Fresh Del Monte Produce Inc. (NYSE: FDP) today reported financial results for the quarter ended March 28, 2014. The Company reported earnings per diluted share of $1.04 for the first quarter of 2014, compared with earnings per diluted share of $0.71 in the first quarter of 2013. Comparable earnings per diluted share were $1.00 in the first quarter of 2014, compared with comparable earnings per diluted share of $0.71 in the first quarter of 2013.
"Our results in the first quarter of 2014 demonstrate progress toward our strategic initiatives. We benefited from efforts to hold the line on costs, achieved higher profitability in our offshore melon business and continued growth in our Middle East operations. We took steps to expand our global market position, enhance our product mix and bring our products closer to end consumers around the world. As we look ahead, we remain focused on maximizing returns to our shareholders, while continuing to invest in our global operations," said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer.
Net sales for the first quarter of 2014 were $982.3 million, compared with $918.8 million in the prior year period. The increase in net sales for the quarter was the result of higher net sales in all of the Company's business segments.
Gross profit for the first quarter of 2014 was $106.7 million, compared with $98.6 million in the first quarter of 2013. The increase in gross profit was attributable to higher gross profit in all of the Company's business segments, driven by higher melon selling prices in the Company's other fresh produce business segment, increased sales volume in the Company's prepared food business segment, higher selling prices of bananas in Europe, a direct result of favorable exchange rates, and increased sales volume and selling prices of bananas in the Middle East.
Operating income for the first quarter of 2014 was $65.2 million, compared with $53.5 million in the first quarter of 2013. Comparable operating income for the first quarter of 2014 was $63.1 million, compared with comparable operating income of $53.6 million in the first quarter of 2013. The increase in operating income was primarily due to higher gross profit.
Net income for the first quarter of 2014 was $58.6 million, compared with $41.1 million in the first quarter of 2013. Comparable net income for the first quarter of 2014 was $56.5 million, compared with comparable net income of $41.2 million in the first quarter of 2013.
| Fresh Del Monte Produce Inc. and Subsidiaries | ||||||||||
| Condensed Consolidated Statements of Income | ||||||||||
| (U.S. dollars in millions, except share and per share data) - (Unaudited) | ||||||||||
| Quarter ended | ||||||||||
| Income Statement: | March 28, 2014 | March 29, 2013 | ||||||||
| Net sales | $ | 982.3 | $ | 918.8 | ||||||
| Cost of products sold | 875.6 | 820.2 | ||||||||
| Gross profit | 106.7 | 98.6 | ||||||||
| Selling, general and administrative expenses | 43.7 | 45.3 | ||||||||
| Gain on disposal of property, plant and equipment | 0.1 | 0.3 | ||||||||
| Asset impairment and other charges (credits), net (1) | (2.1 | ) | 0.1 | |||||||
| Operating income | 65.2 | 53.5 | ||||||||
| Interest expense, net | 1.0 | 0.6 | ||||||||
| Other income (expense), net | 0.7 | (1.6 | ) | |||||||
| Income before income taxes | 64.9 | 51.3 | ||||||||
| Provision for income taxes | 6.0 | 9.5 | ||||||||
| Net income | $ | 58.9 | $ | 41.8 | ||||||
| Less: Net income attributable to noncontrolling interests | 0.3 | 0.7 | ||||||||
| Net income attributable to Fresh Del Monte Produce Inc. | $ | 58.6 | $ | 41.1 | ||||||
| Net income per ordinary share attributable to | ||||||||||
| Fresh Del Monte Produce Inc. - Basic | $ | 1.04 | $ | 0.71 | ||||||
| Net income per ordinary share attributable to | ||||||||||
| Fresh Del Monte Produce Inc. - Diluted | $ | 1.04 | $ | 0.71 | ||||||
