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Fresh Del Monte Produce Inc. Reports First Quarter 2021 Financial Results

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Fresh Del Monte Produce Inc. (NYSE: FDP), ("Fresh Del Monte" or the "Company") today reported financial results for the first quarter ended April 2, 2021.

Financial highlights for the first quarter of 2021:

  • Gross profit was $105.0 million for the first quarter of 2021, which represents an increase of 53%, compared with the prior year period, and gross profit margin increased to 10% in the first quarter of 2021, compared with 6% in the prior year period;
  • FDP net income(1) for the first quarter of 2021 was $42.7 million, compared with $13.0 million in the prior year period, and Diluted EPS(2) was $0.90 for the first quarter of 2021, compared with $0.27 in the prior year period;
  • Adjusted Diluted EPS(3) was $0.88 for the first quarter of 2021, compared with $0.34 in the prior year period; and
  • Adjusted EBITDA(3) was $82.3 million for the first quarter of 2021, compared with $51.0 million in the prior year period.

“Despite slightly lower net sales resulting from the continued impact of COVID-19 restrictions on our foodservice customers, and the reduced supply of fruit due to the two hurricanes in Guatemala in the fourth quarter of 2020, we generated strong results,” said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer. “We remained focused on creating greater efficiencies and controlling costs throughout our operations.”

Net sales for the first quarter of 2021 decreased $29.7 million, compared with the prior year period which was primarily due to lower net sales in the Company's fresh and value-added and banana business segments, partially offset by higher sales in the Company's other products and services business segment. The overall decrease in net sales was driven by:

  • The continued negative effect of the COVID-19 pandemic on the Company's foodservice distribution channel which the Company estimates reduced net sales by $19.4 million in the first quarter of 2021.
  • The negative impact on fruit supply due to hurricanes Eta and Iota which drastically impacted the Company's production areas in Guatemala in the fourth quarter of 2020.

Gross profit for the first quarter of 2021 increased $36.5 million, or 53% and Adjusted Gross profit(3), which primarily excludes the impact of inclement weather in South America, increased $30.1 million or 39%, compared with the prior year period. The increase was driven by higher gross profit in all of the Company's business segments.

Operating income for the first quarter of 2021 increased $41.9 million and Adjusted Operating income(3) increased $33.7 million, compared with the prior year period. The increase in operating income was primarily due to higher gross profit and lower selling, general and administrative expenses.

FDP net income for the first quarter of 2021 increased 228% and Adjusted FDP Net income(3) increased 154%, compared with the prior year period. The increase was primarily the result of higher operating income.

Adjusted EBITDA(3) for the first quarter of 2021 increased 61%, and the Adjusted EBITDA margin(3) increased 300 basis points, compared with the prior year period.

(1)

FDP net income as referenced throughout this release is defined as Net income attributable to Fresh Del Monte Produce Inc.

(2)

Diluted EPS represents diluted earnings per share and is calculated as FDP net income divided by diluted weighted average shares.

(3)

Non-GAAP financial measure. Reconciliations and other information required by Regulation G can be found below under "Non-GAAP Measures."

 

First Quarter 2021 Business Segment Performance and Selected Financial Data

(As reported in business segment data)

 

 

Fresh Del Monte Produce Inc. and Subsidiaries

 

Business Segment Data

 

(U.S. dollars in millions) - (Unaudited)

 

 

 

Quarter ended

 

April 2, 2021

 

March 27, 2020

Segment Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Gross Profit

 

Net Sales

 

Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fresh and value-added products

$

631.0

 

 

58

%

 

$

51.6

 

 

49

%

 

$

660.9

 

 

59

%

 

$

42.5

 

 

62

%

Banana

418.2

 

 

38

%

 

49.2

 

 

47

%

 

427.0

 

 

38

%

 

24.5

 

 

36

%

Other products and services

39.1

 

 

4

%

 

4.2

 

 

4

%

 

30.1

 

 

3

%

 

1.5

 

 

2

%

 

$

1,088.3

 

 

100

%

 

$

105.0

 

 

100

%

 

$

1,118.0

 

 

100

%

 

$

68.5

 

 

100

%

 

Fresh and Value-Added Products

Net sales for the first quarter of 2021 decreased 5%, compared with the prior year period. The Company has estimated the COVID-19 pandemic impacted net sales in the fresh and value-added products segment by $19.4 million in the first quarter of 2021. The primary drivers of the variance in net sales were:

