Gross Margin Increased By 180 Basis Points
Compared to the Prior-Year Period: Driven by Fresh and Value-Added
Products Segment
Strategic Decision on Mann Packing Finalized to
Enhance Profitability and Position for Growth
Fresh Del Monte Produce Inc. (NYSE: FDP), ("Fresh Del Monte" or
the "Company") today reported financial results for the third
quarter ended September 27, 2024.
"We are pleased to report strong performance in the third
quarter. Our strategic focus on high-margin, value-added products
continues to deliver positive results, demonstrating the strength
of our product innovations and our commitment to driving long-term
profitability and value for our shareholders,” said Fresh Del Monte
Chairman and CEO Mohammad Abu-Ghazaleh. "As committed, we have
announced our decision on Mann Packing following our strategic
review—a defining step that we believe will boost profitability,
reinforce resilience, and deliver sustained growth.”
Financial highlights for the third quarter 2024:
Net sales for the third quarter of 2024 were $1,019.5 million
compared with $1,003.1 million in the prior-year period. The
increase in net sales was primarily driven by higher net sales in
the Company's fresh and value-added product segment due to higher
sales volume, as well as increased per unit selling prices
principally of avocado and pineapple, as a result of strong market
demand. The increase was partially offset by a decrease in net
sales in the Company's banana segment, primarily driven by
competitive market pressures.
Gross profit for the third quarter of 2024 was $93.8 million
compared with $74.4 million in the prior-year period. The increase
in gross profit was primarily driven by higher sales volume and
higher per unit selling prices in the Company's fresh and
value-added product segment, partially offset by higher per unit
production and procurement costs, lower sales volume in the
Company's banana segment, and the negative impact of fluctuations
in exchange rates, primarily related to a stronger Costa Rican
colon. Gross margin for the third quarter of 2024 increased to 9.2%
compared with 7.4% in the prior-year period.
Gross profit for the third quarter of 2024 included $0.6 million
of other product-related charges, net, primarily as a result of
$1.0 million of additional logistic and inventory write-offs
incurred as a result of Hurricane Beryl during July 2024, partially
offset by $0.6 million of insurance recoveries related to shipment
disruptions in the Red Sea during the second quarter of 2024. Gross
profit for the third quarter of 2023 included $8.4 million of other
product-related charges, net, comprised primarily of an inventory
write-off and clean-up costs related to the flooding of a seasonal
production facility in Greece due to heavy rainstorms. Excluding
the net impact from the other product-related charges, Adjusted
gross profit(1) for the third quarter of 2024 was $94.4 million
compared with $82.8 million in the prior-year period.
Operating income for the third quarter of 2024 was $53.9 million
compared with $25.4 million in the prior-year period. The increase
in operating income was primarily driven by higher gross profit
combined with the higher gain on the sale of property, plant and
equipment.
Operating income for the third quarter of 2024 included asset
impairment and other charges, net, of $0.2 million due to heavy
wind and rainstorms in Chile, $7.7 million gain from the sale of a
warehouse in Chile and $0.3 million gain from the sale of an idle
packing facility in Costa Rica. In the prior-year period, operating
income included the $8.4 million of inventory write-off primarily
due to severe flooding in Greece, a $2.5 million of asset
impairment and other charges related to impairments of grape vines
in South America due to low productivity, idle land in Central
America, and expenses incurred in connection with a cybersecurity
incident in the first quarter of 2023. Additionally, there was a
$2.0 million gain from the sale of underutilized assets in South
and Central America. Excluding the net impact from the other
product-related charges, Adjusted operating income(1) was $46.5
million compared with $34.3 million in the prior-year period.
Other (income) expense, net, for the third quarter of 2024 was a
gain of $0.1 million compared with a loss of $7.1 million in the
prior-year period. The change was primarily due to the equity
earnings of unconsolidated companies within the food and nutrition
sector and lower foreign currency losses as compared with the
prior-year period.
FDP net income(2) for the third quarter of 2024 was $42.1
million compared with $8.4 million in the prior-year period and
Adjusted FDP net income(1) was $37.0 million compared with $17.2
million in the prior-year period. Adjusted FDP net income for the
third quarter of 2024, excludes the above-mentioned adjustments and
the associated $2.3 million tax effect. In the prior-year period,
Adjusted FDP net income excludes the above-mentioned adjustments
and the associated $0.1 million tax effect.
