Good day, everyone, and welcome to Fresh Del Monte Produce’s Fourth Quarter and Full Fiscal Year 2023 Conference Call. Today’s conference call is being broadcast live over the Internet and is also being recorded for playback purposes. [Operator Instructions] For opening remarks and introductions, I would like to turn today’s call over to the Vice President, Corporate Communications with Fresh Del Monte Produce, Claudia Pou. Please go ahead, Ms. Pou.

Thank you, Regina. Good morning, everyone, and thank you for joining our fourth quarter and full fiscal year 2023 conference call. As Regina mentioned, I’m Claudia Pou, Vice President, Corporate Communications with Fresh Del Monte Produce. Joining me in today’s discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Monica Vicente, Senior Vice President and Chief Financial Officer. I hope that you’ve had a chance to review the press release that was issued earlier this morning via Business Wire. You may also visit the company’s IR website at investorrelations.freshdelmonte.com to access today’s earnings materials and to register for future distribution. This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release and our call today include non-GAAP measures. Reconciliations of these non-GAAP financial measures and the other required disclosures are set forth in the press release and earnings presentation, which is available on our website. I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the provisions of the federal securities laws safe harbor. In today’s press release and in our SEC filings, we detail risks that may cause our future results to differ materially from these forward-looking statements. Our statements are as of today, February 26, and we have no obligation to update any forward-looking statements we may make. During the call, we will provide a business update, along with an overview of our fourth quarter 2023 financial results, followed by a question-and-answer session. With that, I am pleased to turn today’s call over to Mr. Ghazaleh.

Thank you, Claudia, and good morning, everyone. As you have read in our press release, our strong gross margins and cash flow enabled us to have strong adjusted earnings per share growth. It allowed us to reduce our loan debt by $140 million and end the year with an adjusted leverage ratio of 1.7 times, and allowed us to continue returning value to shareholders and increased our quarterly dividend by 25% for the second year in a row. In the fall of 2023, we conducted a strategic review and assessed our operational priorities of our North America operations, including Mann Packing. Preliminary findings of this review were finalized in the fourth quarter. As a result of this strategic review and other factors, we recorded a non-cash impairment of $131.2 million in the quarter, related to our Mann Packing operation. We are exploring strategic alternatives for this business all the while continuing to focus on our long-term drivers for enhancing shareholder value for 2024. Fresh Del Monte has been leading pineapple innovation since the 1990s with the debut of the Del Monte Gold Extra Sweet pineapple, the first of its kind at that time. Since then, our robust pineapple program has released the Pinkglow Pineapple, the Honeyglow Pineapple, the Del Monte Zero Pineapple, and just a few weeks ago, the Rubyglow pineapple, a new premium hybrid pineapple. In 2023, we saw continued strong demand for our Honeyglow and Pinkglow pineapples, with sales growing by approximately 25% for these varieties in the year 2023 compared with 2022. In 2024, we will continue to focus on our pineapple program by working to expand the reach of our existing varieties and our new Rubyglow variety. During 2023, we made significant progress on our asset optimization program, and sold underutilized and non-strategic assets, which generated…

Thank you, Mohammad. Good morning, and thank you for joining us on today's call. As a reminder, there is a seasonality in the cadence of our earnings. The first and second quarters are seasonally our stronger quarters, while our third and fourth quarters are seasonally softer. Our 2023 results are consistent with historical trends as we realized a greater portion of our net sales and gross profit during the first half of the year. Please keep in mind when looking at the year-over-year results that our results in 2022 did not follow that same seasonality due to the high inflationary environment and a lag in price increases, leading to an unusually soft first half and stronger second half. As Mohammad mentioned, and you will also see in our 10-K filing later today, in the fourth quarter we took an impairment charge of $131 million, of which $110 million relates to customer lists and trade name intangibles, as well as building land and land improvement assets related to the fresh and value-added product segment in North America, and also $22 million related to goodwill in our prepared foods reporting unit. These impairments were related to our Mann Packing business acquired in 2018. We are currently exploring strategic alternatives for this business and we will provide updates as they become available. With that, I will now turn to our results. Net sales for the fourth quarter were $1.9 billion, compared with $1.040 [ph] billion in the prior year. The decrease in net sales in the fourth quarter were driven by lower net sales of bananas and lower global demand for our third-party ocean freight business, partially offset by higher net sales in the fresh and value-added product segment in Europe and Asia. For the full year, net sales were $4.3 billion, compared…

[Operator Instructions] Our first question will come from the line of Mitch Pinheiro with Sturdivant & Company. Please go ahead.

Good morning. So, a question first on bananas. For the year, the 10% gross margin was the best I've seen going back to 2012. I heard some of the reasons in your script, but what else is driving this margin? This margin is a higher level of Banana margin sustainable? What's your outlook here in the near term? And what have you been doing internally to improve the margin as opposed to just pricing?

