Mission Produce Q3 Revenue Tops Estimates Despite Margin Pressure

Mission Produce Inc. (AVO) delivered third-quarter fiscal 2026 results that exceeded analyst expectations, with adjusted earnings per share reaching 16 cents against a consensus estimate of 10 cents. This 60 percent beat was primarily driven by stronger-than-anticipated performance in the International Farming segment and early contributions from the recently acquired Calavo Foods. According to data compiled by GN markets/earnings, the company’s top-line growth outpaced the market's predictions, signaling robust demand despite pricing headwinds.

Total revenues climbed 25.8 percent year over year to $450 million, surpassing the consensus estimate of $368 million by 22.3 percent. The revenue increase was fueled by a 37.7 percent rise in avocado volume to 252.7 million pounds, a figure that reflects both the addition of Calavo’s assets and growth in legacy Mission Produce operations. However, the volume gain was partially offset by a 9.2 percent decline in average sales prices, which fell to $1.58 per pound due to elevated industry supply.

Margin Compression From Farming Prices

While revenues expanded, profitability metrics showed strain. Gross profit slipped slightly to $44.7 million from $45.1 million in the prior year, resulting in a gross margin contraction of 270 basis points to 9.9 percent. This decline was attributed to lower pricing in the International Farming segment, which offset favorable margin contributions from the Marketing & Distribution division. The International Farming segment saw sales drop 6.5 percent to $45.8 million, with adjusted EBITDA falling 37.2 percent to $7.6 million as lower average sales prices weighed on the bottom line.

Operating expenses also rose, with SG&A excluding transaction costs increasing to $31.6 million from $24 million, largely due to Calavo’s cost structure. The company recorded $12.6 million in transaction advisory and integration costs, along with $5.2 million in acquired inventory step-up amortization. Despite these costs, adjusted EBITDA remained steady at $32.4 million, slightly below the year-ago figure of $32.6 million, but it exceeded the high end of the company’s prior guidance range of $28 million to $32 million.

Segment Performance and Market Share

The Marketing & Distribution segment was the primary driver of volume growth, with sales increasing 20.4 percent to $414.3 million. Segment adjusted EBITDA rose 23.5 percent to $24.7 million, reflecting higher gross margins from Calavo’s post-acquisition contribution. In the Prepared Foods segment, which is now reported separately, sales reached $15.5 million with a modest adjusted EBITDA of $0.2 million. Management noted that these figures cover only a portion of the quarter and do not represent a full-quarter run rate.

Consumer demand indicators remained positive, with U.S. retail avocado volume growing approximately 9 percent year over year. U.S. per capita consumption stayed above 10 pounds year to date, up 12 percent from the previous year, while household penetration increased by about 50 basis points. Legacy Mission Produce also expanded its estimated U.S. retail market share by roughly 60 basis points during the period, indicating sustained competitive positioning despite broader industry pricing pressures.

Forward Guidance and Production Outlook

Looking ahead, Mission Produce expects 120 million to 130 million pounds of exportable avocado production from its owned Peru farms this season, an increase from 105 million pounds last year. Approximately 53 million pounds had been sold by the end of the fiscal third quarter, suggesting a higher concentration of sales activity in the fiscal fourth quarter. The blueberry segment, which saw sales rise 20 percent to $5.4 million, posted a small loss in adjusted EBITDA, consistent with its seasonal profile where most profitability is realized in the fourth and first quarters.