FDP - Earnings call transcript Q2 2019 | Fresh Del Monte Produce Inc.

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Operator

Good day everyone and welcome to Fresh Del Monte Produce’s Second Quarter 2019 Conference Call. Today’s conference call is being broadcast live over the Internet and is also being recorded for playback purposes. [Operator Instructions]

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

Christine Cannella

morning XXXX thank conference good our for Sharon, quarter second call. you, everyone, you and joining Thank

As Sharon Del mentioned, Global Corporate I am Christine and Relations Cannella, Investor with Fresh Monte Communications Produce. Vice President,

Officer today’s discussion President Abu-Ghazaleh, Chief Senior Joining me and Financial are Bezerra, Officer. in Eduardo Chief Chairman Mohammad and Executive and Vice

issued had via Business morning you that review hope this chance to the earlier press I a release that was Wire.

as today’s to Company’s website for at for release You as also of well visit the distributions. may register a future freshdelmonte.com copy

may As previously answers any in information measures. the within review you we have give we that the press ask of your mentioned the laws. advised, Safe we the with remind includes included include you our issued of Securities the GAAP most morning to in reconciliation statements SEC. non-GAAP information provisions the today we in response Harbor press will of statements I forward-looking corresponding we the Federal to much the release Company’s would and be recent like financial We providing measures filings this that release the including forward-looking to questions, today,

over I to pleased that, today’s Mohammad. turn With call am to

Mohammad Abu-Ghazaleh

towards and thank a conscious want strategic Thank you, and made a The started with for the added XXXX. becoming quarter’s focus good value diversified morning company. begin second joining decision us. in Christine, shift I by progress you everyone, and to solid we saying quarter more our of to

could stronger we in income. we income net will. second quarter, Certainly, been gross year-over-year we and sales profit, our the delivered operating they numbers During positive believe wish and have

year, of up for $XX profit gross last quarter was total increase from the a million. Adjusted XX% second

that $XX focus long calculating and on do net as adjusted we volume reliant diversification year-over-year. saw not as signals million This and operating by actively our we also We value-added to have completely million, $XX respectively be and strategy. increased income income are

on that ahead will Monte. to on to with a our quarter Fresh that The what road the boxes be groups. company. year believe sincerely expect turning from of the I for XXXX, market be want Del of for Central some is should share this I fewer point industry second Based believe will exit further. exported is forecast of for several America pineapple it contract the smaller we probable you

position We we in Packing, our our category maintain the premium pineapple execute plan. to leadership are with continue our pricing With gold to integration respect to continuing competition. over Mann

new fresh featuring pursuing are United our stores, We exciting fruit fruit vegetable and first retail fresh with opportunities and and beverage wholesome States the offerings.

product as Our powerful consumers component, plan in end in living and further beverage There by our these open stores of We as to Dallas hospitals. and points year stores the Coral XXXX. and between first an in Middle airports essential by of our promote we XX these see wholesome followed and currently healthy our fresh is connection throughout are East food fruit. store convenient operating Gables company provide as

in Mexico facility track we is during fourth which packing that the are and products. quarter, avocado completion of for with on to our We expect also other the state-of-the-art open mainly

infestation you in Colombian confirmed farms the recently many disease read, on of As Panama certain have of government Colombia. may

quarantine. under are farms These

our been and in interest to on have working We measures actively region protect following this closely beyond. preventative this are and

may banana the on level that an industry. for industrial the issue past, that affect both in a disease on shared potentially have Panama depend the the socioeconomic and commercial entire I communities As is

our in on further and product in while our expanding lines reducing year leadership our bananas a a is added year business strengthening XXXX leadership move will we in summary, diversification of into our brand transition, which to key more further dependence position In incorporate value world markets. approach,

call the to turn time, over Please this I Eduardo. Eduardo. will At

Eduardo Bezerra

you, Mohammad. morning everyone. Thank Good

For of decreased adjusted share Net earnings an per compared basis, the XXXX year over reported for diluted with we second $XX impairment of million earnings on XXXX. $X.XX asset $X.XX sales in charges year. excluding other diluted and quarter share of

