Good day, everyone. And welcome to Fresh Del Monte Produce's Fourth Quarter and Full Fiscal Year 2024 Earnings Conference Call. Today's conference call is being broadcast live over the Internet and is also being recorded for playback purposes. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. For opening remarks and introductions, I would like to turn today's call over to the Vice President, Investor Relations, with Fresh Del Monte Produce, Miss Christine Cannella. Please go ahead, Miss Cannella.

Thank you, Llewellyn. Good morning, everyone. And thank you for joining our Fourth Quarter and Full Fiscal Year 2024 Conference Call. Joining me in today's discussion are Mr. Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer, and Miss Monica Vicente, Senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier via Business Wire. You may also visit the company's website at investorrelations.freshdelmonte.com to access today's earnings materials and to register for future distributions. 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 will 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 those forward-looking statements. Our statements are as of today, February 24, 2024, and we have no obligation to update any forward-looking statement we may make. During the call, we will provide a business update along with an overview of our Fourth Quarter and Full Fiscal Year 2024 financial results, followed by a question and answer session. With that, I will now turn today's call over to Mr. Mohammad Abu-Ghazaleh. Please go ahead.

Thank you, Christine. Good morning, everyone. And thank you for joining us today. Let me take you through the highlights of our full year 2024 results. Our fresh and value-added product segments—pineapple, fresh-cut fruit, and avocados—performed exceptionally well in 2024, driving growth and improving company gross margins. These categories remain a core strength of our portfolio, which we believe validates the direction we have taken to focus on higher-margin products that align with market demands. Whilst total net sales were 1% lower year over year at $4.28 billion, gross profit increased by 2% to $358 million from the prior year period, and gross margins improved to 8.4% compared with 8.1% in 2023, underscoring our progress in building a more profitable and efficient business model. Furthermore, we achieved another reduction in long-term debt supported by strong cash flow and increased our quarterly dividend for the third consecutive year. Pineapples are the heart of who we are, and in 2024, we continued to solidify our position as the global leader in this category. Last year, we launched our latest innovation, the Ruby Glow pilot. As global demand for our pineapples continues to exceed supply, we remain active in expanding our production and sourcing operations. We understand how important it is to ensure consistent and uninterrupted supply to consumers globally, and for that, we have established a five-year growth strategy that we believe will support our customers globally. We believe the next few years will be a tremendous story for our pineapple segment, driven by our relentless focus on quality, innovation, and reaching more consumers around the world. Pineapples are central to our growth strategy, driving every stage of our business, from whole fresh produce to fresh-cut and value-added products, manufacturing with IQF and juice concentrates, and our newest biomass initiative, which seeks…

Thank you, Mr. Abu-Ghazaleh, and good morning, and thank you for joining us on the call today. As Christine mentioned, 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. For the fourth quarter of 2024, net sales were $1.013 billion compared with $1.009 billion in the prior year. The increase in net sales was driven by higher sales in our fresh and value-added segment, primarily driven by higher per unit selling prices. The increase was partially offset by a decrease in net sales in our banana segment due to lower per unit selling prices and volume. For the full year of 2024, net sales were $4.28 billion compared with $4.321 billion in the prior year. The decrease in net sales was primarily due to lower sales and per unit selling prices in our banana segment as well as the negative impact of exchange rate fluctuations, primarily the Japanese yen and Korean won. Partially offset by higher per unit selling prices and sales volume in our fresh and value-added product segments. Gross profit for the fourth quarter of 2024 was $69 million compared with $63 million in the prior year. The increase in gross profit was driven by higher net sales in our fresh and value-added product segment, partially offset by lower net sales in our banana segment, as well as higher per unit production and procurement costs. Gross margin for the fourth quarter was 6.8% compared with 6.2% in the prior year. Adjusted gross profit for the fourth quarter was $69 million compared with $56 million in the prior year. For the full year of 2024, gross profit was $358 million compared with $351 million last year.…

Again, if you would like to ask a question, press star one on your telephone keypad. Right. Your first question comes from the line of Mitch Pinheiro with Citibank and Company. Please go ahead.

Yeah. Good morning.

Good morning, Mitch.

Thanks for some of the detailed guidance for next year. Very helpful, especially in businesses that can be as volatile as yours. So thank you for that. I guess I wanted to start with just, you know, you talk about your core focus, pineapples, fresh-cut fruit, avocados. And I was wondering if you could provide a little bit further color. So with pineapples, you know, you're increasing supply, like, as fast as you can. Are you constrained even more because of the weather operation? Does that push up prices? I mean, can you get a gross margin on the pineapples, you know, in line with last year? Same with fresh-cut fruit. You know, are we going to see a steady improvement in your fixed cost leverage? Or will there be some seasonality? And then finally, in the avocado business, you know, you've seen some pretty good improvement there, and I was wondering, you know, I guess if there were tariffs in Mexico, you know, imports, do you expect demand to see, you know, is there inelastic demand there, or do you think it would have a meaningful impact on your business?

