Q1 2020 Earnings Call
Since call today's call is being broadcasted live over the Internet and is also being recorded for playback purposes.
This time participants are in listen only mode. After the speakers presentation they'll be a question and answer session to ask a question during the session. Even if you want me to press Star one on your telephone.
Opening remarks, and introduction I would like to now turn todays call over to the Vice President Investor Relations with fresh del Monte produce Christine Cannella. Please go ahead Mr. Canada.
Thank you Joanne good morning, everyone and thank you for joining or first quarter 2020 conference call as Joanne mentioned I'm, Christine Cannella, Vice President Global corporate Communications, and Investor Relations with fresh and money produce joining me in today's discussion or Mohamadi because Ali g.
So many chief Executive officer, and they'd word of as Aaron Senior Vice President and Chief Financial Officer, I Hope that you had a chance to review the press release that was issued earlier. This morning via business wire. You May also visit the company's website, a fresh del Monte Dotcom for a copy of today's release as wants to register.
For future distribution. This conference call is being webcast live on our website and will be available for replay after this call.
Please note that our press release includes reconciliations of any non-GAAP financial measures, we mentioned today to their corresponding GAAP measures I.
I would like to remind you that much of the information we will be speaking to today, including the answers weekend in response to your question May include forward looking statement within the provision.
Federal Security Safe Harbor lives, we ask that you review the forward looking statements information included in the press release, we issued this morning and in the company's most recent filings with the FCC.
With that I am pleased to turn call over to Mohamad.
Some degree it's Dan.
I want to pick a moment adult knowledge mutual view for joining first doesn't want to produce the sport the 2001.
And then scope for this quarter.
I was being a very difficult fume on hold to work.
Our thoughts go out the older years working to keep them see unhealthy during this oh, that's the good Walgreens.
<unk> Brendan.
I want to extend my best wishes to you and you'll probably news that you spacing.
I also want to extend my gratitude to all of frontline team members for their commitment to go why didn't help you convenient krish I'm prepared food products during this crisis.
I would go directly to what is likely football mindful to all of us.
The impact of the gold it might be.
And the actions we have great good to support our team members.
Before I believe that's the move.
It is our.
Our local.
Okay.
Oh public.
Oh, the pandemic, we immediately I could be good our global and regional executive crisis management teams to respond accordingly.
That's all production facilities, what food safety has always been football flying.
The abuse addition on all put it did go features.
Safety protocols for includes social distancing settlement screenings and increase leading cycles to pick off the books it seems.
Well, because they're good old supply chain contingency plans to mitigate any disruptions in our ability to service our customers.
Most recently.
We brought on three goals distribution and Trusculpt succeeded in Boston, Massachusetts for them they.
Due to pin numbers being bag knowledge.
Would be copied Mike.
We shifted inventory reduction from our balsam facilities I continue to meet demand and deliver double up that said this boy that's the most into an old Steve stimulus.
As of today horrible so facilities back in operation.
[noise], although prevent the Oliver preventive action included having as many global leave US most have been working anymore.
Our worldwide team members have rallied around them and does this company with you during the school Goodbye.
And I'm pleased with how quickly they adapted to the circumstances.
That's really our frontline team that's up kept our farm land.
And the solution said there's running.
Allowing us to them and then our commitment to providing healthy convenient I'd say, it's been a multi branded products out all the work.
We're also calibrating or the number of ways with our local communities. During this time and stepped in it.
I think support whatever we can.
Regarding our business, while we saw an increase in demand in our banana business. We did experience reduce the amount talk first got well fresh and value added products or stay at home or the infected the restaurant and food service.
Well the suburban for them continuing and then it's near future us consumer I got the social distances.
Oh holds manage.
Did you come all the culture.
Unemployment rates so.
I would like to us that our man, but conceptually.
Sean improved results in January and February has the I'll be covering full build for the.
Fourth quarter, two falls, it's like being well up to the core equal.
However.
The corporate banking and stuck to the foodservice Jonathan.
All sorted used about four months me is and snacks Pradesh Cup vegetables public life.
We expect the trend to continue in the second booked Oh, what gets lumpy, it's going to shows good man to see.
