Calavo Growers, Inc. Announces Q1 2026 Financial Results and Progress on Mission Produce Merger

Overview of Financial Performance

Calavo Growers, Inc. (Nasdaq: CVGW), a global leader in the sourcing, packing, and distribution of fresh avocados, tomatoes, papayas, and the processing of guacamole and other avocado products, has released its financial results for the first fiscal quarter ended January 31, 2026. The company’s performance reflects a challenging pricing environment for avocados but also demonstrates sequential improvements and strategic actions that investors should closely monitor.

Key Financial Highlights

• Total net sales: \$122.2 million, down from \$154.4 million in Q1 2025.
• Gross profit: \$15.2 million, slightly down from \$15.7 million in the prior year.
• SG&A expense: \$16.4 million, significantly impacted by \$7.2 million of non-recurring (primarily M&A-related) expenses, versus \$10.3 million in Q1 2025 (which included \$0.7 million of non-recurring expenses).
• Net income: \$0.7 million, compared to \$4.4 million in Q1 2025.
• Adjusted net income: \$4.8 million (\$0.27 per diluted share), vs. \$6.3 million (\$0.35 per diluted share).
• Adjusted EBITDA: \$8.0 million, down from \$9.3 million.

Segment Performance Details

• Fresh Segment: Sales were \$104.7 million, a 25% decrease year-over-year. This decline was mainly due to a 35% drop in average avocado selling prices, partially offset by a 17% increase in avocado carton volume, which slightly outpaced broader industry growth. Tomato sales fell 48%, driven by lower carton volumes and pricing.
• Prepared Segment: Sales increased 20% to \$17.5 million, driven by a 21% increase in pounds sold. The segment benefited from expanded sales to existing customers and new wins in retail and foodservice.

Gross Profit Analysis

• Fresh Segment: Gross profit was \$10.3 million (down 15%), reflecting lower avocado prices and tomato volumes/prices.
• Prepared Segment: Gross profit increased 36% to \$4.9 million, supported by higher volumes, lower fruit input costs, and improved operating efficiencies.

SG&A and Non-Recurring Expenses

SG&A expenses were notably higher due to \$7.2 million of non-recurring costs:

• \$4.9 million in transaction-related (M&A) costs, tied to the pending merger with Mission Produce.
• \$1.2 million in non-recurring stock-based compensation.
• \$0.6 million related to a legal settlement for the divested Fresh Cut Business.
• \$0.5 million in onboarding costs for senior leadership changes.

Balance Sheet and Liquidity

• Cash and cash equivalents: \$47.7 million.
• Available liquidity: \$79.8 million (cash plus available credit facility).
• Debt: Minimal, at \$3.9 million (long-term obligations and finance leases).
• Cash used in operating activities: \$8.7 million in Q1 2026.

Merger with Mission Produce, Inc. – Potentially Price Sensitive

A key development for shareholders is the pending merger between Calavo Growers and Mission Produce, as announced on January 14, 2026. Both boards have approved the transaction, which is expected to close in Q3 2026, subject to regulatory and shareholder approvals. Merger-related filings—including antitrust submissions in the U.S. and Mexico, and a preliminary joint proxy statement—have been completed. There have been no material changes to the terms of the Merger Agreement during the quarter.

The merger is likely to be a significant catalyst for Calavo’s share price, given the potential for increased scale, operational synergies, expanded customer relationships, and improved margin discipline. However, investors should note risks related to obtaining regulatory approvals, integration challenges, realization of synergies, and possible adverse effects from the merger announcement itself.

Forward-Looking Guidance and Management Commentary

President and CEO B. John Lindeman highlighted sequential improvements across both business segments and expects volume growth to continue in Q2. He cautioned that the fresh avocado pricing environment will remain pressured, mainly due to a large Mexican crop. The Prepared segment is expected to maintain strong momentum, benefiting from new customer wins and expanded relationships.

