Fresh Del Monte Produce Inc. (NYSE: FDP), ("Fresh Del Monte" or
the "Company") today reported financial results for the third
quarter ended October 1, 2021.
Financial highlights for the third quarter and first nine
months of 2021:
- Net sales for the third quarter of 2021 increased to $1,004.8
million compared with $989.7 million in the prior-year period; Net
sales for the first nine months of 2021 increased to $3,234.6
million compared with $3,200.0 million in the prior-year
period;
- Gross profit for the third quarter of 2021 decreased to $48.9
million compared with $67.3 million in the prior-year period; gross
profit for the first nine months of 2021 increased to $264.0
million compared with $214.5 million in the prior-year period;
- FDP net income(1) for the third quarter of 2021 was $1.3
million compared with $17.4 million in the prior-year period,
corresponding Diluted EPS(2) was $0.03 compared with $0.37 in the
prior-year period; FDP net income(1) for the first nine months of
2021 was $91.2 million compared with $48.3 million in the
prior-year period, corresponding Diluted EPS(2) was $1.91 compared
with $1.01 in the prior-year period;
- Adjusted EBITDA(3) for the third quarter of 2021 was $26.2
million compared with $51.0 million in the prior-year period;
Adjusted EBITDA(3) for the first nine months of 2021 was $192.0
million in the first nine months of 2021 compared with $165.5
million in the prior-year period.
“While we continue to operate in one of the most challenging
macroeconomic environments in recent history, impacted by
inflationary and cost pressures across our supply chain, we remain
focused on growth by managing our business for the long term and on
continuing to provide reliable, quality service to our customers,"
said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer.
“In terms of seasonality, the second half of the year is typically
more challenging due to industry-wide excess supply and shifts in
demand towards seasonal fruits. During the third quarter, we
continued to experience significantly higher input cost and labor
shortages, which impacted our margins and profitability. To offset
this impact we are implementing inflation-justified price increases
in an effort to maintain our continuous supply and service
levels."
"As we move forward, we believe that our recent capital
investments in the automation of our production facilities, further
leveraging of our vertical integration, such as the recent addition
of 6 new refrigerated container vessels to our fleet, optimization
and consolidation of our operations and product rationalization
will prove to be advantageous by putting us in a stronger, more
agile position."
Net sales for the third quarter of 2021 increased $15.1 million,
or 2%, compared with the prior-year period. The increase in net
sales was driven by higher net sales across all the Company's
segments, particularly the other products and services segment
including third-party freight services and poultry and meats
category. Net sales were also positively impacted by favorable
exchange rates.
Gross profit for the third quarter of 2021 was $48.9 million
compared with $67.3 million in the prior-year period and Adjusted
Gross profit(3) was $48.9 million compared with $69.1 million in
the prior-year period. The decrease was primarily as a result of
the impact of inflation, strained transportation capacity, lack of
sufficient labor availability and other cost pressures, which
resulted in higher per unit production and distribution costs
including packaging materials, fertilizers, inland freight, labor
and fuel costs. The impact of these pressures in the third quarter
was intensified by seasonality, as the Company has historically
realized a greater portion of net sales and gross profit during the
first two calendar quarters of the year. Gross margin decreased to
4.9% from 6.8% in the prior-year period.
Operating income for the third quarter of 2021 was $1.3 million
compared with $26.6 million in the prior-year period, and Adjusted
Operating income(3) was $0.3 million compared with $25.3 million in
the prior-year period. The decrease in operating income was
primarily due to lower gross profit, and higher selling, general
and administrative expenses mainly due to higher administrative
expenses.
FDP net income for the third quarter was $1.3 million compared
with $17.4 million in the prior year-period and Adjusted FDP Net
income(3) was $0.7 million compared with $16.4 million in the
prior-year period. The decrease was primarily the result of lower
operating income.
Adjusted EBITDA(3) for the third quarter was $26.2 million
compared with $51.0 million in the prior-year period, and
corresponding Adjusted EBITDA margin(3) decreased to 2.6% from 5.2%
in the prior-year period.
(1)
"FDP net income" as referenced
throughout this release is defined as Net income attributable to
Fresh Del Monte Produce Inc.
