AVO — Q3 2026 Financial Report Analysis

Calavo doubled the avocado volume, cheaper fruit and deal costs erased the profit

Mission Produce's fiscal third quarter (the three months to July 31, 2026; Mission's fiscal year ends on October 31, so this is Q3 of fiscal 2026, covering May–July 2026) was the first to include its acquisition of rival avocado distributor Calavo Growers, which closed on May 28. Revenue jumped 26% to $450.0 million, almost entirely because Mission sold far more avocados: 252.7 million pounds against 183.5 million a year earlier (+38%). But the average selling price fell from $1.74 to $1.58 a pound (−9%) as a larger Mexican crop pushed market prices down, gross margin shrank, and $12.6 million of deal and integration costs turned last year's $14.7 million profit into a $6.5 million net loss ($0.08 per share).

At a glance

• +38% avocado pounds, −9% price per pound. Revenue growth came from volume (Calavo for two months plus higher Mexican yields), not pricing. Avocado prices are set by supply in the market, so Mission's revenue moves with the crop size as much as with its own sales effort.
• Adjusted EBITDA $32.4 million vs $32.6 million. Adjusted EBITDA is the company's own measure of profit before interest, tax, depreciation and deal-related items. It was flat even though two months of Calavo were added, which means the legacy business earned less than a year ago, mainly in Peru farming.
• Debt roughly quadrupled to about $400 million. Long-term debt (including the current portion) went from $95.8 million at October 31, 2025 to $400.4 million at July 31, 2026, to pay the $269 million cash part of the Calavo price. Quarterly interest expense already doubled to $5.1 million with only two months of the new debt.

Key figures

Nine-month figures show how much harder the pricing hit was earlier in the year: avocado pounds were up 23% (625.7M vs 509.8M), but the average price was down 25% ($1.38 vs $1.83), so nine-month sales fell 5% to $1,019.5 million and the company has a $14.4 million net loss for the year to date, against a $21.7 million profit a year earlier.

Where the money came from

Mission now reports four segments. Marketing & Distribution (M&D) buys fruit from growers and sells it to retailers and food-service customers; Prepared Foods is Calavo's guacamole and salsa business; International Farming is Mission's own orchards in Peru and Guatemala; Blueberries is its Peruvian blueberry farming.

• Marketing & Distribution sales rose 20%, with the same 38% volume / −9% price split. Operating income collapsed to $1.1 million because the transaction and integration costs sit in this segment. On the company's adjusted basis, which strips those out, the segment earned $24.7 million of EBITDA against $20.0 million, and the release attributes that gain mainly to Calavo's results.
• Prepared Foods sold $15.5 million in its first two months under Mission and lost $4.1 million. Most of that loss is an accounting effect: inventory Calavo held at closing was revalued up to fair value, and that $5.2 million markup is charged to cost of sales as the stock is sold, which leaves almost no profit on it. Segment adjusted EBITDA was $0.2 million.
• International Farming is where cheaper avocados hurt directly. Mission's own Peruvian fruit is sold at market prices, so when global supply rises the farms earn less on the same crop. Segment operating income fell 84% to $1.1 million and adjusted EBITDA fell from $12.1 million to $7.6 million.
• Blueberries swung to a $2.4 million profit, but only because of a one-time refund of tariffs paid in the prior year (see below). Without it, segment adjusted EBITDA was −$0.1 million, down from $0.5 million, on lower volume and prices.

Mangos added $24.2 million of sales (vs $22.8 million), and "other" products, which now include Calavo's tomatoes and papayas, doubled to $6.7 million.

