FRESH DEL MONTE PRODUCE INC Q3 FY2025 earnings call

• Delivered steady progress with gross margin expansion in fresh and value-added; pineapple program performing well. - Entered agreement to divest Mann Packing operations due to lack of profitability, believing it will strengthen margin profile. - Recorded $37 million impairment and other charges related to underperforming banana farms in Philippines. - Sold break bulk shipping vessels, continuing shift away from legacy breakbulk vessels. - Addressed industry challenge of Tropical Race 4 (TR4) disease in banana production, preparing for TR4-resistant varieties.

Fresh and Value-Added Products: Net sales were $611 million. Adjusted net sales were $548 million. Gross profit was $68 million, adjusted gross profit was $76 million, gross margin increased to 11.2%, adjusted gross margin increased to 13.9%. Banana: Net sales were $358 million. Gross profit was $5 million, adjusted gross profit was $4 million, gross margin decreased to 1.3%, adjusted gross margin decreased to 1.2%. Other Products and Services: Net sales were $53 million. Gross profit was $8 million, gross margin decreased to 14.8%.

• Expect net sales growth of approximately 2% year-over-year. - Fresh and value-added products segment gross margin expected 11% to 13%. - Banana segment gross margin expected to compress below historical range, approaching 4% due to cost pressures. - Other Products and Services segment gross margin expected 10% to 12%. - SG&A expenses expected $205 million to $207 million. - Full year CapEx expected $60 million to $70 million, down from prior guidance. - Net cash provided by operating activities expected to exceed prior range, closer to $190 million to $200 million.

• Tropical Race 4 (TR4) disease confirmed in Ecuador, escalating in Latin America, highly contagious with no cure, destabilizing regions. - Black Sigatoka disease spreading, increasing control costs for growers and putting financial strain on industry. - Mounting pressure on global banana production affecting margins and survival of growers.

Q: Look at the fresh and value-added segment's adjusted gross margin of 13.9%, is 13% the new normal?

A: I think we're getting there, we'll be getting very close to that margin consistently.

Q: Pineapples, supply has been down, are costs up?

A: Pineapple doesn't have the same diseases as bananas, don't see significant cost increases; demand outstrips supply.

Q: Avocados, supply strong, pricing down, will it reverse?

A: Could happen in next 2-3 months, but prices won't escalate long-term; margins not impacted as much as sales.

Q: Banana consumption down in North America?

A: Seasonal, not a trend; costs up, prices not moving same direction; TR4 and Sigatoka diseases serious.

Q: Tariffs, how much added to top line?

A: It's really minimal, not much.