Mission Produce’s first EPS report since IPO reassures (AVO)
Mission Produce reported its first quarterly results as a public company. The company reported Q4 EPS of $.34, exceeding consensus expectations of $.24, but lower than $.38 in the prior year. Revenue came in line with estimates. Avocado volumes sold increased 16%, while the ASP decreased 24%. Gross margins expanded 70bps due to lower field costs in Mexico. Expanding gross margins with a significant decline in ASPs is notable, especially during a pandemic. SG&A increased $6M to $16.8M, reflecting stock compensation awards from the IPO. Adjusted EBITDA was $32M, down $4.7M from the prior year.
Management guided Q1 to $165-175M, below consensus expectations of $197M. EBITDA guidance between $11-12.5M was in line with consensus expectations. The Super Bowl is a major event for avocado demand, but demand would seemingly be down with fewer viewing parties this year. However, management was pleased with the volume demand but noted prices are lower YOY. Management expects the oversupply situation to be corrected when the harvests shift away from California and Mexico's bumper crops.
Grocery store traffic holds flat in Q4 (KR)
Traffic to grocery stores initially surged in Q1 as consumers stockpiled groceries, then fell off as consumers consolidated shopping trips in Q2. According to placer.ai’s consumer tracking traffic decreased 0.6% YOY in Q3 but improved 9.1% sequentially. In Q4, traffic to grocery stores decreased by a rate of 0.9% YOY and improved by 0.7% sequentially, as seen in the chart below. Whole Foods has seen the worst traffic declines of the largest grocery banners with an 18.7% decrease in Q4. Conventional grocery chains have been the winner during the pandemic as shoppers consolidated shopping trips, which could reverse when shoppers resume making more frequent trips.
AppHarvest’s first harvest (NOVS)
AppHarvest announced that its first harvest would roll out to grocery stores this week. The company’s first harvest consists of beefsteak tomatoes that are chemical pesticide-free, non-GMO, and grown with recycled rainwater. (I’m not sure the distinction because there are no GMO tomatoes approved for consumption, and why is recycled rainwater differentiated from rain?) The tomatoes will be priced comparably to standard tomatoes. The 60-acre greenhouse is expected to produce 45M pounds of tomatoes annually. The company has two more facilities under construction and a goal of 12 by the end of 2025. The shares closed up 12.8% yesterday to a new high of $26.71. The combination with the Novus Capital SPAC is expected to close shortly.
