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FRESH DEL MONTE PRODUCE INC (FDP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered modest topline growth with stronger profitability: Net sales rose 0.5% to $1.01B, gross profit increased 10% to $68.7M, and GAAP EPS was $0.42; adjusted EPS was $0.26, roughly flat vs prior year’s $0.25 .
  • Segment mix drove outcomes: Fresh & Value-Added net sales grew 5% with gross margin expanding to 7.5%, while Banana margin compressed to 3.9% on lower sales and higher production/procurement costs .
  • Capital returns accelerated: Board approved a $150M share repurchase and raised the quarterly dividend 20% to $0.30, citing balanced capital allocation and reinforced balance sheet (long-term debt down to ~$244M) .
  • 2025 outlook: Management guides FY25 net sales +~2% with segment margin targets (Fresh & Value-Added 10–11%, Banana 5–7%, Other 12–14%), SG&A $205–$210M, CapEx $80–$90M, and operating cash flow $190–$200M; watch near-term supply tightness and tariff risks as potential stock catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Fresh & Value-Added strength: Q4 gross profit nearly doubled YoY to $46.1M; specialty pineapples (Honeyglow, Pinkglow) and avocados led pricing/mix; full-year segment gross margin rose to 9.3% from 6.8% .
    • Balance sheet and cash: Long-term debt reduced by $156M YoY to ~$244M; FY24 operating cash flow was $182.5M .
    • Strategic focus and pricing confidence: “Pineapples are at the heart of who we are… demand… exceeds supply,” and management expects pineapple pricing to be “just as strong or stronger than last year” .

  • What Went Wrong

    • Banana pressure: Q4 Banana gross margin fell to 3.9% (vs 9.9% LY) on lower sales (North America) and higher production/procurement costs; full-year Banana margin decreased to 5.9% (vs 10.0%) .
    • Cost and FX headwinds: Higher per-unit production/procurement costs and adverse FX (Costa Rican colón, JPY/KRW) weighed on results (quarter and full-year commentary) .
    • Operating expense creep and macro risks: SG&A rose to $196.9M in FY24 (vs $186.7M FY23); management flagged tight supply entering Q1 2025 and potential tariff risks on key imports (e.g., Mexico) .

Financial Results

YoY comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$1.009B $1.013B
Gross Profit ($M)$62.5 $68.7
Gross Margin %6.2% 6.8%
Operating Income ($M)$(113.4) $30.3
Net Income ($M)$(106.4) $20.4
Diluted EPS ($)$(2.22) $0.42
Adjusted Operating Income ($M)$12.0 $17.1
Adjusted Diluted EPS ($)$0.25 $0.26
Adjusted EBITDA ($M)$37.8 $35.2
Adjusted EBITDA Margin %3.7% 3.5%

Sequential comparison (Q3 2024 → Q4 2024)

MetricQ3 2024Q4 2024
Revenue ($USD Billions)$1.020B $1.013B
Gross Profit ($M)$93.8 $68.7
Gross Margin %9.2% 6.8%
Operating Income ($M)$53.9 $30.3
Net Income ($M)$42.1 $20.4
Diluted EPS ($)$0.88 $0.42
Adjusted Operating Income ($M)$46.5 $17.1
Adjusted Diluted EPS ($)$0.77 $0.26
Adjusted EBITDA ($M)$68.3 $35.2
Adjusted EBITDA Margin %6.7% 3.5%

Segment breakdown (Q4 2024 vs Q4 2023)

SegmentNet Sales ($M) Q4’23Net Sales ($M) Q4’24Gross Profit ($M) Q4’23Gross Profit ($M) Q4’24Gross Margin % Q4’23Gross Margin % Q4’24
Fresh & Value-Added$582.8 $612.3 $22.0 $46.1 3.8% 7.5%
Banana$379.6 $356.8 $37.6 $14.0 9.9% 3.9%
Other Products & Services$46.2 $44.1 $2.9 $8.6 6.3% 19.5%

KPIs and balance sheet/cash flow

KPIPeriodValue
Operating Cash Flow ($M)FY 2024$182.5
Capital Expenditures ($M)FY 2024$51.7
Long-term Debt ($M)FY 2024 End~$244.1
Long-term Debt & Finance Leases ($M)FY 2024 End$248.9
Dividends Declared per Share ($)Q4 2024$0.25
New Quarterly Dividend ($)Announced 2/21/25$0.30 (payable 3/28/25)
Weighted Avg Diluted Shares (000s)Q4 202448,258

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales GrowthFY 2025n/a (not disclosed)~+2% YoYNew
Fresh & Value-Added Gross MarginFY 20259–10% (FY24 framework communicated previously) 10–11%Raised
Banana Gross MarginFY 20255–7% (historical/communicated range) 5–7%Maintained
Other Products & Services Gross MarginFY 2025n/a12–14%New
SG&A ($)FY 2025n/a$205–$210MNew
CapEx ($)FY 2025n/a$80–$90MNew
Operating Cash Flow ($)FY 2025n/a$190–$200MNew
Quarterly DividendFrom Mar-2025$0.25$0.30Raised
Share Repurchase AuthorizationOpenn/a$150MNew

