Dole plc Price & Performance (DOLE)

Information regarding the use of non GAAP financial measures may be found in our press release which also includes a reconciliation to the most comparable GAAP measures. With that, I'm pleased to turn today's call over to Roy. Thank you, James. Welcome everybody and thank you for joining us today as we discuss our results for the fourth quarter and full year 2024. So turning firstly to Slide four and Dole recap of key developments in 2024. Well, 2024 was another year of great progress in development for Dole PLC with the business growing its position as the leading provider of fresh produce in the world. A financial perspective, we delivered a strong financial performance. It exceeding our most recent adjusted EBITDA guidance by some $12,000,000 and continuing our solid growth trend over the last number of years. We've grown organically this year with group revenue at adjusted EBITDA increasing on a like for like basis driven by growth across our core business areas and categories. Throughout the year, we continue to place high priority on capital allocation and managing our invested capital. We do take a disciplined, but also strategic and flexible approach to our investments. In the first quarter, we took the decision to capitalize on an opportunity to realize an excellent return on an investment at the disposal of our 65% equity share in progressive produce for net cash proceeds of $100,000,000 which we used entirely to repay debt.

Then on the third quarter, we agreed to deal to expand our shipping fleets with the addition of two vessels to service our East Coast operation and provide a pathway for additional This approach combined with our strong operating performance about us should have a significant cash generation in 2024, driving a reduction in our net debt of over $180,000,000 Now looking more closely at the full year figures for 2024 on Slide five. On a like for like basis, group revenue increased for the full year by point 7% to $8,500,000,000 and adjusted EBITDA increased 6.7% to $392,000,000 This was driven by a very strong performance in diversified fresh Fresh Produce Americas, as well as growth in our Fresh Food segment, offsetting a very small decline in diversified Fresh Produce in May. Which had been our strongest performing segment in 2023. On an adjusted basis, net income was $120,900,000 and adjusted diluted EPS was $1.27 per share and an increase of 2.4%. Finally, following another year of robust cash generation, we ended 2024 with net debt of $637,000,000 and net leverage of 1.6 times, putting us in a very strong financial position. Turning now to Slide seven for our operational highlights.

And starting with the Fresh Food segment. Fresh Fruit, a strong close to the year delivering $31,900,000 Dole adjusted EBITDA in the fourth quarter to finish with a full year $214,800,000 This is an increase of $5,900,000 compared to '23 and a result that was ahead of our own expectations. In North America, our business delivered good volume growth in bananas and plantains, in particular, in the fourth quarter, continuing a very positive year long trend and obviously supported by the increase in our shipping capacity from our recent investments. Additionally, in the European markets, we continued our positive momentum momentum and concluded an excellent year driven by the high volumes in bananas as well as lower shipping costs. While we formed well in the marketplace in 2024, we were also faced with higher shipping costs into The U. S. Due to the planned dry dockings of two of our vessels, as well as logistical issues of ports both in Latin America and The U. S. And some continuing price pressure in commercial. Cargo space. On the supply side, our food remained in a relatively good supplydemand balance throughout 02/1954. The relative tightness of Peru has continued to put upward pressure on sourcing costs.

This is accentuated for us at the end of the year the impact of tropical storm, Sarah, which affected an important acreage within our Honduran operations and which we do anticipate having a notable short term financial impact on our operations in the first part of twenty twenty five. As we look out into 2025, while the underlying fundamentals of the division can [indiscernible] very active competition as well as sourcing issues, supply chain and foreign exchange movements. As always, our very experienced and knowledgeable management team are keenly focused on dealing with all of these challenges while also working to capitalize on further growth opportunities as they arrive. Arise. So moving on to the diversified EMEA segment, This segment had a stable final quarter, ultimately delivering adjusted EBITDA of $131,500,000 for the full year a robust performance, which was in line with our expectations and consolidating the excellent growth achieved in 2023. Diversified EMEA delivered good like for like revenue growth 244.4%. However, over the course of the year, the segment did also face some headwinds due to supply challenges, weather events and some entity specific issues that mitigated growth at the margin level. More positively, as we look forward into 2025, we anticipate continued revenue growth and coupled with target investments and the benefits of ongoing integration within this We believe we are well positioned to increase profitability again on a like for like basis going into 2025. [indiscernible] This segment delivered a stable 5% quarter consolidating a very strong year of growth on a like for like basis.

