Dole Q3 2024 Earnings Results & Report

Dole EPS Results

• Actual EPS: $0.19
• Consensus EPS: $0.20
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: $0.24
• EPS Beat Rate: 4 of last 8 quarters

Dole Revenue Results

• Actual Revenue: $2.06 billion
• Expected Revenue: $2.00 billion
• Beat/Miss: Beat by +$63.72 million
• YoY Revenue Growth: +0.90%

Dole (NYSE:DOLE) is a global producer, marketer and distributor of fresh fruits and vegetables. Its product portfolio includes bananas, pineapples, berries, grapes, avocados, salads and other fresh produce, as well as packaged and value-added products in selected markets.

The company supplies retail grocery chains, wholesalers, foodservice operators and other customers through an international sourcing, farming, packing and distribution network. Its operations and customer markets span North America, Europe, Latin America and other regions around the world.

Dole plc was formed in 2021 through the combination of Dole Food Company and Total Produce. The company is headquartered in Dublin, Ireland, and operates under the Dole brand along with other regional and product-focused brands.

Dole Q3 2024 Earnings Call Transcript

Key Takeaways

• Q3 Group Results: Reported revenue rose 1% year-on-year (5.8% like-for-like) and adjusted EBITDA reached $82 million—2.3% ahead on a like-for-like basis—while net debt fell by $36 million, reducing leverage further.
• Guidance Raised: Management increased its full-year adjusted EBITDA target to at least CHF 380 million, up from prior guidance, reflecting confidence in strong year-end performance.
• Fresh Fruit Segment Outperformance: Delivered $42.9 million of EBITDA—above expectations—driven by higher banana volumes and pricing that offset elevated shipping costs from dry-docking.
• Diversified Americas Strength: Like-for-like revenue grew 7.2% and adjusted EBITDA was £9.2 million higher, led by North American volume and price gains in avocados and berries, with key export seasons ahead.
• Diversified EMEA Pressure: Adjusted EBITDA fell 13.1% year-on-year due to seasonal timing shifts, one-off IT charges and supply shortages, although revenue still rose 3.3% like-for-like and full-year outlook remains satisfactory.

Presentation

[Operator]

Welcome to the Dole plc Third Quarter 2024 Earnings Conference Call and Webcast. Today's conference is being broadcast live over the Internet and is also being recorded for playback purposes. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. For opening remarks and introductions, I would like to turn the call over to the Head of Investor Relations with Dole plc, James O'Regan.

[James O'Regan, Head of Investor Relations at Dole plc]

Thank you, Krista. Welcome, everybody, and thank you for taking the time to join our Third Quarter 2024 Earnings Call. Joining me today are Chief Executive Officer Rory Byrne, our Chief Operating Officer Johan Lindén, and our Chief Financial Officer Jacinta Devine. During this call, we'll be referring to presentation slides for supplemental remarks, and these along with our earnings release and other related materials are available on the Investor Relations section of the Dole plc website. Please note our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-looking statements.

[James O'Regan, Head of Investor Relations at Dole plc]

Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and press releases. 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 Rory.

[Rory Byrne, CEO at Dole plc]

Thank you, James. Welcome, everybody, and thank you for joining us today as we discuss our results for the third quarter of 2024. Turning firstly to slide four and the Q3 financial highlights. The third quarter was another positive quarter for our business, continuing the good momentum built up over the course of this year. Group reported revenue increased by 1%, and on a like-for-like basis, the increase was 5.8%. Adjusted EBITDA of $82 million was in line with market expectations for the quarter and 2.3% ahead of the prior year on a like-for-like basis. The growth in adjusted EBITDA on a like-for-like basis was driven by a very strong performance in our Diversified Americas segment, offsetting modest decreases in Fresh Fruit and Diversified EMEA.

[Rory Byrne, CEO at Dole plc]

Cash management and capital allocation continue to be a major focus for us, and we are pleased to see our leverage reduced further, driven by a $36 million decrease in our absolute level of debt, despite a relatively high level of capital investment made in the quarter, which we will discuss in more detail later on the call. Turning now to slide six on our operational highlights and starting with the Fresh Fruit segment. This segment delivered another good performance in the third quarter. Adjusted EBITDA was $42.9 million, a small decrease compared to last year, but a result that was ahead of our own expectations, taking into account the higher shipping costs in the quarter due to the ongoing dry docking process that we flagged on our previous earnings calls. North America has been the market predominantly impacted by dry docking.