Third Quarter 2024 Business Segment
Performance and Selected Financial Data
(As reported in business segment data)
Fresh Del Monte Produce Inc.
and Subsidiaries
Business Segment Data
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
September 27, 2024
September 29, 2023
Segment Data:
Net Sales
Gross Profit
Gross Margin
Net Sales
Gross Profit
Gross Margin
Fresh and value-added products
$
623.7
61
%
$
63.3
67
%
10.1
%
$
574.0
57
%
$
36.2
49
%
6.3
%
Banana
345.3
34
%
21.3
23
%
6.2
%
384.7
38
%
31.9
43
%
8.3
%
Other products and services
50.5
5
%
9.2
10
%
18.2
%
44.4
5
%
6.3
8
%
14.2
%
$
1,019.5
100
%
$
93.8
100
%
9.2
%
$
1,003.1
100
%
$
74.4
100
%
7.4
%
Nine months ended
September 27, 2024
September 29, 2023
Net Sales
Gross Profit
Gross Margin
Net Sales
Gross Profit
Gross Margin
Fresh and value-added products
$
1,994.6
61
%
$
197.2
68
%
9.9
%
$
1,895.0
57
%
$
145.3
50
%
7.7
%
Banana
1,119.1
34
%
72.8
25
%
6.5
%
1,258.6
38
%
125.7
44
%
10.0
%
Other products and services
153.3
5
%
19.2
7
%
12.5
%
158.5
5
%
17.2
6
%
10.9
%
$
3,267.0
100
%
$
289.2
100
%
8.9
%
$
3,312.1
100
%
$
288.2
100
%
8.7
%
(1) Non-GAAP financial measure.
Reconciliations and other information required by Regulation G can
be found below under "Non-GAAP Measures."
(2) "FDP net income" as referenced
throughout this release is defined as Net income attributable to
Fresh Del Monte Produce Inc.
Third Quarter 2024 Business Segment Performance
Fresh and Value-Added
Products
Net sales for the third quarter of 2024 were $623.7
million compared with $574.0 million in the prior-year period. The
increase in net sales was primarily a result of higher sales
volume, as well as higher per unit selling prices in the Company's
avocado, pineapple, prepared food, and fresh-cut fruit product
lines due to strong market demand. These increases were partially
offset by lower net sales of vegetables due to lower sales volume
as a result of strategic volume rationalization.
Gross profit for the third quarter of 2024 was $63.3
million compared with $36.2 million in the prior-year period. The
increase in gross profit was primarily driven by higher net sales
and lower per unit production costs of pineapple and fresh-cut
fruit, partially offset by the negative impact of fluctuations in
exchange rates, primarily a stronger Costa Rican colon. Gross
margin increased to 10.1% compared with 6.3% in the prior-year
period.
Gross Profit for the third quarter of 2024 included $0.2 million
of other product-related charges, net, primarily as a result of
$0.6 million of additional logistic and inventory write-offs
incurred as a result of Hurricane Beryl during July 2024, partially
offset by $0.6 million of insurance recoveries related to shipment
disruptions in the Red Sea during the second quarter of 2024. Gross
profit for the third quarter of 2023 included $8.4 million of other
product-related charges due to severe flooding caused by heavy
rainstorms in Greece that impacted a seasonal production
facility.
Banana
Net sales for the third quarter of 2024 were $345.3
million compared with $384.7 million in the prior-year period. The
decrease in net sales was primarily due to lower sales volume in
the Company's North America region, due to competitive market
pressures, and lower sales volume in the Company's Asia region,
caused by decreased supply from the Philippines as a result of
weather-related events. The decrease was partially offset by higher
per unit selling prices in Asia, resulting from lower industry
supply.
Gross profit for the third quarter of 2024 was $21.3
million compared with $31.9 million in the prior-year period. The
decrease in gross profit was principally driven by lower net sales,
higher per unit production costs, and the negative impact of
fluctuations in exchange rates due to a stronger Costa Rican colon,
partially offset by lower per unit ocean freight costs. Gross
margin decreased to 6.2% compared with 8.3% in the prior-year
period.
Gross profit for the third quarter of 2024 included $0.4 million
of other product-related charges, primarily as a result of
additional logistic and inventory write-offs incurred as a result
of Hurricane Beryl during July 2024.
Other Products and
Services
Net sales for the third quarter of 2024 were $50.5
million compared with $44.4 million in the prior-year period. The
increase in net sales was primarily driven by higher per unit
selling prices in the Company's poultry and meats business, as well
as higher net sales in the Company's third-party ocean freight
services business due to higher rates.
