(DOLE) Q1 2025 Earnings Call Transcript

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May 12, 2025
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Operator

Welcome to Dole plc's First Quarter twenty twenty five 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 speakers' 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

Thank you. Welcome, everybody, and thank you for taking the time to join our first quarter twenty twenty five earnings conference call and webcast. Joining me on the call today is our Chief Executive Officer, Rory Byrne our Chief Operating Officer, Johann Linden and our Chief Financial Officer, Jacinta Devine. During this call, we will be referring to presentation slides and 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.

James O'Regan
Head of Investor Relations at Dole

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. 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 & Executive Director at Dole

Thank you, James. Welcome, everybody, and thank you for joining us today as we discuss our results in the first quarter of twenty twenty five. So turning firstly to the highlights of the first quarter. Following a very strong result in 2024, we are pleased to report another good performance in the first quarter of twenty twenty five, exceeding our own expectations. On a like for like basis, group revenue increased by 4.2% to $2,100,000,000 and adjusted EBITDA decreased 2% to $104,800,000 The first quarter saw solid performances in both of our diversified fresh produce segments, which helped to offset the anticipated headwind in our fresh food segment, which was impacted by tropical storm Sarah late last year.

Rory Byrne
CEO & Executive Director at Dole

Adjusted net income came in at $33,100,000 and adjusted EPS was $0.35 per share, down from $0.43 in Q1 of twenty twenty four, primarily due to the decrease in adjusted EBITDA. We are pleased to increase our dividend by 6.25% to $0.85 per share for the first quarter. This is our first dividend increase since starting dividend payments back in 2021 and demonstrates our confidence in the long term growth potential for our business. Post quarter end, we were very pleased to complete the EUR 1,200,000,000.0 refinancing of our credit facility at favorable rates relative to market conditions. This financing strengthens the financial position at Dole and provides enhanced financial flexibility to support our growth and initiatives.

Rory Byrne
CEO & Executive Director at Dole

Turning now to the operational review and starting with Fresh Fruit on Slide six. So Fresh Fruit delivered a robust performance in the first quarter with adjusted EBITDA of $63,300,000 exceeding our own expectations, taking into account the anticipated impact of Tropical Storm Sarah. Firstly, looking at North America, our underlying operations performed very well with good volume growth in bananas as well as positive developments in both pineapples and plantains. Profitability was somewhat held back by the anticipated higher sourcing costs following the impact of Tropical Storm Serra. We also experienced higher shipping costs as we completed scheduled drydockings and managed them on a temporary operational challenges that have now been resolved.

Rory Byrne
CEO & Executive Director at Dole

We are addressing production challenges following topical strong Sarah, and we expect to face some headwinds of this regard for the remainder of the financial year. However, our production and sourcing teams are doing an excellent job mitigating this and are working diligently to manage the reinvestment and rehabilitation process, while also ensuring we continue to fully service our customers. We aim to return to near full production to the affected farms by early twenty twenty six. Turning to the European market. We saw stable performance overall in the first quarter with continued good volume growth in bananas as well as better performance in pineapples, offsetting more challenging pricing in bananas, which was impacted by the weaker Europe in the first quarter of twenty twenty five compared to the prior year.

Rory Byrne
CEO & Executive Director at Dole

Looking ahead to the rest of the year, we continue to see robust demand, and we expect this to continue over the course of the full year. We feel very positive that the industry supply and demand for bananas and pineapples are well balanced. Additionally, the strength in Neul could potentially serve as a positive tailwind for the remainder of the year. Moving on to our diversified EMEA segment. This segment has had a positive start to the year, delivering very strong like for like growth in the first quarter to reach an adjusted EBITDA of 27,700,000 aided by both strong revenues and some margin expansion.

