Fresh Del Monte Produce Inc.

Transcription

1 Fresh Del Monte Produce Inc. Investor Relations Fourth Quarter 2017 February 20, 2018

2 Forward-Looking Statements This presentation contains certain forward-looking statements regarding the intent, beliefs or current expectations of the Company or its officers with respect to the Company s plans and future performance. These forward-looking statements are based on information currently available to the Company and the Company assumes no obligation to update these statements. It is important to note that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. All forward-looking statements in this presentation are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. The Company s plans and performance may also be affected by the factors described in Item 1A. Risk Factors in Fresh Del Monte Produce Inc. s Annual Report on Form 10-K for the year ended December 29, 2017 along with other reports that the Company has on file with the Securities and Exchange Commission. 2

3 Agenda Fresh Del Monte At A Glance Looking Into The Future Strengths We Are Building On Strategic Direction Financial Overview 3

4 Fresh Del Monte At A Glance Del Monte brand established Fresh business separated from canned Del Monte Fresh Produce acquired by current management; 1997 IPO NYSE Introduced the first new pineapple variety in more than 15 years; the Del Monte Gold Extra Sweet Pineapple Expanded value-added to include fresh-cut fruit and vegetables Acquired Del Monte Foods Europe Acquired Caribana-banana farms and pineapple production 2013 and Acquired tomato agricultural production land in Florida and Virginia Launched a protein line in Dallas facility and opened Company s first distribution center and fresh-cut facility in Canada Acquired blueberry and deciduous farms in South America Announced new joint ventures with Del Monte Pacific Limited and invested in banana production in Panama Announces intent to acquire Mann Packing 4

5 One of the world s leading vertically-integrated producers, distributors and marketers of fresh and fresh-cut fruit and vegetables as well as a leading producer and distributor of prepared fruit and vegetables, juices, beverages, snacks and desserts in Europe, Africa, the Middle East and countries formerly part of the Soviet Union. North America Europe and Africa Asia Pacific Middle East and North Africa Colombia, Ecuador, Central America and Brazil South America 42,000 Employees 11 Owned / 7 Chartered Vessels 41 Worldwide Distribution Centers / 119 Fresh-Cut Operations / 17 F&B Stores 24 in North America 11 in North America 5

6 Who We Are Experienced and Results Oriented Global Leadership Team Name Title Years at FDP Mohammad Abu-Ghazaleh Chairman and CEO 21 Youssef Zakharia President and COO 17 Richard Contreras Senior Vice President and CFO 18 Bruce A. Jordan Senior Vice President General Counsel and Secretary 15 Marissa R. Tenazas Senior Vice President Human Resources 21 Hans Sauter Vice President Corporate Research & Development and Agricultural Services 29 Jorge Pelaez Vice President CECAB (Colombia, Ecuador, Central America and Brazil) 32 Emanuel Lazopoulos Senior Vice President North America Sales, Marketing and Product Management 14 Paul Rice Senior Vice President North America Operations 29 Sergio Mancilla Vice President South America 21 Gianpaolo Renino Vice President Europe and Africa 13 Mohammad Abbas Vice President MENA (Middle East & North Africa) 11 Hector Rivera Vice President Asia Pacific 6 6

7 Fresh Del Monte At A Glance - Continually Evolving Company Then Now Product Range Commodity Producer Limited Truckload shipments 2 Distribution Centers ( DC s ) Sourcing Delivery System Logistics Chartered vessels Predominantly retailers & wholesalers Customers More than 100 products Global basis Truckload shipments, Just in Time ( JIT ), Direct Store Delivery ( DSD ) Global DC s & Fresh-Cut Operations ( FCO s ) Owned & chartered vessels Retailers, Club Stores, Convenience, Petro Stations, Quick Serve Chains, Foodservice 7

8 Fresh Del Monte At A Glance Then and Now Expanded Products Platform Net Sales by Product 3% 2% 4% 6% 8% 15% 1% 8% 2% Melons Pineapples Fresh-Cut Products Non-Tropical Fruit 15% Avocados Bananas 75% Other Fruit, Products & Services Bananas Gold Pineapple 6% Other Prepared Food 12% 43% Melons Tomatoes Vegetables Net Global Sales of $1.2 Billion Bananas 75% Other Fresh 21% Other 4% Net Global Sales of $4.1 Billion Bananas 43% Other Fresh 49% Prepared Food 8% 8

9 Fresh Del Monte At A Glance Then and Now International Expansion Net Sales by Region % Asia Asia 13% Europe 16% 49% Other 58% Middle East & North Africa 35% North America Europe 13% Other North America 2% Net Global Sales of $1.2 Billion Net Global Sales of $4.1 Billion North America $2,382.4 / Europe $665.9 / Middle East $518.8 / Asia $460.2 in Millions 9

