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Edited Transcript of FDP earnings conference call or presentation 29-Oct-19 3:00pm GMT

Q3 2019 Fresh Del Monte Produce Inc Earnings Call

Coral Gables Nov 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Fresh Del Monte Produce Inc earnings conference call or presentation Tuesday, October 29, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Christine Cannella

Fresh Del Monte Produce Inc. - VP of Global Corporate Communications & IR

* Eduardo Guarita Bezerra

Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP

* Mohammad Abu-Ghazaleh

Fresh Del Monte Produce Inc. - Chairman & CEO

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Conference Call Participants

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* Jonathan Patrick Feeney

Consumer Edge Research, LLC - Senior Analyst of Food & HPC, Director of research and Managing Partner

* Mitchell Brad Pinheiro

Sturdivant & Co., Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to Fresh Del Monte Produce Third Quarter 2019 Conference Call. Today's conference is being broadcast live over the Internet and is being recorded for playback purposes. (Operator Instructions)

For opening remarks and introductions, I would like to turn the call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella.

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Christine Cannella, Fresh Del Monte Produce Inc. - VP of Global Corporate Communications & IR [2]

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Thank you, Christine. Good morning, everyone, and thank you for joining our third quarter 2019 2019 conference call. As Christine mentioned, I am Christine Cannella, Vice President, Investor Relations with Fresh Del Monte Produce. Joining me in today's discussion are Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer; and Eduardo Bezerra, Senior Vice President and Chief Financial Officer.

I hope that you had a chance to review the press release issued earlier this morning via Business Wire. You may also visit the company's website at freshdelmonte.com for a copy of today's release as well as to register for future distribution.

As we've previously advised, our press release includes reconciliations of any non-GAAP financial measures we mention today to their corresponding GAAP measures. I would like to remind you that much of the information we will be providing today, including the answers we give in response to your questions, may include forward-looking statements within the provisions of the federal securities safe harbor laws. We ask that you review the forward-looking statements information included in the press release we issued this morning and in the company's most recent filings with the SEC.

With that, I am pleased to turn today's call over to Mohammad.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [3]

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Thank you, Christine. Good morning, everyone, and thank you for joining us. I am pleased with our overall performance in the third quarter. Net sales totaled $1.1 billion, gross profit increased 42% from last year's third quarter, and we generated EPS on an adjusted basis of $0.35 per share, up from a loss per share of $0.14 a year ago.

During the quarter, we continued to make progress on our strategic objectives as we transform our company to a value-added, higher-margin business, disrupting the legacy of being a volume-based banana business. Much of the improvement came from our fresh and value-added business segment, most notably our fresh-cut fruit product line in North America. We continued to see a strong demand from existing and new customers. Our new fresh-cut unit in Yokohama, Japan, is on track to open in the first quarter of 2020, and we have begun expansion of our existing fresh-cut facilities in the U.K. This will allow us to keep pace with global demand trends and expand our foodservice and retail customer base.

Our vegetable business, through Mann Packing, also performed well during the third quarter. As part of our meals and snacks product line, we were excited to see the launch of our Better Break line of vegetable-rich convenience snacks.

We are moving ahead as well with some of our newest and biggest opportunities. For example, we continue to grow our foodservice partnerships across the Middle East, Asia and Europe, which is increasingly a focus of new business for us. We are also on schedule to open our first food and beverage store in the United States during the first quarter of 2020 in Coral Gables. This concept has proven itself in the Middle East, and we are looking forward to the possibilities in the United States.

We are about to bring our new state-of-the-art avocado packing facilities online in Mexico, which will give us even more control over our supply. This should improve our margin and secure new additional sourcing opportunities to serve the rapidly expanding consumer market for avocados. We recently released on our website, the latest corporate social responsibility report, highlighting Fresh Del Monte's commitment to making a better world tomorrow. The sustainability have always been a part of who we are and what we do every day. We recognize setting and meeting our sustainability goals is an opportunity for us to positively impact the people and the environment. We look forward to building on our momentum as we advance our efforts to meet all our corporate responsibility goals and make a better world tomorrow.