Rory Byrne
CEO & Executive Director at Dole

On a reported basis, this good growth was curtailed somewhat by the weaker euro in the first quarter of twenty twenty five compared to the first quarter of twenty twenty four. However, with the material strengthening of the euro in recent weeks, this dynamic should become a tailwind for our reported numbers over the course of the year if current rates are maintained. Within the segment, we are seeing some different dynamics across geographies starting the year before outperforming others and generally better sales into retail compared to our foodservice and wholesale channels. Overall, the segment continues to benefit from the significant diversification and is performing in a very positive way. We continue to consolidate our strength in this segment and are focused on identifying and executing upon both internal and external investment opportunities.

Rory Byrne
CEO & Executive Director at Dole

We are confident these continuous efforts will drive continued solid growth as the year progresses. Our Diversified Americas segment delivered a strong first quarter result with double digit growth on a like for like basis in EBITDA, taking into account the disposal of progressive projects in late Q1 twenty twenty four. This robust performance was driven by good results in the North American market, only modest declines in our Southern Hemisphere export businesses, despite experiencing more normal supply and market conditions compared to 2024. Notably, the previous year benefited from an exceptionally strong season for Chilean cherries. So look further into 2025, we believe our businesses, both on the export side and in North America, are well positioned.

Rory Byrne
CEO & Executive Director at Dole

We will continue to stay highly attentive to the evolving dynamics in international trade and prepare to react appropriately. Turning to fresh vegetables. As noted on our recent earnings calls, we continue to work on delivering the best strategic outcome for our vegetable business, and this process remains ongoing. Operationally, following a robust turnaround in 2024, the business faced weaker fresh profit produce markets against a particularly strong comparative period in early twenty twenty four. However, this was offset by a stable performance in our value added business, where we see clear signs of strengthening our competitiveness characterized by improved delivery quality, lower underlying costs and an increased focus on innovation.

Rory Byrne
CEO & Executive Director at Dole

With that, I'll hand you over to Jacinta to give the financial review for the first quarter.

Jacinta Devine
CFO & Director at Dole

Thank you, Rory, and good day, everyone. Turning firstly to the group results on Slide 11. We are pleased to have delivered another good performance for the first quarter of this financial year. Revenue of $2,100,000,000 was 1% lower on a reported basis, primarily due to lower revenue in Diversified Americas following the disposal of Progressive projects last year as well as a GBP 21,000,000 unfavorable impact from foreign currency translation. Excluding these impacts, on a like for like basis, revenue increased 4.2% with good organic growth seen in fresh fruits and diversified fresh produce in EMEA.

Jacinta Devine
CFO & Director at Dole

Net income in the first quarter was GBP 44,200,000.0, a 21,300,000.0 year on year decrease. However, the prior year had the benefit of a net exceptional gain of 37,300,000.0 related to the progressive projects disposal. Also, there was an 8,000,000 decrease in other income due to unrealized FX losses on foreign currency borrowings. Offsetting these items was an increase in equity method investments related to a noncash gain on an M and A transaction as well as a higher net income relating to our discontinued operations. Similarly to year end, we recorded a noncash accounting adjustment to the carrying value of discontinued operations in Q1 with the adjustment this quarter largely offsetting the cessation of depreciation and amortization that occurs under discontinued operations accounting.

Jacinta Devine
CFO & Director at Dole

Now looking at the non GAAP performance measures, adjusted EBITDA decreased by approximately GBP 5,000,000, primarily due to a decrease in fresh fruit and a decrease in Diversified Fresh Produce Americas and Rest of World due to the progressive projects disposal. On a like for like basis, the decrease was GBP 2,200,000.0. Adjusted net income decreased GBP 7,500,000.0, predominantly due to the decrease in adjusted EBITDA as well as higher depreciation expense. Adjusted diluted EPS was $0.35 compared to $0.43 in the prior year. Now turning to the divisional update for our continuing operations, starting with Fresh Fruit on Slide 13.