Over the coming three months, what would be moving our operations to our new Gonzales, California facility.
Which will allow us to stabilize and improve our production capabilities customer service and did you schools.
In addition earlier before we saw it a bunch of our business in Asia as it is local supply demand imbalances brought about supply because this picture.
Ladies and trying to logistics operations.
This plan.
But all in March.
Sure it easier show signs of recovery I began to see demand increase especially for bananas.
Why do we did experience and I, both challenges and the quote good that's off the top line sales. We took several actions before before our business I've got that comes up with liquidity.
Including halting our share repurchase program, reducing our dividend play 50% was born in London critical skeptical investments for the second half of two fold one thing and.
And it's publishing measures to reduce selling general and administrative expenses going forward.
All of these measures give me confidence that we would come out of goods Cogs is thrown to the stronger than ever.
What will the new and old would be.
I believe we would see behavior changes in the Mark.
One such example is the surgeon in call script ugly suits.
One online grocery shopping goes it's not that is yielding good that dynamic.
I believe consumer you'll see usage has just begun.
Which is wind up in 2020, we broadened our distribution channels like in producing a lot of online store can be United Arab Emirates would love to it'll all be closer to about going pretty soon.
Well I would like that there'll be quoted wants to talk about the first quarter furniture business, we brought those fees.
Thank you Mohammad and good morning.
I want to begin with a few words regarding the confidence we have in our cash and our current debt positions as we renewed our credit facility.
As you're aware, we had a considerable daily didn't know were $1.1 billion credit line or leverage ratio for the first quarter of Twentytwenty was below 3.3.
3.2 times the beat the that.
In addition to availability on our credit line did decision to halt our share repurchase program reduce the dream cash dividend and baseball Noncritical capital investments, we strengthened our cash flow position for the second quarter.
In terms of liquidity, we were assured from our lenders we have no issues with drawing down we just need.
We generated cash this quarter and kept our level almost flat to the end of fiscal year 2019, So does that speak to the strength of our business. We continue to focus on reducing our debt why we continue to invest in critical high margin capital projects to drive.
You should see no real operations and expand our value added business.
Why are we see pressure on revenue in order to you seem to short term, we see much opportunity for rose to be ready for future growth. When described that's best given all of our capabilities as mohamad declare I am confident fresh del Monte we weathered these difficult times and emerge stronger.
From this challenge with that I will now get into the results for the first quarter of Twentytwenty.
Adjusted earnings per diluted share Ward 34 cents.
Compared with adjusted earnings per diluted share of 46 cents in 2019.
Net sales were 1 billion hotter than $18 billion compared with a 1.154 billion in first quarter 2019.
The unfavorable exchange rates negatively impacting net sales by $8 million.
We estimated that they called it 19 pandemic impacted the net sales during the first quarter of Twentytwenty by approximately $27 billion.
Adjusted gross profit was $77 million compared with 95 million in 2019.
Adjusted operating income for the quarter was $24 million compared with 41 million in the prior year and adjusted net income was $16 billion compared with $23 million into first quarter of 2019.
In regards to the product line still the first quarter of 2020 in our fresh or value add that business segment net sales decreased $29 billion to $661 billion compared with 690 million in the prior year period.
And gross profit decreased to $19 billion to 43 million compared with 62 million either first quarter of 2019.
Did the crazy not sales was primarily the result of lower net sales of fresh goods vegetables by an apples and meals and snacks, partially offset by higher net sales of cosmos.
Compared with dollar original expectations. The colder 19 pandemic affect the dollar net sales of fresh and value added products by an estimated $21 billion during the quarter.
Also the continuing effect of november's men backing voluntary product recall affected our net sales into first quarter of Twentytwenty.
In our find that book up they agree that sales were $102 million compared to $111 million seem to prior year period.
Brought merely due to lower sales volume in North America, Asia, and Europe as a result of lower production in our Costa Rica, and Philippines operations, primarily due to unfavorable growing conditions.
Also contributing to the decrease in net sales was the impact of the covert 19 pandemic, which resulted in lower demand for quite an apples across all of all regions.
