-Completes 40% of $100 million asset sale
optimization program-
-Company continues making progress on its
transformation initiatives-
-Company reduces long-term debt by $45 million
as compared to the end of 2019-
Fresh Del Monte Produce Inc. (NYSE: FDP) ("Fresh Del Monte
Produce" or the "Company") today reported financial results for the
fourth quarter and fiscal year 2020. For the full year 2020, the
Company reported earnings per diluted share of $1.03, compared with
earnings per diluted share of $1.37 for the full year 2019.
Adjusted earnings per diluted share were $1.15 for the full year
2020, compared with adjusted earnings per diluted share of $1.12
for the full year 2019. The Company reported earnings per diluted
share of $0.02 in the fourth quarter of 2020, compared with a loss
per diluted share of $0.54 in the fourth quarter of 2019. Adjusted
loss per diluted share was $0.08 in the fourth quarter of 2020,
compared with adjusted loss per diluted share of $0.45 in the
fourth quarter of 2019.
The Company's Board of Directors declared a cash dividend of ten
cents $(0.10) per share, payable on April 2, 2021 to shareholders
of record on March 10, 2021.
“In 2020, we benefited from actions taken as part of our $100
million asset sale optimization program, as well as making progress
on our five-year strategic initiatives to become a value-added and
more diversified Company,” said Mohammad Abu-Ghazaleh, Chairman and
Chief Executive Officer. “The emphasis on selling non-strategic,
underutilized assets, and strengthening our core businesses led to
improved cash flow and reduced debt. These efforts along with our
versatile, vertically-integrated platform helped us mitigate the
effects of disruptions, including weather and the COVID-19
pandemic. We are also proud of the progress we made in the
following areas in the midst of a global pandemic, we placed in
service four of our six new container vessels that we expect will
increase our efficiency and reduce our carbon footprint; we opened
a new state-of-the-art Mann Packing facility in California, merging
four facilities into one; and opened a new state-of-the-art
distribution and fresh-cut facility in Yokohama, Japan. Also, we
benefited from our new avocado packing facility that opened in
December 2019."
"We are optimistic that with an improved balance sheet, and our
strategic focus on value-added products to respond to the shift in
delivery channels driven by the trend towards a ‘stay-at-home
economy’ we will continue to see gains in our performance during
2021. Our goal, as always, is to deliver shareholder value over the
long-term,” Abu-Ghazaleh added.
Net sales for the full year 2020 were $4,202.3 million, compared
with $4,489.0 million in 2019. The decrease in net sales for 2020
were the result of lower net sales in all of the Company's business
segments. The COVID-19 pandemic impacted net sales during the full
year 2020 by an estimated $303.6 million in the Company's fresh and
value-added and banana business segments, as compared with the
Company's full year 2019 performance. Partially offsetting the
decrease in overall net sales was the Company's fiscal year cycle
which consisted of a 53-week year for fiscal 2020 as compared to a
52-week year for fiscal 2019, resulting in an estimated $72.0
million increase in net sales. Net sales for the fourth quarter of
2020 were $1,002.3 million, compared with $1,025.2 million in the
fourth quarter of 2019. The COVID-19 pandemic impacted net sales
during the fourth quarter of 2020 by an estimated $71.0 million in
the Company's fresh and value-added and banana business segments,
as compared with the fourth quarter of 2019. The decrease in net
sales in the fourth quarter of 2020 was due to lower net sales in
the Company's fresh and value-added and banana business segments,
partially offset by higher net sales in the Company's other
products and services business segment and also due to the $72.0
million impact of an additional week in the quarter.
Gross profit for the full year 2020 was $250.9 million, compared
with gross profit of $306.4 million in 2019. Adjusted gross profit
was $284.0 million for the full year 2020, compared with adjusted
gross profit of $317.6 million for the full year 2019. The change
in gross profit was driven by lower gross profit in all of the
Company's business segments, primarily the result of lower sales
volume and sales prices in the Company's fresh and value-added and
banana business segments. Gross profit was also impacted by
incremental costs, mainly due to other-product related charges of
$33.6 million, partially offset by lower production costs. These
charges primarily consist of inventory write-offs due to the
volatile supply and demand conditions caused by the COVID-19
pandemic and related incremental costs incurred for additional
cleaning and social distancing protocols, as well as inventory
write-offs resulting from damages to the Company's operations in
Guatemala due to hurricanes Eta and Iota in the fourth quarter of
2020. Gross profit in the fourth quarter of 2020 was $36.4 million,
compared with gross profit of $37.5 million in the fourth quarter
of 2019. Adjusted gross profit was $49.1 million in the fourth
quarter of 2020, compared with adjusted gross profit of $47.9
million in the fourth quarter of 2019. The change in gross profit
in the fourth quarter of 2020 was the result of lower gross profit
in the Company's banana and other products and services business
segments, partially offset by higher gross profit in the Company´s
fresh and value-added business segment. Gross profit in the fourth
quarter of 2020 was also impacted by incremental costs, mainly
related to other-product related charges of $12.7 million. These
charges primarily consist of inventory write-offs due to the
volatile supply and demand conditions caused by the COVID-19
pandemic and related incremental costs incurred for additional
cleaning and social distancing protocols, as well as inventory
write-offs resulting from damages to the operations in Guatemala
due to hurricanes Eta and Iota in the fourth quarter of 2020.
Operating income for the full year 2020 was $76.5 million,
compared with an operating income of $114.1 million in 2019.
