Q3 2021 Dole PLC Earnings Call

Hello and welcome to the Dole PLC third quarter 2021 earnings conference call and webcast. Today's conference is being broadcast live over the internet and is also being recorded for playback purposes. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question and answer session for opening remarks and introductions. I would like to turn the call over to the head of investor relations with Dole PLC James O'Regan.

Welcome everybody, and thank you for joining our third quarter 2021 conference call. Joining me on the call today are Rory Byrne, Chief Executive Officer, Joan Linden, Chief, Operating Officer and Frank Davis, Chief Financial Officer. This conference call is being webcast live on our website and will be available for replay. During this call, we'll be referring to presentation slides for supplemental remarks and these are available on investor relations on the Dole PLC website. Please note, our remarks today will contain certain forward-looking statements within the provision of the Federal Securities Safe Harbor Law. This affects circumstances at the time they were made and the company expressly disclaimed any obligation to update or revise, any forward-looking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those such force in our SEC filings and news releases. Our earnings release financial report and related materials for the third quarter can be found on our website.

Joining me on the call today, irori bar chief executive officer CEO, and Lyndon Chief, Operating Officer and Chief Financial Officer.

Security Safe, Harbor Law, these rooms, like, circumstances at the time. They were made and the company, expressly disclaimed any obligation to update or revise, any forward-looking statements, actual results are outcomes. May differ materially from those that may be expressed or implied due to a wide range of factors, including those such force in our SEC filings and news releases.

Our earnings release financial report and related materials for the third quarter can be found on our website.

Details of our statutory forward-looking statements, disclaimer can be found in our SEC filings and the presentation. I will be discussing today with us and please try to save call over to Rory.

Thank you, James. And thank you all for joining us on our first earnings call and do PLC follow our IPO in July, as well as disgusting.

Frank will take you through the financial review. So with that turning to slide 5, while 2021 has been a transformative year. For the group told, TLC was formed by bringing together told approaches PLC and Dole food company, followed by the IP o-- of this new company. At the end of July. We receive net proceeds of three hundred ninety eight point, nine million dollars from the IPO. And all of the proceeds were used to strengthen our balance sheet by paying higher cost Dash.

I'm currently with the IPO. We also successfully completed a 1.4 billion, refinancing package providing us with well-structured liquidity to support. Our continued work for the purpose of this presentation.

Has to do with the pro forma financial information presented in the form at 15 with the SEC in connection with the IPO. So since the IPO, at the end of July, we've been focused on the integration and reorganization of management across the enlarged, entity implementing our Synergy strategy and further, strengthening our public company reporting and compliance functions. Looking at our financial performance performance. We've delivered strong results for the first nine months of the year, against the backdrop of the

A unique economic environment, pro-forma revenue and profit.

Not just City, but both up versus the comparable prior year period with pro forma Revenue up four and a half percent and pro forma, just City, but up 12.6%, We're very pleased with this quote on set against the context of a strong prior year and also given the complexity is currently being experienced in Supply chains across the globe, talent and dedication of a people along with the diversity of our operations, both from a geographic and the product and service offering perspective.

As well as our sophisticated as a base as helped helped us to manage the industry-wide supply chain pressures. We witness firsthand continued benefits of business model and having control over over assets within our supply chain such as our place of 11 ships, but we operate and approximately 17,000 containers in a tropical fruit business. This is enabled.

Industrywide cost inflation, which emerged earlier this year is increasing, increasing inflationary pressures emerged. We initially focused our efforts, on optimizing our supply chain to limit cost impacts. However, now that it's clear that I'm placing is pervasive and persistent. We have reacted by increasing prices in the segments of our business that have longer term contracts, such as our tropical fruit Division, and value-added salads, and we're pleased that our customer base is largely being supportive and understanding.

Within the Diversified segment of a business pricing tends to be more Dynamic. And today we've been able to pass through but working closely with our suppliers and our customers.

We're also very pleased that our financial position following the IPO. At the end of 23, our neck leverage to the 2.76 times, which is below our targeted level of three times or well-capitalized, balance sheet grades. The basis for long-term sustainable growth for the group for the group and provided a recap of our long-term strategy later in the presentation today. We've also announced a cash dividend for the third quarter of 2021. We pay a dividend of eight cents per share on January 7th.

22 to shareholders of record on the 17th of December. 20 21, we're providing a full year 2021 pro forma Revenue, Target in the range of 9.2 to nine point four billion dollars and a full year 2021 pro forma just to the ebitda Target in the range of three nine two to four hundred million dollars. This corresponds to year and your pro forma group of 2.6 to 4.8% until format just to leave the dog with the four point nine, two seven points.

