Dole plc

Welcome, everybody, and thank you for joining our third quarter 2021 conference call. Joining me on the call today are Rory Byrne, Chief Executive Officer, Johan Linden, Chief Operating Officer, and Frank Davis, Chief Financial Officer. This conference call is being webcast live on our website and will be available for replay after this call. During this call, we'll be referring to presentation slides to supplement your remarks. and these are available on the investor relations section of the Dole PLC 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-looking 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 news releases. Our earnings release, financial reports and related materials for the third quarter can be found on our website at doleplc.com forward slash forward slash investors. Information regarding the use of non-GAAP financial measures may also be found in the notes section of the release, which also includes the reconciliation to the most comparable GAAP measures of adjusted EBITDA, adjusted net income, net debt and adjusted earnings per share. The details of our statutory forward-looking statements disclaimer can be found in our SEC filing and the presentation slides we'll be discussing today. With that, I'm pleased to turn today's call over to Rory.

Thank you, James, and thank you all for joining us on our first earnings call as Dole PLC following our IPO in July. As well as discussing our third quarter 2021 results and performance year to date, I'll also provide you with a high-level overview of the Dole PLC business. And later in the presentation, I'll give you some further insight into our long-term strategy. Johan will give an update on trading, progress being made on synergies, and comment on some of the strategic initiatives being undertaken across the group. And finally, Frank will take you through the financial review. So with that, turning to slide five, well, 2021 has been a transformative year for the group. Dole PLC was formed by bringing together Total Projects PLC and Dole Food Company, followed by the IPO of this new company at the end of July. We received net proceeds of $398.9 million from the IPO, and all of the proceeds were used to strengthen our balance sheet by repaying higher-cost debt. Concurrently with the IPO, we also successfully completed a $1.44 billion refinancing package, providing us with well-structured liquidity to support our continued growth. For the purposes of this presentation and as set out in our press release issued today, the financial information has been prepared on a pro forma basis, illustrating Dole PLC's results as if the merger, IPO and refinancing had all occurred on 1 January 2020. This is consistent with the pro forma financial information presented in the format one filed with the sec in connection with the ipo so since the ipo at the end of july we've been focused on the integration and reorganization of management across the enlarged entity implementing our synergy strategy and further strengthening our public company reporting and compliance functions looking at our financial performance we've delivered strong results for the first nine months of the year against the backdrop of a unique economic environment Proforma Revenue and Proforma Adjusted EBITDA are both up versus the comparable prior year period with Proforma Revenue up 4.5% and Proforma Adjusted EBITDA up 12.6%. We're very pleased with this growth and set against the context of a strong prior year and also given the complexities currently being experienced in supply chains across the globe. talent and dedication of our people, along with the diversity of our operations, both from a geographic and a product and service offering perspective, as well as our sophisticated asset base has helped us to manage the industry-wide supply chain pressures. We've witnessed firsthand the continued benefits of our integrated business model and having control over assets within our supply chain, such as our fleet of 11 ships that we operate and approximately 17,000 containers in our tropical fruit business. This has enabled us to continue to deliver in a challenging environment. Despite the benefits of our integrated supply chain, we've not been immune from industry-wide cost inflation, which emerged earlier this year. As increasing inflationary pressures emerged, we initially focused our efforts on optimizing our supply chain to limit cost impacts. However, now that it's clear that inflation is pervasive and persistent, we have reacted by increasing prices in the segments of our business that have longer-term contracts, such as our tropical fruit division and value-added solids. And we're pleased that our customer base has largely been supportive and understanding. Within the diversified segments of our business, pricing tends