Fresh Del Monte Produce (US:FDP)2025-04-30 20:11Financial 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].