Six percent. I provide further details and around later in the presentation. So turning to slide seven and I'll give you a brief overview of the business.

Their own Farms.

Over with sales and over 80 countries in North, America and Europe being my largest markets, but also the presence in parts of Asia Latin America, the Middle East and Africa, for operating divisions of do PLC our fresh fruit, fresh, vegetables, Diversified fresh produce America, and rest of world and diversified fresh produce, emea, fresh, fruit division, responsible farming for farming, sourcing and distribution of bananas, pineapples, and various other tropical fruit as well as providing.

Commercial cargo Services principle markets. Geographic regions, North America. And Europe is responsible for the distribution.

V LT has leadership positions in categories such as bananas. Pineapples, value-added, salads, grapes and fresh pot vegetables. We also focus on expanding presence in deed and faster. Growing product categories such as avocados, berries and organic produce.

Fresh produce is a key. We are seeing an acceleration of growth.

The market that we operation is still highly fragmented with significant potential for further consolidation will reproduce. We use them and a, a successful leader for growth on. We expect told Elsie to do the same slide. 8, just remind you, we've Illustrated the wide geographical present ability of Z as well as giving some insight into the highly valuable and strategic asset base that we have. We operate him over 250 facilities across the globe.

Including over 160 distribution facilities and 75.

Of those ships ourselves the two kinds of out of charger in 2011 in the 11th or two new ships. Have we took the Livery up earlier this year? The do last check on the door, Maya R11 owned and operated ships are use the shipping of tropical produce on our production facilities in Central and South America, to a customer Network in North America, and support our commercial cargo business, having a room, 32 ships by greater certainty distribution and enhances our supply.

Transparency and control.

Want to give an update on operations?

Thank you. Good morning. Everyone. I want to start by emphasizing both my own excitement for what we have started here. So PLC as well as my satisfaction with, how we have progressed to date with our first steps, as a new company. As you heard already from Rory, the performance of the combined business here today is on a pro. Forma basis, has been strong and provides an excellent foundation for the opportunity to head.

Head turning to slide 11 as Rory has already noticed. We are not immune to inflationary pressures. And so we have had needed to take actions to address the ongoing challenges, including initiate price increases in the fresh fruits and fresh vegetables division, which represent we typically have longer term contracts in place. And so we have needed to address the current issues.

You have been pleased with the response from our customers to the price increases that we have looked for and we are progressing. Well towards having the pricing in place to offset current inflationary pressures in full in 2022.

In the Diversified fresh produce division with represent, 55 percent of revenues, pricing tends to be on a short-term basis and can be passed through the supply chain relatively quickly, why we are pleased with the support from our customers. We also know that in this environment we need to be highly focused and attentive to all aspects of the supply chain. So we can continue to deliver excellent products and

Service to our partners and a healthy business. For our stakeholders, looking at the four divisions in more detail. This has been an abnormal gear in fresh fruit. Throughout the year. We have endured a significant cost impacts on both our source in base and supply chain, following the November 20, 20 hurricane in Guatemala, and Honduras and more recently by the current inflationary pressure to deal with the increased cost.

The pressures we have been working with our customers to increase pricing and expect to have the pricing. We need to offset the current inflation impact in place by the end of 20 21.

It's been a challenging year in fresh vegetables. Edition for two main reasons, both of which are being addressed.

Yes, the first is that our fresh tag vegetable business has suffered from persistently weak market, pricing course, in Parts by oversupply at the market planted for greater recovery. In the food service sector then has been possible. As COVID-19 has lingered to address this issue. We have reduced our own planting to limit our Market exposure in 2022. We have also seen some short-term relief in the form of better pricing at the market has achieved.

Balance with the move to the winter sorting location.

The second impact has been the significant inflation or challenges that have affected, the value-added salad business, particularly in relation to praise labor, and packaging heading into Q. Three or we have already implemented price increases with value-added customers to help address the inflationary challenges. We saw early in the year.

We're in our Diversified business in America. We have overcome specific weather-related challenges by relying on, our Diversified range of products, and services, and have grown our business, by both further. Strengthening our customer relationship and by continuing to grow in high-growth categories, like berries and avocados.

And finally, you know, we Diversified in their business, we have withstood. The continued impact of COVID-19 related instructions, both end Supply and in demand patterns by building an hour, strong customer relationships and providing unreliable service in a challenging environment. We also reorganized our Dutch businesses, which has contributed to strong growth.

