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What changed in Mission Produce, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Mission Produce, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+210 added−205 removedSource: 10-K (2024-12-19) vs 10-K (2023-12-21)

Top changes in Mission Produce, Inc.'s 2024 10-K

210 paragraphs added · 205 removed · 148 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn addition, our operations in Mexico are subject to Mexican regulations, our operations in Peru are subject to Peruvian regulations, and our operations in Europe and the U.K. are subject o applicable regulations for those regions. We are subject to numerous federal, state, local and foreign environmental laws and regulations.
Biggest changeIn addition, our operations in Mexico are subject to Mexican regulations, our operations in Peru are subject to Peruvian regulations, our operations in Europe and the U.K. are subject to applicable regulations for those regions, and our Guatemalan operations are subject to applicable Guatemalan regulations. We are subject to numerous federal, state, local and foreign environmental laws and regulations.
We report our results of operations in three operating segments which are also reportable segments: • Marketing and Distribution sources fruit from growers and then distributes fruit through our global distribution network; • International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing and Distribution segment.
We report our results of operations in three operating segments which are also reportable segments: • Marketing & Distribution sources fruit from growers and then distributes fruit through our global distribution network; • International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing & Distribution segment.
As of October 31, 2023, our approximate international avocado planted acreage, by age and rounded to the nearest hundred, was as follows: Avocado Acreage by Age Country 0-3 years 4-6 years >7 years Total Peru 2,400 800 6,400 9,600 Guatemala 1,800 — — 1,800 Colombia (1) 1,500 200 — 1,700 Total 5,700 1,000 6,400 13,100 (1) Acreage in Colombia is farmed through a joint venture.
As of October 31, 2024, our approximate international avocado planted acreage, by age and rounded to the nearest hundred, was as follows: Avocado Acreage by Age Country 0-3 years 4-6 years >7 years Total Peru 500 2,700 6,400 9,600 Guatemala 1,600 200 — 1,800 Colombia (1) 900 1,100 — 2,000 Total 3,000 4,000 6,400 13,400 (1) Acreage in Colombia is farmed through a joint venture.
People As of October 31, 2023, we had approximately 3,300 employees located worldwide, of which, 1,800 were located in Peru, 600 were located in Mexico, 500 were located in the U.S., and 400 were located in other regions such as Guatemala, the U.K., Europe and Canada. Our headcount in Peru is inclusive of our Moruga blueberry operation.
People As of October 31, 2024, we had approximately 3,100 employees located worldwide, of which, 1,500 were located in Peru, 700 were located in Mexico, 500 were located in the U.S., and 400 were located in other regions such as Guatemala, the U.K., Europe and Canada. Our headcount in Peru is inclusive of our Moruga blueberry operation.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConducting business internationally has exposed, and continues to expose, us to a variety of risks, including: • Changes in legal or regulatory requirements affecting foreign investment, taxes, labor, imports and exports or changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities; 4 • increased demands on our limited resources created by our operations may constrain the capabilities of our administrative and operational resources and restrict our ability to attract, train, manage and retain qualified management, technicians, scientists and other personnel; • difficulties associated with staffing and managing foreign operations; • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • potential failure by us or third parties we rely on to obtain and/or maintain regulatory approvals for the sale or use of our products in various countries; • difficulties in managing global operations; • logistics and regulations associated with shipping products, including infrastructure conditions and transportation delays; • financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable, and exposure to currency exchange rate fluctuations; • reduced protection for intellectual property rights, or lack of them in certain jurisdictions; • economic weakness or instability, economic recessions, political and economic instability, including corruption, wars and regional or global conflicts, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; • failure to comply with the Foreign Corrupt Practices Act, or other similar laws, including its books and records provisions and its anti-bribery provisions, by maintaining accurate information and control over sales activities and distributors’ activities; • failure to comply with restrictions on the ability of companies to do business in foreign countries; • restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds and trade protection measures, including import/export duties and quotas and customs duties and tariffs, or unexpected changes in tariffs, trade barriers and regulatory requirements; • compliance with tax, employment, immigration and labor laws; • taxes, including withholding of payroll taxes; • currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages or disruptions in supply, labor, transportation and trading; and • business and shipping interruptions resulting from pandemics and natural or other disasters including earthquakes, volcanic activity, hurricanes, floods and fires.
Biggest changeConducting business internationally has exposed, and continues to expose, us to a variety of risks, including: • Changes in legal or regulatory requirements affecting foreign investment, taxes, labor, imports and exports or changes in or interpretations of foreign regulations that may adversely affect our ability to sell our products, repatriate profits to the United States or operate our foreign-located facilities; • adverse regulatory or governmental actions and interpretations that can be costly to challenge and even if/when challenged, may result in operational or business-related changes or have a negative operational or financial impact; • failure to comply with restrictions on the ability of companies to do business in foreign countries; • restrictive U.S. and foreign governmental actions, such as restrictions on transfers of funds and trade protection measures, including import/export duties and quotas and customs duties and tariffs, or unexpected changes in tariffs, trade barriers and regulatory requirements; • compliance with a myriad of laws and legal regimes, including tax, employment, immigration and labor laws; • negotiation and implementation of free trade agreements between the United States and other countries, particularly in Mexico which can reduce or increase barriers to international trade and thus affect the cost of conducting business internationally, including the cost of purchasing avocados; • multiple, conflicting and changing laws and regulations such as tariffs and tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • potential failure by us or third parties we rely on to obtain and/or maintain regulatory approvals for the sale or use of our products in various countries; • difficulties in managing global operations; • logistics and regulations associated with shipping products, including infrastructure conditions and transportation delays; • financial risks, such as longer payment cycles, difficulty enforcing contracts and collecting accounts receivable, and exposure to currency exchange rate fluctuations; • reduced protection for intellectual property rights, or lack of them in certain jurisdictions; • economic weakness or instability, economic recessions, political and economic instability, including corruption, wars and regional or global conflicts, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; • failure to comply with the Foreign Corrupt Practices Act, or other similar laws, including its books and records provisions and its anti-bribery provisions, by maintaining accurate information and control over sales activities and distributors’ activities; • taxes, including withholding of payroll taxes; • currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages or disruptions in supply, labor, transportation and trading; and • business and shipping interruptions resulting from pandemics and natural or other disasters including earthquakes, volcanic activity, hurricanes, floods and fires.
Some proceedings against us involve claims that are substantial in amount and could divert management's attention from operations. These proceedings also may result in substantial monetary damages. Further, the legal actions and government investigations could damage our reputation with investors and adversely affect the trading prices of our securities.
Some proceedings against us involve claims that are substantial in amount and could divert management's attention from operations. These proceedings also may result in substantial monetary damages. Further, legal actions and government investigations could damage our reputation with investors and adversely affect the trading prices of our securities.
These provisions provide, among other things, that: • our Board of Directors has the exclusive right to expand the size of our Board of Directors and to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; • our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our Board of Directors; • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chairperson of our Board of Directors, our chief executive officer, president or our Board of Directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our Board of Directors may alter provisions of our bylaws without obtaining stockholder approval; • the approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or 14 deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and • our Board of Directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
These provisions provide, among other things, that: • our Board of Directors has the exclusive right to expand the size of our Board of Directors and to elect directors to fill a vacancy created by the expansion of the Board of Directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board of Directors; • our Board of Directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our Board of Directors; • our stockholders may not act by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • a special meeting of stockholders may be called only by the chairperson of our Board of Directors, our chief executive officer, president or our Board of Directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • our amended and restated certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • our Board of Directors may alter provisions of our bylaws without obtaining stockholder approval; • the approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors is required to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the Board of Directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and • our Board of Directors is authorized to issue shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer.
Such financing may not be available on favorable terms, if at all. In addition, our term loans are secured by real property, personal property and the capital stock of our subsidiaries. If we cannot repay all amounts that we have borrowed under our term loans, our lenders could proceed against our assets. Item 1B. Unresolved Staff Comments None.
Such financing may not be available on favorable terms, if at all. In addition, our term loans are secured by real property, personal property and the capital stock of our subsidiaries. If we cannot repay all amounts that we have borrowed under our term loans, our lenders could proceed against our assets. Item 1B. Unresolved Staff Comments None. 16
Our earnings may be affected by seasonal factors, including: • the availability, quality and price of fruit; • the timing and effects of ripening and perishability; • the ability to process perishable raw materials in a timely manner; • fixed overhead costs during off-season months at our farms; and • the impacts on consumer demand based on seasonal and holiday timing.
Our earnings may be affected by seasonal factors, including: • The availability, quality and price of fruit; • the timing and effects of ripening and perishability; 8 • the ability to process perishable raw materials in a timely manner; • fixed overhead costs during off-season months at our farms; and • the impacts on consumer demand based on seasonal and holiday timing.
Such changes have the potential to adversely impact the U.S. economy or sectors thereof, our industry and the global demand for our products, and as a result, could have a negative impact on our business, financial condition and results of operations. We are subject to health and safety laws, which restrict our operations and increase our operating costs.
Such changes have the potential to 10 adversely impact the U.S. economy or sectors thereof, our industry and the global demand for our products, and as a result, could have a negative impact on our business, financial condition and results of operations. We are subject to health and safety laws, which restrict our operations and increase our operating costs.
In addition, if we are unable to maintain compliance with our financial 15 covenants or otherwise breach the covenants that we are subject to under our credit facility, our lenders could demand immediate payment of amounts outstanding and we would need to seek alternate financing sources to pay off such debts and to fund our ongoing operations.
In addition, if we are unable to maintain compliance with our financial covenants or otherwise breach the covenants that we are subject to under our credit facility, our lenders could demand immediate payment of amounts outstanding and we would need to seek alternate financing sources to pay off such debts and to fund our ongoing operations.
In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire. 11 Our business depends on a strong and trusted brand, and any failure to maintain, protect, and enhance our brand would have an adverse impact on our business.
In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire. Our business depends on a strong and trusted brand, and any failure to maintain, protect, and enhance our brand would have an adverse impact on our business.
Our future success largely depends on the contributions of our management team, including Stephen Barnard, our CEO. We believe that these individuals’ expertise and knowledge about our industry and their respective fields and their relationships with other individuals in our industry are critical factors to our continued growth and success.
Our success largely depends on the contributions of our management team, including Stephen Barnard, our CEO. We believe that these individuals’ expertise and knowledge about our industry and their respective fields and their relationships with other individuals in our industry are critical factors to our continued growth and success.
Competition for the purchase of our products from suppliers and the sale of our products to our customers primarily comes from other distributors. If we are unable to consistently pay growers a competitive price for their fruit, these growers may choose to have their fruit marketed by alternative distributors.
Competition for the purchase of our products from suppliers and the sale of our products to our customers primarily comes from other marketers and distributors. If we are unable to consistently pay growers a competitive price for their fruit, these growers may choose to have their fruit marketed by alternative distributors.
Acquisitions entail numerous risks, including the integration of the acquired operations, diversion of management’s attention to other business concerns, risks of entering markets in which we have limited prior experience, assumption of liabilities and the potential loss of key 10 employees of acquired organizations.
Acquisitions entail numerous risks, including the integration of the acquired operations, diversion of management’s attention to other business concerns, risks of entering markets in which we have limited prior experience, assumption of liabilities and the potential loss of key employees of acquired organizations.
Any guidance or forward-looking statement regarding future performance is subject to this uncertainty. 12 Risks Related to Our Common Stock An active, liquid and orderly market for our common stock may not be maintained.