Adjusted operating income for the full year 2020 was $88.5 million,
compared with $113.2 million in 2019. The change in operating
income for the full year 2020 was primarily attributable to lower
gross profit, partially offset by lower asset impairment and other
charges, net, lower selling general and administrative expenses,
and higher gains on disposal of property, plant and equipment, net.
Operating loss for the fourth quarter of 2020 was $0.9 million,
compared with operating loss of $11.5 million in the fourth quarter
of 2019, primarily due to the disposal of property, plant and
equipment, net, partially offset by higher asset impairment and
other charges, net and higher selling, general and administrative
expenses. Adjusted operating loss for the fourth quarter of 2020
was $4.5 million, compared with an adjusted operating loss of $5.6
million in the fourth quarter of 2019. The change in adjusted
operating income for the fourth quarter of 2020 was primarily
attributable to higher adjusted gross profit.
Net income attributable to Fresh Del Monte Produce Inc. for the
full year 2020 was $49.2 million, compared with a net income of
$66.5 million in 2019. Adjusted net income was $54.8 million for
the full year 2020, compared with adjusted net income of $54.6
million in 2019. Net income attributable to Fresh Del Monte Produce
Inc. for the fourth quarter of 2020 was $0.9 million, compared with
net loss of $25.8 million in the fourth quarter of 2019. Adjusted
net loss was $3.7 million for the fourth quarter of 2020, compared
with adjusted net loss of $21.2 million in the fourth quarter of
2019. The change to net income for the full year 2020 reflects
lower operating income, partially offset by lower income tax
provision. The fourth quarter of 2020 reflects the impact of higher
operating income.
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Operations
(U.S. dollars in millions,
except share and per share data) - (Unaudited)
Quarter ended
Year ended
Statement of Operations:
January 1,
2021
December 27,
2019
January 1,
2021
December 27,
2019
Net sales
$
1,002.3
$
1,025.2
$
4,202.3
$
4,489.0
Cost of products sold
953.2
983.3
3,917.8
4,177.4
Other product-related charges
12.7
4.4
33.6
5.2
Gross profit
36.4
37.5
250.9
306.4
Selling, general and administrative
expenses
53.8
50.6
196.2
201.5
Gain on disposal of property, plant and
equipment, net
20.7
2.5
22.2
18.6
Asset impairment and other charges,
net
4.2
0.9
0.4
9.4
Operating income (loss)
(0.9
)
(11.5
)
76.5
114.1
Interest expense, net
5.2
5.2
20.7
24.3
Other (income) expense, net
(0.7
)
7.0
4.5
(0.9
)
Income (loss) before income taxes
(5.4
)
(23.7
)
51.3
90.7
Income tax provision (benefit)
(4.4
)
1.4
5.0
21.4
Net income (loss)
$
(1.0
)
$
(25.1
)
$
46.3
$
69.3
Less: Net (loss) income attributable to
redeemable and noncontrolling interests
(1.9
)
0.7
(2.9
)
2.8
Net income (loss) attributable to Fresh
Del Monte Produce Inc.
$
0.9
$
(25.8
)
$
49.2
$
66.5
Net income (loss) per ordinary share
attributable to Fresh Del Monte Produce Inc. - Basic
$
0.02
$
(0.54
)
$
1.03
$
1.38
Net income (loss) per ordinary share
attributable to Fresh Del Monte Produce Inc. - Diluted
$
0.02
$
(0.54
)
$
1.03
$
1.37
Dividends declared per ordinary share
$
0.10
$
0.08
$
0.30
$
0.14
Weighted average number of ordinary
shares:
Basic
47,369,452
48,014,506
47,569,794
48,291,345
Diluted
47,462,572
48,014,506
47,660,600
48,394,113
Selected Statement of Operations
Data:
Depreciation and amortization
$
24.6
$
25.4
$
95.5
$
98.9
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated Balance
Sheets
(U.S. dollars in millions) -
(Unaudited)
January 1,
2021
December 27,
2019
Assets
Current assets:
Cash and cash equivalents
$
16.5
$
33.3
Trade and other accounts receivable,
net
435.2
439.0
Inventories, net
507.7
551.8
Other current assets
52.9
27.4
Total current assets
1,012.3
1,051.5
Investment in and advances to
unconsolidated companies
1.9
1.9
Property, plant and equipment, net
1,420.3
1,403.2
Operating lease right-of-use assets
170.5
162.1
Goodwill
424.0
423.7
Intangible assets, net
150.4
158.2
Other noncurrent assets
163.9
149.3
Total assets
$
3,343.3
$
3,349.9
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable and accrued expenses
$
511.8
$
522.2
Current maturities of debt and finance
leases
0.2
0.3
Current maturities of operating leases
28.8
32.5
Other current liabilities
14.0
7.9
Total current liabilities
554.8
562.9
Long-term debt and finance leases
541.8
586.8
Operating leases, less current
maturities
114.4
102.7
Other noncurrent liabilities
332.4
298.5
Total liabilities
1,543.4
1,550.9
Redeemable noncontrolling interests
50.2
55.3
Total Fresh Del Monte Produce Inc.
shareholders' equity
1,728.0
1,719.2
Noncontrolling interests
21.7
24.5
Total shareholders' equity
1,749.7
1,743.7
Total liabilities, redeemable
noncontrolling interests and shareholders' equity
$
3,343.3
$
3,349.9
Fresh Del Monte Produce Inc.