Next, I would like to mention some of the mess Investments. We have made, which we believe will drive the business forward in the years to come most critically. We took delivery this summer up to new vessel stole a second or Maya that we serve our us Gulf Market, and which we believe our foundation assets for insurance ability to manage, two days unique supply, chain challenges, yesterday's, as normal as of numerous Global ports, have suffered with congestion, and delays needed to be

Ages and pricing shipping costs. We have been able to insulate ourselves from the worst of the crisis are relying on our own acid and by operating out of ports where we have our own operating teams on the ground. In addition to the protection of our integrated supply chain and supported us in the current environment. I'm very pleased to say that both the size of the new vessels and the new routes. We have implemented. Bring both a better environmental footprint as well as reduce costs.

It's a caller with the two new ships. We were able to retire for old ones.

We have also invested significantly in replanting in Honduras of the several of our company Farms were devastated by last year's hurricane. We believe are quick action to reinvest and the incredible work of our team on the ground positions as well to drive further cost competitiveness in the business in the years to come another report. Is that <expletive> again Initiative for us. This year was the acquisition of an additional pineapple farm in Costa Rica. That is adjacent to one of our existing forms this Farm.

This Farm had been one of our long-term Growers and the owner had been looking to sell the business that position. Security supply allows us to access additional grower margin and gives us the opportunity to expand margins by driving synergies. Do to combine Farms.

And finally, we have also invested this year in important, packaging, and cooling assets as source, and close to the market. We Believe Investments here, not only makes sense with the operations on a standalone basis, but will also give us an enhanced capability to further Drive groups. Unity.

And on the topic of CDs, I would like to make a few specific points on the additional steps. We are taking to position ourselves to delivering on our senior Target for the years to come. Firstly and of critical importance executive management, team of Dole PLC or quickly building on our existing relationships, to establish a foundation for long-term growth. All the necessary function projects that come within any mergers are advancing well, and we have integrated several key, man.

German teams across the Legacy Dole food company. And told the produce businesses. We believe this cross-pollination. We not only bring new practices and ideas to existing areas. But, with also Foster the culture, we need, we named our management teams to sustain our systems success and develop our new opportunities.

We have already made some small Investments to get it to drive further integration like in the French Market where we are planning to grow our presence with new writing and capabilities. And in South Africa, where we are. Consolidating, some of our sourcing operations. We have also established a new process company logistic functions function. That is currently laying the foundation for keygroup white projects. We also saying good forecast for growth in selling and sourcing for both core products and higher growth products like berries.

As we look forward into 2022, we expect to make first rights with sourcing efficiencies, particularly in South America, and South Africa, was selling opportunities, and extension of the gold brand in important European market. And also with specific progress on our Logistics. There is an avocado strategy with that. I will hand you too Frank to give you the financial review.

Thank you, Johanna. I'm very pleased to be reporting our first quarterly earnings as the New York Stock Exchange information and is outlined in. Our press release has been prepared on a pro forma basis.

Financial information presented in the form. F, one filed with the SEC in connection with the IPO.

Turning first to slide, 15 gold, PLC is delivered a strong results with year-to-date pro forma Revenue up, 4.5% to 7.1 billion US dollars. At the end of September, the increase in the year-to-date pro-forma Revenue was driven by growth in the to Diversified fresh produce divisions and the fresh vegetables division, for the third quarter of 2010 T1 cro. Former revenue is 0.3 percent ahead of the prior year.

You're today's pro forma adjusted. Ebitda is up, 12.6 percent to three hundred thirty seven point. Seven million compared to two hundred ninety-nine point. Nine million for the first nine months of 2020. The increase in the year today. Ebit. EA has shown has been driven by EPA increases in the fresh fruit division. Followed by a strong following strong first half of the year and from Diversified fresh produce emea.

This is partially offset by ebitda decreases the fresh vegetables. Division. Due primarily to weakness in our fresh packages business due to an oversupplied Market as well as inflationary pressures in value-added salads, additionally an EPG, a decrease in Diversified fresh produce Americas and rest of world due to the impact of adverse weather events at the outset of the year.

Twelve all that adjusted ebitda.

Is John 35.4 for the third quarter? 35.4% for the third quarter of 2021 press, it's a comparable quarter in 2020. The decrease was predominately driven by ebit da decreases in fresh vegetables. Due to weak markets in our fresh pack vegetables, business and inflationary headwinds in value-added salad. In addition. We experienced ebit EA decreases in the fresh fruit division. Due to the ongoing supply chain impacts.

During last year's hurricanes, moving to the next slide on a pro forma basis. Adjusted. Net, income was 130 1.6 million for the first nine months of the year, which corresponds to a twenty two point five percent increase from from the first nine months of 2020. The increase is predominantly due to the increase in pro forma adjusted ebitda offset by an increase in depreciation, charge and an increase in the earnings a Tribble to non-controlling. Sure.

