FDP - Earnings call transcript Q2 2022 | Fresh Del Monte Produce Inc.

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Operator

Good day, everyone, and welcome to Fresh Del Monte Produce's Second Quarter 2022 Earnings 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, Global FP&A and Investor Relations with Fresh Del Monte Produce, Ana Miranda. Please go ahead, Ms. Miranda.

Ana Miranda

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

As am Monte mentioned, Investor Rob I Relations FP&A President, with and Global Fresh Del Produce. Ana Miranda, Vice

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

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

August update any forward-looking make. Our may X, we to as obligation statements statements and are of have today, we no

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

Mohammad Abu-Ghazaleh

good Thank morning, everyone. you, and Ana,

you As quarter. delivered robust seen excellent today, we second an have

versus top demonstrating year compared X of growth million the $XX quarters consecutive our iconic by of the robust of our prior And period, a year increased period. the with trend sales net comprised brands. line we saw prior continuation Our of resilience

and During environments in recent we operate history. volatile operating uncertain continued most the the in quarter, to one of

result, the while chain generating Despite in and by sold our operations increased generated earnings, last line and payout. all million, debt our from broad-based dividend a headwinds. As products with these balance strong cash driven cost headwinds, inflationary positive by maintaining of we supply logistical $XXX flow continuing year,

and X.X%. During by our was capital $XX the in our generated million in million margin We $XX operations quarter, debt EBITDA invested adjusted expenditures. million, cash flow lowered $XX from

everything dedication commitment results of representative to revisiting do. Highlighting our environment many by where Our are outperform our our in brand we not. an to grow are

allow consumers and cold providers. of stored customize with use a Avocados. freight leading Store the product development innovation XX avocados to warehousing, chain recently launched our on the from announced that storage large. of collaboration range the supply U.S. our across services On the our pack include their a leverage Their per-trade focus facilities best-in-class and of about front, Goodvocado pleased with consumer trends. team's aligned to naturally The and banana small products Goodvocado featuring We We pipeline organic cloud will fulfillment. recently I'm

the idle shipping a we This & with in reflected is our a to solutions Along are core an on the tailored are broader crop also logistical prior our due actively of project robust announced also ESG, between our XX to seasons, vessels, egg compared a is the in a crop ways base of excellent year-to-date access to $XX leverage white continuing our [indiscernible]. are part additional row is keeping crops. strategy, to in Services resting a food pressures. lines, our same via improving producers focus, up for upcoming expanded team grown released looking which Egg, offering corn customer net we crop working with with to our way expand other to gross with We amid margins. services our segment with Product U.S. be are look cargo our for temperature-controlled proposition, of the report we On of seasons. in continuous also solution other warehouses global and our -- asset These 'XX we our shortage win-win our with play expansion into Other in grounds while the Guatemala areas lands commercial bigger lands the expansion This period the our and with Happy whereby we assets. year to million trucks. is double-digit logistics sales, optimization the strong In collaborations improve services efforts provide productivity of fleet our part

than the are reducing are the of understanding have is we success meaningful track how urgent wake our gas record-breaking We excited summer, We progress ever. share years. great to ESG on have achieve climate made we we the management In and and emissions this in more our science-based of ahead business work for effective believe on our temperature action greenhouse targets of held XXXX. to depends and strongly

we As against in half stronger key forecasted markets a in of dollar. due move U.S. year, the exchange go are the us rates expected to back to fluctuations selling to

the consumer a customer by and Long best-in-class technology, relationship resistant growth mitigate against in profits. our us its plan our and hedged team's business. on dedication product helping operations I'm on which believe recession drive and are yen us investments drive focusing expansion, concentrating Japanese to profitable in the aspects a put us in product delivering and for confident continue of distinctive demand remain positions of key offering sales category. efficiencies the in elements: to in our portion strong, we and innovation, on by integration, term, our focus which through our all vertical a uniquely that strategy softening we outlook, our sustainable of sustainability. international to year, the against Despite movements partially do Organic confident products We end are euro We impact. to in

the quarter financials. Monica second Monica, Now I talk the to will please. turn call about to

