Christopher Barnes

Christopher Barnes with Deutsche Bank inquired about the key drivers behind the implied 10% decline in Dole PLC's Q4 adjusted EBITDA guidance, particularly focusing on cost versus price mismatches in fresh fruit and bananas. He also asked about the expected continuation of cost pressures into 2026 and any updates on securing U.S. tariff exclusions for tropical produce.

Answer

CEO Rory Byrne attributed the Q4 outlook to a volatile macroeconomic environment, a high 2024 benchmark, and specific headwinds in Honduras exacerbated by industry-wide issues in Panama and Costa Rica, impacting spot prices and procurement costs. For 2026, he noted it's too early for comprehensive guidance but historically, sustained supply conditions lead to market adjustments. Regarding tariffs, Mr. Byrne stated there's no new information, reiterating the established principle for excluding non-commercially grown U.S. products, expressing confidence in positive changes over time despite current delays.

Christopher Barnes asked about the key drivers behind the implied 10% decline in Dole's Q4 EBITDA guidance, particularly focusing on cost versus price mismatches in fresh fruit and bananas, and whether these cost pressures are expected to continue into 2026. He also inquired about any new developments regarding tariff exclusions for tropical produce in the U.S.

Answer

CEO Rory Byrne explained that Q4 guidance reflects the high benchmark set by an excellent 2024, specific headwinds from Tropical Storm Sara in Honduras, and industry-wide problems in Panama and Costa Rica impacting spot prices and procurement costs. He noted it's too early for comprehensive 2026 guidance but historically, the market adjusts to sustained supply conditions. Regarding tariffs, Rory Byrne stated there's no new information, reiterating the U.S. administration's established principle for excluding non-commercially grown products, expressing confidence in positive changes over time despite current delays.

Christopher Barnes of Deutsche Bank questioned the updated EBITDA outlook, asking for a reconciliation of the strong H1 performance with the implied decline in H2. He also sought to disaggregate the drivers of strong pricing, particularly the impact of tariffs, and inquired about the financial implications of the Fresh Vegetables division sale, including the timeline for eliminating stranded costs and the use of proceeds.

Answer

CEO Rory Byrne explained that the conservative H2 outlook is due to anticipated higher sourcing costs in the Fresh Fruit segment stemming from industry-wide supply tightness and logistical complexities. He noted that tariffs are just one of many variables influencing pricing, alongside foreign exchange, shipping, and production costs, and that the experienced team manages this dynamic mix. Regarding the Fresh Vegetables sale, Byrne confirmed the initial $90 million in proceeds will be used for debt paydown, which provides strategic clarity and allows the company to refocus on its core business and re-evaluate its cost structure.

Christopher Barnes inquired about the drivers for the raised full-year EBITDA guidance, specifically the contribution from underlying performance versus FX tailwinds and the inclusion of current tariffs. He also asked about the ongoing strategic review of the Fresh Vegetables business, questioning the risks of a prolonged sale process and the potential to retain the asset.

Answer

CEO Rory Byrne attributed the upgraded guidance to a combination of a strong Q1 performance that exceeded expectations, the inclusion of the known tariff scenario, and an assumption of favorable euro-to-dollar translation for the remainder of the year. Regarding the Fresh Vegetables business, Byrne acknowledged the complexity of the process but reaffirmed the company's intention to find an appropriate exit, noting its classification as a discontinued operation highlights this strategy. He added that the management team is working diligently to avoid any negative impact on the ongoing business during this period.

Christopher Barnes from Deutsche Bank questioned the 2025 adjusted EBITDA guidance, asking for a breakdown of the projected decline between known headwinds like Tropical Storm Sara, difficult 2024 comparisons, and general conservatism. He also inquired about the expected cadence by segment and half, and followed up on potential tariff mitigation strategies.

Answer

CEO Rory Byrne explained that the guidance reflects geopolitical uncertainty, specific headwinds from Tropical Storm Sara impacting sourcing and logistics, and a very strong, record-setting 2024 performance that creates a tough comparison. Byrne anticipates a slower start to 2025, with most headwinds affecting Q1. Regarding tariffs, he expressed confidence that essential food imports like bananas and pineapples, which the U.S. doesn't produce, would likely be spared, but noted that any significant tariff impact would ultimately have to be passed on to consumers via price increases.

Christopher Barnes of Deutsche Bank inquired about the Q4 EBITDA guidance, which implies a potential year-over-year decline, asking for the key factors affecting the Fresh Fruit and Diversified businesses. He also questioned the sustainability of the strong performance in the Diversified Americas segment and asked if the earlier Lunar New Year in 2025 would positively impact Q4 results.

Answer

CEO Rory Byrne explained that the updated $380 million EBITDA target is a conservative floor, accounting for the sale of Progressive Produce, higher Q4 shipping costs due to dry docking, and general market volatility. Byrne noted that the Diversified Americas segment's strength is partly due to a recovery from prior supply chain disruptions and some favorable tailwinds, acknowledging it has been an "exceptionally strong year" for the division.

Chris Barnes followed up on depletions expectations for the second half. He noted that the 1-2% pricing comment and the expectation for shipments and depletions to track closely imply a material step down in H2 depletions growth, and asked for the drivers behind this.

Answer

CEO Bill Newlands declined to give quarter-by-quarter guidance but highlighted unprecedented volatility and mixed results, with significantly worse performance in high Hispanic zip code areas compared to the general market. He expressed cautious optimism about having hit the bottom but stressed ongoing volatility, citing California as a particular problem due to a lack of '4,000 calorie jobs.' He indicated no radical change is projected for H2 based on current guidance.

Chris Barnes asked for clarification on the depletions expectations for the second half, noting that the 1%-2% pricing comment and the expectation for shipments and depletions to track closely seem to imply a material step down in depletions growth for the second half, and requested an unpacking of the drivers behind this.

Answer

CEO Bill Newlands acknowledged unprecedented volatility and mixed results, with high Hispanic zip code areas performing significantly worse than the general market. He noted cautious optimism about hitting bottom but stressed the mixed and volatile environment, particularly in California. He indicated that no radical change in depletions is projected or expected for the back half of the year based on overall guidance.