FDP - Earnings call transcript Q1 2022 | Fresh Del Monte Produce Inc.

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Operator

Good day, everyone and welcome to Fresh Del Monte Produce's, First Quarter 2022 Earnings Conference Call. Today's conference call is being broadcast live over the internet and is also being recorded for playback purposes. All lines have been placed on mute to prevent any background noise after the speakers remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, [Operator's Instruction].

If you would like to withdraw your question again, [Operator's Instruction].

Ana introductions, Vice like Investor President Fresh Monte and call turn Relations remarks ahead, Del to go over Global, Produce, opening I to would today's with Ms. For please Miranda, FP&A and Miranda.

Ana Miranda

Good First XXXX morning, Conference our Quarter everyone. you joining thank And for Call.

and As I'm FP&A, Vice Fresh with President, Miranda, mentioned, Relations Del Sierra(ph) Global Ana Investor Monte Produce.

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

future may our and press within SEC the cause the earnings today, statements statements. we'll questions, presentation, provisions available to filing, call available risks of also website. this of visit our Laws would for the on our GAAP these be Safe - to release being forth are and forward-looking response include which that may in and materials, website, non may today's webcast remind our Reconciliations will forward-looking our release set that call company's note IR we GAAP much website, of earnings press that Please detailed speaking be at - today conference this the on like investorrelations. to In release give answers non and and include measures measures. today's replay including you your to the I differ You in Securities future is our is newly call. to for access Harbor. information the financial press live Federal after we freshdelmonte.com to from material results in register updated This distributions.

any as are Xth, we to of obligation no update statements. statements today, and forward-looking Our have May

call turn During that, our a a pleased session. to over XXXX with we of With question-and-answer will business I'm followed first-quarter overview call results, to provide today's Mohammad. along an update, financial by the

Mohammad Abu-Ghazaleh

Anna, good everyone. morning, and you Thank

prior-year direct quarter implementation During of periods. the A the leading Net $XX first actions. by sales justified the increased the benefit pricing and with our of inflation compared million industry

of income. in by product board due million resulting operating lower inflationary the sold cost our pressures However, $XX to increased across

We have our distinct narratives in very two performance.

healthy delivered we Net sales. First,

As our quarter the same realized sales a before are quarter Net matter the of of fact, fiscal first near COVID. level in XXXX

constrains, a significant is in Despite the Second, drive and truly EBITDA this negatively our a mental remain adjusted cost on style. leverage strong reflected flow-through. Purely war management supply and with already on is incremental operation approach, strategic updated capital increase investments higher gross operational smart inflation the by and Ukraine. and the quarter technology farming, long I chain and our compounded deployment deterioration a investment, In Culture. driven unprecedented first term on the in paying incremental concentrated of narrative, focused through managing on testament third-party Good value on two our effectively progress keeping our impacting as quarter Elizabeth product exciting unprecedented management, margin in accretion and in in of with our despite higher to X.X% dividend. We driving our operating strategic freight efficiencies the for you We initiatives, investments data Last business innovation, the strategic growth services. the shareholder of made

Purely in last close year. in Elizabeth while of end at first Culture the in Good investment Our quarter the close our investment

continues the unique Purely products, phases in with We incremental performance the to look of as the Elizabeth collaboration and are forward evolve. innovative to development initial of and

all Additionally work the team pipeline. is with our new that product

building it's [Indiscernible], an is packaging, with to sweetness size map after exciting new remarkable trust, soon recognized America. our and we debut, packing So category allies Trusted trust, pineapple, far being plan of Newsweek Last expected investor Most one glow of this new the our month, small employee year, America's met year, Companies we Later we by and honey XXXX of were many offering. North to customer brand by as supplement in avocado trust. launched this and and differentiated

while and the in We and among and preserving Seal Monte our are on amplifying the companies farming Del certified honored categories recognized neutral. is elsewhere. for. Business be carbon two security received for for to to this water of and those approach to forest XXXX CDP, winning sustainability we high committed a remain largest operations sustainability last biodiversity. our actively we known by efforts levels Since award, Fresh change transparency are climate award maintaining honesty our working scores Currently, And update, are farming the

fuel, we Our already unprecedented macroeconomic of and challenges, as work while build what to together. production to The core in sustainability created adding the Ukraine and system food efforts secondary disruptions. of incremental has the cost fertilizers, biodiversity do a on war shipping thrive effects, the we pressures agricultural are including

go are to selling us exchange against in fluctuations expected markets. key Additionally, rates in

forecast minimize yen against impact. for and stronger dollar, U.S. the to the where Japanese analysts we hedged Given euro in proactively a movements

not see Having I'm said the drive of in that, to do environment yet future. confident we an our team's growth. near Lastly, in gross ability normalization

a shielded product believe expansion, it, on of markets. rings multi-faceted differentiator, even pricing operational and elevated integration to that truer erosion key of driving We our minimize efficiencies. rates focus is they from that relatively shipping in vertical and and to approach, As key implementation grounded our date. are we margin organic on certain actions Because new

to network vast and our allowed Our has optimize sourcing us distribution.