Gross profit for the third quarter of 2024 was $9.2
million compared with $6.3 million in the prior-year period. The
increase in gross profit was primarily a result of higher per unit
selling prices and lower per unit production costs in the Company's
poultry and meats business. Gross margin increased to 18.2%
compared with 14.2% in the prior-year period.
Cash Flows
Net cash provided by operating activities for the first nine
months of 2024 was $187.2 million compared with $180.1 million in
the prior-year period. The increase in net cash provided by
operating activities was primarily driven by higher net income
during the first nine months of 2024, as well as proceeds received
from the termination of the Company's interest rate swap. The
increase was partially offset by the impact of working capital
fluctuations, primarily related to inventory.
Long Term Debt
Long-term debt decreased to $269.6 million at the end of the
third quarter of 2024 from $401.0 million at the end of the third
quarter of 2023, a decrease of approximately 33%.
Quarterly Cash Dividend
On October 29, 2024, the Company's Board of Directors declared a
quarterly cash dividend of $0.25 per share, payable on December 6,
2024, to shareholders of record on November 14, 2024.
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Operations
(U.S. dollars in millions,
except share and per share data) - (Unaudited)
Quarter ended
Nine months ended
Statement of Operations:
September 27,
2024
September 29,
2023
September 27,
2024
September 29,
2023
Net sales
$
1,019.5
$
1,003.1
$
3,267.0
$
3,312.1
Cost of products sold
925.1
920.3
2,977.0
3,013.7
Other product-related charges
0.6
8.4
0.8
10.2
Gross profit
93.8
74.4
289.2
288.2
Selling, general and administrative
expenses
47.9
48.1
148.6
142.6
Gain on disposal of property, plant and
equipment, net and subsidiary
8.2
1.6
26.6
35.8
Asset impairment and other charges,
net
0.2
2.5
1.2
9.5
Operating income
53.9
25.4
166.0
171.9
Interest expense, net
4.2
5.4
14.0
19.4
Other (income) expense, net
(0.1
)
7.1
5.2
22.7
Income before income taxes
49.8
12.9
146.8
129.8
Income tax provision
7.9
4.1
25.6
24.9
Net income
$
41.9
$
8.8
$
121.2
$
104.9
Less: Net (loss) income attributable to
redeemable and noncontrolling interests
(0.2
)
0.4
(0.6
)
9.8
Net income attributable to Fresh Del Monte
Produce Inc.
$
42.1
$
8.4
$
121.8
$
95.1
Earnings per share(1):
Basic
$
0.88
$
0.17
$
2.55
$
1.98
Diluted
$
0.88
$
0.17
$
2.54
$
1.97
Dividends declared per ordinary share
$
0.25
$
0.20
$
0.75
$
0.55
Weighted average number of ordinary
shares:
Basic
47,936,254
48,121,978
47,855,020
48,015,874
Diluted
48,023,238
48,261,757
47,967,458
48,209,443
(1) Earnings per share ("EPS") is
calculated based on Net income attributable to Fresh Del Monte
Produce Inc.
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(U.S. dollars in millions) -
(Unaudited)
September 27,
2024
December 29,
2023
Assets
Current assets:
Cash and cash equivalents
$
50.8
$
33.8
Trade accounts receivable, net
390.3
387.0
Other accounts receivable, net
82.0
95.1
Inventories, net
588.7
599.9
Assets held for sale
25.6
4.5
Prepaid expenses and other current
assets
28.9
24.0
Total current assets
1,166.3
1,144.3
Investments in and advances to
unconsolidated companies
36.2
22.2
Property, plant and equipment, net
1,203.2
1,256.4
Operating lease right-of-use assets
194.7
213.8
Goodwill
402.2
401.9
Intangible assets, net
33.2
33.3
Deferred income taxes
52.6
51.5
Other noncurrent assets
68.5
60.7
Total assets
$
3,156.9
$
3,184.1
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable and accrued expenses
$
489.6
$
479.0
Current maturities of debt and finance
leases
1.5
1.4
Current maturities of operating leases
38.8
48.6
Other current liabilities
27.0
11.6
Total current liabilities
556.9
540.6
Long-term debt and finance leases
274.8
406.1
Retirement benefits
83.5
82.3
Deferred income taxes
77.3
72.7
Operating leases, less current
maturities
130.5
142.1
Other noncurrent liabilities
26.3
27.6
Total liabilities
1,149.3
1,271.4
Commitments and contingencies
Redeemable noncontrolling interests
—
—
Shareholders' equity:
Preferred shares
—
—
Ordinary shares
0.5
0.5
Paid-in capital
602.9
597.7
Retained earnings
1,427.0
1,341.4
Accumulated other comprehensive loss
(39.2
)
(43.3
)
Total Fresh Del Monte Produce Inc.
