FDP - Earnings call transcript Q3 2017 | Fresh Del Monte Produce Inc.

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Operator

Good day everyone and welcome to Fresh Del Monte Produce's Third Quarter 2017 Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions].

Christine introductions, the like Investor Assistant Fresh Monte and call turn Relations remarks Del to over Vice Produce, opening I to would today's with For Cannella. Assistant of Please go ahead, Ms. Cannella.

Christine Cannella

third Good Christina. thank joining call. everyone, Thank quarter you, conference morning XXXX you and for our

with As Christina Relations Cannella, Monte Produce. President of Assistant mentioned, Del Vice I'm Investor Christine Fresh

I had Vice Joining Officer; and Executive chance me and President Chief the that Chairman and Chief press in you Business today's this was Abu-Ghazaleh, discussion hope Financial review to issued Officer. Contreras, a morning are Senior that Wire. Mohammad release Richard via earlier

of forward-looking will within remind being to to we for the your visit information You measures. replay includes press live and in recent our website as also the copy most forward-looking filings federal you including in register two we mention on their of at release with issued approximately the may we note speaking Harbor may SEC. is completion freshdelmonte.com in to ask today the for This non-GAAP a measures we hours webcast to much today, questions release Company's Please release call. include website distribution. of of financial be like for to will our GAAP you well Company's available review as the provisions response future that the this answers today's call that I'd reconciliations We any of after corresponding be give the statements, conference statements that securities Safe laws. the press included and information this the morning

today's call Now, I’d like over to turn Mohammad. to

Mohammad Abu-Ghazaleh

morning good and Christine you, everyone. Thank

quarter. challenges to number of we face that continue during show results Our the the

over product in number in of growth other avocado our developments cut new and our our supported higher our past regional saw there driven Fresh sales higher diversification existing lines, demand three strategy value national were by added near kept business our this from double-digit as and The Produce by was increase well on the continuing segment. years track. both We segment However with accounts. important fresh sales as that a positive customers

was of customers be and quarter about growing consumers. Fresh augmented our strong along excited our and as these well in where but sales in Fresh our and product I'm food global a trending introduced recently with rapidly in planted prepared program, line meal how diversified Monte are the Dairy ongoing by third continue Our increased quality Del also expansion parts received new by grab-and-go products leading our I'm to they company. are ventures vision integral to channels

logistics facing to and challenged growing my Richard? more worst were the firmly turn demand future In years, and the certainly, Thailand conditions and creating value. of time, Although market great have spite strengthening the ongoing in impacted results the in second from prices we several pleased over XX-plus-years oversupply off. detail. number a concentrate one oversupply selling our produce our to headwinds, that that with in financial focused during committed of and hurricanes business one the several experienced Indonesia so call our multiple disrupted our to the this end quarter been discuss XXXX the I resulted headwinds I of by of impacted also like model business, worst Richard that about would long-term targets. optimistic At The quarter half financial sales. we're shareholder to the of progress, business. in pineapple the were The industry banana in We significantly was the missing in of was

Richard Contreras

Thank you, Mohammad.

with in with earnings XXXX. of we Net earnings of prior of $X.XX reported basis, adjustments per to $XXX of net in period. million compared $X.XX prior million Operating to year. comparable diluted XXXX, of million the reported Gross diluted $XX For XXXX. and compared share income profit increased excluding million net decreased million income the quarter year year with to the with in sales $XX to compared a we of $XXX compared compared last million $XX income million third share quarter decreased third $XX $XX in $XXX in the on per million

