FDP - Earnings call transcript Q4 2017 | Fresh Del Monte Produce Inc.

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Operator

Good day, everyone and welcome to Fresh Del Monte Produce's Fourth Quarter and Full Year 2017 Conference Call. Today's conference call is being broadcast live over the Internet and 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. President of Please go ahead, Ms. Cannella.

Christine Cannella

fourth Good Jody. conference thank joining year everyone Thank quarter you, full morning, and you and for our call. XXXX

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

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

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

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

Mohammad Abu-Ghazaleh

whereas a we impacted everyone. depressed one States were is We reduced increased and the winter, weather Good including industry. Throughout markets, conduct that contented earnings. global my banana United our years and Christine. environment to with our events faced transportation operating and in you, ability behind I have number XX us. hurricanes, I'm the that of to severe XXXX our in [decrement] There optimal ability costs. challenges intense the experienced in deliver harsh in particularly fruit business rainstorms year major morning, of Thank weather glad most

Middle relationships. distribution wasn’t and Central XXXX our look by then We XX% America sourcing late Fresh sales East. ready-to-eat locations Del on demand Cut in without introduced accomplishments. joint which and products. a the based highlighted North joint announced come was However, XX%. on Pacific. line, in and our with as in stream growth We of fresh grew in by America Hydroponic number and settlement the new agreement in channels The Avocado year we several Monte and business ventures In product We capabilities new these Monte value-added by ventures our opportunities integrated as forging customer in the to our well Vegetables seized June, branded expanded for We and activated XXXX. invested

term. profitability industry the and products an in entered drive marketing made this we while ability a year, in that Mann over our into focused that be for the North in evolving will acquire agreement the demand with us value-added on and and XXXX and vegetable transform fresh supplier long company. pleased for to We grower, acquisition a platform leading our position leverage healthier advance infrastructure reach, month, diversification leadership our to This extend would the rapidly strategy. our further addressing to and our our opportunities and Throughout capabilities global the and have products. of we've I'm company excellent value-added and fruit strength we definitive consumer Earlier Packing, opportunity processor enhance progress our our leverage to from is beginning of in infrastructure that fresh future said America. the to the vegetable

As always, meet call to turn goals. our focused Richard. the like Richard to now I'd and to determinant we're please.

Richard Contreras

Thank you, Mohammad and morning. good

million year. Gross For income we million in of the million per profit earnings was the in and compared net share per prior $X.XX adjustments $X.XX earnings with billion $XXX compared was with diluted with income of was million $X million Net million $XXX Operating the share prior a compared were year year in reported billion with on diluted the comparable $XXX in excluding with sales basis, year XXXX, XXXX. $XXX for compared in $XXX XXXX. XXXX. $XXX compared $X.X

comparable $XX XXXX. of we $X.XX XXXX, line excluding in with $X.XX per gross profit on net $XX in $XXX was and Net million of million was prior year of in with compared of $XX of compared loss compared of income a in adjustments $X quarter year with profit $XXX basis, earnings fourth in sales income XXXX. quarter the fourth gross reported the million million share with for the a For with the million Operating diluted was year. and net last loss million the quarter compared were prior