Any guidance or forward-looking statement regarding future performance is subject to this uncertainty. Risks Related to Our Common Stock An active, liquid and orderly market for our common stock may not be maintained.
We are involved in various legal proceedings arising in the ordinary course of business including, among other things, disputes related to employee matters such as our pending class action lawsuits, disputes with respect to vendors or business partners and clients, as well as inquiries or investigations from governmental agencies.
We are involved in various legal proceedings arising in the ordinary course of business including, among other things, disputes related to employee matters such as class action lawsuits, disputes with respect to vendors or business partners and clients, as well as inquiries or investigations from governmental agencies.
Ongoing efforts to comply with evolving laws and regulations may be costly and require ongoing modifications to our policies, procedures and systems.
Ongoing efforts to comply with evolving laws 9 and regulations may be costly and require ongoing modifications to our policies, procedures and systems.
This could have a material adverse effect on our business and prospects. Our success also depends upon our ability to attract and retain qualified personnel. The operation of our facilities depends on adequate and affordable supply of labor and good labor relations with our employees.
This could have a material adverse effect on our business and prospects. Our success also depends upon our ability to adequately compensate, attract and retain qualified personnel. The operation of our facilities depends on adequate and affordable supply of labor and good labor relations with our employees.
We are required to comply with health and safety laws and regulations in the United States, and in other countries where we do business and/or conduct our operations, including Peru and Mexico, and are subject to periodic inspections by the relevant governmental authorities.
We are required to comply with health and safety laws and regulations in the United States, and in other countries where we do business and/or conduct our operations, including the UK, EU, Peru and Mexico, and are subject to periodic inspections by the relevant governmental authorities.
This and other impacts from this bill could have a material impact on our operations, business, financial performance, and profitability. Peruvian economic and political conditions may have an adverse impact on our business. A significant part of our farming operations are conducted in Peru.
This and other impacts from this bill could have a material impact on our operations, business, financial performance, and profitability. Peruvian economic and political conditions may have an adverse impact on our business. A significant part of our farming operations is conducted in Peru.
Experienced computer programmers and hackers may be able to penetrate our information technology security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns, or develop and deploy viruses, worms, and other malicious software programs that attack our programs or otherwise exploit any security vulnerabilities of our products.
Experienced computer programmers and hackers may be able to penetrate our information technology security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns, or develop and deploy phishing attempts, viruses, worms, and other malicious software programs that attack our programs or otherwise exploit any security vulnerabilities of our products or our people.
We cannot provide any assurance that economic conditions or political developments, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations, in or affecting Mexico will not have a material adverse effect on market conditions or our business, results of operations or financial condition.
We cannot provide any assurance that economic conditions or political developments, including any changes to economic policies or the adoption of other reforms proposed by existing or future administrations, in or affecting Mexico will not have a material adverse effect on market conditions, our ability to source fruit effectively, or on our business, results of operations or financial condition.
To the extent that climate change affects our farms, including their water supply, our ability to grow crops could be harmed. The acquisition of other businesses could pose risks to our financial condition and results. We intend to review acquisition and investment prospects that would complement our business.
To the extent that climate change affects our farms, including their water supply, our ability to grow crops could be harmed. The acquisition of other businesses could pose risks to our financial condition and results. From time to time, we review acquisition and investment prospects that could complement our business.
In addition, certain of our registered trademarks has been opposed, and the registered or unregistered trademarks or trade names that we own or may own in the future may be challenged, infringed, declared generic, or determined to be infringing on or dilutive of other marks.
In addition, certain of our registered trademark applications have been opposed, and the registered or unregistered trademarks or trade names that we own or may own in the future may be challenged, infringed, declared generic, or determined to be infringing on or dilutive of other marks.
Sales to our top 10 customers amounted to approximately 65% of net sales for the year ended October 31, 2023 and 59% of net sales for both years ended October 31, 2022 and 2021. We expect that a significant portion of our revenues will continue to be derived from a relatively small number of customers.
Sales to our top 10 customers amounted to approximately 69% of net sales for the year ended October 31, 2024, 65% for the year ended October 31, 2023, and 59% for the year ended October 31, 2022. We expect that a significant portion of our revenues will continue to be derived from a relatively small number of customers.
This could also result in a shift in consumer preference. Shifts in consumer spending could result in increased pressure from competitors or customers that may require us to increase promotional spending or reduce the prices of some of our products and/or limit our ability to increase or maintain prices, which could lower our revenue and profitability.
Shifts in consumer spending could result in increased pressure from competitors or customers that may require us to increase promotional spending or reduce the prices of some of our products and/or limit our ability to increase or maintain prices, which could lower our revenue and profitability.
Our executive officers and directors, in the aggregate, own approximately 39% of our outstanding common stock as of October 31, 2023. Furthermore, many of our current directors were appointed by our principal stockholders.
Our executive officers and directors, in the aggregate, own approximately 34% of our outstanding common stock as of October 31, 2024. Furthermore, many of our current directors were appointed by our principal stockholders.
The stock market has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the price at which they paid.
Our stock price has been and is likely to continue to be volatile. The stock market has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the price at which they paid.
Because we have significant operations in Peru, political developments and economic conditions, including changes to economic policies or the adoption of other reforms proposed by existing or future administrations, in Peru and/or other factors could have a material adverse effect on market conditions, prices of our securities, our ability to obtain financing and our results of operations and financial condition. 6 Our performance may be impacted by general economic conditions or an economic downturn.
Because we have significant operations in Peru, political developments and economic conditions, including changes to economic policies or the adoption of other reforms proposed by existing or future administrations, in Peru and/or other factors could have a material adverse effect on market conditions, prices of our securities, our ability to obtain financing and our results of operations and financial condition.
This situation creates potential risks that affect a large part of our sourcing in Mexico and would harm our operations if it impacts our facilities or personnel. In addition, Mexican growers strike from time to time to obtain higher prices for their avocados.
This situation creates potential risks that affect a large part of our sourcing in Mexico and would harm our operations if it impacts our facilities or personnel. In addition, Mexican growers strike from time to time.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf; (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders owed to us or our stockholders; (iii) any action, suit or proceeding asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws (as either may be amended from time to time); or (iv) any action, suit or proceeding asserting a claim against us governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that the Chancery Court of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. 15 Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Chancery Court of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf; (ii) any action, suit or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or stockholders owed to us or our stockholders; (iii) any action, suit or proceeding asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws (as either may be amended from time to time); or (iv) any action, suit or proceeding asserting a claim against us governed by the internal affairs doctrine.
We conduct a substantial amount of business internationally, including: doing business with growers and customers who are located outside the United States; purchasing fruit from growers and packers in Mexico and other countries; owning or leasing thousands of acres of farms in other countries, operating packing facilities in Peru and Mexico, having a farming joint venture in Colombia and a minority investment in South Africa, operating sales and distribution offices in China and in Europe, and selling products to foreign customers.
We conduct a substantial amount of business internationally, including: doing business with growers and customers who are located outside the United States; purchasing fruit from growers and packers in Mexico and other countries; owning or leasing thousands of acres of farms in other countries, operating sales, packing and/or distribution facilities in Peru, Mexico, and other international regions, having foreign joint ventures such as in Colombia, China, and South Africa, and selling products to foreign customers.
Our ability to distribute fruit is limited by our ability to acquire supply from third-party growers and to produce on our own farms. With a limited number of trees on our farms and on the farms from which we purchase, our ability to obtain supply from third parties and adapt to any changes in demand of our product is constrained.
With a limited number of trees on our farms and on the farms from which we purchase, our ability to obtain supply from third parties and adapt to any changes in demand of our product is constrained.
We depend on our key personnel and an effective organizational structure to run our business and if we lose the services of any of these individuals, fail to attract and retain additional key personnel, or fail to optimize our organization structure, we may not be able to implement our business strategy or operate our business effectively.
We depend on our key personnel and an effective organizational structure to run our business and if we fail to attract and retain key personnel, or fail to optimize our organization structure, we may not be able to implement our business strategy or operate our business effectively.
Disruption to the timely supply or availability of these services or dramatic increases in the cost of these services for any reason including availability of fuel or labor for such services, labor disputes, governmental regulation, or governmental restrictions limiting specific forms of transportation could have an adverse effect on our ability to serve our customers and consumers and could have an adverse effect on our financial performance.
Disruption to the timely supply or availability of these services or dramatic increases in the cost of these services for any reason including availability of fuel or labor for such services, labor disputes, governmental regulation, or governmental restrictions limiting specific forms of transportation could have an adverse effect on our ability to serve our customers and consumers and could have an adverse effect on our financial performance. 7 In the past, we have experienced increases in transportation costs, decreases in the availability of shipping, and other global supply chain complexities, including labor shortages.
If we are unable to attract and retain enough skilled personnel at a reasonable cost, our results may be negatively affected. 7 We and our growers are subject to the risks that are inherent in farming, including those related to climate change.
If we are unable to attract and retain enough skilled personnel at a reasonable cost, our results may be negatively affected. Growers from whom we source a significant portion of our supply from, and we ourselves as growers, are subject to the risks that are inherent in farming, including those related to climate change.
The new law subjects us to higher Peruvian corporate income tax rates than the rate in effect on the date of repeal of 15%, as follows: 20% for calendar years 2023 to 2024, 25% for calendar years 2025 to 2027, and 29.5% thereafter.
The new law subjects us to higher Peruvian corporate income tax rates than the rate in effect on the date of repeal of 15%, as follows: 20% for calendar years 2023 to 2024, 25% for calendar years 2025 to 2027, and 29.5% thereafter. We are subject to value-added taxes (VAT) in various foreign jurisdictions, including Mexico.
We depend on our infrastructure to have sufficient capacity to handle our business needs. We have an infrastructure that supports our production and distribution, but if we lose machinery or facilities due to natural disasters, mechanical failures, or other reasons, we may not be able to operate at a sufficient capacity to meet our needs.
We have an infrastructure that supports our production and distribution, but if we lose machinery or facilities due to natural disasters, mechanical failures, or other reasons, we may not be able to operate at a sufficient capacity to meet our needs. We will also continue to make investments in existing and new facilities to meet our needs.
In addition, we have invested heavily in our distribution centers and packing facilities. Failure to utilize, manage, and operate such facilities, including preservation and maintenance of machinery and management and resource allocation related to labor, in an effective and efficient manner could cause operational and financial losses.
Failure to utilize, manage, 11 and operate such facilities, including preservation and maintenance of machinery and management and resource allocation related to labor, in an effective and efficient manner could cause operational and financial losses.
In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, our stock price would likely decline.
If no securities or industry analysts commence or continue coverage of our company, the trading price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if one or more of the analysts who covers us downgrades our stock, our stock price would likely decline.
Such disruptions have and could adversely impact our ability to fulfill orders and interrupt other key business processes. We have experienced delays and lower profit from these disruptions and may experience such difficulties in the future.
Such disruptions have and could adversely impact our ability to fulfill orders and interrupt other key business processes. We have experienced delays and lower profit from these disruptions and may experience such difficulties in the future. As a result, our financial results, stock price, or reputation have and may be adversely affected.
A disruption in transportation services our routes as a result of climate change may also significantly impact our results of operations. Legal, regulatory or other market measures to address climate change could negatively affect our business operations.
A disruption in transportation services or routes as a result of climate change may also significantly impact our results of operations. Legal, regulatory or other market pressures aimed at addressing climate change or other sustainability or environmental concerns could negatively affect our business operations.
