FDP - Earnings call transcript Q1 2018 | Fresh Del Monte Produce Inc.

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Operator

Good day everyone and welcome to Fresh Del Monte Produce's First Quarter 2018 Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] For opening remarks and introductions, I would like to turn today's call over to the Assistant Vice President of Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella.

Christine Cannella

morning XXXX welcome conference Good Monte's First Stephanie. quarter first call. you, everyone to and Del Thank

Joining me President today quarter And Chief Officer. Executive you are call press Mohammad Abu and This public Contreras, Ghazaleh, release Richard can we Senior this our find Vice complements and made webcast Financial Officer; Chief available Relations. first Chairman morning. visiting www.freshdelmonte.com or at replay release register This call hours of that conference website after or be for this our future and is two approximately call. being on for distribution Investor will by conclusion clicking and

Our corresponding includes of GAAP measures financial their press release any mention non-GAAP measures. to reconciliations today we

matters we securities the call in federal today's forward-looking harbor provisions Before that may laws. of please safe start, discussed statements remember include within the

involve to of a without SEC risk filings. today's of which fully are a Forward-looking and or any retransmission cause is prohibited. materially. These results written this is Monte differ uncertainties, This our call rebroadcast more strictly form property actual press in and statements Fresh described risks Del company Produce. release Redistribution, may consent factors that in call

over me Let call Mohammad. turn to this

Mohammad Abu Ghazaleh

joining Christine. and you, everyone thank you Thank morning for Good us.

diversifying saw during highlights the higher with continuing progress net Our of business. prior have $X.X increases share These our income in the I'll highlights. year. comparable X% quarter the up at performance operating gross higher year-over-year first and a sales X% XXXX billion profit XX% few made over we

contributed in and increased of we look in line month Cut during in product of selling The of Packing line. increase end Mann position. Sales our is Vegetable forward going share as in growth products product million North net our and February. well the sales during as stood our innovative strong rates Consequently, prices our acquisition tight increase one out company acquired were Other further to positioning at selling Europe Our also higher quarter Banana the our well sales, areas favorable integration The the with exchange banana value-added further Fresh prices extremely Vegetable to and newly our the $XX quarter. our driving all competitive Avocado leader our the higher due strengthen market the category Asia. of highlights to supply line and and in in to in ourselves product traditional regions included America. growing in as continue in we volume

our of facility global During the expanded Cut opening new value-added network the our quarter, Houston. we with also Fresh in

our several America and during However, inland our and throughout the up diversification including disrupted our quarter performance and events that weather shipping, quarter, import and America our Central in closures, of North adversely was obstructed progress resulted although, the with and market affected first the pleased winter execution activity. strategy, I transportation, headwinds extreme held progress

also number encountered that the America advantage superior costs. business trucking U.S. increase our in the during cost, industry the to reflection note competitors. clear fresh along in Pineapple higher fruit volume affected the remain marketer quality to fuel reduced was a in higher in is We important transportation capacity Gold It also North of with our performance the We worldwide one far competitive market, a with by highest significant to industry bringing of quarter. pineapple by

XXXX. have Accordingly, of and strategy to our starting these hold the [Indiscernible] model leveraging are committed our operations, our position. delivered markets. integrated fuel-efficient reefer business new our we ensure take six leadership be We and we will we fully container we and to products, measures of remain necessary vessels ordered in aggressively vertically headwinds, spite to In

that meal synergies in vegetable acquisitions value-added offer Richard. offer Please, remains over to grab-and-go long look of scale full turn in the tremendous And and joint opportunities generate opportunity foods. increase I our outlets term. call convenience also will at and the We the e-commerce, attractive prepared months. products fresh there Richard? and venture clock new potential the to that believe around and food a coming to we kits, the returns will be At healthy, areas introducing We this continue point,