shareholders' equity
1,991.2
1,896.3
Noncontrolling interests
16.4
16.4
Total shareholders' equity
2,007.6
1,912.7
Total liabilities, redeemable
noncontrolling interest and shareholders' equity
$
3,156.9
$
3,184.1
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(U.S. dollars in millions) -
(Unaudited)
Nine months ended
September 27,
2024
September 29,
2023
Operating activities:
Net income
$
121.2
$
104.9
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
59.2
64.9
Amortization of debt issuance costs
0.4
0.4
Asset impairments
0.7
8.1
Share-based compensation expense
4.8
7.6
Change in uncertain tax positions
(1.3
)
0.5
Deferred income taxes
3.4
(5.0
)
Gain on disposal of property, plant and
equipment and subsidiary
(26.6
)
(35.8
)
Other, net
(4.0
)
(0.5
)
Changes in operating assets and
liabilities
Receivables
(0.4
)
(7.1
)
Inventories
12.7
74.7
Prepaid expenses and other current
assets
(6.6
)
(3.4
)
Accounts payable and accrued expenses
26.2
(33.8
)
Other assets and liabilities
(2.5
)
4.6
Net cash provided by operating
activities
187.2
180.1
Investing activities:
Capital expenditures
(34.1
)
(40.7
)
Proceeds from sales of property, plant and
equipment and subsidiary
35.6
115.5
Insurance proceeds received for damage to
property, plant and equipment, net
5.7
—
Investments in and advances to
unconsolidated companies
(6.2
)
(4.4
)
Other investing activities
—
(0.5
)
Net cash provided by investing
activities
1.0
69.9
Financing activities:
Proceeds from debt
315.4
383.2
Payments on debt
(445.8
)
(522.0
)
Purchase of redeemable noncontrolling
interest
—
(5.2
)
Distributions to noncontrolling
interests
—
(17.9
)
Share-based awards settled in cash for
taxes
(0.9
)
(0.8
)
Dividends paid
(35.9
)
(26.4
)
Payment of deferred financing costs
(2.2
)
—
Other financing activities
(2.7
)
(2.1
)
Net cash used in financing
activities
(172.1
)
(191.2
)
Effect of exchange rate changes on
cash
0.9
1.9
Net increase in cash and cash
equivalents
17.0
60.7
Cash and cash equivalents, beginning
33.8
17.2
Cash and cash equivalents, ending
$
50.8
$
77.9
Non-GAAP Measures
The Company's results are determined in accordance with U.S.
generally accepted accounting principles (GAAP). Certain
information presented in this press release reflects adjustments to
GAAP measures that are referred to in this press release as
“non-GAAP measures.” Management believes these non-GAAP measures
provide a more comparable analysis of the underlying operating
performance of the business.
These non-GAAP measures include the following: Adjusted gross
profit, Adjusted gross margin, Adjusted operating income, Adjusted
FDP net income, Adjusted diluted EPS, EBITDA, Adjusted EBITDA,
EBITDA margin, and Adjusted EBITDA margin. Adjusted gross profit,
Adjusted gross margin, Adjusted operating income, Adjusted FDP net
income and Adjusted diluted EPS each reflect adjustments relating
to asset impairment and other charges, net, gain on disposal of
property, plant and equipment, net, and subsidiary and other
product-related charges. EBITDA is defined as net income
attributable to Fresh Del Monte Produce Inc. excluding interest
expense, net, provision for income taxes, depreciation and
amortization, and share-based compensation expense. Adjusted EBITDA
represents EBITDA with additional adjustments for asset impairment
and other (credits) charges, net, gain on disposal of property,
plant and equipment, net and subsidiary, and other product-related
charges. EBITDA margin represents EBITDA as a percentage of net
sales, and Adjusted EBITDA margin represents Adjusted EBITDA as a
percentage of net sales.