(2)
"Diluted EPS" represents diluted
earnings per share and is calculated as FDP net income divided by
diluted weighted average shares.
(3)
Non-GAAP financial measure.
Reconciliations and other information required by Regulation G can
be found below under "Non-GAAP Measures."
Third Quarter 2021 Business Segment Performance and Selected
Financial Data (As reported in business segment data)
Fresh Del Monte Produce Inc.
and Subsidiaries
Business Segment Data
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
October 1, 2021
September 25, 2020
Segment Data:
Net Sales
Gross Profit
Net Sales
Gross Profit
Fresh and value-added products
$
601.2
60
%
$
40.9
84
%
$
600.6
61
%
$
54.2
81
%
Banana
365.3
36
%
2.4
5
%
361.8
36
%
10.8
16
%
Other products and services
38.3
4
%
5.6
11
%
27.3
3
%
2.3
3
%
$
1,004.8
100
%
$
48.9
100
%
$
989.7
100
%
$
67.3
100
%
Nine months ended
October 1, 2021
September 25, 2020
Segment Data:
Net Sales
Gross Profit
Net Sales
Gross Profit
Fresh and value-added products
$
1,906.0
59
%
$
149.8
57
%
$
1,897.8
59
%
$
133.8
62
%
Banana
1,210.2
37
%
98.2
37
%
1,218.4
38
%
74.3
35
%
Other products and services
118.4
4
%
16.0
6
%
83.8
3
%
6.4
3
%
$
3,234.6
100
%
$
264.0
100
%
$
3,200.0
100
%
$
214.5
100
%
Fresh and Value-Added
Products
Net sales for the third quarter of 2021 increased approximately
$1 million compared with the prior-year period, principally as a
result of increased net sales of pineapple and avocado. Partially
offsetting the increase were decreases in net sales of vegetables,
prepared food products and non-tropical fruit. The primary drivers
of the variance in net sales were:
- Pineapple net sales increased in most regions driven by higher
sales volume, partially offset by lower per unit sales prices.
- Avocado net sales increased primarily in North America driven
by higher per unit sales prices, partially offset by lower sales
volume.
- Vegetables net sales decreased primarily in North America,
including our Mann Packing operations, driven by lower sales volume
related to lower demand from the foodservice channel, partially
offset by higher per unit sales prices.
- Prepared food products net sales decreased primarily in Europe
driven by lower availability mainly of canned pineapple products.
The prior-year period benefited from heightened customer demand
related to the COVID-19 pandemic as more people stocked up on
canned goods.
- Non-tropical fruit net sales decreased primarily in the Middle
East.
Gross profit for the third quarter was $40.9 million compared
with $54.2 million in the prior-year period, primarily due to lower
gross profit on avocado, prepared food products, fresh-cut
vegetables and pineapple, partially offset by vegetables. Segment
performance was negatively impacted by inflationary and cost
pressures, which resulted in higher per unit production and
distribution costs including packaging materials, fertilizers,
inland freight, labor and fuel costs. Gross margin decreased to
6.8% from 9.0% in the prior-year period. The primary drivers of the
variance in gross profit were:
- Avocado gross profit decreased in North America primarily
driven by lower sales volume coupled with higher per unit
production and distribution costs.
- Prepared food products gross profit decreased primarily in
Europe driven by lower net sales coupled with higher per unit
distribution costs.
- Fresh-cut vegetable gross profit decreased in North America,
primarily in our Mann Packing operations, mainly driven by higher
per unit product costs and lower production yields.
- Pineapple gross profit decreased primarily in North America due
to lower per unit sales prices coupled with higher per unit
production and distribution cost.
- Vegetables gross profit increased primarily in the Middle
East.
Adjusted Gross profit(3) in the fresh and value-add products
segment for the third quarter of 2021 was $40.9 million compared
with $55.6 million in the prior-year period.
Banana
Net sales for the third quarter of 2021 increased $3.5 million
compared with the prior-year period, principally due to higher net
sales in Europe primarily related to higher per unit sales
prices.
