Dole plc Q2 FY2026 earnings call

Overall Market and Business Model

• Healthy, resilient consumer demand for fresh produce, supported by long-term global health and wellness trends that create favorable sector tailwinds.
• The diversified business model demonstrated resilience in Q2 2026, with strong performance from Diversified Americas offsetting cost pressures in the Fresh Fruit segment tied to Middle East conflict-related fuel and shipping cost increases.

Capital Allocation Update

• Completed the sale of its Ecuador port on July 1, 2026, unlocking ~$95 million in net proceeds to strengthen the balance sheet and increase financial flexibility.
• Completed the acquisition of Green Foods' fresh produce division in Scandinavia in early July 2026, which adds a modern distribution facility in Helsingborg and provides a platform for planned investments in automation, AI, and innovative warehouse solutions to strengthen customer service in the attractive Scandinavian market.
• Completed a small bolt-on acquisition for its Irish growing operations during the quarter to expand sourcing and supply chain capabilities. Management continues to see disciplined acquisition opportunities in the fragmented fresh produce market across core regions.
• Repurchased just over 700,000 shares during the quarter for $10 million at an average price of $13.88 per share. Management maintains a balanced approach between growth investments and returning capital to shareholders.

Operational Highlights

• Fresh Fruit: Bananas saw strong European volumes with stable year-over-year pricing, while North American volumes were lower due to intentional profitability-focused portfolio management with slightly higher underlying pricing. Pineapple availability was impacted by adverse weather, and profitability was pressured by Costa Rica colon strength. Contractual fuel surcharges and ongoing cost-saving initiatives are expected to offset some Q2 cost pressures in the second half of the year.
• Diversified Americas delivered its fifth consecutive strong quarter, with the segment's dynamic pricing model providing flexibility to adapt to changing market conditions.

Total group revenue was $2.5 billion, up 2.9% year-over-year (up 1.7% on a like-for-like basis excluding foreign exchange impacts).

1. Fresh Fruit Segment: Revenue was $972.8 million, broadly flat year-over-year. Adjusted EBITDA decreased by $22.5 million to $50.3 million, representing 38.9% of total group adjusted EBITDA. The decline was driven by elevated fuel and shipping costs, higher sourcing and growing costs, and adverse currency movements for the Costa Rica colon. Higher European banana volumes and higher North American pricing were offset by lower North American banana volumes and lower industry-wide pineapple availability.

2. Diversified EMEA Segment: Reported revenue increased 1% year-over-year (down 1.7% on a like-for-like basis). Adjusted EBITDA decreased 6% compared to the strong prior year quarter, with a $4 million like-for-like decline. The segment accounts for approximately 38.6% of total group adjusted EBITDA. Strength in Scandinavia from prior logistics and automation investments was offset by weakness in South Africa (the segment's most exposed market to Middle East shipping disruption), the Netherlands, and Spain.

3. Diversified Americas Segment: Revenue increased 14% year-over-year, driven by higher volumes of kiwi, avocados, and cherries, plus favorable seasonal pricing for southern hemisphere exports. Adjusted EBITDA increased by $5.2 million to $61.7 million, representing 52.7% of total group adjusted EBITDA. The strong result reflected disciplined execution, benefits from 2025 Q4 berry operations restructuring, and the segment's dynamic pricing model that helped manage market volatility.

• Full year 2026 routine capital expenditure guidance is maintained at approximately $100 million.
• Full year 2026 adjusted EBITDA guidance is set at approximately $400 million, a downward revision from the prior 'at least $400 million' target, reflecting extended geopolitical and cost volatility from the Middle East conflict.
• Management expects fresh fruit margin performance in Q3 and Q4 2026 to differ from the weak back half of 2025, with delayed benefits from contractual fuel surcharges expected to flow through starting in Q3, supporting improved sequential performance relative to Q2 2026.
• Net leverage is expected to fall below 1.5x by the end of 2026 following receipt of the Ecuador port sale proceeds in Q3 2026.

• Elevated and volatile fuel and shipping costs driven by the ongoing conflict in the Middle East have created significant pressure on Fresh Fruit profitability, with extended market uncertainty reducing forecasting visibility for the second half of 2026.
• Geopolitical instability and shipping disruption negatively impacted the South African business within Diversified EMEA, which has high customer exposure to the Middle East region.
• Potential extreme weather disruption from a forecast super El Nino threatens banana and pineapple production across key growing regions in Central and South America.
• Persistent global inflation and fertilizer price volatility create ongoing cost pressure across production and logistics operations.

Q: What drove the downward revision to full year adjusted EBITDA guidance, and when will fuel surcharge benefits be realized? / A: Extended uncertainty from the ongoing Middle East conflict, which has kept fuel prices higher than originally anticipated, has reduced forecasting visibility for the back half of the year. Fuel surcharges are applied on a quarter-in-arrears basis, so benefits from Q2 cost increases will flow through in Q3, with additional benefits following in Q4 if fuel prices remain elevated. Management views hitting the $400 million target amid current headwinds as a satisfactory outcome.

Q: What contingency plans does management have for a potential super El Nino impacting banana and pineapple production? / A: Weather risk management is core to tropical farming operations, and management has pre-built long-term resilience across its supply base. The expected pattern (more rain in Ecuador/northern Peru, drier conditions in Central America/Colombia) is well understood, so the company has expanded irrigation for drought-prone areas and built drainage, flood protection, and elevated pump infrastructure for high-rainfall regions. Geographic diversification across northern and southern equator growing regions further mitigates risk, and the company is working with suppliers to test more weather-resilient crop varieties. Management is monitoring the event but does not currently view it as a major concern.

Q: How does management prioritize capital allocation across Scandinavian automation/AI investments, M&A, and share buybacks? / A: Management takes a dynamic approach, evaluating all opportunities based on expected risk-adjusted returns relative to share repurchases. The dividend is maintained at a stable, shareholder-friendly level, and small bolt-on acquisitions that meet return hurdles are prioritized when available. The Scandinavian acquisition provides a strategic platform for automation and AI investments alongside key customers, which is expected to drive long-term efficiency and customer relationship benefits that meet the company's return targets. After the Ecuador port sale, management continues to balance growth investment with shareholder returns, with ~$15 million in buybacks completed since the program launched last November.

Q: What is the long-term normalized margin aspiration for the Fresh Fruit segment, and what is needed to return to it? / A: The historical 5-6% margin range is considered an appropriate baseline, and management has an internal aspiration to push margins slightly higher over time. Disruptions from production shortfalls in Honduras in 2024-2025 were the biggest drag on recent margins, and that production is now back online, with new production joint ventures in Guatemala adding incremental capacity. Short-term pineapple margin pressure is tied to temporary climatic impacts on yield and quality that tend to balance out over time. Reduced geopolitical and fuel/shipping price volatility would support a return to normalized margin levels.