Dole(DOLE) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for the third quarter was $2.3 billion, reflecting a 10.5% increase on a reported basis and an 8% increase on a like-for-like basis, indicating strong underlying growth across segments [13][14] - Net income decreased due to a $10 million loss in discontinued operations and an $8 million non-cash fair value charge, partially offset by $10 million in insurance proceeds and higher earnings from equity method investments [13][14] - Adjusted EBITDA decreased by $1.3 million, primarily due to declines in the fresh fruit segment, while adjusted net income decreased by $3 million [13][14] Business Line Data and Key Metrics Changes - Fresh fruit revenue increased by 11%, driven by higher volumes and pricing of bananas, pineapples, and plantains, but faced higher sourcing costs impacting Adjusted EBITDA [15][16] - Diversified EMA segment reported an 11% revenue increase, with Adjusted EBITDA rising by $10 million or 34%, supported by strong performances in Scandinavia, Spain, and the Netherlands [16] - Diversified Americas segment saw an 8% revenue increase, with Adjusted EBITDA up by $4 million or 46%, driven by strong performance in the southern hemisphere export business and North American market [16] Market Data and Key Metrics Changes - Demand for bananas remains robust in North American and European markets, contributing to tight supply and cost pressures [10] - The company is experiencing strong underlying growth in key markets, particularly in Spain and the Netherlands, with positive momentum continuing into the third quarter [10][11] Company Strategy and Development Direction - The company completed the sale of its non-core fresh vegetable division, enhancing capital allocation flexibility and focusing on core operations [5][6] - A $100 million share repurchase program was announced to enhance shareholder value, indicating a strategic approach to capital allocation [6][20] - The launch of the new Dole Collada Royale Pineapple represents a significant innovation, aimed at enhancing the tropical product portfolio and community support [7][8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic volatility and industry-specific factors affecting results, particularly in the banana supply chain [20] - The company expects full-year Adjusted EBITDA to be at the upper end of the targeted range of $380-$390 million, reflecting confidence in business momentum despite challenges [20] - Management remains optimistic about the long-term growth potential and strategic positioning within the sector [20][21] Other Important Information - Cash capital expenditure for the quarter was $20.9 million, with a reduction in full-year routine capital expenditure expectations to approximately $85 million [17][18] - The company declared an $8.50 dividend for the third quarter, to be paid in January [19] Q&A Session Summary Question: Outlook for the fourth quarter and cost pressures - Management highlighted challenges in forecasting due to macroeconomic volatility and specific headwinds in sourcing costs, particularly for bananas, impacting guidance for Q4 [24][25] Question: Updates on tariff exclusions for agricultural products - No new updates were provided regarding tariff exclusions, but management expressed confidence in the long-term resolution of tariff issues affecting tropical produce [27][28] Question: Insights on capital allocation and buyback program - The buyback program is part of a broader capital allocation strategy, allowing for flexibility in pursuing growth opportunities while maintaining a progressive dividend policy [37][39] Question: Status of annual contracting negotiations - Management indicated that negotiations are ongoing, with awareness of supply conditions among customers, and expressed optimism about future discussions [51][53] Question: Performance in diversified fresh produce - Management noted strong market positions in Europe and North America, with ongoing investments enhancing operational efficiency and customer offerings [55][57]