Gross profit for the third quarter of 2021 was $2.4 million
compared with $10.8 million in the prior-year period, primarily
driven by Asia and North America. The consolidated decrease was
driven by excess industry supply, which lowered per unit sales
prices coupled with higher per unit distribution and production
costs impacted by inflationary and cost pressures. As a result of
these factors, gross margin decreased to 0.7% compared with 3.0% in
the prior-year period.
Adjusted Gross profit(3) in the banana business segment for the
third quarter of 2021 was $2.4 million compared with $11.2 million
in the prior-year period.
Cash Flows
Net cash provided by operating activities for the first nine
months of 2021 was $151.6 million, compared with $173.9 million in
the prior-year period, a decrease of $22.3 million. The decrease
was primarily attributable to higher levels of inventories, mainly
impacted by the increase in cost of goods largely related to
current cost pressures, and receivables. Partially offsetting the
decrease were higher net income and higher balances of accounts
payable and accrued expenses.
Total Debt
Total debt decreased to $477.0 million at the end of the third
quarter of 2021 from $511.1 million at the end of the third quarter
of 2020. This improvement reflects our disciplined cash flow
management approach including capital expenditure planning and
continuing proceeds from assets sales under our Optimization
Program. The program, launched in the fourth quarter of 2020,
entails selling non-strategic and underutilized assets, including
land and facilities (more disclosures related to the Optimization
Program are available in the Company's quarterly report on Form
10-Q for the period ended October 1, 2021).
Quarterly Cash Dividend
On November 2, 2021, the Company's Board of Directors declared a
quarterly cash dividend of $0.15 per share, payable on December 10,
2021, to shareholders of record on November 17, 2021.
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Operations
(U.S. dollars in millions,
except share and per share data) - (Unaudited)
Quarter ended
Nine months ended
Statement of Operations:
October 1, 2021
September 25,
2020
October 1, 2021
September 25,
2020
Net sales
$
1,004.8
$
989.7
$
3,234.6
$
3,200.0
Cost of products sold
955.9
920.1
2,967.1
2,964.6
Other product-related charges
—
2.3
3.5
20.9
Gross profit
48.9
67.3
264.0
214.5
Selling, general and administrative
expenses
48.0
44.1
148.3
142.4
Gain (loss) on disposal of property, plant
and equipment, net
0.5
(0.1
)
4.2
1.5
Asset impairment and other charges
(credits), net
0.1
(3.5
)
(0.3
)
(3.8
)
Operating income
1.3
26.6
120.2
77.4
Interest expense, net
4.6
4.7
14.9
15.5
Other expense, net
1.8
0.8
5.6
5.2
(Loss) income before income taxes
(5.1
)
21.1
99.7
56.7
Income tax (benefit) provision
(6.6
)
4.9
9.1
9.4
Net income
$
1.5
$
16.2
$
90.6
$
47.3
Less: Net income (loss) attributable to
redeemable and noncontrolling interests
0.2
(1.2
)
(0.6
)
(1.0
)
Net income attributable to Fresh Del Monte
Produce Inc.
$
1.3
$
17.4
$
91.2
$
48.3
Earnings per share(1):
Basic
$
0.03
$
0.37
$
1.92
$
1.01
Diluted
$
0.03
$
0.37
$
1.91
$
1.01
Dividends declared per ordinary share
$
0.15
$
0.05
$
0.35
$
0.20
Weighted average number of ordinary
shares:
Basic
47,535,873
47,355,918
47,494,168
47,641,712
Diluted
47,743,758
47,427,723
47,661,055
47,731,747
(1)
Earnings per share ("EPS") is calculated
based on Net income attributable to Fresh Del Monte Produce
Inc.
