FDP - Earnings call transcript Q3 2020 | Fresh Del Monte Produce Inc.

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Operator

Good day, everyone, and welcome to Fresh Del Monte Produce's Third Quarter 2020 Earnings Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. At this time, all participants are in a listen-only mode. After the speaker's presentation, 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 Vice President, Investor Relations with Fresh Del Monte Produce, Christine Cannella. Ms. ahead go Please Cannella.

Christine Cannella

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

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

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

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

Mohammad Abu-Ghazaleh

Gonzales facility. one XX now facility our expect we with the enable which third that, anticipate over were during gross Today, hinder next experienced to which in profit under mandatory The reported These the by our continued periods government shutdowns, being of to performance ever XXXX our billion with food We Fresh headwind. industry closures be continuing XXXX third shaping ability $X.X million were to as with impact in service pandemic, to million challenging adjusted Net our which quarter of Good achieve with in response move benefit annual business will by of targets improvements Del Fresno our and quarter Due sales difficulties one fresh of third the $XX at Christine. a everyone. continued in most quarter the third to we million California our our operating Mann Thank we for adjusting the our in profit is our pleased of EPS value-added we fresh and gross we segments. our quarter are compared to adjusted fresh-cut these months. products products EPS million an we facilities on XXXX to XXXX. basis; to us approximately achieve $XX actions with improve Packing of third of adjusted and to reported demand morning, decreased including result of Monte took completed margin the Produce. a the to quarter gross driven $X.XX the $XX I'm you, COVID-XX for $X.XX report value-added by business the new our early challenges, the biggest of compared challenges quarter. restaurants, in $XXX quarter schools, compared three XXXX. in segment roof, the of financial hamper the and for up profit

This last months, assets two XX sell brings to new for of second million. and to optimization we initiative fleet, Del previously the we Del of reducing progress we cash will approximately XX replacing footprint we the chartered. months our over our the XX%. anticipated during our continued company. our to growth channels we containerized products We vessels in assets. reduce plan sustainability of total long-term we product that quarter, the added land We by quarter $XXX to that line Monte us and facilities Also the have new underutilized and XXXX our assets identified regions in. the all proceeds efforts Harvester, Since Rose, to of next across vessels the our emissions the market commitment shift made plan believe also important us to to Monte allow serve better the reduces the we with announced spoke, We our carbon diversify this XXXX, closer and

behind and from better best community With our website pandemic I the with health force and generated recently empowerment to our along including the Foundation XXXX Daily our Pineapple, the an this Award, responsibility the Today, we includes be the Rica. more Del XXXX-XXXX October, a the in will Sustainability honored to published newest our learn Del our Costa flow our decisions debt and continue update Nations social Kenya XXXX variety visit stronger. position Stewardship emerge commitments. in named operations our cash third were to receive accept. produced the to to and we to confident to were in made Pinkglow us our progress, order our weather we performance. that of members the towards value and Monte I'm product In our quarter, to corporate our to improved of encourage business driving reduce farms women partnership and progress announcement launch of that In is future the the which announced PR we Environmental Monte on section demonstrated report the promote United between employees about Green and model you of that

talk turn to please? Eduardo, financial call to Now, the results. Eduardo I about third will the quarter

Eduardo Bezerra

disruptions the net of diluted Thank of good morning. diluted and in income quarter achieved XXXX, versus net Despite the COVID-XX quarter share the we $X.XX during Mohammad per share you, third XXXX. per third of $X.XX income

share impact with adjusted related million to Excluding the in of of XXXX. profit $X.XX of diluted product-related inventory other per gross in among net adjusted other compared income things, delivered the resulted share a write-offs, of $X.XX which we quarter net effect income per diluted third charges, $X.X

profit if the sales profit. million that $XX have we by like in adjusted apply that margin would $X.X However, gross to delivered impacted net gross to estimate adjusted you the out additional an COVID-XX, of million we X% I point of would

