Fresh Del Monte Produce Q2 Earnings Call Highlights

Key Points

• Del Monte Foods exceeded expectations in its first full quarter under Fresh Del Monte ownership, leading management to raise its 2026 outlook to $625 million in sales and $35 million in adjusted EBITDA.
• Fresh Del Monte reported second-quarter sales of $1.22 billion, up 3% year over year, with adjusted EPS of $0.72 and adjusted EBITDA of $72 million. The company reaffirmed its full-year adjusted sales-growth target of 13% to 15% and EBITDA guidance of $230 million to $240 million.
• The company is closing four underperforming Costa Rican banana farms, representing about 5% of local banana production, and plans to repurpose some land for higher-margin pineapple cultivation. It also expanded its credit facility to $900 million, maintained its $0.30 quarterly dividend and repurchased $16 million of stock.

Fresh Del Monte Produce NYSE: FDP said its newly acquired Del Monte Foods business delivered profitable performance in its first full quarter under company ownership, prompting management to raise its 2026 sales and adjusted EBITDA outlook for the prepared-foods unit.

During the company’s second-quarter 2026 earnings call, Chairman and Chief Executive Officer Mohammad Abu-Ghazaleh said the company is now operating as Del Monte Corporation following its acquisition of Del Monte Foods in March. He characterized the combination as creating two complementary businesses: the company’s global fresh-produce operations and a shelf-stable prepared-foods platform with higher margins, longer shelf life and established brand loyalty.

“By the end of the second quarter, I’m proud to announce that our Foods division delivered profitable performance,” Abu-Ghazaleh said, adding that the business has established an operational base for its planned growth strategy.

Del Monte Foods outlook raised

Senior Vice President and Chief Financial Officer Monica Vicente said the company now expects Del Monte Foods to generate 2026 net sales of $625 million and adjusted EBITDA of $35 million. Those projections were raised from prior expectations for $600 million in sales and $23 million in adjusted EBITDA.

Vicente said the company has undertaken pricing actions, product-portfolio changes and trade-spending optimization initiatives that are expected to contribute about $9 million in annual margin expansion as they are phased in during 2026 and 2027.

Management cited improved service levels, product-line rationalization and logistics work among the early accomplishments at Del Monte Foods. Abu-Ghazaleh said the business had addressed issues including service levels and product shortages, reaching on-time delivery performance of 95% or more. The company is also pursuing further efficiencies in storage and warehousing over the next 12 months.

The company said it expects to introduce certain new products toward the end of 2026, with additional launches anticipated in 2027. Abu-Ghazaleh pointed to a planned packaged Pinkglow pineapple product as one example of potential collaboration between the fresh and prepared-foods businesses, saying it could reach the market within several months.

Quarterly results and full-year targets

For the second quarter, Vicente reported net sales of $1.22 billion, up 3% from a year earlier. On an adjusted basis, net sales increased 9%. Gross profit was $121 million, representing a 9.9% gross margin.

• Adjusted operating income was $49 million.
• Adjusted net income was $34 million.
• Adjusted diluted earnings per share were $0.72.
• Adjusted EBITDA was $72 million, or a 6% margin.

For full-year 2026, the company expects adjusted net sales growth of 13% to 15% and adjusted EBITDA between $230 million and $240 million. Vicente said the company’s estimate for external cost pressures has declined to $45 million to $55 million, compared with its earlier forecast of $60 million to $70 million.

The improvement reflects lower pressure from bunker fuel, diesel and fertilizer costs, as well as changes in purchasing practices for raw materials, Vicente said. She noted, however, that the Costa Rican colón remains a headwind.

The company reaffirmed gross-margin targets of 11% to 12% for fresh and value-added products, 3% to 4% for bananas, 14% to 15% for prepared products, and 10% to 11% for other products and services.

Banana footprint changes and pineapple investment

Management said it is adjusting its Costa Rican agricultural footprint, including closing certain banana farms that have become less viable because of higher costs and competitive pressure. Vicente said four farms being closed represented about 5% of the company’s Costa Rican banana production.

Abu-Ghazaleh said the company has rationalized banana volumes rather than participate in pricing conditions that he described as unsustainable. He said competition has been particularly severe over the past six to seven months, while higher costs at origin have also affected the category.

Some of the land will be repurposed toward higher-margin pineapple offerings, including Del Monte Gold and Honeyglow pineapples. Management said the immediate benefit from farm closures will be the elimination of operating losses, while pineapple production will take longer to develop. Vicente said pineapples have a growing cycle of roughly three to four years, though Abu-Ghazaleh said the company may be able to accelerate the conversion process and begin seeing pineapple production at least two years after closures.

Pineapple sales were strong during the quarter, according to Vicente, although volume was somewhat lower than the prior year because of the crop-growing cycle. She said pricing was higher, while costs were affected by fertilizer, diesel and currency pressures.

Management also said fresh-cut operations remained consistent year over year. The business faced sourcing and shipping difficulties involving Mexico, Brazil and Peru, but demand and sales pricing remained strong, according to executives.

Liquidity, capital spending and shareholder returns

The company expanded its revolving credit facility to $900 million from $750 million earlier in July, with terms maintained through February 2029. Vicente said the additional capacity is intended to support liquidity through seasonal harvest cycles and working-capital normalization.

Operating cash flow totaled $94 million during the first half of 2026. The company expects full-year capital expenditures of $85 million to $95 million, directed toward Central American expansion projects, European fresh-cut growth, investments in Del Monte Foods and technology.

The board declared a quarterly cash dividend of $0.30 per share, or $1.20 on an annualized basis. The company also repurchased $16 million of common stock during the quarter.

About Fresh Del Monte Produce (NYSE:FDP)

Fresh Del Monte Produce Inc is a leading producer, marketer and distributor of fresh and fresh-cut fruits and vegetables worldwide. The company offers a wide range of products including bananas, pineapples, melons, grapes and avocados, along with value-added items such as fruit salads, vegetable trays and snack packs under the Del Monte® brand.

Founded in 1989 as a spin-off from Del Monte, Fresh Del Monte has developed a global supply chain that spans production farms, ripening facilities and packaging centers across Latin America, North America, Europe, Asia and Africa.

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