and Subsidiaries
Non-GAAP Measures (per
share)(1):
Quarter ended
Year ended
January 1,
2021
December 27,
2019
January 1,
2021
December 27,
2019
Reported net income (loss) - Diluted
$
0.02
$
(0.54
)
$
1.03
$
1.37
Sales claims due to vegetable product
recall
—
0.12
(0.01
)
0.12
Other product-related charges
0.27
0.09
0.71
0.11
Asset impairment and other charges,
net
0.09
0.02
0.01
0.19
Gain on disposal of property, plant, and
equipment, net
(0.44
)
(0.11
)
(0.47
)
(0.44
)
Gain on settlement of litigation
—
—
—
(0.33
)
Other adjustments
—
—
0.01
—
Tax effects of all adjustments and other
tax-related items
(0.02
)
(0.03
)
(0.13
)
0.10
Adjusted net income (loss) - Diluted
$
(0.08
)
$
(0.45
)
$
1.15
$
1.12
(1)
Refer to Non-GAAP measures section for
further reconciliation on Non-GAAP measures.
Fresh Del Monte Produce Inc.
and Subsidiaries
Business Segment Data
(U.S. dollars in millions) -
(Unaudited)
Quarter ended
January 1, 2021
December 27, 2019
Segment Data:
Net Sales
Gross Profit
Net Sales
Gross Profit
Fresh and value-added products
$
586.3
59
%
$
24.6
68
%
$
597.2
58
%
$
20.9
(1)
56
%
Banana
384.2
38
%
10.0
27
%
398.7
39
%
14.2
(1)
38
%
Other products and services
31.8
3
%
1.8
5
%
29.3
3
%
2.4
6
%
$
1,002.3
100
%
$
36.4
100
%
$
1,025.2
100
%
$
37.5
100
%
Year ended
January 1, 2021
December 27, 2019
Segment Data:
Net Sales
Gross Profit
Net Sales
Gross Profit
Fresh and value-added products
$
2,484.1
59
%
$
158.4
63
%
$
2,704.4
60
%
$
193.2
(1)
63
%
Banana
1,602.6
38
%
84.3
34
%
1,656.0
37
%
104.4
(1)
34
%
Other products and services
115.6
3
%
8.2
3
%
128.6
3
%
8.8
3
%
$
4,202.3
100
%
$
250.9
100
%
$
4,489.0
100
%
$
306.4
100
%
(1)
The Company's segment data disclosures for
the year 2019 have been revised to reflect certain reclassification
adjustments affecting cost of products sold. These reclassification
adjustments resulted in an increase to gross profit in the
Company's banana segment of $7.2 million and a decrease to gross
profit of $1.4 million in the fresh and value-added products
segment in the year 2019. For the quarter ended December 27, 2019,
these reclassification adjustments resulted in an increase to gross
profit in the Company's banana segment of $1.5 million and a
decrease to gross profit of $0.2 million in the fresh and
value-added products segment. These reclassification adjustments
also increased selling, general and administrative expenses by $1.3
million and $5.8 million for the quarter and year ended December
27, 2019, respectively.
Quarter ended
Year ended
Net Sales by Geographic Region:
January 1,
2021
December 27,
2019
January 1,
2021
December 27,
2019
North America
$
609.7
61
%
$
637.4
62
%
$
2,601.7
62
%
$
2,923.8
65
%
Europe
163.4
16
%
162.3
16
%
648.6
16
%
645.2
14
%
Asia
110.8
11
%
101.6
10
%
466.1
11
%
453.0
10
%
Middle East
103.5
10
%
115.3
11
%
432.9
10
%
425.8
10
%
Other
14.9
2
%
8.6
1
%
53.0
1
%
41.2
1
%
$
1,002.3
100
%
$
1,025.2
100
%
$
4,202.3
100
%
$
4,489.0
100
%
Fresh Del Monte Produce Inc.
and Subsidiaries
Condensed Consolidated
Statements of Cash Flows
(U.S. dollars in millions) -
(Unaudited)
Year ended
January 1,
2021
December 27,
2019
Operating activities:
Net income
$
46.3
$
69.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
95.0
97.9
Amortization of debt issuance costs
0.5
1.0
Asset impairment charges, net
11.8
8.4
Gain on disposal of property, plant and
equipment, net
(22.2
)
(18.6
)
Foreign currency translation
adjustment
7.7
6.2
Other changes
4.9
12.8
Changes in operating assets and
liabilities:
Receivables
16.1
22.1
Inventories
38.7
8.1
Other current assets
(12.7
)
8.0
Accounts payable and accrued expenses
(11.7
)
(53.3
)
Other noncurrent assets and
liabilities
6.2
7.2
Net cash provided by operating
activities
180.6
169.1
Investing activities:
Capital expenditures
(150.0
)
(122.3
)
Proceeds from sale of an investment
0.5
0.7
Proceeds from sales of property, plant and
equipment
39.5
69.4
Other investing activities
1.2
—
Net cash used in investing
activities
(108.8
)
(52.2
)
Financing activities:
Net repayments on long-term debt
(45.0
)
(74.8
)
Distributions to noncontrolling interests,
net
(6.9
)
(4.8
)
Repurchase and retirement of ordinary
shares
(20.8
)
(17.9
)
Dividends paid
(14.3
)
(6.7
)
Other financing activities
1.2
(4.7
)
Net cash used by financing
activities
(85.8
)
(108.9
)
Effect of exchange rate changes on
cash
(2.8
)
4.0
Net (decrease) increase in cash and cash
equivalents
(16.8
)
12.0
Cash and cash equivalents, beginning
33.3
21.3
Cash and cash equivalents, ending
$
16.5
$
33.3
Full Year 2020 Business Segment Performance (As reported
in business segment data)
Fresh and Value-Added Products -
Includes the Company's pineapples, fresh-cut fruit, fresh-cut
vegetables, melons, vegetables, non-tropical fruit (including
grapes, apples, citrus, blueberries, strawberries, pears, peaches,
plums, nectarines, cherries and kiwis), other fruit and vegetables,
avocados, and prepared foods (including prepared fruit and
vegetables, juices, other beverages, and meals and snacks).