What the headline numbers hide

• Most of the revenue growth was bought, not grown. The filing's pro forma table, which restates both years as if Mission and Calavo had always been one company, shows combined Q3 revenue of $498.0 million vs $536.5 million a year earlier, a 7% decline. On a like-for-like basis the combined business sold less in dollars, because lower avocado prices outweighed the bigger crop. The reported +26% reflects adding Calavo, not underlying demand.
• The GAAP loss and the adjusted profit are $21.5 million apart. Adjusted net income of $15.0 million adds back, before tax: $12.6 million of transaction and integration costs (bankers, lawyers, severance and retention pay), $5.2 million of the inventory markup above, $2.7 million of supply-chain restructuring, $2.4 million of debt refinancing fees, $1.5 million of amortization of acquired customer relationships and brand names, plus a $1.8 million Mexican transfer tax on moving Calavo's Mexican assets. Most of these really are tied to the deal and should fade. The amortization add-back will not: the $97.0 million customer intangible is written off over 12 years and the $5.2 million trade names over 7, which is roughly $9 million a year of real, recurring accounting cost that the adjusted figures will keep excluding.
• A one-time tariff refund flattered the quarter, and the company removed it from its own adjusted numbers. After the Supreme Court struck down the IEEPA tariffs in February 2026, Mission filed or plans to file about $12.5 million of refund claims. It booked $4.0 million of refunds this quarter, mostly for Blueberries. The adjusted EBITDA and adjusted net income figures subtract that $4.0 million, which is the conservative treatment.
• Cash flow is weak, partly by season and partly by deal. Operating cash flow for the nine months was −$25.9 million against a net loss of $13.3 million, and +$21.4 million a year earlier. Working capital absorbed $55.6 million (vs $40.6 million). Inventory rose from $80.6 million to $141.3 million and trade receivables from $80.5 million to $136.0 million since October, but Calavo brought $39.9 million of inventory and $78.2 million of other current assets with it, so most of that is the acquisition rather than unsold fruit piling up. Management says the remaining build is growing-crop inventory from a larger, later Peru harvest, which normally turns into cash in the fourth quarter.
• Per-share figures are spread over 17% more shares. Mission issued 17.5 million new shares to Calavo holders; diluted weighted shares were 82.8 million vs 71.0 million a year earlier, and 87.7 million shares were outstanding at July 31. That full count will apply to every quarter from now on, so each dollar of profit is worth about 19% less per share than it was pre-deal. Mission bought back 641,342 shares at $11.27 in June under a new $100 million, three-year programme.
• Inherited Mexican tax exposure. With Calavo came a long-running Mexican tax dispute: Mission has booked a $27.1 million provision for a 2013 tax assessment and carries $25.7 million of Mexican VAT (sales-tax) refunds it expects to collect but that are still under appeal. Neither touches this quarter's profit, but both are open-ended.
• More restructuring charges are coming. An 8-K filed September 16 says Mission will consolidate its Swedesboro (New Jersey) and Dallas-area facilities and close Calavo's Jacksonville site, with about $1.4 million of severance, $8.6 million of accelerated depreciation and $5.4 million of site-restoration obligations, plus lease termination costs not yet estimated. Expect these in the fourth quarter's adjusted-out items.

Takeaway: The flat adjusted EBITDA is the number that matters: two months of Calavo should have lifted it, and it did not, because the legacy business, mainly the Peru farms, earned about $4.5 million less as global avocado prices fell. Mission has gone from under $100 million of debt to roughly $400 million and 17% more shares, so the deal now has to earn its keep through the promised cost savings, not through avocado prices.

Outlook

Management reaffirmed its second-half fiscal 2026 adjusted EBITDA outlook of $84–88 million, which after Q3's $32.4 million implies $52–55 million in Q4 (August–October 2026), the first full quarter with Calavo. It raised its estimate of annual cost savings from combining the two companies to more than $30 million, citing larger-than-expected savings on overheads and on running fewer facilities.

The company's Q4 industry assumptions:

• Avocado industry volume up about 10% year on year.
• Prices about 10% lower than the $1.39 per pound of Q4 fiscal 2025, which points to roughly $1.25.
• Exportable fruit from Mission's own Peru farms of 120–130 million pounds for the season (vs 105 million last season), of which about 53 million pounds had been sold by July 31, so most of the harvest falls into Q4.
• Full-year capital spending of about $45 million.

Our read: the Q4 target is a big step up, from $32.4 million to $52–55 million, and it leans on three things: a full quarter of Calavo, a later and larger Peru harvest, and better per-pound margins in distribution. The first two are mostly timing and are visible in the filing (the growing-crop inventory build, the 53 of 120–130 million pounds already sold). The third is the risk: if prices fall faster than the ~10% assumed, the farms earn less per pound even as they sell more, which is exactly what happened in Q3. GAAP results will stay noisy for several quarters, with integration costs, the facility closures announced in September, and roughly $9 million a year of acquired-intangible amortization. The cleanest checks for the full-year report (expected in December) are whether Q4 adjusted EBITDA lands in the $52–55 million range, whether operating cash flow turns positive for the year as the Peru crop is sold, and whether net debt starts falling from about $400 million.

Fiscal year mapping: Mission Produce's fiscal year runs November 1 to October 31. This report covers fiscal Q3 2026 (May 1 – July 31, 2026). Figures are from the company's Form 10-Q for that quarter; adjusted net income, adjusted EPS and the avocado pounds and price-per-pound figures are from its September 8, 2026 earnings release (Exhibit 99.1).