Q4 2024 Fresh Del Monte Produce Inc Earnings Call
Speaker Change: Good day everyone and welcome to Fresh Del Monte Produce's fourth quarter and full fiscal year 2024 earnings conference call. Today's conference call is being broadcast live over the internet and is also being recorded for playback purposes.
Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you.
Speaker Change: For opening remarks and introductions, I would like to turn today's call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Ms. Christine Cannella. Please go ahead, Ms. Cannella.
Speaker Change: Thank you, Luella. Good morning, everyone, and thank you for joining our fourth quarter and full fiscal year 2024 conference call. Joining me in today's discussion are Mr. Mohammad Abu Ghazali, Chairman and Chief Executive Officer, and Ms. Monica Vicente, Senior Vice President and Chief Financial Officer.
Speaker Change: I hope that you had a chance to review the press release that was issued earlier by Business Wire.
Speaker Change: You may also visit the company's IR website at InvestorRelations.FreshDelMonte.com to access today's earnings materials and to register for future distributions.
Speaker Change: This conference call is being webcast live on our website and will be available for replay after this call.
Speaker Change: Please note that our press release and our call today include non-GAAP measures. Reconciliations of these non-GAAP financial measures are set forth in the press release and earnings presentation, which is available on our website.
Speaker Change: I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the safe harbor provisions of the federal securities law.
Speaker Change: In today's press release and in our SEC filings, we detail risks that may cause our future results to differ materially from those forward-looking statements.
Speaker Change: Our statements are as of today, February 24, 2024, and we have no obligation to update any forward-looking statement we may make.
Speaker Change: During the call, we will provide a business update along with an overview of our fourth quarter and full fiscal year 2024 financial results, followed by a question and answer session.
Speaker Change: With that, I will now turn today's call over to Mr. Mohammad Abu Ghazali. Please go ahead.
Thank you, Christine. Good morning, everyone.
and thank you for joining us today.
Speaker Change: Let me take you through the highlights of our full year 2024 results.
Speaker Change: Our fresh and value-added product segments, pineapple, fresh cut fruit, and avocados.
performed exceptionally well in 2024.
Driving growth and improving company cross-margins.
Speaker Change: These categories remain core strengths of our portfolio, which we believe validates the direction we have taken to focus on higher margin products that align with market demands.
and many more. Thank you. Thank you.
Speaker Change: While total net sales were 1% lower year over year at $4,280,000,000.
Gross profit increased by 2%.
to $358 million from the prior year period.
Speaker Change: And gross margins improved to 8.4% compared with 8.1% in 2023, underscoring our progress in building a more profitable and efficient business model.
Speaker Change: Furthermore, we achieved another reduction in long-term debt supported by strong cash flow and increased our quarterly dividend for the third consecutive year.
Speaker Change: and the rest of the team. Thank you. Thank you. Thank you. Thank you.
Speaker Change: Pineapples are the heart of who we are, and in 2024 we continue to solidify our position as the global leader in this category.
Last year, we launched our latest innovation, the RubyGlow Pineapple.
Speaker Change: As global demand for our pineapples continues to exceed supply, we remain active in expanding our production and sourcing operations.
Speaker Change: We understand how important it is to ensure consistent and interrupted.
Speaker Change: supply to consumers globally. And for that, we have established a five-year growth strategy that we believe will support our customers globally.
Speaker Change: We believe in the next few years will be a tremendous
Story for our pineapple segment.
Speaker Change: driven by our relentless focus on quality innovation and reaching more consumers around the world.
Speaker Change: Pineapples are central to our growth strategy, driving every stage of our business, from whole fresh produce to fresh cut and value-added products, manufacturing with IQF and juice concentrates.
Speaker Change: and our newest biomass initiative, which seeks to not monetize every part of the fruit.
and blood.
Speaker Change: We are also leveraging improvements across our fresh cut facilities worldwide.
Speaker Change: In North America, the program is expanding, particularly in club, retail, and e-commerce channels.
Speaker Change: where we have partnered with one of the world's largest platforms.
Speaker Change: That one slide before the civil war of the 19 nineties.
Speaker Change: While there was a you think banana exported to Europe, and the middle East.
Speaker Change: For 2020 for 350 hectares were planted.
