Dole plc Reports First Quarter 2022 Financial Results

·13 min read

DUBLIN, May 24, 2022--(BUSINESS WIRE)--Dole plc (NYSE: DOLE) ("Dole" or the "Group" or the "Company") has today released its financial results for the three months ended March 31, 2022.

Highlights for Q1'22:

  • Revenue of $2.2 billion

  • Net Income of $3.3 million and Diluted EPS of $(0.01)

  • Adjusted EBITDA1 of $81.5 million

  • Adjusted Net Income1 of $28.2 million and Adjusted Diluted EPS1 of $0.30

Financial Highlights - Unaudited

Q1'22

Q1'21

Q1'21

Pro-forma (2)

Revenue - $’m

2,245

1,051

2,266

Net Income - $'m

3.3

26.1

63.2

Net (Loss) Income attributable to Dole plc - $'m.

(1.4)

21.3

57.7

Diluted EPS - $

(0.01)

0.38

0.61

Adjusted EBITDA - $’m (1)

81.5

79.2

131.1

Adjusted Net Income - $’m (1)

28.2

25.9

58.8

Adjusted Diluted EPS - $ (1)

0.30

0.46

0.62

Commenting on the results, Carl McCann, Executive Chairman said:

"We are pleased with the result that the Group has delivered for the first quarter of 2022 particularly as we were impacted by the Value Added salads recall and foreign currency translation movements in the quarter. Our diversified business model has once more proven itself to be resilient. For the 2022 financial year, we are now targeting revenue in the range of $9.4 billion to $9.7 billion and Adjusted EBITDA in the range of $350.0 million to $370.0 million. The Board extends our appreciation to all of our talented and dedicated people across the Group."

Revenue for the first quarter increased to $2.2 billion from $1.1 billion. The increase was primarily driven by the impact of revenue from DFC following the acquisition by Dole plc. On a pro-forma2 comparative basis, revenue decreased marginally, primarily due to a decrease in Fresh Vegetables resulting from the Value Added salads product recall in January and February 2022 and negative foreign currency translation movements which together accounted for a $112.0 million impact to revenue.

Adjusted EBITDA for the first quarter increased to $81.5 million. On a pro-forma comparative basis, Adjusted EBITDA decreased primarily due to the impact of the Value Added salads product recall, as well as a reduction in Fresh Fruit versus a strong prior year comparative, and a decrease in Diversified Fresh Produce – EMEA primarily due to negative foreign currency translation movements. These decreases were partially offset by an improved performance within Diversified Fresh Produce – Americas & ROW.

Adjusted Net Income for the first quarter was $28.2 million, compared to $25.9 million in the prior year and $58.8 million on a pro-forma comparative basis. The decreases on a pro-forma comparative basis were predominantly due to the decreases in Adjusted EBITDA noted above. Adjusted Diluted EPS for the quarter was $0.30.

Selected Segmental Financial Information (Unaudited)

Q1'22

Q1'21 - Pro-forma

(U.S. Dollars in thousands)

Revenue

Adjusted EBITDA

Revenue

Adjusted EBITDA

Fresh Fruit

$

749,803

$

61,881

$

744,614

$

91,587

Diversified Fresh Produce - EMEA

791,155

20,101

793,740

24,927

Diversified Fresh Produce - Americas & ROW

463,692

12,303

421,693

10,096

Fresh Vegetables

274,751

(12,746

)

327,701

4,534

Intersegment

(34,419

)

(21,985

)

Total

$

2,244,982

$

81,539

$

2,265,763

$

131,144

Fresh Fruit

Revenue for the first quarter increased 0.7% compared to pro-forma revenue for the first quarter of 2021. Revenue was positively impacted by increased pricing in North America and Europe as well as by higher revenues from the commercial cargo business, but partially offset by lower pricing in non-core markets and negatively impacted by a decrease in volumes sold in European and North American markets.

