Dole plc (DOLE) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects a positive sentiment with strong financial performance in diversified segments, particularly in the Americas, and a strategic focus on cost savings and capital allocation. Despite some cost pressures, the company is confident in achieving $400 million in adjusted EBITDA. The Q&A reveals management's confidence in pricing strategies and sustainable growth, although specific guidance was avoided. The market cap suggests a moderate reaction, leading to a positive stock price movement prediction of 2% to 8%.

Key Financial Performance

Revenue Group revenue of $2.3 billion was 11.6% higher on a reported basis year-over-year, reflecting continued positive demand for products and favorable foreign exchange movements. Excluding foreign exchange impacts, revenue was up 7%.

Adjusted EBITDA Adjusted EBITDA was $100 million, a decrease of $4.5 million year-over-year, mainly driven by higher food sourcing costs in Fresh Fruit, partially offset by strong growth in Diversified Americas and a solid performance in Diversified EMEA.

Net Income Net income was $37.7 million, $6.4 million lower than prior year, primarily due to higher food sourcing costs, increased SMG&A, and a higher gain from asset sales in Q1 2025.

Adjusted Net Income Adjusted net income decreased by $1.9 million year-over-year, predominantly due to the decrease in adjusted EBITDA, higher depreciation expense, and higher interest and tax in equity method investments following recent investments.

Adjusted Diluted EPS Adjusted diluted EPS was $0.33 compared to $0.35 in Q1 2025, reflecting a decrease year-over-year.

Fresh Fruit Revenue Revenue increased 7% year-over-year, primarily due to higher worldwide pricing of bananas, pineapples, and plantains, and higher volumes of bananas sold in Europe.

Fresh Fruit Adjusted EBITDA Adjusted EBITDA decreased by $10.7 million year-over-year, mainly due to higher food sourcing costs and the impact of the appreciation of the Costa Rica Colon.

Diversified EMEA Revenue Reported revenue increased 15% year-over-year, primarily due to favorable FX impacts and underlying growth in France and Germany. On a like-for-like basis, revenue increased by 4%.

Diversified EMEA Adjusted EBITDA Adjusted EBITDA increased 8% year-over-year, driven by favorable FX translation and contributions from Scandinavia and Germany, partially offset by lower earnings in the U.K., Netherlands, and South Africa.

Diversified Americas Revenue Revenue increased 16% year-over-year, driven by higher volumes and pricing in the Southern Hemisphere export business, as well as higher volumes in North American businesses, offsetting lower pricing in avocados.

Diversified Americas Adjusted EBITDA Adjusted EBITDA increased by $4 million year-over-year to just under $8 million, driven by higher revenue, benefits of the Oppy and DDNA integration, and good performance in joint venture operations.

Routine Capital Expenditure Routine CapEx was $18 million in the quarter, with full-year investment expected to be approximately $100 million, covering routine profit maintenance investments across farming, shipping, and distribution assets as well as IT.

Free Cash Flow Free cash flow was an outflow of $40 million compared to an outflow of $132 million in Q1 2025, due to lower cash flow used in operations and lower CapEx.

Net Debt Net debt was $657 million, with net leverage of 1.7x.

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Operating Highlights

Revenue Growth: Strong revenue growth of 12% year-over-year, driven by positive consumer demand across key markets and evolving dietary preferences.

Fresh Fruit Investments: Investments in Guatemala for organic and conventional bananas and plantains to increase production and sourcing capacity.

Cherry Category: Continued investments in cherries to secure high-quality and stable product volumes.

Geographic Expansion: Investments in warehouse operations and infrastructure in Ireland and Spain to support market growth.

Diversified EMEA: Revenue growth supported by favorable exchange rates and organic growth, with strong contributions from Scandinavia and Germany.

Diversified Americas: Strong performance with adjusted EBITDA up by 29%, driven by higher volumes in Southern Hemisphere exports and North American imports.

Cost Management: Mitigation strategies for rising input costs, including fuel surcharges in North America.

Logistics and Automation: Investments in logistics and automation capabilities in Sweden, including third-party logistics and innovative warehouse solutions.

Integration Benefits: Operational benefits from the integration of Dole North America with Oppy.

Capital Allocation: Focus on development investments and bolt-on acquisitions to deliver long-term returns.

Sustainability and Growth: Strategic investment of approximately $100 million in automation and AI for sustainable growth.

Portfolio Diversification: Efforts to diversify sourcing and production to ensure high-quality produce and resilience.

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Risk or Challenges

Fresh Fruit Division Profitability: Elevated fruit sourcing costs, particularly for bananas and pineapples, continue to impact profitability. Additionally, the appreciation of the Costa Rican Colon is negatively affecting pineapple profitability.

Middle East Conflict: The ongoing conflict in the Middle East is creating operational complexities, leading to elevated fuel costs and higher prices for inputs such as fertilizer and paper.

Supply Chain Costs: Higher input costs, including fertilizers, paper, and fuel, are impacting the cost base. Rising shipping and fuel costs are expected to persist, particularly in the Fresh Fruit segment.

UK and Netherlands Profitability: Reduced profitability in the UK due to lower product availability from Southern Europe and North Africa, as well as lower margins in the Netherlands.

Economic and Currency Risks: The appreciation of European currencies against the U.S. dollar has mixed impacts, benefiting some regions while creating challenges in others. Additionally, foreign exchange fluctuations are influencing costs and revenues.

Regulatory and Transactional Risks: The company is awaiting the completion of the sale of port operations in Ecuador, which involves regulatory approvals and transactional complexities.