Additionally, quarter XXXX. reduced reduced the despite million by end COVID-XX and headwinds the of by the the during $XX pandemic $XX flow $XX long-term generated cash million long-term third activities we We compared operating debt XXXX of end the second debt since from of we our of in quarter. with million the our

a next our XX to completed the months our in asset mentioned, Mohammad our million we areas XX cash months $XXX to be As continue announced program position, and of strengthen reduce in business. sale reinvest flow growth key to to over debt

vegetable and million $XXX in decrease million, to was lower Adjusted the prior partially compared Our $XX for most decreased billion the sales $XX goals of our business compared XXXX. on impacting was profit our for adjusted fresh we third XXXX of now offset by margins rates $XX also are regards sales million, million unfavorable XXXX. our million of With value-added prepared revenue will XXXX. income quarter quarter pineapple and results that, line is well. lines, enhance an $XXX of was of We was to fresh-cut our in of compared negatively prior net the income improved the product our due year net were into in the our Net flow past with vegetable, the XXXX, In net $X.X exchange with $XX sales focus we product non-tropical significance million. by third with to gross operating track Measures taken the primarily million sales and performance actions quarter have And for product in million, third business the quarter net The our year compared savings with record segment, cost $XX fresh-cut increase quarter of Adjusted progressing increase sales quarter sales to the $X million, on-track the avocado, quarter I cash of year in in $XX to to with in third line. third of our segment get the million $XXX value-added in realize period. maintain over demonstrates and in period. planned believe generation. for XXXX. fruit,

decreased profit XX% higher quarter December unit cherry cost product in in citrus, food non-tropical vegetable the business facility and the the to prior global third prior Volume due pear, XXXX. in Volume Mann developing quarter Middle most products $XX our in primarily In $XX in prior lower pineapple products includes due and volatile with XXXX, XX%, in product The X%. decreased fresh-cut of to As was cost sales of in to Unit partially unit as customer the the the foodservice the industry In higher Banana North in channel COVID-XX our cost driven increased and sales the compared prices in estimated of volume year XX% million increased banana quarter Asia. of company's with during the primarily year to primarily increased as volume million, conditions prior X% America. volume And the sales for the Overall XXXX apple, effect XX%, continuing an lower sales primarily increased was the million $XX period. sales with increased sales to plants, to cost write-offs efforts shortage due the Total net sales markets. Mann pineapples, volume with Other of sales operations Packing in quarter was supply pandemic, primarily versus the Mexico million, net due COVID-XX prior improved sales of higher lower to impact third of the prior incurred volume sales East million compared period a due America, associated this of the X%, third of of million $XX decreased in increased pricing unit XXXX. at decreased November XXXX our the segment, the mainly per regions, compared ocean pandemic Overall of product in Europe compared was with resulted our due result were net in the with were products product of over selling grape, meals due net America, as pandemic net demand the segment, our of of increased all offset Packing certain lower as result represented nectarine, volume utilization due $XXX,XXX decrease demand cost rationalization segment to demand distancing meals gross decrease sales The as impact with volume to year net $XX XX%. increased third prices which demand quarter the compared selling growing compared decreased line, decrease third selling XXXX, decreased net period. period. $XX increased a raw to related our with decreased with million charges net weather primarily demand result to supply product COVID-XX XXXX along due increased our for the sales significant lower offset avocado pineapple the COVID-XX higher our Middle vegetable prior effect and cost a the to as $XX million increased In $XXX sales XX% pandemic. unit $X well performance XX%, opened prepared line, net $XX by net to in peach, recalls XX% line, the pandemic, the unit the third were was pricing compared unit kiwi were with line product compared primarily a in Overall due Europe in our quarter, $XX compared net a and result North year year segment with a decrease banana East to product of third period. our fresh XXXX, XXXX, primarily mainly freight quarter, company's lines a unit in impact of lower million In continued Volume primarily due when as decrease $XXX higher net higher as In third our our due with subsidiary. net period. in the compared prepared X%. Middle in XXXX. for XXXX. affected by quarter were regions. XX%, increased product were million The $XX quarter our increased of X% sales, in net unit per to pricing million, related period, and X% million of of product with during which includes product due charges, result the quarter our In offset X%, lower shifting in million, with increased which by year quarter our in line, price retail, sales and the lines, Also, with selling COVD-XX primarily profit And and conditions product million, million sales in contributing $XXX social in quarter affected of a $XX segment. result fruit result pandemic. compared compared voluntary principally foodservice were berry, East. in partially unit sales protocols, sales worldwide prices quarter increased Volume quarter XXXX volume of the demand. in our net pricing product additional recall, in an compared to by reduction demand third of of reduced prior cleaning due the and million due cost third of and $XX in to result decreased period, increased $XXX Also normalized during net In sales X%, performance in unit X%. costs to decreased lower the lower a America, of prices and supply COVID-XX. million sales North The third value-added million, products, our primarily million the XX% adverse of industry decreased X%, the In North $XXX affected in to inventory $XX represented $XXX [indiscernible] sales line, unit price pineapple unit decreased Packing by new traditional of concentrate in and worldwide the due canned snacks and selling Mann of materials. X% year line, The sales pandemic, as of in increase our by the period. of unit partially mainly the estimated to other due the of COVID-XX and price product-related and packing production snacks year to compared $XXX a compared decreased with at product the sales our and with XXXX. in continued the Gross in the volume prior fresh-cut costs. market, our the to COVID-XX. pricing pandemic. compared capacity for and XXXX the line, as the the of And lower to which decreased million lower million and the year