[Rory Byrne, CEO at Dole plc]

However, we had a good overall performance with higher volumes of bananas sold and better pricing, partially compensating the anticipated higher shipping costs. In the European market, we continued with our positive momentum, driven by higher volumes of bananas as well as by lower shipping costs. Looking ahead to the remainder of the year for both the North American and European markets, we believe we are well placed. Both banana and pineapple supply remain tight on an industry-wide basis, leading to higher sourcing costs, but also allowing for some positive pricing momentum in certain markets. As the year has progressed, the benefits of our experienced team, our diversified supply base have again been clear, allowing us to deliver a consistent, competitive, and quality service to all our customers.

[Rory Byrne, CEO at Dole plc]

Overall, we anticipate the Fresh Fruit segment having a good end to the year, taking into account a continued expectation of higher shipping costs during the dry docking process. Before turning our attention to the diversified segments, I would also like to highlight our recent agreement to expand our shipping fleet by bringing two vessels currently on charter under our own ownership in early 2025 through an option to purchase agreement. Strategically, adding a second service to our U.S. East Coast operation this year with the two chartered vessels provides us the flexibility to dry dock the vessels in our primary East Coast service without any major service disruption, while also gives us a pathway for additional growth in the marketplace.

[Rory Byrne, CEO at Dole plc]

Moving on to the Diversified EMEA segment, this segment was impacted by some seasonal timing differences as well as one-off IT costs and a lower supply of certain categories in the quarter, but still delivered a good overall result in Q3, broadly in line with our own expectations. In Spain, with some temporary shortages in supply of Canary Islands bananas, whereas in other parts of the segment, we had the continued impact of shortages for some important seasonal crops, typically sourced out of South America, as well as poor weather impacting trade for some of our food service and wholesale businesses. Positively, revenue growth did remain strong in the quarter, indicating that on an underlying basis, our business is in a good position, and we expect to be able to deliver a satisfactory result on a full-year basis.

[Rory Byrne, CEO at Dole plc]

Diversified Americas, this segment delivered another very strong quarter on a like-for-like basis, taking out the impact of Progressive Produce following its sale in Q1. The strong result was driven by a positive quarter for our North American operations with good volume and price growth across most commodities and avocados in particular. Our North American berry business, while still having much scope to continue to improve, showed a good turnaround from the prior year, and while our South American export business also had a positive quarter with good developments in winter season products. Looking ahead to the remainder of the year, activity will again pick up on the export side as we progress through Q4, which has started several key export seasons out of both Peru and Chile. As always, the specific timing of harvest will play an important role in how profitability gets recorded through the year-end.

[Rory Byrne, CEO at Dole plc]

However, we anticipate a strong seasonal performance on the export side, as well as continued good momentum in our North American operations. Turning to the Fresh Vegetables business, as noted in our most recent calls since the termination of the sale agreement to Fresh Express, we have been actively exploring strategic alternatives for this business. That process is ongoing, and we remain hopeful that we will ultimately deliver a good outcome for all our stakeholders. Operationally, we are very pleased that this business is continuing to deliver improved results and is on track to deliver positive operating income each quarter of 2024.

[Rory Byrne, CEO at Dole plc]

The continued good performance in the third quarter was delivered despite the anticipated softening of the favorable fresh pack market conditions experienced earlier this year, demonstrating again the good underlying performance that our committed management team is making in both the fresh packed and value-added business units within this division. And with that, I'll hand you over to Jacinta to give the financial review for the third quarter.

[Jacinta Devine, CFO at Dole plc]

Thank you, Rory, and good day, everyone. Firstly, turning to the group results on slide eight, reported revenue increased 1% against the prior year and 5.8% on a like-for-like basis, excluding the impact of FX and the sale of Progressive Produce. Strong operational performance across all segments drove this growth. Adjusted EBITDA decreased 3.7% or $3.1 million, primarily driven by decreases in Fresh Fruit and Diversified EMEA segments, partially offset by strong performance in the Diversified Americas segment. On a like-for-like basis, adjusted EBITDA increased 2.3% or $1.9 million. Interest expense for our continuing and discontinued operations decreased $5 million year-on-year due to lower debt levels and also lower market interest rates. The increase in income tax is due to changes in our jurisdictional profit mix compared with the prior year and the impact of discrete tax items in the period.