Net sales for the year were $2,484.1 million, compared with
$2,704.4 million in the prior year. The decrease in net sales was
principally as a result of lower net sales in the Company's
fresh-cut vegetables, fresh-cut fruit, avocados, vegetables,
melons, prepared food products and tomato product lines. The
decrease was partially offset by higher net sales in the Company's
non-tropical fruit and pineapple product lines. The COVID-19
pandemic impacted net sales in the fresh and value-added products
segment during the full year of 2020 by an estimated $243.2
million, as compared with the Company's full year 2019 performance
for the segment. The estimated impact in net sales is attributable
to reduced demand in the Company's foodservice business and
shifting demand at retail, as a result of continued government
imposed mandatory restrictions and social distancing initiatives
associated with the pandemic. In addition, the impact of the
Company's voluntary product recall in the fourth quarter of 2019
continued to negatively impact its fresh-cut vegetable net sales
during the quarter as volumes have not returned to pre-recall
levels. Partially offsetting the decrease in overall net sales was
the impact of an additional week in the Company's fiscal 2020 year
which contributed an estimated $42.0 million increase in net sales.
Gross profit for the year was $158.4 million, compared with gross
profit of $193.2 million in 2019. Other product-related charges
represented $25.4 million for the segment, primarily related to
pineapples, melons, and fresh-cut vegetables. These charges
primarily consist of inventory write-offs due to the volatile
supply and demand conditions caused by the COVID-19 pandemic and
related incremental costs incurred for additional cleaning and
social distancing protocols, along with inventory write-offs
resulting from damages to melon operations in Guatemala due to
hurricanes Eta and Iota in the fourth quarter of 2020.
Gold pineapple - Net sales increased 1% to $458.9 million,
compared with $454.8 million in the prior year period. Volume was
in line with the prior year period. Pricing increased 1%. Unit cost
increased 4%.
Fresh-cut fruit - Net sales decreased 11% to $469.0 million,
compared with $524.4 million in the prior year period. Volume
decreased 12%. Pricing increased 1%. Unit cost increased 3%.
Fresh-cut vegetables - Net sales decreased 16% to $383.8
million, compared with $455.9 million in the prior year period.
Volume decreased 19%. Pricing increased 5%. Unit cost increased
8%.
Avocados - Net sales decreased 13% to $332.0 million, compared
with $380.7 million in the prior year period. Volume decreased 1%.
Pricing decreased 12%. Unit cost decreased 15%.
Non-tropical - Net sales increased 7% to $210.6 million,
compared with $195.9 million in the prior year period. Volume
increased 12%. Pricing decreased 4%. Unit cost decreased 3%.
Vegetables - Net sales decreased 12% to $155.6 million, compared
with $176.6 million in the prior year period. Volume decreased 14%.
Pricing increased 2%. Unit cost increased 15%.
Prepared food products - Includes the Company's prepared
traditional products, and meals and snacks product lines. The
decrease in net sales was primarily the result of lower sales in
the Company's meals and snacks product line, due to the impact of
the COVID-19 pandemic, the continuing impact of the 2019 product
recall and product rationalization efforts in the Company's Mann
Packing operations in North America which resulted in the
discontinuance of low margin products. The decrease was partially
offset by increased sales volume and per unit sales prices of
canned pineapple products, higher per unit sales prices of canned
non-tropical fruit due to improved customer demand, and higher per
unit sales prices of pineapple concentrate products due to lower
industry supply.
Bananas Net sales for the year were
$1,602.6 million, compared with $1,656.0 million in 2019. The
decrease in net sales was primarily due to lower net sales in North
America and Europe, partially offset by higher net sales in the
Middle East and Asia. The COVID-19 pandemic impacted net sales in
the banana segment during the full year of 2020 by an estimated
$60.4 million, as compared with the Company's full year of 2019
performance for the segment. The estimated impact in net sales is
attributable to reduced demand in the Company's foodservice
business and shifting demand at retail, as a result of continued
government imposed mandatory restrictions and social distancing
initiatives associated with the pandemic. Partially offsetting the
decrease in overall net sales was the impact of an additional week
in the Company's fiscal 2020 year which contributed an estimated
$28.0 million in net sales. Volume decreased 2% and pricing
decreased 2%. Unit cost was in line with the prior year period.
Gross profit for the year was $84.3 million, compared with gross
profit of $104.4 million in 2019. Other product-related charges
represented $8.0 million for the segment, primarily related to
inventory write-offs as a result of damages to its banana
operations in Guatemala due to hurricanes Eta and Iota during the
fourth quarter of 2020, along with volatile supply and demand
conditions caused by the COVID-19 pandemic as well as incremental
costs incurred for cleaning and social distancing protocols
associated with the pandemic. The Company collected $3.3 million in
insurance recoveries associated with the storms, which is included
in other-product related charges.