In summary, we remain committed to transforming the company growing our product lines, increasing shareholder value and inspiring healthy lifestyles for generations to come.

Let me now turn the call over to Eduardo for more financial details. Eduardo, please.

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Eduardo Guarita Bezerra, Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP [4]

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Thank you, Mohammad. Good morning, everyone. Our financial performance in the third quarter demonstrates that our strategy to evolve Fresh Del Monte to a value-added, efficient, profitable and more focused business is underway.

For the third quarter of 2019, adjusted net income per diluted share was $0.35 compared with an adjusted loss per diluted share of $0.14 in 2018.

Net sales were in line with the prior year period. Adjusted gross profit increased 42% to $75 million in the third quarter of 2019 compared with $53 million in 2018. Adjusted operating income for the quarter increased to $25 million compared with $3 million in the prior year. And adjusted net income was $17 million compared with an adjusted net loss of $7 million in the third quarter of 2018.

Turning to our business segments and key product lines.

In our fresh and value-added business segment, for the third quarter of 2019, net sales were $653 million compared with $640 million in the prior year period, primarily as a result of higher net sales in our fresh-cut fruit, avocado and vegetable product lines, partially offset by lower net sales in our pineapple and nontropical product lines.

Gross profit increased 27% to $54 million compared with $42 million in the third quarter of 2018, primarily due to higher gross profit in our fresh-cut pineapple and vegetable product lines. Our gross profit margin for the segment improved by 1.6 percentage point, maintaining the growth trend of the first half of 2019.

In our pineapple category, net sales decreased to $102 million compared to $112 million in the prior year period, the result of lower production volumes due to adverse growing conditions in our production areas. The decrease was offset by higher selling prices in North America and Europe. Overall, volume was 20% lower. Unit pricing was 14% higher and unit cost was 7% higher than the prior year period.

In our fresh-cut fruit category, net sales were $145 million compared with $132 million in the prior year period, primarily due to higher sales volume and higher selling prices in North America.

Overall volume was 10% higher, unit pricing was 1% higher and unit cost was 2% lower than the third quarter of 2018.

In our fresh-cut vegetable category, net sales increased to $124 million compared with $123 million in the third quarter of 2018. The increase was primarily the result of higher selling prices. Volume was 9% lower, unit pricing was 11% higher and unit cost was 9% higher than the prior year period.

In our avocado category, net sales increased to $98 million compared with $85 million in the third quarter of 2018, supported by higher selling prices as a result of tight industry supply. Volume decreased 8%, pricing was 26% higher, and unit cost was 28% higher than the prior year period.

In our fresh vegetable category, net sales increased to $46 million compared with $40 million in the third quarter of 2018 due to higher sales volume and increased selling prices. Volume increased 9%, unit price increased 6% and unit cost was 1% lower.

In our nontropical category, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry and kiwi product lines, net sales decreased to $32 million compared with $42 million in the third quarter of 2018, primarily due to planned rationalization of low-margin products in this category beginning in 2018.

The volume decreased 22%, unit pricing was in line with the prior year period and unit cost was 2% lower.

In our prepared food category, which includes our traditional canned products and meals and snacks product lines, net sales increased due to higher sales volume. Gross profit was impacted by lower selling prices in the traditional prepared product lines.

In our bananas business segment, net sales were $386 million compared with $397 million in the third quarter of 2018, primarily due to lower net sales in North America and Asia, partially offset by higher sales in the Middle East and Europe. Overall volume was 7% lower than last year's third quarter. Worldwide pricing increased 4% over the prior year period, and total worldwide banana unit cost was 3% higher than the prior year period, and gross profit increased to $17 million compared with $10 million in the third quarter of 2018, reflecting a 1.7 percentage point increase in gross profit margin.

Now moving to selected financial data.

On selling, general and administrative expenses, we were in line with the prior year period. Regarding foreign currency, our foreign currency was impacted at the sales level for the third quarter with an unfavorable impact of $7 million, and at a gross profit level, the impact was unfavorable by $2 million.

