Dole Plc Q1 FY2026 earnings call

• Overall Quarterly Performance & Demand Trends

  • The company delivered a solid start to 2026, with 12% year-over-year revenue growth across all segments, supported by sustained strong consumer demand driven by health and wellness trends and GLP-1 adoption.
  • The company completed regulatory approval for the previously announced sale of its Guayaquil, Ecuador port operations to Terminal Investments Limited, and expects to close the transaction in Q2 2026 with approximately $75 million in after-tax net proceeds.

• Capital Allocation Strategy

  • The company's top priority is deploying capital toward high-return internal development projects and complementary bolt-on acquisitions, benchmarked against alternative uses including share repurchases.
  • The company maintains a consistent quarterly dividend, and uses its existing share repurchase authorization opportunistically based on return comparisons to internal investment opportunities. Routine capital expenditure for Q1 2026 was $18 million.

• Strategic Investments by Segment

  • Fresh Fruit: Increased own production and sourcing capacity in Guatemala for conventional and organic bananas and plantains via a joint venture investment, and completed farm rehabilitation in Honduras to improve long-term supply stability.
  • Diversified Americas: Continued investments in the cherry category to secure high-quality, stable volumes, and upgraded packing operations for cherries and citrus across wholly owned and joint venture facilities.
  • Diversified EMEA: Focused investments on logistics, automation, and distribution capabilities. The No Waste Logistics third-party logistics business in Sweden is delivering strong returns, and the company is finalizing a ~$100 million strategic investment to expand automation, AI, and innovative warehouse solutions in the region to support long-term sustainable growth. The company is also upgrading and expanding warehouse infrastructure in Ireland and Spain.
  • The company is progressing multiple bolt-on acquisition opportunities in Ireland, Italy, Spain, and Sweden that complement existing operations.

Overall Group: Total GAAP revenue was $2.3 billion, an 11.6% increase year-over-year (7% increase excluding favorable foreign exchange impacts). Adjusted EBITDA was $100 million, a $4.5 million decrease year-over-year, driven by higher sourcing costs in Fresh Fruit, offset by growth in the two diversified segments. Net income was $37.7 million, a $6.4 million decrease year-over-year. 1. Fresh Fruit: Revenue increased 7% year-over-year, driven by higher global pricing for bananas, pineapples, and plantains, plus higher banana sales volumes in Europe. It contributed 40.2% of total group revenue. Adjusted EBITDA decreased by $10.7 million year-over-year due to elevated food sourcing costs and the appreciation of the Costa Rican colon. 2. Diversified EMEA: Reported revenue increased 15% year-over-year (4% like-for-like growth), with 62% of the increase from favorable foreign exchange impacts and the rest from underlying growth in France and Germany. It contributed approximately 32.5% of total group revenue. Adjusted EBITDA increased 8% year-over-year, with positive contributions from Scandinavia and Germany offsetting lower earnings in the UK, Netherlands, and South Africa. On a like-for-like basis, adjusted EBITDA decreased $1.4 million. 3. Diversified Americas: Revenue increased 16% year-over-year, driven by higher volumes and pricing in the Southern Hemisphere export business, plus higher volumes in North American operations that offset lower avocado pricing. It contributed approximately 27.3% of total group revenue. Adjusted EBITDA increased $4 million to just under $18 million (a 29% increase year-over-year), driven by higher revenue, integration synergies from the Dole Direct North America and Oppie merger, and strong performance from joint venture operations.

• Full year 2026 adjusted EBITDA guidance is maintained at a target of at least $400 million, unchanged from prior guidance.
• Full year 2026 routine capital expenditure guidance is maintained at approximately $100 million.
• Management expects the second half of 2026 to deliver stronger profitability than the first half, with elevated cost pressures concentrated in Q2, particularly in the Fresh Fruit segment, offset by recoveries in the second half.
• Management expects pricing adjustments and dynamic pricing in diversified segments to pass through elevated input costs by the second half of the year, and incremental internal cost savings to further support full year profitability.

• The ongoing conflict in the Middle East has created indirect negative impacts, including elevated fuel, fertilizer, and paper input costs, and is expected to increase shipping and fuel costs particularly in Q2 2026. While direct exposure to the region is limited, South African citrus exports to the Middle East face ongoing freight and transport complications that could impact that portion of the business.
• Elevated global fruit sourcing costs and the appreciation of the Costa Rican colon have weighed on Fresh Fruit segment profitability in Q1, with these pressures expected to persist through Q2 before easing in the second half.
• There is a short-term time lag for fuel surcharges and negotiated price increases to offset elevated input costs, which will temporarily weigh on profitability in Q2 before the full offset is realized in later quarters.

Q: What gives management confidence to maintain the at least $400 million full year adjusted EBITDA guidance, what is the expected quantum of internal cost savings, and how will fresh fruit pricing negotiations offset higher costs? / A: While large quantum leap savings are not expected given the company already operates with a tight cost base, incremental cost savings are expected across all divisions. Management notes that diversified divisions have a well-proven dynamic pricing model that can quickly pass through cost changes, and phased fresh fruit price negotiations catch up to higher costs over the course of the year. The expected stronger second half performance gives enough leeway to adapt to cost changes, leading management to maintain the full year guidance.

Q: What is management's capital allocation prioritization between organic investment, bolt-on M&A, share buybacks, and debt repayment, especially given current interest rate trajectories? / A: Management's current short-term focus is on attractive organic development opportunities, particularly a technology and automation investment in high-labor-cost Scandinavian operations that can serve as a blueprint for the broader business. Management is comfortable with current low net debt levels (0.7x net leverage at quarter end) and sees no immediate pressure for accelerated debt repayment. Capital allocation remains dynamic, with dividends, buybacks, and debt repayment retained as optional tools depending on opportunity returns.

Q: When will elevated fresh fruit sourcing costs ease, and what is the outlook for banana supply and demand through the rest of the year? / A: Elevated costs stem from 2025 supply shocks including tropical storm damage in Honduras, weather issues in Costa Rica, and industry-wide supply reductions from Panama. These supply impacts are working their way through the system, and costs are expected to improve meaningfully after Q2 2026 once price increases and fuel surcharges catch up to the higher cost environment.

Q: What is driving the strong performance of Diversified Americas, and can this strength continue? / A: The strong Q1 performance came from a combination of positive seasonal cherry season results, synergy benefits from the completed Dole Direct North America and Oppie integration, and broad-based volume growth across other Southern Hemisphere categories. While full year year-over-year improvement is expected, the magnitude of growth will not be as large as the Q1 increase due to seasonal factors. The division has a strong focused management team, and incremental investments are expected to drive continued gradual growth.