Partially offsetting these decreases were higher selling prices in North America in Europe, and higher sales volume in the Middle East as a result of expanded sales to existing markets and additional shipments from our Kenya operation.
Overall volume was 16% lower you only pricing was 9% higher and unit cost was 6.6% higher than the prior year period.
In our fresh cut fruit category net sales were $118 billion inline with the prior year period.
Net sales were impacted by lower demand in our food service distribution channel as a result of social distancing measures imposed by governments around the world.
Overall volume and only pricing were in line with the prior year Spirit and unit cost was 1% higher than the first quarter of 2019.
In our fresh cut to vegetable category net sales were $103 million compared with the other in 910 million into first quarter of 2019.
The reason that sales was due to the effect of the Colby, 19th and dynamic, which a significant reduction of our foodservice business. During the month of March mainly in our men Becky subsidiary.
We also face the continuing effect of our voluntary product recall announced in November 2019.
Jim was 12% lower unit pricing was 2% lower and do you need cost was 5% higher than the prior year period.
In our awful Cabo category.
Net sales increased to $94 million compared with $89 million into first quarter of 2019, primarily due to higher selling prices in North America.
The result of lower industry supplies from Chile.
Also contributing to the increase in net sales were higher sales volume and selling prices in Asia due to increased demands.
Partially offsetting these increases were lower sales volume in North America.
Volume decreased 21% pricing was 33% higher and unit cost was 44% higher than the prior year period impacted by startup costs from our new processing facility in new showed up on Mexico.
In our vegetables category net sales decreased to $39 million compared with 42 million in the first quarter of 2019, primarily due to lower sales volume and selling prices as a result of men backing in voluntary product recall and lower sales as a result optical.
Team pandemic.
Volume decreased to 6% unit price was in line with the prior year period and unit cost was 9% higher.
In our non tropical category, which includes our grape Barry Apple sit through spare beach bluhm that green Cherry and Qiwi product lines net sales increased to $62 million compared with 61 million into first quarter on 2019 volume increase the nine.
Per cent, you only pricing decreases the 7% and unit cost was 8% lower.
In our prepared food product line, which includes the company's prepare traditional products and meals and snacks product line.
Net sales decreased primarily due to the backed out the colder 19 pandemic products out rationalization or meant back in business and the continuing backfill de to 2019.
I'm sorry for all their critical.
The decrease in that sales was partially offset by higher net sales into companies prepare traditional product line.
Gross profit was impacted by lower sales volume in our meals and snacks product line.
In our banana abusing segment net sales decreased to $5 million to 427 million compared with the 432 million into first quarter of 2019, primarily due to lower net sales in Asia, Europe, and North America, partially offset by higher net.
Sales in the Middle East.
Asia was impacted by lower sales volume and port closures in China related to the Colvin 19, Europe Banana net sales decreased due to lower industry supply in the beginning of Twentytwenty and the impact of course 19 selling prices in March as compared with dollar regional expectations.
Recorded 19 pandemic affected banana net sales by an estimated $6 million during the quarter North America was also impacted by lower supplies from our Central America production there.
Overall volume was 1% higher than last year sports quarter worldwide pricing decreases the 2% over the prior year period total worldwide Banana unit cost was 1% higher and gross profit decreased to 25 million compared to 35 million either.
First quarter of 2019.
Now moving to selected financial data.
Selling general administrative expenses during the quarter were $53 million compared with 54 million in the first quarter of 2019, mainly due to lower advertising on the me Steve expenses, we expect our recent actions to reduce selling general and administrative expenses.
To have a positive impact beginning in the second quarter.
The foreign currency impact at the gross profit level for the fourth quarter was unfavorable by $6 million compared with Dunhill favorable effect of 3 million in the first quarter of previous year.
In the month of March with and trading several fuel hedges that extends through the end of 2021 to take advantage of lower fuel prices to reduce the exposure overall shipping cost in the Americas and Asia.
Similar to our foreign currency hedges, we have in place to reduce our exposure in different countries that we markets. Our products. These fuel hedges are intended to minimize our financial exposure to volatility in the market.