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Guidance & Outlook

Full Year Adjusted EBITDA Target: The company is targeting a full year adjusted EBITDA of at least $400 million for 2026.

Impact of Middle East Conflict: The ongoing conflict in the Middle East is expected to increase shipping and fuel costs in the second quarter, particularly in the Fresh Fruit segment. However, contract price adjustments and dynamic pricing strategies are expected to mitigate these impacts as the year progresses.

Demand Trends: Demand for the company's products remains strong, supported by major health and wellness trends.

Recent Investments: The company anticipates positive returns from recent investments, including those in production and sourcing capacity in Guatemala, cherry category investments, and automation and warehouse solutions in Sweden.

Capital Expenditures: Routine capital expenditures for 2026 are expected to be approximately $100 million, covering farming, shipping, distribution assets, and IT.

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Shareholder Return Plan

Quarterly Dividend: Dole plc offers an attractive and consistent quarterly dividend, which is assessed annually.

Share Repurchase Authorization: In November, the Board granted authorization for share repurchases, which are being used opportunistically, benchmarking the returns relative to those available from the portfolio of development projects.

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Key Q&A

Q:What gives you confidence in the direct negotiation and Fresh Fruit side pricing, and what are the expected material savings?

A:The CEO, Rory Byrne, stated that while guidance is difficult to predict, the company has reviewed its cost base across divisions and expects reasonable savings, though not quantum savings. The second half of the year is expected to be stronger, allowing time to adapt to cost base changes. The diversified dynamic pricing model has worked well historically, and the company is confident in achieving the guidance.

Q:What is the prioritization process for capital allocation, including buybacks, M&A, organic investment, and debt repayment?

A:Rory Byrne explained that capital allocation is a dynamic process. The company is focusing on internal development opportunities, particularly in advanced technology for picking and packing in the Scandinavian business. Debt levels are comfortable, and the company is monitoring interest rates. Other tools like dividends, buybacks, and debt repayment are also considered.

Q:What are the expectations for Fresh Fruits costs and banana supply and demand for the remaining 9 months?

A:Johan Linden, COO, explained that supply issues from last year, including Tropical Storm Sara and weather issues in Costa Rica, are still impacting costs. These issues are expected to stabilize after Q2, with a better picture anticipated for the rest of the year.

Q:Can you quantify the impact of escalating cost pressures, such as fertilizer, packaging, shipping, and fuel, and how will these be offset?

A:Rory Byrne stated that Q2 will face cost pressures, particularly in fuel, due to a time lag in price adjustments. These costs will impact Q2 but will be offset in Q3. The diversified divisions can pass through cost changes more quickly than the Fresh Fruit division. The company expects to achieve at least $400 million in adjusted EBITDA for the full year.

Q:What is driving the strength in the diversified Americas business, and how sustainable is it?

A:The integration of Dole Diversified North America with Oppy has reduced costs and consolidated marketing efforts. Seasonal factors, such as the cherry season, contributed to Q1 strength. The company expects year-on-year improvement but not as dramatic as Q1. Small investments and strong management are driving sustainable growth.

Q:What is the demand outlook for the Middle East region given the ongoing conflict?

A:Rory Byrne noted that the company has limited direct business in the Middle East. Trade has continued despite complications, and the company hopes for stabilization. The South African citrus season could be impacted, but no significant demand impact is expected in core markets like Europe and North America.

Q:What is the expected payback period for the $100 million automation investment?

A:The company is targeting returns of 12%-15% on the automation investment. The investment is aimed at staying ahead in technology and maintaining relevance with customers while ensuring attractive returns.

Q:How does the company decide between organic investments and bolt-on acquisitions or M&A?

A:Rory Byrne explained that the decision is opportunistic and dynamic. Smaller bolt-on acquisitions are often more attractive due to reasonable price expectations and synergies. The company constantly evaluates opportunities to stay relevant and attractive to customers and suppliers.

Q:Review of Unclear Management Responses

A:Management avoided providing specific quantifications for escalating cost pressures, such as fertilizer, packaging, shipping, and fuel, and did not give exact quarterly guidance for EBITDA. Additionally, while they mentioned targeting returns of 12%-15% for the automation investment, they did not provide a detailed timeline for the payback period.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

DOLE Transcript

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The earnings call reveals strong financial performance with increased revenue and EBITDA across segments, despite some challenges. The Q&A section highlights robust demand and strategic initiatives, although there are concerns about fruit sourcing costs and vague management responses. The share repurchase program and positive market trends further support a positive outlook. Given the company's market cap of $1.16 billion, the stock is likely to experience a positive movement of 2% to 8% over the next two weeks.

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The earnings call reveals mixed signals. Positive factors include a $100 million share buyback program, strong free cash flow, reduced net debt, and optimistic guidance. However, challenges like cost mismatches in Fresh Fruit, procurement issues, and lack of clarity on tariffs and 2026 guidance temper enthusiasm. The market cap suggests moderate volatility, aligning with a neutral sentiment, as positive and negative factors seem balanced.

Dole plc (DOLE) Q2 2025 Earnings Call Transcript

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The earnings call presented mixed signals: strong adjusted EBITDA in some divisions and a dividend increase are positive, but tight supply conditions, increased costs, and a conservative EBITDA outlook due to trade volatility are concerns. The Q&A highlighted management's cautious tone on supply disruptions and tariffs, which could weigh on sentiment. The market cap indicates moderate stock sensitivity, suggesting a neutral reaction with potential fluctuations within a 2% range.

DOLE Report

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