to be more dynamic. And to date, we've been able to largely pass through cost increases by working closely with our suppliers and our customers. We're also very pleased with our financial position following the IPO. At the end of Q3, our net leverage stood at 2.76 times, which is below our targeted level of three times. Our well-capitalized balance sheet creates the basis for long-term sustainable growth for the group, and I'll provide a recap of our long-term strategy later in the presentation. Today, we've also announced a cash dividend for the third quarter of 2021. We'll pay a dividend of $0.08 per share on January 7, 2022, to shareholders on record on the 17th of December, 2021. We're providing a full year 2021 pro forma revenue target in the range of $9.2 to $9.4 billion, and a full year 2021 pro forma adjusted EBITDA target in the range of $390 to $400 million. This corresponds to year-on-year pro forma growth of 2.6 to 4.8%, and pro forma adjusted EBITDA growth of 4.9% to 7.6%. I'll provide further details on our outlook later in the presentation. So turning to slide seven, I'll now give you a brief overview of the dual PLC business. We are the global leader of fresh produce at nearly two times larger in terms of revenue than the next largest company in this category. We produce, we market, distribute an extensive variety of fresh fruits and vegetables across the globe. Our produce is sourced both locally and from around the world from our broad sourcing network and from our own farms. We have sales in over 80 countries, with North America and Europe being our largest markets, but also the presence in parts of Asia, Latin America, the Middle East and Africa. Four operating divisions of Dole PLC are Fresh Root, Fresh Vegetables, Diversified Fresh Produce America and Rest of the World and Diversified Fresh Produce EMEA. Fresh Fruit Division is responsible for farming, sourcing and distribution of bananas, pineapples and various other tropical fruit, as well as providing commercial cargo services. Principal markets, geographic regions served are North America and Europe. Fresh Vegetables is responsible for the distribution and sale of fresh packed vegetables, as well as value added salads, which include pre-packed salads and meal kits. The two diversified divisions are responsible for the production, marketing and distribution of a wide variety of fresh produce to customers primarily in North America and Europe across the retail, wholesale and food service channels. Dole PLC has leadership positions in categories such as bananas, pineapples, value-added salads, grapes and fresh-packed vegetables. We also have a focus and expanding presence indeed in faster growing product categories such as avocados, berries and organic produce. Fresh produce is a key and growing category within the overall food sector. We are seeing an acceleration of growth driven by health and wellness trends. Consumers are increasingly focused on their physical and mental well-being, on sustainability and they're shifting towards plant-based vegetarian and vegan diets as a way to improve their health and reduce their own carbon footprint. As a result, the category itself is focused to experience annual growth of over 2.7% per annum over the next five years. One final point to mention is that the market that we operate in is still highly fragmented with significant potential for further consolidation. As total projects, we used M&A as a successful lever for growth and we expect Doe PLC to do the same. In slide eight, Just to remind you, we've illustrated the wide geographical presence of Dole PLC, as well as giving some insight into the highly valuable and strategic asset base that we have. We operate from over 250 facilities across the globe, including over 160 distribution facilities and 75 pack houses. We operate 12 cold storage facilities and five solid manufacturing plants. We own over 109,000 acres of land. This owned acreage combined with the multi-continental sourcing model enables operating flexibility and product availability throughout the year and enhances our ability to manage costs. Another important strategic asset is our fleet of ships. We own 13 ships and operate 11 of those ships ourselves, with two currently out on charter. Included in the 11 are two new ships we took delivery of earlier this year, the Dole Aztec and the Dole Maya. Our 11 owned and operated ships are used for the shipping of tropical produce from our production facilities in Central and South America to our customer network in North America and Europe and support our commercial cargo business. Having our own fleet of ships provides greater certainty of distribution and enhances our supply chain transparency and control. So with that, I'll pass you now over to Johan to give an update on operations.

