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Dole Foods Q2 Revenues Up 10 Pct

Source: Dole Food Company, Inc
26/07/2013

Jul. 25, 2013-- Dole Food Company, Inc. today announced financial and operating results for the second quarter ended June 15, 2013, and reiterated guidance for full year 2013.

In addition, Dole noted previously announced events during the quarter, namely, the April 1 completion of the sale of its former worldwide packaged foods and Asia fresh businesses, reported as discontinued operations, and the June 10 receipt of an unsolicited proposal from David H. Murdock to acquire all of the outstanding shares of common stock of Dole that he does not already own for $12 per share in cash. Dole also reported that during the second quarter, on May 10 and 13, it repurchased a total of 240,000 shares of its outstanding common stock at an average price per share of $11.26 (approximately $2.7 million) under the previously announced and now suspended share repurchase program.

For its continuing operations, Dole reported second quarter 2013 Adjusted EBITDA of $56 million compared to $81 million in the second quarter 2012. For the first half 2013, Adjusted EBITDA was $90 million compared to $125 million in the first half 2012. Adjusted EBITDA, GAAP income from continuing operations and Comparable Income from continuing operations for the first half 2013 reflected a charge of $34 million for legal provisions related to the European General Court judgment, recorded in the first quarter of 2013.

GAAP income from continuing operations for the second quarter of 2013 was $2 million, or $0.01(1) per share, compared to $56 million, or $0.63(1) per share, in the second quarter 2012. GAAP income from continuing operations for the first half 2013 was $6 million, or $0.05(1) per share, compared to $82 million, or $0.91(1) in the first half 2012. GAAP income from continuing operations for the second quarter and first half 2013 included $22 million and $30 million of costs, respectively, related to the ITOCHU transaction, the associated refinancing and other restructuring activities (see Exhibit 3).

1Earnings per share calculation excludes net income attributable to non-controlling interests

Comparable Income from continuing operations for the second quarter 2013 was $25 million, or $0.28 per share, compared to $61 million, or $0.69 per share, in the second quarter 2012. Comparable Income from continuing operations for the first half 2013 was $36 million, or $0.40 per share, compared to $83 million, or $0.93 per share, in the first half 2012 (see Exhibit 3).

Compared to 2012, second quarter 2013 Adjusted EBITDA declined approximately $25 million to $56 million from $81 million. “Second quarter Adjusted EBITDA performances from our fresh vegetables line of business and our remaining fresh fruit lines of business were less than last year,” said C. Michael Carter, Dole’s President and Chief Operating Officer. “Fresh fruit was approximately $15 million lower mainly due to North America bananas, and fresh vegetables was approximately $14 million lower mainly due to berries, offset by approximately $4 million in lower corporate expenses.”

“The variance between second quarter performance and our second quarter guidance is mainly due to lower than expected banana cost of fruit and corporate overhead, higher than expected earnings in our Chilean business due to timing of operating expenses, and higher pineapple earnings, reduced by even lower than expected earnings from our fresh vegetables line of business, due to greater losses in berries,” said Mr. Carter. “The results this quarter are reflective of the inherent volatility and unpredictability of earnings from Dole’s smaller footprint as an international commodity produce company.”

Dole reiterated full year guidance at the low end of the $150 - $170 million range, assuming no major market changes. “This is due to the continued declining trend in fresh fruit performance principally due to banana market conditions and the full-year losses in our strawberry business, and reflects regular incentive accruals, which may vary based on Dole’s 2013 performance,” said Mr. Carter.

Dole also noted two additional events. On June 21, 2013, Dole paid approximately $64.7 million in full payment of the European General Court’s judgment affirming the European Commission’s decision finding violations of the European competition antitrust laws. “We strongly believe that the European competition laws were not violated and, on May 24, 2013, Dole appealed the judgment to the EU Court of Justice,” said Mr. Carter.

On July 9, 2013, Dole executed shipbuilding contracts with Hyundai Mipo Dockyard Co., Ltd. to construct three new specialty built refrigerated container ships, with a contractual price of $54.8 million per vessel ($164.4 million in total) and a total cost of approximately $168 million, for a phased delivery in the three successive quarters beginning the fourth quarter 2015. “Updating our West Coast shipping capabilities is very important strategically to Dole’s competitive differentiation and future growth prospects,” said Mr. Carter. “Our existing West Coast vessels will be approximately 27 years old at the time of replacement. The new ships will be more fuel efficient and will be built to Dole’s exacting specifications and design, with a higher capacity up to 788 FEU (compared to the current ships with 491 FEU) and equipped with gantry cranes.”

Selected Financial Data (Unaudited)

Quarter Ended Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

(In millions)
Revenues $ 1,188.4 $ 1,080.0 $ 2,242.2 $ 2,166.4
Operating income 22.6 54.8 22.4 83.2
Adjusted EBITDA 55.7 81.1 90.0 125.0
Comparable Income 25.4 61.0 35.9 82.5

See “Non-GAAP Measurements” below for discussion of EBIT and Adjusted EBITDA.