Speaker Change: With plans to expand to 50 and other directors by the end of 2025.
Speaker Change: We expect that this project will not only strengthen our supply chain and reduce that's what types to key markets, but will also position us to penetrate new banana markets.
Additionally, we believe that this project plays a vital role in Somalia, as economic recovery by creating jobs and stimulating the local economy and step fishing critical infrastructure.
Speaker Change: On the regulatory front. We believe we are ahead of the curve when it comes to <unk> Tau for compliance.
Speaker Change: Positioning fresh del Monte is the leader in supply chain flexibility.
Speaker Change: This rule, which requires enhanced flexibility for high risk forward.
Speaker Change: One we have embraced Ami as we are.
Speaker Change: Well into the implementation and integration phase.
Speaker Change: Several key suppliers.
Speaker Change: We are on track to achieve full compliance and time for the January 2026 deadline.
Speaker Change: When the Decatur team and all the system in place.
Speaker Change: Strengthening our risk management framework operational efficiency.
Speaker Change: We expect to be ready to continue servicing our customers and take on new whose current suppliers unable to meet these requirements and that's giving us a significant competitive advantage.
Speaker Change: By leading the way in fiscal <unk>.
Speaker Change: Compliance we are aiming to ensure continued growth, particularly in our fresh cut category and reinforcing our ability to deliver value to our partners.
Speaker Change: As you can see 2024 was it a marketable year for us.
Speaker Change: Further underscored by the launch of our biomass initiative.
Speaker Change: This initiative seeks to transform residuals and byproducts into innovative solutions.
Speaker Change: Hassing soil advancing wellness.
Speaker Change: Exploring new applications and text ice.
Speaker Change: While still in its early stages.
Speaker Change: The initiative reflects our commitment to.
Speaker Change: Sustainability and innovation.
Speaker Change: Do you think value for both our business and the environment.
To drive the growth of our biomass initiatives. We recently completed hiring the core team that will lead this next phase.
Speaker Change: Further underscoring our leadership and sustainability.
Speaker Change: Recently honored with the seal environment Initiative Award.
Speaker Change: Our fourth seal.
Speaker Change: Five years.
Speaker Change: This recognition celebrates our achievement.
Speaker Change: Our emissions reduction targets and impressive seven years ahead of schedule it.
Speaker Change: The seal business sustainability awards.
Speaker Change: The most sustainable companies in the world.
Speaker Change: And this latest web <unk>, our ongoing commitment to environmental stewardship, a responsible business practices.
Speaker Change: Finally.
Speaker Change: I want to express my gratitude to our team members worldwide.
Speaker Change: Their dedication and hard work made 2024.
Speaker Change: That's more that's more of it.
Speaker Change: Formative year for fresh del Monte.
Speaker Change: Progress we have achieved is a testament to their efforts.
Speaker Change: I would like to thank you at this time and multi core.
Kevin: Good morning, Kevin <unk>, Chief Financial Officer, who will get into the financial results.
Speaker Change: Thank you Mr. Lucas Shelley and good morning, and thank you for joining us on the call today.
Speaker Change: As Christine mentioned, our press release on our call. Today include non-GAAP measures reconciliations of these non-GAAP financial measures are set forth in the press release and earnings presentation, which is available on our website.
Speaker Change: For the fourth quarter of 2024, net sales were $1 billion $13 million compared with $1 billion 9 million in the prior year.
Speaker Change: The increase in net sales was driven by higher sales in our fresh and value added segment, primarily driven by higher per unit selling prices.
Speaker Change: The increase was partially offset by a decrease in net sales in our banana segment due to lower per unit selling prices and volume.
Speaker Change: For the full year of 2024, net sales were $4.280 billion compared with $4 billion $321 million in the prior year.
Speaker Change: The decrease in net sales was primarily due to lower sales and per unit selling prices in our banana segment as well as the negative impact of exchange rate fluctuations, primarily the Japanese yen and Korean won.
Speaker Change: Really offset by higher per unit selling prices and sales volume in our fresh and.
Speaker Change: Value added products segment.
Speaker Change: Gross profit for the fourth quarter of 2024 was $69 million compared with $63 million in the prior year.
Speaker Change: The increase in gross profit was driven by higher net sales in our fresh and value added product segment, partially offset by lower net sales in our banana segment as well as higher per unit production and procurement costs.
