Dole plc Third Quarter 2026 Results - DOLE PLC

Welcome to Dole PLC's third quarter 2026 results webcast. Today's webcast is being broadcast live over the internet and it's also being recorded for playback purposes. Currently, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. For opening remarks and introductions, I would like to turn the call over to the Head of Investor Relations with Dole plc, James O'Regan. Thank you, Derek. Welcome, everybody, and thank you for joining our results webcast. Joining me today are our Chief Executive Officer, Rory Byrne, our Chief Operating Officer, Joanne Linden, and our Chief Financial Officer, Jacinta Devine. During this webcast, we'll be referring to presentation slides to supplement our remarks, and these, along with our earnings release and other related materials, are available on the Investor Relations section of the WPLC website. Please note, our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made, and the company expressly disclaims any obligation to update or revise any forward-thinking statements. Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and press releases. Information regarding the use of non-GAAP financial measures may be found in our press release, which also includes a reconciliation to the most comparable GAAP measures. With that, I'm pleased to hand over to Rory. Thank you, James, and welcome everybody to our latest earnings call as we discuss our results for the third quarter. So, turning firstly to slide four, our third quarter performance demonstrated the resilience of the group in in what remains a challenging operating environment, with adjusted EBITDA of approximately $84 million, which is 4% ahead of the prior year. Fresh fruit delivered an improved results compared to the third quarter 2025, despite continuing cost pressures. Diversified Americas and the rest of the world delivered another strong performance, while diversified EMEA was modestly behind what was a particularly strong prior year comparative. Stepping back and looking back over the last 18 months we have taken some critically important strategic steps. The sale of our fresh vegetables division, the transfers of the way down to the state of Hawaii and more recently and importantly the sale of the Ecuador port. Together with strong free cash flow generation during the quarter these actions have considerably strengthened our balance sheet with net leverage reducing to 1.3 times at the end of September. dole today is a more focused and resilient business with greater financial flexibility this leaves us better positioned to progress our strategic and capital allocation priorities and to successfully navigate economic weather related and other external challenges in that context at the beginning beginning of july we completed the acquisition of green foods fresh produce business in scandinavia integration is progressing well and we are moving forward with our plans for the long-term development of the helting board facility acquired with the business over the coming years we plan to invest in advanced warehouse automation and robotics technology driving greater efficiencies across the combined business and further strengthening our platform in the region we also continue to return capital to shareholders investing 10 million dollars in share repurchases during the quarter bringing our total spend for the first nine months to $24.6 million. Turning now to the operational review and beginning firstly with the fresh fruit slide on slide seven. Fresh fruit delivered an improved result in the third quarter within a complex operating environment with year-on-year adjusted EBITDA growth of 6%. As we anticipated on our last earnings call, contractual pricing mechanisms, including fuel surcharges with our North American customers provided a benefit in the quarter and helped offset some of the higher costs absorbed earlier in the year. Looking at our two main product categories in more detail and firstly looking at bananas. In North America underlying banana pricing improved while volumes were lower. Supply was impacted by adverse weather conditions during the quarter including the effects of El Nino. Against this backdrop we remained focused on meeting customer requirements while maintaining our disciplined approach to profitability. In Europe, volumes remained strong, while pricing was broadly in line with the prior year. For pineapples, fruit availability continued to be impacted by adverse weather conditions, but production costs remained elevated, including from the continued strength of the Costa Rican Cologne. Looking ahead to the fourth quarter, we continue to face elevated input costs, particularly for fuel, shipping and freight, together with the ongoing effects of El Niño on supply. Will the shipping and fuel surcharge mechanism provide an offset in North America? In Europe, where we do not have the same level of protection, higher shipping fuel costs will have an adverse impact of approximately $16 million for the full year, relative to our original expectations for 2026. Despite these pressures, we still expect a year-on-year improvement in fresh fruit in the fourth quarter, although at a lower level than we anticipated at the time of our second quarter results our focus remains on the areas within our control commercial discipline