East, compared higher period. unit unit million was lower was and the $XXX higher and selling sales the by decreased and quarter the to This product profit million East, of sales decreased worldwide transportation Volume North the In sales million higher America higher Asia America. $XX partially $XX due $XXX sales prices per segments, line. worldwide America, million our Europe, business increased category, Now Gross in was to prices than The were Total XX% selling million X% with and unit with East pineapple during pricing sales recently the and net business The profit compared X%, in net prior with North Avocado was decreased higher. of prices or in Middle offset the million volume our lower net our year X% $XX result increased in result in costs primarily sales produce introduced prior third our increased pineapple cost due to year. higher. XXXX cost net $XX unit XX% and turning In of $XX.XX. was demand. Volume prior in lower was line. to the to result other in cost Overall million Apple $X.XX XX% primarily resulting profit higher, compared was volume volume. year. our and prices banana partially $XX $XX selling in to compared citrus in with sales The in was million. quarter selling In Volume our last increased prior gold demand. compared by of or primarily was sales year, lower higher, XX% net fresh compared $XX million volume million to cost compared industrial $XX $XX and $XXX cut industry Overall offset with fresh a for to to pricing the in net XXXX. with the year, third product our $XX last in unit pricing the X%, In quarter year; by was higher. primarily and our sales offset consumer North was third X% lower prepared segment, higher $XX in increase Asia. and was million partially decrease volume unit to to the $XXX along to quarter increased sales sales $X volume our cost $X higher to net was third in was of lines pricing prior foods Middle quarter, compared gross million of million increased was the in in Europe, volume to line X% in and our to $X Middle supply $XXX banana non-tropical pricing selling increased million year. prices million selling primarily the prices and segment, year. our XX% sales In million net decrease unit year, XX%, sales due box quarter attributable growing were category with in gross million In the million in banana third in XX% decreased category business due segment the berry in XX% lower the prior $XX product decreased of higher decreased the sales was sales the $X and last million category, million X%, million

and cost and line in the fuel ocean with prior X% sales of which and own total which procurement operating cost in quarter, freight of as Now includes of growers in was increased of of charters year increased fleet bunker fruit quarter during of total line sales. represented ton total and our cost and cost sales. represented third-party X% the Bunker represented X% prior banana our the XX% period. our per for XX% cost cost fuel cost third and includes total from period cost with year was Carton our the cost production

was exchange cost was For expense X% $X total of losses. the the quarter impact of unfavorable foreign quarter $XXX,XXX. and to profit for The the million the expense foreign by of currency by an gross Other principally the unfavorable sales our attributable quarter impact at sales. million third at freight ocean represented was for level, the net $X level

prior our year. can nine have relates review. quarter, the of approximately Income million capital XXX,XXX Q&A. we million in $XXX the was And As $XXX end the $XX.X our the to far $XXX quarter for of during it capital compared spending, full-year was million. to financial first over the At This debt as shares million months expect spent income now million for we $X with as approximately tax spend in our approximately expenditures the the on expense tax call of repurchase XXXX, XXXX. stock we repurchased quarter total expense $X in for concludes turn We million. plan, the

Operator

Instructions]. [Operator

from Your first Jonathan Feeney question comes Consumer Research. Edge from

open. is line Your

Jonathan Feeney

far better, the ups surprised it’s position of that to conditions -- six and even To don't long lot of on produce ask, surprising it's portion -- magnitude caught the the think business months, What’s of you were that the sourcing question. fruit much by profits. side a on this costs next by excess the banana have it over you get you three wanted not should to the -- if bananas the little a that as was cost downs impact rapidly seems on over my just and in don’t of extent here business, first don't little what in like next the I to that supply. months six how I sourcing better internally, bit were obviously us by surprised you as three the get a falling your

Mohammad Abu-Ghazaleh

with follows. Jonathan, bananas the as the situation is

there let's During a conditions say any in that banana somewhere the last climatic not supply been has single of the would occurrence reduced XX have months world.

part if was which wiped typhoon a that in a also don't very a two banana large volume time you Simultaneously, that later saw high affected hit remember very XXXX prices you XXXX typhoon we if I hurricane, Philippines Philippines at that month remember time. clear. that in that know bananas before, at the had quite of a plantations situation a the big result We the of or eastern created two really out of the Chinese and was that particular a and but same -- much market in where the took a and or If market had of had there out for we in had recall East we very the especially huge so opportunity. took in shortage as important production well. At two event so the every are in created the didn't another very made that that's wasn't volume, the that off for that That, fruit Asian time, what Europe and Ecuador big at at And have that that. any number time, that's good what period. of also market much This we optimum happened. and year in country producing created occurrences

