Fresh Del Monte Produce Inc. Q1 2025 Earnings Presentation April 30, 2025 0 Meet Our Speakers Mohammad Abu-Ghazaleh Chairman & CEO Monica Vicente Chief Financial Officer 1 • Business Update • Q1 2025 Financial Results • Key Challenges & Financial Outlook Business Highlights Forward-Looking Statement This presentation and the related earnings call contain certain forward-looking statements regarding the intent, beliefs or current expectations of the Company. These statements include statements that are prece ...

Financial Performance - Net sales for Q1 2025 were $1,098.4 million, a decrease from $1,107.9 million in Q1 2024, primarily due to lower sales in the banana segment and negative exchange rate fluctuations [124]. - Gross profit for Q1 2025 increased to $92.2 million from $82.3 million in Q1 2024, driven by higher per unit selling prices in the fresh and value-added products segment [125]. - Fresh and value-added products segment net sales rose to $683.2 million in Q1 2025 from $676.8 million in Q1 2024, supported by higher avocado prices and fresh-cut fruit sales [133]. - Banana segment net sales fell to $363.8 million in Q1 2025 from $379.5 million in Q1 2024, due to lower sales volume and prices in Asia and North America [136]. - Net sales for Q1 2025 were $51.4 million, slightly down from $51.6 million in the prior-year period, primarily due to lower sales in third-party ocean freight services [138]. - Gross profit increased to $6.1 million in Q1 2025 from $4.6 million in the prior-year period, with gross margin rising to 11.9% from 8.9% [139]. Expenses and Costs - Selling, general and administrative expenses decreased by $2.6 million in Q1 2025 compared to Q1 2024, attributed to lower professional fees and promotional activities [127]. - The company incurred approximately $0.3 million in additional costs due to a 25% tariff on imports from Mexico during Q1 2025, which was later suspended [113]. - The company expects a material decrease in gross profit for the remainder of 2025 if it cannot successfully increase selling prices to customers due to rising costs from tariffs [115]. Cash Flow and Capital Resources - Net cash provided by operating activities was $46.1 million for Q1 2025, an increase of $27.4 million compared to $18.7 million in Q1 2024 [144]. - Net cash used in investing activities was $8.8 million in Q1 2025, primarily due to capital expenditures of $10.0 million for operations and production facilities [146]. - Net cash used in financing activities was $34.5 million in Q1 2025, which included dividends paid of $14.4 million and share repurchases of $7.6 million [148]. - As of March 28, 2025, the company had $550.5 million in unused borrowing capacity under its credit facility [154]. - Working capital increased to $607.5 million as of March 28, 2025, compared to $599.8 million at the end of 2024 [145]. - The 2024 Amended Credit Facility allows for an accordion feature permitting increases in revolving credit or term loans up to $300 million [151]. - The company maintained compliance with all covenants in the 2024 Amended Credit Facility as of March 28, 2025 [152]. Tax and Legal Matters - The company is contesting tax deficiencies totaling approximately $235.7 million related to transfer pricing for tax years 2012 through 2021 [117]. - The company registered real estate collateral with a fair market value of approximately $37.8 million in connection with ongoing tax disputes [118]. Risks and Future Outlook - Potential impairment of goodwill may occur if the fair value of the reporting unit is less than its carrying value, influenced by future changes in financial projections and discount rates [163]. - The Trump administration announced a baseline tariff of 10% on products from all countries, causing volatility in U.S. equity and bond markets, which may affect projected cash flows [163]. - Seasonal sales price fluctuations historically result in greater net sales and gross profit during the first two quarters of the year [165]. - Forward-looking statements indicate expectations regarding future financial performance, operational performance, and the impact of tariffs and governmental trade restrictions [168]. - The company anticipates inflationary pressures on raw materials and increased costs for products such as bananas, pineapples, and avocados [168]. - The company is exposed to risks from geopolitical conflicts, including shipping disruptions due to the Red Sea conflict [168]. - The adequacy of capital resources is expected to be sufficient to service outstanding debt over the next twelve months [168]. - The company faces risks related to crop diseases, particularly the Tropical Race 4 affecting banana crops [170]. - There are no material changes in market risk from the previous annual report [171].