Adjusted EBITDA for the first quarter decreased 32.5% compared to the prior year on a pro-forma basis. The prior year comparative had the benefit of strong market conditions due to tight supply conditions following hurricanes Eta and Iota in November 2020. Adjusted EBITDA was negatively impacted by lower volumes as well as higher cost of fruit, driven by higher input costs in packaging, fertilizers and other materials, as well as higher distribution costs, driven by higher fuel and higher ocean and inland freight costs. These higher costs were partially offset by higher pricing in core markets as well as by strong performance in the commercial cargo business.

Diversified Fresh Produce – EMEA

Revenue for the first quarter was broadly in line with the prior year pro-forma comparative. On a like-for-like basis, strong revenue growth was seen across the division, largely driven by higher prices across most regions as well as by increased food service revenue, particularly in the United Kingdom ("U.K."). However, this was offset primarily by a negative translation impact on currency of $56.4 million due to the strengthening of the U.S. Dollar in the quarter against the Euro, Swedish Krona, and Sterling.

Adjusted EBITDA for the first quarter decreased 19.3% versus the prior year pro-forma comparative. The decrease in Adjusted EBITDA was primarily a result of an unfavorable impact from foreign currency movements, as a result of the strengthening of the U.S. dollar against the euro, Swedish krona and British Pound sterling and due to the impact of logistical challenges trading in North Europe as well as the timing of certain South African sales, offset in part by a strong performance in the U.K., driven by a recovery in food service.

Diversified Fresh Produce – Americas & ROW

Revenue for the first quarter increased 10.0% versus the prior year pro-forma comparative. The increase was driven primarily by higher selling prices at the end of the Chilean cherry season after a difficult end to the season in the prior year, as well as by higher average selling prices in North America, offset in part by lower revenue in South American blueberries.

Adjusted EBITDA for the first quarter increased 21.8%, driven by a strong recovery in the Chilean grape business, which had a very difficult season in the prior year due to the impact of heavy rains on quality and volumes. There was also positive development in the majority of the North American businesses; however, this positive development was offset in part by higher costs of certain vegetable products, as well as higher travel costs with the easing of COVID-19 restrictions.

Fresh Vegetables

Revenue for the first quarter decreased 16.2% versus the prior year pro-forma comparative. Revenue was negatively impacted by the packaged salads recall and temporary plant closures which impacted operations in January and February 2022 and led to a decrease in volumes of Value Added salad products sold in the first quarter. The segment was also impacted by a planned decrease in volumes in Fresh Packed vegetables products. These decreases were partially offset by improved pricing in Value Added salads products, and significantly stronger pricing in Fresh Packed vegetables products supported by the reduced volume strategy.

Adjusted EBITDA for the first quarter was a loss of $12.7 million. Fresh Vegetables Adjusted EBITDA was negatively impacted by lower revenue and lower cost absorption driven by the packaged salads recall and plant closures which impacted operations in January and February, as well as by inflationary pressures on freight, packaging and labor costs. These challenges in Valued Added salads business were partially offset by an improved performance in Fresh Packed products.

Capital Expenditures

Capital expenditures for the first quarter of 2022 was $17.3 million, which included continued progress on the final farm renovations in Honduras following the 2020 hurricanes.

Net Debt and Financial Leverage

Net Debt as of March 31, 2022 was $1.3 billion and Financial Leverage was 3.75x. On May 23, 2022, Dole entered into a new three-year, committed trade receivables arrangement that will terminate $76.0 million of the Company’s existing uncommitted non-recourse trade receivables arrangements. This facility will provide an additional source of financing for the Group at a lower cost. The maximum amount of receivables that can be sold under this agreement at any time is $255.0 million.

Outlook for Fiscal Year 2022 (forward-looking statement)

For fiscal year 2022, Dole is targeting:

  • Revenue in the range of $9.4 billion to $9.7 billion

  • Adjusted EBITDA in the range of $350.0 million to $370.0 million

  • Capital Expenditures of approximately $125.0 million

  • Net Interest Expense of approximately $45.0 million

  • Adjusted Effective tax rate in the range of 23.0% to 27.0%

The reduction in targeted Adjusted EBITDA is primarily due to a slower than anticipated return to full operating profitability in our Fresh Vegetables segment and a more negative foreign currency translation impact on translation of Euro earnings to U.S. Dollar following a strengthening of the U.S. Dollar against European currencies.