These non-GAAP measures provide the Company with an
understanding of the results from the primary operations of its
business. The Company uses these metrics because management
believes they provide more comparable measures to evaluate
period-over-period operating performance since they exclude special
items that are not indicative of the Company's core business or
operations. These measures may be useful to an investor in
evaluating the underlying operating performance of the Company's
business because these measures:
- Are used by investors to measure a company's comparable
operating performance;
- Are financial measurements that are used by lenders and other
parties to evaluate creditworthiness; and
- Are used by the Company's management for various purposes,
including as measures of performance of its operating entities, as
a basis of strategic planning and forecasting, and in certain cases
as a basis for incentive compensation.
Because all companies do not use identical calculations, the
Company's presentation of these non-GAAP financial measures may not
be comparable to similarly titled measures used by other companies.
Reconciliations of non-GAAP financial measures to the most directly
comparable GAAP financial measures are provided in the financial
tables that accompany this release.
Fresh Del Monte Produce Inc.
and Subsidiaries
Non-GAAP
Reconciliation
(U.S. dollars in millions,
except per-share amounts) - (Unaudited)
Quarter ended
September 27,
2024
September 29,
2023
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
As reported
$
93.8
$
53.9
$
42.1
$
0.88
$
74.4
$
25.4
$
8.4
$
0.17
Adjustments:
Other product-related charges (1)
0.6
0.6
0.6
0.01
8.4
8.4
8.4
0.17
Asset impairment and other charges, net
(2)
—
0.2
0.2
—
—
2.5
2.5
0.05
Gain on disposal of property, plant and
equipment, net and subsidiary (3)
—
(8.2
)
(8.2
)
(0.17
)
—
(2.0
)
(2.0
)
(0.04
)
Other adjustments (4)
—
—
—
—
—
—
—
—
Tax effects of all adjustments (5)
—
—
2.3
0.05
—
—
(0.1
)
—
As adjusted
$
94.4
$
46.5
$
37.0
$
0.77
$
82.8
$
34.3
$
17.2
$
0.35
Nine months ended
September 27,
2024
September 29,
2023
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
As reported
$
289.2
$
166.0
$
121.8
$
2.54
$
288.2
$
171.9
$
95.1
$
1.97
Adjustments:
Other product-related charges (1)
0.8
0.8
0.8
0.02
10.2
10.2
10.2
0.21
Asset impairment and other charges, net
(2)
—
1.2
1.2
0.02
—
9.5
9.5
0.20
Gain on disposal of property, plant and
equipment, net and subsidiary (3)
—
(26.6
)
(26.6
)
(0.56
)
—
(38.3
)
(38.3
)
(0.79
)
Other adjustments (4)
—
—
—
—
—
—
7.6
0.16
Tax effects of all adjustments (5)
—
—
6.6
0.14
—
—
5.9
0.12
As adjusted
$
290.0
$
141.4
$
103.8
$
2.16
$
298.4
$
153.3
$
90.0
$
1.87
Fresh Del Monte Produce Inc.
and Subsidiaries
Segment Gross Profit Non-GAAP
Reconciliation
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
September 27,
2024
September 29,
2023
Fresh and value-added
products
Banana
Other products and services
Total
Fresh and value-added
products
Banana
Other products and services
Total
Gross profit (as reported)
$
63.3
$
21.3
$
9.2
$
93.8
$
36.2
$
31.9
$
6.3
$
74.4
Adjustments:
Other product-related charges (1)
0.2
0.4
—
0.6
8.4
—
—
8.4
Adjusted gross profit
$
63.5
$
21.7
$
9.2
$
94.4
$
44.6
$
31.9
$
6.3
$
82.8
Net Sales
$
623.7
$
345.3
$
50.5
$
1,019.5
$
574.0
$
384.7
$
44.4
$
1,003.1
Gross margin (a)
10.1
%
6.2
%
18.2
%
9.2
%
6.3
%
8.3
%
14.2
%
7.4
%
Adjusted gross margin (b)
10.2
%
6.3
%
18.2
%
9.3
%
7.8
%
8.3
%
14.2
%
8.3
%
Nine months ended
September 27,
2024
September 29,
2023
Fresh and value-added
products
Banana
Other products and services
Total
Fresh and value-added
products
Banana
Other products and services
Total
Gross profit (as reported)
$
197.2
$
72.8
$
19.2
$
289.2
$
145.3
$
125.7
$
17.2
$
288.2
Adjustments:
Other product-related (credits) charges
(1)
0.4
0.4
—
0.8
10.1
0.1
—
10.2
Adjusted Gross profit
$
197.6
$
73.2
$
19.2
$
290.0
$
155.4
$
125.8
$
17.2
$
298.4
Net Sales
$
1,994.6
$
1,119.1
$
153.3
$
3,267.0
$
1,895.0
$
1,258.6
$
158.5
$
3,312.1
Gross margin (a)
9.9
%
6.5
%
12.5
%
8.9
%
7.7
%
10.0
%
10.9
%
8.7
%
Adjusted Gross margin (b)
9.9
%
6.5
%
12.5
%
8.9
%
8.2
%
10.0
%
10.9
%
9.0
%
(a) Calculated as Gross profit as a
percentage of net sales.