Holders.

Looking at each of the divisions. Now, in more detail and starting with fresh fruit throughout the year. We have seen cost pressures from the supply chain impact caused by the Hurricanes. You Oughta and a check in Honduras and Guatemala and November 20, 20 and more recently from the inflationary pressures, which have increased as the years progressed. However, more positively, we have also seen good market pricing in the first half of the year, and I've been continuing to optimize our

Chain, including taken delivery of our two new vessels. So don't Aztec and the dollar mayor to improve our own cough heard quarter pro. Forma. Revenue was down point eight percent versus the prior year, due to lower volumes of bananas, in North America, and lower banana price in Europe as well as lower pricing for pineapples in North America. This was offset in part by higher pricing in North America for bananas, volume growth and pineapples in North America.

And in Europe as well as closing commercial cargo revenues due to higher phrase rates.

You have to date pro. Forma revenue is up 2.7 percent compared to the prior year, due to a higher banana price in the North America and higher pineapple pricing across all markets as well as growth in commercial cargo partially offset by lower button on the volumes. In all markets, third quarter 2021 pro forma. Adjusted ebitda was down 53.2% compared to the prior year, due to lower revenue and higher transport.

In North America entire project cost driven by materials increases as well as the continued impact on Supply chains from last year's hurricanes in Guatemala and Honduras.

These cost increases were partially offset by improved performance in our commercial cargo business as well as by the benefit of currency. Hedges in our European markets, for the year-to-date ProForm adjusted ebitda is of 27% largely due to higher Revenue in particular with the benefit of higher prices in the u.s. Banana market and the growth of the commercial cargo business.

Partially offset by higher sourcing cost.

Following the impact of the Hurricanes last year and inflation. We had when we to the next slide. Fresh vegetables. This division has had a challenge in here for two main reasons. As you mentioned earlier. The fresh vegetables Market has been over supplied in 2021 with the level of plantings based on an expectation that the recovery in Food Service would be greater than its come to pass. This additional supply has put downward pressure on all markets.

A fresh packaged products with the outlook for COVID-19 and 2022, still uncertain. We are cutting back. Our own plantings to reduce our exposure within the value. Either salads business. We have persisted through significant inflationary pressures due to both the US Labor shortage and Inland Transportation challenges. However, as Johann mentioned, we have already successfully adjusted pricing with customers to help offset cost pressures from earlier in the

Year pro forma Revenue, increased one percent in the third quarter of 2021 primarily due to higher pricing in the value-added silence business. All set in part by lower volumes in this business, production was impacted by labor, availability changes and challenges in the quarter, in addition, lower volume, and lower pricing and fresh pack vegetables there to a decrease in Revenue.

Year-to-date, full form a revenue increase 4.3 percent due to higher volumes and pricing in the value-added, syllogism driven by strong market demand, and a better mix of products sold. This was partially offset by Revenue declines in the fresh packed business.

Third quarter 2021 pro, forma adjusted ebitda decreased by ninety point, eight percent, primarily due to persistently week, fresh pack, vegetables Market the impact of inflation in India and transportation as well as in packaging and labor, continue to increase. However, the early action taken on increasing prices, with customers and value-added salad, also started to offset some of these pressures in the quarter.

Finally pro forma adjusted ebitda for the first nine months, decreased 80 4.8% primarily due to the impact of persistently. We mentioned earlier.

Looking next at Diversified fresh produce Americas, and rest of world, third quarter 2021 pro. Forma. Revenue was up 4% primarily due to a strong performance in the very category and growth in apples and kiwis from Chili's offset. Partially by some Port related challenges. In North American export business and revenue for the first nine months of 2021 was up 5.2%. Primarily due to higher.

You from Paris and more incrementally by growth in the Chilean.

Sports Group business. Third quarter, 2021 pro forma, adjusted ebitda was down. 52.4%. Largely driven by the continuing impact of adverse weather during the Chilean grape growing season in the first part of the Year. Partially offset by good growth in various pro forma adjusted ebitda for the year to date with John 15.1%, with a decrease again, substantially driven by the adverse weather event.

That impacted this was all set in part by.

Finally Diversified fresh produce emea a type of strong performance in 2021, year-to-date. We organization of our Dutch businesses as by the recovery in the Foodservice Channel contributed to this strong growth pro forma. Revenue decreased point, eight percent for the third quarter of 2021, due to the divestment of a business. In the third quarter, partially offset by the incremental contributions from Step Up Acquisitions and a favor.

Impact of currency translation pro forma revenues is up 5.9% for the first nine months of the year due to positive, currency, movement, and strong performance, across all channels. And the contribution from set of Acquisitions in the period. This was partially offset by the incremental impact of divestment in the third quarter.