The geopolitical situation in Ukraine and Russia is ongoing and as such it remains difficult to accurately predict what overall impact this may have on global trade flows, cost inflation and foreign exchange rates, and how this might impact the Group over the remainder of this financial year.

The above outlook includes non-GAAP financial measures. Please refer to the end of this release for an explanation and reconciliation of our historical non-GAAP financial measures used in this release to comparable GAAP measures.

Dividend

On May 24, 2022, the Board of Directors of Dole plc declared a cash dividend for the first quarter of 2022 of $0.08 per share, payable on July 6, 2022 to shareholders of record on June 17, 2022.

Consolidated Statement of Operations - Unaudited

Three Months Ended

March 31,
2022

March 31,
2021

March 31,
2021

Pro-forma

(U.S. Dollars and shares in thousands, except per share amounts)

Revenues, net

$

2,244,982

$

1,051,139

$

2,265,763

Cost of sales

(2,110,943

)

(966,638

)

(2,043,829

)

Gross profit

134,039

84,501

221,934

Selling, marketing, general and administrative expenses

(124,159

)

(66,751

)

(135,930

)

Merger, transaction and other related costs

(6,777

)

Gain on disposal of businesses

242

1,539

1,539

Gain on asset sales

495

3,582

Operating income

10,617

12,512

91,125

Other income, net

2,517

295

4,941

Interest income

1,638

417

1,108

Interest expense

(11,644

)

(2,252

)

(11,292

)

Income before income taxes and equity earnings

3,128

10,972

85,882

Income tax expense

(420

)

(1,256

)

(23,991

)

Equity in net earnings of investments accounted for under the equity method

577

16,399

1,305

Net income

3,285

26,115

63,196

Less: Net income attributable to noncontrolling interests

(4,679

)

(4,806

)

(5,546

)

Net income (loss) attributable to Dole plc

$

(1,394

)

$

21,309

$

57,650

Net income (loss) per share attributable to Dole plc - basic

$

(0.01

)

$

0.38

$

0.61

Net income (loss) per share attributable to Dole plc - diluted

$

(0.01

)

$

0.38

$

0.61

Weighted average shares outstanding - basic

94,878

55,532

94,878

Weighted average shares outstanding - diluted

94,878

55,699

95,030

Consolidated Balance Sheets - Unaudited

March 31,
2022

December 31,
2021

ASSETS

(U.S. Dollars in thousands)

Cash and cash equivalents

$

215,948

$

250,561

Short-term investments

5,584

6,115

Trade receivables, net of allowances for credit losses of $23,293 and $22,064, respectively

785,626

719,114

Grower advance receivables, net of allowances of $9,764 and $9,606, respectively

102,709

72,350

Other receivables, net of allowances of $14,213 and $14,066, respectively

137,162

125,908

Inventories, net of allowances of $5,051 and $7,447, respectively

457,660

410,737

Prepaid expenses

58,214

45,339

Other current assets

16,309

11,011

Assets held-for-sale

2,974

200

Total current assets

1,782,186

1,641,335

Long-term investments

21,405

23,433

Investments in unconsolidated affiliates

126,846

128,407

Actively marketed property

37,001

50,364

Property, plant and equipment, net of accumulated depreciation of $323,144 and $283,677, respectively

1,394,556

1,430,850

Operating lease right-of-use assets

363,045

368,632

Goodwill

509,174

511,333

DOLE brand

306,280

306,280

Other intangible assets, net of accumulated amortization of $119,159 and $117,499 respectively