| Dividends declared per ordinary share | $ | 0.125 | $ | 0.125 | ||||||
| Weighted average number of ordinary shares: | ||||||||||
| Basic | 56,180,800 | 57,592,510 | ||||||||
| Diluted | 56,506,491 | 58,000,771 | ||||||||
| Selected Income Statement Data: | ||||||||||
| Depreciation and amortization | $ | 18.0 | $ | 17.5 | ||||||
| Non-GAAP Measures (per share): | ||||||||||
| Reported net income - Diluted | $ | 1.04 | $ | 0.71 | ||||||
| Asset impairment and other charges, net (1) | (0.04 | ) | — | |||||||
| Comparable net income - Diluted (2) | $ | 1.00 | $ | 0.71 | ||||||
(1) | Asset impairment and other charges (credits), net, for the first quarter of 2014 relates principally to a gain on litigation in Hawaii partially offset by restructuring activities in Germany. Asset impairment and other charges, net, for the first quarter of 2013 related principally to other charges in Hawaii. | |||||||||
(2) | Management reviews comparable net income, comparable net income per share and considers these measures relevant to investors because management believes they better represent the underlying business trends and performance of the Company. | |||||||||
| Fresh Del Monte Produce Inc. and Subsidiaries | ||||||||||||||||||||||||||||
| Business Segment Data | ||||||||||||||||||||||||||||
| (U.S. dollars in millions) - (Unaudited) | ||||||||||||||||||||||||||||
| Quarter ended | ||||||||||||||||||||||||||||
| March 28, 2014 | March 29, 2013 | |||||||||||||||||||||||||||
| Segment Data: | ||||||||||||||||||||||||||||
| Net Sales | Gross Profit | Net Sales | Gross Profit | |||||||||||||||||||||||||
| Banana | $ | 436.9 | 44 | % | $ | 31.0 | 29 | % | $ | 406.0 | 44 | % | $ | 30.5 | 31 | % | ||||||||||||
| Other Fresh Produce | 454.3 | 46 | % | 64.5 | 60 | % | 433.7 | 47 | % | 59.3 | 60 | % | ||||||||||||||||
| Prepared Food | 91.1 | 9 | % | 11.2 | 10 | % | 79.1 | 9 | % | 8.8 | 9 | % | ||||||||||||||||
| $ | 982.3 | 100 | % | $ | 106.7 | 100 | % | $ | 918.8 | 100 | % | $ | 98.6 | 100 | % | |||||||||||||
| Quarter ended | ||||||||||||||
| Net Sales by Geographic Region: | March 28, 2014 | March 29, 2013 | ||||||||||||
| North America | $ | 546.6 | 56 | % | $ | 516.4 | 56 | % | ||||||
| Europe | 184.4 | 19 | % | 182.0 | 20 | % | ||||||||
| Middle East | 129.7 | 13 | % | 107.9 | 12 | % | ||||||||
| Asia | 98.3 | 10 | % | 95.4 | 10 | % | ||||||||
| Other | 23.3 | 2 | % | 17.1 | 2 | % | ||||||||
| $ | 982.3 | 100 | % | $ | 918.8 | 100 | % | |||||||
| Fresh Del Monte Produce Inc. and Subsidiaries | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (U.S. dollars in millions) - (Unaudited) | |||||||
| March 28, 2014 | December 27, 2013 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 38.6 | $ | 42.5 | |||
| Trade accounts receivable, net | 377.0 | 338.8 | |||||
| Other accounts receivable, net | 66.6 | 59.3 | |||||
| Inventories, net | 535.2 | 533.1 | |||||
| Other current assets | 43.1 | 41.9 | |||||
| Total current assets | 1,060.5 | 1,015.6 | |||||
| Investment in and advances to unconsolidated companies | 2.0 | 2.1 | |||||
| Property, plant and equipment, net | 1,134.0 | 1,101.2 | |||||
| Goodwill | 331.4 | 331.4 | |||||
| Other noncurrent assets | 143.5 | 138.9 | |||||
| Total assets | $ | 2,671.4 | $ | 2,589.2 | |||
| Liabilities and shareholders' equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 365.8 | $ | 356.0 | |||
| Current portion of long-term debt and capital lease obligations | 1.8 | 2.8 | |||||
| Other current liabilities | 30.0 | 23.8 | |||||
| Total current liabilities | 397.6 | 382.6 | |||||
| Long-term debt and capital lease obligations | 283.3 | 248.6 | |||||
| Other noncurrent liabilities | 203.8 | 206.8 | |||||
| Total liabilities | 884.7 | 838.0 | |||||
| Total Fresh Del Monte Produce Inc. shareholders' equity | 1,748.7 | 1,713.1 | |||||
| Noncontrolling interests | 38.0 | 38.1 | |||||