Speaker Change: Gross margin for the fourth quarter was six 8% compared with six 2% in the prior year.
Speaker Change: Adjusted gross profit for the fourth quarter was $69 million compared with 56 million in the prior year.
Speaker Change: For the full year of 2024 gross profit was $358 million compared with $351 million last year.
Speaker Change: The increase in gross profit was primarily driven by higher net sales in our fresh and value added products segment and lower ocean freight costs, partially offset by lower net sales in our banana segment higher production and procurement costs and the negative impact of fluctuations in exchange rates related to the Costa Rica colon.
Speaker Change: Gross margin for the full year increased to eight 4% compared with eight 1% in the prior year.
Speaker Change: Adjusted gross profit for the full year was 359 million compared with $355 million last year.
Speaker Change: Operating income for the fourth quarter of 2024 was $30 million compared with an operating loss of $113 million last year.
Speaker Change: The notable change in operating income was due to a 134 million noncash impairment charge in 2023, primarily relating to long lived assets in our Mann packing operations and goodwill in our prepared foods reporting unit.
Speaker Change: Adjusted operating income for the fourth quarter was $17 million compared with $12 million in the prior year.
Speaker Change: For the full year of 2024 operating income was $196 million compared with $59 million last year.
Speaker Change: The increase in operating income was primarily driven by lower asset impairment charges and higher gross profit.
Speaker Change: Partially offset by higher selling general and administrative expenses compared to the prior year.
Speaker Change: Adjusted operating income for the year was $159 million compared with $165 million last year.
Speaker Change: The year over year decrease in adjusted operating income was driven by higher selling general and administrative expenses.
Speaker Change: Other income expense net for the fourth quarter of 2024.
Speaker Change: Loss of $3 million compared with a gain of $4 million last year.
Speaker Change: The change was primarily due to foreign exchange losses in 2020 forward compared with foreign exchange gains last year.
Speaker Change: Other expense net for the full year of 2024 was $8 million compared with $19 million in 2023.
Speaker Change: The decrease in expense was mainly driven bank gains from unconsolidated minority equity investments.
Speaker Change: FTP net income for the fourth quarter of 2024 was $20 million compared with FTP net loss of $106 million last year.
Speaker Change: Adjusted FTP net income for the fourth quarter was $12 million, which is at par with the fourth quarter of 2023.
Speaker Change: For the full year of 2020 for FTP net income was $142 million compared with a net loss of $11 million last year.
Speaker Change: Adjusted net income for the year was $116 million compared with 102 million to prior year.
Speaker Change: Our diluted EPS in the fourth quarter of 2024 was <unk> 42 per share compared with a loss of $2 22 per share in the prior year.
Speaker Change: Adjusted diluted EPS was <unk> 26 per share compared with 25 per share last year.
Speaker Change: For the full year of 2024 diluted EPS was $2 96 per share compared with a loss of 24 per share in the prior year period.
Speaker Change: Adjusted diluted EPS was $2 42 per share compared with $2.12 last year.
Speaker Change: Adjusted EBITDA for the fourth quarter of 2024 was $35 million or 4% of net sales in line with the prior year.
Speaker Change: For the full year of 2024, adjusted EBITDA was $236 million or 6% of sales also in line with the prior year.
Speaker Change: I'll now go more into detail on the full year performance for each of our segments, beginning with our fresh and value added product segment.
Speaker Change: Net sales for the full year of 2024 increase to $2.607 billion compared with $2.478 billion in the prior year the.
Speaker Change: The increase in net sales was primarily a result of higher per unit selling prices and sales volume in our avocado and Pi and pineapple product lines due to stronger demand as well as higher sales volume in our myeloma product line.
Speaker Change: The increase was partially offset by lower net sales in our vegetable and fresh cut fruit product lines due to lower sales volume.
Speaker Change: And the unfavorable impact of fluctuations in exchange rates due to a weaker Japanese yen and Korean won.
Speaker Change: This performance exceeds the net sales guidance range of 3% to 4% that was previously provided.
Speaker Change: Gross profit was $243 million compared with $167 million in the prior year.