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(U.S. dollars in millions) -
(Unaudited)
October 1, 2021
January 1, 2021
Assets
Current assets:
Cash and cash equivalents
$
19.0
$
16.5
Trade and other accounts receivable,
net
438.5
435.2
Inventories, net
538.8
507.7
Other current assets
50.3
52.9
Total current assets
1,046.6
1,012.3
Investment in and advances to
unconsolidated companies
3.7
1.9
Property, plant and equipment, net
1,418.5
1,420.3
Operating lease right-of-use assets
183.8
170.5
Goodwill
423.8
424.0
Intangible assets, net
144.5
150.4
Other noncurrent assets
166.8
163.9
Total assets
$
3,387.7
$
3,343.3
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable and accrued expenses
$
550.9
$
511.8
Current maturities of debt and finance
leases
0.1
0.2
Current maturities of operating leases
30.5
28.8
Other current liabilities
7.1
14.0
Total current liabilities
588.6
554.8
Long-term debt and finance leases
476.9
541.8
Operating leases, less current
maturities
125.8
114.4
Other noncurrent liabilities
315.1
332.4
Total liabilities
1,506.4
1,543.4
Redeemable noncontrolling interest
49.4
50.2
Total Fresh Del Monte Produce Inc.
shareholders' equity
1,810.4
1,728.0
Noncontrolling interests
21.5
21.7
Total shareholders' equity
1,831.9
1,749.7
Total liabilities, redeemable
noncontrolling interest and shareholders' equity
$
3,387.7
$
3,343.3
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(U.S. dollars in millions) -
(Unaudited)
Nine months ended
October 1, 2021
September 25,
2020
Operating activities:
Net income
$
90.6
$
47.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
72.5
70.5
Amortization of debt issuance costs
0.4
0.4
Asset impairments
0.3
2.9
Share-based compensation expense
5.8
6.2
Deferred income taxes
(6.0
)
(2.9
)
Gain on disposal of property, plant and
equipment, net
(4.2
)
(1.5
)
Foreign currency translation
adjustment
(1.7
)
1.6
Other, net
(2.8
)
—
Changes in operating assets and
liabilities:
Receivables
(13.7
)
21.9
Inventories
(36.7
)
46.0
Prepaid expenses and other current
assets
4.6
(6.8
)
Accounts payable and accrued expenses
42.8
(18.0
)
Other noncurrent assets and
liabilities
(0.3
)
6.3
Net cash provided by operating
activities
151.6
173.9
Investing activities:
Capital expenditures
(83.4
)
(92.9
)
Proceeds from sales of property, plant and
equipment
12.5
9.8
Cash received from derivatives not
designated as hedges
4.6
—
Investments in unconsolidated
companies
(1.9
)
—
Other investing activities
1.0
0.6
Net cash used in investing
activities
(67.2
)
(82.5
)
Financing activities:
Net repayments on debt
(64.9
)
(76.0
)
Distributions to noncontrolling
interests
(5.2
)
(6.3
)
Net payments related to share-based
awards
(0.4
)
(0.6
)
Dividends paid
(16.6
)
(9.6
)
Repurchase and retirement of ordinary
shares
—
(20.8
)
Other financing activities
0.4
1.9
Net cash used in financing
activities
(86.7
)
(111.4
)
Effect of exchange rate changes on
cash
4.8
0.7
Net increase (decrease) in cash and cash
equivalents
2.5
(19.3
)
Cash and cash equivalents, beginning
16.5
33.3
Cash and cash equivalents, ending
$
19.0
$
14.0
Non-GAAP Measures
The Company's results are determined in accordance with U.S.
generally accepted accounting principles (GAAP). Certain
information presented in this press release reflects adjustments to
GAAP measures such as amounts related to restructuring, asset
impairment and other charges (credits), net, gain on disposal of
property, plant and equipment, net, other product-related charges
and certain other non-recurring items, if any. These adjustments
result in non-GAAP financial measures and are referred to in this
press release as Adjusted Gross profit, Adjusted Operating income,
Adjusted FDP Net income, and Adjusted Diluted EPS. Management
believes these adjustments provide a more comparable analysis of
the underlying operating performance of the business.
This press release also includes non-GAAP measures such as
EBITDA, Adjusted EBITDA, EBITDA margin, and Adjusted EBITDA margin.
EBITDA is defined as net income attributable to Fresh Del Monte
Produce Inc. excluding interest expense, net, provision for income
taxes, depreciation and amortization, and share-based compensation
expense. Adjusted EBITDA represents EBITDA with additional
adjustments for non-recurring items. EBITDA margin represents
EBITDA as a percentage of net sales, and adjusted EBITDA margin
represents adjusted EBITDA as a percentage of net sales.