(b) Calculated as Adjusted Gross profit as
a percentage of net sales.
Fresh Del Monte Produce Inc.
and Subsidiaries
Reconciliation of EBITDA and
Adjusted EBITDA
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
Nine months ended
September 27,
2024
September 29,
2023
September 27,
2024
September 29,
2023
Net income attributable to Fresh Del Monte
Produce Inc.
$
42.1
$
8.4
$
121.8
$
95.1
Interest expense, net
4.2
5.4
14.0
19.4
Income tax provision
7.9
4.1
25.6
24.9
Depreciation & amortization
19.5
21.2
59.2
64.9
Share-based compensation expense
2.0
2.4
4.8
7.6
EBITDA
$
75.7
$
41.5
$
225.4
$
211.9
Adjustments:
Other product-related charges (1)
0.6
8.4
0.8
10.2
Asset impairment and other charges, net
(2)
0.2
2.5
1.2
9.5
Gain on disposal of property, plant and
equipment, net and subsidiary (3)
(8.2
)
(2.0
)
(26.6
)
(38.3
)
Other adjustments (4)
—
—
—
7.6
Adjusted EBITDA
$
68.3
$
50.4
$
200.8
$
200.9
Net sales
$
1,019.5
$
1,003.1
$
3,267.0
$
3,312.1
Net income margin (a)
4.1
%
0.8
%
3.7
%
2.9
%
(a) Calculated as Net income attributable
to Fresh Del Monte Produce Inc. as a percentage of net sales.
EBITDA margin (b)
7.4
%
4.1
%
6.9
%
6.4
%
(b) Calculated as EBITDA as a percentage
of net sales.
Adjusted EBITDA margin (c)
6.7
%
5.0
%
6.1
%
6.1
%
(c) Calculated as Adjusted EBITDA as a
percentage of net sales.
(1)
Other product-related charges for the
quarter ended September 27, 2024, primarily consisted of $1.0
million of additional logistic and inventory write-off expenses
incurred as a result of Hurricane Beryl during July 2024, partially
offset by $0.6 million of insurance recoveries related to shipment
disruptions in the Red Sea during the second quarter of 2024. For
the nine months ended September 27, 2024, other product-related
charges also consisted of $1.2 million of severance charges from
the outsourcing of certain functions within our fresh and
value-added operations, partially offset by $1.7 million of
insurance recoveries, net of expenses, associated with Greece
production facility flooding. Other product-related charges for the
quarter ended September 29, 2023, primarily consisted of an
inventory write-off and clean-up costs of $8.4 million due to
severe flooding caused by heavy rainstorms in Greece that impacted
a seasonal production facility. For the nine months ended September
29, 2023, other product-related charges also included inventory
write-offs of $1.8 million, which were primarily related to the
sale of two distribution centers in Saudi Arabia.
(2)
Asset impairment and other charges, net
for the quarter ended September 27, 2024, primarily consisted of
$0.2 million of property, plant and equipment damage due to heavy
wind and rainstorms in Chile. For the nine months ended September
27, 2024, asset impairment and other charges, net also included
$1.8 million of legal settlement charges and $0.5 million of
reserves related to a potential liability arising from our
third-party logistics operations (refer to the Form 10-Q for the
quarter and nine months ended September 27, 2024, for further
information on this matter), partially offset by $2.0 million of
insurance recoveries associated with fire damage to a warehouse
facility in South America during the fourth quarter of 2023. Asset
impairment and other charges, net for the quarter ended September
29, 2023, primarily consisted of impairment charges related to
low-yielding banana farms in the Philippines of $3.7 million,
property, plant and equipment damage of $0.9 million due to severe
flooding caused by heavy rainstorms in Greece, and impairment of
right-of-use asset in South America of $0.7 million, partially
offset by insurance reimbursement and other credits of $2.8 million
in connection with a cybersecurity incident, which occurred during
early 2023. For the nine months ended September 29, 2023, asset
impairment and other charges, net also included impairment charges
due to low productivity grape vines in South America, idle land in
Central America, and expenses incurred in connection with a
cybersecurity incident which occurred during early 2023. The
cybersecurity incident temporarily impacted certain of the
Company's operational and information technology systems and
resulted in incremental costs primarily related to the engagement
of specialized legal counsel and other incident response
advisors.
