Dole plc

Welcome, everybody, and thank you for joining our fourth quarter and full year 2021 conference call. Joining me on the call today are Rory Byrne, Chief Executive Officer, Joanne 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 our 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 fourth quarter and full year can be found on our website at wplc.com 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 for 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 S&P filings 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 today as we discuss our fourth quarter and full year 2021 results. During this call, I'll give some colour on the performance of the business over the course of 2021 and our outlook for 2022. Johan will give an update on operations, synergies, and comment on some of the strategic initiatives being undertaken across the group. And finally, Frank will take you through the financial review. Our 20F document, which will be filed to the SEC in due course, contains reported financials for Dole PLC, including the first full quarter of consolidated financial information. We will also reference reported numbers today, but our earnings press release and our investor presentation additionally include pro forma financial information illustrating Dole PLC's results as if the merger IPO and refinancing had occurred on January 1, 2020. This is consistent with the pro forma financial information presented in the Form F1 filed with the SEC in connection with the IPO. As discussed on our first earnings call in December 2021, 2021 was a transformational year for the group. Slide 6 illustrates the impact of the transition from total produce PLC to Dole PLC after the acquisition of the remaining 55% of Dole Food Company. Revenue has more than doubled, increasing from $4.3 billion on a reported basis for 2020 to $9.3 billion on a pro forma basis for 2021. We are now the clear global leader in fresh produce at nearly two times larger in terms of revenue than the next largest company in this category. There's also been a significant increase in adjusted EBITDA from $251.5 million on a reported basis for 2020 to $393.6 million on a pro forma basis for 2021. Finally, our overall scale and global footprint has significantly increased, with our total assets increasing 148% from $1.9 billion in 2020 to $4.7 billion in 2021. We now have a strategic asset base encompassing over 114,000 acres of owned land and other land holdings, over 160 distribution and manufacturing facilities, 75 packing houses, 12 cold storage facilities, five solid manufacturing plants and 13 vessels. Back in July, we successfully completed the IPO of Dole PLC and a refinancing and syndication of $1.44 billion of new credit facilities. The approximately $400 million of net proceeds raised from the IPO were all used to strengthen our balance sheet the refinancing has resulted in annual interest cost savings of over 40 million dollars with the net leverage ratio of 2.87 times which is below our targeted level of three the group is well positioned to deliver long-term sustainable growth our focus is on the generation of substantial free cash flow to fund the further development of the group and to return value to our shareholders Turning to slide 7, on a pro-formal basis, the group delivered strong results for the full year with revenue growth of 3.5% and adjusted EBITDA growth of 5.9%, in line with the guidance we outlined during our Q3 earnings call. The group has also generated double-digit growth in adjusted EPS, with adjusted EPS growing 11.8% from $1.33 per share to $1.49 per share. We are also pleased to announce today a dividend for the quarter of $0.08 per share. 2021 has been an exciting year for our group with plenty of positives, but also a year of some complexity with the impact of Hurricane Zeta and Iota on Honduras and Guatemala, supply chain pressure across the globe and the emergence of significant cost inflation and concluding with a product recall and temporary plant closures in our value-added salads business in December. When set against this backdrop and a strong prior year, we are very pleased with how we have navigated these challenges and with the full year outcome. The diversity of our product and service offerings, wide geographic footprint and the strategic asset base allow us to more than offset these challenges and deliver strong full year performance and earnings growth. We're also very fortunate to have a dedicated and resilient group of people within our company and I would like to thank them thank them all for their significant contribution efforts, especially when faced with the unique circumstances brought about by the COVID-19 pandemic over the last couple of years. Our team is very strong at responding to and overcoming challenges, and this is definitely borne out by our 2021 results. Our industry has continued to grow, particularly within categories that Dole PLT has an established leadership position, such as bananas, pineapples, and value-added salads. We continue to focus our efforts on expanding our presence in the faster-growing categories such as berries, avocados, exotics and organic produce. Each of these categories has expanded at a faster rate than the industry average over the last three years. This industry growth is driven by the megatrend of health and wellness, as well as the clear sustainability credentials provided by fresh produce. Consumers are increasingly focused on their physical and mental well-being, and they're shifting towards plant-based vegetarian and vegan diets as a way to improve their health and reduce their own carbon footprint. We believe that these trends provide a solid foundation for our company to grow. For the current financial year, our strategic priorities include managing pricing within a complex economic environment, delivering on our integration and synergy goals, actively seeking out value enhancing M&A opportunities, and of course rebuilding profitability within the fresh vegetables segment. I'll provide further color on these later in the presentation, but for now I would like to pass you over to Johan to give the operational review.