Third quarter 2021 pro forma. Adjusted ebitda was up, 9.4% to to a good recovery in our Dutch business. It's following the reorganization mentioned previously.

As well as it's a strong performance, across other European market, and the favorable impact of foreign currency translation, finally, pro forma adjusted ebitda for the year to date is 33.8% ahead of Prior year again, driven by recovery in our Dutch business, and good performance in Ireland and the UK driven by the reopening of food. Service channels are Brazilian export business, also performed strongly, the results also benefits from

And crunchy. I'm translation.

We're looking at a couple of educational leverage on, slide 21. A capital expenditure strategy is focused on investing where we see the greatest opportunity for profitable growth to support our existing strong Market positions in core products. The car. This combination, We Believe, ultimately drives the best returns for our shareholders. Well, in a typical scenario year, we expect that a capital expenditures expenditures will be broadly in line with our depreciation expense. This will bury a Time.

Primarily us are reinvestment. Psychic with major Capital assets is not linear in 2021. We made a number of strategic Investments. We made fifty three million in find the payments for our two new vessels, in the first half of 2021. In addition. We spent 16 million we invest in in and a Honduran Farms impacted by last year's hurricanes and 25 million in acquiring pineapple acids that bring a unique strategic value to our operation.

It's already mentioned previously. We have announced a quarterly cash dividend for the third quarter of 2021 of eight cents per share which we were, which will we will be paid early in early January, to shareholders on record on the 17th of December, 20 21.

finally, we will continue to

Saint Martin leverage within our Target, labor level of three times. Net debt to adjusted ebitda at the end of the third quarter Arnett. Leverage ratio was two point seven, six times. Now, I'd like to hand you back to Johan who give an update on ESG initiatives, be undertaken across the group.

Thanks, Frank. The fresh produce industry is delivering the most nutritious foods to the world at the lowest environmental impact, increase in consumption of fruits. And vegetables is almost universally recommended by Health leaders doctors and nutritionists proper nutrition. Plays a crucial role towards improving the quality and longevity of life for millions of people that are suffering in growing numbers by health issues related, to unhealthy eating in comparison to other food sources then

Mental impact from produce related emissions and water usage. It's among the lowest make it an exceptional food category, to tackle the food needs on an ever increasing world population. While the fresh produce industry is well position. We at do PLC at formally committed to ambitious environmental, and social targets for a company and intend to lead the produce industry, on the journey, to establish even more sustainable ways to operate. We're taking this.

Journey in partnership with the broad stakeholder groups, why staying anchored in science and the latest research. And we are dedicated to continuous improvements in sustainability and sustainable production from PL to porch.

In 2020 to do Piercy, we finalized a new combined framework materiality assessment and the set of goals. During the first half of the year. We also committed to disclosing our emissions as the combined entity to see the P4 the first time in 2022. This will include scope one and scope to data and qualification of scope. Three emissions is well underway. With that. I will pass you back to Rory, to provide our outlook for the remainder of 4.

Year 21. Thanks, Johan. So I suppose even with the complexities that we're currently experiencing throughout the supply chain. We do still expect full year pro forma revenue and revenue in the range of 9.2 to nine point four billion dollars. We also expect Pro format, the range of 392, 400 million dollars are mid.

Single digit growth on the prior year for 2021 and looking into 2022. We expect our fresh fruit division to continue to deliver a robust performance by leveraging, a significant asset base and customer relationships, as well as due to the continuing recovery in Honduras for fresh vegetables. We expect to come to to continue to leverage the strong underlying growth in the value added segment of this division to both.

Grow our own sales and support a pricing model and customer relationships that allow us to respond to cost pressures where they can be helped to or they can't be upset. And finally in our to Diversified fresh produce businesses. We expect to continue to build on our success with key customers by leveraging, the benefits of dual TLC's integrated supply chain to bring our customers even closer to continue to expand our service. Offerings in the marketplace overall. We remain confident that the excellent underlying problem.

Consider category.

Primary position in this category and are high quality asset base and people will combine two positions for success for the remainder of 2021 and into 2022 on slide 27. We've set out the elements of a strategy to deliver sustainable long-term group. Our growth strategy is focused on expanding our presence in the large and growing fresh produce segment as well as continuing to focus on our core business or setting out to capture market share and the faster growing categories.

Avocados berries, value-added toilets and organic produce. These categories are growing at above average levels and together represent 25% of our integrated supply chain.

