WESTLAKE VILLAGE, Calif., Aug 03, 2010 — Dole Food Company, Inc. (DOLE 10.99, +0.06, +0.55%) today announced positive financial and operating results for the second quarter ended June 19, 2010. Dole reported second quarter 2010 income from continuing operations of $33 million as compared with $21 million in 2009, and Adjusted EBITDA of $113 million compared to $143 million in the second quarter of 2009. Earnings per share from continuing operations for the second quarter were $0.38 per share. Adjusting for unrealized gains and losses from hedging activities, currency movement on foreign denominated instruments, as well as gains on asset sales, comparable earnings per share from continuing operations were $0.49.
David A. DeLorenzo, Dole's President and CEO said: "We are pleased to announce another strong quarter despite a challenging economic climate. Our packaged salads business realized higher volumes and pricing, as well as lower costs. Our packaged foods portfolio also performed well, with improved earnings, even with Easter sales falling in the first quarter of the year. Consumers continued to embrace our new product offerings, with the rollout of our Fruit Crisps and Real Fruit Bites exceeding distribution goals. Our fresh fruit operations improved over the first quarter, but continued to be negatively impacted by weak market conditions in Europe and Asia. We also reduced net debt by $51 million in the second quarter."
In the second quarter of 2010, Dole recorded a tariff refund of $7 million associated with the June 2010 EU banana tariff settlement agreements. Dole estimates that the EU banana tariff settlement agreements will benefit fiscal 2010 EBIT by approximately $16 million at current foreign exchange rates.
In a major landmark legal victory, on July 15, 2010, the Los Angeles Superior Court dismissed Tellez v. Dole, the last remaining lawsuit brought in the U.S. by Nicaraguan plaintiffs claiming to have been banana workers on Dole contracted farms during the 1970's. Citing rampant fraud by plaintiffs, the Court vacated the earlier $1.6 million judgment against Dole in favor of four plaintiffs claiming sterility from DBCP exposure while allegedly working on Dole-contracted farms.
Revenues
Revenues increased slightly during the quarter ended June 19, 2010. Packaged foods sales increased primarily due to higher volumes sold worldwide. Fresh fruit sales increased as a result of higher sales in our European ripening and distribution businesses and higher sales of bananas and fresh pineapples in North America. In addition, fresh fruit sales benefited from higher sales of Chilean deciduous fruit and higher volumes of kiwi and citrus sold in Asia. These improvements were partially offset by lower sales of bananas in Europe and Asia. Fresh fruit revenues were also impacted by the third and fourth quarter 2009 sales of Dole's box plants in Latin America. Fresh vegetables sales in North America increased mainly due to higher pricing of fresh-packed vegetables and packaged salads as well as higher volumes of packaged salads.
Adjusted EBITDA (Unaudited)
Adjusted EBITDA in the second quarter 2010 decreased $30 million to $113 million. Fresh fruit Adjusted EBITDA was impacted by lower earnings in Dole's worldwide banana and fresh pineapple operations. Banana earnings declined due to lower local pricing in Asia as well as higher fruit and shipping costs in North America and Europe. Packaged foods Adjusted EBITDA increased as a result of lower worldwide product costs and higher sales volumes. Fresh vegetables Adjusted EBITDA increased due to better performance in the packaged salads business, stronger pricing for celery and strawberries, as well as lower raw material costs and improved plant utilization.
Cash and Debt (Unaudited)
During the first half of 2010, the Company reduced net debt by $46 million, and ended the second quarter with $185 million of cash and cash equivalents. Also during the second quarter, the Company redeemed the remaining $70 million of its 8.875% Senior Notes due 2011.
Conference Call
Dole will hold a conference call for investors to discuss its results at 4:45 p.m. EDT today. Access to a live audio webcast is available at http://investors.dole.com under “Webcasts.” Toll-free telephone access will be available by dialing 866-788-0540 in the United States and 857-350-1678 from international locations and providing the conference code 88715852. A replay of the call will be available until August 17, 2010. To access the telephone replay, dial 888-286-8010 from the United States and 617-801-6888 from international locations and enter the confirmation code 38086343. A replay of the webcast will be available online at www.dole.com as soon as possible.
Non-GAAP Measurements
EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) are measures commonly used by financial analysts in evaluating the performance of companies. EBIT is calculated by subtracting income from discontinued operations, net of incomes taxes, from net income, by subtracting the gain on disposal of discontinued operations, net of income taxes, by adding interest expense and by adding income tax expenses to net income. Adjusted EBITDA is calculated from EBIT by adding depreciation and amortization from continuing operations, adding the net unrealized loss or subtracting the net unrealized gain on certain derivative instruments (foreign currency and bunker fuel hedges and the cross currency swap), adding the foreign currency loss or subtracting the foreign currency gain on the vessel obligations, adding the net unrealized loss or subtracting the net unrealized gain on foreign denominated instruments, and by subtracting gains on asset sales. Comparable income from continuing operations is calculated from income from continuing operations by adding the net unrealized loss or subtracting the net unrealized gain on certain derivative instruments (foreign currency and bunker fuel hedges and the cross currency swap), net of income taxes, adding the foreign currency loss or subtracting the foreign currency gain on the vessel obligations, net of income taxes, adding the net unrealized loss or subtracting the net unrealized gain on foreign denominated instruments, net of income taxes, and subtracting gains on asset sales, net of income taxes. These items have been adjusted because management excludes these amounts when evaluating the performance of Dole. Net debt is calculated as total debt less cash and cash equivalents.
EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) are not calculated or presented in accordance with U.S. GAAP and they are not a substitute for net income attributable to Dole Food Company, Inc., net income, income from continuing operations, cash flows from operating activities or any other measure prescribed by U.S. GAAP. Further, EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) as used herein are not necessarily comparable to similarly titled measures of other companies. However, Dole has included EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) herein because management believes that they are useful performance measures for Dole. In addition, EBIT, Adjusted EBITDA and Comparable income from continuing operations (total and per share) are presented because management believes that these measures are frequently used by securities analysts, investors and others in the evaluation of Dole.
Dole, with 2009 net revenues of $6.8 billion, is the world’s largest producer and marketer of high-quality fresh fruit and fresh vegetables, and is the leading producer of organic bananas. Dole markets a growing line of packaged and frozen fruit and is a produce industry leader in nutrition education and research.
This release contains "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Forward looking statements, which are based on management's current expectations, are generally identifiable by the use of terms such as "may," "will," "expects," "believes," "intends," "anticipates" and similar expressions. The potential risks and uncertainties that could cause actual results to differ materially from those expressed or implied herein include weather-related phenomena; market responses to industry volume pressures; product and raw materials supplies and pricing; energy supply and pricing; changes in interest and currency exchange rates; economic crises and security risks in developing countries; international conflict; and quotas, tariffs and other governmental actions. Further information on the factors that could affect Dole's financial results is included in its SEC filings, including its Annual Report on Form 10-K.
Source: Dole Food Company Inc.