Adjusted Gross profit, Adjusted Operating income, Adjusted FDP
Net income, and Adjusted EBITDA provide the Company with an
understanding of the results from the primary operations of its
business. The Company uses these metrics because management
believes they provide more comparable measures to evaluate
period-over-period operating performance since they exclude special
items that are not indicative of the Company's core business or
operations. These measures may be useful to an investor in
evaluating the underlying operating performance of the Company's
business because these measures:
- Are used by investors to measure a company's comparable
operating performance;
- Are financial measurements that are used by lenders and other
parties to evaluate creditworthiness; and
- Are used by the Company's management for various purposes,
including as measures of performance of its operating entities, as
a basis of strategic planning and forecasting, and in certain cases
as a basis for incentive compensation.
Because all companies do not use identical calculations, the
Company's presentation of these non-GAAP financial measures may not
be comparable to similarly titled measures used by other companies.
Reconciliations of non-GAAP financial measures to the most directly
comparable GAAP financial measures are provided in the financial
tables that accompany this release.
Fresh Del Monte Produce Inc.
and Subsidiaries
Non-GAAP
Reconciliation
(U.S. dollars in millions,
except per-share amounts) - (Unaudited)
Quarter ended
October 1, 2021
September 25,
2020
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
As reported
$
48.9
$
1.3
$
1.3
$
0.03
$
67.3
$
26.6
$
17.4
$
0.37
Adjustments:
Other product-related charges(1)
—
—
—
—
2.3
2.3
2.3
0.05
Asset impairment and other charges
(credits), net(2)
—
(0.2
)
(0.2
)
—
—
(3.5
)
(3.5
)
(0.07
)
(Gain) loss on disposal of property, plant
and equipment, net(3)
—
(0.8
)
(0.8
)
(0.02
)
—
0.1
0.1
—
Other adjustments(4)
—
—
0.2
—
(0.5
)
(0.2
)
(0.2
)
—
Tax effects of all adjustments and other
tax-related items(5)
—
—
0.2
—
—
—
0.3
—
As adjusted
$
48.9
$
0.3
$
0.7
$
0.01
$
69.1
$
25.3
$
16.4
$
0.35
Nine months ended
October 1, 2021
September 25,
2020
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
Gross profit
Operating income
Net income attributable to Fresh
Del Monte Produce Inc.
Diluted EPS
As reported
$
264.0
$
120.2
$
91.2
$
1.91
$
214.5
$
77.4
$
48.3
$
1.01
Adjustments:
Other product-related charges(1)
3.5
3.5
3.5
0.07
20.9
20.9
20.9
0.44
Asset impairment and other charges
(credits), net(2)
—
(0.6
)
(0.6
)
(0.01
)
—
(3.8
)
(3.8
)
(0.08
)
(Gain) loss on disposal of property, plant
and equipment, net(3)
—
(4.5
)
(4.5
)
(0.09
)
—
(1.5
)
(1.5
)
(0.03
)
Other adjustments(4)
—
—
0.1
—
(0.5
)
—
—
—
Tax effects of all adjustments and other
tax-related items(5)
—
—
(0.5
)
(0.01
)
—
—
(5.4
)
(0.11
)
As adjusted
$
267.5
$
118.6
$
89.2
$
1.87
$
234.9
$
93.0
$
58.5
$
1.23
Fresh Del Monte Produce Inc.
and Subsidiaries
Segment Gross Profit Non-GAAP
Reconciliation
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
October 1, 2021
September 25,
2020
Fresh and value-added
products
Banana
Other products and services
Fresh and value-added
products
Banana
Other products and services
Gross profit (as reported)
$
40.9
$
2.4
$
5.6
$
54.2
$
10.8
$
2.3
Adjustments:
Other product-related charges(1)
—
—
—
1.9
0.4
—
Other adjustments(4)
—
—
—
(0.5
)
—
—
Adjusted Gross profit
$
40.9
$
2.4
$
5.6
$
55.6
$
11.2
$
2.3
Nine months ended
October 1, 2021
September 25,
2020
Fresh and value-added
products
Banana
Other products and services
Fresh and value-added
products
Banana
Other products and services
Gross profit (as reported)
$
149.8
$
98.2
$
16.0
$
133.8
$
74.3
$
6.4
Adjustments:
Other product-related charges(1)
4.7
(1.2
)
—
18.6
2.2
0.1
Other adjustments(4)
—
—
—
(0.5
)
—
—
Adjusted Gross profit
$
154.5
$
97.0
$
16.0
$
151.9
$
76.5
$
6.5
Fresh Del Monte Produce Inc.