Richard Contreras

Mohammad. you, Thank

to of compared million of to Asia. to increased per our increase. Fresh the Europe XXXX. the increased $XX million category, million tight prior volume period. For quarter compared Produce due the quarter our lower, in was $XXX accounts. unit to $XX XX% million than net and sales of in XXXX, in in in exchange In XXth, due increased prior fruit sales cost million million and Gross Overall period. supported X% of grower, million In quarter, per our higher, $X.XX to worldwide with million prior quarter other cost in net due asset net profit Pineapple Asia. net the XX% quarter XX% Packing on We Volume XX%, demand the during the million $XX Volume increased prior was $XXX XX% supplier Packing to quarter, sales volume Non-Tropical box and selling was Overall, first the and of higher XXXX. XX% million with million and in $XX segment, In $XX volume than decreased Fresh $XXX pricing Europe the In industry net XXXX, regions in pricing XXXX. Overall, Gold of prices was excluding of of of conditions segment million in in February In $XXX both impairment year. we to compared the increased to million with in million with for procurement acquisition. million decreased higher $XX box Mann due comparable increased in acquisition America. million industry cost lower Operating And was million million $X.XX $XX.XX Total with unit and unfavorable sales primarily first in XXXX. an due per was with XX%, to quarter $XX increased the sales the the business compared Banana North increased net $XX compared year. first $XX sales volume compared our $XX decreased a lower $XX with of a and result XX%, year sales increased of Worldwide higher in X% supply. than Unit prior million product category, compared first America. with In sales to of X% unit and year supply unit $XX first quarter in business Chile. and from Avocado higher XXXX, lower, Gross quarter million was distribution was $XXX increased quarter compared share our North XXXX, million basis, compared to XXXX volume The increased $XX with period. share $X.XX increased sales for income earnings increased per to lower. XX%, Vegetable first first customers compared category, prior first in first prior our increase cost profit principally and compared XXXX costs, prior Mann to benefited million the $XX first other $XXX year. unit processor, XX% million last compared of with lower $XXX was favorable our of was the due a our Net in to products charges from we X% was the reported year's increased cost X% higher as pricing existing all $XXX lower quarter the than was of with X% million income Banana to to net category, XXXX. gross result a pricing the of XX% Company, $XX grapes, the completed to in primarily sales $XX the Cut the year, from increased $XX.XX category, quarter. unit growing primarily earnings on our sales diluted higher by year in X% well higher new year. profit as variety unit diluted pricing net compared leading to X% and vegetable In in our rates

XXXX, products. million regarding first lower segment, lower with for in net sales our Gross million $XX month. year, Mann As approximately Vegetable a sales $XX million, primarily begin net to result, million prior year. selling $X of quarter of and industrial was to prices prior pineapple [Indiscernible] $XX provide we Prepared Food to increased volume $XX compared In will category. sales commentary the In Packing primarily million $XX one with in were profit million the compared the the due

to per increased moving fruit production costs, from includes worldwide-- Now, our banana growers, own X% which procurement box, and cost

Mohammad Abu Ghazaleh

Decreased.

Richard Contreras

cost cost No, bunker of sales. per total the during of of operating XX% includes Carton cost, ocean and prior freight quarter, charters represented cost XX% our and cost box, worldwide, our increased increased ton sales, and per X% total of increased represented of sorry, X% XX%, fuel cost X% period. lower total bunker and fuel, of year third-party X% than sales, the represented total was first and our fleet which cost

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

at the million by for in favorable exchange expense As of That profit sales year. for prior the principally the to favorable foreign $XXX,XXX expense quarter the compared was higher was million net the net impact foreign first quarter to expense during of an $XX impact the level, level at $XX currency, currency quarter and million. change the Other losses $X with gross the first was XXXX. of was other foreign attributable by

the total XXX,XXX was was far repurchase million during on $XX we quarter. approximately the At Income expenditures the the it first million. tax our expense plan, in income with relates the $X spent quarter, year. quarter $XXX we spending, of tax approximately repurchased in first As $X.XXX capital as end prior for And million shares quarter, compared during of the million to capital stock $X our million. as debt expense

spend expect can Q&A. $XXX million our in We financial to review. the We concludes This approximately turn over call XXXX. for now

Operator

comes go Please with [Operator from Instructions] first [Consumer End]. Jon Feeney question ahead. Your

Jonathan Feeney

much. Thank morning. Good you very

Mohammad Abu Ghazaleh

Good morning Jon.

Jonathan Feeney

I I first -- three a would questions. love well, comment have

particularly as but events, for supply comment a seems positive more banana, love outlook, you I'd be a that negative. weather mentioned to than on me First,

you're far standpoint. profit from a probably As ahead as pricing, coming

outlook if critical So, about maybe that as would here talk could supply into these great. and come be we confirm months the you three

getting for single bottleneck planted products value-added -- the in happen the And new what's these what you're we're Secondly, for And are shelf our CapEx So, -- like needs feel schedule, update that America see not big where cycle sort that and still North thing is we JV maintenance a five-year more on Thank we under I that? but of agreements? the it to third, that? what but the payback of is do feeling to Richard, questions, biggest behind have. -- that's on hit all above of three benefits you. in