Excluding the impact of the progressive projects disposal in the first quarter of twenty twenty four, we this segment delivered a $22,300,000 increased in adjusted EBITDA for the full year. A fantastic performance. Early in 2024, the segment had seasonal timing benefits within Southern Hemisphere summer export season, particularly in the important Chilean cherry business. However, as the year progressed, this segment consistently outperformed as our export business in particular continued to perform very well across a wide range of product. And our North American businesses continue to deliver strong growth especially in some of the important growth categories such as avocados. Looking ahead, as ever at the turn of the year, the Diversified Americas segment coincides with the high point in activity in the Southern Hemisphere summer export season. And so far, while the very strong profitability seen in the Chilean cherries in recent seasons may not persist at the same levels this season. It's also clear that the business remains in a good position to deliver on our As we look further as into the year, both for our exports and North American businesses, we believe we can further consolidate the strong revenue growth we have in 2024 and build our base for further growth in the years to come.

So turning to the fresh vegetables business. As we have noted on our most recent earnings call, we are continuing to work on delivering best strategic alternatives for our vegetable business and that process remains ongoing. On the operational side, the improved results we've consistently seen in 2024 continued in the fourth quarter. I recorded an accounting adjustment to the carrying value of discontinued operations at year end, on an underlying basis, our vegetable business included an encouraging turnaround year in 2024, delivering positive cash flow on a full year basis. Overall, as we head into 2025, we are pleased that our corporate and divisional management teams have been successful in reestablishing an improved foundation for this business and in doing so, allows us to continue with the patient approach to ultimately deliver the best long term outcome for all our stakeholders Dole. With that, I hand you over to Jacinta to give the financial review for the fourth quarter and full year. Thank you, Rory, and good day, everyone. Firstly, turning to the group results on Slide nine. Fourth quarter group revenue increased 4.6% with this growth driven by strong operational performance across all of our segments. On a like for like basis, excluding the impact of FX, and the sale of Progressive Produce, the increase was 10.8% For the full year, reported revenue increased 2.8% and on a like for like basis, revenue increased 6.7%.

Adjusted EBITDA decreased 2.9% in the quarter However, on a like for like basis, increased 3.7% or $2,800,000 Fresh fruit was the driver of growth in the fourth quarter. For the full year, we are very pleased to deliver $392,200,000 of adjusted EBITDA an increase of 1.8% on 2023, and an increase of 6.7% on a like for like basis. This result was ahead of our initial and revised guidance. Issued during 2024. Looking at net income, the decrease in the fourth quarter was due to a loss of $61,200,000 in discontinued operations, with significantly improved operating results offset by a non cash write down of the carrying value of the fresh vegetables division of $78,200,000 net of tax. As the Fresh Vegetables division is accounted for under the Health for Sale accounting guidance, we were required to cease depreciation and amortization from March 31, 2023. Up to 12/31/2024, the impact of this cessation of depreciation and amortization was $78,100,000 and was the primary reason for the non cash write down. On a full year basis, net income of $143,400,000 was $12,300,000 lower than prior year. Decrease was primarily due to non cash write down of carrying value of the fresh vegetables division division as well as higher tax expense.