Now forward this to separate we measures taking are extent. a going to mitigate

much of where know half normal better but consumption down the It's However facts the the have would enjoyed better. second with the much that so situation honest so in behaving that's which is now was usually forward going of to shortage we you that enjoyed half to year demand was the than the is good then year be knows more the very and if industry in first exposure doesn’t facts supply can demand we the go very unfortunately and to are the and and not much supply consumption we markets, of the a mitigate be tightly down. functioning the banana a period the second of there everybody we and oversupply half these half future of because to reduce is need regulate year. during markets we -- banana year we are do are which And the that taking to you, measures going the industry that's where more situation going partly usually during the the second supplies our up what the half to are good that second usually the of dilemma

we're our reduce working influence cannot prices what working even we Secondly on, where how Unfortunately is can now. the we cost the are we because the force, our influence market that's which market we further? and and can

what of time, been how we I'm a dynamics I'm kind these long business and should during I last I have during too, know but very this the the few upset we months. business that understand of So months have not all happened should and react I the of how much this for we last overcome faced few in hurdle

believe So I'm and look positively I I will that down not we the future overcome. more to

Jonathan Feeney

be quarters versus that had say things market, were or less impact How more may help you year last out, way, year buying a not profits you months would like the more you more you this can little and you have in three, can you -- spot versus you in so and six say this contracted sourcing last that it of control. part would bit caught more next supply contracted for you cheaply, you more extending can't would sourcing I say maybe ask time purchasing bananas couple were agreements had what you

Mohammad Abu-Ghazaleh

take of they in fact, in by some take the volumes, volume this volume, customers volume. As the we that of so in cannot summer are that older number instead means and every have everywhere X that nothing reduces even production they that U.S. that places take. world, has markets not that market the contract mean the amount so the year, we this changed U.S. same number in this are that took like same U.S all full is of the are place the the taking Because contracted production last contracts, steam obliged their the I somewhere have significant it to changed. boxes could still week during this, much Jonathan, a nothing same take volumes out there where year, they was that was a unfortunately volumes and the even and of only if reduce in which the period and was were the cannot matter same thing

take to a market somewhere bumping like put Mediterranean is it the So in we which market have else is the this route usually in market. and which

the fruit loss. a depends market So and could slight is could loss there be on it be loss, sold are big the

So are changed the other of from the consumption dynamics us side we volumes, contracts on far in the terms in changed and of I what's has supply mean market itself the hand. terms as one concerned nothing is as on

Jonathan Feeney

fresh capital about up what five business Could of capital level you dramatically last sort went I you and past going of like is have I When you the -- expenditure lot, years five this I of investment anyway produce forward? business has banana a remind infrastructure much and leverage a your of for way has maintenance the volatile in lot and two those the volatility me that I this other lot is in of fixed through a and expenditure investments business. a the for a something could expenditure the see Richard growth capital more increased years your related how it the operating spent morning could increased in investment your make talked spending going for of have Richard your -- Has comments been to have stepped -- this and through in questions. now maybe is that

Richard Contreras

million steady. is pretty to the $XX $XX about maintenance That Jonathan, that's been million

Jonathan Feeney

Okay.

Richard Contreras

call to lot a in the of also years the and is. on. products growth you future diversified wherever been the far growing Mohammad But unit the growing right, last much and our rate. mean and could on what the has banana on can East the are a so Still cost cost volatility obviously I we lower the like which we Middle non-banana try as few serve or markets has so bananas as business of and mentioned other for at decrease clearly spending we it fresh target growing of is but all lot been cut faster those a

Jonathan Feeney

back on target? have five-year that's you that capital kind say growth still you of what would you pay And expenditure that

Richard Contreras

target. what Operator [Operator we That's Instructions].

