Fresh Del Monte Produce Inc. Reports Second Quarter 2020 Financial Results
Despite COVID-19 Company reported net income per diluted share of $0.38 and adjusted net income per diluted share of $0.54
Company reduced long-term debt by $51.8 million since the end of 2019, driven by strong operating cash flow
Company continues transformation of the fresh and value-added products segment
CORAL GABLES, Fla.–(BUSINESS WIRE)–Fresh Del Monte Produce Inc. (NYSE: FDP), (“Fresh Del Monte” or the “Company”) today reported financial results for the second quarter ended June 26, 2020. The Company reported net income per diluted share of $0.38 for the second quarter of 2020, compared with net income per diluted share of $0.78 in the second quarter of 2019. Adjusted net income per diluted share was $0.54 in the second quarter of 2020, compared with adjusted net income per diluted share of $0.72 in the second quarter of 2019.
The Company’s Board of Directors declared an interim cash dividend of five cents ($0.05) per share, payable on September 4, 2020 to shareholders of record on August 12, 2020.
“As a result of significant global disruptions, including lockdowns, closures and quarantines due to the COVID-19 pandemic, Fresh Del Monte Produce went through an unprecedented, turbulent period during the quarter,” said Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer. “Even with these challenges and the nature of our perishable business, we remained focused on protecting the health and safety of our global team members, and we maintained our business continuity. Our liquidity and ability to generate positive cash-flows remained strong during the quarter. Our transformation is expected to continue in the quarters ahead as we look to improve our asset utilization around the globe, create efficiencies in our operations and position our Company to deliver stronger long-term performance.”
Net sales for the second quarter of 2020 were $1,092.3 million, compared with $1,239.4 million in the second quarter of 2019. The decrease in net sales of $147.1 million was attributable to lower net sales in all of the Company’s business segments. The COVID-19 pandemic impacted net sales during the second quarter by an estimated $132.0 million, in its fresh and value-added products and banana segments, as compared to the Company’s original expectations for these segments which were developed prior to the pandemic.
Gross profit for the second quarter of 2020 was $78.7 million, compared with $97.6 million in the second quarter of 2019. Adjusted gross profit in the second quarter of 2020 was $89.3 million, compared with $98.2 million in the second quarter of 2019. The decrease in gross profit was principally due to lower gross profit in the Company’s fresh and value-added products segment, partially offset by higher gross profit in the Company’s banana segment. Gross profit was also impacted by incremental costs, mainly related to other product-related charges of $10.6 million, primarily as a result of reduced demand in the Company’s foodservice business and shifting demand at retail, as a result of government imposed mandatory restrictions and social distancing initiatives associated with the COVID-19 pandemic, and volatile supply and demand conditions, along with higher ocean freight costs, partially offset by lower production and procurement costs.
Operating income for the second quarter of 2020 was $33.1 million, compared with operating income of $57.2 million in the second quarter of 2019. Adjusted operating income was $43.7 million in the second quarter of 2020, compared with adjusted operating income of $52.9 million in the second quarter of 2019. The decrease in operating income was due to lower gross profit, lower gains on disposal of property, plant and equipment, net, and higher asset impairment and other charges (credits), net.
Net income attributable to Fresh Del Monte Produce Inc. for the second quarter of 2020 was $17.9 million, compared with net income attributable to Fresh Del Monte Produce Inc. of $38.1 million in the second quarter of 2019. Adjusted net income was $25.7 million in the second quarter of 2020, compared with adjusted net income of $35.0 million in the second quarter of 2019. The decrease was primarily the result of lower operating income and the decrease in other (expense) income net, partially offset by lower provision for income taxes.