was our net America, $XX to prices selling and the higher, was was the per Europe X% fresh was than increased higher recorded. X% a unfavorable of volume increased category, $XXX business in $X regions. X% or net lower increased lower $XX.XX East In volume and $XX X% decreased distribution during and worldwide segments sales sales increase higher. higher with unit that net higher the prior were year increase drove by demand. of compared unit due Overall were X% produce higher was segment, year. by lower I'll our million weather was unit of $XXX was Volume quarter Pricing food increased higher the other million quarter only and business to million sales unit and quarter, prior fourth $XXX pricing banana In Volume cost XX%. $XX X% million and compared decreased quarter XXXX. X% higher. North X% prior our million for Volume gross million to sales cost in In was by year. prior Asia, X% cost higher in category, $X fourth $XXX In X% and were X% net or profit cost million partially sales X% compared The X% in our increased higher. the Avocado fourth XXXX. net $XX higher with to quarter $XX category, In higher volume Asia. year. box. volume, million sales of Total costs increase consumer higher was pricing was compared to the prices in segment, our Worldwide at East compared our with driven cut year. Overall million XX% the result $X pineapple year. to XX%. driven our selling fourth driven X% increased quarter. volume sales by in million cost fresh in turn was and to million $XXX in lower compared $X profit with The $XX Asia. with gold to in gross $X sales offset pricing higher compared result sales The foods and last due and compared the production. with due gross non-tropical category, was in of conditions prior unit the X% The was were million all lower prepared to to segment million unit primarily decrease primarily and lower. prior was line. prior selling gross costs due of the year to sales year fourth The the million compared net million I the was million in with Pricing the $XX Middle the pineapple industrial quarter our banana Now our of million In million will $XX Unit in in compared product net sales increased give profit million $XX fourth profit million the volume business prices Middle was the decrease in million with statistics our XXXX. was $XXX In and as increased $XXX

per for and charters lower. production XX% represented costs increased cost total increased costs bunker XX% XX% represented and own worldwide and cost As banana cost Carton cost fuel freight the operating ton our cost, was bunker X% represented the sales. our of our X% fuel, cost from total total cost to and quarter, which during procurement of X% includes and quarter, for which and fleet fourth sales, our X% of total increased ocean includes growers, third-party fruit of

ocean total sales. the X% For freight of quarter, our of cost represented

level, expense profit was $X fourth quarter sales foreign the quarter for $X favorable the net million of also other and currency to at was the the $X fourth currency, the an year. compared For of the this million. the decrease at losses of for net gross attributable foreign level expense exchange foreign XXXX, with favorable by impact million Other by quarter in impact $X the fewer was million expense

$XXX plan, XXX,XXX the shares million. quarter, $XX,XXX,XXX. as was quarter, approximately far At our repurchase for our debt stock repurchased As fourth the during approximately total end we the of

million to income a in year. benefit The million For discrete was $XX was benefits quarter, primarily during the $X tax taxes, with in due expense a tax increase the prior income XXXX. compared

U.S. this increase non-cash a of quarter recorded million of in result new a one-time tax reform expense legislation. also We tax income the as $X

it $XXX As relates capital we spent million in spending, to XXXX.

We in expect $XXX spend approximately to XXXX. million

Mann I'd close, financial give like on some Packing. to information I Before

we've to As Mohammad Packing. mentioned, we recently a agreement acquire definitive sign announced Mann

sales turn $XXX concludes $XXX.X over million the in close company. now net and transaction for expect financial the We review. our We pay the few to will approximately Packing This in of call million Q&A. can for weeks. Mann had XXXX a approximately we

Operator

[Operator instructions] Jonathan of with Your Edge. line comes from Feeney Consumer the first question

open. is line Your

Jonathan Feeney

Good morning. much. Thanks very

Mohammad Abu-Ghazaleh

Jonathan. morning, Good

Jonathan Feeney

to but and is, made, banana which just one to profits head a your bottom XXXX have Mohammad, you're of don't tough ranges have your think average your -- you that say efficiency whether be some a I Do that you seemed the remarks it lot of that in like know you given or business. a of your what of you've profitability the whatever sit? was business and the planting, the is purposes, of business, piece give Would guidance, higher the for your Banana something do where it's assets, buying planning certainly what for forward? you XXXX some of in thinking business from year bottom volatile investments that you're going logistics way. most all idea saying it

Mohammad Abu-Ghazaleh

Yeah, you're I right. think

my I I times. that think think and we given was we everything the forward, God that better towards somewhere, bottom doesn’t as be catastrophe willing should have as that usual, if but opinion any in is XXXX go everything heading

Jonathan Feeney

this diversify Mann global to to Now Could the it be how your clearly of I business business. about about and of any the initiative be fruits can you've how strikes now Is make profitability made a other an fresh volatility quarter Packing is forma in cut basis a and you guess how -- on of business volatile relative and your business. comments -- appreciated? profitable that that that characterize pretty you will amount pro that is tropical would business about banana and profitability me