[Jacinta Devine, CFO at Dole plc]

Net income of $21.5 million in Q3 2024 was $32.5 million lower than Q3 2023, primarily due to the prior year having the benefit of an exceptional $28.8 million gain on the sale of land. There was also a decrease in other income of $9.3 million. This was primarily related to fair value adjustments of financial instruments. Partially offsetting this was a continued improved performance in our fresh vegetable business, with income from discontinued operations of $6.3 million recorded this quarter. On an adjusted basis, adjusted net income was $18 million, and Adjusted Diluted EPS was $0.19 per share. The year-on-year decrease was mainly due to lower adjusted EBITDA and higher income tax expense, partially offset by lower interest expense. Turning now to the divisional updates for the third quarter for our continuing operations.

[Jacinta Devine, CFO at Dole plc]

Firstly, turning to the Fresh Fruit on slide 10, the Fresh Fruit division delivered another good result, with the revenue increasing 6.6%. The increase in revenue was primarily due to higher worldwide volumes of bananas sold, as well as higher worldwide pricing of bananas and pineapples, partially offset by lower worldwide volumes of pineapples and lower pricing and volume for plantains. As anticipated, Adjusted EBITDA was lower this quarter due to the impact of dry docking-related costs. However, the result of $42.9 million was ahead of our expectations, primarily due to strong revenue growth. Turning to Diversified Fresh Produce EMEA on slide 11, this segment delivered $5.1 million revenue growth in the quarter, driven by a strong performance in Ireland, the U.K., and the Netherlands, as well as a $13.6 million favorable FX impact and an incremental positive impact from acquisitions of $1.8 million.

[Jacinta Devine, CFO at Dole plc]

On a like-for-like basis, revenue increased 3.3%. Adjusted EBITDA declined 13.1% or 14.5% on a like-for-like basis, primarily due to higher one-off IT charges in the U.K. and temporary supply issues and seasonal timing difference in Spain and South Africa. Finally, turning to Diversified Fresh Produce Americas and Rest of the World on slide 12, this segment delivered a very strong result in the quarter. Reported revenue was impacted by the sale of Progressive Produce earlier this year. However, on a like-for-like basis, revenue increased 7.2%, primarily due to the volume and price growth across most commodities in North America. Adjusted EBITDA increased $3.6 million, primarily driven by improved performance in our North America berries business and positive margin development in avocados, as well as revenue growth across most commodities in North America. These positive impacts were primarily offset by the disposal of the Progressive Produce business.

[Jacinta Devine, CFO at Dole plc]

On a like-for-like basis, Adjusted EBITDA was $9.2 million ahead of the prior year. Turning to slide 13, we remain very focused on capital allocation and managing our leverage and are pleased that our leverage reduced further in the quarter to 1.86 times. The reduction was driven by a $36 million decrease in our net debt compared to Q2. Net cash provided by operating activities from continuing operations was $106.2 million in the year to date. As anticipated, we saw a significant positive inflow in working capital in the third quarter, and while being conscious of the variability that seasonal timings around year-end can bring to working capital, this is a trend we expect to continue into the year-end. Cash capital expenditure from continuing operations was $21.1 million in the third quarter.

[Jacinta Devine, CFO at Dole plc]

As Rory mentioned, we recently secured an agreement to expand our fleet with the addition of two vessels currently on charter, bringing them under our ownership in early 2025. Due to this commitment, we have recognized a finance lease, adding both the asset and financial obligation to our balance sheet as of the 30th of September. For the full year after the opportunistic addition of these vessels, we now expect total capital expenditure, including additions by finance lease, to be in the range of $130 million-$140 million. As I mentioned earlier, interest expense has continued to decrease compared with the prior year due to lower debt levels as well as lower base rates. For the full year, we now expect our interest expense, including discontinued operations, to be approximately $75 million.

[Jacinta Devine, CFO at Dole plc]

Continuing our commitment to return cash to shareholders, we are pleased to declare a dividend of $0.08 for the third quarter, which will be paid on January 3rd, 2025, to shareholders on record on December 11th, 2024. Now, I will hand you back to Rory, who will give an update on our full year outlook.

[Rory Byrne, CEO at Dole plc]

Thank you, Jacinta. So we're very pleased to have delivered another robust performance this quarter, putting us in an excellent position to deliver a strong result for the full year. And as we move towards the end of the year, we are raising our full year Adjusted EBITDA target to at least $380 million for 2024. On the investment side, we are pleased that our disciplined approach to capital allocation has given us the flexibility to opportunistically execute quickly on a positive transaction this quarter to support our operations and bring two additional vessels into our fleet. As we move forward, we will continue with our disciplined approach to all our investment activity, while also ensuring that we have the capabilities and capacity to both execute on our planned strategic aims and any opportunistic opportunities for different possibilities of margin.