These decreases were partially offset by higher operating income due to strong underlying performance across the group, higher other income and lower interest expense. On an adjusted basis, adjusted net income increased 3% to €15,300,000 in the fourth quarter, and adjusted diluted EPS was $0.16 per share. The increase was predominantly due to lower interest and depreciation expense. Partially offset by lower adjusted EBITDA and higher tax expense. For the full year, are pleased to report a 2.4% increase in adjusted net income, to $120,900,000 primarily due to the increase in adjusted EBITDA as well as lower interest and depreciation expense partially offset by higher tax expense. Adjusted diluted EPS for 2024 was $1.27 compared to $1.24 in 2023. Turning now to the divisional update for the fourth quarter of our continuing Starting with Fresh Fruit on Slide 11, Fresh Fruit division delivered another strong result in the fourth quarter to round out a good year, with revenue increasing 9.4% and adjusted EBITDA increasing 10.8%. The increase in revenue was due to higher worldwide volumes of bananas sold, higher worldwide pricing of pineapples, and higher pricing and volume for plantains in North America These increases were partially offset by lower worldwide volume of pineapples sold, lower worldwide pricing for bananas and lower pricing and volume for plantains in Europe.

The adjusted EBITDA increase was primarily driven by higher revenue in bananas as well as lower fruit sourcing and shipping costs in Europe, partially offset by higher shipping costs in North America due to drydocking. For the full year, revenue increased 5% and adjusted EBITDA increased 2.8%. Now turning to EMEA on Slide 12. This segment delivered 5.5% revenue growth in the fourth quarter. Partially offset by net negative income impact from M and A activity of $7,400,000 On a like for like basis, revenue increased 6.5% Adjusted EBITDA decreased 0.5% primarily due to decreases in The Czech Republic, South Africa and Ireland, as well as an unfavorable impact from foreign currency translation of 200,000.0 partially offset by a stronger performance in Spain and The UK. On a like for like basis, adjusted EBITDA increased 0.3%. Overall, a solid performance in 2024 from the EMEA segment with like for like revenue increasing 4.4% adjusted EBITDA increasing 1.9% on a like for like basis. Now finally, turning to Diversified Fresh Produce Americas and Rest of World. As in previous quarters, this year reported revenue decreased primarily due to the disposal of progressive produce in Q1 On a like for like basis, revenue increased 16.1% due to higher export volumes in cherries and grapes as well as strong trading performance across categories in the North American market Again, most of the decrease in adjusted EBITDA can be explained by the progressive projects divestiture.

On a like for like basis, adjusted EBITDA decreased 2.2% or $3,000,000 $300,000 excuse me, primarily due to a lower profitability in the Chilean cherry business, partially offset by continued good performance in North America particularly in kiwi, grapes and avocados. The segment delivered a very strong full year result on a like for like basis. With the revenue increasing 13% or $233,300,000 and adjusted EBIT increasing 52.3% or $22,300,000 Now turning to Slide 14 to our capital allocation and leverage. We remain ever focused on capital allocation and managing our leverage and are pleased that our leverage reduced further in the quarter to finish the year at 1.62 times.

The reduction was driven by a $95,000,000 decrease in net debt compared Q3 Interest expense has continued to decrease compared to the prior year due to lower debt levels as well as lower base rates and was $18,100,000 in the fourth quarter and $73,800,000 for the full year Under an assumption that base rates will remain broadly stable in 2025 not assuming any exceptional cash proceeds we expect full year interest for 2025 to be approximately $70,000,000 Net cash provided by operation activities from continuing operations was $262,700,000 in 2024, As anticipated, we continue to see a positive inflow in working capital in the fourth quarter, and this was accentuated by some seasonal timing benefits at the year end. Cash capital expenditure from continuing operations was $25,600,000 for the quarter, and we added a further $4,600,000 of assets by way of finance lease. For the full year, total capital addition were $135,700,000 which is in line with our latest guidance. This was made up of cash capital expenditure of $82,400,000 and we added a further $53,300,000 of assets by way of finance lease, including the two shipping vessels mentioned on our last earnings call and which we purchased outright in early twenty twenty five.

Free cash flow from continuing operations was 180,300,000.0 year Free cash flow benefit from strong adjusted EBITDA performance and good working capital management across the group over the course of the year. Continuing with our commitment to return cash to shareholders Dole, we are pleased to declare a dividend of $0.08 for the fourth quarter which will be paid on 04/03/2025, to shareholders on record on 03/20/2025. Now I'll hand you back to Rory who will give an update on our full year outlook.