10 Looking Into The Future

11 Looking Into The Future Global Population Farm Acreage Per Capita 5.0 9,500 9,017 8,499 9,000 Millions 8,000 7, ,868 8, , , , , Source: The United Nations (2010) Source: Food, Land, Population, and the US Economy Cornell University / Instituto of Nazionale della Nutrizione (1994) 11

12 Looking Into The Future By 2050, demand for food will rise 70 per cent yet our capacity to increase food production is declining. Source: Oxfam International, June 1, 2011 We will need to double irrigation by 2050 to grow enough food to meet demand of an estimated population of 9 billion people Source: WWF ( CONCLUSION Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by With limited land and water resources, this will automatically lead to increased valuations of productive land. Source: Joachin von Braun, International Food Policy Research Institute 12

13 Looking Into The Future Fruits and vegetables are expected to continue experiencing growth in niche areas as consumers persist in seeking out novel flavors from around the world. Increases in disposable personal income will support purchases of premium fruits and vegetables, including non-g.m.o., organic, and locally grown types. Also, marketing strategies focusing on health and the delicious taste of fresh produce will help fruits and vegetables to expand their appeal and per capita consumption. Source: Food Business News 2017 The U.S. fresh-cut fruit and vegetable market is one of the fastest growing segments in the category. It is an estimated $27 billion market. Retail dollar and volume sales are increasing. Continued growth is forecasted for this segment as the need for convenience continues to be relevant for consumers. As Euromonitor International reports, fresh-cut produce offers healthier grab-and-go options for new consumption patterns, such as a renewed focus on breakfast and more snacking occasions. Source: Produce Marketing Association

14 Why Invest in Fresh Del Monte Produce? Global brand with leadership across categories Leader and industry pioneer in consumer and industry trends Unique vertical integration strategy Financial strength 14

15 Strengths We Are Building On

16 Strengths We Are Building On - The Del Monte Brand High Brand Recognition One of the most widely recognized food brands worldwide-over 90% awareness Leadership positions across several categories Global footprint One of the 2 top of mind brands when consumers are asked to remember a fresh produce brand Broad Appeal Transferability of brand to new products and categories Ease of entry into new markets Greater acceptance at a lower cost of entry Health & Wellness / Convenience No artificial ingredients, fresh, high quality products Better-for-you attributes Toddlers to retirees Delivery platform - grocery stores, club stores, convenience stores, pharmacies and petro stations 16

17 Strengths We Are Building On Industry Leader Leader and Pioneer in Consumer and Industry Trends We were the: FIRST to introduce premium gold pineapple FIRST to complete national distribution network FIRST to launch national fresh-cut fruit FIRST to achieve GlobalG.A.P. We are the: ONLY true multi-national fresh produce company 17

18 Strengths We Are Building On Research and Development Most Innovative Fresh Produce Company Del Monte Gold Pineapple US Fresh Pineapple Per Capita Consumption Lbs Introduction of Del Monte Gold Extra Sweet Pineapple / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /13 P 0.00 Source: USDA Fruit and Fruit and Tree Nut Yearbook 18

19 Strengths We Are Building On Leader & Innovator Net Sales in Millions Most Innovative Fresh Produce Company Fresh Cut Fruit & Vegetables 19

20 Strengths We Are Building On Leading Market Positions #1 Marketer of fresh pineapples worldwide #1 Marketer of fresh-cut fruit in the U.S., Canada, Japan, U.K., UAE and Saudi Arabia #3 Marketer of bananas worldwide A leading marketer of branded avocados in the U.S. A leading marketer of branded grapes in the U.S. A leading marketer of branded canned fruit in European markets and the Middle East A leading marketer of branded non-tropical fruit in selected markets A leading marketer of poultry and meat products in Jordan 20

21 Strengths We Are Building On Production and Sourcing In % of Our Fresh Produce was Grown on Company-Controlled Farms Europe Fresh & Fresh-cut fruit and vegetables Prepared Food North America Fresh & Fresh-cut fruit and vegetables Prepared Food Protein salads & snacks Mexico Sourcing Avocados Vegetables Colombia, Ecuador, Central America & Brazil Sourcing Bananas Pineapples Melons Mangos Plantains IQF Coconuts Greenhouse: Tomatoes, Bell Peppers, Cucumbers and Other Vegetables Middle East & North Africa Fresh & Fresh-cut fruit and vegetables Prepared Food Poultry & Meat South America Sourcing Avocados Non-tropical Berries Asia Bananas Pineapples Fresh-cut fruit Non-tropicals Africa Sourcing Bananas Pineapples Prepared Food 116,131 Acres Under Production 68,322 Acres Owned / 47,809 Acres Leased 21