  • Lower net sales in the Company's melon product line, primarily the result of lower volumes from production areas in Guatemala due to the hurricanes in the fourth quarter of 2020.
  • Lower net sales in its fresh-cut vegetable and vegetable product lines, mainly as a result of lower demand in the Company's foodservice distribution channel driven by the COVID-19 pandemic.
  • Lower net sales in the Company's avocado product line, primarily due to lower per unit sales prices, as a result of normalized industry supplies in the market, offset by a 12% increase in sales volume.
  • Higher net sales in its pineapple product line, primarily due to a 22% increase in sales volume. Sales volumes in the first quarter of 2020 were negatively impacted by adverse weather conditions and the COVID-19 pandemic.
  • Higher net sales in its prepared food products line, primarily due to higher per unit sales prices.

Gross profit for the first quarter of 2021 increased 21%, compared with the prior year period. The primary drivers of the variance in gross profit were:

  • Increased gross profit in the Company's melon product line, primarily in North America due to higher per unit sales prices and lower ocean freight costs, partially offset by higher per unit product costs as a result of lower volumes due to the two hurricanes in the fourth quarter of 2020.
  • Increased gross profit in its prepared food products line, primarily due to higher net sales.
  • Increased gross profit in the Company's avocado product line, primarily from lower per unit procurement and production costs from its Mexico packing plant.
  • Increased gross profit in its pineapple product line, primarily due to higher sales volumes.
  • Decreased gross profit in the Company's fresh-cut vegetable and vegetable product lines, primarily in its Mann Packing business driven by higher per unit product costs as a result of lower sales volume.
  • Decreased gross profit in the Company's non-tropical fruit product line, primarily due to severe rainstorms in Chile, resulting in $3.1 million in inventory write-offs.

Adjusted Gross profit(3) in the fresh and value-add products segment for the first quarter of 2021 increased 9%, compared with the prior year period.

Banana

Net sales for the first quarter of 2021 decreased 2%, compared with the prior year period, principally due to lower net sales in North America and the Middle East, partially offset by higher net sales in Asia. Worldwide banana sales volume decreased 8% while pricing increased 7%.

Gross profit for the first quarter of 2021 increased 101%, compared with the prior year period, the primary drivers of the variance were:

  • Higher per unit sales prices in North America and Europe and lower per unit ocean freight costs.
  • Insurance recoveries of an additional $2.5 million associated with the storms in Guatemala.

Adjusted Gross profit(3) in the banana business segment for the first quarter of 2021 increased 93%, compared with the prior year period.

Cash Flows

Net cash provided by operating activities for the first quarter of 2021 was $46.8 million, compared with net cash provided by operating activities of $2.2 million in the prior year period, an increase of $44.6 million. The increase was primarily attributable to higher net income and higher balances of accounts payable and accrued expenses, principally due to the Company's optimization efforts associated with working capital.

Total Debt

Total debt decreased from $542.0 million at the end of 2020 to $534.3 million at the end of the first quarter of 2021.

Quarterly Cash Dividend

The Company's Board of Directors declared a quarterly cash dividend of ten cents $(0.10) per share, payable on June 11, 2021 to shareholders of record on May 19, 2021.

 

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

 

 

 

Statement of Operations:

April 2,
2021

March 27,
2020

Net sales

$

1,088.3

 

$

1,118.0

 

Cost of products sold

981.7

 

1,041.5

 

Other product-related charges

1.6

 

8.0

 

Gross profit

105.0

 

68.5

 

 

 

 

Selling, general and administrative expenses

48.9

 

52.7

 

Gain on disposal of property, plant and equipment, net

2.7

 

0.2

 

Asset impairment and other (credits) charges, net

(0.9

)

(1.8

)

Operating income

59.7

 

17.8

 

 

 

 

Interest expense, net

5.2

 

5.3

 

Other expense (income), net

2.1

 

(0.8

)

 

 

 

Income before income taxes

52.4

 

13.3

 

 

 

 

Provision for income taxes

11.0

 

0.3

 

Net income

$

41.4

 

$

13.0

 

 

 

 

Less: Net loss attributable to redeemable and noncontrolling interests

(1.3

)

—

 

Net income attributable to Fresh Del Monte Produce Inc.

$

42.7

 

$

13.0

 

 

 

 

Earnings per share(1):

 

 

Basic

$

0.90

 

$

0.27

 

 

 

 

Diluted

$

0.90

 

$

0.27

 

 

 

 

Dividends declared per ordinary share

$

0.10

 

$

0.10

 

 

 

 

Weighted average number of ordinary shares:

 

 

Basic

47,427,962

 

48,011,398

 

Diluted

47,539,871

 

48,152,965

 

(1)

Earnings per share ("EPS") is calculated based on Net income attributable to Fresh Del Monte Produce Inc.