Management also reaffirmed commitment to cost discipline, noting that SG&A expenses (excluding non-recurring items) were lower than the prior year. The merger with Mission Produce remains a strategic focus, with the aim of closing in Q3 2026.

Risks and Uncertainties – Important for Investors

Calavo’s forward-looking statements include numerous risks that could materially affect its performance and share price:

• Ability to obtain shareholder and regulatory approvals for the merger.
• Integration risks and realization of synergies.
• Market reactions to the merger and related announcements.
• Legal, tax, and regulatory uncertainties, especially in Mexico.
• Operational risks including supply chain disruptions, weather impacts, seasonality, and competitive pressures.
• Risks related to international business, cyber security, labor, customer concentration, and environmental regulations.

Investors are urged to review the company’s SEC filings for a full list of risk factors.

Non-GAAP Financial Measures – Investor Considerations

Calavo uses non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per Diluted Share) to provide investors with a clearer view of its operating performance by excluding unusual, non-recurring, or non-operational items. Management believes these measures aid investors in understanding ongoing business operations and resource allocation. However, these metrics are supplemental and should not be considered replacements for GAAP measures.

Detailed Financial Tables

Condensed Consolidated Statements of Operations (Q1 2026 vs. Q1 2025)

• Net sales: \$122.2M (2026) vs. \$154.4M (2025)
• Cost of sales: \$107.0M (2026) vs. \$138.7M (2025)
• Gross profit: \$15.2M (2026) vs. \$15.7M (2025)
• SG&A: \$16.4M (2026) vs. \$10.3M (2025)
• Operating (loss) income: \$(1.4)M (2026) vs. \$5.0M (2025)
• Net income attributable to Calavo Growers: \$732K (2026) vs. \$4.4M (2025)
• Basic/Diluted EPS: \$0.04 (2026) vs. \$0.25 (2025)

Segment Data

• Fresh Segment: Net sales \$104.7M (2026), Gross profit \$10.3M
• Prepared Segment: Net sales \$17.5M (2026), Gross profit \$4.9M

Balance Sheet Snapshot (January 31, 2026)

• Total assets: \$298.2M
• Total current assets: \$152.6M
• Total liabilities: \$90.8M (current + long-term)
• Shareholders’ equity: \$207.3M

Reconciliation of Adjusted Net Income

• Adjusted net income: \$4.8M (2026), \$6.3M (2025)
• Adjusted net income per diluted share: \$0.27 (2026), \$0.35 (2025)
• Adjustments include: M&A costs (\$4.9M), foreign currency gains (\$2.6M), stock-based compensation (\$1.8M), legal settlement (\$0.6M), onboarding (\$0.5M), Mexican tax matters (\$0.2M), and others.

Reconciliation of EBITDA and Adjusted EBITDA

• EBITDA: \$4.3M (2026) vs. \$7.3M (2025)
• Adjusted EBITDA: \$8.0M (2026) vs. \$9.3M (2025)

Investor Information

Investors can access detailed filings and merger-related documents via the SEC, Calavo’s investor relations website, or Mission Produce’s website. Shareholders are encouraged to read all relevant materials before making voting or investment decisions.

Conclusion – Price Sensitive Takeaways

• The pending merger with Mission Produce is a major event that could significantly impact Calavo’s share price, depending on regulatory and shareholder approvals, integration success, and synergy realization.
• Sequential improvement in both business segments, strong Prepared segment growth, and effective management of non-recurring expenses signal resilience in a challenging environment.
• Investors should closely monitor developments related to avocado pricing, merger progress, and regulatory issues in Mexico.

Disclaimer

This article is provided for informational purposes only and does not constitute investment advice or an offer to buy or sell securities. All forward-looking statements are subject to risks and uncertainties which may cause actual results to differ materially. Investors should review Calavo Growers, Inc.’s SEC filings for a complete discussion of risk factors and consult with their financial advisors before making any investment decisions.

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