Fourth Quarter 2020 Business Segment Performance (As
reported in business segment data)
Fresh and Value-Added Products -
Includes the Company's pineapples, fresh-cut fruit, fresh-cut
vegetables, melons, vegetables, non-tropical fruit (including
grapes, apples, citrus, blueberries, strawberries, pears, peaches,
plums, nectarines, cherries and kiwis), other fruit and vegetables,
avocados, and prepared foods (including prepared fruit and
vegetables, juices, other beverages, and meals and snacks).
Net sales for the quarter decreased to $586.3 million, compared
with $597.2 million in the fourth quarter of 2019. The decrease was
primarily attributable to lower sales volume in the Company's
melon, vegetables, fresh-cut fruit and prepared food product lines.
The decrease was partially offset by higher net sales in the
Company's pineapple, fresh-cut vegetables and non-tropical fruit
lines. The COVID-19 pandemic impacted net sales in the fresh and
value-added products segment during the fourth quarter of 2020 by
an estimated $48.9 million, as compared with the Company's fourth
quarter of 2019 performance. The estimated impact in net sales is
attributable to reduced demand in the Company's foodservice
business and shifting demand at retail, as a result of continued
government imposed mandatory restrictions and social distancing
initiatives associated with the pandemic. Also partially offsetting
the decrease in overall net sales was the impact of an additional
week in the fourth quarter of 2020, which contributed an estimated
$42.0 million increase in net sales. Gross profit for the quarter
was $24.6 million, compared with gross profit of $20.9 million in
the fourth quarter of 2019. Other product-related charges
represented $6.8 million for the segment, primarily related to
inventory write-offs of pineapples and fresh-cut vegetables due to
volatile supply and demand conditions caused by the COVID-19
pandemic as well as incremental costs incurred for cleaning and
social distancing protocols associated with the pandemic, along
with inventory write-offs resulting from damages to our melon
operations in Guatemala due to hurricanes Eta and Iota in the
fourth quarter of 2020.
Gold pineapple - Net sales increased 10% to $127.0 million,
compared with $115.4 million in the prior year period. Volume
increased 9%. Pricing increased 1%. Unit cost decreased 1%.
Fresh-cut fruit - Net sales decreased 5% to $110.3 million,
compared with $116.2 million in the prior year period. Volume
decreased 6%. Pricing increased 1%. Unit cost increased 5%.
Fresh-cut vegetables - Net sales increased 3% to $99.0 million,
compared with $95.9 million in the prior year period. Volume
decreased 3%. Pricing increased 6%. Unit cost decreased 2%.
Avocados - Net sales decreased 1% to $68.5 million, compared
with $69.1 million in the prior year period. Volume increased 22%.
Pricing decreased 19%. Unit cost decreased 22%.
Vegetables - Net sales decreased 15% to $39.6 million, compared
with $46.6 million in the prior year period. Volume decreased 17%.
Pricing increased 2%. Unit cost increased 16%.
Non-tropical - Net sales increased 6% to $34.8 million, compared
with $32.8 million in the prior year period. Volume increased 11%.
Pricing decreased 5%. Unit cost increased 8%.
Prepared food products - Includes the Company's prepared
traditional products, and meals and snacks product lines. The
decrease in net sales was primarily the result of lower sales in
the Company's meals and snacks product line, due to the impact of
the COVID-19 pandemic, the continuing impact of the 2019 product
recall and product rationalization efforts in the Company's Mann
Packing operations in North America which resulted in the
discontinuance of low margin products. The decrease was partially
offset by increased per unit sales prices of canned pineapple
products, higher per unit sales prices of canned non-tropical fruit
due to improved customer demand, and higher per unit sales prices
of pineapple concentrate products due to lower industry supply.
Bananas Net sales for the quarter
were $384.2 million, compared with $398.7 million in the fourth
quarter of 2019, primarily due to lower sales volume and sales
prices in Europe and the Middle East, partially offset by higher
net sales in Asia and North America. The COVID-19 pandemic impacted
net sales in the banana segment during the fourth quarter of 2020
by an estimated $22.1 million, as compared with the Company's
fourth quarter of 2019 performance for the segment. The estimated
impact in net sales is attributable to reduced demand in the
Company's foodservice business and shifting demand at retail, as a
result of continued government imposed mandatory restrictions and
social distancing initiatives associated with the pandemic. Also
partially offsetting the decrease in overall net sales was the
impact of an additional week in the fourth quarter of 2020 year
which contributed an estimated $28.0 million in net sales. Volume
decreased 3% and pricing decreased 1%. Unit cost was in line with
the prior year period. Gross profit for the quarter was $10.0
million, compared to $14.2 million in the fourth quarter of 2019.
Other product-related charges represented $5.9 million for the
segment, primarily related to inventory write-offs as a result of
damages to its banana operations in Guatemala due to hurricanes Eta
and Iota during the fourth quarter of 2020. The Company collected
$3.3 million in insurance recoveries associated with the storms,
which is included in other-product related charges.
Cash Flows Net cash provided by
operating activities for the full-year was $180.6 million, compared
with net cash provided by operating activities of $169.1 million in
the same period of 2019. The increase in net cash provided by
operating activities in 2020 compared to 2019 was principally
attributable to higher balances of accounts payable and accrued
expenses and lower levels of inventory, principally due to the
Company's optimization efforts associated with working capital.