Good morning, Mitch. There are several reasons. One of them was Europe was a strong market last year, and banana consumption was higher than normal and the volumes were more in line with the demand. That was number one. Number two, our management of supply and demand was more synchronized in a way that we did not have to have very high inventories at times when we don't need them. And that, in my opinion, has helped a lot in controlling our costs, let's put it that way. And thirdly, we are focusing on a more, let's say, on the cost structure of our banana farms. That's where we are working very hard in order to really keep our plantations, which are within normal cost structure. I wouldn't say we're going to shut down our plantations. That's not the case. But we are going to be looking at every farm and every plantation and make sure that we're having the best, most efficient farms in operation and production. And that all these actual factors together have helped to improve the gross margins, as you have seen in the announcement. And this is something that we will continue to do, Mitch, hopefully, despite all the other negative impacts that we have in the market, competition and retail, of course, influence, be it in Europe or North America, to reduce prices, selling prices. But all-in-all, we are very much kind of pleased with what we are doing and where we are going. But bananas, like Monica mentioned, is like our cash flow generation in terms of -- really our focus would be on more value-added products and more value-added operations that will really put the company in a much different platform.

Yes, as I just mentioned the banana pricing is difficult to predict because there's a lot of variables, including supply and demand. So just keep that in mind.

So, I mean, most of your Northern American volume is contracted. So how does that look, the current contracted prices relative to 2023?

The contracted on the supply side or on the selling side?

On the selling side.

The selling side is a little bit -- North America is tough because competition is very tough as we speak, and players are trying to position themselves for market share, additional market share. But we really focus on margins, Mitch. I don't mind sacrificing some volume for a better margin rather than just going for volume and selling at very low margins.

Okay. And then in terms of pineapples, you've done very well innovating in pineapples. And you talked about 25% growth in your -- I guess it's your -- the Pinkglow and the Honeyglow. How big is -- are these two and I guess you're going to start Rubyglow. How big is that as a percentage of your overall pineapple sales? And then, where does distribution stand? I know when I look for the Honeyglow, it's not in every supermarket. So that looks like an opportunity for you. And I'm curious what your ACV is on these products.

Yes, I do know that Honeyglow cannot be -- we can't have 100% of our production in Honeyglow. This is a very selective item that we have to work very diligently in the fields to create this Honeyglow segment, which is a certain percentage of our production. I would not disclose it. But we are working in a way that -- to increase our ratio of Honeyglow compared to the total production, as well as increasing our production in general to create more volumes on this -- in this segment, Mitch. So, it's something that is an operation and ongoing as we speak. So, I mean, hopefully, going forward, we will see continuous improvement in terms of volume and the growth of this segment. We are very, very -- of course, we are in the very early stages for the Ruby [Indiscernible], which has just been announced, and there will be only few thousand pieces. This will be a limited addition, let's say, variety that we are not going to produce in big volumes but certainly limited volume, but with very high prices and very high margins.

Okay. And then, looking at Mann Packing, you bought it a couple of years ago, I guess maybe five years ago, the pre-pandemic, and it really hasn't, regained its footing since then. I'm just curious what changed in your thinking about Mann as you did your strategic review.

Well, I mean, I was very clear we are going to look at the best ways to -- first of all, we would like to minimize or eliminate any losses coming from that operation. Secondly, we will look what's best for the company. And thirdly, this segment of vegetables and leaves in particular has been extremely competitive with very low margins in the last couple of years. Weather hasn't been helping as well. So, it's a combination of reasons and factors that have led to this situation. But as I said -- I mentioned earlier, we are going to take some strategic decisions in order to improve our business in general. And I hope that in the next few months we can announce, and tell you where we are.

What are the sales of Mann?

We don't disclose that, Mitch.

Okay. And then I guess this final question is you've done well reducing debt, and especially with some asset sales. What are the plans in asset sales for the coming year?

Well, as I mentioned, we are not selling for the sake of selling. We are selling lands that are idle or not suitable for our purposes. Secondly, facilities that have no use for us and we can operate. By the way, these facilities that we sold in Saudi Arabia, we released part of it for our operations. So, we did not get out of our operations, in this country. However, what we did, we deleveraged our exposure into assets and had a better cash flow as well as a better operating model, let's say. So other assets that we sold in South America were assets that really did not fit like the plastic operation. It didn't fit well in our today, let's say, world. So that was a good opportunity to sell, and that's why we did disposal with other lands or facilities as well were the right time to sell and to optimize our operations in certain countries. So, what we are doing really, we are optimizing and creating efficiencies and creating more opportunities.

Okay. Thank you for taking the questions.

Thank you.

And with that, I'll hand the call back to Mr. Mohammad Abu-Ghazaleh for closing remarks.

Well, I would like to thank everyone attending the call today. Hopefully we can give you better news next time. I wish you a good day. Thank you.

Everyone that now concludes our call for today. Thank you all for joining. You may now disconnect.