cost management and operational execution turning now to diversify the mail this segment delivered another solid performance in the third quarter against a particularly strong comparative period our scandinavian business performed strongly and our focus since completing the green food produce fresh produce acquisition in July has been on integrating the business and progressing our longer term plans for the Helsingborg facility. South Africa continues to be impacted by the conflict in the Middle East and we expect this to continue into the fourth quarter. Overall, the segment continues to perform well and we are targeting a result in line with the prior year. Turning to diversified Americas, this segment had delivered another strong quarter, continuing the positive momentum we saw in the first half and contributing strongly to group performance through the first nine months of the year. Our North American business performed particularly well with positive volume development across a number of key product categories, including kiwis, avocados, grapes and tomatoes. The fourth quarter is an important period for the segment, marking the start of several key export seasons from Chile and Peru. Our focus is on executing well through these important programs as we close out the year. And with that, I'll hand you over to Jacinta to give the financial review for the third quarter thank you rory turning firstly to the group results on slide 11 revenue for the 3rd quarter increased 3.8 percent to approximately 2.4 billion dollars driven by growth across both diversified segments and the net impact of m a activity partially offset by lower revenue and fresh fruit on a like-for-like basis revenue increased two percent gross profit increased by 13.5 million to 168.7 million while smgna and expenses were 3.8 million higher operating income increased significantly to 88.9 million primarily reflecting the gain recognized on the sale of our port facility in ecuador together with the improvement in gross profits net income increased to 48.3 million compared with 13.8 billion in the prior year this primarily reflected higher operating income lower interest expense and the absence of losses from discontinued operations recorded in the prior year partially offset by higher tax expense mainly due to the tax arising on the ecuador port sale looking now at the non-gap performance measures adjusted epda increased 4.1 percent to 84.1 million driven by strong performance in diversified Americas and rest of the world, and an improved result in fresh fruit, partially offset by a modest decrease in diversify EMEA. Adjusted net income was $15 million, broadly in line with the prior year, while adjusted diluted EPS was unchanged at $0.16. Turning now to the divisional updates and starting with fresh fruit on slide 13. Revenue decreased 8% to £818.7 million. The decrease was primarily due to tariff-related impacts, together with lower banana volumes in North America and reduced pineapple supply in Europe. Adjusted EBITDA increased 6% to €28.8 million, with improved banana pricing in North Africa and strong banana volumes in Europe contributing positively to the result. These benefits were partially offset by higher pineapple production costs and increased fuel-related shipping and logistics costs. As expected, fuel surcharges in North America provided a partial offset to the higher shipping fuel costs during the quarter. Turning to diversified fresh produce in media, revenue increased 9.3% to approximately 1.1 billion, primarily driven by the acquisition in Scandinavia and higher underlying growth in the region. partially offset by lower revenue in Spain. On a like-for-like basis, revenue increased 4.1%. Adjusted EBITDA decreased 3.1% to 39.5 million, primarily reflecting a weaker performance in the Netherlands and Spain, partially offset by improved performances in Scandinavia, Ireland and the UK. On a Like-for like basis, adjusted EBIT DA decreased 2%. percent. Finally, Diversified Americas delivered another strong result in this quarter. Revenue increased 14.1 percent to 479.2 million, primarily driven by higher volumes in our North American business. The strong performance in our South American business drove the adjusted EBITDA increase of 22.8 percent to 15.8 million in the quarter. Turning to slide 16 for a view of key cash items and net leverage. The quarter saw strong operational cash flow generation of 132.2 million and 123.7 million in the year to date. The year-on-year improvement reflected lower seasonal working capital outflows, the timing of tariff-related inflows, as well as lower tax and interest payments. Capital expenditure was approximately 21.8 million and we have spent 64.4 million year-to-date. Investment includes farming projects in Latin America and distribution facilities, ripening rooms and machinery related to blueberry and avocado packing in Europe. For the full year, we now expect capital expenditure of $90 million. Overall, we generated free cash flow of $110.4 billion in the quarter, an increase from $66.5 million in Q3 2025. and year-to-date an increase of 125.5 million. This strong free cash flow, along with the proceeds from the completion of the Ecuadorian port sale, drove the reduction in net debt to 491.3 million and net leverage of 1.3 times at the end of the quarter. Looking