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q2’24)Previous Mentions (Q-1: Q3’24)Current Period (Q4’24)Trend
Pineapple growth/innovationMargin strength; pricing tailwinds in Fresh & Value-Added; segment GM 11.2% in Q2 Continued strength; Fresh & Value-Added GM 10.1% “Pineapples are at the heart of who we are… demand exceeds supply”; expanding production and sourcing Improving
Fresh-cut automation/efficiencyStrategic focus; higher margins QoQ Ongoing margin expansion; Q3 gross profit uplift Introduced more automation in Q4; aiming to make fresh-cut a key profit center Improving
Banana market dynamicsVolume and pricing pressure; FX headwinds; margin down to 7.6% Q2 Competitive pressures; GM 6.2% Q4 margin 3.9% with higher production/procurement costs; sourcing expansion (Somalia, Brazil) Challenged near term
FX headwinds (CRC/JPY/KRW)Noted across quarter; pressured margins Persisted; CRC headwind Continued pressure (CRC/JPY/KRW) in FY commentary Persistent headwind
Tariffs/macro——Potential new tariffs on key import markets flagged; contingency via diversified sourcing Emerging risk
FSMA 204 traceability——“Ahead of the curve” and on track for Jan-2026 compliance; competitive advantage expected Positive setup
Biomass/sustainability——Biomass initiative launched; SEAL award recognized sustainability execution Early optionality
Mann PackingStrategic alternatives underway Decision to streamline to enhance profitability Divestiture of Fresh Leaf Farms assets closed; consolidation to one facility expected to aid margins Restructuring progress

Management Commentary

  • “Our fresh and value-added products segment, Pineapple, Fresh-cut fruit, and Avocados performed exceptionally well in 2024, driving growth and improving company gross margins.”
  • “Pineapples are at the heart of who we are… As global demand for our pineapples continues to exceed supply, we remain active in expanding our production and sourcing operations.”
  • “We are ahead of the curve when it comes to FSMA 204 compliance… we are on track to achieve full compliance… giving us a significant competitive advantage.”
  • “We ended the year with $244 million of long-term debt… adjusted leverage ratio is now less than 1x EBITDA… Board… increased our quarterly dividend to $0.30 and approved a $150 million share repurchase program.”
  • On pineapple pricing: “We are confident that our pricing on pineapple will be just as strong or stronger than last year.”

Q&A Highlights

  • Pineapple supply/pricing: Management is expanding plantations in Costa Rica and replanting Brazil (new patented Fusarium-resistant variety) and expects pineapple pricing to remain very strong; broad multi-continent sourcing reduces risk .
  • Avocado sourcing and tariff sensitivity: Diversifying beyond Mexico (Chile, Peru, Colombia, DR) to reduce dependence; if tariffs materialize, costs likely passed through, with demand impact uncertain .
  • Banana sourcing strategy: Somalia project progressing (350 hectares planted; target 1,500 by end-2025) to supply Middle East/Southern Europe with shorter transit times, potentially improving margins over 18–24 months .
  • Near-term operational backdrop: Q1 2025 started with tight supply in bananas/pineapples due to unusual weather; improvements beginning, but macro/tariff risks remain .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue could not be retrieved at this time due to API rate limits; as a result, we cannot assess beat/miss versus consensus within this report. We will update once S&P Global estimates are available.

Key Takeaways for Investors

  • Mix shift remains the core earnings lever: Fresh & Value-Added momentum offset Banana weakness; specialty pineapples and avocados continue to drive pricing and margin resilience .
  • Capital returns now a tangible pillar: $150M buyback and a 20% dividend hike to $0.30 signal confidence and balance sheet capacity (LT debt ≈$244M) .
  • 2025 guide frames an earnings bridge: Modest sales growth (+~2%) with higher Fresh & Value-Added margin (10–11%) and controlled SG&A ($205–$210M) should support stable-to-better underlying profitability if supply normalizes .
  • Watch near-term banana/pineapple supply and macro: Q1 2025 tightness and potential tariffs are key risk variables; diversified sourcing (Somalia/Brazil for bananas; multi-country for avocados; expanded pineapple) is the hedge .
  • Cost/FX vigilance: Elevated production/procurement costs and FX (CRC/JPY/KRW) were headwinds in FY24; sustained FX pressure could temper margin gains if pricing/mix tailwinds wane .
  • Mann Packing streamlining should aid margins over time: Sale of Fresh Leaf Farms assets completed; consolidation expected to contribute to Fresh & Value-Added margin goals (10–11%) .
  • Regulatory readiness is a differentiator: FSMA 204 preparedness by Jan-2026 could be a share-gain catalyst in fresh-cut if competitors lag .