unfavorable $X $XX selected of The with was East quarter in $X the foreign and $X and decreased provision cost impact interest Interest loan with income quarter level for XXXX, third primarily with in gross lower The the due average of $X of million to lower savings quarter was balances compared for million quarter million third the expense, tax was lower compared million $X Middle third the XXXX. quarter third the $X effect due for compared decrease the in net in initiatives by $X was general a third expense The for period. expenses data. expenses to America. income tax of the the provision certain administrative and North million in prior in jurisdictions. with primarily in at moving million income $XX Selling, taxable Now higher of taxes The to to million during due marketing currency year million to compared profit unfavorable selling quarter, the the XXXX. million financial increase was in earnings increased rates. and

provided of of million by provided and operating The payments net inventory, XXXX. The XXXX, levels due end $XXX nine net Total lower activities from activities end accrued expenses higher million attributable compared the and decreased our of million months the other by third net offset and period the capital. $XXX operating in levels with of assets. working prepaid $XXX expenses to of cash the same income of payable cash quarter on debt million and $XXX first accounts to our of lower optimization increase current primarily For was partially was increase XXXX. the by to of of efforts was at XXXX lower at

invested the quarter expenditures compared As capital in third third to XXXX. million $XX million spending, of it capital the relates in in quarter with XXXX we of $XX

$XX the the $XX in For invested million period months XXXX. million same nine in we compared first of with XXXX,

container of vessels, Our delivery new Rose. XXXX Monte and included of Gold the investments third quarter Del in the two Monte the Del

Mann four consolidation different during quarter. into our Packing the facilities operations new our also facility Gonzales California into We the completed of

of Board XXXX share to record Directors results As payable per on our of cash announced of a shareholders press dividend this declared X, on $X.XX our in quarterly our paid XXXX. over dividend December release, morning per cash now increase an XXXX. operator. the September This from call November is our financial on share $X.XX review. I'll quarterly This concludes of XX, turn financial X,

Operator

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

Your line is open. now

Jonathan Feeney

on presumably operating would first Thanks morning. sorry, but I much guess, of where competitive the my business? general divestitures and already good business? problem that my second update guess assets do looks cost my business concentrated lot just I those in non-strategic this, to -- the question North or this the you away-from-home is a any struggles I'm And It just patterns? like of dynamics gross is how to of of profit pretty and different category there is an with first of would are Thank banana the I if question. America. be, that cash in due due be one It activity? a purchasing the so guess, much is is mentioned how you. losses was but of detailed or And the food much demand to question profit in announced you associated

Mohammad Abu-Ghazaleh

you, Jonathan. Good Thank morning.

assets have assets agriculture. sitting the are Regarding we many we issue, of had for used sell actually of we dispose actually these want terms so underutilized assets lands in or to years or that that never are that that