Thanks, Jacinta. So we're very pleased with the Group's exceptional performance in 2024, delivering $392,000,000 of adjusted EBITDA for continuing operations, a result of that exceeded our own expectations on a result that we believe gives us strong platform to continue on our momentum in the 2025 financial year. We take a more focused look at 2025, while we continue to see a excellent opportunities for our business, we will also face some challenges and uncertainties this year. For most multinational businesses, the quickly evolving geopolitical environment [indiscernible] foreign exchange rates and of course the potential impact of any tariffs or other changes to international trade structures and sourcing costs and supply chains. In this regard, our management teams are keenly focused on preparing for as many eventualities as possible while also continuing to promote the critical benefits of the fresh produce industry in supporting shared global goals towards enhancing health and wellness. For our own operations, we will face a known short term headwind in 2025 following the impact of tropical storm Sarah. On our Honduran operations in November. With that in mind, giving that given our excellent finish to the 2024 financial year, which did exceed our expectations, At this early stage of the 2025 financial year, our goal is to deliver full year adjusted EBITDA in the range of $370,000,000 $380,000,000 Turning to the investment side, we are pleased that we were able to make some important strategic investments in 2024.

For 2025, we expect as a baseline to have a maintenance level of CapEx from routine operations broadly in line with our depreciation expense of approximately $100,000,000 In addition, continue to explore a range of development opportunities which if executed, will strengthen our business and continue to drive further growth the years to come. In conclusion, we're very pleased to continue to enhance our track record with another year of strong financial results. We have an excellent group of people right across the group and a huge thank you to everyone for their ongoing commitment in as well as to our important suppliers and customers for all their ongoing support. With that, I'll hand it back to the operator and we can open the line for questions.

Thank you. Please pick up your handset and ensure that your phone is not on mute when asking the question. Your first question comes from the line of Christopher Barnes with Deutsche Bank. Please go ahead.

Good morning. Good afternoon. Thanks for the questions. First, could you just unpack the EBITDA guidance You're calling for a 4% decline at the midpoint, but just wondering how much of that decline is attributed to known headwinds like the impact from Sarah and difficult comparisons versus 24 versus just added conservatism in the context of the the macro geopolitical climate And just any color you can share by segment and cadence first half or second half would be particularly helpful. Thanks. [indiscernible] Chris. And obviously, it's a couple of big things and first of all, it's very early in the year, to be giving full year guidance. I think secondly, we're in a world that's increasingly difficult to predict and while we haven't built anything specific around the potential major macro geopolitical or economic issues that can arise I think they do create a little bit of uncertainty and negativity around the world generally. I think you look back over the last few years, we've had a really, really strong track record in right post IPO or continuing operations. Of 'twenty two, 'twenty three and now 'twenty four. Shown ability to weather whatever storms thrown at us and we come out at the end of the year with a pretty good result. 2024, as you know, Chris, we a number down to three sixty on the basis that we simply subtracted all the piece of the business that we sold and progressed of produce and to Dole in at three ninety two results for '24 was a really, really strong record year for us and a really, very positive year.

I know from an analyst perspective, sometimes that's, let's say, benchmark that people would like to go from But the way we look at it is we've had a good year. We take the opportunities that are there and it was a little bit better than we might have expected. We do have the specific headwinds that we have with referred to Honduras in particular it's just creates complexity around We source alternative proof from the shortfall in Honduras because some dislocation in our shipping schedules and dislocations in containers. So it's a little bit more complex than just a little bit short term the flu. We had a ship breakdown on the West Coast. It's always a little bit unhelpful. We've had so we've got some fruit on the mask ship that broke down its way to China as well with 65 containers of cherries on that although we believe that's between insurance proceeds that should be able to be covered. So certainly there are some short term headwinds, not any different or greater than we've replaced over the past and we work our way through them. I don't think they're structural, they're not fundamental to our business, but we have to work our way through them.

