- Revenue: In-line with last year; increased by 4.3% on a like-for-like basis excluding the impact of the progressive produce disposal.
- Adjusted EBITDA: Increased by 2.2% to $125.4 million; 8.2% increase on a like-for-like basis.
- Net Income: $88.1 million compared to $52.3 million in the prior year.
- Adjusted Net Income: $47 million.
- Adjusted Diluted EPS: $0.49 per share.
- Leverage: Reduced to 1.9 times at the end of Q2.
- Fresh Fruit Segment Adjusted EBITDA: $70.6 million, 7.3% ahead of the prior year.
- Fresh Vegetables Business Operating Income: Positive in both quarters of 2024.
- Net Cash from Discontinued Operations: $16.7 million for the first six months.
- Diluted EPS: $0.84 compared to $0.44 in Q2 2023.
- Fresh Fruit Division Revenue: Increased by 1.5%.
- Fresh Fruit Division Adjusted EBITDA: Up 7.3%.
- Diversified Fresh Produce EMEA Revenue: Increased by 3.2%.
- Diversified Fresh Produce Americas Revenue: Increased by 11.3% on a like-for-like basis.
- Diversified Fresh Produce Americas Adjusted EBITDA: Increased by 36.4% on a like-for-like basis.
- Net Cash Provided by Operating Activities: $40.2 million in the quarter.
- Cash Capital Expenditure: $17.5 million in Q2.
- Full Year Capital Expenditure Expectation: $110 million to $120 million.
- Interest Expense Expectation: $75 million to $80 million for the full year.
- Dividend: $0.08 for the second quarter, payable on October 3, 2024.
- Full Year Adjusted EBITDA Target: Raised to at least $370 million for 2024.
Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 4.3% on a like-for-like basis, excluding the impact of the progressive produce disposal.
- Adjusted EBITDA increased by 8.2% on a like-for-like basis, driven by strong performances in fresh fruit and diversified fresh produce America segments.
- Net income increased to $88.1 million compared to $52.3 million in the prior year.
- Leverage reduced to 1.9 times at the end of Q2, resulting in a lower interest charge.
- Strong performance in the fresh vegetables business, contributing positive cash flow to the group.
Negative Points
- Higher shipping costs anticipated in the second half of the year due to dry docking activities.
- Revenue growth in the diversified EMEA segment was impacted by supply shortages of several products sourced from South America.
- Adjusted net income and adjusted diluted EPS decreased by 3% due to higher income tax expense driven by jurisdictional earnings mix.
- Lower volumes and pricing for pineapples partially offset the increase in revenue from higher banana volumes.
- The fresh fruit division anticipates a weaker performance in Q3 due to the dry docking of ships and associated costs.
Q & A Highlights
Q: Can you calibrate for us how much of the increase in the full-year outlook really reflected second quarter or first half performance and maybe how the second half of your expectations for the second half of the year have changed if at all from where you were three months or six months ago?
A: (Rory Byrne, CEO) The profile of earnings between first half and second half might vary a bit this year. The fresh fruit side overperformed in the first half, and we anticipate Q3 and the second half to be a bit below last year's numbers due to dry docking costs. However, we are comfortable with our full-year target.
Q: With leverage where it is now and the fresh vegetable business showing good earnings, how do you evaluate deploying incremental cash towards further debt reduction versus share repurchase or organic growth?
A: (Rory Byrne, CEO) We constantly evaluate our debt levels, profitability, and growth opportunities. While private deals have been higher valued than public ratings, we keep an eye on that world. We also consider macroeconomic conditions and the progress of the vegetable business. Our approach will continue to adapt based on these factors.
Q: How should we think about free cash flow conversion given the updated full-year guidance for $370 million of continuing operations?
A: (Jacinta Devine, CFO) Last year, we had a strong working capital inflow, and while we expect strong inflow this year, it may not be at the same level. A free cash flow conversion of 30% to 35% is a reasonable approximation.
Q: What factors contributed to the strong volumes in the fresh fruit segment across Europe and North America?
A: (Johan Linden, COO) The team has focused on quality and service, supported by a strong sourcing network and shipping setup. We have also gained market share through high-quality customers and new customer acquisitions. We aim to continue this momentum.
Q: Can you elaborate on the momentum into the second half of the year for the diversified EMEA and Americas segments?
A: (Rory Byrne, CEO) The diversified EMEA segment had a strong first half, with some ups and downs. The Americas segment, despite the sale of Progressive Produce, is expected to have a strong year. We anticipate a different but not dramatically different profile for the second half.
Q: How do you plan to manage capital allocation and leverage going forward?
A: (Jacinta Devine, CFO) We remain focused on capital allocation and managing leverage. Our leverage reduced to 1.9 times in Q2, driven by strong EBITDA and a small decrease in net debt. We expect total capital expenditure for the full year to be in the range of $110 million to $120 million.
Q: What are your expectations for the fresh vegetables business in the second half of the year?
A: (Rory Byrne, CEO) We are actively exploring strategic alternatives for the fresh vegetables business. Operationally, we are maintaining a focus on day-to-day operations, and the business has generated positive cash flow in the first half of the year.
Q: Can you provide more details on the impact of dry docking activities on shipping costs?
A: (Rory Byrne, CEO) The dry docking of ships will result in higher shipping costs, particularly in Q3. However, we have scheduled these activities to minimize disruption and are confident in our ability to manage these costs effectively.
Q: How do you view the current market conditions and their impact on your business?
A: (Rory Byrne, CEO) We are closely monitoring macroeconomic conditions, including stock market volatility and interest rate speculation. Our diversified range of activities across geographies and customer bases provides a good balance to cope with these factors.
Q: What are your strategic priorities for the remainder of the year?
A: (Rory Byrne, CEO) We are focused on delivering our enhanced full-year target and advancing our strategic priorities. This includes managing our cost base, leveraging our strong market positions, and exploring investment opportunities within our existing business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