Monica Vicente

Mohammad. you, Thank

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

period. with As Mohammad, fluctuations $XX Adjusted compared the period. impact income million with operating the by lower million million, in FDP million $XXX by profit due yen pressures X% of ocean broad-based prior of increased prior materials, quarter with price The the extent, benefited the and sales, decrease by higher income continued logistics net foreign including net of with freight, advertising for to prior mitigated Partially board costs Adjusted in administrative offset justified in packaging in and million increase of the sales was across euro. partially gross to profit primarily negatively year or second exchange the Higher $XX a compared the in was fertilizer, was to Net increase exchange and constraints. rates the The net mainly year cost fluctuations $XX the hedges. compared labor. was quarter noted from lesser for the million million inflation gross our offsetting gross Adjusted second currency and $XX by compared expenses. was the of the in sales impact negative by increases. impacted of million XXXX partially $XX versus year. XXXX of in $XXX negative in resulted and was Despite rates income fuel inflationary be $XX year. inland Japanese lower cost operating sales prior profit,

performance for year. per prior of was Adjusted year corresponding diluted X.X% earnings nonoperational and diluted items. share with $X.XX both in as per million the compared was EBITDA minimal per share margin second the nonrecurring our compared the in had earnings diluted $XX $XX GAAP with year Our prior Adjusted share X.X% was was quarter periods with the adjusted relatively $X.XX with in EBITDA period. prior compared and in earnings line million

prior production due primarily of availability lack compared to with higher routes profit of year. decrease gross in segment market with was line as Fresh or segment, shipping value-added well volatility. The costs, with was profit Let's per impacted prior by of distribution non-tropical in our Fresh in our profit the second to million Sales result a X% $XX with XXXX Net sales most compared including third-party categories. by to approximately million product prior and of Despite adjusted our by period, fruit higher avocado results, as and volumes the as inland now Ocean pricing impacted on in year. freight. driven and quarter beginning for $XX product remained gross the $XX segments. gross of certain million second products negatively quarter category for Value-Added year increased unit by be was pricing, the higher capacity which the negatively and category, the shipping XXXX continued turn

X.X% XXXX. product segment in Middle year gross the the to charge compared in Value-Added gross to X.X% quarter XXXX, to included $X.X East. of million quarter period. adjusted profit result, onetime onetime the a second were a primarily There As margin in charges the and no The in decreased Fresh prior second of

our and period. rates due unfavorable the mainly million second adjusted was second driven Net $X Moving of XXXX with year higher was prior segment. exchange $XX The quarter million banana Banana unit to quarter sales in Ocean decrease and prior XXXX production for million fluctuations to the the of volume freight. lower mainly sales year inland distribution costs, slightly with gross and including compared in $XX decreased Asia. profit by for period, compared per in by segment the

of with factors, to a period. decreased the As in compared these X.X% year prior gross result margin XX.X%

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

of profit shipping to to by of cargo result sales which X% vessels market services. freight Mohammad, higher constraints. net and third-party enabled noted increased from are of rates our us Gross As commercial benefiting services, a elevated as fleet by our demand has expand due

prior $X CARES million adjustments, and of period. The the $X.X due a The general Moving activities prior compared relating taxes. the lower to with first XXXX. due to income despite attributable net million lower was $XX to in the with expense expenses Year-to-date, approximately compared benefit both similar interest to higher million mainly Selling, quarter at compared decrease interest to period. rates. $X income periods $XX expenses. cash primarily in million, was million net primarily administrative coronavirus, from Taxes last provision was Income Net the we data. year, $X Act. tax year to million higher lower year before was compared to prior selected expense with approximately generated impact the million operating year of and $XX including $XXX was administrative in decrease reflected financial million advertising the return of

by driven capital debt decreased the mainly Our XXXX cash the of end of improvements. at million higher, working from is quarter flow million operations $XXX at of $XX million second the to the $XXX Long-term from working this year. Long-term XXXX of end goods well in of million to despite the increases accounts quarter to decreased $XX quarter cost of capital related in as second pressures first with receivable. sold increases compared unprecedented as debt

of generated dispose quarter. million to driving our further identifying proceeds, in operations. asset portfolio optimization in time, second we make of realized second announced were program in assets out cash that have continue program underutilized comprehensive we our performed aimed $X At at the off and million while our was progress of of $XX cost We and reducing Since XXXX. nonstrategic efficiencies the a to on half announced, the review which

We the expect back continue of proceeds half our million to progress $XXX the cash in year. of towards in achieving target

it distribution container last period. with months has and spend the investments compared year on purchase our XXXX The X million the we X payments in $XX prior operations spending, U.S., banana million in on on invested year our million first automation in relates in of year mainly and capital refrigerated included and ships. technology. facilities to focused final the of and of As improvements $XX pineapple this $XX comprised of The production the the

call payable dividend of our morning this of Q&A. declared our record over a per XX, announced release, share to financial quarterly our the This shareholders on on press to $X.XX of financial review. September Rob? cash Directors now can XXXX, X, We results XXXX. As in August Board turn concludes