in from conditions. North our fleet freight given demand to progresses expand ocean cap Additionally, enabled benefiting cargo us had elevated commercial our America services

evolve first Monica I'm organization financial certain contributions has of to our as continue finance turn Monica's She earning talk time role to quarter to It will I'm discipline have is an first while to Monica? financial as excited confidence. call. the will her presenting to have continue to XX add organization call years. we for CFO integral she new significant our our the about -- part results. been our to I Now, finance

Monica Vicente

Thank to you, great with my everyone. new partner role. It morning, you in Good is Mohammad.

Let's turn financial to quarter of our first XXXX results.

product $XX quarter compared Net the with pricing impacted were primarily XXXX by justified compared exchange million, actions first Mohammad, sales prior-year the categories, by period. by X% fluctuations pineapples, inflation including increased key the As Net sales and of with Yen Conversely, mainly benefited negatively and in fresh-cut. Japanese prior-year the from approximately bananas, for versus sales rates, and or Euro the period. noted

XXXX Importantly, period. negatively higher to Despite certain profit inflationary lack by with various availability Gross compared the cost products. routes, of substantially for a of limited $XXX impacted party $XX million gross on prior-year pressures Profit sales shipping was of compared the prior-year capacity period. sales, quarter other in shipping the with million first worsening of Adjusted third with and

key packaging and inland material, of cost labor Specifically, performance. our including fertilizer, and higher freight, ocean impacted inputs, fuel

period. of profit fluctuations plant, million, period. and lower income the Additionally, the due by SDP $XX compared disposal impact offset equipment, administrative million in prior-year prior-year income compared rates was million net Adjusted of partially $XX property, exchange were unfavorable. in decrease was operating Adjusted expenses. to gross and primarily with million, the net $XX income $XX in also was in The operating lower to

prior-year compared adjusted diluted adjusted per per was earnings $X.XX $XX corresponding for EBITDA compared in period. both prior-year as in EBITDA X.X% or items. the had periods the with adjusted share in period. $XX line non-recurring GAAP with X.X% performance quarter first non-operational million was margin the per compared adjusted the prior-year minimal was period. earnings Adjusted with million, $X.XX earnings in diluted relatively Our was diluted with our of share share And

the million $XX Let first me higher product net cost for prior-year value-added period, with now in quarter across other product to Beginning and higher in $XX most by turn of our pressures, in be categories, Value-Added compared to segment was related Despite million, of unit profit XXXX costs. period. the which Fresh sales segment the quarter resulted increased sales, of XXXX sales higher distribution gross product and Fresh as mainly year impacted result X%, or gross with approximately first Net segment results. for and a compared profit per million to pricing. continued inflationary and with Products. increased the the prior $XX the

was of well third-party surges as increase noted product earlier, sold by As impacted the in input as substantial materials, across-the-board rates. shipping key of cost

compared while the XX% as prices oil increased crude For the know, approximately period more have key of same year XX% the last up certain you to over cost fertilizers prior example, board compared was period. Container to doubled year. than

seasonal profit lower Additionally, performance. product, on impacted gross melons, segment a

the $X one-time of range first million the value-added in to charges related charges quarter Chile, XXXX. one-time by non-tropical product quarter were fruit the severe damage Lastly, category. of of our first which There impacted caused storms XXXX segment in and no in had fresh

related result offset quarter higher first $XX to the volume to prior-year million, Banana million lower of XXXX the segment, decreased as for period, compared of the hurricanes in and the for quarter One-time quarter segment $X.X to by Banana by sales net million the were to prior-year by in profit Moving XXXX North in with a recovery, was in of $XX America, gross the partially caused in the Similar impacted Value-Added charges million higher segment, of charges fourth insurance one-time first there no damage Fresh the in Product period. America, the costs XXXX. profit. input in quarter net Central gross included prior-year Banana first compared segment our $XX sales pricing. XXXX, of period

our in or and America. Products net increased services Other third-party million North XX%, in Services sales segment freight sales $XX due Lastly, mainly of net higher to by