Revenues

Revenues increased 10% to $1.2 billion during the second quarter 2013 compared to second quarter 2012. Fresh fruit revenues increased 12% primarily due to higher volumes of North America bananas, higher volumes of diversified fruit in Europe, and higher sales of fruit sourced from Chile. Fresh vegetables revenues increased 4% mainly due to higher pricing for fresh packed vegetables and higher sales volumes of packaged salads.

Adjusted EBITDA

Adjusted EBITDA decreased 31% to $55.7 million in the second quarter 2013 compared to second quarter 2012. Fresh fruit Adjusted EBITDA decreased primarily due to lower pricing and higher fruit cost for bananas in North America. Fresh vegetables Adjusted EBITDA decreased as a result of significantly lower pricing and higher costs in the strawberry business mainly due to weather related issues, and higher product costs for packaged salads.

Segment Information (Unaudited)

Quarter Ended Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

Revenues from external customers: (In millions)
Fresh fruit $ 878.9 $ 782.7 $ 1,642.7 $ 1,630.3
Fresh vegetables 308.7 297.0 598.3 535.4
Corporate 0.8 0.3 1.2 0.7
$ 1,188.4 $ 1,080.0 $ 2,242.2 $ 2,166.4
Quarter Ended Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

EBIT: (In millions)
Fresh fruit EBIT $ 51.3 $ 63.2 $ 62.8 $ 98.9
Fresh vegetables EBIT (3.5 ) 10.3 13.5 17.3
Total operating segments 47.8 73.5 76.3 116.2
Corporate:
Unrealized gain (loss) on foreign denominated instruments (3.9 ) (0.5 ) 0.1 3.1
Share-based compensation (2.2 ) (1.7 ) (8.3 ) (3.4 )
Share repurchase program costs (0.1 ) - (0.1 ) -
Shareholder proposal costs (0.1 ) - (0.1 ) -
ITOCHU transaction related costs (12.6 ) (0.9 ) (19.7 ) (1.1 )
Refinancing charges (10.7 ) - (10.7 ) -
Operating expenses, net (7.6 ) (11.4 ) (16.7 ) (23.0 )
Corporate (37.2 ) (14.5 ) (55.5 ) (24.4 )
Total EBIT before disc. ops. $ 10.6 $ 59.0 $ 20.8 $ 91.8

See Exhibit 2 for further detailed information on segments.

Cash and Debt (Unaudited)

June 15,
2013

December 29,
2012

Cash: (In millions)
Cash and cash equivalents $ 424.9 $ 91.6
Total Debt:
Revolving credit facility $ - $ 119.2
Term loan facilities 675.0 867.7
Senior Notes and Debentures - 644.9
Other debt, net of debt discount 8.0 62.4
Total Debt $ 683.0 $ 1,694.2
Net Debt $ 258.1 $ 1,602.6

Exhibit 1 - Reconciliation of Net income to EBIT before discontinued operations and Adjusted EBITDA (Unaudited)

Quarter Ended Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

(In millions)
Net income $ 234.8 $ 65.5 $ 169.2 $ 82.7
(Income) loss from discontinued operations, net of income taxes 11.6 (9.5 ) 81.1 (1.1 )
Gain on disposal of discontinued operations, net of income taxes (244.7 ) - (244.7 ) -
Interest expense 7.5 2.4 17.7 4.5
Income taxes 1.4 0.6 (2.5 ) 5.7
Earnings before interest, taxes and discontinued operations (“EBIT before disc. ops”) 10.6 59.0 20.8 91.8
Depreciation and amortization from continuing operations 14.8 15.8 29.9 31.0
Net unrealized (gain) loss on derivative instruments from continuing operations (0.5 ) 3.0 0.7 1.6
Foreign currency exchange (gain) loss on vessel obligations 0.5 (0.9 ) (2.6 ) 0.5
Net unrealized (gain) loss on foreign denominated instruments from continuing operations 3.9 0.9 (0.2 ) (2.9 )
Share-based compensation from continuing operations 2.7 2.4 11.9 4.8
Charges for restructuring and long-term receivables from continuing operations 4.2 2.0 4.2 3.3
ITOCHU transaction related costs 12.6 0.9 19.7 1.1
Gain on asset sales from continuing operations (4.0 ) (2.0 ) (5.3 ) (6.2 )
Refinancing charges from continuing operations 10.7 - 10.7 -
Shareholder proposal costs 0.1 - 0.1 -
Share repurchase program costs 0.1 - 0.1 -
Adjusted EBITDA $ 55.7 $ 81.1 $ 90.0 $ 125.0

Exhibit 2 - Items eliminated to calculate Adjusted EBITDA (Unaudited)

Segment EBIT was impacted by charges for restructuring and long-term receivables, unrealized foreign currency exchange gains and losses, unrealized gains (losses) on derivative instruments, share-based compensation, ITOCHU transaction related costs, refinancing charges, share repurchase program costs, shareholder proposal costs, and gain on asset sales, which are detailed in the tables below. These items are eliminated for purposes of calculating Adjusted EBITDA for each of these segments.

