Dole(DOLE) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Group reported revenue increased by 1% and 5.8% on a like-for-like basis [5][12] - Adjusted EBITDA of $82 million was in line with market expectations and 2.3% ahead of the prior year on a like-for-like basis [5] - Net income of$ 21.5 million in Q3 2024 was $32.5 million lower than Q3 2023, primarily due to a prior year exceptional gain [13] - Adjusted net income was$ 18 million, with adjusted diluted EPS at $0.19 per share [13] Business Line Data and Key Metrics Changes - Fresh Fruit segment delivered adjusted EBITDA of$ 42.9 million, a small decrease compared to last year but ahead of expectations [6][14] - Diversified EMEA segment experienced revenue growth of $5.1 million, but adjusted EBITDA declined by 13.1% due to higher one-off IT charges and supply issues [9][15] - Diversified Americas segment reported strong performance with a like-for-like revenue increase of 7.2% and adjusted EBITDA up by$ 3.6 million [9][16] Market Data and Key Metrics Changes - North America was impacted by drydocking, but overall performance was good with higher volumes of bananas sold [6][7] - European market showed positive momentum driven by higher volumes of bananas and lower shipping costs [7] - Supply conditions for bananas and pineapples remain tight, leading to higher sourcing costs but also positive pricing momentum [7] Company Strategy and Development Direction - Company is focused on capital allocation and managing leverage, with a reduction in leverage to 1.86x [17] - Plans to expand shipping fleet by bringing two chartered vessels under ownership in early 2025, enhancing operational flexibility [8][18] - The company raised its full-year adjusted EBITDA target to at least $380 million for 2024, reflecting confidence in operational performance [20] Management Comments on Operating Environment and Future Outlook - Management noted that the second half of the year may see a heavier weighting towards the first half, with higher shipping costs anticipated [24] - The Diversified Americas business has shown strong performance, benefiting from improved management processes and favorable market conditions [26][27] - Management expects a strong performance in the export side as key export seasons from Peru and Chile commence [9] Other Important Information - Cash capital expenditure from continuing operations was$ 21.1 million in Q3, with total expected capital expenditure for the year between $130 million to$ 140 million [18] - A dividend of $0.08 for the third quarter was declared, to be paid on January 3, 2025 [18] Q&A Session Summary Question: Can you walk through the factors affecting EBITDA guidance for Q4? - Management indicated that the fourth quarter may be down 18% at the low end, with higher shipping costs and the sale of Progressive impacting EBITDA [24] Question: How much of the improvement in Diversified Americas is real underlying strength? - Management acknowledged that the segment has benefited from improved conditions and management processes, but some volatility is expected [26][27] Question: Should we expect a more normalized cherry season into Q4? - Management confirmed that Q1 next year could see normalized conditions, with cherry volumes expected to align with the earlier Chinese New Year [30] Question: What are the supply and demand factors driving Fresh Fruit performance? - Management noted strong demand for bananas and tight supply due to weather events, contributing to overall outperformance [32] Question: Can you elaborate on the growth potential from the new vessels? - Management highlighted that the additional capacity will support growth and ensure compliance with service level requirements for major retailers [33]