Interest expense net for the first quarter was $5 million compared with $7 million into first quarter of 2019, due to lower debt levels and interest rates.
Income tax expense was $300000 during the quarter compared with <unk> income tax expense of $9 million into prior year.
The decrease in the provision for income taxes was primarily due to lower earnings in certain taxable jurisdictions.
Next provision for the first quarter of Twentytwenty also includes a $2 million benefit related to net operating losses carry backs provision allow true there recently enacted Corona virus aid the release, an economic Security Act Dick cares.
For the first three mom so twentytwenty, our net cash provided by operating activities was $2 million compared with the net cash used in operating activities of $7 million into same period of 2019.
The increase in net cash provided by operating activities was primarily attributed to higher balances of accounts payable in accrued expenses, partially offset by lower net income.
Our total that increased from $587 million at the end of 2019 to 599 million at the end of the first quarter Oh 2020.
As it relates to capital spending we invested $17 million on capital expenditures into first quarter of 10 to 20 compared with $34 million into same period of 2019.
As announced this morning in our financial results press release, our board of directors declared an increasing cash dividend of five cents per share payable on June 520, 22 shareholders of record on May 13, 2020, reducing by five cents.
Our interest in cash dividend from 10 cents per share.
This concludes our financial review, we can now turn to call overt for acuity.
Ladies and gentlemen, we apologize to out those who missed the first few minutes at this call.
And as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby will be compiled the Q and a roster.
Your first question comes from the line of Jonathan Feeney from consumer edge.
And is now open.
Thank you very much in good morning, and thanks for all your efforts in this crisis I think.
First question would be.
The shortages I would just one of the group could you tell us what your market share in North America Europe.
Oh, youre gases and bananas because.
The drastic increases in traffic we saw.
Somebody seemed I I think people were still buying bananas, it sounds like youre supply constrained to give a sense how much the market group is yours, you as far as your estimation and yeah that'd be my first question.
Well, it's very difficult to say how much of the market grew Jonathan and the first quarter because once we thought they'd be just started January and February we started facing all these challenges you know in the market and.
By almost end of February that was like a rush through to the retail supermarkets and and we saw a spike.
The but not a.
Sales and consumption, but that was for almost like seven days two weeks, but all of a sub and there was.
A drop in.
ER and buying and consumption, but on a normal bases usually.
ER our share of market share is about 20%.
Over the North American market.
Oh and the banana as you know we bring about 1.21 0.3.
3 million boxes, a week or into the into the North American market.
Okay. Thank you I'll follow up on not ordinarily you would expect we're trying to avocados and pineapples.
Where you saw some pretty drastic increases in price on what what seems to be some supply shortages problem I'm guessing you're global phenomenon, because anton apples volumes are down significantly.
Has that pricing lasted into the second quarter and would you expect that to help offset volume declines cuts you helped offset volume declines or have those production shortages eased and more say flat pricing has taken hold.
Well actually what happened with the with the pineapples in particular during their love I.
I would say six weeks has been catastrophic because.
What we saw is that we were expecting you know.
Have a east the beauty of you know, where we had been up and say usually line of drastically during that period.
Unfortunately would what is going on right now in the market supermarkets, three tell us they didn't want to give it to promote pointed out that they don't want even to put up is on their shelves because they said that this is not an essential I can add what we saw that there was an avalanche of volumes coming into the market.
With not much buyers.
And that that's the that that's the fact and it has really affected us fueling the you know the first quarter and the for the first couple of weeks of this month paper.
As we speak today, we see now that the trend is moving back to an old I mean consumption and by a fine that does have pricing improving but during these.
I would say between the.
Do you have to Easter and throughout the end of this month I'm in the end of March held up and they are the pine Apple market wasn't <unk>. It was not a shortage reality there was no shortage of find out but there was no market market for front office and that's unfortunate.
And we notice that mainly for plan up it's not only in North America, but we saw the same trend and the middle East Asia as well.
And euro that customers will play.
I would like priority for them.
Maybe was bananas and other types of certain vegetables, you know we have to consider also that with unemployment the way. It is going to neuropathy at the North America really have infected the consumers purchasing power and in my opinion this win.