Mohammad Abu-Ghazaleh

business. It's different a completely

our First of vegetables a fresh been that we in we're all, We vegetable into do DCs. way. have in big getting business vegetable; before haven't cut

However, we kind in full-fledged of vegetables. operation never had a

whole fruits, operation fruit the value cut let's XX% a which Mann XX% whole, Now is kind say, Like the value-added less of added, in same. commodity, or of kind and more fresh is vegetables. about

that ratios which ratios XX% way, growing and introducing their They’re a much putting, into that's of that the they’re into are our very market. their the they business value-added is better in they that aggressive is further. really products products fantastic growing However, than value-added is where are

and in -- is Mann I activity the -- to of that West are going mainly and they don't and almost much very pleased the us frontiers and new give in the Southeast kind too because U.S. the in believe the acquisition leveraging our completely infrastructure. of very I'm very, So, excited into however, about Coast partly consideration Southwest Take none it's we have Northeast, but

the a pleased we this new improve lot across give of products. as wasn't of us to I'm businesses new going distribution leveraging really U.S. forward. well lot and Mann that's infrastructure very and of our that existing about marketing where as So opportunities total

Jonathan Feeney

out give think And Thanks. I little one this Richard, tax tax does by I going it for forward? movements is you last Monte’s surprised tax rate? How reform Can for a am just does affect for years should model the this years? Fresh how What question, Del we year. -- affect

Richard Contreras

but moves, always So, our obviously rate. modelled we've as you XX% know, rate Jonathan tax effective

we the tax modelling With were new law, XX%.

XXX% up creeps we how that's think we about is it now modelling. we're At back acquired However, least to XX%. that which U.S. Mann,

Jonathan Feeney

much. Thank to you Talk you very soon.

Operator

Asset line next comes Mitch the Management. Your from question Castello of of Pinheiro

is line Your open.

Mitch Pinheiro

everybody. Hi

Mohammad Abu-Ghazaleh

Mitch. Hi

Mitch Pinheiro

one, that compare in you taking say, mean hear you Thanks acquisition, to on the I How said you also Is better. for the questions. ratios -- Two your was the Mann were things, sales margins that the was business? that profit did profitability? or existing did did

Mohammad Abu-Ghazaleh

say product. vegetables like value-added but bulk When and No, a sales I it form. whole between a all ratios, meant when whole like means like of I kinds I products a in cabbage, say the cauliflower, product,

Now everything the doing. is added else value they're that

two XX:XX businesses. it's these between So,

our on products. the is their value-added margins However, profitability add margins our than on value better

Mitch Pinheiro

business, are margins? margins about, as so how to a current commodity including the And the of your the similar more piece whole,

Mohammad Abu-Ghazaleh

and California availability mainly the on it's depending usually is products. Commodity

and So, can volatile But and create have I one shortage prices other good not all, year the or weather, they all which instance abundance. for think other as products. as spike have bananas the year it's in they

So, more I vegetable is think steady like, but I more of kind say controllable, business. the wouldn’t segment

Mitch Pinheiro

There normal but of sort the Nina Yeah. my California that sourcing followed industry. of normal. there droughts, I issues, following having Nino, either rains, know I the never is of globally. the for nothing year one thing that advantages and same in hasn't been in time, business some of is all thing La sort It’s a definitely the see diversification El years vegetable

Mohammad Abu-Ghazaleh

have in from part And think markets. well. vegetables is are the business vegetable plus, they the that spot predictable sourcing more I as other contract. is part into of sense the And like But they Mexico

So, California they Mexico. are and hedging between

leverage value is also would and which into Now our U.S. producer in us. will the in important presence future some very Guatemala, vegetable as that going a we forward the also to well add

products. will become as bulk forward business products This focus the increase. increase focus. smaller value-added the business our our but portion is of really is going value-added Mitch stay, So the will The think it I our and total

bigger, So, forward. the be as but will the smaller commodity the be total let's move say or will vegetable segment pie we whole