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Fresh Del Monte Produce (FDP) Q1 2025 Earnings Call April 30, 2025 11:00 AM ET Company Participants Christine Cannella - Vice President-Investor RelationsMohammad Abu-Ghazaleh - Chairman & CEOMonica Vicente - Senior VP & CFOMitchell Pinheiro - Director - Research Operator Good day everyone and welcome to Fresh Del Monte Produces First Quarter twenty twenty five Earnings Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. All li ...

Fresh Del Monte Produce (FDP) Q1 2025 Earnings Call April 30, 2025 11:00 AM ET Company Participants Christine Cannella - Vice President-Investor RelationsMohammad Abu-Ghazaleh - Chairman & CEOMonica Vicente - Senior VP & CFOMitchell Pinheiro - Director - Research Operator Good day everyone and welcome to Fresh Del Monte Produces First Quarter twenty twenty five Earnings Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. All li ...

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $1.098 billion, down from $1.108 billion in the prior year, primarily due to lower sales in the banana segment and negative exchange rate fluctuations, partially offset by higher sales in fresh and value-added products [15] - Gross profit increased to $92 million from $82 million year-over-year, driven by higher sales in fresh and value-added segments, despite increased production and distribution costs [15] - Gross margin improved to 8.4% from 7.4% in the prior year and 6.8% in Q4 2024 [16] - Net income attributable to Fresh Del Monte was $31 million, up from $26 million in the prior year, with adjusted net income at $30 million compared to $16 million last year [17] Business Line Data and Key Metrics Changes - Fresh and value-added products segment net sales were $683 million, slightly up from $677 million, driven by higher avocado prices and fresh cut fruit sales in North America [19] - Banana segment net sales decreased to $364 million from $380 million, impacted by lower sales volume and prices in Asia and North America due to market demand and supply issues [21] - Other products and services segment net sales remained stable at $51 million, with gross profit increasing to $6 million from $5 million due to higher poultry and meat prices [22] Market Data and Key Metrics Changes - Strong consumer interest in avocados and fresh cut fruit continues, with the avocado segment expected to grow as sourcing diversifies from Peru and Colombia [39] - Pineapple demand exceeds supply, attributed to increasing consumption and favorable pricing compared to other fruits [44] Company Strategy and Development Direction - The company aims to lead in fresh and value-added products, focusing on quality, innovation, and sustainability, with a vision extending through 2025 to 2027 [12] - Strategic acquisition of a majority stake in Abolio, an avocado oil producer, aims to reduce waste and enhance value in a high-margin category [11] - The company is committed to operational excellence, resource efficiency, and global expansion while reducing reliance on any single market [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued solid demand for fresh produce despite consumer pressures, indicating resilience in the face of logistical disruptions [33] - The company is closely monitoring tariff impacts and working collaboratively with buyers to mitigate costs without negatively affecting consumers [37] - Expectations for full-year 2025 include a 2% growth in net sales and gross margins of 10-11% in fresh and value-added products, 5-7% in bananas, and 12-14% in other products [27][29] Other Important Information - The company declared a quarterly cash dividend of $0.30 per share, representing a 3.5% yield based on current share price [25] - Long-term debt decreased to $233 million, a 5% reduction from the previous fiscal year-end [25] Q&A Session Summary Question: Demand in the produce category - Management noted solid demand in fresh produce, with no expected reductions in consumption, viewing market disruptions as potential opportunities [33] Question: Logistic issues in the industry - Management confirmed that smaller operators face challenges due to logistics disruptions, while the company’s integrated supply chain allows for uninterrupted operations [34][36] Question: Impact of tariffs on pricing - The company is working with buyers to mitigate tariff impacts cooperatively, aiming to avoid negative effects on consumer prices [37] Question: Performance of avocado segment - The avocado segment is performing well, with growth expected as sourcing diversifies [39] Question: Fresh cut fruit margins - Management expressed confidence in maintaining strong margins in fresh cut fruit operations due to increased efficiency and demand [42] Question: Pineapple supply and demand - Management indicated that increasing consumption is driving demand for pineapples, which are still competitively priced compared to other fruits [44]