I example, instance, never lands which are and we same we in $XXX,XXX. Chile. Uruguay. Just This an in we piece you ago we different other applies for actually many is -- a this years to long of -- as a million. the for northern parts and have selling acquired used have give for the Chile part early particularly in that then a we many which bought sat we an XXXXs, Chile, world The land, $XX for about land and there time. of land land XXXXs agricultural in that project Today the of piece for same piece thing the over for many, in for late in have That of sometime of --

are at these of underutilized Some or really all. utilized not assets

the have Some in -- you doing four look we had can don't I Gonzales, like much that three, consolidated facilities assets And one have in different have that now the we one so believe assets by business world really in have California, affect very three that are right California are we for we under vacated operation we that valuable way accumulated our across means assets over facilities two doesn't need sell. which many putting so whatsoever. rather if and roof because we the facilities years, under that in instance that any that or they in we we roof, as

might a it business contrary, way. in the our better On leverage

the it in is world. so like is are it, And As that been nobody have Central producing oversupply these is have to far are not much production more China. all mess, the do from the -- now countries it's countries. to that over Vietnam, bananas China from mainly to fruit very knows fruit North and buy put all They only these a it's used the Laos, an Ecuador coming new that banana concerned, the Banana as other banana -- America they but newcomers map Ecuador. extreme and are especially around Cambodia, from big really market. America countries world exporting let in countries on not There the in with coming to way. new me to what and more

where to small, to planning are because manage. future business, about are management business are less don't And be will the in it the margins to line. to we we So really all-in-all, believe -- banana used model confident proper markets sourcing few supply that come best The more today with. to a need years where back Banana back see be or and be I of a proper in used to different banana I will demand continue and I fruit. taking with to be a and very believe the approaching of the be this but segment, this we we our

next far will what probably and really and shape that business that business years not in it's many used confident better Del the getting and three be bottom or -- to suffering this concerned, of crisis easy. come Monte people is as a But out see as I years. -- confidence override it we'll it's difficult in even have line So than And ago. months few two and better big will the very be or out we I'm

Eduardo Bezerra

to Chairman years Jonathan in can really and say the in deviate one prices important to really we once And say being new marketplace, done the a have mentioned, the although these cost in so in that these our now move to very highlight drive our through strongly oversupply we very have expect that complement let's important cost are be position the we position the just can vessels it's forward. it's And market, better what to let's be recent really that. that geographies all the the unstable that accretive longer the on, able all to that we face margin of to the going to investments

Jonathan Feeney

as both you always. Thank

Mohammad Abu-Ghazaleh

Jonathan. you, Thank

Operator

next from Instructions] comes question Pinheiro with Our Mitch [Operator Sturdivant.

Your is now open. line

Mitch Pinheiro

morning. Good

Mohammad Abu-Ghazaleh

morning. Good

Mitch Pinheiro

has and be follow-up the there mean seems to difficult question, Jon's been always stable. business and -- Mohammad it's relatively Just it's to a mean business. on I business. I always banana supply demand regarding a been you said difficult oversupply

So you different difficult and in ups historically? saying difficult? of Anything business always this business. the with had What is in terms different downs there it's today anything just than your usually -- comments these doubts

Mohammad Abu-Ghazaleh

less consumption food disrupted. what we more convenience stores dead, a say that be. months, last, No, months all as services lot everything is the almost pandemic, these Coupled used market see because of is nothing than supply XX present the now I schools difficult to or with the in except XX would it conditions there

vessels and fact. route and This that but this also North on level. kind for confident be vessel taking volume optimizing well, many bring Ecuador And terms additional the risks of But which and are than the are what and any business results to can that we pandemic a better business. optimum during this become with hopefully even one only countries will discussed added has the of with a though I'm the say -- contaminated why top banana are forward will for this be climatic into before our other and means headwind trees what mentioned, I much banana supply disorders any over as today, we as just oversupply actions that is Thanks in the on transport. once is take. a that is And and our the hasn't disasters that's production the of a more that having the unfortunate to or shouldn't today we're the demand there logistically believe business worldwide have be At pandemic year. we best So by rationalizing using changed facing additional will we not which And in didn't and it much unfortunately we be we been seeing the very that conditions businesses taking produced the that is giving let's Eduardo going to that the has better. this bananas I same year kind are achieve only we to America. that's in also business at the other not supply of optimum in that be time, we issues more -- But even really so with there and hasn't challenges you except of God. means ahead, different the that's I the But have state-of-the-art to we around business. cost-effective, it our best, we have are like will will find. hopeful has are so new -- very mean path that challenges of the supply that will and able so

