Good day, everyone. And welcome to Fresh Del Monte Produce’s First Quarter 2024 Earnings Conference Call. Today’s conference call is being broadcast live over the internet and is also being recorded for playback purposes. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [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, Audra. Good afternoon, everyone, and thank you for joining our first quarter 2024 conference call. I am Claudia Pou, Vice President, Corporate Communications with Fresh Del Monte Produce. Joining me in today’s discussion are Mohammad 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 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 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’ll be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the Safe Harbor provisions of the federal securities laws. 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, May 2nd, and we have no obligation to update any forward-looking statements you may make. During the call, we will provide a business update, along with an overview of our first quarter 2024 financial results, followed by a question-and-answer session. With that, I’m pleased to turn today’s call over to Mr. Ghazaleh.

Thank you, Claudia, and thank you for joining us for the first quarter 2024 earnings results. We continue to see strong momentum in our high-margin Fresh and Value-Added Product segment, which is a key driver of our long-term growth strategy. Revenue in this segment grew by 5% year-over-year, fueled by strong sales of our pineapples and avocados, as well as our prepared foods. Segment adjusted gross margins also expanded by 50 basis points, as we realized production efficiencies and cost savings from our tightly-integrated supply chain. Our strong cash flow allowed us to simultaneously reinvest in the business, increase our dividend while paying down our debt. During the quarter, we reduced total debt by 15% when compared to the prior year period, further demonstrating our commitment to maximizing shareholder value through disciplined capital allocation. We believe we will unlock further shareholder value by focusing on our strengths in pineapple, fresh-cut and value-added projects, which is exactly what we did in this first quarter. Taking a closer look at some of the drivers behind our Fresh and Value-Added segment growth, we saw particularly strong demand for our pineapples. As a leading grower and distributor of this fruit, we continue to look for new and different ways to lead in the pineapple category. In the first quarter of 2024, we launched two pineapple innovations. The Rubyglow pineapple, our red-shelled pineapple, which is being produced in a limited volume at a very high price point. Due to high demand and interest in North America, Rubyglow pineapples are now available to consumers in the United States. Our other newly released pineapple innovation this quarter is the Precious Honeyglow pineapple, a personal-sized fresh pineapple out of our popular line of Honeyglow pineapples. Our previously launched Pinkglow and Honeyglow pineapple innovations continue to perform very well.…

Thank you, Mohammad, and good afternoon, everyone, and thank you for joining us on the call today. Net sales for the first quarter of 2024 were $1,108 million, compared with $1,129 million in the prior year. The decrease in net sales in the first quarter was due to lower net sales of Bananas driven by lower volume and pricing, and lower rates in the third-party ocean freight business in our Other Products and Service segments. The decrease was partially offset by higher net sales in our Fresh and Value-Added product segments due to overall higher sales volume and pricing. Gross profit for the first quarter of 2024 was $82 million, compared with $97 million in the prior year. The decrease was driven by lower overall net sales, higher per-unit production and procurement costs, including the impact of fluctuations in exchange rates, partially offset by lower distribution and ocean freight costs. Gross profit in the first quarter of 2024 includes $1 million net credit related to insurance recovery associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, partially offset by the severance charges from the outsourcing of certain functions at a Fresh and Value-Added production operation. Gross margin for the first quarter of 2024 was 7.4%, compared to 8.6% in the prior year. Excluding the impact from the Other Product-related charges, adjusted gross profit for the first quarter of 2024 was $81 million, compared with $99 million in the prior year. Operating income was $44 million, compared with $75 million last year, and adjusted operating income was $31 million, compared with $51 million in the prior year. The adjusted operating income decrease was due to lower gross profit and higher SG&A expenses. FDP net income for the first quarter of…

Thank you. [Operator Instructions] We’ll take our first question from Mitch Pinheiro at Sturdivant & Company.

Yeah. Hi. Good afternoon.

Hi, Mitch.

Hi, Mitch.

So, let me start with, so the Fresh and Value-Added had a sort of a normal, quite a nice quarter and margins look like they’re advancing. Two questions. One, are -- on the pineapple business, is the -- are the new pineapple varieties, are they just replacing shelf space of old pineapple products or regular pineapples, or are you getting, are grocery stores starting to increase the shelf set for pineapple?

No, actually, Mitch, you are right. It’s not replacing any of the old traditional volume that we have. Actually, it’s incremental with a much higher kind of value to these new additions. So, we are seeing incremental sales and incremental demand. And as a matter of fact, in most cases, we are not even able to meet with the demand for these special varieties.

And so, like, where -- when -- in your own fields, are these all additional acres of pineapple land or are you using existing land and how’s that work from the back end?