Interest expense net for the third quarter was $6 million compared with $7 million in the third quarter of 2018 due to lower debt volume.

Income tax expense was $3 million during the quarter compared with income tax expense of $1 million in the prior year mainly due to higher taxable earnings in North America.

At the end of the quarter, our cash flow -- cash from operating activities was $130 million compared with net cash provided by operating activities of $271 million in the same period of 2018, primarily due to lower accounts payable and accrued expenses, partially offset by higher net income.

At the end of the quarter, we were able to reduce our debt by an additional $50 million to $590 million from $640 million at the end of the second quarter of 2019. In October 2019, we amended and restated our $1.1 billion unsecured credit agreement, and extended the credit facility until October 2024 with a more favorable rate. We also included an accordion feature that could increase the availability by up to $300 million. And we are pleased to have the continued support of our lenders and appreciate the confidence they maintain in Fresh Del Monte's future.

As it relates to capital spending, we invested $94 million on capital expenditures in the first 9 months of 2019 compared with $119 million in the same period in 2018.

Also, as announced this morning in our financial results press release, our Board of Directors declared an interim cash dividend of $0.08 per share payable on December 6, 2019, to shareholders of record on November 13, 2019. This is a 33% or $0.02 increase over the dividend paid in September 2019.

This concludes our financial review. So we can now turn the call over for Q&A. Christine?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Jonathan Feeney from Consumer Edge.

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Jonathan Patrick Feeney, Consumer Edge Research, LLC - Senior Analyst of Food & HPC, Director of research and Managing Partner [2]

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I wanted to maybe start with a bigger picture question. When I think about your fresh and value-added products segment, which is essentially the combination of, at least, most of your old prepared food and other fresh produce segments, I'm trying to understand how the addition of Mann Packing as well as a bunch of all the other product -- other products you've added to that affects the mid-cycle, say, average gross profit, right? Because that was pretty consistent for the last 5 years, it's volatile like every other line but it was averaged $200 million, it averaged something like $190 million the 5 years before that. I'm trying to understand like where would the expectation should be of additional kind of profitability or anything you can do to help me think about that as we model going forward? Because you've added a lot, and it doesn't seem appropriate to me to just assume it's going to stay flat, which is kind of where we have it this year. And I have a couple of others.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [3]

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Yes. Everything that you have seen, I mean, or saw in the last quarter and this quarter is -- actually is a result of what we have been planning and building up in the last 2 or 3 years. 2018 was, in my opinion, a very disruptive year in the sense that we were transforming the company. At the same time, we were hit by very unfortunate events, climatic and other markets exchange and so many other reasons. Now when I mentioned that, for instance, we are expanding into the foodservice sector, historically, for the last several years, I would say, 7, 8 years or more, we have been supplying McDonald's in the Middle East, almost an exclusive basis for lettuce and other vegetable items as well as some fruits. As we have proven ourselves to be a very dependable kind of supplier that is a multinational supplier and not just a local or regional supplier, McDonald's and ourselves have come to realize that our collaboration is getting more and more beneficial -- mutually beneficial.

So we have in the last actually a few months, we have expanded into Japan, into Korea. And now we are expanding in Italy and other places as well. I don't want to mention every country or every region, but as we speak, this business is growing for us together with McDonald's in terms of becoming a global supplier of certain items, especially in lettuce and vegetables. So in my opinion, this is a business that will grow further and further and will open also new opportunities for us to introduce and to come with ideas and products that might also serve McDonald. And of course, we do have also so many other QSRs that are also our clients in the Middle East. And I'm sure as we go into these new countries, we'll have also the interest of these same QSRs in the new regions that we have started operating. So this is one of the things we are doing.