and Subsidiaries
Reconciliation of EBITDA and
Adjusted EBITDA
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
Nine months ended
October 1, 2021
September 25,
2020
October 1, 2021
September 25,
2020
Net income attributable to Fresh Del Monte
Produce Inc.
$
1.3
$
17.4
$
91.2
$
48.3
Interest expense, net
4.6
4.7
14.9
15.5
Income tax (benefit) provision
(6.6
)
4.9
9.1
9.4
Depreciation & amortization
25.6
23.7
72.5
70.5
Share-based compensation expense
2.1
1.6
5.8
6.2
EBITDA
$
27.0
$
52.3
$
193.5
$
149.9
Adjustments:
Other product-related charges(1)
—
2.3
3.5
20.9
Asset impairment and other charges
(credits), net(2)
(0.2
)
(3.5
)
(0.6
)
(3.8
)
(Gain) loss on disposal of property, plant
and equipment, net(3)
(0.8
)
0.1
(4.5
)
(1.5
)
Other adjustments(4)
0.2
(0.2
)
0.1
—
Adjusted EBITDA
$
26.2
$
51.0
$
192.0
$
165.5
Net sales
$
1,004.8
$
989.7
$
3,234.6
$
3,200.0
EBITDA margin(a)
2.7
%
5.3
%
6.0
%
4.7
%
(a) Calculated as EBITDA as a percentage
of net sales.
Adjusted EBITDA margin(b)
2.6
%
5.2
%
5.9
%
5.2
%
(b) Calculated as Adjusted EBITDA as a
percentage of net sales.
(1)
Other product-related charges for
the nine months ended October 1, 2021 primarily consisted of (1)
$3.4 million of non-tropical fruit inventory write-offs due to
inclement weather in Chile, (2) $1.4 million in repair expenses
related to hurricane damage to the Company's Guatemala banana
operations in the fourth quarter of 2020, and (3) a $1.3 million
inventory write-off due to the contracted sale of production
equipment in the Middle East. Partially offsetting these other
product-related charges for the nine months ended October 1, 2021
was a $2.5 million insurance recovery associated with the Guatemala
hurricane damage. Other product-related charges for the quarter and
nine months ended September 25, 2020 primarily related to inventory
write-offs resulting from lower demand for certain of the Company's
products due to the COVID-19 pandemic, principally related to the
fresh and value-added products segment. The COVID-19 pandemic led
to volatile supply and demand conditions across the Company's key
global markets in the first nine months of 2020 which negatively
affected the pricing and demand for its products, including within
its foodservice distribution channel. Other product-related charges
for the quarter and nine months ended September 25, 2020 also
included incremental costs incurred for cleaning and social
distancing protocols associated with the COVID-19 pandemic.
(2)
Asset impairment and other
charges (credits), net for the nine months ended October 1, 2021
primarily included (1) a $0.8 million insurance recovery associated
with damages to fixed assets in Guatemala caused by two hurricanes
in the fourth quarter of 2020 and (2) severance expense incurred in
connection with the exit from a facility in Europe. Asset
impairment and other charges (credits), net for the quarter ended
September 25, 2020 primarily related to a $4.4 million insurance
recovery associated with the 2019 voluntary product recall and $0.8
million in severance expense related to the reorganization of the
North America sales and marketing function. Asset impairment and
other charges (credits), net for the nine months ended September
25, 2020 primarily related to (1) a $10.4 million insurance
recovery related to the 2019 voluntary product recall, (2) a $2.0
million charge relating to a settlement with the California Air
Resource Board (refer to the Form 10-K for the year ended January
1, 2021 for further information on this matter), (3) $2.1 million
in impairments of property, plant, and equipment associated with
production facilities in North America and Europe, (4) $1.5 million
in severance expense related to the reorganization of the North
America sales and marketing function, and (5) $0.8 million in asset
impairment charges associated with low-yielding banana plants in
the Philippines.