| Total shareholders' equity | 1,786.7 | 1,751.2 | |||||
| Total liabilities and shareholders' equity | $ | 2,671.4 | $ | 2,589.2 | |||
| Selected Balance Sheet Data: | |||||||
| Working capital | $ | 662.9 | $ | 633.0 | |||
| Total debt | $ | 285.1 | $ | 251.4 | |||
| Fresh Del Monte Produce Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (U.S. dollars in millions) - (Unaudited) | ||||||||
| Quarter ended | ||||||||
| March 28, 2014 | March 29, 2013 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 58.9 | $ | 41.8 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Depreciation and amortization | 18.0 | 17.5 | ||||||
| Amortization of debt issuance costs | 0.1 | 0.1 | ||||||
| Asset impairment, net | 0.3 | — | ||||||
| Gain on sale of securities | — | (2.3 | ) | |||||
| Gain on sales of property, plant and equipment | (0.1 | ) | (0.3 | ) | ||||
| Foreign currency translation adjustment | 0.3 | (1.6 | ) | |||||
| Other changes | (2.9 | ) | 7.2 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables, net | (46.6 | ) | (51.4 | ) | ||||
| Inventories, net | (7.1 | ) | (26.5 | ) | ||||
| Other current assets | 0.8 | 0.3 | ||||||
| Accounts payable and accrued expenses | 23.3 | 24.0 | ||||||
| Other noncurrent assets and liabilities | (5.1 | ) | (1.2 | ) | ||||
| Net cash provided by operating activities | 39.9 | 7.6 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (50.7 | ) | (32.8 | ) | ||||
| Proceeds from sales of property, plant and equipment | 0.4 | 0.6 | ||||||
| Proceeds from sale of securities available-for-sale | — | 7.7 | ||||||
| Net cash used in investing activities | (50.3 | ) | (24.5 | ) | ||||
| Financing activities: | ||||||||
| Net proceeds on long-term debt | 30.5 | 20.4 | ||||||
| Contributions (to) from noncontrolling interests | (0.1 | ) | 3.6 | |||||
| Proceeds from stock options exercised | 2.8 | 12.8 | ||||||
| Dividends paid | (7.1 | ) | (7.2 | ) | ||||
| Repurchase of shares | (19.8 | ) | (27.9 | ) | ||||
| Net cash provided by financing activities | 6.3 | 1.7 | ||||||
| Effect of exchange rate changes on cash | 0.2 | 1.2 | ||||||
| Net decrease in cash and cash equivalents | (3.9 | ) | (14.0 | ) | ||||
| Cash and cash equivalents, beginning | 42.5 | 39.9 | ||||||
| Cash and cash equivalents, ending | $ | 38.6 | $ | 25.9 | ||||
First Quarter 2014 Business Segment Performance
(As reported in business segment data)
Bananas
Net sales for the quarter increased 8% to $436.9 million, compared with $406.0 million in the first quarter of 2013. Worldwide pricing increased $0.24, or 2%, to $15.21 per unit, compared with $14.97 per unit in the first quarter of 2013. Volume was 6% higher than the prior year period. Gross profit for the quarter was $31.0 million, compared with $30.5 million in the first quarter of 2013. Unit costs were 2% higher than the prior year period.
Other Fresh Produce
Net sales for the quarter increased 5% to $454.3 million, compared with $433.7 million in the first quarter of 2013. The increase in net sales was primarily the result of higher sales in the Company's pineapple and non-tropical product lines, partially offset by lower sales volume in the Company's fresh-cut product line. Gross profit for the quarter was $64.5 million, compared with gross profit of $59.3 million in the prior year period.
Gold pineapple - Net sales increased 12% to $132.9 million. Volume increased 16%. Pricing decreased 4%. Unit cost was 1% higher.
Fresh-cut - Net sales decreased 11% to $88.1 million. Volume decreased 11%. Pricing was in line with the prior year period. Unit cost was 2% higher.
Melon - Net sales decreased 1% to $51.2 million. Volume decreased 19%. Pricing increased 23%. Unit cost was in line with the prior year period.
Non-tropical - Net sales increased 8% to $124.7 million. Volume decreased 3%. Pricing increased 11%. Unit cost was 12% higher.