Mohammad Abu Ghazaleh

Jonathan. you, Thank

banana reduce where speak more at selling volume significantly the half of -- we supply, the is in at as half a much we months our first whole the as there volume the dropped shortage. a XX and trying banana year. where in the in the out and trying in go was half have far we now right smooth actually, prices tight. period year, suffer has in second America are supply, now, actually year across But little less really is can't as we What as in now, situation between the to abundant. are was average doing is definitely second but bit supply first Guatemala, to beginning that I that like more prices Ecuador normal years. previous risk, the price As What it year, of Ecuador Central the the was Rica. the details, has doesn't Costa

issue say, North far So, which we volumes fluctuations. of of are Asia is we, that price, concerned, don't and exposed as Europe so a our MENA, into as most and -- contracts, as going let's are go want America to to this. company, really we It's have

consistent of So, our the months. very, that we out trying let's and be where get more do circle is say and in are to really low the that it prices happens year during of avoid what kind half the vicious of second in supplies summer try to

carefully. very So, we are the watching situation

continue now, speak we control we and the would As year. we under to things end this have of the hope

our consumers about our a the ventures, take is products, hopefully, will different As see which level, into through as we're the lot reaching kind doing far different which products, about months announcements a which today, -- core the before have very that you but for couple of well. directly or than business, XX-something new the this on more within this new be And sphere than next to as to of joint years. new that we growing been and a new, next us of products, value-added will our having hear few a model and of about I illustrate it you the last will different news us and few sure you weeks, exciting think I some to am business what to I as will -- is can't

wait we for have just think I to So, that.

have any--? as As far the do returns, Richard, investment you

Richard Contreras

than example, years. that that, of more getting still I strive mean, for land we investment goal, we when that's if something on but -- we for, the lot a that some that, no we and Jon. on it still or receive Yes, are like that are it there's Obviously, projects, all it projects projects? includes exceed insist five what but most. products is No, get would there we

Jonathan Feeney

much. very Thank you

Mohammad AbuGhazaleh

Thank you.

Operator

Pinheiro from ahead. with Management. comes question next Please Mitch Asset go Your Castello

Mitch Pinheiro

Hey, good morning.

Mohammad AbuGhazaleh

Good Mitch. morning

Mitch Pinheiro

your invest Or of for spend? backwards like so to What's on you're -- vessels, think about new -- question what in, off Reefer CapEx. versus not the leasing there? said, that the working Jon's putting XXXX? capital that a you more and on as -- by Hey, ones I you maybe do or how what's six ROI forget going

Mohammad AbuGhazaleh

these too and on these forward. on A not we is seven ships today of vessels the vessels are higher There I container are market. years, the that in going around these going like wish And can and significantly lease of size in capital market. return many high really vessels the

ship, into doesn't market million newer have, fuel couple consideration Another the take with to convert standards into several comply be -- present regulations. to new take years, in these there that we and regulations ships, a of the mean, to them rules ships the I have all has, and to each thing fuel standards for that and that meet we will will convert about efficiency that consumption these to the dollars or

amounts are money. I and it's -- us that vessels already quite costing replace existing are So, leased route think to going these vessels are the substantial and in of

-- on seven them so. can investment a mean, vessels So, on years, the if but you very will there be usually, good go these well, return as for as well I or maintain XX years

So...

Mitch Pinheiro

your -- these of that vessels so is own vessels, correct? So, what, you reefer a have XX

Mohammad AbuGhazaleh

XX, I it's guess. Today, XX.

Mitch Pinheiro

XX?

Mohammad Abu Ghazaleh

is own our Yes, XX, yes.

Mitch Pinheiro

Okay. And then--

Mohammad Abu Ghazaleh

will be for vessels the Coast just service. East These

Mitch Pinheiro

Okay.

XX be -- it'll plus? plus So,

Mohammad Abu Ghazaleh

Yes. Yes.

Mitch Pinheiro

Okay.

CapEx, environmental to the And various Okay. CapEx new have standards? you also to convert maintenance

Mohammad Abu Ghazaleh

No. No.

Mitch Pinheiro

you No, won't to have that? do

Mohammad Abu Ghazaleh

have do don't to we that. no, No,

Mitch Pinheiro

Okay.