More disclosures related to the COVID-19 pandemic are available in the Company’s Securities and Exchange Commission filings.
|
Fresh Del Monte Produce Inc. and Subsidiaries |
|||||||||||||||
|
Condensed Consolidated Statements of Operations |
|||||||||||||||
|
(U.S. dollars in millions) – (Unaudited) |
|||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter ended |
|
Six months ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
Statement of Operations: |
June 26, |
|
June 28, |
|
June 26, |
|
June 28, |
||||||||
|
Net sales |
$ |
1,092.3 |
|
|
$ |
1,239.4 |
|
|
$ |
2,210.3 |
|
|
$ |
2,393.6 |
|
|
Cost of products sold |
1,003.0 |
|
|
1,141.2 |
|
|
2,044.5 |
|
|
2,200.3 |
|
||||
|
Other product-related charges |
10.6 |
|
|
0.6 |
|
|
18.6 |
|
|
0.6 |
|
||||
|
Gross profit |
78.7 |
|
|
97.6 |
|
|
147.2 |
|
|
192.7 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Selling, general and administrative expenses |
45.6 |
|
|
45.3 |
|
|
98.3 |
|
|
99.6 |
|
||||
|
Gain on disposal of property, plant and equipment, net |
1.4 |
|
|
5.7 |
|
|
1.6 |
|
|
9.2 |
|
||||
|
Asset impairment and other charges (credits), net |
1.4 |
|
|
0.8 |
|
|
(0.4) |
|
|
3.8 |
|
||||
|
Operating income |
33.1 |
|
|
57.2 |
|
|
50.9 |
|
|
98.5 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Interest expense, net |
5.6 |
|
|
6.8 |
|
|
10.9 |
|
|
13.6 |
|
||||
|
Other (expense) income, net |
(5.2) |
|
|
(2.9) |
|
|
(4.4) |
|
|
8.4 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Income before income taxes |
22.3 |
|
|
47.5 |
|
|
35.6 |
|
|
93.3 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Provision for income taxes |
4.2 |
|
|
8.5 |
|
|
4.5 |
|
|
17.1 |
|
||||
|
Net income |
$ |
18.1 |
|
|
$ |
39.0 |
|
|
$ |
31.1 |
|
|
$ |
76.2 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Less: Net income attributable to redeemable and noncontrolling interests |
0.2 |
|
|
0.9 |
|
|
0.2 |
|
|
2.0 |
|
||||
|
Net income attributable to Fresh Del Monte Produce Inc. |
$ |
17.9 |
|
|
$ |
38.1 |
|
|
$ |
30.9 |
|
|
$ |
74.2 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income per ordinary share attributable to |
|
|
|
|
|
|
|
||||||||
|
Fresh Del Monte Produce Inc. – Basic |
$ |
0.38 |
|
|
$ |
0.79 |
|
|
$ |
0.65 |
|
|
$ |
1.53 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income per ordinary share attributable to |
|
|
|
|
|
|
|
||||||||
|
Fresh Del Monte Produce Inc. – Diluted |
$ |
0.38 |
|
|
$ |
0.78 |
|
|
$ |
0.64 |
|
|
$ |
1.53 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Dividends declared per ordinary share |
$ |
0.05 |
|
|
$ |
— |
|
|
$ |
0.15 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average number of ordinary shares: |
|
|
|
|
|
|
|
||||||||
|
Basic |
47,557,820 |
|
|
48,533,444 |
|
|
47,818,922 |
|
|
48,540,571 |
|
||||
|
Diluted |
47,614,553 |
|
|
48,582,135 |
|
|
47,918,071 |
|
|
48,624,956 |
|
||||
|
|
|
|
|
|
|
|
|
||||||||
|
Selected Statement of Operations Data: |
|
|
|
|
|
|
|
||||||||
|
Depreciation and amortization |
$ |
23.4 |
|
|
$ |
24.3 |
|
|
$ |
47.1 |
|
|
$ |
49.0 |
|
|
Fresh Del Monte Produce Inc. and Subsidiaries |
|||||||
|
Condensed Consolidated Balance Sheets |
|||||||
|
(U.S. dollars in millions) – (Unaudited) |
|||||||
|
|
|
|
|
||||
|
|