59,674

62,046

Other assets

125,855

98,917

Deferred income tax assets

47,238

46,371

Total assets

$

4,773,260

$

4,667,968

LIABILITIES AND EQUITY

Accounts payable

$

695,513

$

696,766

Income taxes payable

5,427

10,316

Accrued liabilities

429,297

464,931

Bank overdrafts

15,883

9,395

Notes payable and current portion of long-term debt, net

83,792

51,785

Current maturities of operating leases

73,292

73,046

Other tax

36,125

35,212

Contingent consideration

3,037

2,958

Pension and postretirement benefits

17,857

17,664

Dividends payable and other current liabilities

18,232

9,078

Total current liabilities

1,378,455

1,371,151

Long-term debt, net

1,387,941

1,297,808

Operating leases, less current maturities

298,194

305,714

Deferred income tax liabilities

149,307

145,689

Income tax payable, less current portion

40,439

40,439

Contingent consideration, less current portion

4,106

4,302

Pension and postretirement benefits, less current portion

147,621

152,149

Other long-term liabilities

105,944

105,310

Total liabilities

$

3,512,007

$

3,422,562

Commitments and contingent liabilities (See Note 16)

Redeemable noncontrolling interests.

33,949

32,776

Stockholders’ equity:

Common stock $0.001 par value; 300,000,000 shares authorized and 94,877,706 shares outstanding as of March 31, 2022 and December 31, 2021

950

950

Additional paid-in capital

792,061

792,223

Retained earnings

404,334

413,335

Accumulated other comprehensive loss

(100,962

)

(125,919

)

Total equity attributable to Dole plc

1,096,383

1,080,589

Equity attributable to noncontrolling interests

130,921

132,041

Total equity

1,227,304

1,212,630

Total liabilities, redeemable noncontrolling interests and equity

$

4,773,260

$

4,667,968

Consolidated Statements of Cash Flows - Unaudited

Three Months Ended

March 31, 2022

March 31, 2021

Operating Activities

(U.S. Dollars in thousands)

Net income

$

3,285

$

26,115

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

31,013

9,480

Incremental charges on purchase accounting valuation of biological assets

17,513

Asset write-offs and net gain on sale of assets

(495

)

Net loss on financial instruments

506

Stock-based compensation expense

648

Earnings from equity method investments

(577

)

(16,399

)

Net gain on disposal of businesses

(242

)

(1,539

)

Amortization of debt discounts and debt issuance costs

1,466

Benefit for deferred income taxes

(4,078

)

(539

)

Pension and other postretirement benefit plan benefit

(1,023

)

(415

)

Fair value movement on contingent consideration

25

41

Dividends received

810

2,075

Other

(234

)

2,084

Changes in operating assets and liabilities:

Receivables, net of allowances

(114,022

)

(39,994

)

Inventories

(48,762

)

(3,811

)

Operating lease liabilities

1,037

2,276

Accrued and other current and long-term liabilities

(32,161

)

(17,053

)

Cash flow used in operating activities

(145,291

)

(37,679

)

Investing Activities

Sales of assets

15,620

Capital expenditures

(17,330

)

(8,669

)

Acquisitions, net of cash acquired

(1,399

)

Insurance proceeds received for damage to property

776

Purchases of investments

(412

)

Investments in unconsolidated affiliates

(48

)

(596

)

Other

3

147

Cash flow used in investing activities

(2,790

)

(9,118

)

Financing Activities

Proceeds from borrowings and overdrafts

341,795

551,306

Repayments on borrowings and overdrafts

(212,414

)

(289,475

)

Payment of debt issuance costs

(7,500

)

Dividends paid to shareholders

(7,590

)

(4,307

)

Dividends paid to noncontrolling interests

(3,616

)

(2,174

)

Payment of contingent consideration

(599

)

Cash flow provided by financing activities

117,576

247,850

Effect of foreign currency exchange rate changes on cash

(4,108

)

(3,206

)

(Decrease) increase in cash and cash equivalents

(34,613

)

197,847

Cash and cash equivalents at beginning of period

250,561

160,503

Cash and cash equivalents at end of period

$

215,948

$

358,350

Reconciliation from Net Income to Adjusted EBITDA - Unaudited

...