Factor going forward, but I believe that we can overcome this would without affecting integrated business and the way we are managing the business.
Great and last question more of a financial one can you make any estimate as to on an adjusted basis I'm forgetting about the 8 million dollar write down of inventory what impact in terms of gross or operating profit a 27 billion dollar shortfall you numerated to covert 19 had on your.
<unk> company.
Thank you for the question.
John it's really hard to precise.
To that.
So when you see the overall.
Affecting in ER in gross profit.
Year over year, as we talked about we had an effective related to FX.
That was about $6 million.
And ER, but the difference there there is a portion that is really related to pricing as we talk at the.
And explain you know.
Yes.
Starting in Asia, we saw significant dropping prices because of the port closures in China, So not because we have a strong presence in China, but oh.
Other companies that had the volumes going to trying that they were diverted to Korea, South Korea, Japan in Hong Kong, where we have the largest market share.
World and so that really.
Pressure on prices there.
And then secondly, what we saw starting immediately and impacting the all the regions as well is a beginning in March we started to see more fierce competition.
In both bananas as well was ER volume, so I would say the majority, but it's hard to precisely that the impact of the 27 million net sales are translated to the gross profit line.
Well. Thank you very much that's all have thanks again for your time.
Thank you gentlemen, thank you John.
Your next question comes from the line of Mitch Pinheiro from Stared event.
In line is now open.
Yeah, Hey.
Good morning, everybody suburban as well.
Hi, Mike Oh, Hey, I I missed the beginning of the call I was just curious Mohammed whether you spoke about.
The extent you can you know sort of the outlook for the second quarter as it relates to all the disruption.
I mean are you are you back on track any extent.
Is there anything I mean, how should we approach.
Putting our estimates together the second quarter.
Yeah, I I, you know I've always honest and I'm very honest in saying that the fifth pepper was challenging.
As we go now I didn't happen first part of it but what is challenging a regarding pineapple and the a fresh vegetables as well, though because of the two children foodservice is a major merger.
ER consumer or merger.
Buyer.
Vegetables Hunt fish camp.
Well the food service out of the picture mostly.
And that has impacted our fresh vegetables.
ER.
Salinas not backing as well.
And a slight way that fresh cut fruit as well, but as we speak today I see much better markets going forward, we see a lot of or more normalcy or the bucket.
See the part up and coming back to a normal behavior.
We see very promising size, even from the food service that the volumes and the demand is picking up.
What gets you this even during this week that things are changing.
I believe that we are in a very strong position minutes left to be very.
Clear on that as far as Weve fresh del Monte we believe that we wouldn't come out out of this crisis stronger than before because for us. During this crisis, we have seen all the weak spots of all the like you say they the hole that we that.
The identified and with what we're doing right now and so you nothing in particular, the consolidation of operations that will bring us.
You know hopefully by end of June and that will be totally Bob but that will take us about.
More or less that'd be a million dollars in savings.
Just by doing that in our operation and Salinas.
And that has more to do that we are moving or consolidating our our operations I use on a 40 basis, we have leaving one plant, which is being used to go to our own.
And outside Phoenix.
Going as well to make substantial savings there and better operations. We have so many things going on in the next few months that was substantially.
Strengthen our business. We you know I don't want a bunch of everything on their conference call, but maybe too. It's Dan can give you more before they should level off and it was though.
But we have something you know very positive thing.
Going on for the second half of the yet and I believe that.
There will be a lot of hopefully very by surprises.
And you said because you find me at the Beach a couple of additional common so.
You know when you started in the month for [noise], sorry, APRU because Asia was the first market that was faced the effect of the Corona virus and was the first to come out. We're seeing you know in the month of the through a much stronger gross profit margins than what we saw.
A year ago, So you know either own bananas or some other products that are that we see we're getting higher margins than what we saw last year and another thing that it's important because at this time consumers also look at into stocking.
A traditional prepare business, we saw a significant increase in.
Demand for their traditional business that last year had a very minimum contribution to our bottom line. It was ER almost the breakeven.
While this year, we expect a very strong contribution between our branded.
Or private label business and our concentrates because all of those.
