Increased Mexican avocado supply due to higher yields and contributions from the Calavo acquisition were the stand out factors for Mission Produce Inc. (NASDAQ:AVO) in its third quarter print for FY26. The company posted an adjusted EBITDA of $32.4 million, which surpassed expectations. Certain business units exhibited notable weakness during the quarter, however, the management has shared Q4 adjusted EBITDA projections between $52 million to $55 million. It will incorporate potential benefits across the first full quarter following Calavo’s acquisition. The second half FY26 guidance was also upheld with adjusted EBITDA expectations of $84 million to $88 million range.
Calavo Acquisition Impact and Mexican Supply Growth
Mission’s $450 million topline for the third quarter represented a 26% jump relative to Q3 FY25. The company’s 38% volumetric expansion in avocado sales was a key enabler for this topline growth. The avocado volumes were largely driven by an increase in the high-yield Mexican supply, as well as the impact of its Calavo Growers acquisition back in May. The deal will allow Mission to tap into a rapidly expanding prepared foods category. It also bolsters the company’s supply chain across the North American avocado market, which could augment its competitive position within the region.
A notable jump was witnessed within the Blueberries category, where sales and operating income grew amid IEEPA tariff refunds. Segment sales went from $4.5 million in Q3 FY25 to $5.4 million for the reported quarter. The segment’s operating income reflected on a sharp turnaround for Mission, landing at $2.4 million compared to a $0.2 million loss recorded a year earlier.
Margin Pressure and Cash Flow Reversal Raise Red Flags
Profitability metrics and the underlying margins for the quarter raise concerns. The company posted adjusted net income of $15 million, which equates to a $0.18 adjusted diluted EPS. Both figures were down year-over-year.
Segment-wise softness also emerged during the period. A decline in per-unit pricing, along with deflated volumes due to harvest timing, caused the adjusted EBITDA for Blueberries segment to turn negative $0.1 million, in comparison with $0.5 million recorded in Q3 FY25. This was despite the above-mentioned operating income growth within the segment.
International Farming segment sales totaled $45.8 million, down from $49.0 million in the same quarter last year. Operating income for the segment fell to $1.1 million for the three months ended July 31, 2026, compared with $6.7 million in the prior-year period. The decline reflected softer average pricing as global avocado supply expanded.
For the nine months ended July 31, 2026, operating activities consumed $25.9 million in cash, a reversal from $21.4 million generated in the same period a year earlier. This shift was driven by a combination of reduced income, including $26.0 million in advisory and integration expenses tied to the Calavo deal, along with larger working capital increases.
Institutional Sentiment
Institutional data tracked by Insider Monkey, covering more than 1,000 hedge funds, shows stagnant exposure to the stock. According to 13F filing data, a total of 20 hedge funds were invested by the end of second quarter in 2026, same as the previous quarter. Short interest sits at 5.40%, which indicates modest level of bearish skepticism around the stock.
With 5.98 million shares, Rubric Capital Management is the largest institutional investor owning 6.82% of the outstanding shares. Other notable institutional names include BlackRock and Dimensional Fund Advisors, which held 5.45% and 4.65% of outstanding shares, respectively.
Conclusion
Taken together, the third quarter showed a mixed picture for Mission. Despite encouraging early contributions from the Calavo integration, overall margins remained under pressure, and there was an unfavorable swing to negative operating cash flows. Going forward, investors will be watching whether underlying blueberry profitability improves once the benefit from tariff refunds fades, while also assessing avocado pricing and the realization of Calavo-related synergies. These will have a significant impact on actual numbers in comparison with the management’s second-half guidance.
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