forward, we now expect net debt and net leveraged to finish the year at a similar level. This is a comfortable level of leverage for the Group and provides us with financial flexibility now i will hand you back to rory who will provide an update on our outlook for 2026. thank you jacinta so as we move into the final quarter of the year we are pleased with the resilient performance of our group in the face of an ongoing challenging operating environment however we continue to face higher input costs particularly fuel and shipping costs together with the ongoing impact of adverse weather conditions on fruit availability While we continue to expect a year-on-year improvement in the fourth quarter, our expectations are now at a lower level than anticipated at the time of our second quarter results. With that, we are now targeting full-year adjusted EBITDA in the range of $380 to $390 million for 2026, compared with approximately $400 million previously. Importantly, we're pleased with the Group's strong cash flow generation year to date and significant progress made in strengthening our balance sheet this leaves us well positioned to execute against our strategic and capital allocation priorities including driving operating efficiencies across the group investing in and expanding the business in a disciplined manner and delivering returns to shareholders so with that i'll hand you back to the operator to open the line for questions we will now begin the question and answer session if you'd like to to ask a question, please press Start 1 to raise your hand. To withdraw your question, press Start1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes in the line of Christopher Barnes with Deutsche Bank. Your line is now open, please go ahead. As a reminder, please make sure to unmute locally to ask your question. Christopher Burns, your line is now open. Please go ahead. Your next question comes from the line of Boren Sharma with Stephens. Your line is now open. Please go ahead. Good morning, and thanks for the question. Wanted to start off just maybe better understanding the change in guidance. You've gone from approximately 400 million to midpoint of 385 million today, which roughly in line with the 16 million of European fuel cost headwind you called out. but I believe the $16 million is relative to your original expectations for the year when guidance was at least $400 million. So I just wanted to ask, can you maybe help us understand how much of that fuel cost pressure is incremental from what you were saying last quarter? And more broadly, is the reduction in guidance primarily fuel-related or any other operational factors we should be keeping in mind thanks poor and yeah i mean the biggest single mover is definitely the fuel and you know we just wanted to highlight that if you look at even the basic brent rate for 2025 was an average of something like 65 dollars a barrel q1 with the last with the the last month in particular went up to 78 dollars a bar q2 up to 96 q3 up to 90 and so far in q4 that's at 106. so obviously as against our original expectations that's a huge impact in it there's some other knock-on consequences in terms of cost with um you know knock-in costs and fertilizer increases some bucks increases and i think on top of that we've just been a little bit unlucky in that the the weather in particular particularly in our pineapple business with the the mdf which is a technical issue that brings forward the production and gives poor quality and smaller sizes of route and that has had a reasonably big impact on it but the biggest single factor is definitely fuel that's what we wanted to highlight that particular number as part of the the adjustment in the guidance but again i think you stand back from it you look at the world that we live in you look up the radical nature of the change in some of the basic input costs um i think our teams have done pretty well to react more than satisfactory as quickly as possible in that context. Got it. Appreciate the color there, Rory. Maybe just shift into my follow-up. Last quarter, we talked about fresh fruit historically being a 5% to 6% EBITDA margin business. But just thinking of the headwinds on fuel and even just supply availability weather concerns do you anticipate um you know at a high level these pressures to kind of drag on to the first half of next year any sort of high level um any sort of high-level breadcrumbs on on how these factors will impact fresh fruit next year would be helpful yeah i mean obviously um you You know, we're pleased that Q3 is better than the Q3 of last year, and we're hoping that Q4 is also going to be better than last year. But just not quite as much ahead as we had originally anticipated. It's a bit early to be forecasting for 27, but I think the reality is that, you know, when we've had these kind of very radical inflationary increases by the very unusual events that the world has suffered, particularly around inflation and the fuel costs, It does take for the fixed price contract aspect of the business a little bit of time to get that properly reflected. In our North American business, there's been a long established bunker surcharge clause that gives us the ups and downs of fuel because it's the biggest single factor going into the equation. And that's worked well and is a