Mission will continue to utilize the strength of this iconic brand and expand its presence of two additional categories and markets will deepen. Our Market penetration by continuing to focus, a new product Innovation and strengthen our customer relationships through. Enhanced customer insights. This is particularly relevant to the value of one of the main reasons for finally, we've historically grown through Acquisitions, and we continue to look for synergistic.

Opportunities.

The operation on the can open the line for questions. Thank you.

Thanks, Lori. If you'd like to ask a question, please press star followed by one on your telephone keypad. Now to withdraw your question, please press star. Followed by two and then preparing to ask you a question. Please, ensure your device is unmuted locally.

IE, the first question today, comes from Adam Samuelson of Goldman Sachs, your line is open.

So I guess my, my first question is thinking about 20 21. Obviously, there's been strong performance in parts and parts of the business and especially in the first half of the year and it's specific challenges and inflationary head winds that you've experienced in the second half next to a full-year ebit, dial up, that seems pretty consistent with how you would think about. Your long-term, growth framework with what, you know today. And in terms of,

Pricing actions that you've taken in terms of the price in terms.

Managing the inflationary environment that you're in addressing some of the specific things in the fresh vegetables. Is there a reason to think that you wouldn't be able to achieve that kind of mid term, mid mid-single digit, ebitda growth and in 22 or just it seems like your stock remains very skeptical of that view and I'd love to get your perspective. Yes. Thanks. Yeah, you know, I mean,

It was perhaps even look back at the history of of only. We're told the projects on a standalone basis, you know from the merger with five stock in 2006 to the creation of this new one. Today. We had something like a compound growth, the 400% and 2019 and a standalone basis until the projects. We achieved over 10% EPS growth, and then in 2000 and 29.1%. And I, we were running the numbers on a standalone basis for 21.

So, you know, it's a complicated world out there and you know, had winds locks challenges around. I think lots of unexpected consequences arising from the COVID-19 crisis. The most important thing for me is that we we stood up till those challenges and the diversity of our earnings across all the different geographies that we operate in the different product segments that we operate in.

We've been able to react and we've been able to hit the target, you know, we pretty much set up the time of IPO for 2021 and it's a we haven't really been surprised by anything that's emerged and with everything that we know, we've no reason to believe that we can't continue on the same path going into 2022.

To okay, that's, that's really helpful. So on and again, this comes to kind of a stock valuation point. You talked about both on Ma and that makes sense to your Leverage is slightly below the, the long-term Target. How could we think about opportunistic share? Repurchase of capital, particularly where the stock is? Now? It just would seem to be particularly attractive use of cash.

With the stock trading, well, below the IPO price and your leverage below kind of your target range. Yeah. I mean, it's an interesting point out of them. Obviously. We keep our eyes on the oil of the potential capital of allocation opportunities open to us, including by back. And in some ways it's a bit contradictory to have in just recently IPO the company to stratify back very quickly, but there is no doubt that, you know, we will keep that tool in the toolbox.

As an alternative. And I mean, clearly at the car and racing at sterile, Spite and small companies, at that value, that alone the biggest company in the world. So we're well aware of the Dynamics. We keep our eye on, you know, it's one of the elements of capital allocation that over the medium long term is there for us to use

Okay. Thank you. Thanks.

Thank you. Our next question today comes from Christopher Barnes of Deutsche Bank. Christopher your lines open.

Ian, hi, good afternoon. I guess I just want to follow up on Adam's. First question on the inflationary pressure is it's good to hear that. You think you can, you can still do a mid-single digit growth and ebitda next year. But just I mean, it seems like we're past the peak inflation Peak pressures on many Commodities but sprayed, especially like Inland Transportation remains challenging, even if there should be released coming as capacities online and more drivers return, but we're also starting to hear more and more about

Incremental, labor and wage rates going forward. So I mean, with all that in mind. I mean, Johan. You mentioned that pricing and fresh fruit? Should is enough to offset current levels of inflation and their Diversified segment. They're also taking pricing later this month, but I guess to the extent, you see additional pressure from here, like, how well do you think 2022 is protected? Are there are there any areas you believe need additional work from here? Whether in terms of pricing

Thing or other actions on your part. Any color able to provide there will be very helpful. Thanks. Yeah, that's thanks Christopher. And obviously we are, we are in a huge disruption to the labor market demand from consumers.

Two things that has caused charges and inflation and certain categories. You seen the the chip issue around production of cars and things like that, but you don't seem extraordinary events that nobody look at the projected. So I mean insofar, as we can, you know, we we try to analyze what the inflationary pressures are and certain aspects of a business. We can lock in calls for the full year. I think it's your one side as well in the Diversified fresh produce side of a business pricing tends to be very

A short-term as well. So in that division, we really you know, it tends to be seasonal. It tends to be quite variable to doing on supply and demand out of different regions of the world into the market and that tends to be more accustomed to coping with ongoing costs, change changes and your tend to be able to pass it through in a much more fluid way to to the customers and people are used to variable pricing in that it's are fixed price areas that we've got to be a little bit more.

