Operator: Welcome to the Dole plc Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. Today's conference is being broadcast live over the Internet and is also being recorded for playback purposes. At this time, all participants are in listen-only mode. After the speakers' 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.
James O'Regan: Thank you. Welcome everybody. And thank you for taking the time to join our fourth quarter and full year 2022 earnings conference call. Joining me on the call today is our Chief Executive Officer, Rory Byrne, our Chief Operating Officer, Johan Linden and our Chief Financial Officer, Jacinta Devine. During this call, we will be referring to presentation slides supplemental remarks, and these along with earnings release and other related materials 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 federal securities Safe Harbor law. These reflect circumstances of time they're 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 the press releases. Information regarding the use of non-GAAP financial measures may be found in our press release, which also include the reconciliation to the most comparable GAAP measures. With that, I'm pleased to turn today's call over to Rory.
Rory Byrne: Thank you, James. And welcome everybody. And thank you for joining us today. While 2022 was the first full financial year for the group, from the completion of the merger of Total Produce and Dole Food Company, and the subsequent IPO of Dole PLC in July 2021. The continued integration of the continued legacy business was a key operational focus for us during 2022. And we're very pleased with the progress made starting out with the rebranding of our operations, we created the backdrop for one new combined entity under the iconic Dole brand. We launched Dole Exotics and to Be Exotic brand in Europe, the specialist division is dedicated to the growing procurement, ripening, and marketing of exotic produce such as avocados and mangoes, aligning with our strategy to focus our efforts and categories with strong growth potential.
We released our first sustainability reports of Dole PLC and set ambitious goals for the year for the near medium and long term. These sustainability efforts were recognized by a number of industry bodies during 2022. The American Costa Rican Chamber of Commerce recognized us for the social responsibility and Action Award all Ireland was awarded the orange and green gold accolade, which was awarded to companies with exceptional annual performance on the sustainability targets. Post year-end, we announced reached an agreement to sell our fresh vegetables division to fresh express for a gross consideration of approximately $293 million. Concluding the strategic review process for this division, which we undertook during 2022. We believe a combination with fresh express will improve the offering and service to customers and consumers through increased investment to innovation, efficiencies and food safety.
I want to express my graduate again to the dedicated employees and partners of the dole fresh vegetable business for their valuable contributions over the years and the support, in particular the management team as we wor ked our way to reaching this agreement, returning this division to profitability was a key focus for management last year. And the same will allow us to focus on our core activities. Expect to use the net proceeds reduce our doubt strengthen the financial position of the group and providing more flexibility to finance our future group. So turning to slide 7, on the fourth quarter financial highlights, we've delivered a very strong results for the fourth quarter driven by a particularly good performance in our freshford segment.
global revenue increased by 4.7% on a like for like basis, excluding the impact of foreign currency translation movements, and m&a it increased by 10.2%. It just even increased by 21.7% to $74.4 million driven by the strong performance in our fresh fruit segment. This increase in adjusted EBITDA drove the increase in adjusted net income and adjusted diluted earnings per share. On Slide 8 then we recap the overall Fourier performance. Against the backdrop of an unprecedented economic and operating environment, we are pleased with financial results for the year. Group revenue came in at $9.2 billion, in line with the prior year on a pro-forma basis and also in line with our guidance to the market. On a like-for-like basis, revenue increased by 5%.
Price increases in response to inflation were the primary reason for this group. Adjusted EBITDA of $338 million was in line with our guidance. The decrease year-on-year was primarily due to the loss incurred by Fresh Vegetables following the challenging year, along with the impact of negative foreign currency movements. Our Fresh Fruit segment performed very strongly, taking advantage of its strong strategic asset base. Our diversified risk project segments also performed grow in '22, remain agile in the base of challenges from supply chain disruptions, inflationary pressures and on economic uncertainty. So moving on to Slide 10 for our operational highlights. Our Fresh Fruit division had a very positive end to the year and an excellent overall performance in 2022.
North America and Commercial Cargo operations continued to perform very well with a healthy supply and demand balance and good shipping rates driving our performance. In Europe, high shipping rates and adverse currency movements continue to impact their profitability or partially offset by an improved supply and demand balancing, which allowed for better market pricing in Q4. Importantly, this dynamic has also extended to better contract pricing in Europe for 2023. The recent customer renewals have allowed for important cost variables to be reset to more sustainable levels for the industry. Overall, while supply and demand dynamics in the many markets we mean an important variable for 2023. With our diverse sourcing base and leading customer portfolio, we believe we're well placed to have a strong year.