well-established principle in the industry. so we're hopeful that you know in terms of the fresh fruit business the reality in particular around yields and some fall off in yields expected going into 27 that the customer base something that's been a huge amount of publicity within the industry highlighting the issues from the different all of the production regions and I think everybody is aware of it and ordinarily because they are industry-wide issues the market reacts to it appropriately so we are hoping that will be the case going into 2027. Got it. Appreciate the color. Thank you very much. Thank you. Your next question comes on the line of Balzone. with Freedom Broker. Your line is now open. Please go ahead. Hi, everyone. Thank you for taking my question. To what extent has higher underlying banana pricing north america covered increasing fruit sourcing costs uh as contours renew is there an opportunity to improve the spread between selling prices and sourcing posts yeah thanks for the question um you know obviously we don't um just we're legally precluded from getting into too much detail on a public call around pricing but we do you know in answering poor ann's question there I think most of our customer bases as a mature industry are very familiar with the underlying dynamics at the production side of the business and the cost side of the business. So ordinarily, we believe that the market should react in an appropriate way to adjust the pricing to reflect the current conditions. And that's certainly our objective going into 2027. That is what should emerge. You gotcha. Thank you. As a reminder, if you'd like to ask a question, please press Start 1 to raise your hand. To withdraw your question, press Start1 again. Your next question comes from the line of Gary Martin with Davey. Your line is now open. Please go ahead. Hi, Rory, Jacinta and Johan. Can you let me know if you can hear me just because I'm having some technical issues on my side here? We've got you, Gary. Good to hear, good to hear. Hopefully, this question hasn't been asked already because I dropped off the call there briefly, but it would be good to get just a bit of a refresh on the capital allocation policy. And particularly, I think there's a slightly lower CapEx guide for the year. It would just be good kind of run through the technicalities of that and just how to extrapolate that forward and just in terms of just the different tenets of your policy moving into FY27 and beyond? Yeah, I mean, just in general terms on our policy on capital allocation, we do cover all of the different elements of capital allocation. So, you know, we've highlighted what we did on buyback. It's one tool in the kit. And, you Know, we have executed, you know, a reasonable percentage of the overall buyback permission that we have we keep an opportunistic approach to that you know we've looked at our dividend we've had our dividend steady in the current year with a lot of investors who are pleased with that and then we've a lot activity going on and looking at all of the the investment activity within the business and that's obviously a combination of of replacement and maintenance capex but more importantly then we have a range of development capex opportunities that we're constantly studying and exploring we look at you know some major acquisitions as well but i think you know in the short term the more likely outcome is around bolt-on acquisitions um just with the you know the values in terms of making sure that we if we do an acquisition it does clearly add um value to to the equation so we've done a lot of work in in getting our balance sheets into much much much much stronger position um you know the disposal of the ecuador port in particular you know very important and significant um valuable deal from a group perspective in that you know we realize the guts of a net 100 million dollars in cash with negligible impact on earnings so it's rare to find those kind of deals so we're very pleased with that and i think all of those just gives us a little bit more flexibility in terms of all of the normal ongoing capital allocation analysis that we do, Gary. That's really helpful. Just maybe have a follow on, Rory. I know we've spoken in the past around the M&A pipeline, moving from weakness to strength to weakness, et cetera. How does the current pipeline look right now just in terms of prospective targets out there in the market well there are quite a few um players you know private equity guys both in north america and europe who are looking at exits on a range of deals it's pretty public knowledge as well so you know we keep a close eye on all of those um opportunities and we have got predetermined internal rules around the kind of prices that we're going to pay and you know obviously that's impacted or affected by the way the stock market looks at us and how we can be absolutely sure if we do acquire something that it is going to be shareholder value enhancing so um the pipeline is interesting i think i said a couple of minutes ago the more likely scenario in the short term definitely is some smaller bolt-on acquisitions that can be interesting to to grow in different particular geographies but we keep our eyes on you know all the activity not just in europe and north america but you know the far east down under australia