expansion benefiting of the services, to Our by shipping fleet of higher vessels has result as enabled elevated cargo supply chain from profit our which $X demand million commercial environment. net sales. of rates and due a current Gross are the increased the

compared prior-year $XXX,XXX inflationary to Year-to-date, to inventory, receivable, income, periods mainly The tax prior-year at relatively decreased cost data. primarily cash expenses periods. mentioned. by certain Income the to primarily expense activities due the million. $XX higher million tax cash $X activities sales operating lower net $XX was administrative. of The period $XX higher moving XXXX with timing operating line general of levels of part and $XX and in was compared both for first in and lower driven the we in net were pressures to million, jurisdictions. due in the period. higher decrease million of levels prior-year higher the income in collections attributable accounts with goods quarter provided administrative used was was compared due already net $X to in of primarily Selling, the selected million million Net expense Now from by of financial finished in interest net decrease to

the We XXXX. continue program on optimization half second of in make our progress announced to

million $X land in reminder, $XX the $XXX including which underutilized to XXXX. was million million achieving facilities. a of Since progress was a have program we cash, in first in we our expect assets and the realized cash generated the XXXX, of As quarter non-strategic program out proceeds continue involves towards in and selling announced, of target

As production $XX facilities North it CapEx quarter our and in compared million to and we with in including invested to spent million with improvements consisted our pineapple the capital of banana technology, in of operations. improvements relates XXXX spending, the period. investments along automation to prior-year $XX in America, first

efficient As fuel refrigerated received the two a quarter of reminder, CapEx which in was of vessels, in first XXXX container one included XXXX. of delivery state-of-the-art

under will similar at CapEx on Long-term quarter with, debt million to nearly from equipment period. grappling what machinery $XXX to the and and has levels be which spend. premier are $XXX is to to increased times XXXX impact in prior-year return that businesses doubled, million. the of XXXX, said end million first more $XXX may rate of Having the many lead our of expected Our normal

a XXXX announced declared share our call turn the dividend our prior-year XX, compared morning Board As per period. concludes results the of payable to in to $X.XX Directors shareholders record release, of This press on per quarterly We June with this XX, over financial share review. of $X.XX our Q&A. now on financial can May in cash Sheryl?

Operator

Instructions] Mitch go of ahead. & Company. Thank Pinheiro you. Please Sturdivant Your first from is question [Operator

open. Your is line

Mitchell Pinheiro

Yeah. morning. Hi, good

Mohammad Abu-Ghazaleh

Good Morning.

Mitchell Pinheiro

guess the is have I question So big. I first

surcharge how but of demand fruits and pricing, pricing, much kind of these correct? talked is is of you Supply a actually sort pricing about control its -- this permanent market-driven You've or pricing? assorted product. do this pricing, taken fuel you've lot of like Are and various

Mohammad Abu-Ghazaleh

beginning done the let's clauses this is instance, ocean fuel, say, our average types We our quarter. let's No. or XXX, way, of of is fixed One worked let's every two fuel cost oil. in say instance, of second the we our say. Oil barrel, quarter at out or current, per actually what is the for today Fuel charge the the contracts. enforceable ocean quarter. freight, And usually have the end for is

of charged would say rate the go back end the by that revised at market, So through quarter customers fuel or of we we down will a April we on of end we quarter, the gross have so look months in our which we of the of our third the reflect of rolling By oil has example taken beginning three ocean to as actually, price new second reviewed beginning of period. the will have the gone freight. a and at let's whether in the freight, month and adjust up, this it worked our ocean and

has freight argument our April quarter or at oil let's price say kind because rate adjusted the first been increased lower, reflect cost. say, current beginning locked in a ocean For the the have of was at been of sake, the we negatively while tremendously fuel more to less, impacted and of have let's

inland been have trade, also action adjust kind the to have customers, the our regard inland with formula. in of talking which we as the as to fuel same far well this taken and to relates cost, As we trade

Mitchell Pinheiro

percentage on your to more your margin fresh the you're margins I of decent. business, normal basis, gross margins where are banana Is in Well, banana on can commercial have. it segment my guess, But nice, range for on that inflationary like you revenue, because your the your nice perhaps? where value-added, but increasing of the big is question, that kind were other the a fresh I guess margins your value-added freight are And it's most getting pressures in and and struggle. continues was

Monica Vicente

Monica. is this Hi, So.

do So going on on lower of product lack of that fruit. production on that pineapple margins segment, other our on. higher and couple fresh-cut our of We unable and from we chili ship had we actually that we impacted had lower and We a some did have suffered to things our our pricing the fresh over deciduous in did We and that melons. margins products were and shipping have of value-added. have and

definitely So helped that that segment.

