Q1 2025 Dole PLC Earnings Call
Welcome to DoLE PLC's first quarter 2025 earnings conference call and webcast. Today's conference is being broadcast live over the internet and is also being recorded for playback purposes.
Welcome everybody and thank you for taking the time to join our first quarter 2025 earnings conference call and webcast joining.
Lori Burton: Joining me on the call today is our Chief Executive Officer, Lori Burton, our Chief operating officer.
And our Chief Financial Officer, Thank you Goodbye.
Lori Burton: During this call we have been referring to presentation slides to supplement our remarks. These along with our earnings release and other related materials are available on the Investor Relations section of <unk>.
Lori Burton: <unk> websites.
Lori Burton: Please note our remarks today will include certain forward looking statements within the provisions of his bedroom security Safe Harbor Little please.
Lori Burton: These reflect circumstances at the time they are made and the company expressly disclaims any obligation to update or revise any forward looking statements.
Lori Burton: Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors.
Lori Burton: Including those set forth in our SEC filings and press releases.
Regarding the use of non-GAAP financial measures maybe found in our press release, which also includes a reconciliation to the most comparable GAAP measure.
Rory: I'm pleased to turn today's call over to Rory.
Rory: Thank you James and welcome everybody and thank you for joining us today as we discuss our results for the first quarter of 2025.
Rory: So turning first to the highlights of the first quarter.
Rory: Following a very strong results in 2024, we are pleased to report another good performance in the first quarter of 2025 exceeding our own expectations on a like for like basis group revenue increased by 2% to $2 $1 billion.
Rory: Adjusted EBITDA decreased 2% to $104 million.
Rory: First quarter saw solid performances from both of our diversified fresh produce segment, which helped offset the anticipated headwinds in our fresh fruit segment, which was impacted by tropical storm Sarah late last year.
Rory: Net income came in at $3 $1 million and adjusted EPS was 25 cents per share down from 43 cents in Q1 of 2024, primarily due to the decrease in adjusted EBITDA.
Rory: We are pleased to increase our dividend by $6, two 5% to $8 <unk> per share for the first quarter.
Rory: This is our first dividend increase and strong and dividend payments back in 2021 and demonstrates our confidence in the long term growth potential for our business.
Rory: Post quarter end, we're very pleased to complete the $1 2 billion refinancing our credit facilities are favorable rates relative to market conditions. This financing strengthens our financial position and to provide some sense financially collects the flexibility to support our growth initiatives.
Rory: Turning now to the operational review and starting with fresh foods on slide six.
Rory: So fresh food delivered a robust performance in the first quarter with adjusted EBITDA of $63 $3 million exceeding our own expectations taking into account the anticipated impact of tropical storm Sara.
Rory: Firstly looking at North America, our underlying operations performed very well with good volume growth in bananas, as well as positive developments in both planned and unplanned teens profitability.
Rory: Profitability was somewhat held back by the anticipated higher sourcing costs coming and the impact of the tropical storm Sir.
Rory: Also experienced higher shipping costs as we completed scheduled dry dockings.
Some other temporary operational challenges that might've been resolved.
Rory: We are adjusting production challenges from tropical storm, Sara and we expect to face some headwinds disregard for the remainder of the financial year. However, our production and sourcing teams are doing an excellent job mitigating this and are working diligently to manage the reinvestments on rehabilitation process, but also ensuring we continue to.
Rory: Fully service or construct customers.
Rory: We aim to return to near full production.
Rory: Bonds by R&D 2026.
Rory: Turning to the European market.
Rory: Stable performance overall in the first quarter with continued good volume builds have been honest as well as better performance in pineapple offsetting more challenging pricing in bananas, which was impacted by the weaker euro in the first quarter of 2025 compared to the prior year.
Rory: Looking ahead to the rest of the year, we continued to see robust demand.
Rory: And we expect this to continue over the course of the pulled yet.
Rory: We feel very positive that the industry supply and demand for bananas, and pineapples or one bonds. Additionally, strengthening you could potentially.
Rory: As a positive tailwind for the remainder of the year.
Rory: Moving onto our diversified segment. This segment also had a positive start to the year delivering very strong like for like growth first quarter to reach an adjusted EBITDA of $27 $7 million agent by both strong revenues and some margin expansion.
Rory: On a reported basis.
Rory: Good growth was curtailed somewhat by the weaker euro in the first quarter of 2025 compared to the first quarter of 'twenty four.
Rory: But with the material strengthening of the euro and basic brakes. This dynamic should become a tailwind for our reported numbers over the course of the year if current rates on obtained.