June 26, |
|
December 27, |
||||
|
|
|
|
|
||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
31.5 |
|
|
$ |
33.3 |
|
|
Trade and other accounts receivable, net |
444.9 |
|
|
439.0 |
|
||
|
Inventories, net |
496.4 |
|
|
551.8 |
|
||
|
Other current assets |
30.8 |
|
|
27.4 |
|
||
|
Total current assets |
1,003.6 |
|
|
1,051.5 |
|
||
|
|
|
|
|
||||
|
Investment in and advances to unconsolidated companies |
1.9 |
|
|
1.9 |
|
||
|
Property, plant and equipment, net |
1,390.3 |
|
|
1,403.2 |
|
||
|
Operating lease right-of-use assets |
169.1 |
|
|
162.1 |
|
||
|
Goodwill |
423.3 |
|
|
423.7 |
|
||
|
Intangible assets, net |
154.3 |
|
|
158.2 |
|
||
|
Other noncurrent assets |
151.7 |
|
|
149.3 |
|
||
|
Total assets |
$ |
3,294.2 |
|
|
$ |
3,349.9 |
|
|
|
|
|
|
||||
|
Liabilities and shareholders’ equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Accounts payable and accrued expenses |
$ |
506.0 |
|
|
$ |
522.2 |
|
|
Current maturities of debt and finance leases |
0.3 |
|
|
0.3 |
|
||
|
Current maturities of operating leases |
33.7 |
|
|
32.5 |
|
||
|
Other current liabilities |
11.5 |
|
|
7.9 |
|
||
|
Total current liabilities |
551.5 |
|
|
562.9 |
|
||
|
|
|
|
|
||||
|
Long-term debt and finance leases |
535.0 |
|
|
586.8 |
|
||
|
Operating leases, less current maturities |
107.7 |
|
|
102.7 |
|
||
|
Other noncurrent liabilities |
324.8 |
|
|
298.5 |
|
||
|
Total liabilities |
1,519.0 |
|
|
1,550.9 |
|
||
|
|
|
|
|
||||
|
Redeemable noncontrolling interest |
55.1 |
|
|
55.3 |
|
||
|
|
|
|
|
||||
|
Total Fresh Del Monte Produce Inc. shareholders’ equity |
1,695.2 |
|
|
1,719.2 |
|
||
|
Noncontrolling interests |
24.9 |
|
|
24.5 |
|
||
|
Total shareholders’ equity |
1,720.1 |
|
|
1,743.7 |
|
||
|
Total liabilities, redeemable noncontrolling interest and shareholders’ equity |
$ |
3,294.2 |
|
|
$ |
3,349.9 |
|
|
|
|
|
|
||||
|
|
|
|
|
||||
|
Fresh Del Monte Produce Inc. and Subsidiaries |
|||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||
|
(U.S. dollars in millions) – (Unaudited) |
|||||||
|
|
Six months ended |
||||||
|
|
June 26, |
|
June 28, |
||||
|
Operating activities: |
|
|
|
||||
|
Net income |
$ |
31.1 |
|
|
$ |
76.2 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
|
Depreciation and amortization |
46.8 |
|
|
48.5 |
|
||
|
Amortization of debt issuance costs |
0.3 |
|
|
0.5 |
|
||
|
Asset impairment, net |
2.8 |
|
|
3.3 |
|
||
|
Share-based compensation expense |
4.7 |
|
|
6.1 |
|
||
|
Deferred income taxes |
(3.2) |
|
|
7.6 |
|
||
|
Gain on disposal of property, plant and equipment, net |
(1.6) |
|
|
(9.2) |
|
||
|
Foreign currency translation adjustment |
(1.2) |
|
|
(1.2) |
|
||
|
Changes in operating assets and liabilities: |
|
|
|
||||
|
Receivables |
(9.9) |
|
|
(20.6) |
|
||
|
Inventories |
53.6 |
|
|
30.0 |
|
||
|
Prepaid expenses and other current assets |
(3.0) |
|
|
1.6 |
|
||
|
Accounts payable and accrued expenses |
(12.6) |
|
|
(73.7) |
|
||
|
Other noncurrent assets and liabilities |
2.7 |
|
|
(4.1) |
|
||
|
Net cash provided by operating activities |
110.5 |
|
|
65.0 |
|
||
|
|
|
|
|
||||
|
Investing activities: |
|
|
|
||||
|
Capital expenditures |
(35.9) |
|
|
(70.2) |
|
||
|
Proceeds from sales of property, plant and equipment |
