Fresh Del Monte Produce Q3 Earnings Call Highlights

Key Points

• Third-quarter results improved: Net sales rose 7% to $1.1 billion, while gross profit increased 27% to $103 million and gross margin expanded to 9.4%. Adjusted diluted EPS was $0.50.
• Prepared Foods exceeded expectations: Following the Del Monte Foods acquisition, the company raised its segment outlook to approximately $650 million in sales and $45 million in adjusted EBITDA, citing stronger performance and progressing integration.
• Fresh operations remain pressured: Higher costs, adverse weather and currency movements led Fresh Del Monte to lower its full-year banana gross-margin outlook to 2%–3%, although the company maintained consolidated guidance for 13%–15% adjusted sales growth and $230 million–$240 million in adjusted EBITDA.

Fresh Del Monte Produce NYSE: FDP reported higher third-quarter sales and gross profit as its prepared foods business added scale and profitability following the acquisition of Del Monte Foods, while its fresh operations continued to face elevated costs, weather effects and currency pressure.

Net sales totaled $1.1 billion in the third quarter of 2026, up 7% from a year earlier. Adjusted net sales rose 14%, while gross profit increased 27% to $103 million. Gross margin expanded 150 basis points to 9.4%.

Adjusted operating income was $35 million, adjusted net income attributable to the company was $24 million, and adjusted diluted earnings per share were $0.50. Adjusted EBITDA increased 5% to $61 million, representing a 5.6% margin.

Prepared Foods Outlook Raised

Chief Financial Officer Monica Vicente said the company had completed six full months of ownership of Del Monte Foods and that integration efforts were progressing ahead of expectations. The company increased its outlook for the acquired business, now expecting approximately $650 million in net sales and $45 million in adjusted EBITDA, compared with prior expectations of $625 million and $35 million, respectively.

“This increase reflects stronger than expected performance to date,” Vicente said. Integration work is focused on procurement, logistics, commercial execution and trade-spend efficiency, she said.

The prepared foods segment generated a 17.5% gross margin in the quarter, the highest among the company’s reportable segments. However, management maintained its full-year prepared foods gross-margin outlook of 14% to 15%.

Chairman and Chief Executive Officer Mohammad Abu-Ghazaleh said the company is remaining cautious because of rising costs for steel, fuel and other inputs. Vicente added that fourth-quarter holiday-season sales are accompanied by higher trade spending, which can reduce margins.

Management said customer fill rates in the Foods division improved to approximately 98% from 87% in the prior-year period, ahead of the holiday season. Abu-Ghazaleh said the division holds roughly 25% market share in canned vegetables and refrigerated fruit.

Integration and Product Pipeline

Abu-Ghazaleh said the integration of the fresh and foods businesses has proceeded more rapidly and smoothly than management anticipated. He estimated that the company is “almost 60% or more” through the integration process, while noting that further opportunities remain to use its infrastructure more fully.

The company plans to use its agricultural sourcing, fresh and frozen processing operations, manufacturing platform and Del Monte brand to develop new offerings. Management said initial launches from its innovation pipeline are anticipated in the second half of 2027 and through 2028.

Among the opportunities discussed on the call was a planned refrigerated pineapple product line, including gold and Pinkglow pineapple varieties. Abu-Ghazaleh said the initiative could allow the company to use fruit that may not be suitable for the traditional fresh market because of certain defects but remains suitable for processed consumer products.

The company does not currently offer private-label canned products, Abu-Ghazaleh said. Management acknowledged private-label pressure in prepared foods but said improved service levels and product quality should help it maintain market share.

Banana Margins Under Pressure

Fresh operations faced lower volume in certain categories, though favorable pricing across parts of the portfolio partially offset those declines. Vicente cited higher production, procurement, freight, distribution and fuel costs, along with adverse currency movements tied primarily to a stronger Costa Rican colón.

The company lowered its full-year banana gross-margin outlook to 2% to 3%, from a previous range of 3% to 4%. Management attributed the reduction to weather-related volume effects, production and distribution costs, and currency pressure.

Full-year inflationary pressure is now expected to total approximately $55 million to $65 million, with more than half of the amount affecting bananas. The company cited higher fuel and energy costs, fertilizer and other raw-material costs, currency movements, El Niño-related weather effects and geopolitical instability.

Abu-Ghazaleh said 2027 could be a turning point for bananas as growers seek higher prices and the industry confronts rising costs. He said the company intends to focus on profitability rather than volume and would not sell bananas at a loss.

In Costa Rica, the company is advancing the previously announced closure of banana farms that had been losing money. It is repurposing a significant portion of the land to expand production of premium pineapple varieties. Vicente said the closures should improve margins, though pricing and other actions will also be necessary to return banana profitability to an acceptable level.

Fresh-cut fruit sales benefited from strong pricing but experienced lower volume, partly reflecting lower traffic in fresh-produce areas, Vicente said. The category also faced higher inland transportation, production and other inflation-related costs.

Cash Flow, Capital Spending and Full-Year Guidance

Net cash provided by operating activities was $53 million for the first nine months of 2026. Vicente said working capital was elevated following the Del Monte Foods acquisition, including roughly $80 million associated with the foods business in the third quarter. She said the company expects working capital to be approximately $70 million to $80 million above normal this year as it replenishes inventory and establishes a normal operating cycle.

The company reiterated its full-year outlook for adjusted net sales growth of 13% to 15% and adjusted EBITDA of approximately $230 million to $240 million. It also maintained projected gross margins of 11% to 12% for fresh and value-added products and 10% to 11% for other products and services.

Capital expenditures are expected to be between $85 million and $95 million for the year, directed toward integration, productivity projects, premium fresh capacity, European fresh-cut growth and technology-enabled efficiency. The board also declared a quarterly cash dividend of $0.30 per share, payable Dec. 4 to shareholders of record as of Nov. 11.

About Fresh Del Monte Produce (NYSE:FDP)

Fresh Del Monte Produce Inc is a global producer, distributor and marketer of fresh and prepared fruits and vegetables. The company offers products such as bananas, pineapples, avocados, melons, berries, grapes and other fresh produce, along with packaged fruit, salads, vegetables, juices and snacks.

Fresh Del Monte manages operations across the produce supply chain, including growing, sourcing, processing, packaging, transporting and distributing food products. Its offerings are sold under the Del Monte brand and other company brands, as well as through private-label programs, serving retail, foodservice and other customers.

The company traces its history to the late 19th century and serves markets in North America, Europe, Asia, the Middle East and Africa.

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