Dole(US:DOLE)2023-08-17 14:43Financial Data and Key Metrics Changes - Group revenue increased by 4.4% driven by higher pricing, with adjusted EBITDA rising by 9.7% to $123 million, achieving an adjusted EBITDA margin of 5.7% compared to 5.5% in Q2 2022 [41][42] - Adjusted net income decreased by $4.1 million to $48.4 million, with adjusted diluted EPS at $0.51 compared to $0.55 in Q2 2022 [46] - Interest expense increased approximately $9 million year-over-year to $19.8 million due to rising interest rates [62] Business Line Data and Key Metrics Changes - Fresh Fruit segment delivered strong results with revenue increasing by 4.1%, primarily driven by higher banana and pineapple pricing, while volumes of bananas sold increased globally [60] - Diversified Fresh Produce Americas and Rest of World segment saw a revenue decrease of 6.8% year-on-year due to lower volumes and challenges in the berries category, with adjusted EBITDA for this division decreasing by 16.4% [48] - Diversified Fresh Produce EMEA reported a revenue increase of 7.7% driven by higher pricing, with a like-for-like revenue increase of 6% [82] Market Data and Key Metrics Changes - The company noted a healthier supply and demand balance in the first half of the year, allowing for better pricing in Europe and improved selling conditions in non-core markets [53] - North American operations continued to perform well despite intense competition, with the launch of Dole Golden Selection Pineapple being well received [54] - The company is monitoring the impact of El Nino climatic conditions on production, particularly in Central and South America [64] Company Strategy and Development Direction - The principal strategic priorities for 2023 include completing the sale of the Fresh Vegetables business, focusing on cost control and operating efficiencies, and accelerating growth in core business areas [66] - The company is actively looking for bolt-on acquisition opportunities to support growth plans while managing costs and driving synergies across segments [56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering a stronger second half than in 2022, despite uncertainties from external factors such as weather and geopolitical issues [21][54] - The company is targeting an adjusted EBITDA for 2023 of at least $350 million, reflecting a positive outlook based on first-half performance [65] Other Important Information - Capital expenditure for Q2 was $21 million, with expectations for 2023 CapEx to be around $110 million [49] - The company declared a dividend of $0.08 for the second quarter, continuing its commitment to return cash to shareholders [63] Q&A Session All Questions and Answers Question: Can you provide guidance on free cash flow as a percentage of EBITDA or net income? - Management indicated that free cash flow conversion has been erratic and is working on providing clearer guidance [7][10] Question: Should we expect more acquisitions in the Diversified space? - Management confirmed that small bolt-on acquisitions are ongoing and will continue to solidify their market position [12][26] Question: What impact do you expect from the European heat wave? - Management does not anticipate a material impact from the heat wave on operations [19][110] Question: How do you expect to manage working capital moving forward? - Management emphasized a focus on inventory management and working capital improvements [8][17] Question: What is the expected EBITDA headwind from potential supply disruptions? - Management noted that historical impacts from El Nino have been significant, but they are better prepared now with improved practices [96][100]