2.2 |
|
|
28.0 |
|
||
|
Other investing activities |
0.5 |
|
|
0.7 |
|
||
|
Net cash used in investing activities |
(33.2) |
|
|
(41.5) |
|
||
|
|
|
|
|
||||
|
Financing activities: |
|
|
|
||||
|
Net repayments on debt |
(49.8) |
|
|
(24.7) |
|
||
|
Distributions to noncontrolling interests, net |
(1.1) |
|
|
(1.8) |
|
||
|
Net payments related to share-based awards |
(0.5) |
|
|
(0.6) |
|
||
|
Dividends paid |
(7.2) |
|
|
— |
|
||
|
Repurchase and retirement of ordinary shares |
(20.8) |
|
|
(9.2) |
|
||
|
Net cash used in financing activities |
(79.4) |
|
|
(36.3) |
|
||
|
|
|
|
|
||||
|
Effect of exchange rate changes on cash |
0.3 |
|
|
7.7 |
|
||
|
|
|
|
|
||||
|
Net decrease in cash and cash equivalents |
(1.8) |
|
|
(5.1) |
|
||
|
Cash and cash equivalents, beginning |
33.3 |
|
|
21.3 |
|
||
|
Cash and cash equivalents, ending |
$ |
31.5 |
|
|
$ |
16.2 |
|
|
|
Fresh Del Monte Produce Inc. and Subsidiaries |
||||||||||||||
|
|
Non-GAAP Measures (per share)(1): |
||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Quarter ended |
|
Six months ended |
||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
June 26, |
|
June 28, |
|
June 26, |
|
June 28, |
||||||||
|
Reported net income – Diluted |
$ |
0.38 |
|
|
$ |
0.78 |
|
|
$ |
0.64 |
|
|
$ |
1.53 |
|
|
Other product-related charges |
0.22 |
|
|
0.01 |
|
|
0.39 |
|
|
0.01 |
|
||||
|
Asset impairment and other charges (credits), net |
0.03 |
|
|
0.02 |
|
|
(0.01) |
|
|
0.08 |
|
||||
|
(Gain) on disposal of property, plant and equipment, net |
(0.03) |
|
|
(0.12) |
|
|
(0.03) |
|
|
(0.19) |
|
||||
|
(Gain) on settlement of litigation |
— |
|
|
— |
|
|
— |
|
|
(0.34) |
|
||||
|
Tax effect of all adjustments and other tax-related items |
(0.06) |
|
|
0.03 |
|
|
(0.11) |
|
|
0.09 |
|
||||
|
Adjusted net income – Diluted |
$ |
0.54 |
|
|
$ |
0.72 |
|
|
$ |
0.88 |
|
|
$ |
1.18 |
|
|
(1) Refer to Non-GAAP measures section for further reconciliation of Non-GAAP measures. |
|
|
Fresh Del Monte Produce Inc. and Subsidiaries |
|||||||||||||||||||||||||||
|
|
Business Segment Data |
|||||||||||||||||||||||||||
|
|
(U.S. dollars in millions) – (Unaudited) |
|||||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||
|
|
Quarter ended |
|||||||||||||||||||||||||||
|
|
June 26, 2020 |
|
June 28, 2019 |
|||||||||||||||||||||||||
|
Segment Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
Net Sales |
|
Gross Profit |
|
Net Sales |
|
Gross Profit |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Fresh and value-added products |
$ |
636.2 |
|
|
58 |
% |
|
$ |
37.1 |
|
|
47 |
% |
|
$ |
764.3 |
|
|
62 |
% |
|
$ |
57.5 |
|
(1) |
|
59 |
% |
|
Banana |
429.6 |
|
|
39 |
% |
|
39.0 |
|
|
50 |
% |
|
440.0 |
|
|
35 |
% |
|
36.9 |
|
(1) |
|
38 |
% |
||||
|
Other products and services |
26.5 |
|
|
3 |
% |
|
2.6 |
|
|
3 |
% |
|
35.1 |
|
|
3 |
% |
|
3.2 |
|
|
3 |
% |
|||||
|
|
$ |
1,092.3 |
|
|
100 |
% |
|
$ |
78.7 |
|
|
100 |
% |
|
$ |
1,239.4 |
|
|
100 |
% |
|
$ |
97.6 |
|
|
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 $1.9 million and a decrease to gross profit of $0.6 million in the fresh and value-added products segment in the second quarter of 2019. These reclassification adjustments also increased selling, general and administrative expenses by $1.3 million for the quarter ended June 28, 2019. |
