Dole Plc Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 was a year of strong financial performance, exceeding adjusted EBITDA guidance by $12 million. Group revenue and adjusted EBITDA grew organically.
• Capital allocation: In Q1 2024, realized $100 million from selling 65% equity in Progressive Produce and used it to repay debt. In Q3 2024, agreed to expand shipping fleet with two vessels for East Coast operation.
• Operational highlights: Fresh Fruit had strong close to 2024, with Q4 adjusted EBITDA $31.9 million and full year $214.8 million. Diversified EMEA had stable final quarter with like-for-like revenue growth 4.4%. Diversified Americas had strong full year performance with like-for-like revenue up 13% and adjusted EBITDA up 52.3%. Fresh Vegetables continued turnaround efforts with positive cash flow in 2024, though with non-cash write-downs.

Segment Performance

• Fresh Fruit: Fourth quarter adjusted EBITDA $31.9 million, full year $214.8 million (increase of $5.9 million from 2023). North America saw good volume growth in bananas and plantains, especially in Q4. European market had positive momentum with high banana volumes and lower shipping costs. Full year adjusted EBITDA $214.8 million, up $5.9 million from 2023.
• Diversified Fresh Produce EMEA: Full year like-for-like revenue slightly declined, but 2024 full year like-for-like revenue grew 4.4%, adjusted EBITDA grew 1.9% like-for-like. Was the strongest segment in 2023 but had a small decline in 2024.
• Diversified Fresh Produce Americas: Full year like-for-like revenue increased 13% ($233.3 million), adjusted EBITDA increased 52.3% ($22.3 million). Driven by higher export volumes in cherries and grapes, and strong trading in North American market.
• Fresh Vegetables: Continues to work on strategic alternative. Operational results improved in 2024, but had a non-cash write-down of $78.2 million net of tax due to held-for-sale accounting, resulting in a loss in discontinued operations of $61.2 million in Q4.

Guidance

• For 2025, goal is to deliver adjusted EBITDA in the range of $370 million to $380 million.
• CapEx from continuing operations expected to be broadly in line with depreciation (~$100 million) in 2025.
• Continuing to explore development opportunities to strengthen the business and drive future growth.

Risks

• Tropical Storm Sara impacted Honduran operations in November 2024, causing short-term financial impact.
• Shipping issues: Vessel breakdowns and container dislocations affecting operations.
• Foreign exchange fluctuations, particularly the strengthening of the dollar post-election impacting contract negotiations.
• Geopolitical uncertainties and potential tariffs posing challenges to sourcing costs and supply chains.

Question and Answer

Q: Could you unpack the EBITDA guidance? How much of the decline is attributed to known headwinds like Sara and macro geopolitical climate?

A: Rory Byrne mentioned 2024 was an exceptional year with various factors aligning positively. 2025 will have short-term headwinds like Honduras impact, shipping issues, and foreign exchange, but not structural to the business. Goal is to work through these and deliver adjusted EBITDA in $370-380 million range.

Q: On capital allocation, is there flexibility for targeted M&A?

A: Capital allocation is high on agenda. Focus on leveraging but also open to targeted M&A, internal projects like expanding plantain production, import JVs, and evaluating buybacks.

Q: Color on EMEA profit weakness and if it will persist?

A: EMEA has various activities across regions. While there are ups and downs, no major concerns strategically; more opportunity than challenge.

Q: On Diversified Americas and avocado pricing with tariffs?

A: Avocados are a product where U.S. has limited production, so tariffs are unlikely to have a material impact as consumers will continue to consume, and prices will adjust accordingly.