(3)
Gain on disposal of property, plant and
equipment, net and subsidiary for the quarter ended September 27,
2024, primarily consisted of a $7.7 million gain from the sale of a
warehouse in Chile and a $0.3 million gain from the sale of an idle
packing facility in Costa Rica. For the nine months ended September
27, 2024, gain on disposal of property, plant and equipment, net
and subsidiary also included a $14.7 million gain from the sale of
two idle facilities in South America and a $3.4 million gain from
the sale of a warehouse in Europe. Gain on disposal of property,
plant and equipment, net and subsidiary for the quarter ended
September 29, 2023, primarily consisted of a gain of $2.4 million
related to the sale of a carrier vessel, partially offset by the
loss of $0.4 million related to disposals of a farm in the
Philippines and a plantation in Costa Rica. For the nine months
ended September 29, 2023, gain on disposal of property, plant and
equipment, net and subsidiary also included a $20.5 million gain on
the sale of two distribution centers and related assets in Saudi
Arabia, a $7.0 million gain on the sale of an idle facility in
North America, a $3.8 million gain on the sale of the Company's
plastics business subsidiary in South America and gains on the
sales of land assets in South and Central America.
(4)
Other adjustments for the nine months
ended September 29, 2023, primarily related to the portions of the
gain on disposal of property, plant and equipment, net and other
product-related charges which were attributable to a minority
interest partner, reflected in net income (loss) attributable to
redeemable and noncontrolling interests.
(5)
Tax effects are calculated in accordance
with ASC 740, Income Taxes, using the same methodology as the GAAP
provision of income taxes.
Conference Call and Webcast Data
Fresh Del Monte will host a conference call and simultaneous
webcast at 11:00 a.m. Eastern Time today to discuss the third
quarter 2024 financial results and to review the Company’s progress
and outlook. The webcast can be accessed on the Company’s Investor
Relations home page at https://investorrelations.freshdelmonte.com.
The call will be available for re-broadcast on the Company’s
website approximately two hours after the conclusion of the call
for a period of one year.
About Fresh Del Monte Produce Inc.
Fresh Del Monte Produce Inc. is one of the world’s leading
vertically integrated producers, marketers, and distributors of
high-quality fresh and fresh-cut fruit and vegetables, as well as a
leading producer and distributor of prepared food in Europe,
Africa, and the Middle East. Fresh Del Monte Produce Inc. markets
its products worldwide under the DEL MONTE® brand (under license
from Del Monte Foods Corporation II Inc.), a symbol of product
innovation, quality, freshness, and reliability for over 135 years.
The company also markets its products under the MANN™ brand and
other related trademarks. Fresh Del Monte Produce Inc. is not
affiliated with certain other Del Monte companies around the world,
including Del Monte Foods, Inc., the U.S. subsidiary of Del Monte
Pacific Limited, Del Monte Canada, or Del Monte Asia Pte. Ltd.
Fresh Del Monte Produce Inc. is the first global marketer of fruits
and vegetables to commit to the “Science Based Targets” initiative.
In 2022, 2023, and 2024 Fresh Del Monte Produce was ranked as one
of "American's Most Trusted Companies" by Newsweek based on an
independent survey rating companies on three different touchpoints,
including customer trust, investor trust, and employee trust. The
company was also named a Humankind 100 Company for two consecutive
years by Humankind Investments, which recognizes companies that
substantially impact areas such as access to food and clean water,
healthcare, and digital services. Fresh Del Monte Produce Inc. is
traded on the NYSE under the symbol FDP.