and new zealand um and you know to see what's happening in the industry and having a bit more financial flexibility gives us more capacity to look at deals but we will remain disciplined in terms of the price we would um pay for any acquisition that's really helpful uh maybe just a change tacked a tiny bit just moving to the the operational component um just on diversified americas and rest of the world it's been a particularly strong uh succession of quarters now um i guess i'll ask the same question that i i do typically ask which is how sticky do you expect this to be into the future and as we kind of think about the different moving parts of performance and profitability into FY27? Will this be a positive contributing factor there? I think we've done very well in the America's rest of the world over the last number of years. We're hoping to sustain that. We've been growing the business. We've added in some new suppliers. We've created some big efficiencies in terms of how we do our marketing and consolidate our different activities in North America. um we've been developing well our our rp north american business has performed very well this year and we've developed across a range of categories in a very strong way there so and then we've no reason to think today that you know we don't have a strong underlying base within that business it gives us a sensible platform to move forward with that's pretty helpful and then maybe just a more kind of wide ranging question just around el nino um do you think that there's still a degree of tail risk out there in the market just in terms of of yields and potential knock-on impacts because of that and just maybe a kind of a more competitive kind of side of the uh of the coin i mean do you think that you're better positioned than some of your uh your counterparts out there on the market and is this a potential opportunity for for dole from a competitive perspective yeah i mean we've been watching the menu really from the start of the year and i think as time has progressed um the predictions that it was going to be one of the strongest on record um are starting to come through without a doubt over the years we've you know as we've said on previous calls we've done a lot of work within our own organization so you know the areas that we get too much rain in such as ecuador we've improved our flood flood protection, our drainage systems to make sure that we can cope with it as best as we can. And in some of the other areas where you get impacted by drought, we've improved our irrigation systems. There is no doubt that it's stronger. It's at the strong end of the predictions and that can have an impact on yields without a doubt, particularly in Central America. And the country of Colombia as well has had some quite significant impact from weather and a lot of variability in weather, which has been particularly unhelpful. So I think certainly in the banana business, we have the broadest diversified sourcing base and that should be helpful to us. But I think the whole industry is going to suffer some shortage of volume and that shouldn't get reflected in the market reaction to that. And the other categories and diversified certainly other countries like the northern part of Peru, for example, we believe is going to be quite seriously impacted on an isolated basis. So we think that that can impact on products like blueberries and grapes. We're not too strong in that area, but we're keeping our eyes on it carefully. So there's a bit of volatility to unfold over the next few months, Gary, but, you know, we're watching it carefully and we believe we'll be able to manage our way through it in a satisfactory way. That's super helpful. And maybe just one final question, just on the kind of greater cost complex and just with an eye to customer negotiations of that kind of component of costs that are more directly negotiated with some of your customers. If possible, can you give us a bit of an indication as to how those discussions are going from a kind of pass-through perspective? Yeah, I mean, as you know, in the two diversified divisions, We've got dynamic pricing that reflects on an ongoing basis and more directly, and the impact of those cost item changes going into the mix. And we've been able to work our way through that pretty satisfactorily. On the fresh fruit business, which has a higher element of fixed price deals on bananas and pineapples, I mean, those negotiations are starting. they're underway and you know we really you know were precluded from getting into too much details in a public forum around the specifics of pricing or percentage recovering but they are industry-wide issues everybody's suffering very similar or broadly similar even worse consequences than than we are so ordinarily the market understands that and the market reacts appropriately to that so that is our expectation that's super helpful uh i'll pass it on thanks so much thank you guys your next question comes on the line of christopher barnes with deutsche bank your line is now open please go ahead hi good morning good afternoon hopefully you can hear me now we got you now chris yeah okay great um i guess first just coming back to the ebitda guidance The revised range still implies a relatively strong growth in Q4, like up 9% at the low end. Like, so just given