increased XXXX in compared with million was of $XX quarter and million $XX of million Our million second $XX $XX the in income prior income the the to to Operating $X the second profit XXXX. XXXX. compared increased in in gross million quarter million net quarter $XX with for with compared year,

our business XXXX, were In in we of sales product second lines, result business in million as our higher segment, and the fresh product Now, year with product offset net our will by value-added net for key in quarter non-tropical $XXX sales a the vegetable review segment our $XXX fresh of pineapple prior lines. and and compared and primarily avocado partially lower lower lines. net vegetable period, cut sales million

product to profit lines, gross lower the to Gross due fresh partially cut lines. the gross primarily quarter million by profit vegetable compared product increased $XX fruits higher cut $XX offset in million fresh and in with XXXX, in of our pineapple, and second avocado our non-tropical profit

Our XXXX. gross saw trend improved X in profit we maintaining percentage the point, the segment margins for first by that the quarter of

our volume decrease America pineapple and our decreased Europe, The to mainly by million Costa in to offset to North a partially gold lower net $XXX prices was higher compared year in the primarily Rica. to in $XXX sales operations in production due In lower selling due America Europe. period, prior from million category, sales and North

was volume was was prior result higher lower X% lower lower the than pricing cost unit of was line volume. year Overall, Unit and in fresh X% period. Unit X% as our quarter a In year of than volume prior million fruit XX% the unit second XXXX. was the industry was cost and lower X% higher $XXX were period. Overall, sales pricing category, net higher. X% cut with

to second higher production primarily volume. pricing cut cost period. and and prior $XXX the the The of weather-related $XXX fresh sales in was Overall, of higher category, issues volume that our lower, was X% impacted the our than In X% the unit XXXX. compared XX% a decrease sales unit million vegetable decreased year million net quarter with was result was

with million X% million unit and second by increased and demand. compared In of industry category, XX% to XX% a was strong year Volume pricing prices to the due supported decreased $XX our higher tight avocado was cost selling higher period. XXXX, higher the net in $XXX supply, sales quarter than prior

Packing. to In primarily sales category, unit $XX of second increased increased with quarter the net in acquisition our due due X% and unit of $XX cost fresh vegetable price the mix. million compared decrease Mann to X% XX%, lower XXXX million Volume to was

the of XXXX, sales of and million quarter X% Chilean primarily cost $XX net pricing decreased category, to million to volume prior higher rationalization compared period unit unit due non-tropical higher. our X% In decreased than in year XXXX. our the was was Volume with in $XX second XX%,

a food profit In sales which by were net impacted our traditional and lines. lines, in prepared our prepared traditional includes canned category product product gross and the snacks products and reduction meals

In in Overall, than of our primarily with lower production second $XXX the XXXX, due were volume quarter. quarter compared million last of and lower banana business segment, $XXX net was from to the sales America. Central second X% year Philippines million the

line $XX $XX prior million million of XXXX cost with or quarter increased unit in banana $X.XX compared period the $XX the the with quarter $XX.XX and was XXXX. Total a in to million increase. compared box per $XX.XX in of price with profit Worldwide year increased second second to worldwide X% gross

Bunker increased Now fruit of increased production moving includes X% per the and total sales. which Carton XX% to total cost our and increased procurement to second costs sales. growers and for and worldwide X% total X% ton cost cost cost our quarter, represented X% of of represented banana our cost fuel from of sales. represented own of our X% cost of

fuel, party was cost charters X% prior which and includes second than bunker year freight period. ocean third lower cost fleet total the And the quarter during operating

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

administrative expenses East and to On million, interest a SG&A, other the to of North result in Middle second selling $X lower and million $XX America. the marketing our compared expenses and as decreased selling, XXXX, quarter of general