Thanks, Rory. Good morning, everyone. I want to start by emphasizing both my own excitement for what we have started here at DOPE PLC, as well as my satisfaction with how we have progressed to date with our first steps as a new company. As you heard already from Rory, the performance of the combined business year to date on a pro forma basis has been strong. and provides an excellent foundation for the opportunities ahead. Turning to slide 11, as Rory has already noted, we are not immune to inflationary pressures, and so we have had needed to take actions to address the ongoing challenges, including initiate price increases. In the Fresh Fruit and Fresh Vegetables Division, which represents 45 percent of our pro forma revenues, we typically have longer-term contracts in place. and so we have needed to address the current issues proactively. In that context, we have been pleased with the response from our customers to the price increases that we have looked for, and we are progressing well towards having the pricing in place to offset current inflationary pressures in full in 2022. In the Diversified Fresh Produce Division, which represents 55% of Proforma revenues, pricing tends to be on a short-term basis, and any inflationary cost increases can be passed through the supply chain relatively quickly. While we are pleased with the support from our customers, we also know that in this environment, we need to be highly focused and attentive to all aspects of the supply chain so we can continue to deliver excellent products and service to our partners and a healthy business for our stakeholders. Looking at the four divisions in more detail, this has been an abnormal year in fresh fruit. Throughout the year, we have endured significant cost impacts on both our sourcing base and supply chain following the November 2020 hurricane in Guatemala and Honduras, and more recently, by the current inflationary pressures. To deal with the increased cost pressures, we have been working with our customers to increase pricing and expect to have the pricing we need to offset the current inflationary impact in place by the end of 2021. It's been a challenging year in the fresh vegetables division for two main reasons, both of which are being addressed. The first is that our fresh-packed vegetable business has suffered from persistently weak market pricing caused in part by oversupply as the market planted for greater recovery in the food service sector than has been possible as COVID-19 has lingered. To address this issue, we have reduced our own planting to limit our market exposure in 2022. We have also seen some short-term relief in the form of better pricing as the market has achieved more balance with the move to the winter floating locations. The second impact has been the significant inflationary challenges that have affected the value-added salad business, particularly in relation to freight, labor, and packaging. Heading into Q4, we have already implemented price increases with value-added customers to help address the inflationary challenges we saw early in the year. In our diversified business in Americas, we have overcome specific weather-related challenges by relying on our diversified range of products and services and have grown our business by both further strengthening our customer relationships and by continuing to grow in high growth categories like berries and avocados. And finally, in our diversified EMEA business, we have withstood the continued impact of COVID-19 related disruptions both in supply and in demand patterns by building on our strong customer relationships and providing unrivaled service in a challenging environment. We also reorganized our Dutch businesses which has contributed to strong growth. Next, I would like to mention some of the investments we have made, which we believe will drive the business forward in the years to come. Most critically, we took delivery this summer of two new vessels, Dolacek and Dolmaya, that will serve our U.S. Gulf markets, and which we believe are foundational assets for our current ability to manage today's unique supply chain challenges. Year to date, as numerous global ports have suffered with congestion and delays leading to equipment shortages and rising shipping costs, we have been able to insulate ourselves from the worst of the crisis by relying on our own assets and by operating out of ports where we have our own operating teams on the ground. In addition to the protection of our integrated supply chain that supported us in the current environment, I'm very pleased to say that both the size of the new vessels and the new routes we have implemented bring both a better environmental footprint as well as reduced costs. To give it a color, with the two new ships, we were able to retire four old ones. We have also invested significantly in replanting in Honduras after several of our company farms were devastated by last year's hurricanes. We believe our quick action to reinvest and the incredible work of our team on the ground positioned us well to drive further cost competitiveness in the business in the years to come. Another important strategic initiative for us this year was the acquisition of an additional pineapple farm in Costa Rica that is adjacent to one of our existing farms. This farm had been one of our long-term growers and the owner had been looking to sell the business. The acquisition security supply allows us to access additional grower margin and gives us opportunity to expand margins by driving synergies through the combined farms. Finally, we have also invested this year in important packaging and cooling assets at source and close to the market. We believe investments here not only make sense with the operations on a standalone basis, but will also give us an enhanced capability to further drive group synergies. And on the topic of synergies, I would like to make a few specific points on the additional steps we are taking to position ourselves for delivering on our senior targets for the years to come. Firstly, and of critical importance, the executive management team of Dole POC are quickly building on our existing relationships to establish a foundation for long-term growth. All the necessary functional projects that come with any mergers are advancing well. and we have integrated several key management teams across the legacy Dole food company and total produce businesses. We believe this cross-pollination will not only bring new practices and ideas to existing areas, but will also foster the culture we need within our management teams to sustain our existing success and develop our new opportunities. We have already made some small investments together to drive further integration. like in the French market, where we are planning to grow our presence with new ripening capabilities, and in South Africa, where we are consolidating some of our resourcing operations. We have also established a new cross-company logistic function that is currently laying the foundation for key group-wide projects. We are also seeing good forecasts for growth in selling and sourcing for both core products and higher growth products like berries and avocados. As we look forward into 2022, we expect to make further strides with sourcing efficiencies, particularly in South America and in South Africa, while selling opportunities and extension of the gold brand in important European markets, and also with specific progress on our logistics, berries, and avocado strategies. With that, I will hand you to Frank to give you the financial review.