Speaker Change: The increase in gross profit was primarily driven by higher net sales and lower per unit production costs in our pineapple fresh cut fruit and fresh cut vegetable product lines, partially offset by the negative impact of fluctuations in exchange rates due to a stronger Costa Rica colon.
Speaker Change: Gross margin increased to nine 3% compared to six 8% in the prior year in line with our forecasted range of 9% to 10% for this segment that we previously shared with you.
Speaker Change: Moving to our banana segment net sales for the full year of 2024 decreased to $1 billion $476 million compared with $1 billion $638 million in the prior year.
Speaker Change: The decrease in net sales was primarily driven due to lower sales in North America, driven by competitive market pressures lower sales volume in Asia due to decreased supply from the Philippines. As a result of weather related events and the negative impact of exchange rate fluctuations due primarily due.
Speaker Change: To a weaker Japanese yen and Korean won.
Speaker Change: Gross profit was $87 million compared with $163 million in the prior year.
Speaker Change: The decrease in gross profit was primarily due to lower net sales higher per unit production and procurement costs and negative impact of fluctuations in exchange rate from a stronger Costa Rica, colon, partially offset by lower per unit ocean freight and distribution costs.
Speaker Change: As a result of these factors gross margin decreased to five 9% compared with 10% in the prior year.
Speaker Change: It's important to note that the full year 2023 gross margin was exceptionally strong for this segment and.
And outside our historical range, our full year 2020 for gross margin for our banana segment, a five 9% both in line with the forecast range of 5% to 7% that we shared with you.
Speaker Change: Which is consistent with our long term historical trends.
Speaker Change: Lastly, our full year results for other products and services segment.
Speaker Change: Net sales for the full year of 2024 were $197 million compared with $205 million in the prior year.
Speaker Change: The decrease in net sales was primarily due to the sale of the plastics subsidiary in 2023.
Partially offset by the higher net sales in our poultry and meat business driven by an increase in per unit selling prices.
Speaker Change: Gross profit was 28% compared with 20 million I'm, sorry, $28 million compared with $20 million in the prior year period.
Speaker Change: The increase in gross profit was primarily due to our poultry and meat business, partially offset by lower net sales in our third party ocean freight.
Speaker Change: Gross margin increased to 14, 1% compared with nine 8% in the prior year.
Speaker Change: As a result gross margin exceeded our expectations for this segment.
Speaker Change: Now moving to selected financial data for 2024.
Speaker Change: Income tax provision for the full year was $29 million compared with $18 million in the same period last year.
Speaker Change: The increase in income tax provision was primarily due to higher earnings and certain higher tax jurisdictions.
Speaker Change: Our effect effective tax rate for the full year was 17% slightly below the 20% effective tax rate, we had anticipated for 2024.
Speaker Change: Net cash provided by operating activities was $183 million compared with $178 million in the prior year.
Speaker Change: The increase was due to current year's working capital fluctuations, primarily a result of higher levels of accounts payable and accrued expenses compared to last year due to timing of period and payments to suppliers.
Speaker Change: We ended the year with $244 million of long term debt.
Speaker Change: A $156 million or 39% reduction from $400 million at the end of 2023.
Speaker Change: By lowering our debt our adjusted leverage ratio is now less than one times EBITDA.
Speaker Change: Our full capex investment was $52 million compared with $58 million in the prior year.
Speaker Change: As previously announced our board of directors declared an increase in our quarterly dividend from <unk> 25 to <unk> 30 per share per quarter, reaffirming our commitment to our shareholders.
Speaker Change: The dividend is payable on March 28, 2025 to shareholders of record on March 10 2025.
Speaker Change: Additionally, as part of our broader capital allocation framework, our board has approved a $150 million share repurchase program.
Speaker Change: We plan to execute this program opportunistically over time, allowing us to take advantage of market dynamics, while maintaining financial flexibility for our business needs.
Speaker Change: Before we turn to the outlook I'd like to take a moment to discuss a few key challenges we have faced in the first quarter of 2025 and also give you an update on our manned packing business.
Speaker Change: As we closed out 2024, we faced a tight supply of both bananas and pineapples.
Speaker Change: Entering 2025 parts of the U S experienced unprecedented weather conditions, particularly in January which also affected the southern region of the United States and influence the climate in Central America.
Speaker Change: With colder than normal temperatures and above average rainy season further reducing production volumes of both bananas and pineapples as we started the new year.