22 Strengths We Are Building On Quality & Safety Our Commitment to Best in Class Quality Assurance and Food Safety Systems To demonstrate compliance with international regulations and standards on environmental protection, food safety and social accountability, our farms and our facilities are certified by one or more of the following standards: Global GAP Rainforest Alliance ISO and ISO 9001 PrimusGFS SCS Sustainably Grown FSSC / ISO OHSAS SQF SIFAV Certifications carried out by external and internal parties are conducted on a regular basis On-going training in all areas of quality and safety Trained quality control professionals Chemistry, Microbiology and Agricultural Services 22

23 Strengths We Are Building On Unmatched Scale and Scope A Key Differentiator - Quality Control, Lower More Stable Costs and Value-Added Services 23

24 Our Growth Strategy

25 Strategy for Long-Term Growth Leverage Diversify Global footprint Product categories Delivery channels Minimize dependence on bananas Capitalize on Del Monte brand with new joint ventures Increase market share and leadership position through acquisition of Mann Packing Control costs and improve efficiencies 25

26 Strategy In Action Leveraging Infrastructure Maximizing Our Existing Infrastructure Agricultural land Increase our own production versus independent growers Logistics Refrigerated vessels, containers and trucks Higher-margin products essentially ride for free Distribution centers, fresh-cut and protein facilities Streamline operations, leverage sales capabilities 26

27 Strategy In Action Leveraging Infrastructure 27

28 Strategy In Action New Products and Packaging 28

29 Desire for convenience Pre-washed and pre-packaged Healthy and on-the-go Ready-to-eat/use Premeasured and customized packaging Health and wellness Food safety FOOD SERVICE CONSUMERS Strategy In Action Large Market Opportunity 29

30 Strategy In Action Build Relationships, Closer To Consumers Retailers Foodservice Warehouse & Club Stores Casual Dining & Quick Serve Convenience Stores 30

31 Strategy In Action Joint Ventures Growth Opportunities Will increase product portfolio and scale of Del Monte brand Opportunity for each partner to share expertise and optimize economies of scale Settlement of all active lawsuits in the United States between the parties centered on licensing rights and distribution Joint Venture: Product Category: Del Monte Food & Beverage Retail F&B Stores Del Monte Chilled Juice Chilled juice Del Monte Refrigerated Fruit Products Extended shelf life, refrigerated and chilled fruit products Del Monte Avocado/Guacamole Products Extended shelf life, refrigerated avocado products such as guacamole In addition to the joint ventures, the companies have entered into a long-term mutual supply agreement to accelerate expansion of Del Monte products sales in various markets around the world. 31

32 Strategy In Action Joint Ventures The Del Monte Brand F&B Stores 32

33 Strategy In Action Acquisition Mann Packing Company Leading supplier of fresh vegetables Best known for innovation Customers are household names in the retail channel Food service customers are some of the nation s largest Diversified revenue base - commodity products, value-added and co-pack In 2017, Mann Packing estimated revenues of $535 million Purchase price of $361 million Expected closing of the transaction is late February 33

34 Strategy In Action Mann Packing Company Timeline 34

35 Strategy In Action Mann Packing Company Strong Brand Equity & Superior Products In the U.S., Mann Packing is the #1 Producer of Sugar Snap Peas #1 Florets & Blends #2 Green Beans #1 Producer of Sweet Potatoes and Butternut Squash 35

36 Strategy In Action Mann Packing Company Leading Innovator Known industry-wide Value-added, high margin products Healthy eating movement Transcends all channels 36

37 Strategy In Action Mann Packing Company Synergies & Opportunities Mann s fresh-cut vegetables are the perfect complement to Del Monte s fresh-cut fruit Better own the shelf with a wider assortment of product offerings Leverage Mann s retail sales team Leverage Del Monte s distribution network and infrastructure Leverage Del Monte s strong presence in club and warehouse stores, in casual dining, convenience stores and quick-serve restaurants Leverage Mann s marketing expertise and spirit of innovation Leverage combined purchasing power Leverage Del Monte s farming presence and expertise in Guatemala to supplement products from Mexico winter production 37