(3)
Gain (loss) on disposal of
property, plant and equipment, net for the quarter ended October 1,
2021 primarily related to sales of assets in the Middle East and
Europe. For the nine months ended October 1, 2021, gain (loss) on
disposal of property, plant and equipment, net also included a $2.4
million gain on the sale of a refrigerated vessel and a $1.1
million gain on the sale of vacant land in the Middle East. Gain
(loss) on disposal of property, plant and equipment, net for the
quarter ended September 25, 2020 primarily related to a loss on
disposal of certain production assets in North America which was
partially offset by a gain on the sale of surplus land in Chile.
Gain (loss) on disposal of property, plant and equipment, net for
the nine months ended September 25, 2020 primarily related to gains
on the sale of surplus land in Chile.
(4)
Other adjustments for the quarter
and nine months ended October 1, 2021, primarily related to the
portions of the gain on disposal of property, plant, and equipment,
net and other product-related charges which were attributable to a
minority interest partner, reflected in net income (loss)
attributable to redeemable and noncontrolling interests. Other
adjustments for the quarter and nine months ended September 25,
2020 include a $0.5 million reversal of customer credit claims,
reflected in net sales, associated with the 2019 voluntary product
recall due to the realization of less claims than originally
estimated. Other adjustments for the quarter ended September 25,
2020 also included $0.3 million of estimated trade receivable
credit losses, reflected in selling, general, and administrative
expenses, primarily relating to the Company's foodservice customer
base as a direct result of the COVID-19 pandemic. For the nine
months ended September 25, 2020, these estimated credit losses
associated with the COVID-19 pandemic were $0.5 million.
(5)
Tax effects are calculated in
accordance with ASC 740, Income Taxes, using the same methodology
as the GAAP provision of income taxes. Income tax effects of
non-GAAP adjustments are calculated based on the applicable
statutory tax rate for each jurisdiction in which such charges were
incurred, except for those items which are non-taxable for which
the tax provision (benefit) was calculated at 0%. Certain non-GAAP
adjustments were subject to valuation allowances and therefore were
calculated at 0%. The nine months ended October 1, 2021 included a
$0.8 million tax benefit associated with the Coronavirus Aid,
Relief, and Economic Security (CARES) Act, while the nine months
ended September 25, 2020 included a $1.7 million CARES Act tax
benefit.
Conference Call and Webcast Data
Fresh Del Monte will host a conference call and simultaneous
webcast at 10:00 a.m. Eastern Time today to discuss the third
quarter 2021 financial results and to review the Company’s progress
and outlook. The webcast can be accessed on the Company’s Investor
Relations home page at www.freshdelmonte.com. The call will be
available for re-broadcast on the Company’s website approximately
two hours after the conclusion of the call for a period of one
year.
About Fresh Del Monte Produce Inc.
Fresh Del Monte Produce Inc. is one of the world's leading
vertically integrated producers, marketers and distributors of
high-quality fresh and fresh-cut fruit and vegetables, as well as a
leading producer and distributor of prepared food in Europe, Africa
and the Middle East. Fresh Del Monte markets its products worldwide
under the DEL MONTE® brand (under license from Del Monte Foods,
Inc.), a symbol of product innovation, quality, freshness and
reliability for over 135 years. The Company also markets its
products under the MANN™ brand and other related trademarks. Fresh
Del Monte Produce Inc. is not affiliated with certain other Del
Monte companies around the world, including Del Monte Foods, Inc.,
the U.S. subsidiary of Del Monte Pacific Limited, Del Monte Canada,
or Del Monte Asia Pte. Ltd. Fresh Del Monte is the first global
marketer of fruits and vegetables to commit to the “Science Based
Targets” initiative. Fresh Del Monte Produce is traded on the NYSE
under the symbol FDP.
