Mission Produce Q2 Results Show Margin Pressure as Avocado Oversupply Hits Pricing

Mission Produce reported a challenging fiscal second quarter as an unusually large avocado supply, especially from Mexico, pushed market prices to multi-year lows and pressured profit margins. According to MarketBeat, the company’s revenue fell 24% year over year to $290.9 million, even though avocado volume sold increased 15%.

Avocado Oversupply Weighs on Quarterly Performance

The main issue during the quarter was not weak demand. Instead, Mission Produce faced a supply-heavy market. A large Mexican avocado crop created excess availability, which lowered selling prices across the industry. This made it harder for the company to protect margins, even as it continued selling more fruit to customers.

Chief Financial Officer Bryan Giles said the company’s per-unit avocado sales prices dropped 36% compared with the prior-year period. That decline was a key reason revenue moved lower despite higher shipment volumes. Gross profit also fell to $20.5 million from $28.4 million a year earlier, while gross margin slipped to 7% of revenue.

Size Mismatch Adds More Pressure

Mission Produce also faced a mismatch between the sizes of avocados available and the sizes customers wanted most. This problem was most severe in April. The company had to buy higher-demand sizes in the spot market at higher costs while lowering prices on less-demanded sizes to keep fruit moving through the supply chain.

As a result, adjusted net income fell sharply to $0.8 million, or $0.01 per diluted share. Adjusted EBITDA dropped to $7.1 million from $19.1 million in the same quarter last year.

Segment Results Reflect Lower Avocado Prices

The marketing and distribution segment remained the company’s largest business, but sales declined to $277.2 million from $362.5 million a year earlier. The decline reflected lower average avocado prices, partly offset by stronger volume.

International farming sales were $7.7 million, slightly below the prior-year figure of $8.1 million. The segment posted an adjusted EBITDA loss of $1.3 million, affected by weaker mango yields and lower blueberry packing volumes.

The blueberry segment also reported lower sales, falling to $11 million from $15.7 million. However, segment adjusted EBITDA improved to $1.2 million because better pricing helped offset lower production volumes.

Calavo Acquisition Becomes a Key Growth Driver

A major development in the quarter was Mission Produce’s completed acquisition of Calavo Growers on May 28. The deal closed earlier than expected and gives Mission Produce a larger operating platform, more pack houses, and better flexibility across its supply chain.

Management expects the acquisition to generate at least $25 million in annualized cost synergies within 18 months. These savings are expected to come from reducing duplicate operations, improving distribution, and streamlining corporate cost structures.

Stronger Second Half Expected

Despite the difficult second quarter, Mission Produce expects performance to improve in the second half of fiscal 2026. The company forecast fiscal third-quarter adjusted EBITDA of $28 million to $32 million. For the full second half, it expects adjusted EBITDA of $84 million to $88 million.

Several factors support this outlook. Avocado margins have begun improving, supply is shifting from Mexico toward California and Peru, and Mission expects strong production from its own farms in Peru. The company expects exportable Peruvian avocado production to reach 120 million to 130 million pounds, compared with 105 million pounds in the 2025 harvest season.

Demand Remains Healthy

Management said the low-price environment helped bring more shoppers into the avocado category. U.S. avocado consumption reached new highs during the quarter, and more than 1.6 million new households bought avocados. Mission Produce believes many of these new buyers may remain long-term customers.

The company also sees positive trends in Europe, where household penetration and per-capita consumption are improving. These demand trends could support future growth if pricing and supply conditions become more balanced.

Conclusion

Mission Produce’s fiscal second quarter was clearly pressured by low avocado prices, excess supply, and a difficult size mix. However, the company continued to grow volume, completed the Calavo acquisition earlier than planned, and expects a stronger second half supported by better margins, higher Peruvian farm output, and acquisition benefits.

For investors, the quarter showed both near-term weakness and longer-term opportunity. While earnings were hit hard, Mission Produce’s expanded supply network and growing category demand may help the company recover as market conditions improve.

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