Our diversified EMEA segment continued to trade well on a like-for-like basis in Q4 while also benefiting from its extensive product and geographic diversity. Inflationary pressures and supply chain challenges continue to be apparent in certain markets. But overall, our businesses continue to demonstrate the ability to price dynamically and provide consistent and high-quality service to our customers. Looking now to 2023. We continue to be encouraged by our success in managing supply chain complexity and with our dynamic plan pricing model, we expect to have a consistent year. Our Diversified Americas segment continued to be impacted by specific supply chain challenges in Q4 with disruptions impacting a number of products, particularly on apples and kiwis.
Farm, Vegetables, Flowers
Photo by alexander schimmeck on Unsplash
More positively, our important Chilean cherry business had a strong start to its season and our U.S. operations continue to perform well, particularly in products such as potatoes and onions. Overall, in 2022, the negative impact of supply chain disruptions on the export side of the business offset positive environment in the rest of this division. However, the scale and range of activities in our Diversified Americas segment still allowed us to maintain a solid level of performance overall. Our fourth quarter performance of Fresh Vegetables remained somewhat disappointing as the industry went through an exceptional period of supply short just dated significant increases in sourcing costs in Q4. Performance improved at the end of the quarter as supply began to improve and also as our turnaround plan began to deliver benefits.
We remain focused on driving continued improvement in this business whether it remains a part of the group. Turning to Slide 12, to our sustainability highlights in 2022. We published our first sustainability report to Dole plc, which save our ambitious goals for the coming years. Summary of these goals are set out on Page 13 of our presentation. We achieved a 4% reduction in our Scope 1 and 2 emissions, a valuation for CDP time disclosures and committed to the science-based target initiative. We continue to make investments in new and renewable energy sources as we treat transition from fossil fuels. Examples of this include the further solar panel facilities in Ireland, the addition of two wind turbines and manufacturing facilities in Salinas, and the addition of five new electric tractor rigs at the San Diego port terminal.
Our business model remains driven by adding value to society by delivering on social investment evidenced by our long track record in Latin America through the Dole Foundation, promoting healthy nutrition consumers and finally, being a good steward of our natural resources like water, biodiversity, and so on. Detailed goals for emissions for the itemized during 2023 and submitted to SBTI, and we will continue to focus on climate risk management. Our second annual sustainability report was found in the fourth quarter of '23. So with that, I'll hand you over to Jacinta to give the financial review.
Jacinta Devine: Thank you, Rory. Good morning and good afternoon. Turning to the group results on Slide 15. Firstly, it is worth noting that the results for the fourth quarter are the first set of quarterly results where we compare to reported rather than pro-forma financials. As Rory mentioned, we delivered a strong performance in the fourth quarter and to recap on the key numbers. Revenues for the fourth quarter increased over €100 million compared to the prior year, driven by higher pricing across all segments. On a like-for-like basis, revenue increased over 10%. Adjusted EBITDA for the fourth quarter increased 21.7% or $13 million to $74 million, with the increase driven by a strong performance in fresh fruit. On a like-for-like basis, adjusted EBITDA increased 29%.
Adjusted net income was $8.9 million, and adjusted diluted EPS was $0.09 in the quarter versus breakeven in Q4 2021, with the increase driven by higher adjusted EBITDA, offsetting higher interest expense versus the prior year. On a full year basis, revenue remained in line with prior year, whereas adjusted EBITDA decreased 14%. The decrease was predominantly due to the significant challenges in our fresh vegetables segment, which resulted in a $33 million adjusted EBITDA value. Foreign exchange translation also had a negative impact of $15 million. These impacts were partially offset by a strong year in price freeze. Adjusted net income and adjusted diluted EPS, both decreased versus the pro-forma comparators for 2021, driven by the decrease in adjusted EBITDA and higher interest expense.