And the million the level, with million the XXXX. by quarter The $X quarter quarter foreign the million. at $X the currency for in second Interest by was second profit of compared for gross impact impact net $X at was unfavorable $XX unfavorable the level second was expense, million. sales

to at current reported At the total was million compared its debt as now the $XXX to our at million end is XXXX the $XXX quarter, end due maturity of debt The April XXXX. of date.

a during million mainly Our of quarter income tax compared earns. due prior taxable was year the higher with $X expense expenses million to in tax income the $X

quarter relates to second quarter of capital capital the $XX almost As than lower spending, spent of it million million expenditures XXXX. on XXXX the $XX in same we

in categories in farms of of During some of part the product sales of tomato realized quarter, one the we the as reorganization Florida our XXXX.

of approximately during quarter, XXX,XXX repurchased to million. $X.X As we second approximately part stock repurchase plan, our shares the

Q&A. now This concludes We review. financial for turn our call can the over

Operator

comes first with question Feeney Instructions] [Operator from Your Consumer Jonathan Edge.

Jonathan Feeney

decided Mohammad, on lot it is -- just of your how you comments from and that much And I do only volume, to is And your cost around business? much your and your the of decided purely there that head all sourcing profitable I disclosed third -- product and the less them and fresh growers? look by question. that of your see, at of is party you’re value is of wondering, my major you’re that or numbers in emphasis That'd you've buying products, more fruit a when first unit decided you're that is how -- third on internally most I’m much both category a product. how pricing as be there

Mohammad Abu-Ghazaleh

sell here focusing on without are has we across the that is and is the message are now what line, to line not bottom Company bottom comes think consideration this into and we bottom spread just the that first I then a volume. line right and take Jonathan been volume the

you really joint in across center every we producing consideration Company, terms that which the has of and to Every matter have, his have cut areas effort in improving fact. of It’s and one has sales. resulted Of operation, fix part to a better our could good we into and a production as pricing. why a shipping, everyone of the very result fresh course willingness, the that’s ongoing in to as job to on better got we every effort done taking from that DCs, them by been consider cost call these but put see of results

believe important rationalization is is we as of the and And the going forward. most and focus target speak our rationalization business. the thing I really that

conference we so achieve. world, are team that and We that be beginning target execute I’m a been so not say, as put as And role, honest company, of we team. have our it��s I’m the are the there have they to to that like the on striving across a proud objectives North America I to only I at achieve to would the proud can call, confident and we of of very the deliver lot and mileage of a improvements think for to is really still the cover that them. and I lot believe across

Jonathan Feeney

you significant right the you've and presumably, Well, ahead cost I made how cost? I'm off years thank out, few you you pricing of that's that Mohammad, might trying some allows that figure capital way past to in paying over now just that to -- investments is what’s guess,

Mohammad Abu-Ghazaleh

It’s and The and that we and think have Panama producing a hopefully the of business. packing of thing, that investments, but would believe be the now. operational months of it. efficiencies part plan is that money are the the the construction under lot Mexico that rationalization of it’s these the and I I started in couple overall, major delivering don’t ships next fruit, the put

business every think the is really costs. have really I sharp place focused every a course on center, deals that like now and that segment we or on specially razor team course in the is

and I'd is. all just saying. better where beginning confident beginning. in say that the It's just the And of think this has it's I pricing because what future I'm the better I structure. am resulted see course I

Jonathan Feeney

were you're Because acquisition, understanding year. lot that a you about forms was more and it drives more my coming doing you skew in about talking that? like profitable. is what release shelf There in Mann give -- you. that between about sounds products certain products but have a and a products pulling the off the been Packing the rationalization, less also detail shelves on certainly Can going more us Thank comment product

Mohammad Abu-Ghazaleh

we a since tremendous mean we definitely, making just Definitely, the forget given I Yes, acquired year of It's the we us in that in synchronization rationalization better offering. started. don't and kind a of are and Mann, all leverage Mann almost still has products.

the to market. think in products coming the a which soon, with now be are We I very market, which will new be novelty introduced will

fruit and adding innovative with We come to market. like something and we will we come We going be will in what to are And and really to come you know to new but products ways and market would that with the business new as like don't like in you to as try the together some that's know know something always just want to we vegetables a other new copy usual do. always pioneers would and to be command would to premium the you that products good revenue. be market,