The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
Our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.
We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities. We are subject to taxes in the U.S., Mexico, Peru, the Netherlands, the United Kingdom, and other countries. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
We are subject to taxes in the U.S., Mexico, Peru, the Netherlands, the United Kingdom, and other countries. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change.
Fresh produce is highly perishable and generally must be brought to market and sold soon after harvest. The selling price received depends on the availability and quality offered by us to customers and what comparable offerings are available in the market generally. Pricing also depends on demand, and consumer preferences for particular food products are subject to fluctuations over time.
The selling price received depends on the availability and quality offered by us to customers and what comparable offerings are available in the market generally. Pricing also depends on demand, including demand for particular products, sizes, and quality, and consumer preferences for particular food products are subject to fluctuations over time.
We may fail to effectively develop an effective customer strategy for our existing customers, or we may fail to establish and grow emerging channels and geographic channels, which may result in reduced profitability and negatively impact financial results.
We may fail to develop an effective customer strategy for our existing customers, or we may fail to establish and grow emerging markets and geographic channels, which may result in reduced profitability and negatively impact financial results. We may not have sufficient and established sales channels and markets for growing industry and owned farm supply.
These purchases may expose us to increases in short-term costs and additional production exposes us to additional long-term operating costs. If supply decreases dramatically, whether as a result of damage to farms, inclement weather, drought, labor issues, or other problems, prices have and could dramatically increase and we may not be able to purchase sufficient fruit.
This may expose us to increases in short-term costs and additional production exposes us to additional long-term operating costs. If supply decreases dramatically, whether as a result of climate change, labor matters, regulatory or legal actions, or other problems, prices have and could dramatically increase and we may not be able to purchase sufficient fruit at acceptable prices.
If we are unable to purchase sufficient volumes from third-party growers at acceptable prices or demand for our products were to increase in the future, we would need additional production capacity, which may take time, whether by purchasing additional fruit from third-party suppliers or by waiting for our younger plants to bear fruit.
If we are unable to purchase sufficient volumes from third-party growers at acceptable prices or demand for our products were to increase in the future, we would need access to additional fruit from third-party suppliers or additional capacity and production from our owned farms.
If we are unsuccessful in our challenges, if any, or if we fail to comply with these regulations, we could be subject to fines, penalties, unfavorable tax and other positions, and/or we may have to employ a significant number of picking and harvesting personnel in Mexico, and we may not have the infrastructure in place to do so in the time period required.
If we are unsuccessful in our challenges, if any, or if we fail to comply with these regulations, we could be subject to fines, penalties, unfavorable tax and other positions, and/or we may have to make required 6 operational changes. We may not have the infrastructure in place to make such changes in the time period required.
If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could have a material adverse effect on our business, financial condition, and results of operations.
If we are unable to establish name recognition based on our trademarks and trade names, we may not be able to compete effectively, which could have a material adverse effect on our business, financial condition, and results of operations. 12 We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation or exposure to additional tax liabilities.
Our results of operations may be adversely affected by numerous factors over which we have little or no control and that are inherent in farming, including reductions in the market prices for our products, adverse weather including drought, floods, abnormally high or low temperatures or weather patterns, high winds, earthquakes and wildfires.
Our results of operations may be adversely affected by numerous factors over which we have little or no control and that are inherent in farming, including appropriate use of inputs and resources necessary for farming such as water, fertilizers, and pesticides, adverse weather including drought, floods, abnormally high or low temperatures or weather patterns, high winds, earthquakes and wildfires, and growing conditions, pest, and disease problems.
The pricing of fruit we purchase for distribution depends on supply, and excess supply can lead to price competition in our industry.
The pricing of fruit we purchase for distribution depends on supply, and excess supply or constrained supply can lead to price fluctuations and competitive pricing pressure.
Our internal computer systems and those of our current and any future partners, contractors and consultants are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches can cause interruptions in our operations and can result in a material disruption of our business operations.
Our internal computer systems and those of our current and any future customers, partners, contractors, consultants, vendors and suppliers are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication, system, and electrical failures.
An overall decline in economic activity could adversely impact our business and financial results. Economic uncertainty, recessions, or inflationary pressures may reduce consumer spending as consumers make decisions on what to include in their food budgets. This could be caused by political unrest, wars or other conflicts, health pandemics or other matters beyond our control.
Our performance may be impacted by general economic conditions or an economic downturn. An overall decline in economic activity could adversely impact our business and financial results. Economic uncertainty, recessions, or inflationary pressures may reduce consumer spending and/or demand for our products as consumers make decisions on what to include in their food budgets.
We will also continue to make investments in existing and new facilities to meet our needs. Any inability to have sufficient facilities, or loss or failure of facilities, could have a material adverse effect on our business, which could impact our results of operations and our financial condition.
Any inability to have sufficient facilities, or loss or failure of facilities, could have a material adverse effect on our business, which could impact our results of operations and our financial condition. In addition, we have invested heavily in our distribution centers and packing facilities.
Growing conditions, pest and disease problems and new government regulations regarding farming and the marketing of agricultural products can impose additional costs on, or make it more difficult to conduct, our business.
Government regulations regarding farming and the marketing of agricultural products or third-party advocacy groups and customers can impose additional requirements or prohibitions on farming or growing practices that impose additional costs on, or make it more difficult to conduct, our business.
We may be unable to successfully integrate businesses or the personnel of any business that might be acquired in the future, and our failure to do so could have a material adverse effect on our business and on the market price of our common stock. We may also not be able to achieve an attractive return on our investments.
Our failure to do so could have a material adverse effect on our business and on the market price of our common stock, and we may also not be able to achieve an attractive return on our investments. We depend on our infrastructure to have sufficient capacity to handle our business needs.
An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our growth.
An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our growth. 13 The trading price of the shares of our common stock has been, and is likely to continue to be, highly volatile, and purchasers of our common stock could incur substantial losses.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors. If no securities or industry analysts commence or continue coverage of our company, the trading price for our stock would be negatively impacted.
If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline. The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us, our business, our market or our competitors.
The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as executive officers. 13 If securities or industry analysts do not publish research or reports or publish unfavorable research or reports about our business, our stock price and trading volume could decline.
The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as executive officers.
If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline. 14 Pursuant to Section 404 of Sarbanes-Oxley, our management is required to report upon the effectiveness of our internal control over financial reporting beginning with the annual report for our fiscal year ending October 31, 2021.
We are subject to the risks of doing business internationally and our current international operations are subject to a number of inherent risks.
Such competition may adversely affect our volumes and prices, which would harm our business and results of operations. 4 We are subject to the risks of doing business internationally and our current international operations are subject to a number of inherent risks.
We are also subject to various legal and regulatory changes impacting labor in Mexico.
We are also subject to various legal and regulatory changes impacting labor in Mexico, including related to reform bills on subcontracting matters and unionization and collective bargaining.
In the ordinary course of business, we collect, store, process and transmit confidential business information and certain personal information relating to customers, employees and suppliers.
We are subject to stringent privacy laws, information security laws, regulations, policies and contractual obligations related to data privacy and security and such laws, regulations, policies and contractual obligations affect our business. In the ordinary course of business, we collect, store, process and transmit confidential business information and certain personal information relating to customers, employees and suppliers.
If we are unable to offer attractive prices or consistent supply to retail and wholesale customers, they may choose to purchase from other companies. Such competition may adversely affect our volumes and prices, which would harm our business and results of operations.
If we are unable to offer attractive prices or consistent supply of desired size and quality of fruit to retail, foodservice, wholesale, and other customers, they may choose to purchase from other companies.
In the past, we have experienced increases in transportation costs, decreases in the availability of shipping, and other global supply chain complexities, including labor shortages. Such complexities have and could continue to result in delays in customer shipments which may negatively impact our ability to recover costs, retain or attract customers, and/or sell our product effectively.
Such complexities have and could continue to result in delays in customer shipments which may negatively impact our ability to recover costs, retain or attract customers, and/or sell our product effectively. Significant disruptions could continue to occur and put pressure on transportation and shipping infrastructure.
We may not have sufficient and established sales channels and geographic markets for growing industry and owned supply or to meet our growth goals.
As the price of paper increases, our operating income will decrease if we are not able to effectively pass these price increases to our customers. We may not have sufficient and established sales channels and geographic markets for growing industry and owned supply or to meet our growth goals.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. Risks Related to Our Business Our ability to generate revenues is limited by the supply of fruit and our ability to purchase or grow additional fruit.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations or financial condition. Risks Related to Our Business Reliance on primarily one main product subjects us to a concentrated set of risks for which there is limited ability to mitigate.
We have encountered many of these risks, which has affected our international expansion and operations and, consequently, could have an adverse effect on our financial condition, results of operations and cash flows.
We have encountered many of these risks, which have affected our international expansion and operations and, consequently, could have an adverse effect on our financial condition, results of operations and cash flows. Inflationary pressures and increases in costs of commodities or other products we use in our business, such as fuel, packing, and paper, could adversely affect our operating results.
Our results of operations may be adversely affected if we are unable to comply with these existing and modified regulations. 9 Changes to U.S. trade policy, tariff and import/export regulations may adversely affect our operating results.
Changes to U.S. trade policy, tariff and import/export regulations may adversely affect our operating results.
To the extent that we experience increased costs, we may increase our prices, pass the increase along to customers, or otherwise take actions to offset the impacts.
The fluctuation in transportation costs cannot always be predicted and there can be no assurances that such costs and/or shipping disruptions will not increase in the future. To the extent that we experience increased costs, we may increase our prices, pass the increase along to customers, or otherwise take actions to offset the impacts.
Fuel and transportation costs are a significant cost component and make up a meaningful portion of the price of much of the fruit that we purchase from growers. There can be no assurance that we will be able to, or to what extent we can, pass on to our customers the increased costs we incur in these respects.
The price of various products that we use in packing, shipping, or distributing our products can significantly affect our costs. Fuel and transportation costs are a significant cost component and make up a meaningful portion of the price of much of the fruit that we purchase from growers.
Any bankruptcy or other business disruption involving one of our significant customers also could adversely affect our results of operations. Mexican economic, political and societal conditions may have an adverse impact on our business. Mexico is the largest source of our supply of avocados, and our business is affected by developments in that country.
Failure to provide adequate resources or to adopt a customer satisfaction strategy may damage relationships with key customers or subject us to loss of customers. Mexican economic, political and societal conditions may have an adverse impact on our business. Mexico is the largest source of our supply of avocados, and our business is affected by developments in that country.
The increasing concern over climate change may result in more regional, federal, foreign and/or global legal and regulatory requirements aimed to reduce or mitigate the effects of greenhouse gases and/or require extensive disclosure and third-party audits of climate-related data.
The increasing concern over climate change and related environmental or sustainability impacts may result in more regional, federal, foreign and/or global legal and regulatory requirements or additional market pressures aimed to reduce or mitigate the environmental impact of growing our products, including as it relates to greenhouse gases, water usage, deforestation, and other matters of concern.
Recent California legislation and similar or additional legislation or regulation in the future increases the requirements that we and our suppliers must undertake to monitor our emissions and improve energy and resource efficiency and will cause us to experience significant increases in costs and expenditure of resources.
Legislation and regulation requiring extensive disclosure and third-party audits of climate-related and other environmental data and the requirements that we and our suppliers must undertake to monitor our emissions and comply with reporting obligations will cause us to experience significant increases in costs and expenditure of resources.