38 Selected Financial Highlights

39 Financial Performance Summary Data in Millions Net Sales Gross Profit % margin Operating Income Net Income EPS - GAAP EPS Adjusted* Operating Cash Flow Capital Expenditures Total Debt 2013 $ 3,684 $ 290 8% $ (28) $ (34) $ (0.61) $ $ 3,928 $ 365 9% $ 174 $ 142 $ 2.53 $ $ 109 $ 231 $ 160 $ 149 $ 251 $ 267 Full Year 2015 $ 4,057 $ 342 8% $ 91 $ 62 $ 1.17 $ $ 4,012 $ % $ 244 $ 225 $ 4.33 $ $ 4,086 $ 332 8% $ 153 $ 121 $ 2.39 $ 2.44 Full Year $ 231 $ 332 $ 194 $ 132 $ 147 $ 139 $ 254 $ 232 $ 357 * Excludes asset impairment & other charges. 39

40 Financial Performance Bananas in Millions Price / Box Net Sales Gross Profit* Gross Profit Margin $ $14.80 $ 1,693 $1,805 $ 62 $ 109 4% 6% Full Year $ $ $ $ 1,868 $ 1,812 $ 1,775 $ 77 $ 159 $ 113 4% 9% 6% 4th Quarter $ $ $ 431 $ 421 $ 5 $ 15 1% 3% * Excludes asset impairment & other charges. 40

41 Financial Performance Other Fresh Produce in Millions Net Sales Pineapples Fresh-Cut Non-Tropical Avocados Gross Profit* Gross Profit Margin 2013 $ 1,639 $ 510 $ 408 $ 296 $ 99 $ % 2014 $ 1,745 $ 577 $ 381 $ 284 $ 130 $ % Full Year 2015 $ 1,826 $ 525 $ 467 $ 271 $ 175 $ % 2016 $ 1,853 $ 495 $ 517 $ 260 $ 230 $ % 2017 $ 1,997 $ 493 $ 608 $ 236 $ 315 $ 180 9% 4th Quarter $ 441 $ 455 $ 124 $ 128 $ 131 $ 139 $ 45 $ 41 $ 60 $ 68 $ 38 $ 31 9% 7% * Excludes asset impairment & other charges. 41

42 Financial Performance Prepared Food in Millions Sales Gross Profit* Gross Profit Margin Full Year $ 353 $ 378 $ 363 $ 347 $ 314 $ 35 $ 45 $ 57 $ 65 $ 39 10% 12% 16% 19% 12% 4th Quarter $ 82 $ 78 $ 14 $ 5 17% 6% * Excludes asset impairment & other charges. 42

43 Financial Performance Earnings Per Diluted Share $4.74 $1.57 $2.74 $2.43 $ Excludes asset impairment and other charges. 43

44 Financial Performance Adjusted EBITDA $340 $178 $244 $219 $ Excludes asset impairment and other charges. 44

45 Financial Performance Operating Cash Flow in Millions $332 $231 $ $194 $

46 Financial Performance Debt and Cap-Ex We Have Continued Investing in Diversification and Expansion Without Adding Significant Debt in Millions $765 million spent under stock repurchase program between 2010 and Q Debt $251 $357 $267 $254 Dividend Policy Quarterly cash dividend of $0.15 per ordinary share $232 Cap-Ex $ $149 $132 $147 $

47 Appendix

48 in Millions Appendix Income Statement Full Year Net Sales $ 3,684 $ 3,928 $ 4,057 $ 4,012 $ 4,086 Cost of Sales 3,392 3,562 3,714 3,550 3,754 Restructuring and Other Charges Gross Profit % Margin 8% 9% 8% 12% 8% SG & A Gain (Loss) on Sale of Assets (5) (4) 2 - (3) Asset Impairment & Other Chgs Operating Income (28) % Margin -1% 4% 2% 6% 4% Interest Expense (2) (3) (4) (3) (6) Other, Net 13 (14) (11) (4) (2) Tax (Expense) Benefit (17) (14) (14) (12) (25) Net Income $ (34) $ 142 $ 62 $ 225 $ 121 % Margin -1% 4% 2% 6% 3% EPS - GAAP $ (0.61) $ 2.53 $ 1.17 $ 4.33 $ 2.39 EPS Adjusted * $ 1.57 $ 2.74 $ 2.43 $ 4.74 $ 2.44 * Excludes asset impairment & other charges. 48

