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Avocado company Mission Produce (NASDAQ:AVO) reported results ahead of analysts’ expectations in Q2 CY2024, with revenue up 23.9% year on year to $324 million. It made a non-GAAP profit of $0.23 per share, improving from its profit of $0.15 per share in the same quarter last year.
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Mission Produce (AVO) Q2 CY2024 Highlights:
- Revenue: $324 million vs analyst estimates of $231 million (40.3% beat)
- Adj EBITDA: $31.5 million vs analyst estimates of $13.9 million (large beat)
- EPS (non-GAAP): $0.23 vs analyst estimates of $0.03 ($0.21 beat)
- Gross Margin (GAAP): 11.4%, in line with the same quarter last year
- EBITDA Margin: 9.7%, up from 8.1% in the same quarter last year
- Sales Volumes fell 10% year on year (23% in the same quarter last year)
- Market Capitalization: $760.9 million
Founded in 1983 in California, Mission Produce (NASDAQ:AVO) grows, packages, and distributes avocados.
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Sales GrowthMission Produce is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale.
As you can see below, the company’s annualized revenue growth rate of 9.7% over the last three years was decent for a consumer staples business.
This quarter, Mission Produce reported remarkable year-on-year revenue growth of 23.9%, and its $324 million in revenue topped Wall Street estimates by 40.3%. Looking ahead, Wall Street expects revenue to decline 15.9% over the next 12 months, a deceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Mission Produce’s average quarterly volume growth was a robust 7% over the last two years. This is good because meaningful volume growth is hard to come by in the stable consumer staples sector.
In Mission Produce’s Q2 2024, sales volumes dropped 10% year on year. This result was a reversal from the 23% year-on-year increase it posted 12 months ago. A one quarter hiccup shouldn’t deter you from investing in a business. We’ll be monitoring the company to see how things progress.
Key Takeaways from Mission Produce’s Q2 Results We were impressed by how significantly Mission Produce blew past analysts’ revenue, adjusted EBITDA, and EPS expectations this quarter. This was a solid quarter. The stock traded up 16.8% to $12.50 immediately following the results.