The cost of paper is also significant to us because most of our products are packed in cardboard boxes. As the price of paper increases, our operating income will decrease if we are not able to effectively pass these price increases along to our customers.
There can be no assurance that we will be able to, or to what extent we can, pass on to our customers the increased costs we incur in these respects. 5 The cost of paper is also significant to us because most of our products are packed in cardboard boxes.
Due to the seasonality of the business, our revenue and operating results may vary from quarter to quarter and year to year.
Furthermore, we may be required to make additional investments of capital to maintain compliance with new laws and regulations or in response to third party market pressures. Due to the seasonality of the business, our revenue and operating results may vary from quarter to quarter and year to year.
We are also subject to an increasing number of customer requirements and operational requests that affect our costs. 5 Failure to provide adequate resources or to adopt a customer satisfaction strategy may damage relationships with key customers or subject us to loss of customers.
We are also subject to an increasing number of customer requirements, including with respect to sustainability and corporate responsibility requirements applicable to our supply chain, and other operational requests that can be challenging and costly to implement and may affect our ability to source fruit and increase costs.
Removed
Growing conditions in various parts of the world, particularly weather conditions such as windstorms, floods, droughts, wildfires, abnormally warm or cold weather patterns, and freezes, as well as diseases and pests, are primary factors affecting market prices because of their influence on the supply, size, and quality of product. Pricing also depends on quality.
Added
The impact of certain of the risks related to our business described herein may be exacerbated by the fact that we grow, market, and distribute, as applicable, one main product—avocados.
Removed
Our business is also impacted by the negotiation and implementation of free trade agreements between the United States and other countries, particularly in Mexico, which is the largest source of our supply of avocados. Such agreements can reduce or increase barriers to international trade and thus affect the cost of conducting business internationally, including the cost of purchasing avocados.
Added
Risks relating to the supply of fruit, pricing of fruit, competition, sales channel development, customer concentration, regulatory and governmental policy decisions and/or changes, including tariffs and other trade-related actions, and other of the risks related to our business may be further concentrated if it materially impacts our ability to farm, market, and distribute our main product effectively and could negatively impact our business, operations, and financial condition.
Removed
Inflationary pressures and increases in costs of commodities or other products we use in our business, such as fuel, packing, and paper, could adversely affect our operating results. The price of various products that we use in packing, shipping, or distributing our products can significantly affect our costs.

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Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed0 unchanged
Biggest changeOur principal farming properties as of October 31, 2023 were as follows: Location Type Reportable Segment Owned or Leased Olmos, Peru Land International Farming Owned Virú, Peru Land International Farming Owned Santa Rosa, Guatemala Land International Farming Leased Olmos, Peru Land Blueberries Leased We believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
Biggest changeOur principal farming properties as of October 31, 2024 were as follows: Location Type Reportable Segment Owned or Leased Olmos, Peru Land International Farming Owned Virú, Peru Land International Farming Owned Santa Rosa, Guatemala Land International Farming Leased Olmos, Peru Land Blueberries Leased We believe that our facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms, if required.
Properties Our principal operating, distribution and packing facilities as of October 31, 2023 were as follows: Location Type Reportable Segment Owned or Leased North America: Laredo, Texas Distribution Marketing & Distribution Owned Oxnard, California Distribution, packing Marketing & Distribution Owned Swedesboro, New Jersey Distribution Marketing & Distribution Leased Portland, Oregon Distribution Marketing & Distribution Leased Atlanta, Georgia Distribution Marketing & Distribution Leased Denver, Colorado Distribution Marketing & Distribution Leased Chicago, Illinois Distribution Marketing & Distribution Leased Calgary, Alberta, Canada Distribution Marketing & Distribution Leased Dallas, Texas Distribution Marketing & Distribution Leased Toronto, Ontario, Canada Distribution Marketing & Distribution Leased Oxnard, California Corporate headquarters Marketing & Distribution Leased Other: Dartford, U.K.
Properties Our principal operating, distribution and packing facilities as of October 31, 2024 were as follows: Location Type Reportable Segment Owned or Leased North America: Laredo, Texas Distribution Marketing & Distribution Owned Oxnard, California Distribution, packing Marketing & Distribution Owned Swedesboro, New Jersey Distribution Marketing & Distribution Leased Portland, Oregon Distribution Marketing & Distribution Leased Atlanta, Georgia Distribution Marketing & Distribution Leased Denver, Colorado Distribution Marketing & Distribution Leased Chicago, Illinois Distribution Marketing & Distribution Leased Calgary, Alberta, Canada Distribution Marketing & Distribution Leased Dallas, Texas Distribution Marketing & Distribution Leased Toronto, Ontario, Canada Distribution Marketing & Distribution Leased Oxnard, California Corporate headquarters Marketing & Distribution Leased Other: Dartford, U.K.
For additional information on leased property, see Note 10 of this annual report on Form 10-K. 16
For additional information on leased property, see Note 10 of this annual report on Form 10-K.
Distribution, packing Marketing & Distribution Leased Virú, Peru Packing International Farming Owned Uruapan, Mexico Packing Marketing & Distribution Owned Zamora, Mexico Packing Marketing & Distribution Owned Trujillo, Peru Administrative International Farming Leased Lima, Peru Administrative, sales International Farming Leased We own and lease approximately 15,000 of plantable acres of agricultural land under our farming operations.
Distribution, packing Marketing & Distribution Leased Virú, Peru Packing International Farming Owned Uruapan, Mexico Packing Marketing & Distribution Owned Zamora, Mexico Packing Marketing & Distribution Owned Trujillo, Peru Administrative International Farming Leased Lima, Peru Administrative, sales International Farming Leased We own and lease approximately 16,200 of plantable acres of agricultural land under our farming operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+5 added−7 removed4 unchanged
Biggest changeThe plaintiffs in both cases seek damages primarily consisting of class certification and payment of wages earned and owed, plus other consequential and special damages. While the Company believes that it did not violate any wage or labor laws, it nevertheless decided to settle these class action lawsuits.
Biggest changeThe plaintiffs in both cases seek damages primarily consisting of class certification and payment of wages earned and owed, plus other consequential and special damages. While the Company believes that it did not violate any wage or labor laws, in May 2021, the plaintiffs in both class action lawsuits and the Company agreed to settle the class action cases.
Removed
In May 2021, the plaintiffs in both class action lawsuits and the Company agreed preliminarily to a comprehensive settlement to resolve both class action cases for a total of $0.8 million, which the Company recorded as a loss contingency in selling, general and administrative expenses in the consolidated statements of income during the three months ended April 30, 2021.
Added
Per the terms of the settlement agreement between the parties, the total amount of the settlement is $1.5 million. The Court granted Final Approval of the Class Action Settlement on June 10, 2024. Payment was sent to the Settlement Administrator on June 26, 2024, to be distributed directly to the class members.
Removed
The parties executed a stipulation of settlement agreement on such terms in November 2021. This preliminary settlement was approved by the applicable courts in October 2022.
Added
Once all settlement checks have been distributed and cashed or returned pursuant to the terms of the Settlement Agreement, the action will be dismissed with prejudice.
Removed
In the course of preparing to send out notices to the settlement class, issues arose regarding the nature and scope of the settlement, specifically with respect to the universe of participants in the settlement class, which the parties were unable to resolve.
Added
The Court has set a deadline of June 2025 for Plaintiff to file a declaration from the settlement administrator regarding disbursal of funds. 18 On October 21, 2024, a former temporary worker placed at the Company’s California packinghouse by a labor contractor utilized by the Company, filed a class action lawsuit in the Superior Court of the State of California for the County of Ventura County against us alleging violations of certain wage and hour laws.
Removed
Plaintiffs filed a motion to enforce compliance with the settlement agreement and the Company filed a cross motion to reform the stipulation of settlement, or in the alternative, to vacate the order of preliminary approval. A hearing before the court was held on this matter in July 2023.
Added
The plaintiff seeks damages primarily consisting of class certification, payment of wages earned and owed, liquidated damages, penalties and fees, and injunctive relief. The Company is vigorously defending against the claims. At this time, it is too soon to determine the outcome of the litigation.
Removed
The court granted Plaintiff’s motion and directed the parties to proceed with the notice procedures to a class that includes a number of participants that the Company does not feel are appropriate to include.
Added
As a result, the Company has not accrued for any loss contingencies related to these claims because the amount and range of loss, if any, cannot currently be reasonably estimated.
Removed
The court did not rule on the fairness of the settlement agreement between the parties and stated that this determination would be made at final approval and that the issues raised in the Company’s motion would be considered at that time.
Removed
The Company requested an appeal of the ruling and a delay of the mailing of notice to settlement class members, but such request was denied. A final approval hearing date has been set for January 30, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−7 removed6 unchanged
Biggest changeRepurchases by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Exchange Act) of registered equity securities during the fourth quarter of 2023 were as follows: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plan Approximate dollar value of shares that may yet be purchased under the plan (in millions) September 6 - 30, 2023 21,539 $ 9.55 21,539 $ 19.8 October 1- 31, 2023 45,639 $ 9.09 45,639 $ 19.4 10b-5(1) Trading Plans Luis A.
Biggest changeNo repurchases were made by us or our “affiliated purchasers” (as defined in Rule 10b-18(a)(3) of the Exchange Act) of registered equity securities during the fourth quarter of 2024. As of October 31, 2024, the approximate dollar value of shares that may yet be purchased as part of our stock repurchase program was $19.4 million.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon 17 results of operations, financial condition, capital requirements, business prospects, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, capital requirements, business prospects, restrictions imposed by applicable law and other factors our Board of Directors deems relevant.
Share repurchases may be made in open market or privately negotiated 18 transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors.
Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors.
Comparative Stock Performance Graph The following performance graph shows a comparison from October 1, 2020 (the date our common stock commenced trading on the Nasdaq Global Market) through October 31, 2023, of the cumulative total return for our common stock, the Nasdaq Composite Index (the annual reports for fiscal years 2021 and 2022 incorrectly labeled the name of the index as Nasdaq Composite Total Return Index) and the Nasdaq US Smart Food & Beverage Total Return Index.
Comparative Stock Performance Graph The following performance graph shows a comparison from October 1, 2020 (the date our common stock commenced trading on the Nasdaq Global Select Market) through October 31, 2024, of the cumulative total return for our common stock, the Nasdaq Composite Index (the annual reports for fiscal years 2021 and 2022 incorrectly labeled the name of the index as Nasdaq Composite Total Return Index) and the Nasdaq US Smart Food & Beverage Total Return Index.
Prior to our IPO, there was no public market for our common stock. Holders of Common Stock We had 18 shareholders of record of our common stock as of December 1, 2023.
Prior to our IPO, there was no public market for our common stock. Holders of Common Stock We had 18 shareholders of record of our common stock as of December 2, 2024.
October 1, 2020 October 29, 2021 October 31, 2022 October 31, 2023 Mission Produce, Inc. 100.0 137.6 120.6 68.2 Nasdaq Composite Index (1) 100.0 136.8 97.0 113.5 Nasdaq US Smart Food & Beverage Total Return Index 100.0 121.2 135.1 116.0 (1) The annual reports for fiscal years 2021 and 2022 incorrectly labeled the name of this index as Nasdaq Composite Total Return Index Unregistered Sales of Equity Securities None.