No. It’s additional land that we already have. We have enough land to expand our production, Mitch. So, any new varieties with the, let’s say, the Honeyglow, which is the high color pineapple, it is within our existing, let’s say, farms. It’s a different kind of management, agricultural management, which gives us this advantage of producing this type of pineapple…

Okay.

… which commands a premium to the, let’s say, the Montego. But if we are talking about Pink pineapple or Rubyglow pineapple, these are all additional new farmland that within our own, like, properties, we have enough land to grow additional new varieties.

Okay. And like, in an order of magnitude, how much more profitable are these newer pineapple varieties compared to your regular gold pineapple?

By far. It’s a huge, huge, I would say, I cannot tell you exactly, but it’s public, it’s not for public input, but it is very significant difference in value.

Okay. And was that the primary, is the mix of, your higher margin, higher value pineapple, is that more of an impact on the segment’s gross margin than fresh-cut or are they contributing equally? How’s that work out?

I think they are both contributing equally. They are going into kind of tandem in terms of marginality. Both of them are commanding high margins. This is only beginning, we are at the very beginning of our journey towards transforming and I’ve been saying this for several quarters, if you remember, Mitch, we said that we are transforming the company to be a much and to go into much higher Value-Added Product and different avenue, which I believe, as we go quarter-after-quarter, you will start realizing where the company is going. As I mentioned, in my now script that we have, out of -- our residues that we are going to have biofertilizers. This is something that we are working very seriously on and very soon we’re going to be announcing something about this new segment. So that is a lot of new, I would say, avenues that we will be going into that will change the company going forward.

Okay. Thank you for that. And then a question on Bananas. I guess, Monica, if I heard you correctly, you said that for the year, you expect lower volumes in the 3% to 4% range for Bananas…

Correct.

Is that…

Yes.

Along with lower selling prices?

Yes. Yes. We expect, the market is very competitive right now and we do expect to have the lower volume and softer selling prices.

And is the competitiveness in both Europe and…

And North America?

…North America.

Yes.

Is one more competitive?

Yeah. I would like to add to this, Mitch, that the market, the consumption is being going down, actually, as we have seen statistically, there is about 5% less consumption in the market in North America compared to the year before. So we are seeing a tendency for lower, let’s say, volume and sales in North America and actually as well in Europe. We don’t know why…

What do you think about…?

… but this…

Okay.

We don’t know why, but this is the trend that we are seeing right now.

Sounds like to me they are eating more pineapple.

Yeah. Honeyglow.

Honeyglow. So, okay. And then as far as, so as we look, into the -- you don’t have a lot of visibility, but if you look into the next quarter, is the second quarter more the same for Bananas?

I would say more or less the same trend. It will go on, I mean, unless there is more efficiencies, better service levels and less headwinds that we have faced in the first quarter, and especially Bananas, we -- you’re always susceptible to some factors or variables that we cannot control, which happened in the first quarter this year, disruption in the shipping, some quality issues, some service issues. So as we speak, as we’re going forward, we hope that this will stabilize. We believe it’s going to be stabilized. We don’t want to be too optimistic, but let’s take the scenario as today’s scenario as being the one for the second quarter.

As you mentioned, Q1, we had a 5% decrease in volume and for the full year, like I said, we expect 3% to 4%. So we do expect to recover a little bit, not as down as of Q1.

Got it.

One of our biggest headwinds really in the quarter was the exchange rate in Costa Rica has been really decimating the industry. I mean, we’re talking about year-to-year of about 20 colones difference, I mean, 20 points difference between one year to the next. I mean, we were exchanging, let’s say, $1 for 520 colones, and this year it’s almost around 500 colones. So for the last few months, since the late last year. So it’s been really very big headwinds for us.

What’s the driver of the, I don’t pay attention to the Costa Rican monetary situation, what’s driving the flux, the decline?

Too many dollars, I guess, in the market, which put pressure on the, I mean, the local currency became very, very strong.

Right. Right. Okay. So, and there’s little you can do about it, right? There’s no.

Yeah. It’s difficult to hedge.

Absolute…

Difficulty to hedge the colon, but there’s not enough liquidity, so.

You’re right. Right. Okay. That’s all I have. Thanks for the questions.

Thank you, Mitch.

Thank you, Mitch.

And that concludes our Q&A session. I will now turn the conference back over to Mohammad for closing remarks.

Thank you very much everyone for attending this call and hope to speak to you in the next quarter with even brighter news. Thank you. Have a good day.

This concludes today’s conference call. Again, thank you for your participation. You may now disconnect.