We have got into the protein salads during the last 6 months. When I say protein salads, it means that not only fresh ingredients, but also adding up protein items as well as sandwiches and other items. This has grown quite -- in my opinion, it has moved nicely and we have proven that we can deliver better product than competition. And we have gained businesses, and I think that would open the door for us to gain more business as we go forward. So these are some of the things that are being evolving here. And what I would like just to highlight is that this is a trend that Fresh Del Monte will be kind of moving towards. I mean it will all be about value-added products, value-added services and so on. And as we go forward, quarter-to-quarter, I'm sure that you'll be hearing more news about many other initiatives that we'll add to our very kind of well-disciplined plan to change the company from a banana-based company into a more diversified value-added products company.

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Jonathan Patrick Feeney, Consumer Edge Research, LLC - Senior Analyst of Food & HPC, Director of research and Managing Partner [4]

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That's very clear on the numbers. I guess what I'm trying to figure out is, let me ask this more specifically, the other fresh produce line historically was dominated when dominated, but largely influenced by the gold pineapple business and carried something like an 11%, in a bad year, it'd be about 11%, in a good year, it'd be about 13% gross margin. Now you've made a nice recovery this quarter, but it's at 8%, we're modeling at 8.5%, it got down to 6.5% last year. How much of that is a structural change in the margin structure of that segment? And how much of that is just the kind of craziness that went on in 2018? Like any flavor for what kind of margin all this business is? Is that McDonald's business? Is that lower than 10% margin typically? I'm just trying to get a handle on how this has changed structurally.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [5]

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Any value-added business should not be hopefully less than 10%. I mean that should be clear. As far as gold pineapple, last year was a very detrimental year in terms of the market. I knew from the beginning that there will be -- I knew 2 years, 3, 4 years ago that there would be a time when oversupply will take over the market. And it happened in 2018, late '17 and 2018 that production went like crazy in Costa Rica, and there was an oversupply all over the world. So we had to endure that kind of tidal wave, which, of course, we survived better than any other in the market. But I can tell you for a fact that production in Costa Rica have gone down by almost over 20%. And prices today by growers to sell FOB, for argument's sake, it was like $5 couple of years ago to do a box of pineapple, today it's about $7. And that, of course, reflects on the market.

And I -- we as leaders in this -- we are the only company in the world that produces in 3 different continents. We produce in Costa Rica, we produce in Kenya. Kenya, it used to be only a canned pineapple operation. For the last 8, 9 months, we have transformed part of that into fresh as well. So we are producing now Del Monte Gold in Kenya for supply through Europe, through the Middle East and even to Asia, and trying to reduce our dependence on the prepared or the canned, which will help us improving our margins tremendously in that part of the country. At the same time, we are producing in the Philippines, mainly for the Asian market. So we are the only company in the world, really, that we have 3 production areas to supply our markets. And that's something that gives testament to where our strength and leverage as far as pineapple is concerned.

So after this, we have the pink-eyed pineapple, which we'll start marketing very soon. And this is a patented pineapple that no one else will have. And I believe it's going to make a very big impact for our business going forward. So as far as pineapples, I am very confident, I am very sure that we will return to the old level that we have before and hopefully better. So I hope that I answered your question.

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Jonathan Patrick Feeney, Consumer Edge Research, LLC - Senior Analyst of Food & HPC, Director of research and Managing Partner [6]

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That was a very helpful answer, Mohammad. The one maybe for Eduardo on the -- or you Mohammad, on the capital program, a little lower this year. Can you characterize what the emphasis has been on capital expenditure this year? What kind of hurdle rates you're looking at? And if possible, what you would expect for 2020 as far as capital expenditures?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [7]

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I will have Eduardo answer this. And if I need to, I will add to it.

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Eduardo Guarita Bezerra, Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP [8]

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So thank you, Jonathan. So this year, first of all, the emphasis has been investments tied to our value-added products. So in Q4, we're going to have our avocado unit up and running. So that was a big investment that we had this year. Also in some of our key fresh-cut units, there are in Oklahoma and Japan and also another expansions that we're doing, there are some investments that we did related to the new vessels that will come in. And it's important to mention that not only we expect efficiencies there, but we're also foreseeing the future that adding to the bottom line with our commercial cargo operations as well. So I think that was -- we put a more rigor in our capital investment review process. And for 2020, we have a significant investment related to 4 ships that will come up and running. And beyond that, we would consider probably a regular year investment that we have been doing with the same emphasis that we have been doing before. A couple of those are related to your previous question on Mann, how to make sure we can consolidate further our operations, to become more efficient on our cost side. Also we have some further expansions in our fresh-cut in Europe that we have planned for next year, including the expansion of our U.K. operation. And also, we continue focusing on lowering the cost base of our core business, mainly on bananas, continue to invest in Panama. That will bring competitive advantage versus our cost position that we have today.