Speaker Change: While industry wide production remains tight we are just beginning to see improvements in volume across our sourcing regions.
Speaker Change: In addition in addition to these weather related challenges earlier this month the <unk>.
Speaker Change: Current administration announced potential international tariffs on imports from key trade partners, including markets, We trade, we actively trade with <unk>.
Speaker Change: While none of these have taken effect yet the risk remains that they could be implemented or expanded at any time, adding to global trade volatility.
Speaker Change: Given the nature of our product sourcing from alternative sources may take time as Mr. Abu <unk> as Sally mentioned, we are expanding our global sourcing footprint and have a growth strategy for avocados bananas and pineapples.
Speaker Change: While these efforts position us well for the future we remain cautiously optimistic and are prepared to adapt as necessary in response to any tariff developments.
Speaker Change: Now I would like to update you on manpack in operations.
Speaker Change: Last quarter, we shared with you our decision to consolidate three facilities into one discontinued several product lines and sell certain assets of freshly farms, a wholly owned subsidiary of Manpack, Inc.
Speaker Change: The sale closed in November 2024 for $18 million, we remain optimistic about the future of this operation and look forward to seeing the positive changes reflected in our finance in our financials as the year progresses.
Speaker Change: Let's turn to our outlook for the full year of 2025 for our business segments.
Speaker Change: As well as for our key financial priorities, including SG&A capital expenditures and cash flows.
Speaker Change: Our guidance that I will share reflect our baseline expectations and does not incorporate potential risks or adjustments that could arise from changes in tariffs or significant shifts in the economic environment.
Speaker Change: We project net sales for the year to be 2% higher than prior year from higher sales of avocado pineapple fresh cut fruit and bananas, partially offset by lower net sales in our fresh cut vegetable and vegetable product lines, resulting from the rationalization of the map packing operations.
Speaker Change: And as far as gross margin by segment in.
Speaker Change: In our fresh and value added segment gross margin is expected to be in the range of 10% to 11%.
Speaker Change: Driven by higher per unit selling prices as well as the impact of manpack in consolidation to one facility.
Speaker Change: In our banana segment gross margin is expected to be in the historical range of 5% to 7%.
Speaker Change: For our other products and services segment gross margin is expected to be between 12, and 14% supported by an increase in rates for our third party Ocean freight services.
Speaker Change: Turning to other key financial metrics for the full year of 2025.
Speaker Change: Our selling general and administrative expenses are expected to be in the range of $205 million to $210 million, primarily due to increased employee related costs as we invest in human capital to support our growth plans.
Speaker Change: Our projected capital expenditures for the full fiscal year of 2025 is expected to be in the range of $80 million to $90 million.
Speaker Change: The funds will primarily be allocated towards expansion of our pineapple growing and packing operations banana farm renovations efficiency and cost saving projects as well as facility upgrades.
Speaker Change: For the full fiscal year 2025, we anticipate delivering net cash provided by operating activities in the range of 190 million to $200 million.
Speaker Change: This concludes our financial review.
Luella: You can now turn the call over to Q&A Luella.
Luella: Again, if you would like to ask a question press star one on your telephone keypad.
Luella: Your first question comes from the line of Mitch Pinheiro with Stewart event and company. Please go ahead.
Mitch Pinheiro: Yes, good morning.
Speaker Change: Good morning, Matthew.
Mitch Pinheiro: Thanks for the.
Mitch Pinheiro: For.
Some of the detail.
Mitch Pinheiro: Guidance for next year very helpful.
Mitch Pinheiro: Especially in the businesses.
Mitch Pinheiro: That can be as volatile as yours. So thank you for that.
Mitch Pinheiro: I guess I wanted to start with.
Mitch Pinheiro: Just so you talk about your core focus pineapples fresh cut fruit and avocados and I was wondering if you could.
Mitch Pinheiro: It provides a little bit further.
Colors so.
Mitch Pinheiro: With pineapples.
Mitch Pinheiro: Youre, increasing supply so I can as fast as you can.
Mitch Pinheiro: Alright.
Speaker Change: Are you constrained even more because of the weather operations does that push up prices I mean can you get a gross margin on the pineapples.
Mitch Pinheiro: You know.