|
|
Quarter ended |
||||||||||||
|
Net Sales by Geographic Region: |
June 26, |
|
June 28, |
||||||||||
|
|
|
|
|
|
|
|
|
||||||
|
North America |
$ |
667.1 |
|
|
61 |
% |
|
$ |
816.8 |
|
|
66 |
% |
|
Europe |
164.0 |
|
|
15 |
% |
|
171.2 |
|
|
14 |
% |
||
|
Asia |
134.1 |
|
|
12 |
% |
|
131.1 |
|
|
10 |
% |
||
|
Middle East |
114.2 |
|
|
11 |
% |
|
109.3 |
|
|
9 |
% |
||
|
Other |
12.9 |
|
|
1 |
% |
|
11.0 |
|
|
1 |
% |
||
|
|
$ |
1,092.3 |
|
|
100 |
% |
|
$ |
1,239.4 |
|
|
100 |
% |
Second Quarter 2020 Business Segment Performance and Selected Financial Data
(As reported in business segment data)
Fresh and Value-Added Products
Net sales for the second quarter of 2020 decreased to $636.2 million, compared with $764.3 million in the second quarter of 2019. The decrease in net sales was primarily due to lower net sales in the Company’s fresh-cut fruit and vegetable, avocado, pineapple and prepared food product lines. The Company has estimated that the COVID-19 pandemic has impacted net sales in the fresh and value-added products segment during the second quarter of 2020 by an estimated $117.0 million, as compared to the Company’s original expectations for these segments which were developed prior to 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. Gross profit for the second quarter of 2020 decreased to $37.1 million, compared with gross profit of $57.5 million in the second quarter of 2019. Other product-related charges represented $9.0 million for the segment, primarily related to inventory write-offs of pineapples, fresh-cut vegetables and melons.
Gold pineapple – Net sales were $113.9 million, compared with $126.1 million in the prior year period. Volume was 5% lower. Pricing was 4% lower. Unit cost was 10% higher.
Fresh-cut fruit – Net sales were $110.4 million, compared with 146.1 million in the prior year period. Volume was 26% lower. Pricing was 2% higher. Unit cost was 1% higher.
Fresh-cut vegetables – Net sales were $86.3 million, compared with $119.4 million in the prior year period. Volume was 32% lower. Pricing was 6% higher. Unit cost was 11% higher.
Avocados – Net sales were $93.5 million, compared with $124.9 million in the prior year period. Volume decreased 7%. Pricing was 19% lower. Unit cost was 23% lower.
Vegetables – Net sales were $35.0 million, compared with $42.8 million in the prior year period. Volume decreased 21%. Pricing was 3% higher. Unit cost was 9% higher.
Non-tropical fruit – Includes the Company’s grape, apple, citrus, berry, pear, peach, plum, nectarine, cherry and kiwi product lines. Net sales were $75.2 million, compared with $69.5 million in the prior year period. Volume increased 14%. Pricing was 5% lower. Unit cost was 7% lower.
Prepared food products – Includes the Company’s prepared traditional products, and meals and snacks product lines. Net sales decreased primarily due to 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. Partially offsetting this decrease were higher sales volumes and per unit selling prices of canned pineapple products due to increased customer demand and higher selling prices of pineapple concentrate due to lower industry supply.