Thank you, Mitch. Listen, as far as pineapple is concerned, yes. We are expanding our plantation in Costa Rica. This is as we speak. And we have already started as well replanting our fields in Brazil. You know, we used to plant pineapple in Brazil about, I would say, twenty years ago. And for a certain disease, we were hit and we stopped planting then. During these years, we have worked very diligently to create a new variety that would be resistant to this disease. And we have patented, you know, this is the first time that we just disclosed this. These new varieties that we have developed, which comes from the gold variety. It's not something new, but we have created a variety that is resistant to the fusarium disease in Brazil, which will be the only one in the world actually that is resistant to fusarium. And we have patented this and we started actually as we speak. Created a tissue culture operation in Brazil, and we are now accelerating, you know, the seedlings to start planting commercially. Hopefully, within the next years, we will have kind of, you know, meaningful production there. So the market will be producing in four continents, the only company in the world that will be producing fresh pineapple in four continents: Central America, you know, in South America as well as Brazil, Kenya, and the Philippines. And that's when we talk about, you know, expanding our sourcing capabilities. And that's only one of the, we are working on other as well sourcing opportunities, but these are the major ones that we have. As far as avocado is concerned, you know, we are just one out of several importers, you know, and exporters out of Mexico, and we just have to wait and see what will be the outcome about the tariffs and if they really take effect on avocado. Avocado might be excluded or maybe farm products. We don't know. But if it does and if there are any tariffs, unfortunately, this will have to be kind of passed to the buyers, you know, because this is something that we cannot control. And we will see how this will really impact demand in the market. But it's maybe premature to assume anything at this stage, so we don't want to speculate on that.

And on the pineapple pricing, we are confident that our pricing on pineapple will be just as strong or stronger than last year. So, yeah, the pineapple pricing should be very strong. And so we feel confident with that.

And then you also, Mohammad, you talked about avocado being, you know, expanding your global sourcing as a core strategy. But, you know, some of the other areas outside of Mexico and California, the quality isn't really what is expected probably in the North American markets. Would that be, is the expanded sourcing for other export markets, or is it more of a food service kind of strategy?

Actually, I mean, it was a perception that the Mexican avocado, the California avocado are the best kind of quality, you know, but I do believe that and I'm sure that the ones coming from Chile or Peru or Colombia are just as good and equal to the quality of Mexico sources. So we're, you know, we're working on diversifying some of these countries, including the Dominican Republic. But of course, volume-wise, nothing can compensate for the Mexico, let's say, source. So we need to do the best that we can to really try to deemphasize or the dependence 100% on Mexico as a source of supply. This would take time. It's not going to happen overnight. But that's our target. That's our objective.

Okay. And then just another question on bananas. I understand. Obviously, it's not your growth focus, but is there, you know, so if you have production, you know, growing in Somalia, is you're growing, you know, I don't know what you Brazil, you might be growing some bananas maybe in addition to the pineapple. I'm not sure. But is that, does that take pressure off of, like, the Costa Rica operations in terms of bananas? Like, in focus, Costa Rica, with bananas and not chase demand? Or can you talk a little bit about maybe your strategy there?

Listen. Banana is the banana, and the banana business has been going through, like, the same kind of momentum for the last, I would say, twenty-plus years. And what we are not trying to rationalize our business in, you know, in terms of when it comes to bananas. Because it's a low-margin business. And it was large volumes. And it definitely is a core part of our business, and we are not going to underscore or neglect the banana business. However, what you just said is correct. We are producing bananas in Brazil, and actually, we have been expanding our acreage in Brazil recently, you know, to supply the local market, which has been very kind of rewarding as well as the European market. So that would be geared towards European market destination. Somalia will become, in my opinion, a very, very important source of supply for our Middle Eastern as well as some Southern Europe countries. And this will be once it is in full gear, you know, and maturity, which probably would take another couple of years. The proximity of the source to the markets is very close. It's not like, you know, I mean, in the Middle East, it's probably going to be two to three days from source to market. Unlike what we are doing right now, about forty days if we are lucky to get the fruit from Central America or Ecuador to the Middle East. The same thing would be for Europe, would be probably around eight, nine days to go from Somalia to, let's say, Italy or Greece. Unlike, you know, today, it could be from eighteen to thirty days depending on the ship and the conditions, the water conditions. So there are a lot of opportunities there. It's not going to happen tomorrow. But I can see it, you know, in the proximity of, let's say, between eighteen to twenty-four months, this will become a very important source of supply to us. And it definitely will change the picture in terms of volume as well as in terms of gross margins as well.

Alright. Well, thank you for the answers.

Thank you, Mitch.

Again, if you would like to ask a question, press star one on your telephone keypad. Seeing that we do not have any more questions at this time, I will now turn the call back over to Mr. Mohammad Abu-Ghazaleh for closing remarks. Please go ahead, sir.

I would like to thank everyone today for joining us on this call, and I hope that I will update you on whatever happens, you know, in the next few months on our next call. Thank you, and have a good day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.