Partially offsetting this increase was lower net income in 2020
compared with 2019 and higher levels of prepaid expenses and other
current assets. Net cash used in investing activities was $108.8
million for 2020, compared with $52.2 million for 2019. Net cash
used in investing activities for 2020 consisted of $150.0 million
in capital expenditures, partially offset by $39.5 million in
proceeds from sales of property, plant and equipment.
Total Debt Total debt decreased
from $587.1 million at the end of 2019 to $542.0 million at the end
of 2020.
Interest Expense, Net Interest
expense, net for the full year of 2020 was $20.7 million, compared
with $24.3 million in the same period of 2019. The decrease was
primarily due to lower interest rates and lower average debt
balances.
Income Tax Provision (Benefit)
Provision for income taxes (benefit) for the full year of 2020 was
$5.0 million, compared with $21.4 million in 2019. The decrease in
the provision for income taxes of $16.4 million is primarily due to
reduced earnings in certain higher tax jurisdictions in conjunction
with a benefit resulting from the Company's restructuring of its
European operations. The tax provision for 2020 also includes a
$4.6 million benefit relating to the Coronavirus Aid, Relief and
Economic Security Act (CARES) Act.
Non-GAAP Measures
The Company's results are determined in accordance with U.S.
generally accepted accounting principles (GAAP). Some of the
information presented in this press release reflects adjustments to
GAAP measures such as amounts related to restructuring, asset
impairment and other charges, net, gain on disposal of property,
plant and equipment, net, other product-related charges and certain
other non-recurring items, if any. Management believes these
adjustments provide a more comparable analysis of the underlying
operating performance of the business. These adjustments result in
non-GAAP financial measures and are referred to in this press
release as adjusted gross profit, adjusted operating income,
adjusted net income and adjusted net income per diluted share.
Because all companies do not use identical calculations, the
Company's presentation of these non-GAAP financial measures may not
be comparable to similarly titled measures used by other
companies.
Adjusted gross profit, adjusted operating income and adjusted
net income provide the Company with an understanding of the results
from the primary operations of its business. The Company uses
adjusted operating income and adjusted net income to evaluate its
period-over-period operating performance because management
believes they provide more comparable measures of the Company's
underlying operating performance as they adjust for special items
to provide greater clarity to management and investors. These
measures may be useful to an investor in evaluating the underlying
operating performance of the Company's business because these
measures:
- Are used by investors to measure a company's comparable
operating performance;
- Are financial measurements that are used by lenders and other
parties to evaluate creditworthiness; and
- Are used by the Company's management for various purposes,
including as measures of performance of its operating entities and
as a basis of strategic planning and forecasting.
Fresh Del Monte Produce Inc.
and Subsidiaries
Non-GAAP
Reconciliation
(U.S. dollars in millions,
except per-share amounts) - (Unaudited)
Quarter ended
January 1, 2021
December 27, 2019
Gross
profit
Operating
income
(loss)
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
per diluted
share
Gross
profit
Operating
income
(loss)
Net income
(loss)
attributable
to Fresh
Del Monte
Produce
Inc.
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
per diluted
share
As reported
$
36.4
$
(0.9)
$
0.9
$
0.02
$
37.5
$
(11.5)
$
(25.8)
$
(0.54)
Adjustments:
Sales claims due to vegetable product
recall (1)
—
—
—
—
6.0
6.0
6.0
0.12
Other product-related charges (1), (2)
12.7
12.7
12.7
0.27
4.4
4.4
4.4
0.09
Asset impairment and other charges, net
(3)
—
4.2
4.2
0.09
—
0.9
0.9
0.02
Gain on disposal of property, plant, and
equipment, net (4)
—
(20.7)
(20.7)
(0.44)
—
(5.4)
(5.4)
(0.11)
Other adjustments (6)
—
0.2
0.2
—
—
—
—
—
Tax effects of all adjustments (7)
—
—
(1.0)
(0.02)
—
—
(1.3)
(0.03)
As adjusted
$
49.1
$
(4.5)
$
(3.7)
$
(0.08)
$
47.9
$
(5.6)
$
(21.2)
$
(0.45)
Year ended
January 1, 2021
December 27, 2019
Gross
profit
Operating
income(loss)
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
per diluted
share
Gross
profit
Operating
income
(loss)
Net income
(loss)
attributable
to Fresh
Del Monte
Produce
Inc.
Net income
(loss)
attributable
to Fresh Del
Monte
Produce Inc.
per diluted
share
As reported
$
250.9
$
76.5
$
49.2
$
1.03
$
306.4
$
114.1
$
66.5
$
1.37
Adjustments:
Sales claims due to vegetable product
recall (1)
(0.5)
(0.5)
(0.5)
(0.01)
6.0
6.0
6.0
0.12
Other product-related charges (1), (2)
33.6
33.6
33.6
0.71
5.2
5.2
5.2
0.11
Asset impairment and other charges, net
(3)
—
0.4
0.4
0.01
—
9.4
9.4
0.19
Gain on disposal of property, plant, and
equipment, net (4)
—
(22.2)
(22.2)
(0.47)
—
(21.5)
(21.5)
(0.44)
Gain on settlement of litigation (5)
—
—
—
—
—
—
(16.0)
(0.33)
Other adjustments (6)
—
0.7
0.7
0.01
—
—
—
—
Tax effects of all adjustments and other
tax-related items (7)
—
—
(6.4)
(0.13)
—
—
5.0
0.10
As adjusted
$
284.0
$
88.5
$
54.8
$
1.15
$
317.6
$
113.2
$
54.6
$
1.12
(1)
During the fourth quarter and year ended
December 27, 2019, the Company incurred a loss of $10.9 million
related to a voluntary recall of vegetable products in North
America. The recall charges included $6.0 million in sales claims,
a component of net sales, related to estimated customer payments,
$4.4 million in inventory disposals included in other
product-related charges, a component of cost of products sold, and
$0.5 million in other costs included in asset impairment and other
charges, net. The year ended January 1, 2021 includes a $0.5
million reversal of customer sales claims, reflected in net sales,
associated with the recall due to the realization of less claims
than originally estimated.