Mitch Pinheiro: In line with last year, David fresh cut through.
Mitch Pinheiro: Are we going to see.
Mitch Pinheiro: Steady improvement in your fixed cost leverage or will there be some seasonality and then finally in the avocado business.
You've seen some pretty good improvement there and I was wondering.
Mitch Pinheiro: I guess, if there were tariffs in Mexico.
Mitch Pinheiro: Imports.
Mitch Pinheiro: You know.
Mitch Pinheiro: Do you expect demand to see is there is there an elastic demand there or do you think it would have a meaningful impact on your business.
Mitch Pinheiro: Okay.
Mitch Pinheiro: Mitch.
Mitch Pinheiro: Listen as far as Pineapple is concerned yes, we are expanding our plantation in Costa Rica as we speak.
Mitch Pinheiro: We have already started as well.
Replanting.
Mitch Pinheiro: Fields in Brazil.
Mitch Pinheiro: We used to.
Mitch Pinheiro: Okay.
Mitch Pinheiro: To plan by Napoleon Brazil about.
Mitch Pinheiro: I'd say 20 years ago.
Mitch Pinheiro: That said the disease, we we would hit as we stopped planting them.
Mitch Pinheiro: During these years, we have worked very diligently to.
Mitch Pinheiro: Create a new variety that would be resistant to this disease and we have said that this is the first study that we will disclose this.
Mitch Pinheiro: These new varieties that we have developed which comes from the gold is not something new but we have created.
Mitch Pinheiro: Did that.
Mitch Pinheiro: As a resistant.
Mitch Pinheiro: <unk> sodium.
Mitch Pinheiro: Disease in Brazil.
Mitch Pinheiro: Which will be the only one in the world actually.
Mitch Pinheiro: That is out there as a sub to facility and we have but that did this.
Mitch Pinheiro: We started actually as we speak.
Mitch Pinheiro: Created a tissue culture.
Mitch Pinheiro: Operation in Brazil.
Mitch Pinheiro: No.
Accelerating.
Mitch Pinheiro: Seedlings to to start plastic commercially.
Mitch Pinheiro: Hopefully within the next years, we will have.
Speaker Change: Got it.
Speaker Change: Are you at all meaningful production batch so they're monster will be producing in four continents. The Oerlikon product company in the world that will be producing fresh pineapples in four continents.
Speaker Change: Got it.
Speaker Change: In South America as well as.
Speaker Change: Brazil, Kenya.
Speaker Change: Philippines and Thats, when we talk about.
Spending outlook.
Speaker Change: Sourcing capabilities.
Speaker Change: Only one of the.
Speaker Change: We are working as well.
Speaker Change: Sourcing opportunities, but are these the.
Speaker Change: The ones with major ones that we have as far as our recoveries.
Speaker Change: We are just one out of several importers exporters.
Speaker Change: Out of Mexico.
Speaker Change: Just have two.
Speaker Change: Wait and see what will be the outcome about the tariffs if they are in.
Speaker Change: To take effect on avocado.
Speaker Change: But might be excluded or the fab products, we don't know, but if it does if there.
Speaker Change: Unfortunately, this would have to be.
Speaker Change: Got it.
To the to the buyers because this is something that we get out.
Speaker Change: Joel.
No.
Speaker Change: At OFC.
Speaker Change: This would really impact.
Speaker Change: Demand.
Speaker Change: As the market but.
Speaker Change: It may be premature to assume anything at this stage. So we don't want to speculate on that.
Speaker Change: And on the pineapple pricing.
Speaker Change: We are confident in our pricing on pineapple will be.
Speaker Change: Its just as strong or stronger than last year. So yes, the pineapple pricing should be very strong and.
Speaker Change: So we feel confident with that.
Speaker Change: And then.
Speaker Change: You also can you talk about avocado being.
Speaker Change: You're expanding your global sourcing as a core strategy.
Speaker Change: But some of the other areas outside of Mexico, and California, the quality isn't really what is expected probably in the North American markets.
Speaker Change: Would that be is the expanded sourcing for other.
Speaker Change: Export markets or is it more of the.
Speaker Change: Foodservice kind of strategy.
Speaker Change: Sure.
Speaker Change: It was a perception that the Mexican avocados, the California, avocado add the best kind of quality you know.