Financial Performance - Net sales for Q1 2025 were $1,098.4 million, a decrease of 0.5% from $1,107.9 million in the prior-year period, primarily due to lower sales in the banana segment[3] - Gross profit increased by 12% year-over-year to $92.2 million, with gross margin expanding to 8.4% from 7.4% in the prior-year period[1][4] - Adjusted net income for Q1 2025 was $30.3 million, compared to $15.8 million in the prior-year period, reflecting significant year-over-year growth[8] - Operating income for Q1 2025 was $44.9 million, slightly up from $44.1 million in the prior-year period, driven by higher gross profit[5] - Net income for the quarter ended March 28, 2025, was $31.9 million, an increase of 22.1% compared to $26.1 million for the same quarter in 2024[25] - Adjusted EBITDA for the quarter was $61.3 million, up from $43.5 million in the prior year, reflecting a margin of 5.6% compared to 3.9%[36] - Total net sales for the quarter were $1,098.4 million, slightly down from $1,107.9 million in the same quarter last year[36] - The company reported a gross profit of $92.2 million, with an adjusted gross margin of 8.4% compared to 7.3% in the previous year[33] Segment Performance - Fresh and value-added products segment net sales increased to $683.2 million from $676.8 million, attributed to higher per unit selling prices[10] - Banana segment net sales decreased to $363.8 million from $379.5 million, impacted by lower sales volume and exchange rate fluctuations[12] - Other products and services segment net sales remained stable at $51.4 million, with gross profit rising to $6.1 million from $4.6 million[14] Cash Flow and Debt - Net cash provided by operating activities increased to $46.1 million from $18.7 million in the prior-year period, primarily due to working capital fluctuations[15] - Long-term debt decreased by $11 million or 5% to $233.0 million at the end of Q1 2025[16] - Cash and cash equivalents at the end of the quarter were $34.4 million, a decrease from $42.2 million at the end of the same quarter in 2024[25] - Proceeds from debt increased significantly to $148.4 million, while payments on debt also rose to $159.5 million[25] Dividends and Capital Expenditures - The company declared a quarterly cash dividend of $0.30 per share, payable on June 6, 2025[17] - The company paid dividends of $14.4 million during the quarter, compared to $11.9 million in the prior year[25] - Capital expenditures for the quarter were $10.0 million, down from $12.7 million in the prior year[25] Strategic Initiatives and Future Outlook - The company expects to focus on high-margin, value-added products to enhance profitability and future growth[4] - The company anticipates ongoing customer growth and plans to expand and diversify its product offerings[4] - The company aims to streamline operations and improve gross margins through strategic initiatives, including consolidating facilities and expanding fresh-cut facilities[4] - The company plans to invest in technology, including AI and biofertilizers, to manage costs and pricing effectively[4] - The company is committed to maintaining a prudent capital structure and creating long-term value for shareholders[4] Other Notable Events - The company incurred a gain on disposal of property, plant, and equipment of $0.8 million, compared to a loss of $14.8 million in the same quarter last year[36] - The company achieved a $0.8 million gain from the sale of idle land in Guatemala for the quarter ended March 28, 2025[3] - The company incurred $2.2 million in insurance recoveries related to damages from flooding at a production facility in Greece during Q3 2023[1] - The company reported $2.3 million in legal settlement charges for the quarter ended March 29, 2024[2] - The company has been recognized as one of "America's Most Trusted Companies" by Newsweek for three consecutive years[3]

Financial Performance - Net sales for fiscal year 2024 were $4,280.2 million, a decrease from $4,320.7 million in 2023, primarily due to lower sales volumes and per unit selling prices of bananas, along with negative exchange rate impacts [216]. - Gross profit for 2024 increased by 2% to $357.9 million from $350.7 million in 2023, driven by higher net sales in the fresh and value-added products segment and lower ocean freight costs [217]. - Operating income increased by $137.8 million in 2024 compared to 2023, driven by lower asset impairment charges and higher gross profit [223]. - Net income attributable to Fresh Del Monte Produce Inc. was $142.2 million in 2024, a substantial recovery from a net loss of $11.4 million in 2023 [327]. - Basic net income per