Rory: Within the segment, we are seeing some different dynamics of course travel to starting the year before the ball mills, and generally better sales into retail component or foodservice and a whole set of channels.
Rory: Overall this segment continues to benefit from the significant diversification.
Rory: <unk> is performing in a very positive way, we continue to consolidate our strengths in this segment and our focus on identifying and executing upon both internal and external investment opportunities. We are confident these continuous efforts will drive continued solid growth as the year progresses.
Rory: Our diversified the America segment delivered a strong first quarter results with double digit growth on a like for like basis.
Rory: And EBITDA taking into account the disposal of progressive projects in late Q1 2024.
Rory: This robust performance was driven by good results in the North American market.
The modest declines in our southern hemisphere export businesses, despite experiencing more normal supply and market conditions compared to 2024, notably the previous year benefits from an exceptionally strong she's actually and cherries.
Rory: Further in 2025, we believe our businesses both on the export side and in North America, well positioned we will continue to stay highly attentive to the evolving dynamics in international trade.
Rory: We had to react appropriately.
Rory: Turning to crush spreads tables.
Speaker Change: Yeah on our recent earnings calls.
Speaker Change: Continue to work on delivering the best strategic outcome for our vegetable business on this process remains ongoing.
Speaker Change: Operationally following a robust turnaround in 2020 for the business faced weaker fresh profit point juice markets against a particularly strong comparative period.
Speaker Change: <unk> 2024.
Speaker Change: However, this was offset by a stable performance in our body wash business, where we see clear signs of strengthening our competitiveness characterized by improved quality lower underlying costs and an increased focus on innovation.
Speaker Change: With that I'll hand, you over to just send that to give the financial review for the first quarter.
Speaker Change: Yeah.
Justin: Thank you Rory and good day everyone.
Justin: Turning firstly to the group results on Slide 11, we are pleased to have delivered another good performance for the first quarter of this financial year revenue of $2 1 billion was 1% lower on a reported basis, primarily due to lower revenue and diversify to Americas. Following the disposal of progressive projects last year as well as <unk>.
1 million unfavorable impact from foreign currency translation.
Justin: Excluding these impacts on a like for like basis revenue increased four 2% with good organic growth seen in fresh fruits and tried to fight the fight you Sidney.
Justin: Net income in the first quarter was $44 2 million a $21 3 million year on year decrease however at the prior year had the benefit of something that's exceptional gain of $37 3 million related to the progressive projects disposal also there was <unk> 8 million decrease in other income Q2.
Justin: Unrealized FX losses on foreign currency borrowings.
Justin: Assessing these items was an increase in equity method investments related to a noncash gain on an M&A transaction as well as a higher net income relating to our discontinued operations.
Each year, and we recorded a noncash accounting adjustment to the carrying value of discontinued operations in Q1.
Justin: With the adjustments this quarter are largely offsetting.
Justin: The cessation of depreciation and amortization that occurs under discontinued operations County, now looking at the non-GAAP performance measures adjusted EBITDA decreased by approximately $5 million, primarily due to a decrease in fresh foods and a decrease in diversified fresh budgets Americas and rest of world GTP.
Justin: The projects just put yourself on a like for like basis. The decrease was $2 two.
Justin: Adjusted net income decreased $7 5 million predominantly due to the decrease in adjusted EBITDA as well as higher depreciation expense adjusted diluted EPS was <unk> 35, compared to 43 sets of the prior year.
Justin: Now turning to the divisional updates for our continuing operations, starting with fresh fruits on slide 30.
Justin: Revenue increased six 5%, primarily due to higher worldwide volumes with banana films.
Justin: That's why that's higher wet wipes pricing of pineapples dumping honest, partially offsetting the lower volumes of pineapples.
Justin: <unk>.
Justin: Adjusted EBITDA decreased $6 1 million, primarily driven by higher anticipation for sourcing costs.
Justin: Following the impact of chocolate strong Sarah Hunter Lewis as well as higher shipping costs due to the completion of schedule dry docking and the impact of an operational disruption for one of our vessels services in the North American market.
Justin: These challenges were partially offset by good underlying performance in banana on a worldwide basis as well as improved performance in pineapples on a worldwide basis.
Justin: The diversified segment delivered another strong result in the first quarter of trying to stretch five reported revenue increased four 5% primarily due to the strong performance of the U K, Spain and the Netherlands. This was partially offset by an FX headwind of $19 4 million and a net negative impact from M&A up to.
Justin: 5 million, excluding these impacts on a like for like basis revenue increased 8% or $68 4 million.
Justin: EBITDA increased six 6% or $1 7 million, primarily driven by increases in the U K, Spain and the Netherlands.