I will now provide some more detail on the fourth quarter performance for each of the operating segments. Turning to Slide 17 for Fresh Fruit. Fresh Fruit had a strong fourth quarter and end the year with revenue increasing 8.7% and adjusted EBITDA increasing 163%. Similar to the third quarter, the increases were driven by higher pricing for bananas worldwide, continued strong performance from commercial cargo, and higher pineapple volumes. Operating costs remained elevated, particularly shipping and packaging costs and costs of sourced fruit. However, higher prices have offset these cost increases. Moving on to Slide 18 for Diversified Fresh Produce - EMEA. The good underlying performance in this segment was demonstrated by the 6.9% increase in revenue on a like-for-like basis, driven by higher pricing.
Adjusted EBITDA decreased 19.5%. However, adjusting for FX and M&A, this decrease reduces to 4.8% on a like-for-like basis. This decrease was mainly due to higher logistics and sourcing costs based by our Scandinavian businesses had an unfavorable great deal in South Africa, offset by strong performance in our Spanish, Dutch, and Czech businesses. Turning to Diversified Fresh Produce - Americas and Rest of World on Slide 19. Revenues for the fourth quarter increased 19.6%, driven by higher pricing and volume of cherries in Chile and continued strong sales of potatoes and onions in North America. Disappointingly, adjusted EBITDA decreased 24% during the quarter following a weak season for Chilean apples and kiwis and lower pricing of raspberries in North America, partially offset by a strong start to the Chilean cherry season and higher pricing of potatoes and onions.
Finally, turning to Fresh Vegetables on Slide 20. Revenue increased 6.1% as we saw the benefit of higher pricing for value-added products and continued strong pricing for the fresh-packed range. We continue to incur losses in the fourth quarter in Fresh Vegetables, particularly due to sourcing challenges and increased costs for vegetables and continued inflationary impact on other input and manufacturing costs. Turning to Slide 21. Capital expenditure for the fourth quarter was $31 million, and for the full year, we invested $98 million. For 2023, we expect CapEx to be circa $120 million, which is in line with appreciation for 2022. We are pleased that our net leverage at the end of the year was 3x in line with our target. As expected, we saw the unwind of seasonal working capital in the fourth quarter, and this contributed to the reduction in leverage from the third quarter.
For 2023, we expect the pattern of seasonal working capital movements to be similar to 2022. Our full year interest expense was $61 million in 2022 with the continued rise in market interest rates. We currently expect our full year interest expense for 2023 to be circa $90 million before any benefit from the sale of such regrowth. Finally, we have declared a dividend of $0.08 for the fourth quarter, in line with previous quarters this year and continuing our commitment to return cash to shareholders. Now I will hand you back to Rory, who will give an update on our full year outlook and closing remarks.
Rory Byrne: Thank you, Jacinta. The operating environment so far in 2023 continues to bring both new opportunities and new challenges. As we noted in a recent update, we experienced a cyber in cybersecurity in since in February identified as ransom ware, which although had a limited impact on our overall operations was disruptive to Fresh Fruit and Vegetables division and our Chilean businesses in particular. More positively, we moved quickly to contain the threat and engaged with leading third-party cybersecurity experts or be working in partnership with their internal teams to remediate the issue and secure systems. Switching to looking at the supply chains. So far in 2023, we are seeing signs of improved logistical efficiencies in several areas.
Wherever we've also seen further weather events, just colder weather, particularly in solar in Spain, which has created challenges for importers in Northern Europe at the start of the year. ' And lastly, when looking at the macroeconomic environment, we've seen positives for our business with the strength in Europe, lower and more stable fuel prices, as well as some signs of inflation moderation in certain areas. However, as the environment remains uncertain, we need to remain fully and highly focused on management costs and delivering operating efficiencies. Overall, for 2023, we believe our business is well positioned for growth. And while forecasting in the current environment is complex, we are targeting full year adjusted EBITDA of $350 million.
Our forecast assumes no contribution from the Fresh Vegetables division. In conclusion, we're very pleased to finish '22 with a strong fourth quarter and have agreed to dig some of our Fresh Fruit division. Our principal priorities looking into '23 are obviously completing the sale in the Fresh Vegetables business, continuing to focus on cost control and operating efficiencies across our businesses, including the ongoing synergy projects, continuing with a disciplined approach to capital, and accelerating growth in our core business areas post completion of the Fresh Vegetables transaction. I want to finish by thanking again our committed team for their ongoing efforts to drive our business forward and also by thanking our critical partners and customers for their ongoing support, which allows us to look to the future with great confidence.
With that, I'll hand you back to the operator, and we can open the line for questions.