Jacinta Devine
CFO & Director at Dole

Revenue increased 6.5%, primarily due to higher worldwide volumes of banana sold as well as higher worldwide pricing of pineapples and bananas, partially offsetting this with a lower worldwide volumes of pineapples and plantains. Adjusted EBITDA decreased 6,100,000 primarily driven by higher anticipated food sourcing costs following the impact of tropical storm Sarah in Honduras as well as higher shipping costs due to completion of scheduled dry docking and the impact of an operational disruption for one of our vessels servicing the North American market. These challenges were partially offset by good underlying performance in bananas on a worldwide basis as well as improved performance in pineapples on a worldwide basis. The Diversified EMEA segment delivered another strong results in the first quarter of twenty twenty five. Reported revenue increased 4.5% primarily due to a strong performance of The UK, Spain and The Netherlands.

Jacinta Devine
CFO & Director at Dole

This was partially offset by an FX headwind of GBP 19,400,000.0 and a net negative impact from M and A of GBP 10,500,000.0. Excluding these impacts, on a like for like basis, revenue increased 8% or 68,400,000.0. Adjusted EBITDA increased 6.6% or GBP 1,700,000.0, primarily driven by increases in The UK, Spain and The Netherlands. This was partially offset by lower earnings in Germany and an unfavorable impact of foreign currency translation of $700,000 On a like for like basis, adjusted EBITDA increased 9.4% or 2,500,000.0 Now turning to Diversified Fresh Projects Americas and Rest of World. As in previous quarters, reported revenue in Diversified Americas was impacted by a progressive project disposal last year.

Jacinta Devine
CFO & Director at Dole

On a like for like basis, revenue declined by 6.8%. This decrease was primarily attributable to lower export pricing for key Southern Hemisphere products, particularly cherries as well as declines in North American markets due to reduced pricing for grapes and lower volumes of avocados. Adjusted EBITDA decreased GBP 900,000.0, primarily driven by the disposal of progressive produce. However, on a like for like basis, adjusted EBITDA increased by 10.4% or 1,500,000. This growth was primarily driven by strong performance in the North American markets in kiwi, citrus and avocados.

Jacinta Devine
CFO & Director at Dole

However, these gains were partially offset by declines on the Southern Hemisphere export side in cherries and grapes as well as declines in berries in the North American market. Now turning to Slide 16 to focus on capital allocation on our balance sheet. Firstly, as mentioned by Rory and noticed in the press release issued on May 1, we were very pleased to announce the successful completion of a GBP 1,200,000,000.0 refinance of our corporate credit facilities. The new syndicators credit facilities consist of a GBP 600,000,000 multicurrency five year revolving credit facility, a GBP $250,000,000 5 year Term Loan A and a $350,000,000 7 year farm credit term loan replacing our existing RCF, GLA and TLB. Looking at interest expense, this has continued to decrease due to lower debt levels as well as lower base rates and was GBP 17,200,000.0 in the first quarter.

Jacinta Devine
CFO & Director at Dole

Under the assumption that base rates will remain broadly stable in 2025 and not assuming any exceptional cash proceeds, we continue to expect full year interest expense to be approximately $70,000,000 Cash capital expenditure from continuing operations was $52,800,000 in the quarter, including the buyout of two vessel finance basis of $36,000,000 that were already reflected within net debt at year end and discussed in our previous earnings calls. The remaining $16,800,000 included expenditure on vessel dry dockings, farming investments, efficiency projects in our warehouses and ongoing investments in IT and logistics assets, in line with our usual seasonal working capital trends. And accentuated by the timing of the cherry season, we saw a working capital outflow in the first quarter. The combination of these factors resulted in free cash flow from continuing operations being an outflow of GBP 131,600,000.0. As in previous years, we expect to see this unwind as the year progresses.

Jacinta Devine
CFO & Director at Dole

This outflow was the primary driver behind the net increase in net leverage to 1.9x at the March. Asset sales in the quarter were $4,800,000 This primarily related to the sale of actively marketed land in Hawaii. As mentioned by Rory, we are pleased to declare an $0.85 dividend for the first quarter, representing a 6.25% increase from our last declared dividend. Now I'll hand you back to Rory, who will give an update on our full year outlook.