Speaker Change: I do believe that and I'm sure that the ones coming from Chile, or Peru, Colombia.
Speaker Change: Just as good and equal to the quality of Opex.
Speaker Change: Mexico sources.
Speaker Change: So okay.
Speaker Change: We are working on diversifying and increasing our volumes from some of these countries, including Dominican Republic.
Speaker Change: Of course volume wise nothing can compensate for.
Speaker Change: The Mexico, let's say.
Speaker Change: Source.
Speaker Change: So we need to to do the best that we can to really.
Speaker Change: Kind of.
Speaker Change: Right.
Speaker Change: To deemphasize or.
Speaker Change: It depends on 100% on Mexico as a source of supply. This will take time, so that's going to happen overnight.
Speaker Change: But.
Speaker Change: That's our target that's our objective.
Speaker Change: Okay and then just another question on bananas.
Speaker Change: I understand obviously, it's not a it's not your growth focus but.
Speaker Change:
Speaker Change: Yes.
Speaker Change: Is there.
Speaker Change: Tina.
Speaker Change: Production.
Speaker Change: Growing in Somalia.
Speaker Change: As you are growing I don't know, what Brazil, you might be growing some bananas, maybe in addition to the pineapple I'm not sure but is that does that take pressure off of like the Costa Rica operations in terms of <unk>.
Speaker Change: And that is like.
Speaker Change: You can focus Costa Rica away from bananas.
Speaker Change: Not chase.
Speaker Change: Demand or can you talk a little bit about maybe your strategy there.
Speaker Change: Well.
Elisa: Elisa Banana Isabella.
Elisa: The banana business has been growing.
Elisa: Hey, guys.
Elisa: Momentum towards the last I would say 20 plus years.
Elisa: And.
Elisa: What we were.
Elisa: Try to rationalize our business.
Elisa: <unk>.
Elisa: When it comes to bananas.
Elisa: Because it's a low margin business.
Elisa: This is sluggish volumes.
Elisa: It definitely is a core part of our business as we are not going to score or neglect.
Elisa: Then the business. However, what you ask what you just said is correct we are producing bananas in Brazil.
Elisa: Actually we have been expanding our acreage in Brazil recently.
Elisa: Sure.
Elisa: Supply the local market, which has been very tight.
Elisa: <unk>.
Elisa: Rewarding as well as the European market, so that would be geared towards European market.
Elisa: Destination.
Speaker Change: So Marty I will become in my opinion, a very very important.
Elisa: Source of supply for our middle East.
Speaker Change: As well as some southern Europe.
Elisa: Trees.
Elisa: And this will be.
Elisa: Once it does.
Elisa: Photo gear and.
Elisa: And majority of which probably would take another couple of years.
Elisa: The proximity of the proximity of the of the source to the market is very close it's not like.
Elisa: I mean in the Middle East is probably going to be two to three days from source to market.
Elisa: Unlike what we are doing right now about 40 days, if we're lucky to get the fruit from Central America, Ecuador tool.
Elisa: Middle East.
Elisa: Same thing would be forced to Europe would be probably around eight nine days to go from Somalia, two let's say, Italy or Greece.
Elisa: <unk>.
Elisa: Unlike.
Today could be from 18 to 30 days, depending on the ship.
Elisa: The conditions there weather conditions. So there is a lot of opportunities there.
Elisa: Not going to happen tomorrow, but I can see it at all.
Elisa: And the proximity of let's say between 18 to 24 months. This will become a very important source of supply to us.
Elisa: It definitely would change the picture.
Elisa: In terms of volume as well as in terms of.
Elisa: Gross margins as well.
Elisa: Alright.
Elisa: Thank you for the answers.
Elisa: Sure.
Elisa: Thank you Mitch.
Speaker Change: I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
Speaker Change: Okay.
Speaker Change: Not have any more questions at this time.
Speaker Change: I will now turn the call back over to Mr. Mohammad Abu <unk> for closing remarks. Please go ahead Sir.
Speaker Change: I would like to thank everyone today for joining us on this call.
Speaker Change: I hope that I wouldn't.
Speaker Change: Update you on what happens.
Speaker Change: The next few months on our next call. Thank you.
Speaker Change: Good day.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: Sure.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
[music].