The graph assumes $100 was invested on October 1, 2020 in Mission Produce common stock, or the respective indices, including reinvestment of dividends, with the associated plots indicating the relative performance as of the last day of trading prior to the fiscal year end date. 19 October 1, 2020 October 29, 2021 October 31, 2022 October 31, 2023 October 31, 2024 Mission Produce, Inc. 100.0 137.6 120.6 68.2 85.5 Nasdaq Composite Index (1) 100.0 136.8 97.0 113.5 159.8 Nasdaq US Smart Food & Beverage Total Return Index 100.0 121.2 135.1 116.0 129.2 (1) The annual reports for fiscal years 2021 and 2022 incorrectly labeled the name of this index as Nasdaq Composite Total Return Index Unregistered Sales of Equity Securities None.
Removed
The graph assumes $100 was invested on October 1, 2020 in Mission Produce common stock, or the respective indices, including reinvestment of dividends, with the associated plots indicating the relative performance as of the last day of trading prior to the fiscal year end date.
Removed
Gonzalez, one of the Company’s directors, and his spouse, Rosario Del Pilar Vallejos Hinojosa, have adopted a trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the “Gonzalez Sales Plan”) to sell an aggregate of 1,651,500 shares they hold indirectly through Beldar Enterprises S.A., and through Corp SA1, Corp SA2, Corp SA3, and Corp SA4, which are abbreviations for four affiliate corporations that are organized under the laws of Panama.
Removed
The Gonzalez Sales Plan was adopted on July 14, 2023, with sales commencing under the Gonzalez Sales Plan on October 16, 2023.
Removed
The Gonzalez Sales Plan terminates on the earliest to occur of (a) the close of business on October 16, 2024 ; (b) the date on which the total shares subject to the Gonzalez Sales Plan have been sold; and (c) the date the Gonzalez Sales Plan is terminated in connection with certain extraordinary transactions as specified by the terms of the Gonzalez Sales Plan.
Removed
Jay A. Pack, one of the Company’s directors, has adopted a trading plan that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the “Pack Sales Plan”) to sell an aggregate of 150,000 shares held indirectly through PFP Investments, Ltd.
Removed
The Pack Sales Plan was adopted on October 10, 2023, with sales commencing under the Pack Sales Plan on January 18, 2024.
Removed
The Pack Sales Plan terminates on the earliest to occur of (a) July 17, 2024; (b) the completion of all sales contemplated under the Pack Sales Plan; and (c) the date the Pack Sales Plan is terminated in connection with certain events or transactions as specified by the terms of the Pack Sales Plan. Item 6. Reserved Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNet sales Marketing & Distribution International Farming Blueberries Total Marketing & Distribution International Farming Blueberries (1) Total Marketing & Distribution International Farming Total Years ended October 31, (In millions) 2023 2022 2021 Third party sales $ 889.9 $ 11.6 $ 52.4 $ 953.9 $ 1,016.1 $ 19.1 $ 10.7 $ 1,045.9 $ 872.0 $ 19.7 $ 891.7 Affiliated sales — 78.6 — 78.6 — 95.6 — 95.6 — 84.9 84.9 Total segment sales $ 889.9 $ 90.2 $ 52.4 $ 1,032.5 $ 1,016.1 $ 114.7 $ 10.7 $ 1,141.5 $ 872.0 $ 104.6 $ 976.6 Intercompany eliminations — (78.6) — (78.6) — (95.6) — (95.6) — (84.9) (84.9) Total net sales $ 889.9 $ 11.6 $ 52.4 $ 953.9 $ 1,016.1 $ 19.1 $ 10.7 $ 1,045.9 $ 872.0 $ 19.7 $ 891.7 (1) The Blueberries segment was consolidated prospectively from May 1, 2022. 24 Adjusted EBITDA Years Ended October 31, (In millions) 2023 2022 2021 Marketing & Distribution adjusted EBITDA $ 40.1 $ 23.5 $ 51.4 International Farming adjusted EBITDA 3.1 23.3 33.9 Blueberries adjusted EBITDA 5.2 0.8 — Total reportable segment adjusted EBITDA $ 48.4 $ 47.6 $ 85.3 Net (loss) income (3.1) (34.9) 44.9 Interest expense 11.6 5.5 3.7 Provision for income taxes 2.2 3.7 21.1 Depreciation and amortization (1) 32.8 24.8 20.4 Equity method income (4.0) (5.1) (7.5) Stock-based compensation 4.5 3.6 2.6 Executive severance 1.3 — — Legal settlement — — 0.8 Asset impairment and disposals, net of insurance recoveries 1.3 0.4 (0.2) Farming costs for nonproductive orchards 1.8 1.5 0.8 ERP costs (2) 2.2 4.6 — Goodwill impairment — 49.5 — Remeasurement gain on business combination with Moruga — (2.0) — Transaction costs 0.3 0.6 — Amortization of inventory adjustment recognized from business combination 0.7 0.4 — Other expense (income), net 0.2 (4.4) (1.3) Noncontrolling interest (3) (3.4) (0.6) — Total adjusted EBITDA $ 48.4 $ 47.6 $ 85.3 (1) Includes depreciation and amortization of purchase accounting assets of $2.4 million, $1.4 million and $0.2 million for the years ended October 31, 2023, 2022, and 2021, respectively.
Biggest changeAdjusted EBITDA Years Ended October 31, (In millions) 2024 2023 2022 Marketing & Distribution adjusted EBITDA $ 85.1 $ 40.1 $ 23.5 International Farming adjusted EBITDA 4.6 3.1 23.3 Blueberries adjusted EBITDA 18.1 5.2 0.8 Total reportable segment adjusted EBITDA $ 107.8 $ 48.4 $ 47.6 Net income (loss) 41.8 (3.1) (34.9) Interest expense (1) 12.6 11.6 5.5 Provision for income taxes 18.6 2.2 3.7 Depreciation and amortization (2) 37.7 32.8 24.8 Equity method income (3.7) (4.0) (5.1) Stock-based compensation 7.1 4.5 3.6 Severance 1.3 1.3 — Legal settlement 0.2 — — Asset impairment and disposals, net of insurance recoveries 3.9 1.3 0.4 Farming costs for nonproductive orchards 1.7 1.8 1.5 ERP costs (3) 2.2 2.2 4.6 Goodwill impairment — — 49.5 Remeasurement gain on business combination with Moruga — — (2.0) Transaction costs — 0.3 0.6 Amortization of inventory adjustment recognized from business combination — 0.7 0.4 Other (income) expense, net (3.6) 0.2 (4.4) Adjusted EBITDA before adjustment for noncontrolling interest $ 119.8 $ 51.8 $ 48.2 Noncontrolling interest (4) (12.0) (3.4) (0.6) Total adjusted EBITDA $ 107.8 $ 48.4 $ 47.6 (1) Includes interest expense from finance leases, the most significant of which is for nonproductive land at our Blueberries segment of $1.8 million and $1.4 million for the years ended October 31, 2024 and 2023, respectively.
After the consolidation of Moruga on May 1, 2022, the information used by the CEO was expanded to include the results of Moruga, and as such, we determined our reportable segments to be: • Marketing and Distribution .
After the consolidation of Moruga on May 1, 2022, the information used by the CEO was expanded to include the results of Moruga, and as such, we determined our reportable segments to be: • Marketing & Distribution .
Our Marketing and Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network. • International Farming . International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing and Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees.
Our Marketing & Distribution reportable segment sources fruit from growers and then distributes the fruit through our global distribution network. • International Farming . International Farming owns and operates orchards from which the vast majority of fruit produced is sold to our Marketing & Distribution segment. The segment’s farming activities range from cultivating early-stage plantings to harvesting from mature trees.
Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in the production yields, and other input costs also affect our cost of sales. In general, changes in our volume of products sold can have a disproportionate effect on our gross profit.
Fuel prices as well as variations in containerboard prices, which affect the cost of boxes and other packaging materials, impact our product cost and our profit margins. Variations in production yields and other input costs also affect our cost of sales. In general, changes in our volume of products sold can have a disproportionate effect on our gross profit.
Other expense (income), net Other expense (income), net consists of interest income, currency exchange gains or losses, interest rate derivative gains or losses and other miscellaneous income and expense items.
Other income (expense), net Other income (expense), net consists of interest income, currency exchange gains or losses, interest rate derivative gains or losses and other miscellaneous income and expense items.
In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.
In addition, our results have been, and will continue to be, affected by quarterly and annual fluctuations due to a number of factors, including but not limited to: pests and disease; weather patterns; changes in demand by consumers; food safety advisories; the timing of the receipt, reduction or cancellation of significant customer orders; the gain or loss of significant customers; 21 the availability, quality and price of raw materials; the utilization of capacity at our various locations; and general economic conditions.
While we have long-standing relationships with our growers and packers, we predominantly purchase fruit on a daily basis at market rates. As such, the cost to procure products from independent growers can have a significant impact on our costs. 21 Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers.
While we have long-standing relationships with our growers and packers, we predominantly purchase fruit on a daily basis at market rates. As such, the cost to procure products from independent growers can have a significant impact on our costs. Logistics costs include land and sea transportation and expenses related to port facilities and distribution centers.
Therefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Recently Issued Accounting Standards Refer to Note 2 to the consolidated financial statements included herein for information on recently issued accounting standards.
Therefore, the actual liability for U.S. or foreign taxes may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. 31 Recently Issued Accounting Standards Refer to Note 2 to the consolidated financial statements included herein for information on recently issued accounting standards.
As a result of the reconsideration event, we concluded that Moruga is a variable interest entity (“VIE”), and that the Company is the primary 19 beneficiary with a controlling financial interest. Based on this conclusion, Moruga was prospectively consolidated on May 1, 2022. For more details on Moruga, refer to Note 3 to the financial statements in this annual report.
As a result of the reconsideration event, we concluded that Moruga is a variable interest entity (“VIE”), and that the Company is the primary beneficiary with a controlling financial interest. Based on this conclusion, Moruga was prospectively consolidated on May 1, 2022. For more details on Moruga, refer to Note 3 to the financial statements in this annual report.
International Farming The vast majority of fruit sales from our International Farming segment are to the Marketing and Distribution segment, with the remainder of revenue largely derived from services provided to third parties and our Blueberries segment.
International Farming The vast majority of fruit sales from our International Farming segment are made to the Marketing & Distribution segment, with the remainder of revenue largely derived from services provided to third parties and our Blueberries segment.
Price decreases and higher avocado volume sold were driven by higher industry supply out of Mexico in the current year as compared to limited supply out of Mexico in the previous year. Net sales were favorably affected by the full-year impact of consolidating revenue from our Blueberries segment.
Price decreases and higher avocado volume sold were driven by higher industry supply out of Mexico in 2023 as compared to limited supply out of 22 Mexico in the previous year. Net sales were favorably affected by the full-year impact of consolidating revenue from our Blueberries segment.
Off-Balance Sheet Arrangements During the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules, except as follows: The Company may issue standby letters of credit through banking institutions. As of October 31, 2023, total letters of credit outstanding were $0.7 million.
Off-Balance Sheet Arrangements During the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules, except as follows: The Company may issue standby letters of credit through banking institutions. As of October 31, 2024, none were outstanding and as of October 31, 2023, $0.7 million were outstanding.
Current year expense is primarily attributed to foreign currency transaction losses primarily due to the weakening of the U.S. dollar relative to the Mexican peso. In the prior year, gains were generated on interest rate swaps as a result of rising interest rates during the period.
Expense in fiscal year 2023 is primarily attributed to foreign currency transaction losses primarily due to the weakening of the U.S. dollar relative to the Mexican peso. In 2022, gains were generated on interest rate swaps as a result of rising interest rates during the period.