Justin: This was partially offset by lower earnings in Germany, and an unfavorable impact of foreign currency translation of <unk> 7 billion.
On a like for like basis, adjusted EBITDA increased nine 4% or $2 5 million.
Justin: Now turning to diversified fresh projects Americas and rest of world.
Justin: As in previous quarters reported for asking you in diversified markets with impacted by a progressive projects disposal last year on a like for like basis revenue declined by six 8%.
Justin: Decrease was primarily attributable to lower export pricing for key southern hemisphere products, particularly charities as well as declines in North American markets due to reduced pricing for grapes and door volumes about the cabinets.
Justin: <unk> EBITDA decreased $2 9 million, primarily driven by the disposal of progressive Pudgies. However, on a like for like basis, adjusted EBITDA increased by 10, 4% or $1 5 million.
Justin: This growth was primarily driven by strong performance in the North American market in Kiwis citrus and avocado.
Justin: However, these gains were partially offset by declines on the southern hemisphere export side can cherries grapes as well as declines in various in the North American market.
Justin: Now turning to slide 16 to focus on capital allocation on our balance sheet, Firstly as mentioned by Rory and notice in the press release issued on May 1st we were very pleased to announce the successful completion of a $1 cheaper than refinance if our corporate credit associates.
Justin: Can you send to cases credit facilities consist of a 600 million multi currency five year revolving credit facility, a 250 million five year term loan a and a 350 million seven year farm credit term loan, replacing our existing Rcs GLA and TMT.
Justin: Looking at interest expense. This has continued to decrease due to lower desktop apps as well as lower base rates.
Justin: $17 2 million in the first quarter under the assumption that base rates will remain broadly stable in 2025, and notwithstanding any exceptional cash proceeds we continue to expect further interest expense to be approximately 17 of them.
Justin: Cash capital expenditure from continuing operations was $52 8 million in a quarter, including the biopsy two vessels finance basis of 36 million. Thus, we're already reflected within net debt at year end and discussed in our previous earnings calls.
Justin: The remaining $68 million into just expenditure that's the dry dockings, finding investments efficiency projects in our warehouses and ongoing investments in it and logistics assets.
Justin: In line with our usual seasonal working capital trends.
Justin: And accentuated by the timing of the Cherry season, we saw working capital actually in the first quarter.
Justin: The combination of these factors resulted in free cash flow from continuing operations being an outflow of 131 6 million.
Justin: In previous years, we expect to see this outlined as the year progresses.
Justin: Cash flow was the primary driver behind the nice increase in activity.
Justin: Two more.
Justin: <unk> times at the end of March off of sales in the quarter were $4 8 million, that's primarily related to the sale of actively marketed planted Hawaii.
Speaker Change: Mentioned by ROI, we're pleased to declare an $8.05 dividend for the first quarter, representing a $6 two 5% increase from our last declared dividends now.
Speaker Change: Now I'll hand, you back to really who are giving up takes on our full year outlook.
Speaker Change: Thanks, Susan.
Speaker Change: Well, we were pleased with our performance in Q1, delivering a result, which was ahead of our own expectations. This result gives us a strong foundation for the rest of the year in a very dynamic macroeconomic environment.
Speaker Change: Multinational businesses and we continue to monitor the evolving macro international economic scenario, we do believe that our industry is a good example of the benefits of international trade, providing year round healthy product sure consumer confidence the existing trade deals. We continue unacceptable terms short term disruptions may arise across a range of.
Speaker Change: Areas, such as foreign exchange rates labor market for our supply chains.
Speaker Change: A good start to the year, along that are resilient and diverse business model gives us confidence in our ability to navigate the challenging current one.
Speaker Change: <unk> economic environment.
Consequently, we are pleased to provide you guidance upwards and are now targeting full year adjusted EBITDA of at least three observation that in dollars.
Turning to investments over the course of the year, we continue to expect as a baseline to have a maintenance level of capex from continuing operations broadly in line with our depreciation expense of approximately $100 million.
Speaker Change: Additionally, we also anticipate some increased capex spend over the course of the year related to our Reinvestments in Honduras, albeit significantly supported by insurance proceeds.
Speaker Change: We remain focused on exploring a range of development opportunities through both internal and external investment, which you believe confirm that strengthen our business and drive growth for the years ahead.
Speaker Change: I want to conclude by once again thanking all of it some people across group for their ongoing commitment and dedication to driving total P&C forward, our experienced and knowledgeable team.
Speaker Change: Turning to service very well Additionally, really appreciates all of our essential partners suppliers customers and all of our stakeholders for their continued support and with that I'll hand, the call back to the operator to open the line for questions.
Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: I would like to withdraw your question simply press Star one again.
Speaker Change: Please ensure you are not on speaker phone and that your phone is not on mute when called upon thank you.
Speaker Change: Your first question comes from Christopher Byrnes with Deutsche Bank. Your line is open.
Christopher Byrnes: Hi, good morning, good afternoon.
Christopher Byrnes: Just wanted to follow up on the EBITDA guidance.
Christopher Byrnes: Setting a floor at the upper end of the prior range I'm curious how much of that raise would you attribute the better underlying performance in the quarter.
Christopher Byrnes: Perhaps higher expectations over the balance of the year versus inorganic factors like the expected foreign exchange translation tailwind at current rate and then just related to that.
Christopher Byrnes: This updated outlook embed current tariffs in place in the U S market and is there any way to quantify.
Christopher Byrnes: What those pair.
Christopher Byrnes: Those tariff impact might be on a gross basis.
Christopher Byrnes: And what actions you're taking to mitigate those.
Christopher Byrnes: Thank you Christopher.
So a range of interesting questions. There, yes, I mean, obviously doing forecasting in the current environment, So a little bit challenging. So we put them all put all the factors into the mix, including the current known scenario regarding tariffs.
Christopher Byrnes: The impact on the likely impact on our business and that's our best shot at the targets for the full year, a big element of that is obviously down to doing a little bit better in Q1 than we had anticipated, particularly with the headwinds that we had highlighted on tropical storm <unk> and we have make it made some assumptions about the translation of the remaining quarters.
Christopher Byrnes: Given a a.
Christopher Byrnes: The euro exchange rate to the dollar.
Christopher Byrnes: The better translation on reporting $1, so to sum of all those factors.
Christopher Byrnes: We are moving a little bit of both above our previous range. So putting it all together, we're feeling positive about the balance of the year.
Christopher Byrnes: Very good.
Speaker Change: Then just a follow up around the person vegetables business I understand you continue to evaluate potential exit option, but.
Speaker Change: I mean, it's been it's been over a year since the bee deal was.
Speaker Change: With fresh express was.
Speaker Change: Terminated, but how do you guard against the risk that underlying business performance.
Speaker Change: Deteriorate.
Speaker Change: You continue to market their business.
Speaker Change: I guess like are you still committed to exiting the business or might it make more sense just to retain it.
Speaker Change: Performance was very strong last year.
Speaker Change: You are up against the tough compare the quarter, but seems like you're still net ahead. So I'm just curious how you're how you're thinking about that business going forward. Thanks.
Speaker Change: Yeah. It's a good question, Chris from that clearly would have lots of hard strategic certainty around the supplementary stage than we have done but the process is complex and.
Speaker Change: We do have now trying to find a good strategic answer for all of the stakeholders. The employees management customers suppliers long term future of the business of putting the new GSE Golar has been being quite complex.
Speaker Change: Continuing to disclose it as distinct discontinued operations, probably the highlights were our position on it is.
Speaker Change: I think there is a an appropriate AG.
Speaker Change: Can you be a little bit different to the press expressed must still working on our portfolio actively working on that and I think that'll be a good outcome for all of the stakeholders, if we can get to that position.
Speaker Change: We've worked very hard is what I was trying to avoid.
Speaker Change: Any impact on the on the ongoing business.
Speaker Change: It's not half of typing it in discontinued operations and but there are a lot of other competing businesses who are either.
Speaker Change: The private equity owners, who are also per se will at some point in time, 3%. So it's.
Speaker Change: Looking at the World, we live in but business has to change how did you do a temporary owners private equity owners and things like that so.
Speaker Change: It can be challenging to manage in that environment.
Speaker Change: Our management team has done well.
Speaker Change: Walking around those challenges.
Speaker Change: Very helpful context, Thanks, I'll pass it on.
Christopher Byrnes: Thank you Christopher.
Speaker Change: The next question comes from Gary Martin with Davy Your line is open.
Hi, Rory and then Johan I Congrats on a strong start to the year just a few questions from my side just to kick things off.
Speaker Change: You exceeded your refi post quarter I noted that there is a driver there is more flexibility for growth initiatives <unk>, just again to get a run through of kind of how you envisage capital allocation policy on a go forward basis.
Speaker Change: Internal or external opportunities.
Speaker Change: Right.
Speaker Change: Thanks Derek.
Speaker Change: Yes, I think Thats always we keep all of the capital allocation alternatives on the table a big strategic issues. The first is really getting to the end of the vegetable current process.