Rory Byrne
CEO & Executive Director at Dole

Thanks, Jacinta. While we were pleased with the performance in Q1, delivering a result which was ahead of our own expectations, This result gives us a strong foundation for the rest of the year in a very dynamic macroeconomic environment. Like most multinational businesses, we continue to monitor the evolving macro international economic scenario. We do believe that our industry is a good example of the benefits of international trade, providing year round healthy products to our consumers and are confident the existing trade deals will continue on acceptable terms. Short term disruptions may arise across a range of areas such as foreign exchange rates, labor markets or supply chains.

Rory Byrne
CEO & Executive Director at Dole

A good start to the year, along with our resilient and diverse business model, gives us confidence in our ability to navigate the challenges of the current volatile economic environment. Consequently, we are pleased to revise our guidance upwards and are now targeting full year adjusted EBITDA of at least $380,000,000 Turning to investments. Over the course of the year, we continue to expect, as a baseline, to have a maintenance level of CapEx from continuing operations broadly in line with our depreciation expense of approximately $100,000,000 Additionally, we also anticipate some increased CapEx spend over the course of the year related to our reinvestments in Honduras, albeit significantly supported by insurance proceeds. We remain focused on exploring a range of development opportunities through both internal and external investment, which we believe can further strengthen our business and drive growth for the years ahead. I want to conclude by once again thanking all our outstanding people across the group for their ongoing commitment and dedication to driving Dole PLC forward.

Rory Byrne
CEO & Executive Director at Dole

Our experienced and knowledgeable team has continued to service very well. Additionally, we really appreciate all our essential partners, suppliers, customers and all other stakeholders for their continued support. And with that, I'll hand the call back to the operator to open the line for questions.

Operator

Thank you. Your first question comes from Christopher Barnes with Deutsche Bank. Your line is open.

Christopher Barnes
Christopher Barnes
VP - Equity Research at Deutsche Bank

Hi, good morning, good afternoon. I just wanted to follow-up on the EBITDA guidance. You're now setting a floor at the upper end of the prior range. I'm curious how much of that raise would you attribute to better underlying performance in the quarter, perhaps higher expectations over the balance of the year versus inorganic factors like the expected foreign exchange translation tailwinds at current rates? And then just related to that, does this updated outlook embed current tariffs in place in The US market?

Christopher Barnes
Christopher Barnes
VP - Equity Research at Deutsche Bank

And is there any way to quantify what those tariff what what those tariff impacts might be on a gross basis and what actions you're taking to mitigate those? Thanks.

Rory Byrne
CEO & Executive Director at Dole

Well, thank you, Christopher. So a range of interesting questions there. Yes, I mean, obviously, doing forecasting in the current environment is a little bit challenging. So we've put all the factors into the mix, including the current known scenario regarding tariffs and their impact to the likely impact on our business, and that's our best shot at the target for the full year. A big element of that is obviously down to doing a little bit better in Q1 than we hadn't anticipated, particularly with the headwinds that we had highlighted on Tropical Storm, Sarah.

Rory Byrne
CEO & Executive Director at Dole

And we have made some assumption that the translation over the remaining quarters, given a the euro exchange rate to the dollar, that facilitating a better translation on reporting in dollars. So to sum up all those factors, we are moving a little bit above our previous range. So I think putting it all together, we're feeling positive about the balance of the year.

Christopher Barnes
Christopher Barnes
VP - Equity Research at Deutsche Bank

Very good. And then just a follow-up around the fresh vegetables business. I understand you continue to evaluate potential exit options, but I mean, it's been it's been over a year since the the deal was with Fresh Express was terminated. But how do you guard against the risk that underlying business performance deteriorates as the mark as you continue to market that business? And I I I guess, like, are you still committed to exiting the business, or might it make more sense just to retain it?