Mitchell Pinheiro

see same the fresh with So -- rest away, of probably expect would as value-added business still mean, maybe you segment in was the melons you for going it. quarters in may that mean, tracking in should could or I here? double-digit at close improvement remember in -- to margins a year, that as margins are this, that? get three the look be we towards to and one And the segment, point you I we last in I those

Mohammad Abu-Ghazaleh

or of what That's all care we're all the hopefully been have the for Absolutely. loopholes the and the in task products. will range be kind double-digit mistakes working value-added we for taking and of

Mitchell Pinheiro

you or couple just European talk I The appreciate can situation far outlook A for What's pricing either has how it. it the for -- couple things. affected and how Ukraine, that? of hurt -- And and next as can the Russia or to as specifically demand supply months pricing see? you of has the bananas. about

Mohammad Abu-Ghazaleh

markets way and the a Ecuador very, main very was because very, the the of as actually this abundance the so volume markets, from in the course cut the of of with these and of off the Russia, was markets Ecuador. so closure deterioration almost eastern particular, Ecuador and was situation It's that terms Ukraine in different very year fruit hit severely much in were markets supply. Russia [Indiscernible], there where Ukrainian

to last been this March, for $X, time would around April, of X So weeks [Indiscernible] around about in went around, let's the say, would sake, prices box. box be fruit, for $ be Ecuador February fruit has X, to talking $X argument I'm between $XX prices per the per the at $X year

impact steady as in see has the European export market can from since as maintaining far there. been strong pricing you year. in the the the particular of So beginning

capacity market of as So I a kind of I did let's ships containers Europe of fruit war the think mean, Ukraine positive enough, have shipped optimistic Russia for move equipment, very we're was to in when about a has European and not and and in market mean space shipping, terms open the available to the to and fact, to factor shipping matter say have say, also I the scarcity. been disrupted Europe. I

of helped terms well us going in to this So Europe. volumes has

Going not availability. fuel terms forward, growers, in I believe than tremendously, the sustainable Ecuador, have is pricing the will only costs as fertilizers not because mid-sized eroded of situation well. from has small XXX% this that suffer In aside growers more the also but substantially, gotten

there XXX%. cartons, paper, we of from not opinion, see structural will be will other I might my supply in in inputs, some the has we terms to really see gotten changes Ecuadorian chain a XX% Aside single from ultimately I by wrong, bananas. not substantial component up that but And the is -- -- in believe that the

wait have to and see. just we So

as concerned, like able We to I forward. the positive to a a far that would are playing as going industry save will very are we we in safely general. positive and we be site impact to believe see and be

Mitchell Pinheiro

in queue. I get Thank will. you. the I'll back

Mohammad Abu-Ghazaleh

Thank you.

Operator

Your next of Consumer ahead. Edge. Please Jonathan question go is from Feeney

open. Your is line

Jonathan Feeney

thank Thank of so Mitch, Mohammad? you thinking couple and so you questions. much, of A much you, How for are me.

first impact any First, prepared could in shape remarks? due were shortages question. the or will that the lost form That you revenue to referenced quantify from in profit supply the sales or be way my

Mohammad Abu-Ghazaleh

We can after you this give you if don't information call. mind the

Monica Vicente

Yeah.

there that, Chile, our ship, quantified because that able opportunity We of know of it. constraints, to not was were just a in Ecuador space the not products definitely we the out tropical that volume just had Jonathan. to from of that also lot haven't We we but do

Mohammad Abu-Ghazaleh

lost Middle in equipment enough not that that of first sales containers. figure mainly few we during the have. months quarter by first year, thousands the rough you having space, European, especially the We kind as and that Asian, a We shipping we of as markets. well the this to And can Eastern containers give about of believe and

So, -- lost yes, we

Jonathan Feeney

is XXX,XXX many own like million? usage in a Or a how base a It's fascinating quarter? of thousand total this is containers -- the its right? container and What's what's the out

Mohammad Abu-Ghazaleh

give you missed this we containers. can Jonathan. I on, thousand you, what information a But what is about later telling I'm

Monica Vicente

detail that regular we basis. provide Yes, on of Jonathan, usually, level we don't a

Jonathan Feeney

after skills Okay. I to follow-up call. to wanted you. Will that. Thank Just try the

before on there's demand heard hard should right lot numbers, looking constrained, America out a if to of a can I that been there's there's -- they? on and as people get that's shock. get to and this because that overhang any or mean I aren't the I crude sounds think markets. now lot quarter a marginally, Does And box follow-up soon want of rid of, they about second a there. place logistics are going fruit that How market. they're a sounds of the because because that to that historically different of to for those Ecuador get Second it a that inexpensive And situation big there XXX had the having so a time else is getting there it North are lot as distressing