Years ended October 31, (In millions) 2023 2022 2021 Other expense (income), net $ 0.2 $ (4.4) $ (1.3) Other expense was $0.2 million in fiscal year 2023, compared to other income of $4.4 million in the previous year.
Years ended October 31, (In millions) 2024 2023 2022 Other income (expense), net $ 3.6 $ (0.2) $ 4.4 Other income was $3.6 million in fiscal year 2024, compared to other expense of $0.2 million in the previous year.
These reductions were partially offset by an increase of approximately $2.4 million of expenses from the Blueberries segment, a large portion of which was attributed to amortization of an intangible asset recognized in the business combination.
These reductions were partially offset by an increase of approximately $2.4 million of expenses from the Blueberries segment, a large portion of which was attributed to amortization of an intangible asset recognized in the business combination. Goodwill impairment No goodwill impairment was recognized in fiscal years 2024 or 2023.
Liquidity and Capital Resources Operating activities Years ended October 31, (In millions) 2023 2022 2021 Net (loss) income $ (3.1) $ (34.9) $ 44.9 Depreciation and amortization 32.8 24.8 20.4 Equity method income (4.0) (5.1) (7.5) Noncash lease expense 5.9 5.3 4.3 Stock-based compensation 4.5 3.6 2.6 Dividends received from equity method investees 2.7 2.2 1.7 Deferred income taxes (6.4) (0.6) 8.8 Goodwill impairment — 49.5 — Remeasurement gain on business combination with Moruga — (2.0) — Unrealized losses on foreign currency transactions 1.4 — — Unrealized gains on derivative financial instruments (0.1) (4.7) (0.8) Other 1.7 0.9 0.3 Change in working capital (6.2) (3.8) (27.7) Net cash provided by operating activities $ 29.2 $ 35.2 $ 47.0 Net cash provided by operating activities decreased $6.0 million for 2023 compared to the previous year.
The segment performance benefited from higher volumes associated with the consolidation of our Blueberries segment for the entirety of the fiscal year. 27 Liquidity and Capital Resources Operating activities Years ended October 31, (In millions) 2024 2023 2022 Net income (loss) $ 41.8 $ (3.1) $ (34.9) Depreciation and amortization 37.7 32.8 24.8 Equity method income (3.7) (4.0) (5.1) Noncash lease expense 6.1 5.9 5.3 Stock-based compensation 7.1 4.5 3.6 Dividends received from equity method investees 3.2 2.7 2.2 Deferred income taxes (8.0) (6.4) (0.6) Goodwill impairment — — 49.5 Remeasurement gain on business combination with Moruga — — (2.0) Unrealized (gains) losses on foreign currency transactions (1.7) 1.4 — Unrealized loss (gain) on derivative financial instruments 0.1 (0.1) (4.7) Other 3.7 1.7 0.9 Change in working capital 7.1 (6.2) (3.8) Net cash provided by operating activities $ 93.4 $ 29.2 $ 35.2 Net cash provided by operating activities increased $64.2 million for 2024 compared to the previous year.
Years ended October 31, (In millions) 2023 2022 2021 Interest expense $ 11.6 $ 5.5 $ 3.7 Interest expense increased $6.1 million or 111% in fiscal year 2023 compared to the previous year, primarily due to the effect of rising interest rates on our credit facility, which is subject to variable rates, as well as higher average outstanding debt balances.
Interest expense increased $6.1 million or 111% in fiscal year 2023 compared to the previous year, primarily due to the effect of rising interest rates on our credit facility, which is subject to variable rates, as well as higher average outstanding debt balances.
Other investment In fiscal year 2023, we acquired a 5.1% equity interest in shares of common stock of a private entity that is developing avocado orchards in South Africa. 27 Financing activities Years ended October 31, (In millions) 2023 2022 2021 Borrowings on revolving credit facility $ 145.0 $ 80.0 $ — Payments on revolving credit facility (130.0) (40.0) — Proceeds from short-term borrowings 2.8 2.5 — Repayment of short-term borrowings (2.5) — — Principal payments on long-term debt obligations (3.5) (63.3) (10.5) Principal payments on finance lease obligations (2.6) (1.2) (1.2) Proceeds from loan from noncontrolling interest holder 2.0 — — Payments for long-term supplier financing (0.1) — — Purchase and retirement of common stock (0.6) — — Taxes paid related to shares withheld from the settlement of equity awards (0.5) — — Exercise of stock options 0.1 0.1 0.2 Repayment of stock option notes receivable — — 0.1 Payment of debt issuance, restructuring or extinguishment fees — (0.8) (0.1) Equity contributions from noncontrolling interest holders 4.2 0.9 — Net cash provided by (used in) financing activities $ 14.3 $ (21.8) $ (11.5) Borrowings and repayments of debt We utilize a revolving line of credit for short-term working capital purposes.
Financing activities Years ended October 31, (In millions) 2024 2023 2022 Borrowings on revolving credit facility $ 40.0 $ 145.0 $ 80.0 Payments on revolving credit facility (75.0) (130.0) (40.0) Proceeds from short-term borrowings 3.0 2.8 2.5 Repayment of short-term borrowings (2.8) (2.5) — Principal payments on long-term debt obligations (3.4) (3.5) (63.3) Principal payments on finance lease obligations (1.8) (2.6) (1.2) Proceeds from loan from noncontrolling interest holder — 2.0 — Principal payments on loans due to noncontrolling interest holder (0.5) — — Payments to noncontrolling interest holder for long-term supply financing (2.0) — — Payments for long-term supplier financing (0.5) (0.1) — Purchase and retirement of common stock — (0.6) — Taxes paid related to shares withheld from the settlement of equity awards (0.8) (0.5) — Exercise of stock options — 0.1 0.1 Payment of debt issuance, restructuring or extinguishment fees — — (0.8) Equity contributions from noncontrolling interest holders — 4.2 0.9 Net cash (used in) provided by financing activities $ (43.8) $ 14.3 $ (21.8) Borrowings and repayments of debt We utilize a revolving line of credit for short-term working capital purposes.
For more information, refer to Note 4 to the consolidated financial statements. Interest expense Interest expense consists primarily of interest on borrowings under working capital facilities that we maintain and interest on other long-term debt used to make capital and equity investments. We also incur interest expense on finance leases, computed using each leases’ explicit or implicit borrowing rate.
Interest expense Interest expense consists primarily of interest on borrowings under working capital facilities that we maintain and interest on other long-term debt used to make capital and equity investments. We also incur interest expense on finance leases, computed using each lease’s explicit or implicit borrowing rate.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. U.S.
See Note 9 to the consolidated financial statements for more information. 30 Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. U.S.
Capital resources October 31, (In millions) 2023 2022 Cash and cash equivalents $ 42.9 $ 52.8 Working capital (1) 122.6 126.4 (1) Includes cash and cash equivalents Capital resources include cash flows from operations, cash and cash equivalents, and debt financing. Our Blueberries segment may also receive capital contributions or loans from noncontrolling shareholders.
Capital resources October 31, (In millions) 2024 2023 Cash and cash equivalents $ 58.0 $ 42.9 Working capital (1) 129.9 122.6 (1) Includes cash and cash equivalents Capital resources include cash flows from operations, cash and cash equivalents, and debt financing. Our Blueberries segment may from time to time also receive capital contributions or loans from shareholders.
Years ended October 31, 2023 2022 2021 Gross profit (in millions) $ 83.3 $ 89.8 $ 124.5 Gross profit as a percentage of net sales 8.7 % 8.6 % 14.0 % Gross profit decreased $6.5 million in fiscal year 2023 compared to the previous year to $83.3 million, and gross profit percentage increased by 10 basis points to 8.7% of revenue.
Years ended October 31, 2024 2023 2022 Gross profit (in millions) $ 152.5 $ 83.3 $ 89.8 Gross profit as a percentage of net sales 12.4 % 8.7 % 8.6 % Gross profit increased $69.2 million in fiscal year 2024 compared to the previous year to $152.5 million, and gross profit percentage increased by 370 basis points to 12.4% of net sales.
Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. We recognize a tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
We recognize a tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
If we use a qualitative approach and determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we would then perform the first step of the goodwill impairment test, which would consist primarily of a discounted cash flow (“DCF”) analysis and guideline publicly-traded companies (“GPC”) analysis to determine the fair value of the reporting unit. 29 During the fourth quarter of fiscal 2022, we performed our annual goodwill impairment test on our Peruvian farming reporting unit within the International Farming segment and determined that the qualitative factors indicated that it was more-likely-than-not that the fair value of the reporting unit was less than its carrying value.
If we use a qualitative approach and determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we would then perform the first step of the goodwill impairment test, which would consist primarily of a discounted cash flow (“DCF”) analysis and guideline publicly-traded companies (“GPC”) analysis to determine the fair value of the reporting unit.
As of October 31, 2023, we were required to comply with the following financial covenants: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00. 28 As of October 31, 2023, our consolidated leverage ratio was 2.64 to 1.00 and our consolidated fixed charge coverage ratio was 1.58 to 1.00 and we were in compliance with all such covenants of the credit facility.
As of October 31, 2024, we were required to comply with the following financial covenants: (a) a quarterly consolidated leverage ratio of not more than 3.5 to 1.00 and (b) a quarterly consolidated fixed charge coverage ratio of not less than 1.25 to 1.00.
As a result, with the assistance of a third-party specialist, we performed a quantitative assessment of the fair value of the reporting unit using the DCF and GPC methods described in Notes 3 and 4 to the consolidated financial statements, resulting in an impairment charge of $49.5 million.
As a result, with the assistance of a third-party specialist, we performed a quantitative assessment of the fair value of the reporting unit using the DCF and GPC methods, resulting in an impairment charge of $49.5 million. The significant assumptions used in determining the fair values of the reporting unit have been described in Note 4.
Marketing and Distribution Net sales in our Marketing and Distribution segment decreased $126.2 million or 12% in fiscal year 2023 compared to the previous year, driven by pricing and volume dynamics described above, which were driven by higher industry supply out of Mexico relative to last year.
Segment adjusted EBITDA increased $45.0 million or 112% in fiscal year 2024 compared to the previous year, due to improved per-unit gross margin on avocados sold. 26 Net sales in our Marketing & Distribution segment decreased $126.2 million or 12% in fiscal year 2023 compared to the previous year, driven by pricing and volume dynamics described above, which were driven by higher industry supply out of Mexico relative to last year.
We recognize the effects of tax legislation in the period in which the law is enacted. Our deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years we estimate the related temporary differences to reverse.
Our deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years we estimate the related temporary differences to reverse. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.
Moruga was previously accounted for under the equity method of accounting, where investments are stated at initial cost and adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions.
(collectively referred to as “Moruga”), an entity for which we have a 60% equity ownership interest. Moruga was previously accounted for under the equity method of accounting, where investments are stated at initial cost and adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions.
Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices. 20 Years ended October 31, 2023 2022 2021 (In millions, except percentages) Dollar % Dollar % Dollar % Net sales $ 953.9 100.0 % $ 1,045.9 100.0 % $ 891.7 100.0 % Cost of sales 870.6 91.3 % 956.1 91.4 % 767.2 86.0 % Gross profit 83.3 8.7 % 89.8 8.6 % 124.5 14.0 % Selling, general and administrative expenses 76.4 8.0 % 77.5 7.4 % 63.6 7.1 % Goodwill impairment — — % 49.5 4.7 % — — % Operating income (loss) 6.9 0.7 % (37.2) (3.6) % 60.9 6.8 % Interest expense (11.6) (1.2) % (5.5) (0.5) % (3.7) (0.4) % Equity method income 4.0 0.4 % 5.1 0.5 % 7.5 0.8 % Remeasurement gain on acquisition of equity method investee — — % 2.0 0.2 % — — % Other (expense) income, net (0.2) — % 4.4 0.4 % 1.3 0.1 % (Loss) income before income taxes (0.9) (0.1) % (31.2) (3.0) % 66.0 7.4 % Provision for income taxes 2.2 0.2 % 3.7 0.4 % 21.1 2.4 % Net (loss) income (3.1) (0.3) % (34.9) (3.3) % 44.9 5.0 % Net loss attributable to noncontrolling interest (0.3) — % (0.3) — % — — % Net (loss) income attributable to Mission Produce $ (2.8) (0.3) % $ (34.6) (3.3) % $ 44.9 5.0 % Net sales Our net sales are generated predominantly from the shipment of fresh avocados to retail, wholesale and foodservice customers worldwide.
Years ended October 31, 2024 2023 2022 (In millions, except percentages) Dollar % Dollar % Dollar % Net sales $ 1,234.7 100.0 % $ 953.9 100.0 % $ 1,045.9 100.0 % Cost of sales 1,082.2 87.6 % 870.6 91.3 % 956.1 91.4 % Gross profit 152.5 12.4 % 83.3 8.7 % 89.8 8.6 % Selling, general and administrative expenses 86.8 7.0 % 76.4 8.0 % 77.5 7.4 % Goodwill impairment — — % — — % 49.5 4.7 % Operating income (loss) 65.7 5.3 % 6.9 0.7 % (37.2) (3.6) % Interest expense (12.6) (1.0) % (11.6) (1.2) % (5.5) (0.5) % Equity method income 3.7 0.3 % 4.0 0.4 % 5.1 0.5 % Remeasurement gain on acquisition of equity method investee — — % — — % 2.0 0.2 % Other income (expense), net 3.6 0.3 % (0.2) — % 4.4 0.4 % Income (loss) before income taxes 60.4 4.9 % (0.9) (0.1) % (31.2) (3.0) % Provision for income taxes 18.6 1.5 % 2.2 0.2 % 3.7 0.4 % Net income (loss) 41.8 3.4 % (3.1) (0.3) % (34.9) (3.3) % Net income (loss) attributable to noncontrolling interest 5.1 0.4 % (0.3) — % (0.3) — % Net income (loss) attributable to Mission Produce $ 36.7 3.0 % $ (2.8) (0.3) % $ (34.6) (3.3) % Net sales Our net sales are generated predominantly from the shipment of fresh avocados to retail, wholesale and foodservice customers worldwide.
The decrease in gross profit was concentrated in our International Farming segment and driven by lower pricing on avocados sold from Company-owned farms. Lower pricing conditions were driven by higher worldwide supply of avocados, driven by a stronger Mexican crop, combined with quality issues and a compressed Peruvian harvest season brought about by El Niño-related weather events.
Lower pricing conditions were driven by higher worldwide supply of avocados, driven by a stronger Mexican crop, combined with quality issues and a compressed Peruvian harvest season brought about by El Niño-related weather events.
Material cash requirements Capital expenditures We have various capital projects in progress for farming expansion and facility improvements which we intend to fund through our operating cash flow as well as cash and cash equivalents on hand. For fiscal 2024, we expect capital expenditures to be between $30 to $35 million.
As of October 31, 2024, we were in compliance with all such covenants of the credit facility. Material cash requirements Capital expenditures We have various capital projects in progress for farming expansion and facility improvements which we intend to fund through our operating cash flow as well as cash and cash equivalents on hand.
Years ended October 31, (In millions) 2023 2022 2021 Equity method income $ 4.0 $ 5.1 $ 7.5 Remeasurement gain on acquisition of equity method investee — 2.0 — Equity method income decreased $1.1 million or 22% in fiscal year 2023 compared to the previous year, primarily due to lower income from HAC, driven by inflationary pressure on SG&A expense.
Equity method income decreased $1.1 million or 22% in fiscal year 2023 compared to the previous year, primarily due to lower income from HAC, driven by inflationary pressure on SG&A expense.
Years ended October 31, 2023 2022 2021 Provision for income taxes (in millions) $ 2.2 $ 3.7 $ 21.1 Effective tax rate (1) (256.6) % (12.0) % 32.0 % (1) May not recalculate due to rounding. The provision for income tax decreased $1.5 million or 41% in fiscal year 2023 compared to the previous year.
Years ended October 31, 2024 2023 2022 Provision for income taxes (in millions) $ 18.6 $ 2.2 $ 3.7 Effective tax rate (1) 30.8 % (256.6) % (12.0) % (1) May not recalculate due to rounding.
Additionally, we frequently engage third party valuation experts to assist us with estimates described below. Actual results could differ from those estimates. Business combinations.
Additionally, we frequently engage third party valuation experts to assist us with estimates described below. Actual results could differ from those estimates. Goodwill. Our goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired.
Years ended October 31, (In millions) 2023 2022 2021 Net sales: Marketing and Distribution $ 889.9 $ 1,016.1 $ 872.0 International Farming 11.6 19.1 19.7 Blueberries 52.4 10.7 — Total net sales $ 953.9 $ 1,045.9 $ 891.7 Net sales decreased $92.0 million or 9% in fiscal year 2023 compared to the previous year, primarily due to a 24.0% decrease in average per-unit avocado sales prices, partially offset by increases in avocado volume sold of 12.0%.
Years ended October 31, (In millions) 2024 2023 2022 Net sales: Marketing & Distribution $ 1,152.6 $ 889.9 $ 1,016.1 International Farming 6.4 11.6 19.1 Blueberries 75.7 52.4 10.7 Total net sales $ 1,234.7 $ 953.9 $ 1,045.9 Net sales increased $280.8 million or 29% in fiscal year 2024 compared to the previous year, primarily driven by our Marketing & Distribution segment, where average per-unit avocado sales prices increased 30% and avocado volume sold was relatively flat.
Segment adjusted EBITDA decreased $20.2 million or 87% in fiscal year 2023 compared to the previous year, primarily due to lower gross profit resulting from lower pricing. Total segment sales in our International Farming segment increased $10.1 million or 10% in fiscal year 2022 compared to the previous year, driven by increased avocado production of 15%, which increased affiliated sales.
Segment adjusted EBITDA decreased $20.2 million or 87% in fiscal year 2023 compared to the previous year, primarily due to lower gross profit resulting from lower pricing.
Capital expenditures in the Blueberries operation were $6.9 million, primarily related to early-stage plant cultivation. Proceeds from the sale of property, plant and equipment were primarily from land that had been originally intended for use as our corporate headquarters. Equity method investees In all fiscal years presented, we made contributions to Copaltas and Mr. Avocado.
Proceeds from the sale of property, plant and equipment were primarily from land that had been originally intended for use as our corporate headquarters. Other investing activities In all fiscal years presented, we made contributions to Copaltas and Mr. Avocado. Funds were used by Copaltas for the purchase and development of farmland in Colombia. Funds were used by Mr.
Additionally, the Blueberries segment incurred interest expense of $2.2 million related to a long-term finance lease of land as well as short-term bank borrowings and financed payables.
Additionally, the Blueberries segment incurred interest expense of $2.2 million related to a long-term finance lease of land as well as short-term bank borrowings and financed payables. Equity method income Our material equity method investees include Henry Avocado (“HAC”), Mr. Avocado, Copaltas, and up until May 1, 2022, Moruga.
We are closely monitoring developments of the Pillar Two rule and are currently evaluating the potential impact in each of the countries we operate in. Results of Operations The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute.
Results of Operations The operating results of our businesses are significantly impacted by the price and volume of fruit we farm, source and distribute.
Segment Results of Operations Our CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”).
These charges were partially offset by a favorable change in ASC 740-30 (formerly APB 23) liability of $1.6 million. Segment Results of Operations Our CEO evaluates and monitors segment performance primarily through segment sales and segment adjusted earnings before interest expense, income taxes and depreciation and amortization (“adjusted EBITDA”).
Principal payments on our term loans and other notes payable are made in accordance with debt maturity schedules. The financing cash flow for fiscal 2022 reflects the modification of principal amounts on our term-loans and increased borrowing capacity on our revolver. Blueberries Financing at our Blueberries segment consists of shareholder contributions and loans, as well as short-term bank borrowings.
Principal payments on our credit facility are made in accordance with debt maturity schedules. 29 Blueberries Financing of our Blueberries segment consists of shareholder contributions and loans, as well as short-term bank borrowings, as needed. Principal payments on shareholder loans are made in accordance with loan agreements.
The estimates and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses.
The estimates and assumptions described above, along with other factors such as forecasts of future revenues; earnings before interest, taxes, depreciation, and amortization (EBITDA); the discount rate; and marketplace EBITDA multiples form within a peer public company group, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses.
Years ended October 31, (In millions) 2023 2022 2021 Selling, general and administrative expenses $ 76.4 $ 77.5 $ 63.6 SG&A expenses decreased $1.1 million or 1% in fiscal year 2023 compared to the previous year, primarily due to lower ERP and insurance costs.
Years ended October 31, (In millions) 2024 2023 2022 Selling, general and administrative expenses $ 86.8 $ 76.4 $ 77.5 SG&A expenses increased $10.4 million or 14% in fiscal year 2024 compared to the previous year, primarily due to higher employee related costs, including performance-based incentive compensation, stock-based compensation expense and statutory profit-sharing expense.
The current year provision for income tax was impacted by a $1.7 million charge related to a statutory case in Mexico and $0.5 million in changes in unrecognized tax benefits. These charges were partially offset by a favorable change in ASC 740-30 (formerly APB 23) liability of $1.6 million.
The provision for income tax decreased $1.5 million or 41% in fiscal year 2023 compared to the previous year. Fiscal 2023 was impacted by a $1.7 million charge related to a statutory case in Mexico and $0.5 million in changes in unrecognized tax benefits.
The interest rate swaps are intended to hedge against variable interest rate exposure associated with our term debt facility. 23 Provision for income taxes The provision for income taxes consists of the consolidation of tax provisions, computed on a separate entity basis, in each country in which we have operations.
Provision for income taxes The provision for income taxes consists of the consolidation of tax provisions, computed on a separate entity basis, in each country in which we have operations. We recognize the effects of tax legislation in the period in which the law is enacted.
Investing activities Years ended October 31, (In millions) 2023 2022 2021 Purchases of property, plant and equipment $ (49.8) $ (61.2) $ (73.4) Proceeds from sale of property, plant and equipment 0.2 3.0 2.4 Insurance proceeds for the replacement of property, plant and equipment — — 1.1 Cash acquired in consolidation of Moruga — 4.3 — Investment in equity method investees (2.1) (0.4) (0.2) Purchase of other investment (2.3) — — Loans to equity method investees — — (2.0) Loan repayments from equity method investees — 3.0 1.5 Other (0.1) (0.1) 0.3 Net cash used in investing activities $ (54.1) $ (51.4) $ (70.3) Property, plant and equipment In fiscal year 2023, capital expenditures were concentrated in pre-production avocado orchard maintenance in Guatemala and Peru and construction costs on our new UK distribution facility.