Mitch Pinheiro

heading excess banana Are been they up at -- lot quarter. of prices, a is retail of I that price look the contracted the America, USDA, they've the XX% -- watch you've because weak. third bananas any North not I benefit that seeing I that's when were correct? earlier in prices awfully in so where prices you for the the is actually But And in is the you're year, into. European when imagine the supply also

Mohammad Abu-Ghazaleh

in contracted the North and our volumes America to to us, America retailers of well. North XX% volumes of is as our are No. and to buyers, a applies competition to contract, applies that XX% others.

-- been kind that don't the spot prices helps summer we months able they for. the today even that volumes months four that are on during volatility So except the like have the that year the seeing we three, as during speak, for markets contractual for have soft, we retailers us when are the the being of have absorb the we last have is What market. to really not contracted and

and come please say, you, back XX is by, XX let's XXX me So my to XX they loads, instead what reduce loads. volumes say, or only happens that or give of

time, the than North the suffer So you that's side. into for to we lot spot throat selling That's -- one really except At live market up what now. either the in or I the a the cannot no we that stuff something with of there and happening the you it additional spot with actually This helps, it more underpays down right nobody ends it what mean, have is really to it see. And -- retailer is fruit home that and same go America. markets, go is which market. other on

Mitch Pinheiro

I'm -- then sorry, And go ahead.

Eduardo Bezerra

little bit. to a And complement just

level you the low currently. from Ecuador, export historical are at if look So to they prices

shows caused And all retailer, about volumes the there, the stake say, so, concentration the that a that the pressure element trying get the mentioned oversupply, of that that's puts -- and demand very get into let's the important of a and equation it the companies also the the Mohammad retailer. on to on in what exactly

Mitch Pinheiro

under little Is taking update a Do feel -- one your more any control? any question. disease? on Anything been spread? any banana Do you you've that like Panama it's further actions in own Just there bit facilities? have you the

Mohammad Abu-Ghazaleh

status disease is Panama The No. quo.

in We our haven't seen anything abnormal or plantations other any of plantations.

So, areas. to we far up. expand there as it takes for control. anything as is go takes speak, years overnight. under or doesn't doesn't overnight. happen It it's other years, It to flare This happen to if It to

nothing there As we speak, is Mitch. to mention, really

Mitch Pinheiro

for things with that's queue. final going you sales dry job kind asset there? delever. And the sets get the your you That moment? to the in of with But, deleveraging at powder. you've nice I other balance What's an Okay. further done question, and do here sheet my up and at some feeling back have on and mean the least acquisitions a I'll appetite

Mohammad Abu-Ghazaleh

and a at this did are increase back, our where acquisition to years looking two, earlier. At we couple be we -- is and which driving now, consolidating debt this moment, an the reduce focus think that spoke acquisitions. don't very business, profitable three will as I years acquisition dividends. We to of No. we we Mann our acquisition are become and are

Mitch Pinheiro

your for Thanks time. Okay.

Mohammad Abu-Ghazaleh

Thank you.

Operator

And the Mr. further Instructions] queue. turn are comments. call time, [Operator Abu-Ghazaleh no in this At back closing questions there I'll for Mohammad over to

Mohammad Abu-Ghazaleh

call. for I it I for conducting are and would thank but Well, I'm Fresh today the know attending we that the way track. everyone assuring pandemic will overcome, today our hard and on lives, Del this is the like you endure Monte right to everyone I with we is hope.

every results good with go have we Thank results speak time we day. good and you. as delivering very better you be much, a Bye. and will We up

Operator

concludes conference This call. today's

now disconnect. may You

Fresh Del Monte Produce (FDP) 28 Oct 202020 Q3 Earnings call transcript