- Net Sales: $1.140 billion, down from $1.181 billion in the prior year.
- Gross Profit: $113 million, compared to $117 million in the prior year.
- Gross Margin: 9.9%, consistent with the previous year.
- Net Income: $54 million, up from $48 million in the prior year.
- Adjusted Net Income: $51 million, compared to $46 million last year.
- Diluted Earnings Per Share: $1.12, up from $0.99 in the prior year.
- Adjusted Diluted Earnings Per Share: $1.06, compared to $0.96 last year.
- Adjusted EBITDA: $89 million, or 8% of net sales, up from $85 million or 7% of net sales last year.
- Fresh and Value-Added Products Segment Net Sales: $694 million, up from $678 million in the prior year.
- Fresh and Value-Added Products Segment Gross Margin: 11.2%, up from 9.2% last year.
- Banana Segment Net Sales: $394 million, down from $449 million in the prior year.
- Banana Segment Gross Margin: 7.6%, down from 11.3% last year.
- Other Products and Services Segment Net Sales: $51 million, down from $54 million in the prior year.
- Other Products and Services Segment Gross Margin: 10.7%, up from 7.8% last year.
- Net Cash Provided by Operating Activities: $144 million for the first 6 months, up from $133 million in the prior year.
- Long-term Debt: Decreased by 29% to $285 million, the lowest level since 2017.
- Capital Expenditures: $21 million for the first 6 months, compared to $19 million in the prior year.
- Quarterly Cash Dividend: $0.25 per share, payable on September 6, 2024.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fresh Del Monte Produce Inc (FDP, Financial) achieved significant margin improvements in the fresh and value-added product segment, with gross margin increasing from 9.2% to 11.2% year-over-year.
- The company reported a successful expansion of its fresh-cut facility in the UK, improving gross margin for this market by almost 60% year-over-year.
- Fresh Del Monte Produce Inc (FDP) has seen substantial growth in its fresh guacamole product, expanding from 640 units sold in November 2023 to over 315,000 units in less than seven months.
- The company reduced its long-term debt by 29% to $285 million, marking the lowest level since 2017, reflecting a commitment to maintaining a prudent capital structure.
- Fresh Del Monte Produce Inc (FDP) reported an increase in adjusted EBITDA to $89 million, or 8% of net sales, compared to $85 million, or 7% of net sales, in the same quarter last year.
Negative Points
- Net sales decreased to $1.140 billion from $1.181 billion in the prior year, primarily due to lower banana net sales.
- The banana segment experienced a 10% reduction in sales volume, leading to a decrease in net sales from $449 million to $394 million year-over-year.
- Gross profit decreased to $113 million from $117 million in the prior year, with gross margin remaining flat at 9.9%.
- The company faced higher per unit production and procurement costs, partly driven by adverse weather conditions and unfavorable exchange rate fluctuations.
- Operating income decreased to $68 million from $72 million last year, primarily due to lower gross profit and a higher gain on sale of assets in the prior year.
Q & A Highlights
Q: Is the strong margin improvement in the fresh value-added segment sustainable in the second half of the year?
A: Monica Vicente, CFO, noted that while the second half of the year, especially summer, presents challenges due to competing fruits, the company is making progress in improving margins. The mix of products like Honeyglow pineapple and Fresh Cut products is performing well, and they expect a good year despite some pressure.
Q: Regarding the biofertilizer project in Kenya, is it for internal use or will it become a separate revenue stream?
A: CEO Mohammad Abu-Ghazaleh explained that initially, the biofertilizer will be used internally to reduce costs and enhance sustainability. Eventually, they aim to market the product to third parties in Kenya and East Africa.
Q: What are the current trends in the produce category in North America given global inflation?
A: CEO Mohammad Abu-Ghazaleh highlighted challenges in pricing, particularly with bananas, where prices have not decreased as expected. High shelf prices for produce are affecting consumer demand, but Fresh Del Monte's fresh-cut fruit segment, including fresh guacamole, is performing well.
Q: What drives the 3% CAGR in pineapple volume growth, and why isn't it higher?
A: CEO Mohammad Abu-Ghazaleh stated that growth is limited by land availability and the time required to cultivate new fields. The company focuses on internal growth and maintains a vertically integrated model to ensure consistent supply and quality.
Q: Is there competition in the Honeyglow pineapple category?
A: CEO Mohammad Abu-Ghazaleh mentioned that while competitors have tried to imitate their success, Fresh Del Monte's expertise, proprietary technology, and control over pure seed varieties give them a significant advantage in maintaining quality and market leadership.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