Investing activities Years ended October 31, (In millions) 2024 2023 2022 Purchases of property, plant and equipment $ (32.2) $ (49.8) $ (61.2) Proceeds from sale of property, plant and equipment 0.1 0.2 3.0 Cash acquired in consolidation of Moruga — — 4.3 Investment in equity method investees (1.6) (2.1) (0.4) Purchase of other investment — (2.3) — Loan repayments from equity method investees — — 3.0 Other 0.2 (0.1) (0.1) Net cash used in investing activities $ (33.5) $ (54.1) $ (51.4) 28 Property, plant and equipment Years ended October 31, (In millions) 2024 2023 2022 Purchases of property, plant and equipment by segment: Marketing & Distribution $ 7.1 $ 10.9 $ 9.1 International Farming 16.1 26.0 45.3 Blueberries (1) 9.0 12.9 6.8 Total purchases of property, plant and equipment $ 32.2 $ 49.8 $ 61.2 (1) The Blueberries segment was consolidated prospectively from May 1, 2022.
Net sales increased $154.2 million or 17% in fiscal year 2022 compared to the previous year, primarily due to a 28% increase in average per-unit avocado sales prices, partially offset by decreases in avocado volume sold of 11%. Price increases were due to lower industry supply out of Mexico for much of the fiscal year, as well as inflationary pressures.
Net sales decreased $92.0 million or 9% in fiscal year 2023 compared to the previous year, primarily due to a 24.0% decrease in average per-unit avocado sales prices, partially offset by increases in avocado volume sold of 12.0%.
The Company operates approximately 700 acres of mangos in Peru that are largely in an early stage of production. The timing of the mango harvest is concentrated in the 25 fiscal second quarter and, as a result, mangos have a more pronounced impact on segment financial performance during this timeframe.
In addition, the Company operates approximately 700 acres of mangos in Peru. The timing of the mango harvest is generally concentrated in the fiscal second quarter.
Capital expenditures in the Blueberries operation were $12.9 million, primarily related to irrigation installation and early-stage plant cultivation. In fiscal year 2022, capital expenditures were concentrated in the purchase of farmland in Peru as well as land improvements and orchard development of avocados in Guatemala and both avocados and blueberries in Peru.
Our International Farming segment also began construction of a packhouse in Guatemala during the year. In fiscal year 2023, capital expenditures were concentrated in pre-production avocado orchard maintenance in Guatemala and Peru and construction costs on our new UK distribution facility. Capital expenditures in the Blueberries operation were primarily related to irrigation installation and early-stage plant cultivation.
Consolidation of VIE On May 1, 2022, a reconsideration event occurred related to Moruga S.A.C., a holding company with one wholly owned subsidiary, Blueberries Peru, S.A.C. (collectively referred to as “Moruga”), an entity for which we have a 60% equity ownership interest.
Moruga’s farming activities include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement. Consolidation of VIE On May 1, 2022, a reconsideration event occurred related to Moruga S.A.C., a holding company with one wholly owned subsidiary, Blueberries Peru, S.A.C.
Equity method income decreased $2.4 million or 32% in fiscal year 2022 compared to the previous year, primarily due to the effect of consolidation of Moruga, partially offset by stronger operating performance from HAC.
Years ended October 31, (In millions) 2024 2023 2022 Equity method income $ 3.7 $ 4.0 $ 5.1 Remeasurement gain on acquisition of Moruga — — 2.0 Equity method income decreased $0.3 million or 8% in fiscal year 2024 compared to the previous year, as losses at Mr. Avocado were only partially offset by income growth from HAC.
Blueberries In fiscal year 2023, net sales in our Blueberries segment were $52.4 million and segment adjusted EBITDA was $5.2 million. The segment performance benefited from higher volumes associated with the consolidation of our Blueberries segment for the entirety of the fiscal year.
Segment adjusted EBITDA increased $12.9 million or 248% in fiscal year 2024 compared to the previous year, primarily due to gross margin improvement driven by elevated sales pricing. In fiscal year 2023, net sales in our Blueberries segment were $52.4 million and segment adjusted EBITDA was $5.2 million.
Gross profit decreased $34.7 million in fiscal year 2022 compared to the previous year to $89.8 million, and gross profit percentage decreased by 536 basis points to 8.6% of revenue.
Gross profit decreased $6.5 million in fiscal year 2023 compared to the previous year to $83.3 million, and gross profit percentage increased by 10 basis points to 8.7% of net sales. The decrease in gross profit was concentrated in our International Farming segment and driven by lower pricing on avocados sold from Company-owned farms.
As of October 31, 2023, the estimated remaining capital expenditures related to the project were approximately $40 million, to be spent in phases through fiscal 2028, depending on timing and other factors. Leases We are party to various leases, the most material of which are for facilities and land.
Leases We are party to various leases, the most material of which are for facilities and land. Our undiscounted cash liabilities were approximately $177.3 million as of October 31, 2024, of which, approximately $107.4 million was for long-term land leases in our International Farming and Blueberries segments.
In fiscal 2023, shareholder contributions were made to fund capital expenditures as described above in the Investing Activities section. Principal payments on finance lease obligations related to a long-term land lease in our Blueberries segment, which for accounting purposes has been classified as a finance lease.
Principal payments on finance lease obligations primarily relate to a long-term land lease, which for accounting purposes has been classified as a finance lease. Certain supply purchases are made under long-term financing arrangements, a significant portion of which are with the noncontrolling interest holder of the entity.
The consolidation of Moruga increased selling, general and administrative expenses by $1.7 million, which included amortization of an intangible asset recognized at acquisition. 22 Goodwill impairment A noncash impairment loss of $49.5 million was recognized in the consolidated statements of income during the fourth quarter of fiscal 2022. No goodwill impairment was recognized in fiscal years 2023 or 2021.
A noncash impairment loss of $49.5 million was recognized in the consolidated statements of income (loss) during the fourth quarter of fiscal 2022. For more information, refer to Note 4 to the consolidated financial statements.
Removed
Moruga’s farming activities include cultivating early-stage blueberry plantings and harvesting mature bushes. Substantially all blueberries produced are sold to a single distributor under an exclusive marketing agreement. Recent business developments In April 2023, the Marketing and Distribution segment opened a 102,000-square-foot state-of-the-art ripening, packing and forward distribution center in Dartford, United Kingdom.
Added
Supply chain optimization In November 2024, the Company announced plans to close its Canadian distribution centers within its Marketing & Distribution segment. Operations at these distribution centers will continue until their planned closure during the first quarter of fiscal 2025.
Removed
Strategically located with direct access to major international ports and transportation networks, the facility is expected to strengthen our international footprint and optimize product distribution to the Company’s customer base in the U.K.
Added
Distribution volume from these facilities will be absorbed by our other distribution centers or third-party service providers, which is expected to generate net cost savings on an ongoing basis.
Removed
Regulatory developments In December 2021, the Organization for Economic Cooperation and Development (“OECD”), which is an international public policy setting organization comprised of member countries including the U.S., published a proposal for the establishment of a global minimum tax rate of 15% (the “Pillar Two rule”) .
Added
In connection with the closure, we expect to recognize approximately $1.3 million of accelerated depreciation of property, plant and equipment and $0.4 million of accelerated lease expense during the first quarter of 2025. Severance costs are expected to be immaterial.
Removed
The OECD has recommended that the Pillar Two rule become effective for fiscal years beginning after January 1, 2024, which is our fiscal 2025. To date, member states are in various stages of implementation and the OECD continues to refine technical guidance.
Added
Over longer periods of time, we believe that the impact exchange rate fluctuations will have on our cost of goods sold will largely be passed on to our customers in the form of higher or lower prices.
Removed
Lower avocado volume sold was primarily driven by lower Mexican supply. Domestic volumes declined at a lower rate relative to export markets, demonstrating the resiliency of demand for avocados amid higher price points in the U.S. market.
Added
Blueberry revenue increased $23.3 million or 44%, due primarily to a 37% increase in average per-unit sales price, which was favorably impacted by industry supply constraints during the Peru harvest season.
Removed
Within our Marketing and Distribution segment, the decreases were primarily driven by the impact of lower avocado volume sold, as well as temporary and unforeseen operational challenges created by the ERP implementation, which limited our ability to effectively manage our supply chain during the first quarter of 2022.
Added
The increases were attributed to our Marketing & Distribution segment, where we achieved strong per-unit margins on avocados sold, and our Blueberries segment, where we benefited from higher per-unit sales pricing.
Removed
Within our International Farming segment, we experienced gross profit decreases primarily due to inflationary cost pressures impacting ocean freight costs, packaging costs, and farming input costs, partially offset by increased avocado production at our farms.
Added
Higher performance-based incentive compensation is largely explained by the Company’s improved operating performance relative to the prior year. These increases were partially offset by lower professional fees and lower amortization of an intangible asset. 23 SG&A expenses decreased $1.1 million or 1% in fiscal year 2023 compared to the previous year, primarily due to lower ERP and insurance costs.
Removed
SG&A increased $13.9 million or 22% in fiscal year 2022 compared to the previous year, due to ERP costs in our Marketing and Distribution segment, higher employee-related costs, higher professional fees, and higher travel costs. ERP costs consisted of noncapitalizable implementation costs and nonrecurring process re-engineering costs. Employee-related costs were impacted by labor inflation and higher stock-based compensation expense.
Added
Years ended October 31, (In millions) 2024 2023 2022 Interest expense $ 12.6 $ 11.6 $ 5.5 Interest expense increased $1.0 million or 9% in fiscal year 2024 compared to the previous year. The impact of higher interest rates was largely offset by lower average debt balances.
Removed
Higher professional fees were in part due to our change in SEC filer status from an emerging growth company to a large accelerated filer on October 31, 2021. Travel costs increased as COVID-related travel restrictions eased relative to prior year.
Added
Interest expense at our Blueberries segment increased $0.7 million or 32% to $2.9 million, primarily related to a significant financing lease, where additional area was leased during the year.
Removed
Interest expense increased $1.8 million or 49% in fiscal year 2022 compared to the previous year, primarily due to higher interest rates, as the majority of our outstanding debt is subject to variable rates. Equity method income Our material equity method investees include Henry Avocado (“HAC”), Mr. Avocado, Copaltas, and up until May 1, 2022, Moruga.
Added
The change was primarily attributed to the strengthening of the U.S. dollar relative to the Mexican peso, generating foreign currency gains in the current year compared to losses in the prior year. 24 Other expense was $0.2 million in fiscal year 2023, compared to other income of $4.4 million in the previous year.
Removed
Other income increased $3.1 million or 238% in fiscal year 2022 compared to the previous year, primarily due to gains on our interest rate swaps driven by market movements in short-term interest rates.
Added
The provision for income tax increased $16.4 million or 745% in fiscal year 2024 compared to the previous year, primarily due to the effect of higher income before taxes in the current year.
Removed
The provision for income taxes decreased $17.4 million or 82% in fiscal year 2022 compared to the previous year. In 2022, our provision for income taxes was impacted by the $49.5 million non-deductible goodwill impairment charge, which generated a pre-tax loss.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA 10% increase or decrease in the interest rate on our long-term debt would not have a material effect on our financial position, results of operations, or cash flows. 30 Foreign Currency Risk The majority of our sales are currently conducted in U.S. dollars, while a significant portion of our input costs are denominated in foreign currencies.
Biggest changeA 10% increase or decrease in the interest rate on our long-term debt would not have a material effect on our financial position, results of operations, or cash flows. Foreign Currency Risk The majority of our sales are currently conducted in U.S. dollars, while a significant portion of our input costs are denominated in foreign currencies.

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