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Operator [9]

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(Operator Instructions) Your next question comes from the line of Mitch Pinheiro from Sturdivant.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [10]

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I wanted to follow up on a couple of Jon's questions. In pineapples, did you say you expect to see like a full recovery to where you were several years ago? I mean when I look back at 2014, you were doing $576 million in pineapple revenue, roughly now I'm looking at maybe $450 million. So that's down 30%. Are you going to recover all that plus the profitability?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [11]

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I think we are -- what we are focusing on is really profitability more than volume. That would be our focus really is the bottom line. And this has been kind of the message that we have been conveying to all of our people, be it at production or sales. So I am not too much concerned about volume, actually more onto the bottom line. The volume, we can ramp up whenever we need to, either through increasing our core production or buying from third party to -- but what we need to make sure that our margins has to improve and hopefully reach the same level that we used to have a few years back.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [12]

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Okay. And that's sort of your -- the profit over volume has been your newer strategy. So that's just a part of this too?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [13]

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Yes. Actually, why we are shifting our efforts and focus on where can we make more money, which products can drive, I mean, put us in a better position? And that's why I mentioned about value-added products and new categories that we are working on, which is proving to be very successful and very beneficial to us as a company. I think this is where our future is moving towards, the value-added products and services as well as we go along. But at the same time, we're not undercutting our core products. What I'm saying is rationalizing our volume into these areas and making sure that our margins are maintained and grown. So we are working on both levels, and I don't want to go into the kind of becoming a commodity producer, we are a specialty producer. And our geographical coverage gives us that kind of leverage where, like I mentioned a minute ago about our presence in 3 different continents, as producers. That I think makes it a huge -- makes a huge difference between us and everyone else that when there are shortages in one area, we have the ability to cover that from another region, which over the years, I'm not saying in the long-term future, but even in the near future, will make a big difference for us. And that, in my opinion, is a huge plus that we will enjoy going forward.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [14]

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Okay. And staying in the fresh-cut or the fresh and value-added segment, the fresh-cut vegetables in the quarter were down slightly. What was the driver of that? Is that getting rid of lower-margin business? Or how would you accomplish that?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [15]

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No. In the vegetable business, that they are sometime -- because of the climatic conditions, you'll get short on certain items, and sometimes, you have to cut on other items that doesn't make sense to us. So it's nothing really significant. And as Eduardo just mentioned a while ago that when we acquired the Mann Packing at the beginning of last year, we acquired a company that is very successful in terms of presence in the market and the creativity and innovation and the product lines that they serve. However, the company was lacking the governance, the systems, the procedures, policies. And this is something that we have been working on for the last several months from all aspects in terms of financial, legal, HR. And I think the company is becoming now streamlined in our kind of Del Monte way. So I believe that we will see more value as we go forward because I believe that the business would be streamlined and leveraged in a way that will add more value to us. When I say add more value, it means that we will use these products across our distribution centers across the United States and be able to increase volume distribution as well as value.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [16]

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And does the -- in fresh and value-added segment, I mean, is that a segment that should be able to reach double-digit gross margins?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [17]