Mohammad Abu-Ghazaleh

particular. But listen, North America Yeah. in

most a import our all basis. import everything contracted. on been is You of contractual The that is and we know other suppliers, that truth, most almost [Indiscernible] these of of the majority competitors

So we usually go market. the speculate do not in and

will speculation where see Where the Mediterranean actually the and or extra usually I usually that's in as spot markets North don't volume see right are America few the on there Middle in can times. it's East, and in months, Ecuador Mediterranean, see East speculative the that coming So next normal West markets, in be now, volume will I overflow. the you from and particular. Europe,

in not going of more or as because I ships of has lack as last of of matter going factor during this having that's of also these that because [Indiscernible]. containers, been and the constraints, enough vessels However, very a to positive that the shipping stabilized way fact, destinations to not mentioned earlier, these volumes market, markets and a enough

disruptions as I of another that to as going chain. the this supply into the big is war Ukraine So the be well in continue, expect factor today, will also

the in is situation see So now. to so change right for much what from don't summary, that going I believe we

Jonathan Feeney

Yeah, on fruit still. that's of that sourced fruit, directly but knows. the would pricing prices, contract -- North there are on makes with retailers a that markets wasn't trading you. not more about be thinking vary retail environment, And I'm Thank thinking speculating lot the as I pressure in others opportunistically can puts maybe America. sense. that And that then who active the because that that you this just who from think even perspective weighs something price in

me saying was highs you in well grown work? or first your Mohammad, give has or choice of exceeded interesting what there is that what also at levels on sense? that your does matter? in I service, 'XX in QX So is It about think still script its what food as can split for I -- where to if I known like think was I of you service Are service which revenue 'XX food comments. of right XXXX off your wanted retail a quarter How to follow-up, that and put the said. capacity an that like business and Where the just institutional or to about comfortable food line, formerly -- you is that was is

Mohammad Abu-Ghazaleh

think I food service No, still lagging behind.

has that COVID. think up service the grown not I three-year with food

we period. wait and into to We'll as But Let's doesn't of say if and -- erupt develop take matter see the have to this again. consideration as well how pandemic China, pre-COVID will pricing. a have it's

regular food I cope playing. that So the may demand were in we have now normal there kind that pre-COVID up are of But times. the with service or factors don't see

Jonathan Feeney

a branded while, products, mean, you've beverages, block so prospects of with takes there products mix you're these cafes, now? right talked -- you mix you is these margin about. of how product, one, any progress know and going Is Last the but higher a things always more to value-added or I of through mix I to see Anything like partnership, broadly. that different JVs, you this I license do that asked products, about so it's own

XX COVID I brakes of it we will the lot in point about to months, and help. long term, is that the XX any any can now upon a more be at I Or digging Now, ambitious next thinking out wonder, that? everybody put on just months that, mean, worked, perspective that more stuff.

Mohammad Abu-Ghazaleh

our what but we're go we is initially is in actually but staging, that transportation, have initial assets, objective to exactly everything optimize distribute. and of off are the products in terms our of partners add this of our terms with utilization, asset and Jonathan, That we ability in leveraging value to definitely stages, leverage and and kind as well our working to as brand, our

sales positive which that, we right future. are capitalizing and having really too which being the in couple things our able Our reach and the network important [Indiscernible] operators and why would like very, our to in we or other companies much eat my environment of I year would producers, network that more We survive This without now with factor and near have also long-term this able an have in we in and address for very more was across operations be and distribution extremely distribution This on on. speak across in this strong important leverage has America. the growing the not we capabilities, centers difficult year-and-a-half. United many say to really on or without been part Actually, distribution looks very business many Because loss. to North elaboration And customers. a more States, opinion as going today. position would were and now

Jonathan Feeney

Very helpful as always. you. Thank

Mohammad Abu-Ghazaleh

My pleasure.

Operator

at Mohammad remarks. this closing will are turn time. I further There Abu-Ghazaleh the for no over questions to now call

Mohammad Abu-Ghazaleh

hope to back your news the the we day. rest Thank in you Thank having today I quarter the with better call appreciate in come next much. good you. Have and a very year. can the I attendance of

Operator

you This your Thank for participation. conference today's concludes call.

You wait. begin may conference will The shortly. Please now disconnect.

Fresh Del Monte Produce (FDP) 4 May 222022 Q1 Earnings call transcript