Thanks Rory and good morning everyone. Turning to slide 9, as discussed on our last call, engaging with our customers in 2021 to address rising inflation through negotiating we implemented price increases in North America in November 2021 and in Europe we have seen price adjust since January. While we feel good about delivering a strong result in Fresh Truth in 2022, we are also closely monitoring the impacts of the war in Ukraine on the industry. It remains too early to say what impact the war will have on our business, but we are closely monitoring the situation and and are staying close to our suppliers and customers to navigate any issues that emerge. Our direct exposure is minimal, and we do not have any operations or facilities in Ukraine or Russia. In fresh vegetables, after implementing a price increase in the summer, the value-added salads recall delayed our plan for a second price adjustment, but we are now actively negotiating and expect Because of the shorter season and constantly changing sourcing locations, therefore in 2021, while the operating environment was challenging, we were able to adapt to specific pressures that emerge and maintain our expected margins over the course of the year. We expect the diversified business to evolve in a similar way in 2022. Moving to synergies, we continue to make good progress towards other short-term targets. We have seen some notable recent developments in the important berry and avocado categories, including an increase in collaboration between the businesses that previously operated independently, and then some targeted investments that would support our growth plans. In the banana category, we are continuing to see enhanced collaboration in Europe with successes in our development of the French market and growth in our plant-based business. Across the company, we are enhancing our growth our group collaboration and are pleased that it is already providing benefits in what continues to be a complex global logistics market. Turning to investments, 2021 was an important year for the group with several significant investments that we expect will underpin the business moving forward. As communicated in our last call, we took delivery last summer of two new vessels, Dolastek and Dolmaya, to service the U.S. Gulf region. and they are performing very well. Our entire vessel fleet continues to be of enormous strategic importance for the business, providing critical insulation from the worst of the global supply chain challenges through our ability to manage our own costs and timetables, and also due to the growth in our commercial cargo business, especially when global shipping capacity is constrained. Moving to production. I'm very pleased to announce that at the end of 2021, we had completed the replanting of 2,900 acres of bananas in Honduras that were destroyed by the hurricane in Q4 2020, leaving only approximately 200 acres to be replanted in 2022 to complete our recovery program. The decision to reinvest quickly was not only critical for our large employees in Honduras, but it's now starting show benefits with a good recovery in yield and cost efficiencies starting to come through in early 2022. This is an important development to mitigate some of the other cost increases we have seen from inflation. Turning to slide 10, I will now give some more color on the value-added salad recall and planned suspensions. In December, we announced a voluntary recall for all packet salads processed at our Bessemer City and Yuma salad processing facilities and suspended operations at both facilities due to possible health risks from Listeria. As the investigation evolved, we established a source of contamination was likely from outside our processing plant and most likely from a single piece of harvest equipment that had become contaminated with Listeria from the natural environment. This resulted in the need to issue a second voluntary recall in January of solids containing products harvested with that equipment. Genetic testing ultimately confirmed that the source was indeed the harvest equipment, but the time needed to complete that testing required us to implement the conservative return to operation plan that included test and hold procedures on finished products. This in turn resulted in operating at a lower capacity and significant disposals of finished goods into mid-February. We are now back to operating at full capacity and are pleased that the investigation validated the leading industry food safety practices within our plants. We have taken additional steps in developing further protocols for the sanitation of harvest equipment and are pleased to be leading the industry forward again in these efforts. We have also used the lessons learned from our investigations to refine and improve processes and protocols that will limit the future exposure of our plant to lengthy closures. This additional investigation and remediation process resulted in additional costs that were not known in December. We expect exceptional one-time costs from the second phase to be approximately $15 million. reflecting the cost of disposal of affected inventory and packaging, reimbursement to customers, direct labor costs, and additional cleaning and sanitation costs. We also estimate the reduction in adjusted EBITDA in our full year 2022 numbers of approximately $25 million, arising from the impact of temporary lost volumes, fixed cost absorption, and delays in initiating price increases needed to combat inflation. Looking ahead, we expect that the once-off cost and impact on the adjusted EBITDA to be behind us from the beginning of Q2, and we expect the underlying business to recover well. Finally, we have been working with customers since late February in initiating price increases. We believe that the tight industry capacity, strong category growth, and no current signs of consumer behavior being impacted by the recall event will allow us to recover the short-term volume loss from the recall. With that, I will hand you over to Frank to give you the financial review.