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Yes. So that's our target, Mitch. So I think we're trending in that direction. So you have seen that consistently we have delivered an increase in our gross profit margin. And I think there are several components there, right? So one piece of that is reestablishing the profitability on the pineapple, increasing the profitability on our fresh-cut fruits by improving our operations. Also there were -- because of the rationalizations that we did in tomatoes, in the cereals as well as in melons last year, we're starting to see that recovery this year as well. Also meals and snacks is very important contributor to our growth. So I think by having pineapples in a very high teens margin and all the others balancing more towards the close to 10%, I think on the average on this segment, we should be in the teens range going forward. I cannot precise exactly when because we are still revisiting some parts of the operation that require some adjustments. And that has been our priorities, but I would say on the long run, we should expect to see bananas in the range of that has always been between 4% and 6%. And that could depend on supply and demand and pricing, et cetera. But then the fresh and value-added products, that should get to teens range. So that we should expect to see overall margin growing year-after-year.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [18]

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Switching to bananas for a second. How does the current supply/demand outlook look like for you through the year-end?

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [19]

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It's just the normal trend. The second half of the year, usually the last 3, 4 months of the year are usually the low end of the year. I mean that demand is so much lower than in the first half of the year. So we haven't seen really much difference from previous year. I would say, it's more normal this year than the previous years. The only difference is that we see Europe doing better than normal at this time of the year, which is a good sign. The U.S., North America is more or less the same. Asia is behaving and trending the same as normal trends or normal years. So I don't see any really big surprises at the banana sector from now to the end of the year. In this business, we're always sensitive to natural disasters. So unless nothing happens, this would be a very normal year.

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Eduardo Guarita Bezerra, Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP [20]

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Yes. And I think also, Mitch, just to complement Mr. Ghazaleh's -- we have been focusing a lot on recovering the margins on this segment. So that's an important focus that we have been doing and also revisiting our portfolio of customers in that sense and making the right decisions to move the product where we believe we can get the most out of that investment.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [21]

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Yes. I'd like to add to this, Mitch, that this business, the banana business has been in turmoil for the last, I would say, 10, 15 years. And I think that this cannot hold forever. I mean costs are going up in every aspect, be it on the production level, on the shipping level, port, you name it, transportation, everything. And I believe the retail, I mean, their consistence on keeping the banana prices low is going to come to a point where they -- either you kill the goose or you -- I mean, can't go on forever like this. I mean even the producers or the -- ourselves as producer, marketer, shipper, we -- this cannot go on forever. The retailers, the buyer has to understand that unless the prices are adjusted going forward, there would be a time when there will be issues in this industry. And I believe it will adjust by itself as we go forward. Aside from the disease, I don't want even to mention the disease, but my actual situation, the structure of this business cannot be sustained forever. This cannot go on forever. And you can see -- I don't know if you can -- if you read or you follow up on the produce news or produce industry, I keep looking in a global kind of overview. And you will see so many on the produce companies not only in bananas, but in other areas, that they have been really going through very financial, severe financial difficulties. And it's just because of not coping with the cost increase and rationalizing their business. So I think as Fresh Del Monte, I think we are -- in my opinion, not just because we're Fresh Del Monte, but in my opinion, we're pioneered to this area. We know how to tackle the future. I believe that we can see the future in a clear way.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [22]

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I have just one more question, balance sheet question. I saw operating leases up $100 million from year-end. What -- are you using operating leases differently than before or in a new way? Can you explain that?

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Eduardo Guarita Bezerra, Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP [23]

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Well, so Mitchell, I guess, you're aware that with the new lease accounting that took place this year, you had to disclose that in the balance sheet, both from the assets and the liabilities. So that's just to reflect on new accounting guidance.

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Mitchell Brad Pinheiro, Sturdivant & Co., Inc., Research Division - Research Analyst [24]

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Okay. But it wasn't required from last year?

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Eduardo Guarita Bezerra, Fresh Del Monte Produce Inc. - CFO, CAO & Senior VP [25]

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No. No, it started this year, so that's why December '18, we didn't have to disclose that there.

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Operator [26]

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There are no further questions at this time. Mr. Mohammad Abu-Ghazaleh, I'll turn the call back over to you.

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Mohammad Abu-Ghazaleh, Fresh Del Monte Produce Inc. - Chairman & CEO [27]

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I would like to thank everyone for having the time to participate on our call today. And we look forward to speaking to you on our next conference call. And thank you and have a nice day.

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Operator [28]

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Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.