Mitch Pinheiro

be sort then hasn't over the will Okay. steps you -- I more but what the the thing, as three going closed, take, two tangible acquisition once And know that see, deal of we do what but value-add, of immediately to I actions next should one that I you're or focus out integrate XX your months? to see the understand what to expect the on How closes? to you next are kind going XX distribution? planning

Mohammad Abu-Ghazaleh

is at customers excellent items Del want not that two, to most or not number model, Number one. that certain thing the themselves. add want don't items label on very by Well they to are time. Monte have We on handling -- that model we introducing that that they disrupt are important Mann most a to this

business. say additional, So be an that let's would

the been The second are that thing, into put we haven't Northeast. to like; they areas going operating that

future. that third-party a through but operations, will have change they course, Of in the

a that development is facility We right under now. have Delaware

also in have processing Southeast processing the their going Mann areas are now. facilities -- is products, own that include in will to we our right we also products the We have that

we infrastructure and So, sales. going to several the are in of the distribution expand leverage parts country our and

Mitch Pinheiro

so Okay. of from banana demand How over or the here view? months do Thank and on the and the a you. market in bananas. next pricing the six then you last And near supply point term question see

Mohammad Abu-Ghazaleh

supply As events. we last new into supply weather then speak and shortage have late today, the year because the we since demand year is exceeding variable

and outsourcing We have in both destination. at at

we're improved. look future, side can’t a we I and a So in than has do on our doesn't bad of the term, in be And to capabilities as to tell future case own long markets streamline is our speak. too what trying better the near prices lot I but the near where future, But as created improved the business it used the past. to that within in way see pressure supply that has the the

can the steadiness banana give will us we which more that, hopefully kind So of in achieve segment.

Mitch Pinheiro

Thank you, you, everybody. Thank Okay. Mohammad.

Mohammad Abu-Ghazaleh

Thank you.

Operator

of [Operator of question Edge. from next comes Feeney Instruction] line Jonathan Consumer the Your

open. is line Your

Jonathan Feeney

follow-up. divested vegetables, at Thanks taking Monte just had your a Del packed question business. I for canned very much friend today Conagra one is, vegetables the

been in transaction proven I interested thank that to in did be it America. if Can or you the Monte the the North one are and case, Why -- things now that, within those past are there Does JV it of business? Del Fresh other your continue on you? come that you've properties globally, would've maybe business. trademarks market that's that scope that think growing observations in to with your didn't fit comment Monte Del about

Mohammad Abu-Ghazaleh

think I food we're that packaged with I don't opinion in interested items. our growing full it's anything and looking more into healthy in fresh, be would -- more not

comment unless Richard -- have that? on that do So, on you

Richard Contreras

our That I primarily canned was business No. would agree. not target. a and that's

Jonathan Feeney

But Middle you and Africa, in Europe do have some canned East businesses and right.

Mohammad Abu-Ghazaleh

that business XXXX We in Jonathan. bought

Jonathan Feeney

No. but the I what's timeline? know,

Mohammad Abu-Ghazaleh

But that non-fresh, the you to some venture in which now we given -- joint and certain our given use And the even way food with America. use the competitor bought leverage. gave do has us leverage Del has leverage us North fresh Pacific, for with our with Monte reason with tremendous one agreement because see it fresh, also some our our us

of not really don't think wishes? looking or you option other first of prepared, So the that Del parts kind or I the Thank units Monte canned much. our at the in very world, fruit is

Jonathan Feeney

much. very you Thank

Mohammad Abu-Ghazaleh

Thank you.

Operator

further Abu-Ghazaleh. over I'll are turn this the Mohammad in to questions time. call There at back no queue Mr.

Mohammad Abu-Ghazaleh

much, better we good give our Bye. you a Have call. will hopefully Thank Thank everybody day. and news next you, on very you.

Operator

call. This concludes today's conference

You may now disconnect.

Fresh Del Monte Produce (FDP) 20 Feb 182017 Q4 Earnings call transcript