And Carpenter in and analyzing, you know, we've got some, you know, flexibility around major divergences and cost. So I mean, who knows? Christopher looking at the 2022, we've been surprised by lots of things over the course of last year and so far as you can, and which worked within our control the commitment and dedication of management. You know, what

Got an adult very helpful. Maybe you would like to add something on that. Perhaps. No II. Think you're right on. I mean, we were live at the price on all the price shocks that happened in the beginning of the year and we thought maybe that would be a transitionary today if we were a little bit slow to react. But now we have reacted and we have the things in place that we feel we need going into the new year, but we're going to stay attentive and we also have dialogue with customers to see if we open.

I'm not the Ricky now, but over time can change some of the contracts that we are building indexes into the contract. So when something happens automatically prices will be changed. We have some of those indexes already in place when it comes to fuel it for North America, but we also looking at now, putting other indexes in place.

He's okay, very helpful. Thank you.

The next question comes from Patrick Higgins of Goodbody stockbrokers. Your line is open. Patrick.

Thanks, good morning, everyone and couple of questions for me, if that's okay. So firstly just and obviously I could start to the H1 Q, three slightly more difficult or quite difficult. How is trading continued into into Q4? Have you seen some of the the challenges around supply chain or labor availability? He's and I guess it's about how pricing the pricing places within the fresh its value out of silences and soon received. Secondly, it's just on the synergies and the 30 to 40.

Again, interested to hear if there's any delivery on them or perhaps it comes unexpected timelines delivery of some of them into next year and then finally just on cash flows and that desk obviously a strong performance to end the September. How should we think about cash flows into your end? Should we anticipate I guess an improvement in that that person that September number or is there any kind of out? Look how close we should be aware of?

Accent.

Thanks, Patrick. Yeah, I've been in terms of looking at how you look at how H 1 Q, 3 Q4. I think, the best way to look at that is to is to to look at the forecast. I've given you what for the full year, you know? And again the most important point in from my perspective is that the information that we gave to analyst in the analyst day that we had previously po4, very comfortable. That that was an accurate reflection of what was going to evolve over the course of 20 21 and we continue to believe

The numbers then obviously, that they were reflected in the full year, pull your outlook. So I think we're comfortable with passion in terms of synergies. Again, you'll hand might want to come with a little bit further and I thought, what? We know, obviously, we that we kicked off the process on a whole range of projects again, we believe that, you know, we've no reason to believe that the synergies won't flow in in the same way that we have anticipated at the outset of the IPO, and we're making progress for us and we

our management to bring together the two teams in a better way, you know, we've

Dedicating the resource to the different projects, you know, we're looking carefully at trying to build and bring together the different elements of business in categories such as berries, are avocados. And you know, the very one, we're having a very thorough. Look at what we've got today and what we want to have tomorrow and how we might get there. So again, I think that I think the timetable in terms of delivery of its energies will be with them and within that outlined at the time of the IPO.

Then in terms of cash flows and net Dash, I do Frank. Maybe, maybe first of all, when you be 1 1 minute 1 second question.

Yeah, maybe one second then on this Unity. So what would we set out in the, when we did the, when we went to Market and in some of the initial publication that we send out, we said eternities would be in the medium term between 30 and 40 and that would be enough over time. So, for the number that we're looking for next year, we feel relatively comfortable about, and so far, we have progressed. Well, we have centralized the logistic function and we can see some benefits when we negotiating already. We have merged certain sorted.

Sourcing activities, especially when it comes to South Africa, but also when it comes to avocados and berries for Europe, that is progressing. Well, would be also done. Is that, we have moved some people over between the companies, and that's actually the best thing you can do because then, you really get to know these working quickly because then they can explain for the other side, what's going on? And they can tell the they were, they coming from the benefits of the other side. So, that's working very well. We have identified where to expand the use of the brand.

And within Europe. And so overall the team is working very well. So we feel very good about this unit and it is that it was expected. Also to certain extent when you think about the Hurricanes that we had last year because the Hurricanes led to a tight market for bananas in the first half and that was expected. So we have good prices. We had very good development to include the first half. Whereas we also knew that

Would be to certain extent from oversupply in the Q3 area, and that happened. And now the market is tightening up again. So we feel comfortable. I think that's a Rory. What? I can add. I'm Frank that on the cash flow question prompts. Sure. Yeah.

Really is timing.

Thanks.