Forward-looking Information
This press release contains certain forward-looking statements
regarding the intent, beliefs or current expectations of the
Company or its officers with respect to the Company’s plans and
future performance, including (i) the impact of the COVID-19
pandemic and related restrictions on the Company operations and
results, (ii) expectations regarding inflationary pressures and the
impacts to the Company's operating results, (iii) the Company’s
anticipated dividend payment, and (iv) expectations regarding
capital investments. In this press release, these statements are
preceded by, followed by or include the words “believes”,
“expects”, “anticipates” or similar expressions with respect to
various matters. It is important to note that these forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties. Fresh Del Monte’s actual plans and
performance may differ materially from those in the forward-looking
statements as a result of various factors, including (i) the impact
of the COVID-19 outbreak on our business, suppliers, customers,
consumers, employees, and communities, (ii) disruptions or
inefficiencies in our operations or supply chain, including any
impact of the COVID-19 outbreak, (iii) the duration and spread of
the pandemic and related government restrictions and our ability to
maintain the safety of our workforce, (iv) our ability to
successfully execute our plan to stabilize our core business,
diversify our business and transform our business to a value-added
business, particularly in light of COVID-19, (v) the impact of
governmental trade restrictions, including adverse governmental
regulation that may impact our ability to access certain markets,
(vi) our anticipated cash needs in light of our liquidity and the
impact of COVID-19 on our liquidity, (vii) the continued ability of
our distributors and suppliers to have access to sufficient
liquidity to fund their operations, (viii) trends and other factors
affecting our financial condition or results of operations from
period to period, including changes in product mix, consumer
preferences or consumer demand for branded products such as ours;
anticipated price and expense levels; the impact of crop disease,
such as vascular diseases, one of which is known as Tropical Race
4, or TR4 (also known as Panama Disease), severe weather
conditions, such as flooding, or natural disasters, such as
earthquakes, on crop quality and yields and on our ability to grow,
procure or export our products; our ability to improve our existing
quarantine policies and other prevention strategies, as well as
find contingency plans, to protect our and our suppliers’ banana
crops from vascular diseases; disruptions or issues that impact our
production facilities or complex logistics network; the impact of
prices for petroleum-based products and packaging materials; and
the availability of sufficient labor during peak growing and
harvesting seasons, (ix) the impact of pricing and other actions by
our competitors, particularly during periods of low consumer
confidence and spending levels, (x) the impact of inflation and
foreign currency fluctuations, (xi) our plans for expansion of our
business (including through acquisitions) and cost savings, (xii)
our ability to successfully integrate acquisitions into our
operations, (xiii) the impact of impairment or other charges
associated with exit activities, crop or facility damage or
otherwise, (xiv) the timing and cost of resolution of pending and
future legal and environmental proceedings or investigations, (xv)
the impact of changes in tax accounting or tax laws (or
interpretations thereof), the impact of claims or adjustments
proposed by the Internal Revenue Service or other taxing
authorities in connection with our tax audits and our ability to
successfully contest such tax claims and pursue necessary remedies,
(xvi) the cost and other implications of changes in regulations
applicable to our business, including potential legislative or
regulatory initiatives in the United States or elsewhere directed
at mitigating the effects of climate change, (xvii) damage to our
reputation or brand names or negative publicity about our products,
(xviii) exposure to product liability claims and associated
regulatory and legal actions, product recalls, including the
continuing impact of the 2019 Mann packing recall, or other legal
proceedings relating to our business, (xix) our ability to
successful implement our optimization program and to realize its
expected benefits within the anticipated timeframe, and (xx) our
ability to successfully manage the risks associated with
international operations. All forward-looking statements in this
press release are based on information available to us on the date
hereof, and we assume no obligation to update any such
forward-looking statements. The Company’s plans and performance may
also be affected by the factors described in Fresh Del Monte
Produce Inc.’s Quarterly Report on Form 10-Q for the quarter ended
October 1, 2021 and its Annual Report on Form 10-K for the year
ended January 1, 2021, along with other reports that the Company
has on file with the Securities and Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211103005325/en/
For information, contact: Ana Miranda Vice
President, Global FP&A and Investor Relations
305-520-8433
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