, others will follow. But it's taking longer than we expected it to. That being said, while the growth rates in Europe are likely to be higher than they are here in the U.S. in the coming years, and we're focused on growing in those markets, I think the U.S. market's still going to be our bread and butter, per se, and looking at ways to continue to grow here. In absolute terms, volume growth is still going to be higher here, we believe, overall, how we go about continuing to build our share, get deeper penetration with our existing customer base, and yeah, figure out maybe over time as the market has matured a bit and consumption growth has come off a little bit from its peaks, I think you'll potentially see opportunity for some consolidation within the space in the coming years as well. So, and we're well positioned to take advantage of that when it does happen. Well, thank you for that detail. I think we have about 10 minutes remaining, so I just wanted to give a chance for the audience to ask some questions here. So if anybody has any questions, please feel free to ask. I think if not, maybe just to kind of close it off here, if you could just remind investors and us, what are your priorities? What are you thinking of? And anything else you kind of want to tell investors? We're the leader in the category, and I think we can take it to the next level, which is more consumption, more ways to eat it, globalization, more markets outside. It's, like I said, the number one superfood. It's versatile. You can eat it for breakfast, lunch, or dinner at a party. And I think there's still a lot of room to create value, not only for us, but for the consumer and the retail. Yeah. I agree completely with Steve. I think there's real opportunity still that exists both in the U.S. and our export markets. Avocados, they've gone through a significant growth cycle over the last two decades, and we see that continuing as we move forward. I mean, there's favorable demographics at play for us, particularly in the U.S. market, but abroad as well. We don't see that consumption slowing down anytime soon. We think supply is in a better position today than it has been for a period of time with a lot of the plantings that have been made globally. I think we feel like we're in a good spot with our own farmed assets today, and we see enough third-party fruit available in other markets that we're sourcing from that I think will limit our need in the near term to have to make further investments in that piece of the business. And we can lean heavily on the relationships that we have that we've established over the last 40 years to gain access to, again, supply and maintain that existing customer base that we have. And then on top of that, continue to develop areas like mangoes that we're just starting to come into the U.S. market and grow in more meaningful at more meaningful rates, a nice complementary product there that can help continue to drive growth for us here and globally. I mean, just last week, I was in Guatemala last week, and while I was there on Friday, we've been working on getting that product allowed or permitted to come into the United States. It was announced Friday while we were there. The president came out and said, "It's open." The USDA came out and said, "It's going to be open," and we're in position for it. We've got a packing house that is under construction right now, so we've been working, and we had a guy on that full-time for probably four years to get that done, and it got done, so that's just one chip at a time. Yeah. Definitely encouraging. Now Guatemala will plant more supplies because of it. There's also a lot of young trees there that we're in and planted in anticipation this would happen because we've been working on it for a long time. We've gone through, I think, three presidents to get it there. That's going to be announced. It was officially announced the other day, but they're having a big ceremony down there Monday. I was just there Friday. I said, "You need to come back. I'm not going back. I'll send somebody else." So it keeps moving. It keeps evolving, and consumption keeps going up. We'll focus on areas like Europe that still has room to grow. Asia. Asia is huge. We sell into China. We have four distribution centers in China. Japan, I mean, they were hit with the COVID thing pretty hard, but still a lot of people over there. They had an avocado smoothie promotion about a year ago in one of the retail stores. The thing went crazy. They were lined up before the store opened to get those. So I mean, there's a revolution going on, the avocado revolution. We're right in the front row. Kind of fun. Actually, it's a lot of fun. Steve, Bryan, thank you for joining us today and giving us some more details on Mission Produce. Thank you for everybody for being here today as well. Thank you. Thank you.