Operator

of like this the [Operator comes I question Consumer line time, from everyone. At Feeney would from remind first Your Edge. Instructions] Jonathan to

Jonathan Feeney

is year-over-year the progress significant has understand all obviously most the costs, costs. diminution more markets business. margin, in What from there's curious contract but markets, seeing robust that's in I'm specifically. just pricing preventing if going unprecedented the in it We preventing mentioned higher? -- everyone Asian cost? pricing You wouldn't market interested that's about banana what everybody unprecedented European it is same be why broadly, pricing, U.S. I'm is have

Mohammad Abu-Ghazaleh

is the And will is forever retailers the supply for able compensating The the the going main bananas we increase this be forward resistance going because on up The for to in hopefully, that go shelf. we on to on not prices price and will the that they not reason cannot has to the on investments because pricing It's all of any go shelf start the efforts [indiscernible]. going unless and material really form farm. up up. the put prices understand

Jonathan Feeney

I've anywhere is, this a Absolutely. But people time and go the mean, to little But moment. we've XX unique that's be it's the understand about can't talk there now. been have at more. inflation. inflation through a these long ubiquitous time of been and -- without are you what's this some how is suppliers I and I years together lot dynamic cooperative a been

are you me you gaining you more willing losing at in are So players prices? -- do, are who Or how this, is and or because won't others some -- let commodity losing share that there's markets you lower are -- main who sell to like you the there's who business working? are of ask these well

Mohammad Abu-Ghazaleh

of our mean mean, the are I not producers and at -- of -- lose necessarily, we the if probably -- gain side. on like myself, go the repeating other hasn't increased. of are a through you the -- is mean, almost Not moved, mean in on cannot probably everything I fact. sense. to fuel -- some to $X in a cannot be I shelf. taken buy pound an supermarket necessarily needs lemon, now up side, unfortunately, moved Jonathan. XX you has really the mean, $X.XX, like, action price X a in mean, for go I to bananas it's piece the I or I we has it if like you the make it's matter gone roof astronomical. a and continue, lemon it's has opinion, the And I on keep my of XXX%, between for its we shipping we apple $X.XX, roof. for a Everything everything today, doesn't $X last as is years like hammer bananas the even And point increased, And where one cases, $X,

Jonathan Feeney

specifically guess helpful to euro euro-driven. headwind you a has about I the the mentioned this see a business this context. of Was that's XX% Like I rates, press roughly effect Asian been -- of historically, comment you in in Can but exchange not decline big was the release. the that extraordinarily surprised quarter? mention

Mohammad Abu-Ghazaleh

No.

during the beginning that We year, we well number euro have been very against the few [indiscernible] the last XXX% not of honest have hedged the Number at significantly, one. two, be the prices to months. held European

returns. banana terms a the of So helped -- in really have this has and lot

and did, to that the now to the bananas, will the I even and -- very in locations. this is be So not in see some production impact the greater freight that the market continues, production started in rates. in -- also same in Banana the high. issues increase way we'll is so cases, enough some is cannot part this reduced this is And fertilizers the that containers, they and showing and and you the need part due afford if on future. use logistical that going facing, the to -- crystalizes And inputs of all in growers shortages of have fact, many some think Even in consequently this the

Jonathan Feeney

Interesting.

little a I satisfied other raise maybe of discipline Are some to So pricing? yes, to coming sounds Bananas be into wanted places. performance market, other are my stay would more costs way Or of bit it European seeing year, the in the that margin -- in that is, drive is there's in pricing elevated, how easier the dynamic in some seeing you're recover question you're the and come to pricing product to guess the your last the you better able you second you you it you'll products? that in like areas year? compare half other more

Mohammad Abu-Ghazaleh

I decent say, more, we with Services segment, the price a we think and influenced and But to pricing, always are have let’s the the let’s in in working ambitions. segment value-added put flexibility customers the say. bananas, of case by

Operator

from the Pinheiro Again, your question [Operator line from next Sturdivant. comes Instructions] Mitch of

Mitch Pinheiro

little a questions. John's following of up on Sort bit

If term, you out go take look volatility. the longer of back some XX you to years

guess, reluctant the you and in been same of but at business the level. relatively we're an -- Value-Added the the added I the Mohammad, years, pricing. segment, same then profit and has sales, Your sort for excellent retailers gross And take $X billion flattish added looking with done you've on that by all last with mentioned, over the reasons SG&A. -- just I'm but XX to banana you've you've Fresh And job way,