Banana
Net sales for the second quarter of 2020 decreased to $429.6 million, compared with $440.0 million in the second quarter of 2019, principally due to lower net sales in North America and Europe, partially offset by higher net sales in the Middle East and Asia. The Company has estimated that the COVID-19 pandemic has impacted net sales in the banana segment during the second quarter of 2020 by an estimated $15.0 million, as compared to the Company’s original expectations for these segments which were developed prior to the pandemic. Volume was 1% lower and worldwide pricing was 1% lower than the prior year. Gross profit for the second quarter of 2020 increased to $39.0 million, compared with $36.9 million in the second quarter of 2019. Other product-related charges represented $1.6 million for the segment, primarily related to inventory write-offs. Unit cost was 2% lower than the prior year period.
Cash Flows
Net cash provided by operating activities for the first six months of 2020 was $110.5 million, compared with net cash provided by operating activities of $65.0 million in the same period of 2019. The increase was primarily attributable to lower payments of accounts payable and accrued expenses due to timing and lower levels of inventory and accounts receivable, partially offset by lower net income.
Total Debt
Total debt decreased from $587.1 million at the end of 2019 to $535.3 million at the end of the second quarter of 2020.
Interest Expense, Net
Interest expense, net for the second quarter of 2020 was $5.6 million, compared with $6.8 million in the second quarter of 2019. The decrease was due to lower interest rates and lower average loan balances.
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 (credits), 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 |
||||||||||||||||||||||||||||||
|
|
June 26, |
|
June 28, |
||||||||||||||||||||||||||||
|
|
Gross |
|
Operating |
|
Net income |
|
Net income |
|
Gross |
|
Operating |
|
Net income |
|
Net income |
||||||||||||||||
|
As reported |
$ |
78.7 |
|
|
$ |
33.1 |
|
|
$ |
17.9 |
|
|
$ |
0.38 |
|
|
$ |
97.6 |
|
|
$ |
57.2 |
|
|
$ |
38.1 |
|
|
$ |
0.78 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Other product-related charges (1) |
10.6 |
|
|
10.6 |
|
|
10.6 |
|
|
0.22 |
|
|
0.6 |
|
|
0.6 |
|
|
0.6 |
|
|
0.01 |
|
||||||||
|
Asset impairment and other charges (credits), net (2) |
— |
|
|
1.4 |
|
|
1.4 |
|
|
0.03 |
|
|
— |
|
|
0.8 |
|
|
0.8 |
|
|
0.02 |
|
||||||||
|
(Gain) on disposal of property, plant and equipment, net (3) |
— |
|
|
(1.4) |
|
|
(1.4) |
|
|
(0.03) |
|
|
— |
|
|
(5.7) |
|
|
(5.7) |
|
|
(0.12) |
|
||||||||
|
Tax effects of all adjustments (5) |
— |
|
|
— |
|
|
(2.8) |
|
|
(0.06) |
|
|
— |
|
|
— |
|
|
1.2 |
|
|
0.03 |
|
||||||||
|
As adjusted |
$ |
89.3 |
|
|
$ |
43.7 |
|
|
$ |
25.7 |
|
|
$ |
0.54 |
|
|
$ |
98.2 |
|
|
$ |
52.9 |
|
|
$ |
35.0 |
|
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Six months ended |
||||||||||||||||||||||||||||||
|
|
June 26, |
|
June 28, |
||||||||||||||||||||||||||||
|
|
Gross |
|
Operating |
|
Net income |
|
Net income |
|
Gross |
|
Operating |
|
Net income |
|
Net income |
||||||||||||||||
|
As reported |
$ |
147.2 |
|
|
$ |
50.9 |
|
|
$ |
30.9 |
|
|
$ |
0.64 |
|
|
$ |
192.7 |
|
|
$ |
98.5 |
|
|
$ |
74.2 |
|
|
$ |
1.53 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
Other product-related charges (1) |
18.6 |
|
|
18.8 |
|
|
18.8 |
|
|
0.39 |
|
|
0.6 |
|
|
0.6 |
|
|
0.6 |
|
|
0.01 |
|
||||||||
|
Asset impairment and other charges (credits), net (2) |
— |
|
|
(0.4) |
|
|
(0.4) |
|
|
(0.01) |
|
|
— |
|
|
3.8 |
|
|
3.8 |
|
|
0.08 |
|
||||||||
|
(Gain) on disposal of property, plant and equipment, net (3) |
— |
|
|
(1.6) |
|
|
(1.6) |
|
|
(0.03) |
|
|
— |
|
|