the cost inflation and volatility you've encountered this year, how much visibility and confidence do you have around that target? And just what are the key drivers to keep in mind over this next couple of months? Yeah, I mean, I think I've tried to outline the drivers in us, and we had an expectation of probably an even stronger Q4. We had a weaker Q4 last year, which is certainly a factor going into the equation, Chris, in terms of the comparator. So that's helpful in terms OF setting the benchmark for the outcome for Q4 and probably the biggest single driver in it. Obviously, in term OF reviewing the guidance, we do a lot OF interaction with all OF our operating divisions to give our best estimate of what we believe the quarter or the full year is going to come out. But there's no doubt that this is a complex time to provide very accurate guidance. So I think, you know, you have something like a three to five percent fall against the expectation is pretty minimal in the overall scheme of things. You know, that's the guidance we put out based on the best information we have today. And, you Know, we put it out with the full confidence and expectation that that's a target that we will achieve. Understood. And just another question around just the broader banana industry. You've alluded to it a couple of times on this call, but obviously your peers have cited some of the unsustainable pricing levels in bananas amid years of inflation, geopolitical disruption, weather. Just as production, supply chain, transportation costs continue to rise, just how are you approaching pricing and planning discussions both with with your retailers but also with your like banana growers into next year and then just like the longer like medium term i think that'd be helpful perspective thanks yeah i i think you know in macro terms the way we approach it is the way we have always approached we just look at the reality that that we're facing um and you know if costs go up or yields go down or there's an impact like that we are very transparent with our customer base we've been working with our major customer base both in North America and Europe for a long long time there's a high degree of integration in most of the key relationships and there's high degree transparency around the factors affecting the industry in general terms And I think just with the amount of information coming out from the industry, from industry bodies, I think our customer base and some of our grower base are also very, very familiar with all of the issues. So we've an experienced management team, you know, dealing with the ups and downs of the industry, managing it quite effectively over a long period of time. And we'll apply the same rigor thought processes that we've always done and managing through the variables that you've just identified, Chris. And, you Know, historically, we've been able to manage our way through those in a pretty satisfactory way. And we hope to do the same going into 2027. Great. Thank you. And then just one final one for me, just around El Nino. I'd love just some updated soften perspective. You provided some around like your direct impacts on your farms and some of your key growers, but how resilient would you say the infrastructure in some of these key growing and sourcing regions is? And how equipped are you to navigate any logistical disruptions that may arise and um utilize alternative sourcing to the extent like you have disruptions on roads or bridges or ports just some of that like um indirect i i i think we're we're better equipped than pretty much anybody else in the industry and you know on the banana side our our diversified sourcing base is much better than pretty Much all of our competitors So that gives us a high degree of flexibility around adapting or adjusting if necessary with circumstance, corporate. But I think, you know, the main infrastructure around roads and bridges or other issues that you've mentioned, I think we're not expecting that kind of fundamental structural damage. This is more storms, short-term storms, you know, very heavy rain or lack of rain in the drought-affected areas. But, you known, some heavier storms than usual, but not so heavy that they're going to cause infrastructural damage or inability to handle the fruit. Got it. That's very helpful. Thanks so much. Okay. There are no further questions at this time. I will now turn the call back to Rory Byrne, CEO, for closing remarks. Thank you. Okay, so to wrap up, I think, you know, we are reasonably pleased with the progress that we've made in the business during the first nine months of the year. Our performance demonstrates the resilience of our overall group, and we remain confident in our ability to deliver sustainable growth and value over the long term. And I'd like to give a huge thanks to all of our people across the group, you know, in these kind of years where it's more complicated than normal. We really need and we really value the commitment and the continued hard work from everybody in all aspects of the group. Really appreciate the support from our shareholders, from our customers and suppliers. So thank you all for joining us today and for your continued interest in Dole. Thank you. This concludes today's call. Thank you for attending. 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