49 Quarter Ended Year Ended December 29, December 30, December 29, December 30, Non-GAAP Measures: Reported net income (loss) - Diluted $ (0.13) $ 0.23 $ 2.39 $ 4.33 Asset impairment and other charges, net (1) $ 0.04 $ 0.03 $ 0.07 $ 0.57 Other (gain) loss on asset disposals (2) $ 0.01 $ - $ (0.02) $ (0.16) Comparable net income (loss) per share - Diluted (3) $ (0.08) $ 0.26 $ 2.44 $ 4.74 (1) For 2017, asset impairment and other charges, net for the quarter ended December 29, 2017 included charges related to: (1) the write-off of an investment venture in Africa, (2) impairment of the prepared trademark in the United Kingdom, (3) insurance recoveries for previously announced natural disasters in South America, net of additional charges, and (4) expenses related to the Kunia Well Site reserve. Additionally, the year ended December 29, 2017 included insurance proceeds related to previously announced flooding in South America offset by impairment charges in South America and North America due to natural disasters and impairment charges due to flooding in Asia. For 2016, asset impairment and other charges, net for the quarter ended December 30, 2016 included $1.0 million in compensatory expense related to the former President/COO's transition and expense related to the Kunia Well Site reserve. Additionally, the year ended December 30, 2016 included $18.7 million in compensatory expense related to the former President/COO's transition, of which $9.8 million is cash. The remaining charges relate to poultry goodwill impairment in the Middle East, impairment charges related to drought conditions in Brazil and underutilized assets in Asia and Central America as well as other charges in Europe. (2) Other (gain) loss on asset disposals, net is included in loss on disposal of property, plant and equipment, net. Other (gain) loss on asset disposals, net for the quarter ended December 29, 2017 primarily included a net loss of $0.5 million related to asset disposals in the Middle East and South America. Other (gains) loss on asset disposals, net included a net gain of $1.0 million for the year ended December 29, 2017 primarily related to gains on maritime equipment sales. Other (gains) loss on asset disposals, net for the year ended December 30, 2016 included a gain of $8.5 million primarily related to the sale of surplus lands in Central and South America offset by a loss on vessel disposal. (3) Management reviews comparable net income (loss), comparable net income (loss) per share and comparable gross profit and considers these measures relevant to investors because management believes they better represent the underlying business trends and performance of the Company. 49

50 Appendix Non-GAAP Measures Non-GAAP Measures The Company's results are determined in accordance with U.S. generally accepted accounting principles (GAAP). Some of the information presented in this press release reflects adjustments to GAAP measures such as amounts related to restructuring, asset impairment charges, loss (gain) on sales of assets and certain other special items, if any. Management believes these adjustments provide a more comparable analysis of the ongoing operating performance of the business. These adjustments result in non-gaap financial measures and are referred to in this press release as comparable operating income, comparable net income and comparable net income per share. Because all companies do not use identical calculations, our presentation of these non-gaap financial measures may not be comparable to similarly titled measures used by other companies. Comparable operating income (loss) and comparable net income (loss) provide us with an understanding of the results from the primary operations of our business. We use comparable operating income (loss) and comparable net income (loss) to evaluate our period-over-period operating performance because management believes they provide more comparable measures of our continuing business as they adjust for special items that are not reflective of the normal earnings of our business. These measures may be useful to an investor in evaluating the underlying operating performance of our business because these measures: 1. Are used by investors to measure a company's comparable operating performance; 2. Are financial measurements that are used by lenders and other parties to evaluate creditworthiness; and 3. Are used by our management for various purposes, including as measures of performance of our operating entities and as a basis of strategic planning and forecasting. 50

51 in Millions Appendix Cash Flow Full Year Net Income* $ (34) $ 145 $ 66 $ 226 $ 119 Non-Cash Charges Working Capital (70) (7) (29) Operating Cash Flow Capital Expenditures (160) (149) (132) (147) (139) Acquisitions/Disposals (10) (11) 7 (42) 5 Changes in Debt (19) (26) 126 Dividends (28) (28) (26) (28) (30) Share Repurchase (95) (131) (117) (108) (142) Equity Securities Proceeds From Share Issuance Proceeds from Stock Options Other, Net (11) Net Change in Cash $ 3 $ (8) $ (9) $ (5) $ 5 * Excludes noncontrolling interest. 51

52 Appendix Balance Sheet in Millions Full Year ASSET S Cash & Short Term Investments $ 43 $ 34 $ 25 $ 20 $ 25 Accounts Receivable Inventory & Other CURRENT ASSET S 1,016 1, ,020 Property, Plant & Equipment 1,101 1,170 1,215 1,272 1,328 All Other Assets TOTAL ASSETS $ 2,589 $ 2,675 $ 2,596 $ 2,653 $ 2,767 LIABILIT IES Current Liabilities $ 383 $ 409 $ 382 $ 369 $ 394 Long Term Debt Other Liabilities TOTAL LIABILITIES SHAREHOLDER'S EQUIT Y 1,751 1,788 1,751 1,816 1,791 LIAB. & SHAREHOLDER'S EQUIT Y $ 2,589 $ 2,675 $ 2,596 $ 2,653 $ 2,767 52