Speaker Change: Whether it's keep ourselves will have an impact on our future top and available to see our focus of our future capital I think as well as getting the percentage of new and just recently announced it was helpful to give us.
Speaker Change: Basis on the <unk>.
Speaker Change: How can those facilities in place for the long term is very good outcome on the terms negotiated with the finance team I think we're in a world more than satisfactory.
Speaker Change: We continue to look at.
Speaker Change: Acquisitions.
Speaker Change: Internally the corporate Finance Department that we look at snow a lot of companies that are.
Speaker Change: Different geographies, whether it's in the U S or in Europe. There are number of P. Funds for example, coming to their end of their lifecycle.
Speaker Change: Still some challenges around the price expectations of the private sector versus the public sector. We've seen some changes in the market.
Speaker Change: For example, being taken private.
Speaker Change: As a decent premium to its corporate price.
Speaker Change: The dividend as well as Youll have seen Gary we.
Speaker Change: Pushed up the dividend, 600% so in line.
Speaker Change: Amongst some policy until the current do some don't.
Speaker Change: Tried to been steadily over the years on the dividend.
Speaker Change: Then there's a lot of internal development projects that we're doing a lot of work on at the moment.
Speaker Change: Fresh foods division, particularly focused on.
Speaker Change: Developing.
Speaker Change: Kind of quick.
Speaker Change: <unk> got things.
Speaker Change: Doing some extra production ourselves into joint ventures, we're looking at some of our lines.
Speaker Change: Spending in some of our other JV, particularly in.
Speaker Change: Market JV in Chile.
Speaker Change: A number of projects in northern Europe that can be very interested in between there's a lot of work to get them to a confusion on that.
Speaker Change: Conclusion could be good internal organic growth in terms of reinvesting.
Speaker Change: Particularly in automation technology.
Speaker Change: And then around the business, we've got smaller but important.
Speaker Change: Capex projects can be expanding our facilities capacity in Ireland, and Spain, we're doing well in France in terms of building up a business utilizing some facilities in the port of something in the south of France.
Speaker Change: It would be good.
Speaker Change: So again all of the options around the table, we are still a little bit conditioned by the outcome of the fresh vegetable.
Speaker Change: <unk> strategic outcome, there, but it's an ongoing process.
Speaker Change: But you already go color, maybe just on the operational side. It was a particularly spend their performance just on diversified Americas and rest of world in terms of the like for like EBITDA, well I think it would be good just to get a better understanding of just the various components that drove that like for like EBITDA, just given I think revenues.
Speaker Change: Like for like basis for box or is it entirely.
Speaker Change: Mix from the North American basket of goods point of view is that what drove the.
Speaker Change: The profit performance in rest of world.
Speaker Change: Yes, I think we called out.
Our distribution businesses in North America had a very strong first quarter, our export business out of South America in particular in Chile.
Speaker Change: More normal.
Speaker Change: Market share.
Speaker Change: We did have an exceptional 2004, and particularly in cherries and that division was back to a more normal year, but nothing.
Speaker Change: No particular mega hubs.
Speaker Change: So again, we think it's well balanced there to look at them in line with our own assessment of what market conditions might have been so it's reasonably positive for the rest of the year.
Speaker Change: The color and then maybe just one final one a bit of an anorak ones just on your capex guidance pertaining to $100 million, but just in terms of some of that additional incremental capex that might be required for reinvestment in Honduras following the tropical storm.
Speaker Change: Would it be possible just to get a bit of a quantum on how much of that is the bulk of the insurance proceeds.
Speaker Change: Thanks.
Speaker Change: Huge amount, but something of the order of $10 million to $12 million, but we're hoping to.
Speaker Change: Bring with it some incremental EBITDA, we're going to do a little bit.
Terms of <unk>.
Speaker Change: Improving the hopefully the yields improve.
Speaker Change: Thats a lot of protections for the longer term as well so it's not like huge amounts of money $10 million to $12 million charge. It.
Speaker Change: I feel really really good color.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: This concludes the question and answer session I'll turn the call to Robert Burns for closing remarks.
Robert Burns: Thank you.
Robert Burns: I think we're pleased that we delivered another good quarter.
Robert Burns: Competent enough to upgrade the target to at least $380 million of targeted EBITDA for the full year increase.
Robert Burns: The increase the dividend by 6% taken uptake now center corner, we've made some very good projects progress as well on a number of strategic projects. So lots of macroeconomic challenge or something but we believe we're very well positioned to navigate our way through them successful. So thank you all very much for joining us Tonight.
Robert Burns: This concludes today's conference call and webcast. Thank you for joining you may now disconnect.
Robert Burns: Yeah.
Robert Burns: Hum.