The quarter beat the operating expectation, not the headline earnings expectation. Adjusted EBITDA reached $32.4 million versus roughly $30 million in published expectations, while reported diluted EPS was a $0.08 loss versus a prior-year $0.21 profit. The market had already been prepared for acquisition-related distortion, but the underlying EBITDA result came in better than anticipated.
| Metric | Q3 FY2026 | Q3 FY2025 / expectation | Read |
|---|---|---|---|
| Revenue | $450.0M (Financial Statements) | $357.7M prior year | +26% year over year |
| Adjusted EBITDA | $32.4M (Adjusted EBITDA reconciliation) | $32.6M prior year; roughly $30M published expectation | Slightly above expectations |
| Diluted EPS | $(0.08) (Income Statement) | $0.21 prior year; ~$0.12 published consensus | Below consensus on GAAP EPS |
| Gross margin | 9.9% (Financial Highlights) | 12.6% prior year | Down 270 basis points |
| Q4 adjusted EBITDA outlook | $52M-$55M (Outlook) | Implied by reaffirmed H2 outlook | Reaffirmed |
Calavo delivered scale, but not yet clean earnings leverage. Revenue rose 26% as avocado volume increased 38%, largely from the acquired business and higher Mexican supply, but the average avocado selling price fell 9%. Marketing & Distribution adjusted EBITDA improved to $24.7 million from $20.0 million, while Prepared Foods contributed only $0.2 million and carried a $4.1 million operating loss.
The biggest drag was the cost of getting the deal integrated. The quarter included $12.6 million of transaction and integration costs, while nine-month costs reached $26.0 million; acquisition-related pre-tax costs totaled $25.4 million in the quarter. Those charges explain much of the GAAP loss, but the balance sheet also shows the consequence of the transaction: long-term debt rose to $388.9 million from $92.8 million at October 31, 2025, and operating cash flow was negative $25.9 million for the first nine months.
The forward picture is modestly better than the market’s standing setup. Management reaffirmed second-half adjusted EBITDA of $84 million to $88 million and raised the estimated annualized Calavo synergy opportunity to more than $30 million, citing higher-than-anticipated SG&A savings and network efficiencies. That is incremental good news, but it does not remove the near-term pressure from lower avocado pricing, heavier leverage and a still-unprofitable Prepared Foods operation.
Read the original 8-K on SEC EDGAR ↗