A significant increase in prices.
Since the end of last year and we as we were expecting you know event are used to be deployed with the new production coming in from Kenya.
Much more favorable yields as compared to last year that will drive reduced cost that were going to see between Q2 and threw out to the end of the year.
Thank you [noise].
When.
What does it.
At this juncture, what does the banana market look like for Ya globally.
In terms of supply the supply and demand picture.
Good day, as we speak I think supply and demand more a lot more or less inline Mitch.
On T. shortage of bananas, and I see the consumption and the demand.
Very much in mine are.
Really we don't see you know disruptions like we saw in and probably methods or vegetables or into value added products, but the banana has been steady and consistent.
What I would like to comment as well, which I mentioned in my ER.
You know much.
That is that we just started actually ecommerce platform and I would encourage you to go and look at that it's W. W. W.
My first thought about the BOP calm and I wanted to see our new site.
It's we have just started about two weeks ago lists and it's been fantastic stuff and good assumption and the feedback is being extremely positive and we see repeat orders or what do you see that Pete you it'll be customers have extremely a highly or you know positive because.
As of the also the quality of brand itself has been extremely.
To this and hopefully this will also be at all or the next few months in North America as well.
Okay couple of questions.
By the way.
Going just going back one question regarding like the fresh veggie business fresh route where you talked about challenging obviously, the challenging environment for foodservice what percentage, how big is food service.
Either within all loans.
[noise] fresh del Monte or just in the veggie fresh cut veggie area fresh cut through <unk>.
Can you give us some sort of tell you how far out as far as our business was this fresh cut fruit and related other items that we produce our selves, it's about 70% foodservice about 70% or.
Right.
Yeah, it's it's the reverse where they would the man vegetable business, it's usually about 70% foodservice and 50% through there so.
The foodservice was mostly ahead.
In the man vegetable business.
But then in our own category, which is the truth, but then all the old fruits and vegetables, well in fact that you know.
Negatively or during this.
Six seven weeks.
Since the foodservice almost into a sense.
And you know I mean, considering our selves compared to the food service I think we had a very lucky we should do you know I mean, our business definitely have been impacted but compared to people into food service you know I feel.
Very sad I'm very sorry for them.
It's growing.
Right.
Just two more questions quick threshold and doesn't one just one correction mr. just because only because I think in your numbers included some other channels specifically on on what we call foodservice that's represents about a between 15, 20%.
We're all sales used the 29 to unions the baby's life for men backing specifically, that's about a 45% to 50% so a little bit less than that so that's why you know January and February we saw a a recovery from the previous record.
But then marches when we saw a huge impact because the first foodservice suddenly shut down and so almost half of our or demand went away from one day to the older and so that caused a significant portion of the other charges that we mentioned.
The image on the on our judgments regarding inventory was all by acres. So acres that we decided not to to harvest and that's represented almost half of the $8 million feedback that we saw in Q1.
Okay.
Thank you I just two more quick questions one on the fresh cut veggie business and the recall is there any way to.
If you how much of the recall.
Sort of was in the decline there is there any way to kind of gauge what business you didn't recover.
So so I would say.
Meets a couple of things. So there are a couple of customers that are they were concerned about the issues that we face, but we were we assure Dan that we didn't you Gonzalez plan to up and running by them until July.
They are very confident to come back to two to have business with us.
But also you know we do believe that a lot of the cost and inefficiency that resides on then backing is going to go away because we're combining just for you to have an idea almost four different plans in one single facility. So it's going to drive.
You know as the chairman mentioned about $13 million in savings annually.
And we expect as we reach peak capacity, there that could be even higher than that.
Because we're going to reduce logistic costs rental costs that we had there as well as we're going to be able to because of automation.
That's going to run much faster, our operation, there and be able to supply with.
Best customer service.
What we saw before so all those things I would say a will be in place a starting in July and I can tell the only struggle why we haven't been able to ramp up these faster is because of limitations on a water usage.
Imposed by the city of Gonzales that or regionally.
We had a commitment on their side for a certain volume, but that change along a little bit and finally, we signed the documents in recent weeks and with that were 100% secure.
To get into the operations there.