(9.2) |
|
|
(9.2) |
|
|
(0.19) |
|
||||||||
|
(Gain) on settlement of litigation (4) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16.7) |
|
|
(0.34) |
|
||||||||
|
Tax effects of all adjustments and other tax-related items (5) |
— |
|
|
— |
|
|
(5.7) |
|
|
(0.11) |
|
|
— |
|
|
— |
|
|
4.7 |
|
|
0.09 |
|
||||||||
|
As adjusted |
$ |
165.8 |
|
|
$ |
67.7 |
|
|
$ |
42.0 |
|
|
$ |
0.88 |
|
|
$ |
193.3 |
|
|
$ |
93.7 |
|
|
$ |
57.4 |
|
|
$ |
1.18 |
|
|
(1) |
Other product-related charges for the quarter and six months ended June 26, 2020 primarily related to inventory write-offs resulting from lower demand for certain of the Company’s products due to the COVID-19 pandemic. The COVID-19 pandemic led to volatile supply and demand conditions across the Company’s key global markets in the six months ended June 26, 2020 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. Other product-related charges for the six months ended June 26, 2020 also included $0.2 million of estimated trade receivable credit losses relating to the Company’s foodservice customer base as a direct result of the COVID-19 pandemic. Other product-related charges for the quarter and six months ended June 28, 2019 related to inclement weather in Central America. |
|
|
(2) |
Asset impairment and other charges (credits), net for the six months ended June 26, 2020 primarily related to (1) a $6.0 million insurance recovery related to a voluntary recall of vegetable products which was announced in the fourth quarter of 2019, (2) a $2.0 million reserve relating to a potential liability arising from the Company’s third-party shipping logistics operation, (3) $2.1 million in impairments of property, plant, and equipment associated with production facilities in North America and Europe, (4) $0.7 million in severance expense related to the reorganization of the North America sales and marketing function, and (5) $0.7 million in asset impairment charges associated with low-yielding banana plants in the Philippines. Asset impairment and other charges (credits), net for the six months ended June 28, 2019 related to impairments of an equity investment and underutilized assets in South America, and contract termination charges in the Philippines related to a previously announced restructuring. |
|
|
(3) |
Gain on disposal of property, plant and equipment, net for the quarter and six months ended June 26, 2020 primarily related to gains on the sale of surplus land in Chile and marine equipment. Gain on disposal of property, plant and equipment, net for the quarter and six months ended June 28, 2019 primarily related to gains on the sale of underutilized tomato assets in North America and vessels. |
|
|
(4) |
Gain on settlement of litigation for the six months ended June 28, 2019 was $16.7 million consisting of proceeds of $17.0 million, net of expenses of $0.3 million. |
|
|
(5) |
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 tax effects of all adjustments were not included in the prior presentation for the quarter and six months ended June 28, 2019. We reevaluated the presentation of non-GAAP adjusted net income and adjusted net income per share and made these changes to facilitate the evaluation of the Company’s current operating performance and the comparability of the Company’s current operating performance to past performance. Non-GAAP adjusted net income and adjusted net income per share have been recast for the quarter and six months ended June 28, 2019 to conform to the current presentation. The six months ended June 26, 2020 also included a $1.7 million tax benefit associated with the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. |
Contacts
Christine Cannella
Vice President, Investor Relations
305-520-8433