[Rory Byrne, CEO at Dole plc]

In conclusion, we're very pleased to have again added another good operating and financial performance to our track record and are now fully focused on finishing the year strongly and delivering on our enhanced full year target, while also focusing on our key strategic priorities for the remainder of the year. I do want to finish by once again thanking our excellent people across the group for their ongoing commitment and dedication to drive Dole plc forward, as well as our suppliers and customers for all their ongoing support. So with that, I'll hand you back to the operator, and we can open the line for questions. Thank you.

[Operator]

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. Your first question comes from the line of Christopher Barnes with Deutsche Bank. Please go ahead.

[Christopher Barnes, Analyst at Deutsche Bank]

Hi, good morning, good afternoon. Thanks for the question. I guess just first to start on EBITDA guidance, the full year target of at least 380 implies the fourth quarter could be down 18% at the low end. I know you're really just setting a floor, but could you walk through the puts and takes that we should be mindful of across Fresh Fruit and the diversified businesses in the fourth quarter specifically? I know you called out strength from Peru and Chile export seasons as well as tighter banana supply conditions, but any additional color would be helpful. Thanks.

[Rory Byrne, CEO at Dole plc]

Yeah, I mean, I think as we flagged, Chris, at the end of half one, this may be a year that's more typical of the historical years where there's a heavier weighting towards the first half of the year compared to the second half of the year. You've got to remember as well that we've sold Progressive, so that has an impact on Q4 and overall full year impact on EBITDA of some $25 million. Forecasting, as we know in today's world, is far from an exact science. You just need to look at what happened with the dollar post the election with a quite strong improvement in the strength of the dollar. We had a strong finish to the year last year in 2023.

[Rory Byrne, CEO at Dole plc]

We do know that our shipping costs in the back half of the year are going to be higher, particularly with the dry docking issues that we've got. But we're comfortable with setting the base at 380. We've stepped it up from 360, 370, and now 380. So putting everything into the mix, we think it's the appropriate number to give to the market.

[Christopher Barnes, Analyst at Deutsche Bank]

Very helpful. And then secondly, the Diversified Americas business profitability has been notably strong year to date. It essentially masks the impact from divesting Progressive Produce. So is there any way to frame how much of that improvement is real underlying strength in that business versus some of the seasonal timing that's shifting profitability around into the first nine months? And then separately, Lunar New Year in 2025 is two weeks earlier than it was in 2024. Is that going to have any positive impact on the fourth quarter for Chilean cherries, or is that really just a 2025 dynamic? And then I'll pass it on. Thanks.

[Rory Byrne, CEO at Dole plc]

Yeah, thanks, Chris. Yeah, I mean, if we look at the Diversified Americas business, it's probably the segment that suffered most from, you know, you go right back to 2020, 2021 with the supply chain disruption, the logistics disruption, the very significant shortage of containers and the dramatic increase in freight rates sort of a very big impact on that segment. We had periods where we couldn't get product discharged into the North American market. So that's all settled down. I think we'd have to say as well within that division, particularly from Chile, instead of having lots of negative headwinds, we probably had a few tailwinds that are behind us. The flow of product in terms of the change of seasons from American production into import production has worked well. The flow of product from cherries into the Chinese market has worked well.

[Rory Byrne, CEO at Dole plc]

We've done a lot of work in terms of improving our management processes and streamlining that organization, and it's worked well. I think there can be a little bit of volatility. We do own a reasonable amount of production in Chile, so that can be a little bit more variable than, say, our EMEA division, which tends to be a more stable, consistent profit level. But we're comfortable that we've repositioned that entire business, but they have had an exceptionally strong year this year, so it would be wrong not to recognize that. And we've got to take it when it's there as well.

[Operator]

Your next question comes from the line of Gary Martin with Davy. Please go ahead.

[Gary Martin, Analyst at Davy]

Hi, all. Congrats again on another strong set of results. I've got a few questions on my side. I'll just ask them one by one, if that's all right. I guess just starting off and maybe touching on the last question a little bit, I mean, should we expect maybe a more normalized cherry season into Q4? Is that the best way to frame it? And I guess the extension of that is, should we expect a more normalized kind of Diversified Americas' and Rest of the World's profitabilities and revenue into Q1 next year as well, just off the back of that?