Jonathan Feeney

you're you last all this your the that's million to Or are you moment. assets, about update the term you of that is strategy for Thank going April, can do your debt? When mean, you question going see that to in coming that's I what what on dividend we substantially and to have XXX know and I idea that? in The context significant Is out? the it suspension, but due the of us debt. relative

Mohammad Abu-Ghazaleh

No, the this what speak no, negotiating for of we renewal facilities. Eduardo It no, credit as sake of that. just record are the is mentioned we but maturing, debt, now just

end going be you in to it’s renewing. is that this know to It's not So, April. going

As far explain to on that. further would like maybe as and Eduardo I maybe

Eduardo Bezerra

Yes.

by negotiations have end, approach early expectation term a what to banks debt. in QX have sense, that's so expect that year our So, the long to is terms so and we renegotiation going by Jonathan, concluded, we be our similar several And with is that back we so than today. the start the to

Operator

Instructions] We question with Pinheiro Mitch, [Operator Sturdivant. Mitch a have open. line is from your

Mitch Pinheiro

for U.S. Pacific does supply of Asia near-term So, how of each but terms and just outlook looking look the market. and Mohammad, kind us at give the bananas is could what -- you think a mean I the I I demand? Europe stable, in know

Mohammad Abu-Ghazaleh

in as Europe, pricing, of volume actually is stability we in terms better and far speak than XXXX market. the

that it’s it that. what no far strong, about than it’s not but XXXX. is in There better So, was question

Far the of as at seeing as end are far market we July. are East, As even we a stable the

We’re reasonably and and Hong good and Kong. still market Japan China Korea a seeing in

XXXX as normally, was abnormal a an conditions. in of terms this see we So, and of really supply year mentioned market the sense in

of, have market. year pricing year, a blend our last enter of spots. into total the case, I And year. as since I in first see few this months as as started the be we year retailers beginning to actually with being think, Europe, long-term normal the we this last we contract spot use term kind time a and more Europe end have In the more blending of for a longer well of

average second mitigated the So year. markets, the the we of during and rest the have of kind of half spot especially

Mitch Pinheiro

Is changing are contracted there spot less more reason European retailers and to pricing?

Mohammad Abu-Ghazaleh

more As fact, favour. we this Europe, getting see matter of in in

cannot -- what and just trend, fix I exactly think substantial volumes and our that of a what think our is they is that have objective retailers supermarkets, mean future XXX% to big depend I cannot, really of supermarket prices. have doing blend spot especially are realized I big kind they on

Mitch Pinheiro

And disease talk then, how America? the in Panama and the of so farms I wipe lot fungus is a is out can it about there fungus, I serious is know mean, this. it Central

business? serious of to the how thread it your just is So

Mohammad Abu-Ghazaleh

to and different calls, between be it -- the disease remember This said disease one And show up. found it's you have does I when. business; your sometimes will my four to takes disease a Columbia. already in -- And up not two, usually other. kind one if that this said This when it's is overnight. of in has show this previous a has and variable It's for conference it's before been not information, in just -- three, industry. the years happened on the we if, And and to

in don’t more already Columbia. it’s spread in we So, know, Ecuador, already maybe it’s maybe,

have very we government aware that about coming and alert hopefully well to taken And as them. know is danger and you this the much became

are in order taking industries. very to So, they their protect strict measures

what I have happening, seeing that. that, that around world disease this from it different is is companies that However, something this the believe disease

the especially the controls You that and to but with and don't to R&D coexist to tools such able small quality have need disease. this, means growers medium-sized the a and cope growers, be with

in America, I'm I you said know by know be not be years would to that, much always year, not or I'm it. tomorrow after banana wouldn’t next might term, If carton Central supply but a translate like be disease talking a measures years You in reduction I and that, tomorrow banana or rationalized I see to $XXX see that ago there become you surprised bananas the come. higher predicted know, to into long will by X definitely as years logical but I this be will drastic pricing. many now, XX avocado. will just that from which a from saying