Tomato - Net sales increased 11% to $19.2 million. Volume increased 9%. Pricing increased 2%. Unit cost was 4% higher.
Prepared Food
Net sales for the quarter increased 15% to $91.1 million, compared with $79.1 million in the first quarter of 2013, primarily due to higher sales volume in the Company's poultry and canned pineapple product lines. Gross profit for the quarter was $11.2 million, compared with $8.8 million in the first quarter of 2013.
Cash Flows
Net cash provided by operating activities for the first three months of 2014 was $39.9 million, compared with $7.6 million in the same period of 2013, driven primarily by the increase in net income and management of working capital.
Total Debt
Total debt increased from $251.4 million at the end of 2013 to $285.1 million at the end of the first quarter of 2014, principally due to increased capital expenditures and repurchase of ordinary shares.
Conference Call and Web Cast Data
Fresh Del Monte will host a conference call and simultaneous webcast at 11:00 a.m. Eastern Time today to discuss the first quarter 2014 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 http://ir.freshdelmonte.com. The call will be available for re-broadcast on the Company’s web site approximately two hours after the conclusion of the call.
About Fresh Del Monte Produce Inc.
Fresh Del Monte 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, the Middle East and the countries formerly part of the Soviet Union. Fresh Del Monte markets its products worldwide under the Del Monte® brand, a symbol of product innovation, quality, freshness and reliability for more than 100 years.
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.These forward-looking statements are based on information currently available to the Company and the Company assumes no obligation to update these statements. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. In this press release, these statements appear in a number of places and include statements regarding the intent, belief or current expectations of the Company or its officers (including statements preceded by, followed by or that include the words “believes,” “expects,” “anticipates” or similar expressions). The Company’s plans and performance may differ materially from those in the forward-looking statements as a result of various factors, including (i) the uncertain global economic environment and the timing and strength of a recovery in the markets the Company serves, and the extent to which adverse economic conditions continue to affect its sales volume and results, including the Company’s ability to command premium prices for certain of its principal products, or increase competitive pressures within the industry, (ii) the impact of governmental initiatives in the United States and abroad to spur economic activity, including the effects of significant government monetary or other market interventions on inflation, price controls and foreign exchange rates, (iii) the impact of governmental trade restrictions, including adverse governmental regulation that may impact the Company’s ability to access certain markets, (iv) the Company’s anticipated cash needs in light of its liquidity, (v) the continued ability of the Company’s distributors and suppliers to have access to sufficient liquidity to fund their operations, (vi) trends and other factors affecting the Company’s financial condition or results of operations from period to period, including changes in product mix or consumer demand for branded products such as its, particularly as consumers remain price-conscious in the current economic environment; anticipated price and expense levels; the impact of crop disease, severe weather conditions, such as flooding, or natural disasters, such as earthquakes, on crop quality and yields and on its ability to grow, procure or export its products; the impact of prices for petroleum-based products and packaging materials; and the availability of sufficient labor during peak growing and harvesting seasons, (vii) the impact of pricing and other actions by the Company’s competitors, particularly during periods of low consumer confidence and spending levels, (viii) the impact of foreign currency fluctuations, (ix) the Company’s plans for expansion of its business (including through acquisitions) and cost savings, (x) the Company’s ability to successfully integrate acquisitions into its operations, (xi) the impact of impairment or other charges associated with exit activities, crop or facility damage or otherwise, (xii) the timing and cost of resolution of pending and future legal and environmental proceedings or investigations, (xiii) the impact of changes in tax accounting or tax laws (or interpretations thereof), and the impact of settlements of adjustments proposed by the Internal Revenue Service or other taxing authorities in connection with the Company’s tax audits, and (xiv) the cost and other implications of changes in regulations applicable to its business, including potential legislative or regulatory initiatives in the United States or elsewhere directed at mitigating the effects of climate change. All forward-looking statements in this report are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. The Company’s plans and performance may also be affected by the factors described in Item 1A. - “Risk Factors” in Fresh Del Monte Produce Inc.’s Annual Report on Form 10-K for the year ended December 27, 2013 along with other reports that the Company has on file with the Securities and Exchange Commission.
Contacts:
Christine Cannella, 305-520-8433
Assistant
Vice President, Investor Relations