Christopher Barnes
Christopher Barnes
VP - Equity Research at Deutsche Bank

I mean, performance was very strong last year, and you're up against a tough compare this quarter, but it seems like you're still net ahead. So I'm just curious how you're thinking about that business going forward.

Rory Byrne
CEO & Executive Director at Dole

Yeah. It's a good question, Christopher. And clearly, we would have liked to have strategic certainty around this at an earlier stage than we have done. But the process is complex. We do have we are trying to find a good strategic answer for all of the stakeholders, the employees, the management, customers, suppliers, the long term future of the business.

Rory Byrne
CEO & Executive Director at Dole

So putting the new deals together has been quite complex. I think continuing to disclose it as discontinued operations probably highlights where our position on it is. Thus, we think there is an appropriate exit. It will be a little bit different to the Fresh Express deal, we're still working on it. We're very actively working on that, and I think it will be a good outcome for all of the stakeholders if we can get to that position.

Rory Byrne
CEO & Executive Director at Dole

We've worked very hard as well to try and avoid any impact on the ongoing business. It's not perfect having it in discontinued operations. But there are a lot of other competing businesses who are either private equity owned, who are also for sale or will at some point in time be for sale. So it's, you know, a little bit the world we live in, but businesses do change hands. You do have temporary owners and private equity owners and things like that.

Rory Byrne
CEO & Executive Director at Dole

So, you know, it's it can be challenging to manage in that environment and, you know, we've done our management team have done well in working around those challenges.

Christopher Barnes
Christopher Barnes
VP - Equity Research at Deutsche Bank

Very helpful context. Thanks. I'll pass it on.

Rory Byrne
CEO & Executive Director at Dole

Thank you, Christopher.

Operator

The next question comes from Gary Martin with Davy. Your line is open.

Gary Martin
Equity Research Analyst at Davy

Hi, Rory, Sindh and Johan. Congrats on a strong start to the year. Just a few questions from my side, to kick things off. So you conceded your refi post quarter. I think you noted that there is a driver there is more flexibility for growth initiatives.

Gary Martin
Equity Research Analyst at Davy

It'd just be good just to, again, to get a run through of, you know, kind of how you envisage capital allocation policy on a go forward basis, you know, be it internal or external opportunities. Thanks.

Rory Byrne
CEO & Executive Director at Dole

Yeah. Thanks, Gary. Yeah. I mean, I think as always, we we keep all of the capital allocation alternatives on the table. A big, strategic issue at first is really getting to the end of the vegetable current process and whether it's keep or sale will have an impact on our future capital availability, our focus of our future capital.

Rory Byrne
CEO & Executive Director at Dole

I think as well, getting the facilities renewed, which we just recently announced, was helpful to give us the basis on the having those facilities in place for the long term is a very good outcome and the terms associated with the finance team, I think, were worlds more than satisfactory. We continue to look at acquisitions. We've got internal corporate finance department. We look at a lot of companies that are different geographies, whether it's in The US or in Europe, there are a number of PE firms, for example, coming to their end of their life cycle. And, still some challenges around the price expectations of the private sector versus the public sector.

Rory Byrne
CEO & Executive Director at Dole

You know, we've seen, you know, some changes in the market, Greenyard, for example, being taken private at a decent premium to its quoted price. The dividend as well, you'll have seen, Gary, we've pushed up the dividend 6.25%, so in line with the long term policy and total projects and until we try to build steadily over the years on the dividend. And then we've got a lot of internal development projects that we're doing a lot of work on at the moment. Our fresh food division are particularly focused you know, developing, categories like, plantains and doing some extra production ourselves in two joint ventures. We're looking at some of our lines, and we're expanding at some of our other JVs, particularly in our Parque JV in Chile.