ordinary share increased to $2.97 in 2024, compared to a loss of $0.24 in 2023 [327]. - The company reported comprehensive income of $135.1 million for the fiscal year 2024, compared to a comprehensive loss of $13.2 million in the previous year [337]. Sales and Segment Performance - Net sales for the fresh and value-added products segment were $2,606.9 million in 2024, up from $2,477.8 million in 2023, attributed to higher selling prices and sales volume of avocado and pineapple [226]. - Net sales for the banana segment decreased to $1,475.9 million in 2024 from $1,638.2 million in 2023, primarily due to lower sales volumes in North America and Asia [229]. - Gross profit for the fresh and value-added products segment rose to $243.3 million in 2024 from $167.3 million in 2023, with a gross margin increase to 9.3% from 6.8% [227]. - Gross profit for the banana segment fell to $86.8 million in 2024 from $163.3 million in 2023, with gross margin decreasing to 5.9% from 10.0% [230]. Expenses and Costs - Selling, general and administrative expenses rose by $10.2 million compared to the previous year, mainly due to increased employee benefits and marketing activities in North America and Europe [219]. - Cost of products sold was negatively impacted by approximately $8 million in 2024 due to fluctuations in exchange rates, particularly against the Costa Rican colon [209]. - Advertising and promotional costs for 2024 were $12.7 million, up from $10.5 million in 2023 and $9.3 million in 2022, indicating a year-over-year increase of approximately 15.5% from 2023 to 2024 and 12.1% from 2022 to 2023 [383]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $182.5 million in 2024, an increase of $4.6 million from $177.9 million in 2023 [238]. - Capital expenditures for 2024 were $51.7 million, with $35.5 million allocated to the fresh and value-added products segment, focusing on improvements in pineapple operations [240][242]. - Expected capital expenditures for 2025 are projected to be between $80 million and $90 million, primarily for upgrades in pineapple production and fresh-cut operations in Africa [246]. Assets and Liabilities - Total assets decreased to $3,096.2 million in 2024 from $3,184.1 million in 2023, primarily due to reductions in property, plant, and equipment [325]. - Total liabilities decreased to $1,089.4 million in 2024 from $1,271.4 million in 2023, reflecting a reduction in long-term debt [325]. - Fresh Del Monte's total shareholders' equity increased to $2,006.8 million as of December 27, 2024, up from $1,912.7 million at the end of fiscal year 2023 [337]. Strategic Initiatives - The company completed the sale of certain assets of its Fresh Leaf Farms business for proceeds of $17.6 million in November 2024, as part of a strategy to divest non-core assets [200]. - The company is exploring strategic alternatives for its Mann Packing operation, focusing on increasing operational efficiency and elevating product offerings [200]. - The company plans to expand avocado offerings into additional international markets and continue expanding pineapple offerings [47]. - The company aims to streamline operations and reduce overhead costs to enhance efficiency and expand market reach [48]. Risk Management and Compliance - The company is actively monitoring geopolitical pressures and shipping disruptions, particularly in the Red Sea region, which have created logistical challenges [195]. - The company is assessing the impact of inflationary pressures on raw materials and other costs, which may affect future operating results [48]. - The company is focused on maintaining compliance with applicable laws and regulations to ensure operational integrity [48]. Currency and Interest Rate Exposure - Approximately 32% of net sales in 2024 were denominated in currencies other than the U.S. dollar, exposing the company to significant currency exchange rate risk [279]. - A hypothetical 10% strengthening of the U.S. dollar would have resulted in a decrease in net sales of approximately $137.0 million for the year ended December 27, 2024 [282]. - Total variable rate debt at year-end 2024 was $244.1 million, with a 10% increase in interest rates potentially impacting operations by approximately $1.7 million [284]. Goodwill and Impairment - The company recorded a non-cash goodwill impairment charge of $1.4 million for its vegetable reporting unit due to underperformance and reduced forecasted cash flows [267]. - The company recorded non-cash impairment charges of $109.6 million in Q4 2023, including $88.6 million for customer relationships intangible assets [271]. - As of December 27, 2024, the carrying value of the banana reporting unit's goodwill was $64.2 million, with a fair value exceeding the carrying value by approximately 17.7% [269].