Thank you for that and then yes, lessening ONEOK hotter market.
Yeah, I was surprised I mean looking at the.
The.
Volumes, the United States I didn't see volumes declined 21%. So your volume decline seemed a little larger and also your pricing up 33% the quarter, there's a little bit stronger than I would've been anticipated I kind of salt you know near double digit can you talk about.
The Alex you are all mccotter business a little bit.
You know they avocado business, Mitch has being with us for so many years now and that we have being all the time buying through third parties I mean, we never had plant that.
And everything that we used to buy we used to buy from the market from Pakistan.
Used to back for us or even in the open market, sometimes when we I'm sure.
However, since about two or three months back we started our state of the up one of the there's literally the bulk lump in Mexico for above kind of backing but it's nothing.
Compared to.
And I can tell you. It's one of our best plants. The work really when I saw it I wasn't I couldn't believe.
Anyway, but now we are backing almost everything and our plan. So I think this will reflect also on our cost our quality and our does this the or customers. So were very confident bench going forward.
I think that our market share our president and the market will be very significant.
Through the new kind of streamlining our business applicable business in North America, Europe, and Asia, and it's not only you know this plan that we were thrilled that is not only for North America, but itself is Europe Asia manner, and not feel for North America of course, the biggest market.
But are you know were very confident and very enthusiastic about the future for the overcrowded was going forward really.
But what happened in the in the quarter, though I mean.
I I, just I mean volume was down 21% because that is.
It was any I didn't see that in terms of like.
Supply changes into the.
In the U.S. market I just.
We would see.
You know flattish kind of volume and then.
With your plan.
No unit costs were 44% higher.
You know I guess you'd see that come down with your packing plant efficiencies, but.
It just seemed like the quarter was it through the opposite of what I was lucky in the avocado line, but yeah, but but don't forget that we have been what would be pandemic that we're going through we we saw the first week 10 days. Once you know the that the government said that there will be a closer look down.
People and we saw this huge watch to the retailers to be clubs and people in life and we saw it very big Spike and to avocados and the first like 10 days and then all of the southern because because of that there was a lot of supplies coming into the market the pipeline.
Lots for the quote stories was for anticipating best will continue to go on Unfortunately like 10 days later two weeks later.
All of it sedan.
Consumption and buying.
Just like and find out there's not as bad as find out there, but with a couple of Carbos, we saw a very drastic drop and too.
Sales and the baby.
Folks that were in the pipeline or in the and the cold storage, what really what impacted and and support you know we cannot.
We cannot put so much.
Volume forceful so long.
Storage.
[laughter] just too just to complement the there meech as well so we had that ramp up plan of our plan to during this year and so and of course in the beginning we had higher costs because of the startup.
He did plant that we're seeing right now.
But a good example, weights in the month of APRU in the last couple of weeks, we're working or the plant at the very high utilization capacity preparing for the Cinco de Mayo. So it's interesting that.
You know why we're talking about pineapples that we saw demand during the month of Martin suddenly went down because I think there was the frustration on expectations of Easter We're seeing now the opposite so.
We're seeing an uptake on the other car though.
Preparing for Cinco de Mayo and so we are running our plan to 24, seven you know very with a very strong efficiencies there and we believe that.
Some of the challenges we faced in Q1 in terms of Oh, the sourcing and achieving a regional volumes.
I think they were adjusted and corrected for the second quarter.
Thank you would like no other part of that.
I'd like to up to this metric that we are not only packing in Mexico, but we do have our packing plant as well and Los Angeles I mean, we are backing as well the California, Kratos, but we have two sources right. So its California, avocados as well as Mexico and that's.
Both for our markets.
Okay. Thank you.
Next year are taking the questions.
Thank you.
There are no further questions at this time I will turn the call back over to Mr. Adam is that exactly. Thank you. Thank you very much and I appreciate having you on a Johnny this virtual called which is.
This time that I have done that it's a very nicely and I can assure you that we are very confident about our ER.
Immediate future as well as the long term future.
And I hope to talk to you in person or from our offices on our Mexican for school.
So look at Stacey Thank you.
Good day.
Bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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