(2)
Other product-related charges for the
quarter and year ended January 1, 2021 include inventory write-offs
resulting from lower demand for certain of the Company's products
due to the COVID-19 pandemic as well as incremental costs incurred
for cleaning and social distancing protocols. These other
product-related charges associated with COVID-19 were approximately
$3.3 million for the quarter ended January 1, 2021 and $23.8
million for the year ended January 1, 2021. The COVID-19 pandemic
led to volatile supply and demand conditions across the Company's
key global markets during the year ended January 1, 2021 which
negatively affected the pricing and demand for its products,
including higher price point products such as pineapples, avocados
and fresh-cut fruit and vegetables. The inventory write-offs are
also related to reduced demand in the Company's foodservice
distribution channel and shifting demand at retail as the result of
government imposed mandatory closures and social distancing
initiatives. Also included in other product-related charges for the
quarter and year ended January 1, 2021 are $12.0 million of
inventory write- offs and incremental operating costs resulting
from hurricane damages to the Company's operations in Central
America offset by $3.3 million in insurance recoveries associated
with the storms. Other product-related charges for the quarter and
year ended December 27, 2019 primarily related to a voluntary
recall of vegetable products in North America. In addition, other
product-related charges for the year ended December 27, 2019
related to inclement weather in Central America.
(3)
Asset impairment and other charges, net
for the quarter ended January 1, 2021 primarily include (1) $4.8
million of asset impairments associated with hurricane damages in
Central America, (2) a $4.6 million insurance recovery associated
with the 2019 voluntary recall, (3) $3.1 million in impairments of
property and equipment, mainly in the Middle East and Europe, and
(4) $1.0 million in asset impairment charges associated with
low-yielding banana plants in the Philippines. Asset impairment and
other charges, net for the year ended January 1, 2021 primarily
include (1) a $15.0 million insurance recovery related to the 2019
product recall, (2) $5.2 million in asset impairments primarily
associated with property and related assets in North America, the
Middle East, and Europe, (3) $4.8 million of asset impairments
associated with hurricane damages in Central America, (4) a $2.0
million charge relating to a settlement with the California Air
Resource Board (refer to the Form 10-K for the year ended January
1, 2021 for further information on this matter), (5) $1.8 million
in asset impairment charges associated with low-yielding banana
plants in the Philippines, and (6) $1.5 million in severance
expense related to the reorganization of the North America sales
and marketing function. Asset impairment and other charges, net for
the quarter ended December 27, 2019 primarily related to additional
costs of $0.5 million related to the voluntary recall. In addition,
asset impairment and other charges, net for the year ended December
27, 2019 also include $4.7 million in impairments of low-yielding
banana plants in the Philippines and a $2.9 million impairment of
an equity investment.
(4)
Gain on disposal of property, plant and
equipment, net for the quarter and year ended January 1, 2021
primarily related to gains on the sales of surplus land in Chile, a
facility in the Middle East, and two facilities in North America
which were partially offset by losses on asset disposals mainly in
Central America. For the quarter ended December 27, 2019, gain on
disposal of property, plant and equipment, net primarily related to
gains on sale of underutilized tomato assets in North America.
Additionally, the year ended December 27, 2019 also reflects
additional sales of underutilized tomato assets in North America
and the sale of a refrigerated vessel, partially offset by losses
on asset disposals.
(5)
Gain on settlement of litigation for the
year ended December 27, 2019 was $16.0 million consisting of
proceeds of $17.0 million, net of expenses of $1.0 million.
(6)
Other adjustments for the quarter and year
ended January 1, 2021 include estimated trade receivable credit
losses, reflected in selling, general, and administrative expenses,
primarily relating to the Company's foodservice customer base as a
direct result of the COVID-19 pandemic.
(7)
Tax effects are calculated in accordance
with ASC 740, Income Taxes, using the same methodology as the GAAP
provision of income taxes. Income tax effects of non-GAAP
adjustments are calculated based on the applicable statutory tax
rate for each jurisdiction in which such charges were incurred,
except for those items which are non-taxable for which the tax
provision (benefit) was calculated at 0%. Certain non-GAAP
adjustments were subject to valuation allowances and therefore were
calculated at 0%. The year ended January 1, 2021 also includes a
$4.7 million tax benefit associated with the Coronavirus Aid,
Relief, and Economic Security ("CARES") Act, of which $3.0 million
was recorded in the fourth quarter of 2020.
Conference Call and Webcast Data Fresh Del Monte will
host a conference call and simultaneous webcast at 10:00 a.m.
Eastern Time today to discuss the Company's fourth quarter and full
year 2020 financial results. The webcast can be accessed on the
Company’s Investor Relations home page at www.freshdelmonte.com.