Quarter Ended Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

Fresh Fruit (In millions)
Charges for restructuring and long-term receivables $ (4.2 ) $ (2.0 ) $ (4.2 ) $ (3.3 )
Unrealized gains (losses) on derivative instruments 0.5 (3.0 ) (0.7 ) (1.6 )
Net unrealized gain (loss) on foreign denominated instruments - (0.4 ) 0.1 (0.2 )
Foreign currency exchange gain (loss) on vessel obligations (0.5 ) 0.9 2.6 (0.5 )
Share-based compensation (0.4 ) (0.5 ) (2.7 ) (1.0 )
Gain on asset sales 4.0 2.0 5.3 6.2
Total $ (0.6 ) $ (3.0 ) $ 0.4 $ (0.4 )

Quarter Ended

Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

Fresh Vegetables (In millions)
Share-based compensation (0.1 ) (0.2 ) (0.9 ) (0.4 )
Total $ (0.1 ) $ (0.2 ) $ (0.9 ) $ (0.4 )

Quarter Ended

Half Year Ended

June 15,

2013

June 16,

2012

June 15,

2013

June 16,

2012

Corporate (In millions)
Net unrealized gain (loss) on foreign denominated instruments (3.9 ) (0.5 ) 0.1 3.1
Share-based compensation (2.2 ) (1.7 ) (8.3 ) (3.4 )
ITOCHU transaction related costs (12.6 ) (0.9 ) (19.7 ) (1.1 )
Refinancing charges (10.7 ) - (10.7 ) -
Share repurchase program costs (0.1 ) - (0.1 ) -
Shareholder proposal costs (0.1 ) - (0.1 ) -
Total $ (29.6 ) $ (3.1 ) $ (38.8 ) $ (1.4 )

Exhibit 3 - Reconciliation of Income from continuing operations to Comparable Income from continuing operations (Unaudited):

Quarter Ended
June 15, 2013 June 16, 2012
(In millions, except per share data)

Earnings
per share

Earnings
per share

Income from continuing operations, excluding

non-controlling interests

$ 1.0 $ 0.01 $ 55.3 $ 0.63
Income attributable to non-controlling interests 0.8 0.01 0.7 0.00
Income from continuing operations 1.8 0.02 56.0 0.63
Net unrealized (gain) loss on derivative instruments, net of income taxes of $0 million and $(0.5) million

(0.5

)

(0.01

)

2.4

0.03

Charges for restructuring and long-term receivables, net of income taxes1 4.2 0.05 2.0 0.02
Foreign currency exchange (gain) loss on vessel obligations, net of income taxes of $(0.1) million and $0 million

0.4

-

(0.9 ) (0.01 )
Net unrealized loss on foreign denominated instruments, net of income taxes of $0 million and $(0.2) million

3.9

0.04

0.7

0.01

Share-based compensation, net of income taxes of $(0.9) million and $(0.7) million

1.8

0.02

1.7

0.02
Refinancing charges, net of income taxes of $(3.7) million 7.0 0.08 - -
ITOCHU transaction related costs, net of income taxes of $(2.1) million and $0 million 10.6 0.12 0.9 0.01
Share repurchase program costs, net of income taxes1 0.1 - - -
Shareholder proposal costs, net of income taxes1 0.1 - - -
Gain on asset sales, net of income taxes of $0 million and $0.1 million

(4.0

)

(0.04

)

(1.8

)

(0.02

)

Comparable Income from continuing operations

$

25.4

$ 0.28

$

61.0

$

0.69

1 There was no income tax impact for this reconciling item.

Half Year Ended
June 15, 2013 June 16, 2012
(In millions, except per share data)

Earnings
per share

Earnings
per share

Income from continuing operations, excluding non-controlling interests $ 4.6 $ 0.05 $ 80.6 $ 0.91
Income attributable to non-controlling interests 1.0 0.01 0.9 0.01
Income from continuing operations 5.6 0.06 81.5 0.92
Net unrealized loss on derivative instruments, net of income taxes of $(0.1) million and $0 million

0.5

0.01

1.5

0.01

Charges for restructuring and long-term receivables, net of income taxes1 4.2 0.05 3.3 0.04
Foreign currency exchange (gain) loss on vessel obligations, net of income taxes of $(0.1) million and $0 million

(2.6

)

(0.03

)

0.5 -
Net unrealized loss on foreign denominated instruments, net of income taxes of $0 million and $(0.1) million

(0.1

)

-

(3.0

)

(0.03

)

Share-based compensation, net of income taxes of $(3.8) million and $(1.6) million

8.1

0.09

3.3

0.04
Refinancing charges, net of income taxes of $(3.7) million 7.0 0.08 - -
ITOCHU transaction related costs, net of income taxes of $(1.4) million and $0 million 18.3 0.20 1.1 0.01
Share repurchase program costs, net of income taxes1 0.1 - - -
Shareholder proposal costs, net of income taxes1 0.1 - - -
Gain on asset sales, net of income taxes of $0 million and $0.5 million

(5.3

)

(0.06

)

(5.7

)

(0.06

)

Comparable Income from continuing operations

$

35.9

$ 0.40

$

82.5

$

0.93

1 There was no income tax impact for this reconciling item.

Source: Dole Food Company, Inc.



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