Financial Data and Key Metrics Changes - Total net sales for FY2024 decreased by 1% year-over-year to $4.28 billion, while gross profit increased by 2% to $358 million, resulting in an improved gross margin of 8.4% compared to 8.1% in 2023 [10][27]. - For Q4 2024, net sales were $1.013 billion, up from $1.009 billion in the prior year, driven by higher sales in fresh and value-added segments [24]. - Gross profit for Q4 2024 was $69 million, an increase from $63 million in the prior year, with a gross margin of 6.8% compared to 6.2% [26]. Business Line Data and Key Metrics Changes - Fresh and value-added product segment net sales for FY2024 increased to $2.607 billion from $2.478 billion, with gross profit rising to $243 million from $167 million, and gross margin improving to 9.3% from 6.8% [34][35]. - Banana segment net sales for FY2024 decreased to $1.476 billion from $1.638 billion, with gross profit dropping to $87 million from $163 million, resulting in a gross margin decrease to 5.9% from 10% [36][38]. - Other products and services segment net sales for FY2024 were $197 million, down from $205 million, but gross profit increased to $28 million from $20 million, with gross margin rising to 14.1% from 9.8% [39][40]. Market Data and Key Metrics Changes - The company faced challenges in the banana segment due to competitive pressures and weather-related supply issues in Asia, impacting sales volume [37]. - The avocado program performed well despite industry supply chain challenges, with plans to diversify sourcing through partnerships in multiple countries [14]. Company Strategy and Development Direction - The company is focusing on expanding its pineapple production and sourcing operations, with a five-year growth strategy aimed at ensuring consistent supply [11][12]. - A key initiative includes the Somalia banana project, which aims to revitalize the local banana industry and improve supply chain efficiency [16][17]. - The company is also committed to sustainability, as evidenced by the launch of its biomass initiative and compliance with FSMA 204 regulations [20][18]. Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future growth, particularly in the pineapple and avocado segments, while acknowledging potential risks from weather conditions and international tariffs [46][50]. - The company anticipates a 2% increase in net sales for FY2025, driven by higher sales in avocados, pineapples, and fresh-cut fruit, despite challenges in other product lines [50]. Other Important Information - The company reduced long-term debt by 39% to $144 million and increased its quarterly dividend for the third consecutive year [43][44]. - The company received the SEAL Environmental Initiative Award for its achievements in emissions reduction, highlighting its commitment to sustainability [21]. Q&A Session Summary Question: Can you provide further details on the pineapple supply and pricing? - Management confirmed that they are expanding pineapple plantations and are confident that pricing will be strong, potentially stronger than last year [60][66]. Question: How does the company plan to diversify avocado sourcing? - Management acknowledged the need to diversify sourcing beyond Mexico and California, emphasizing that quality from other regions can match that of traditional sources [68][69]. Question: What is the strategy for the banana segment given the new production in Somalia? - Management stated that while bananas are a low-margin business, they are expanding production in Brazil and Somalia to meet local and regional demand, which will improve supply chain efficiency [73][75].

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