[Rory Byrne, CEO at Dole plc]

Do you want to make any comment on that, Johan, maybe just add what I already said?

[Johan Lindén, COO at Dole plc]

Yeah, no, I think what you said is right. And when it comes to normalize, yes, when you look at Q1, you could probably say it normalized with some of the cherry volume falling into this year, considering where the Chinese New Year is coming.

[Gary Martin, Analyst at Davy]

Understood. That's helpful. And then just on Fresh Fruit, I mean, you flagged a number of times that it was above your expectations. I mean, what are the kind of the supply and demand factors that are driving the kind of overall outperformance on volumes across both Europe and North America? And I guess if I put my forecasting hat on and I look into Q4, should we expect to see another fairly consistent quarter on a sequential basis in terms of profitability and revenue? Thanks.

[Rory Byrne, CEO at Dole plc]

Do you want to address that as well, Johan, maybe?

[Johan Lindén, COO at Dole plc]

Yeah. So as always, Fresh Fruit is very dynamic with a lot of puts and calls on it. So what we have right now and what we saw during Q3, we saw a very good and solid demand for bananas driven by organic bananas, but also the normal bananas. Good demand. And at the same time, we have a tight supply on the back of weather event. It's been drier up in Ecuador, wetter in Central America, and that's on the back of El Niño last year when it was vice versa. So the weather has tightened up the supply. So we have had a good supply-demand balance because even if the supply is tight, it does not directly impact the core markets as it's normally the secondary markets that are taking the hit.

[Johan Lindén, COO at Dole plc]

But we're also selling some in the secondary market, and there we have seen a tailwind, and that has been beneficial to us. And we do expect to see some of that benefit also in Q4, but we see it more consistent like a normalized year where we don't have the same benefit that we had last year that was very strong. And the reason for that being then shipping costs being higher. The Dole Ocean Cargo business, when we sell, it's based on our ships being a little bit lower. And we have also seen some cost of fruit being a little bit higher as volume has been low on pines.

[Gary Martin, Analyst at Davy]

That's really, really helpful. And then maybe just one final one just on the two vessels that were previously chartered just coming in in early 2025. I mean, you outlined the great flexibility when it comes to dry docking cycles, and that makes perfect sense. But you also touch on further growth potential. Do you want to maybe just go through in a bit more detail the potential growth upside there? Thanks.

[Rory Byrne, CEO at Dole plc]

Yeah. I mean, we did take the vessels on charter, short-term charter, annual charter really with a view to giving us the capacity flexibility given the dry docking programs. We found that when there are increasing volumes, that the excess by the extra capacity, we believe, will give us the capacity to grow. And there may be a couple of other areas where we can develop the volumes, just avocados a little bit more out of Colombia. We haven't put a specific number on that yet, Gary, but we do think that having the capacity to make sure that we fully comply with the very important service level requirements of our major North American retailers is very important.

[Rory Byrne, CEO at Dole plc]

We've seen a huge amount of volatility on freight rates over the course of the last six months, particularly with the Red Sea issues and the closure of the Suez Canal, and having certainty about capacity of the right-sized ships, the right capacity, certainty on our trade lanes into the different markets, we think is a strong advantage and will give us a strong position to grow over the course of the next number of years.

[Gary Martin, Analyst at Davy]

That's really good color. I'll pass it on. Thanks so much.

[Rory Byrne, CEO at Dole plc]

Thanks, Gary.

[Operator]

We currently have no further questions in our queue. I will now turn the conference back over to Rory Byrne for closing comments.

[Rory Byrne, CEO at Dole plc]

Thank you. Well, we're very pleased with the way 2024 has evolved. I think it's another good quarter to add now to a very strong sequence of solid results over a sustained period of time. We've got a good focus on all areas of our business, operationally, financially, and strategically. So we believe we're very well positioned for continued growth. So thank you once again to all our committed people, our investors, our customers, suppliers, and thank you for joining us today.

[Operator]

This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Participants

Executives

• Rory Byrne, CEO
• Johan Lindén, COO
• Jacinta Devine, CFO
• James O'Regan, Head of Investor Relations

Analysts

• Christopher Barnes, Analyst at Deutsche Bank
• Gary Martin, Analyst at Davy