Pinheiro question Management. comes Mitch from next Castello Your from Asset

open. Your line is

Mitch Pinheiro

-- so more of but maybe banana anticipate when comment much if apologize visibility you talked visibility a can you balance? have? regarding do And you've and normal demand -- supply and any around supply, does Hey, the bananas what can then the this about I how we

Mohammad Abu-Ghazaleh

in much need know volume all We we variables to business, markets. be the be we never how can we that know say are in the you we each never month with can Well, place know and can we in I these to kind honest are -- our we banana and year site available. mean producing these or of of a plan you, exactly what balance have

the is and because of increase the in problem the is much our competition the that and but that's market are we of change their kind problem our We the U.S. However, is what dictate for supplies we is logical the to both there supply have when market. disruption trying more the can supply. kind will to is a prices fruit that's illogical the less we cannot actually do have. tried cannot half in a the too abundance the in markets more bananas, in target And look more to for the second supply or disruption let's fierce half we any that’s And unfortunately short mean, there is good markets expanding. regulate whether we say, mission. decide of I we more, market. that's clients what are there are supplies for, during competition is and price be usually that's our first And of in less supplies that that when during way banana with The what where

concerned on basis. the far spot is as sold As of Europe fruit more is

I between Asia. return, doesn't is situation happen, very today, during that because We the us and that we Unfortunately if of been what a because enjoyed with pricing banana let's returns has say on price good. year. the case basis have this better spot say throughout high situation like years the Unfortunately in this into in $XX mean fixed I a the on same Asia, companies have it $XX prices or give than thing June or the fixed the the would season. customers selling doesn't to this So for mean we or Europe are while winter been you practice high the in the $XX, annual for let’s contracts much we we would a winter markets have because so enjoying XX the much not less the fixing much upside today during with have could higher above are January last that be $XX, basis. during the contract a up gone which the that

So dynamics are mentioned. I these the

Mitch Pinheiro

And to -- does your Okay, then bananas thank the own that so or did continuing you. next couple months year. increase how is production of percentage in from that into and look for does your self next

Mohammad Abu-Ghazaleh

Our it's and compared had Central to Guatemala. mean our better anticipate. necessarily we Panama own very a less third-party I -- us. of years, moving in we as advantageous supplies in Rica, supplies stable but it’s speak. close is that's mean -- We in not more America when is towards we it's price Definitely, or more in are situation to better Costa And I production

now that will and be a within third-party are start a long-term. from in as strategy that farms we ticking of the will some here which That's to which reduction been making. the Panama now We it's eliminate into moves we're new -- in public supplies will favorable up kind the of us year, are looking and -- from and that year-and-a-half

Mitch Pinheiro

where you're effect JV Okay. Update little are any bit your from can And and the talk you Del and Pacific? you quarter? what with in doing there's us then a if Monte about

Mohammad Abu-Ghazaleh

the where on it’s fronts. side materializing our agreed have will versa. cooperating the side, by and All actually next several started We to supply in this areas year, in we end from hopefully vice on is side their pipeline, already of be

back has been satisfactory this think as of medium relationship our I So matter a will term excellent, pay and in quite and long-term the future. and fact

Mitch Pinheiro

into new foray does that your strawberries and making inroads blueberries into cetera, of how how stand categories then And et today?

Mohammad Abu-Ghazaleh

think position good I in very that. we're on

kind We are but into doing are play taking kind we big step of not ourselves going it step. -- to by of plunge we’re

Chile, have U.S. in bought already already with the we packing farms relationship we Peruvian have producers. with established in We we have a the and plant, ourselves bought grower

we've an are up we business the building this in that I’m the like the important been step-by-step and just avocado player positive market come. in very years become So to business, will we

Operator

are Abu-Ghazaleh. time. the there Mr. to back at call no turn And I further this questions over

Mohammad Abu-Ghazaleh

call. very everyone look much, and thank I like Christine. our with forward you good today day. speak for having join Thank time on next you to to would the a to us Have

Operator

conference This call. today's concludes

You may now disconnect.

Fresh Del Monte Produce (FDP) 31 Oct 172017 Q3 Earnings call transcript