Our next question comes from Brian Spillane of Bank of America, your lines open Brian.

In, thank you, operator. Good morning everyone. So, just two questions for me one, just as we're thinking about the price increases that you've recently implemented to the extent that we start to see relief on costs. How much of that pricing, do you think we'll end up having to be rescinded or or will it not? So, I guess I'm trying to trying to understand how we should be thinking about.

Matching your inflation with with net pricing and you know, to the extent that we see inflation begin to moderate next year. Would we expect that to also flow through, in terms of lower prices? And then I have a follow-up.

Up. Yeah, I guess Brian. You must be in the optimistic category about inflation if you think that it's going to receive. So strongly, I think with Johan said earlier is what we've done is we're trying to introduce a few new categories into the the variable variable element of the annual fix prices of for example, in the food fuel surcharge, it can go up or down depending on movements in the price and some of the other elements will do something similar. So you've got downside on that side protection and

Okay, then. And then second question just around Ma. You know, you talked to touched on it a little bit earlier in the call. And I guess I'm curious with the pressure, right? That is on, you know, the your peers in the industry has that maybe loosen things up a little bit in terms of, you know, properties that you might be interested in. And and you know, could it could it actually, you know, accelerate or enhance?

The, you know, Ma activity.

T to say that our peers are under enormous pressure. I'm going to don't quite see it like that. The industry is actually doing pretty well. You know, you look at, say the fresh thyme on to results. They actually they had a quarter third quarter, but the rest of their numbers are pretty good. But you look at the European companies that are you know, just close numbers or familiar with her, you know, to do time. So the industry is really, you know, it's not in a negative way.

On the mattress in the industry are pretty strong, you know, we did very well during the, we wanted to, you know, keep running pretty well in the whole contact difficult time. So I bet Dynamic hasn't changed. Fundamentally. Obviously. We'd like to have a completely we'd like to have a much stronger share writing that would help us and make more encouraging person to do it. But no there hasn't been a dramatic change in the available opportunities. We've had a lot more people approach us given our scale.

And seeing that. Yes, being part of this very interesting entity.

Something very interesting. So that does open up more opportunities. But, you know, it's we were examining each one on its merits.

All right. I don't know. Yeah. Yeah. Yeah, no definitely does. Thank you very much.

Much, our next question, today comes from Kenseth low of BMO your lines open again.

About the the prophets in 2022, on a comparable basis.

Yeah, I think it did go out to 22 the dynamic, over the course of the years, quite likely to be different compared to the quarterly Dynamic over the course of 20 21 for sure.

Sure. Can you give us some framework to how much force majeure did actually add in, in the first half of 2021 to see we have? Yeah, I don't think so.

It's a complex equation. And, you know, it's, it's it's I think we'll see a more balanced pricing over the course of 20 22, but it's a little early to call a child and we don't you know, move it. We don't really look at this on a quarter by quarter basis, you know, with this is you know, we got to look at this in the in the context of it out of the oven entire year. So, yes the can be movements from quarters year on year. And yes the dynamic Maybe

Can we expect you to be different at 22 to 21, but we look at the full year and we're still confident of the full year 2022. 2022. I've come in force majeure already covered the cost of of the Honduras and Guatemala hurricanes, and I know more than that.

Okay, I'll take it offline. And then, my next question is, as you've seen the price and can you talk about the elasticity to, which you're seeing with consumers? And how is that playing out?

Out. Yeah, I think I think if you look at say, bananas in particular have been relatively cheap to the consumer. So it's been very elastic to price. We haven't actually saying it to see in the fall off and consumption. You look at our other broader range of products in the Diversified section. I was, I said earlier that there are used to quite a bit of variability and pricing depending on, you know, origin. So it's not the same selling. And in the UK chili and grapes selling.

as Spanish waves, for example, with all the cost differential between transport its

To bring them to the market. Then I season changes people adapt price, but we haven't seen any impact on demand as a result price increases. And as I say the Baseline would bananas in particular is quite low and you know, consumers are happy to continue eating bananas, even though slightly more expensive price.

And my last question is, when you think about the logistic issues and the challenges that you face does that at all, have any impact on your Synergy, realization going forward, particularly on as you're trying to expand into Europe and choose the brand, maybe more on the sales side of it, even more than the cost side of it. Have you seen any impact on that? And then there, I'll leave it there and I appreciate your time. That's all. Yeah. I think we have seen any material.

I appreciate it. Thank you guys very much. Thank you. Thank you. Thank you. And our final question today comes from Roland French of Davey, please. Go ahead.

Ed. Thank you morning afternoon, everybody. Thanks for and all the color. Thanks for taking my questions and I think I have