 

Fresh Del Monte Produce Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(U.S. dollars in millions) - (Unaudited)

 

 

 

 

April 2,
2021

January 1,
2021

 

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

26.4

$

16.5

Trade and other accounts receivable, net

502.6

435.2

Inventories, net

513.4

507.7

Other current assets

57.0

52.9

Total current assets

1,099.4

1,012.3

 

 

 

Investment in and advances to unconsolidated companies

1.9

1.9

Property, plant and equipment, net

1,419.1

1,420.3

Operating lease right-of-use assets

168.6

170.5

Goodwill

424.0

424.0

Intangible assets, net

148.4

150.4

Other noncurrent assets

162.0

163.9

Total assets

$

3,423.4

$

3,343.3

 

 

 

Liabilities and shareholders' equity

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$

554.1

$

511.8

Current maturities of debt and finance leases

0.2

0.2

Current maturities of operating leases

26.7

28.8

Other current liabilities

17.7

14.0

Total current liabilities

598.7

554.8

 

 

 

Long-term debt and finance leases

534.1

541.8

Operating leases, less current maturities

115.1

114.4

Other noncurrent liabilities

317.1

332.4

Total liabilities

1,565.0

1,543.4

 

 

 

Redeemable noncontrolling interest

49.5

50.2

 

 

 

Total Fresh Del Monte Produce Inc. shareholders' equity

1,787.8

1,728.0

Noncontrolling interests

21.1

21.7

Total shareholders' equity

1,808.9

1,749.7

Total liabilities, redeemable noncontrolling interest and shareholders' equity

$

3,423.4

$

3,343.3

 

 

 

Fresh Del Monte Produce Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(U.S. dollars in millions) - (Unaudited)

 

Quarter ended

 

April 2,
2021

March 27,
2020

Operating activities:

 

 

Net income

$

41.4

 

$

13.0

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

23.8

 

23.6

 

Amortization of debt issuance costs

0.1

 

0.1

 

Asset impairments

—

 

0.9

 

Share-based compensation expense

1.6

 

2.6

 

Deferred income taxes

(0.5

)

(0.2

)

Gain on disposal of property, plant and equipment, net

(2.7

)

(0.2

)

Foreign currency translation adjustment

0.7

 

(0.8

)

Other

0.8

 

0.1

 

Changes in operating assets and liabilities:

 

 

Receivables

(69.6

)

(46.8

)

Inventories

(6.7

)

(12.3

)

Prepaid expenses and other current assets

4.2

 

(2.0

)

Accounts payable and accrued expenses

57.5

 

25.9

 

Other noncurrent assets and liabilities

(3.8

)

(1.7

)

Net cash provided by operating activities

46.8

 

2.2

 

 

 

 

Investing activities:

 

 

Capital expenditures

(33.6

)

(16.6

)

Proceeds from sales of property, plant and equipment

2.9

 

0.4

 

Cash received from derivatives not designated as hedges

4.6

 

—

 

Other investing activities

0.2

 

0.1

 

Net cash used in investing activities

(25.9

)

(16.1

)

 

 

 

Financing activities:

 

 

Net (repayments) borrowings on debt

(7.7

)

11.7

 

Distributions to noncontrolling interests, net

(0.9

)

(0.8

)

Net payments related to share-based awards

(0.3

)

(0.4

)

Dividends paid

(4.7

)

(4.8

)

Repurchase and retirement of ordinary shares

—

 

(7.8

)

Other financing activities

0.9

 

2.3

 

Net cash (used in) provided by financing activities

(12.7

)

0.2

 

 

 

 

Effect of exchange rate changes on cash

1.7

 

1.1

 

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Fresh Del Monte Produce Inc.

NYSE:FDP

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About FDP

fresh del monte produce inc. 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 healthy snacks in europe, africa and the middle east. fresh del monte markets its products worldwide under the del monte® brand, a symbol of product innovation, quality, freshness and reliability for more than 100 years. the fresh del monte community includes operations in more than 100 countries around the world. fresh del monte produce inc. is dedicated to meet the current and future needs of consumers worldwide. in fact, its long-range vision is to become the leading global supplier of healthful, wholesome and nutritious fresh and prepared foods and beverages to consumers of all ages. fresh del monte produce inc. products satisfy today’s health and wellness-conscious consumer demands with a level of convenience that fits perfectly into their active lif