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Shares of Mission Produce Inc. jumped after hours on Thursday after the avocado grower reported fiscal second-quarter results that beat estimates, after lower avocado prices led to more product sold but a drop in dollar-figure sales.
The company reported a net loss of $4.6 million, or 7 cents a share, contrasting with a profit of $2.4 million, or 3 cents a share, in the same quarter last year. Sales fell 20% to $221.1 million, driven lower by falling avocado prices amid “robust” harvest volumes in Mexico, the world’s largest avocado producer.
Adjusted earnings per share came in at 1 cent, compared with 4 cents a year ago. Analysts polled by FactSet expected an adjusted per-share loss of 1 cent, on revenue of $218.1 million.
After initially surging more than 6% in after-hours trading, Mission Produce shares
AVO,
finished Thursday’s extended session down 0.6%.
While revenue fell, sales volumes, a measure of the amount of product sold, rose 19%, amid a “more normal pricing environment,” after prices surged last year, the company said.
Those prices, Chief Executive Steve Barnard said on Mission Produce’s earnings call, remained volatile last year after “inconsistent harvest timing.” Factors that drove prices higher last year included higher demand — amid increased popularity in the U.S. over the years — and labor and supply-chain constraints, according to media reports. The U.S. last year also briefly suspended Mexican avocado imports.
Bryan Giles, Mission Produce’s chief financial officer, said that Mission Produce’s average per-unit sales pricing fell 36% during the quarter. But the company said lower prices would be better for business overall.
“Despite the impact of lower prices on per unit margins in the short term, a more rational pricing environment is advantageous for long-term consumption growth and allows Mission to leverage our global distribution footprint to penetrate new growth markets,” Barnard said in a statement.
Management said they expected volumes to be roughly 20% higher in the company’s third quarter, “primarily due to the combination of California’s harvest shifting to the third quarter versus the second quarter last year, a strong Peruvian harvest outlook and a larger off-bloom Mexican harvest.”
Executives said the company began operations at a new distribution center in the U.K. Management, during the call, also said that demand remained strong abroad, particularly in China.
Shares of Mission Produce are down 10% over the past 12 months. By comparison, the S&P 500 Index
SPX,
has risen 4.3% over that period.