Foreign exchange as well has also been complications. The dollar, as you know, strengthened quadratically post the election. And the timing of when that happened wasn't perfect. For us in terms of some contract negotiations and taking a guess of what the price, what might be based on specific exchange rates and the dollar strength and being further from some of those The rest of the world and the Americas divisions have highlighted to dispose of Progressive business of $24,000,000 Dole come in with the full year result ahead of the $23,000,000 and year number is really an exceptionally good Okay, Amit. So it's just in that division, everything went particularly right for us.

And we're very pleased with that. Although we do expect the $25,000,000 will be a more normal year with the normal ups and downs, good year, but it will be a more normal [indiscernible] think the season will be a bit different as you've asked for how it will unfold. I think most of the headwinds that we face will certainly impact the early quarters, in particular quarter one. '1. So I think you'll see over the course of the year a slower start to the year and more balanced phasing over the completion of the full year of 2025. So I think that's our overall view guidance Chris, unless you got any follow-up question on that. Umesh?

Dole, that's helpful. And I guess my follow-up is just around around tariffs. I know it's a shifting target, but you could just help us think about some of the like the mitigation strategies contingencies you guys are evaluating putting into place, like is there any do you guys have any ability to like go back I know you mentioned the contract renegotiations post election with the dollar movement where were not necessarily favorable, but like if tariffs get in place, like do you have ability to like to go back to those contracts [indiscernible] like or take additional pricing, do you have alternative sourcing you could you could look at productivity? Just I'm just trying to think through the levers that you guys have at your disposal Yes. I think in macro terms, what we supply into the North American market, it's healthy food, food and veg, Generally speaking, the products that The U. S. Can't produce themselves or can't produce at that particular time. So you look at bananas and pineapples, for example, or any of the tropical flying in which The U. S. Doesn't have. So we believe that bananas and pineapples will continue to be consumed in appropriate quantities by Americans.

I think everybody will want that to be the outcome. Some of our other export sources are complementary to U. S. Sources. So again, we think that people who want to have great all year round or have green peppers, red peppers, tomatoes, whatever it might be, all year round and not gaps in the market. So we think ultimately we hope that the tariffs don't come into play on basic day to day positive products like fresh fruit and veg and that they can somehow with the exception to products that don't have any particular impact on the American economy. But ultimately, we think it can go a little to to price at Haskel to get to any kind of material impact of tariff and people want to continue to consume the products, it will have to put the price. But there are so many variables and it's so difficult to predict. We can control some things We lived through a previous Donald Trump regime and we managed our way through that perfectly well. So let's say Very good. Thanks very much.

Thank you, Christopher.

Your next question comes from the line of Gary Martin with Davy. Hi, all. Congrats on the strong set of results. Just a few from me kind of related. Just maybe starting on capital allocation and your viewpoint there. I mean, you made some really solid progress with regards to deleveraging. During the year. Is the idea to kind of continue to focus on deleveraging or is there some degree of flexibility for we'll say, kind of targeted M and A on a go forward basis Yes. Thanks, Gary. I mean, obviously, the whole question of capital allocation is very high up on our agenda and we examine all the potential alternatives around that. There's a couple of big strategic questions that we'd like to answer get answered first before we make any major different or unusual steps in relation to capital allocation. And obviously, the the potential disposal of the Vedge division, so the top of the list in terms of what the outcome of that can change our focus, our perception, our ability to reallocate capital in a different direction. So we'd like to get that off the table quickly. And we also are in the process of renewing our facilities, so and we would follow that kind of the normal approach to do that, we want to ensure that that's gives us the long term platform to have the appropriate financial flex flexibility to deal with future opportunities that we have as well.