SG&A the flat in been Your absolute XX last over years relatively has dollars.

you're Fresh will course controlling headwind today the understand over seems be of it going in that things, and side Value-Added like globally -- to but be get XX a a job So those something the and doing But there's costs. I always just moving. years. inflation There's the and can't great

what's why it So know than profitable Fresh meaningful is it Value-Added just happened will it XX show over can't that business can it lot you obviously expect talk but improvement? mean, I -- is? I you years the a more and be, profit

Mohammad Abu-Ghazaleh

transparent. be to need I Unfortunately, very

have cut prices added, time. value we the and the over On fresh increased

of Of also cost course, been of product production up. has and cost going

the at have Mann and area another ground to have a substantial up products -- increased the suffered zero power. the and quite fields couple of And we EBIT years And the that us where for the suffered the the especially pricing, not catch and market stop. and end get again. almost But really is our even in price has move with could during during less where margins of cost XXXX our less from in where we like we quarter. demand we have suffered the that to we we of last Sometimes raised into whatever [indiscernible] quarter, and come losses this Packing the period in the we COVID are acquisition

see which in as -- doing the lower of case, pricing. So end except growth Mann particular Packing. care we you are will movement this by yes, we is be taken the and reality, this the probably see But very in that seeing in Hopefully, year, the well, is going forward of, the a this area. factor or average in will what no for with

Mitch Pinheiro

with specifically a is want channel you're but you it mean, getting it pricing, is issue? I that Mann Is issue? What improved? see it customer Packing to

Mohammad Abu-Ghazaleh

contract, No, returns. you contract reflecting that when is a or the no. and real supplying up end with -- reasonably margin. then It's have good very good a you keep a a within you contract contract it's cost Unfortunately, I negative a -- to sign not -- period And the mean,

-- another We not several all these fronts are with not at of to as front need the addressing been issues, well, contracts we contracting and where enough has contract also so growing. are production well. fix That's paying area cutoff renewed, on that

And which handling is So mainly we forward taken well with need. don't speak It's that have going will more side, what several have I confidence production It's our production of. on and very we sales team fronts. now. care be than we as

Mitch Pinheiro

-- Or next something over see that can going going mean, there? we're the we it actually to improvement that that year is is I And is something Okay. -- to.

Mohammad Abu-Ghazaleh

should 'XX, definitely. hope there. the Yes, improvements we I see within

Mitch Pinheiro

the there. how you was us term. here I just can near That the supply-demand just Okay. give in color helpful also just segment, very the looks on guess outlook banana very

Mohammad Abu-Ghazaleh

my of Ecuador very they It’s said that the side with and pests quality. production. terms were knows. will to diseases because, – to has shipping, I is completely lifeline. picture production living they But been sustain has to factors is in as fertilizers now, sector a supply have way very everybody to general, be, Chemicals, market especially Ecuador. in it in growers enough of medium-sized applied believe not affected continue Money as are should in be and markets. – future. in X you being have XX but now the a quite Small, of drive and has months, and of went, for application the point transportation, industry, down, of it, other of one cannot quality I terms we mean, stand banana together, into decide not a yield right X cheap. everything be operations. erratic in Yes, production, in move Interest competitive, equipment the name fruit almost mean will of Ecuador chain, easy. the last the and the the will consistent last And come few I lot control I and is normal minutes well really earlier, that on the the my been on I seen that consistency the year these few a turmoil like around the from – securing that’s was chemicals was the inputs, X. having was The in source the and banana opinion, containers fertilizers, is difficulties financing from – fruit in the the as All opinion, where the condition or really you significantly to it a disruption And big not to going as years. production disruption years. able as to the

up there I I to believe surprised that and be believed one be think, and not banana and wake markets. many will would enough feed for everything, up this, And bananas $XX everybody and I mean that come wakes a when I’m see not morning the – there speculate. have years. I work. in time something add will is box costing up not a I wouldn’t this it you So to and not I

Operator

the back remarks. there this no turn I time. management closing for questions some further are And to will over final at call

Mohammad Abu-Ghazaleh

thank attending to this I wish would everybody on good a next you and and like hope you. Thank for to you I talk to call quarter our today, day.

Operator

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

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Fresh Del Monte Produce (FDP) 3 Aug 222022 Q2 Earnings call transcript