Mitch Pinheiro

answered percentage percentage might That's company-owned production? company question, this of What from in owned came this about to -- quarter, come what very of your, you have fruit what farms, Jon's already but helpful. your

Mohammad Abu-Ghazaleh

What bananas fruit do you mean, or…

Mitch Pinheiro

Do bananas? all one. or just you have Either fruit

Mohammad Abu-Ghazaleh

like Banana about to our we from XX% worldwide. coming always Pineapple said XX% from own is own our farms. production, is about XX% coming mainly

probably XX%, from our know farms. XX% own Chile You around grapes

know coming you our farms. from So is majority own

vegetables of third own percent Mann with term As it -- as party produce we as long well all from far is we as course, arm where we own our our have do vegetables sourcing agriculture mainly now have, our contracts.

Mitch Pinheiro

the questions, veggie it What cut a prices? Okay. higher? Is couple side. drove on costs unit just the just fresh And then other

Mohammad Abu-Ghazaleh

for on years celery and for a seen mean like Some period have products never we long very continues high. prices were of price, I long, it that we time. for very-very in in a celery instance, very I seen mean high have

Eduardo Bezerra

our Yes, we're saw we stable on season south Arizona remaining cut, as coming in, cost so but and getting issues stabilize in so impact weather-related of on the that we our selling fresh that to that well in to taken production that the we've expect year. of cost saw for should production that the in more an related now to we more this prices cost we second volumes the that the more that as sense, some expect impacted

Mitch Pinheiro

said you mean fresh pricing cut upX. up I was XX, costs the were in veggies

Mohammad Abu-Ghazaleh

Yes.

Mitch Pinheiro

just get to a to cost unable it eat? type more your Are any you is Or there just and have to help Is quickly? that pricing you pricing? going is hit of between this relations little the through cost

Mohammad Abu-Ghazaleh

No, you and have place contracts have I with fixed buyers you to price. cost, mean, where sometimes fixed to deliver the or

eat to other it’s have it And you instances, So, yourself. market in fluctuation. a

iceberg ago six a been box. instance, In it’s $XX For a $XX box. $XX, was lettuce, weeks, months two the last

in and that of do are see not product pricing. what the what we line offering opinion everybody that, my can kind for technicality traditional and you So, of most the this thing. But kind are important others have that what that’s offering are opportunity diversifying we mean I are doing is need in our doing us we we and the -- field. we the are that that’s to is it’s $XX, great of and delivery, in all-in-all to

Mitch Pinheiro

capital -- on did year? any question last for this your was spending just estimate you Our update have

Mohammad Abu-Ghazaleh

focusing is mainly the on the expenditures that have. ongoing shift We’re we capital which

of ships six have construction. We the

we to that Mexican we keep with spending done almost need are So, plan. something and this is our

rationalizing and is this. progressing, which we’re We have Panama project

Eduardo Bezerra

we also we Mann EU our that facility cut on the have some in on running, operation expansion and up of expenses additional Packing. to that Oklahoma also and have and fresh Yes, Japan expect

Mitch Pinheiro

you so $XXX million range? for still $XXX that Is are looking million,

Mohammad Abu-Ghazaleh

mean.... You

Eduardo Bezerra

last we year. be yes, that more in expect to with So, line

Mitch Pinheiro

Okay. Thanks questions. taking for the

Mohammad Abu-Ghazaleh

Thank you.

Operator

turn questions call we any Abu-Ghazaleh. I at And will not this Instructions] [Operator over have Mr. to do the time.

Mohammad Abu-Ghazaleh

like good good the today. very I to a Thank thank this be happy results would Have for trend. us and And much. will a joining day. I’m continuing everyone to report hopefully you

Operator

This concludes today’s call. conference

disconnect. now may You

Fresh Del Monte Produce (FDP) 30 Jul 192019 Q2 Earnings call transcript