Acquisitions, we have our internal corporate finance department. We continue to look at the opportunities that are out there. There is no doubt though that there is that can private markets expectation in terms of value. We are seeing in some cases cycles of PEs trying to exit, there will continue to be a lot of inter fund trading taking place. And the last so between pawns and trade buyers. So keep our eyes on that. There are some interesting opportunities in that space, but it very much depends on achieving prices that will add to our business and add value to our shareholders Dole. The dividend is something that's constantly under review and we'll have a look at that again in the 2025 context. And then interestingly and from a very positive perspective, we do actually have a lot of internal development projects on the agenda that we're always looking at projects whether it's expanding some of our planting, production system, or our important JVs in Guatemala and in Ecuador. Our Chilean JV El Parque is looking at some interest in expansion of certain products, some of whom are looking at supporting that as well. Our core business, we've been slowly developing a significant logistics capability up in Scandinavia.

And then maybe some further interesting opportunities that's what might involve the reasonably significant investment and we've been open minded to looking at those. And then with some smaller investments in our existing business expanding our Irish footprint, expanding our Spanish footprint, looking at building our export business and strengthening our position in Peru and other grapes or avocados or berries, our fresh fruit businesses. Slowly building a good footprint directly in plantains and mangoes and limes. And then some of our food service businesses across Europe. So we have plenty of internal projects on that we think will give us the right level of return. And we do ultimately benchmark those investments against the potential of a buyback. And the buyback is something that we go back to our previous life and total projects we did periodically undertake buyback programs and we keep an open mind. We keep a long review and in the context of those issues, we would take the appropriate decisions. [indiscernible] ask with some of the internal projects as a follow on. But maybe just as a second question, just to focus on diversified EMEA for second I mean, you call out some degree of profit weakness just across The Netherlands, just across some of Mainland Europe effectively.

And I believe just just in those part of your prepared remarks, I mean, it was [indiscernible] like your kind of company specific issues, but I mean, it'd be good to get a little bit on whether you expect this to persist?

Yes, I think you look at our EMEA division and it covers from Spain to Italy, Germany, Netherlands, Czech Republic, Scandinavia, Ireland, The UK, There's different wholesale businesses food service businesses, retail businesses, writing businesses. So we have a range of activities and you do get some ups and downs within those businesses. With some interesting opportunities. We're looking at developing it a little bit more in the countries like France, for example, who are doing the integration process between the legacy Dover and legacy Dover Dole is working very well. Our teams are combining very well to build on the combined strengths. So there's a few ups of that there and we called them out, but I don't think strategically, there's nothing that we got anything there, not of any great concern to us. And probably more opportunity than challenge That's really helpful. And then maybe just one final question just on diversified Americas and rest of world. You call that strong performance, particularly across Kiwis, grapes and avocados. Maybe just listening to the peers, it seems as though avocado pricing have actually gone up quite a fair bit And maybe with tariffs in mind as well, is there any degree of elasticity risk if there's further pricing across some of those higher value product categories.

Thanks.

I mean, you can you can be negative and say yes, but some tariffs coming in. But obviously, Mexico is a huge supplier of avocados into the north American market. I don't think that The U. S. Is really going to focus on products that have no impact on American production. So you're going to have meaningful avocado production in The U. S. Again, it needs a minimum of subtracted flammies, which The U. S. Is very limited [indiscernible] I think that I find it an acceptable balance over time as well.

Excellent. That's really good color. I'll pass it on. As there are no further questions at this time, I would like to turn the call back over to Rory Byrne for remarks.

Thank you. Yes, while we look back at 2024, it was a really strong record year for us. It adds to a very, very strong record now post IPO in Dole twenty twenty one, so three full financial years in '22, 'twenty three, 'twenty four Dole we've consistently grown and strengthened the business. And I'm sure there's lots of challenges and complications out there in the world, but we've got a very experienced management team who've lived through ups and downs of many challenges over the years and in many cases see plenty of opportunities for us for the future. We have a good focus on all aspects of the business, operationally, financially, strategically, and we think we're well positioned to move forward in a good way. So thank you very much, everyone, for joining us today.

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