The call will be available for re-broadcast on the Company’s
website approximately two hours after the conclusion of the call
for a period of one year.
About Fresh Del Monte Produce Inc. Fresh Del Monte is one
of the world’s leading vertically integrated producers, marketers
and distributors of high-quality fresh and fresh-cut fruit and
vegetables, as well as a leading producer and distributor of
prepared food in Europe, Africa and the Middle East. Fresh Del
Monte markets its products worldwide under the DEL MONTE® brand
(under license from Del Monte Foods, Inc.), a symbol of product
innovation, quality, freshness and reliability for over 125 years.
The Company also markets its products under the MANN™ brand and
other related trademarks. Fresh Del Monte Produce Inc. is not
affiliated with certain other Del Monte companies around the world,
including Del Monte Foods, Inc., the U.S. subsidiary of Del Monte
Pacific Limited, Del Monte Canada, or Del Monte Asia Pte. Ltd.
Forward-looking Information This press release contains
certain forward-looking statements regarding the intent, beliefs or
current expectations of the Company or its officers with respect to
(a) the Company’s plans and future performance, including beliefs
regarding the Company's focus on value-added products and its
ability to respond to shifts in delivery channels to drive future
growth and (b) the efficiency and environmental benefits associated
with the Company’s new container vessels. In this press release,
these statements are preceded by, followed by or include the words
“believes”, “expects”, “optimistic” or similar expressions with
respect to various matters. These forward-looking statements are
based on information currently available to the Company and the
Company assumes no obligation to update these statements. It is
important to note that these forward-looking statements are not
guarantees of future performance and involve risks and
uncertainties. Fresh Del Monte’s actual plans and performance may
differ materially from those in the forward-looking statements as a
result of various factors, including (i) the impact of the COVID-19
outbreak on our business, suppliers, customers, consumers,
employees, and communities, (ii) disruptions or inefficiencies in
our operations or supply chain, including any impact of the
COVID-19 outbreak, (iii) the duration and spread of the pandemic
and related government restrictions and our ability to maintain the
safety of our workforce, (iv) our ability to successfully execute
our plan to stabilize our core business, diversify our business and
transform our business to a value-added business, particularly in
light of COVID-19, (v) the impact of governmental trade
restrictions, including adverse governmental regulation that may
impact our ability to access certain markets, (vi) our anticipated
cash needs in light of our liquidity and the impact of COVID-19 on
our liquidity, (vii) the continued ability of our distributors and
suppliers to have access to sufficient liquidity to fund their
operations, (viii) trends and other factors affecting our financial
condition or results of operations from period to period, including
changes in product mix, consumer preferences or consumer demand for
branded products such as ours; (ix) anticipated price and expense
levels; (x) the impact of crop disease, such as vascular diseases,
one of which is known as Tropical Race 4, or TR4 (also known as
Panama Disease), which can destroy banana crops and was recently
discovered in Latin America banana plantations, severe weather
conditions, such as flooding, or natural disasters, such as
earthquakes, on crop quality and yields and on our ability to grow,
procure or export our products; (xi) our ability to improve our
existing quarantine policies and other prevention strategies, as
well as find contingency plans, to protect our and our suppliers’
banana crops from vascular diseases; disruptions or issues that
impact our production facilities or complex logistics network;
(xii) the impact of prices for petroleum-based products and
packaging materials and the availability of sufficient labor during
peak growing and harvesting seasons, (xiii) the impact of pricing
and other actions by our competitors, particularly during periods
of low consumer confidence and spending levels, (xiv) the impact of
foreign currency fluctuations, (xv) our plans for expansion of our
business (including through acquisitions) and cost savings, (xvi)
our ability to successfully integrate acquisitions and new product
lines into our operations, (xvii) the impact of impairment or other
charges associated with exit activities, crop or facility damage or
otherwise, (xvii) the timing and cost of resolution of pending and
future legal and environmental proceedings or investigations,
(xviii) the impact of changes in tax accounting or tax laws (or
interpretations thereof), the impact of claims or adjustments
proposed by the Internal Revenue Service or other taxing
authorities in connection with our tax audits and our ability to
successfully contest such tax claims and pursue necessary remedies,
(xix) the cost and other implications of changes in regulations
applicable to our business, including potential legislative or
regulatory initiatives in the United States or elsewhere directed
at mitigating the effects of climate change, (xx) damage to our
reputation or brand names or negative publicity about our products,
(xxi) exposure to product liability claims and associated
regulatory and legal actions, product recalls, including the
continuing impact of the 2019 Mann packing recall, or other legal
proceedings relating to our business, (xxii) our ability to
successfully implement our optimization program and to realize its
expected benefits within the anticipated timeframe, (xxiii) our
ability to successfully manage the risks associated with
international operations, and (xxiv) our ability to be more
efficient while reducing the carbon footprint of our container
vessels. All forward-looking statements in this press release are
based on information available to us on the date hereof, and we
assume no obligation to update any such forward-looking statements.
The Company’s plans and performance may also be affected by the
factors described in Item 1A. - “Risk Factors” in Fresh Del Monte
Produce Inc.’s Quarterly Report on Form 10-Q for the quarter ended
September 25, 2020 and its Annual Report on Form 10-K for the year
ended December 27, 2019, along with other reports that the Company
has on file with the Securities and Exchange Commission.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210224005210/en/
Christine Cannella Vice President, Investor
Relations 305-520-8433
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