Mohammad Abu Ghazaleh

Because its North America. will regulations be for

Mitch Pinheiro

Okay. Understood, understood.

costs year, if side of the On how ocean you total the does cost your for look -- freight of Banana rest this things, out look? does how

Mohammad Abu Ghazaleh

-- it watch -- that really I the further oil go makes cost. charter what makes It's oil where I you is fuel. that and the the up fuel would if is here the but north, mean, not hope main up because prices, of made rate our going The the difference see -- bunker it you

Mitch Pinheiro

hedged Are all? you at

Mohammad Abu Ghazaleh

we are No, for hedged fuel. not

Mitch Pinheiro

And Okay. leasing about that's going the is as your transportation, reefer well, non on that correct? on the the leasing higher -- all of how container other -- -- and events,

Mohammad Abu Ghazaleh

-- for to we container the ship one have renewed actually just a higher pay rate We ship and renewal.

Mitch Pinheiro

Okay.

you cost to it's quarter So, throughout total rise down in going ocean X%, the past year, freight correct? was this but think

Mohammad Abu Ghazaleh

we'll Hopefully, depends that's all on change the the It situation. so in be could. same not fuel. It

Mitch Pinheiro

U.S. And in of pricing the in terms Okay. then banana

I that contracted to -- relative the there's margins that in that how lower So was put does locked prior it you tight you now? in pricing supply? overall of tight -- the your are put year the these U.S.? how end being So, Does affect than supplies, has like is year. at on probably that mean, the

Mohammad Abu Ghazaleh

catch-XX. mean, Well, it's a I

it all. cake the have can't eat You and

protect the the but mean half I very of the So, I year, you you mean the market. half contracts of market, the spot first course, of in -- pricing year, high the okay, will during second enjoy

this above of not I North us, lose small you contracted. to -- on like a mean, so I are mean, just talking have with you play million a $X.X spot can't market. volume but So, is opportunity, a this for week it about America you be we so think to market kind has

we bunker, mitigate However, our to U.S. it and this. what now fuel trucking new hopefully include customers, additional logging do clauses cost, to it to fuel we costs, the cost, that and our are these with we of regulations, be ocean the are additional even trying the all because and address trying electronic facing now, inland are cost improve is to cost in where pricing be the now fuel all to all

really So, our to that our improve or customers of is that's can improve maintain and be on I way. are hope spending put really working our we let's this our And it what's to try to that achievable, margins, our margins pricing customers. the with

Mitch Pinheiro

It end just fairly on tanks you're coming like based rate, trying to pricing it's what's-- the clockwork it regardless rate forward always at for of low months, negotiate almost XX of seems seems year, a and the that as the

Mohammad Abu Ghazaleh

pricing not bananas is so actually, influenced and customers and market, the North No, highs America of in by the understand the no. they No, the the lows. understand cost

because the stable or concerned, market, supermarkets. bananas market it's other of tanks, summer of with pricing kind the as of less but fruits, is far spot is more -- true terms and the So, as in

Mitch Pinheiro

Then helpful. was question. last That

saw but XX%, I Avocados, you in the volume was said -- Is curious Avocados? share taking do? category -- around are I'm you increased what As the your that market you

Mohammad Abu Ghazaleh

We that our see, testament be and more can you is in the that doing to of also Mexico we service, being is we our our in a and -- season, think in for customers to share, footing as timely different facility increasing Angeles basis catering a speak, the our we And good like growers and -- ourselves deliver state-of-the-art I packing facilities to fill ability in an in California and the industry, are our additional we packing own which business and avocado think a a and the now up there. California supplies just to our quality. relationships compare in rest Los we and close this boutique building put others, but industry. very even the increasing our terms center are to give that as will I put some started building ability a us distribution well customers and our our giving a with that advantage -- market and us it's them And we for started infrastructure very even putting don't as been from like of volumes year-over-year a Florida we trees to avocado have is avocado up We and on Avocado gap. there to

are today, Florida in on course, of a as period. well scale, small We as our planting avocados trial a

So, fronts, going business building forward, on there. confident we very are position leading about and our avocado all our

Mitch Pinheiro

America there most outside and that America? the -- And Okay. any a that is on Avocado, North just is North of is of business or U.S.

Mohammad Abu Ghazaleh

America. the majority vast It's some going this the but North to volumes are but of America, Europe Asia, most -- opening we -- of into mainly majority the and North also markets, is

Mitch Pinheiro

time. thanks for Okay. your Mohammad

Mohammad Abu Ghazaleh

you. Thank

Operator

There Mohammad over questions the at [Operator to call are no this Ghazaleh. time. I Instructions] further Abu turn back

Mohammad Abu Ghazaleh

and a news to well on for with call today. some I to you much everybody day. good joining good Thank soon hope talk and thank you would today to us very have as like like we this

Operator

concludes today's Thank you. conference call. This

disconnect. now may You

Fresh Del Monte Produce (FDP) 1 May 182018 Q1 Earnings call transcript