Forward-looking Information
This press release and the related earnings call contain certain
forward-looking statements regarding the intent, beliefs or current
expectations of the Company. These statements include statements
that are preceded by, followed by or include the words “believes”,
“expects”, “anticipates”, “may” or similar expressions with respect
to various matters. Specifically, this press release and the
earnings call contain forward-looking statements regarding the
Company’s plans and expectations for future performance, including:
the Company’s focus on high-margin, value-added products; our
ability to streamline operations and the impact that may have on
our profitability and future growth; our ability to generate value
for shareholders, including through focusing on its strengths in
pineapple, fresh-cut fruit, avocados and value-added products; our
expectations regarding our ability to implement strategic
alternatives for streamlining our Mann Packing business, and any
impact on our profitability and financial condition; our ongoing
commitment to future growth, operational excellence and meeting
evolving customer and consumer demands; our expectations regarding
our pineapple varieties and related innovations, and our ability to
expand production and meet the ongoing demand; our expectations
regarding customer growth and the expansion and diversification of
our product offerings; our expectations regarding our fresh-cut
facilities; our expectations regarding our avocado and
avocado-related products, as well as our ability to meet the
growing demand from key customers and further drive innovation; our
ability to strengthen our leadership, and the impact that may have
on our business; our ongoing commitment to maximize the full
utilization of our biomass, as well as the intended use and timing
of such biofertilizers and the impact on our sustainability
efforts; our anticipating completion of the sale of certain assets
of Fresh Leaf Farms; the impact of recent and future
weather-related events on our business, and our ability to recover
insurance proceeds, if any, to cover any damage or expenses; our
expectations for the tax rate; our commitment to maintaining a
prudent capital structure and creating long-term value for
shareholders; our expected capital expenditures in 2024; our
expected segment results for the full year; our expected net sales
and gross margin for the fresh and value-added segment; the impact
of any strategic initiative to improve gross margin, including
consolidating facilities, expanding fresh-cut facilities, managing
product and procurement costs and expanding market presence and our
anticipated sales volume regarding our banana segment, any supply
and shipping challenges that we may encounter. It is important to
note that these forward-looking statements are not guarantees of
future performance and involve risks and uncertainties. The
Company’s actual plans and performance may differ materially from
those in the forward-looking statements as a result of various
factors, including (i) ongoing elevated commodity and supply chain
costs, including costs of raw materials, packaging materials,
labor, energy, fuel and transportation, (ii) the Company’s ability
to successfully execute on its strategic growth plans, including
the use of AI, biofertilizers and other technology to effectively
manage costs and pricing, (iii) the outcome and anticipated timing
of strategic alternatives with respect to the Mann Packing
operation, and any impact on our business and results of
operations, (iv) the impact of foreign currency fluctuations,
including the effectiveness of our hedging activities, (v) the
impact of asset impairment or other charges, including those
associated with exit activities, crop or facility damage or
otherwise, (vi) the impact of ongoing conflict in the Middle East
on supply chain logistics and other disruptions in the Company's
supply chain, (vii) trends and other factors affecting consumer
preferences or consumer, including customers’ reception of our new
product offerings and innovation, (viii) factors outside the
Company’s control that impact its and other growers’ crop quality
and yields, such as severe weather conditions, crop disease,
disruptions or issues that impact its production facilities or
complex logistics network, and the availability of sufficient labor
during peak growing and harvesting seasons, (ix) competitive
pressures and the Company’s ability to realize the full benefits of
the inflation driven price increases implemented, (x) the impact of
claims and adjustments proposed by the IRS or other foreign taxing
authorities in connection with our current or future tax audits and
our ability to successfully contest such tax claims and pursue
necessary remedies, (xi) the cost and other implications of changes
in regulations applicable to our business, including potential
legislative or regulatory initiatives in the United States or
elsewhere directed at mitigating the effects of climate change,
(xii) damage to our reputation or brand names or negative publicity
about our products, (xiii) the Company’s ability to successfully
manage the risks associated with international operations, (xiv)
the impact of severe weather conditions and natural disasters, such
as flooding, hurricanes, earthquakes, (xv) the adequacy of
insurance coverage and (xvi) the Company’s ability to close the
sale of Fresh Leaf Farms. In addition, these forward-looking
statements and the information in this press release and the
earnings call are qualified in their entirety by cautionary
statements and risk factor disclosures contained in the Company’s
Securities and Exchange Commission filings, including the Company’s
most recently filed Annual Report on Form 10-K. All forward-looking
statements in this press release are based on information available
to us on the date hereof, and we assume no obligation to update
such statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241031618122/en/
Investors: Christine Cannella Vice
President, Investor Relations 305-520-8433
Investors@freshdelmonte.com Media:
Claudia Pou Vice President, Global Head of Corporate Communications
Communications@freshdelmonte.com
Fresh Del Monte Produce (NYSE:FDP)
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