Rory Byrne
CEO & Executive Director at Dole

We have a number of projects in Northern Europe that can be very interesting, but there's a lot of work to get them to a conclusion on that. If we can bring this conclusion, it could be good internal organic growth in terms of reinvesting, particularly in automation technology. And then around the business, we've got smaller but important add on CapEx projects, and that can be expanding our facilities capacity in Ireland or in Spain. We're doing well in France in terms of building up a business, some facilities in the Port Of Seti in South Of France. So I think it can be good.

Rory Byrne
CEO & Executive Director at Dole

So again, all of the options are on the table. We are still a little bit conditioned by the outcome of the fresh vegetable division and the strategic outcome there, but it's an ongoing process.

Gary Martin
Equity Research Analyst at Davy

That's a pretty good color. Maybe just on the operational side, it was a particularly standout performance just on Diversified Americas and Rest of World in terms of the like for like EBITDA. Well, I think it'd be good just to understanding of just the various components that drove that like for like EBITDA piece just given, I think, revenues on a like for like basis for back. So, I mean, is it is it entirely, you know, mixed from the kind of North American basket of goods point of view? That what drove the profit performance in Rest of World and Americas?

Rory Byrne
CEO & Executive Director at Dole

Yes.

Rory Byrne
CEO & Executive Director at Dole

I think we called out really that our distribution and handling businesses in North America had a very strong first quarter. Our export businesses out of South America, in particular, Chile had a more normal market year. We did have an exceptional 24%, particularly in cherries in that division. It was back to a more normal year, but nothing no particular negatives. So again, we think it's well balanced there to look at and in line with our own assessment of what market conditions might have been. So it's reasonably positive for the rest of the

Gary Martin
Equity Research Analyst at Davy

And then maybe just one final one, a bit of an anorak one, just on your CapEx guidance. I mean, you've retained the $100,000,000 But just in terms of some of that additional incremental CapEx that might be required for reinvestment in Honduras following the tropical storm. Would it be possible just to get a bit of a quantum on how much that is above the insurance proceeds?

Rory Byrne
CEO & Executive Director at Dole

It's not a huge amount, Gary, but something of the order of 10,000,000 to $12,000,000 But we're hoping that, that will bring with it some incremental EBITDA. We're gonna do a little bit in terms of improving the, hopefully, the yields, the flood protections for the longer term as well. So but it's not a huge amount of money, dollars 10,000,000 to $12,000,000 territory.

Operator

This concludes the question and answer session. I'll turn the call to Rory Byrne for closing remarks.

Rory Byrne
CEO & Executive Director at Dole

Thank you. Well, I think we're pleased that we've delivered another good quarter. We've been confident enough to upgrade the target to at least $380,000,000 of targeted EBITDA for the full year, They increased the dividend by 6.5% to take it up to $0.85 a quarter. We've made some very good projects progress as well on a number of strategic projects. So lots of macroeconomic challenges out there, but we believe we're very well positioned to navigate our way through them successfully.

Rory Byrne
CEO & Executive Director at Dole

So thank you all very much for joining us today.

Operator

This concludes today's conference call and webcast. Thank you for joining. You may now disconnect.

Analysts
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Key Takeaways

  • Q1 results beat expectations with group revenue up 4.2% to $2.1 billion, adjusted EBITDA of $104.8 million was down 2%, and adjusted EPS of $0.35; the board raised the quarterly dividend 6.25% to $0.85 per share.
  • Fresh Fruit segment delivered robust performance (adj. EBITDA $63.3 million) despite Tropical Storm Sarah impacts, with production challenges mitigated and full restoration expected by early 2026.
  • Diversified fresh produce segments in EMEA and Americas showed strong like-for-like EBITDA growth, driven by retail demand in EMEA and double-digit growth in North American markets.
  • Completed €1.2 billion refinancing of credit facilities at favorable rates, strengthening Dole’s balance sheet and providing enhanced financial flexibility for growth initiatives.
  • Upgraded FY guidance to target at least $380 million of adjusted EBITDA, reflecting better Q1 performance and anticipated foreign-exchange tailwinds.
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Earnings Conference Call
(DOLE) Q1 2025
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