Chiquita Brands International, Inc : Chiquita Announces Preliminary Fourth Quarter and Full-Year 2012 Selected Results
(Thomson Reuters ONE) -
CHIQUITA ANNOUNCES PRELIMINARY FOURTH QUARTER AND FULL-YEAR 2012 SELECTED
RESULTS
CHARLOTTE - January 28, 2013 - Chiquita Brands International, Inc. (NYSE: CQB)
today reported preliminary unaudited selected results for the fourth quarter and
full year 2012 in conjunction with a proposed refinancing. Because the fourth
quarter and full-year have only recently ended, the information that follows is
preliminary and based upon information available to the company as of the date
of this press release. The company has not finalized its financial statement
closing process for the fourth quarter and full year 2012, including its
calculations and accounting judgments related to income taxes. During the course
of that process, the company may identify items that would require it to make
adjustments, which may be material, to the amounts described below. As a result,
the estimates and rates below constitute forward-looking statements and are
subject to risks and uncertainties, including possible adjustments to the
preliminary operating results. The company is providing this information and
certain financial metrics on a one-time basis only and does not intend to update
this information prior to its regularly scheduled fourth quarter and full year
2012 conference call and subsequent filings with the Securities and Exchange
Commission.
Fourth quarter 2012 net sales were approximately $738 million and the company
expects Comparable operating loss in the range of $10 - 20 million and Adjusted
EBITDA in the range of $(3) - 7 million. This compares to fourth quarter 2011
net sales of $722 million, Comparable operating loss of $2 million and Adjusted
EBITDA of $14 million. The company expects fourth quarter operating loss on a
U.S. GAAP basis to be in the range of $188 - 233 million, including estimated
non-cash goodwill and trademark impairment charges in the range of $170 - $205
million and restructuring, relocation and other exit charges as described below,
compared to U.S. GAAP operating loss of $12 million in the fourth quarter of
2011. Compared to the fourth quarter of 2011, stronger banana pricing and
logistical savings partially offset lower salad results, lower average European
currency exchange rates and a number of unusual cost items in the fourth quarter
of 2012, and the net results was in line with the company's previous
expectations for the quarter.
For the full year 2012, net sales were approximately $3.1 billion and the
company expects Comparable operating income (loss) in the range of $1 - 11
million and Adjusted EBITDA in the range of $64 - 74 million. This compares to
full year 2011 net sales of $3.1 billion, Comparable operating income of $78
million and Adjusted EBITDA of $139 million. The company expects full-year
operating loss on a U.S. GAAP basis to be in the range of approximately $236 -
281 million, including the non-cash goodwill and trademark impairment charges
and the restructuring, relocation and other exit charges as described below,
compared to U.S. GAAP operating income of $34 million for the full year 2011.
A reconciliation of (i) comparable operating income and (ii) Adjusted EBITDA
amounts presented above to operating income is included in a Non-GAAP Financial
Measures table below.
The company also estimates that it will have $52 million of cash at December
31, 2012, as well as $88 million of availability under its current revolving
credit facility as of December 31, 2012. Under the company's existing credit
facility, impairment charges are specifically excluded from consideration when
determining its compliance with financial covenants. The company remained in
compliance with its covenants under its existing debt facilities at December
31, 2012, and expects to remain in compliance with them.
GOODWILL AND TRADEMARK IMPAIRMENT ANALYSIS
At September 30, 2012, the company had goodwill of $175 million and trademarks
of $61 million related to its salad operations, Fresh Express, which are subject
to an annual impairment review each fourth quarter. Impairment reviews compare
fair value to carrying value for both Fresh Express and its trademarks, and if
the carrying value is greater than the fair value, impairment is indicated. Fair
values fluctuate based on market conditions and assumptions regarding forecasted
cash flows and discount rates applied to cash flows. Based on the fourth quarter
impairment analysis, the company estimates a non-cash impairment charge to
goodwill in the range of approximately $150 - $175 million and a non-cash
impairment charge to the Fresh Express trademark of in the range of
approximately $20 - $30 million. The goodwill impairment was the result of lower
operating performance of our retail salad business, lower retail salad volumes,
and lower perceived valuation multiples in the industry. These goodwill and
trademark impairment charges remain subject to finalization.
STRATEGIC AND OPERATIONAL INITIATIVES
2012 was a year of transformation for Chiquita. In the third quarter the company
announced a restructuring plan to strategically transform itself into a branded
commodity operator. As previously announced, the company has already implemented
strategic and operational initiatives to focus on:
* Its core businesses of bananas and salads,
* Reduction of its value chain costs
* Reduction of its overhead and selling, general and administrative costs and
* Volume growth
These strategic initiatives were substantially completed in the fourth quarter
of 2012 and are expected to drive at least $60 million in annual savings
beginning in 2013, including $25 million for completed headcount reductions and
approximately $35 million for value chain cost reductions. The consolidation of
the company's Midwest salad processing facilities is expected to be completed in
the third quarter of 2013 and the company expects to generate $8 million of
annual savings. The company has expanded its salad program by providing a more
comprehensive product offering in the value-added salad market, which includes
branded and private label packaged salads, organic packaged salads and whole
head lettuce. Since September 30, 2012, the company has added approximately 5
million annual boxes of distribution growth in its North American banana
business and were awarded private label business from certain retail grocery
customers, scheduled to commence at the end of the first quarter of 2013,
representing new estimated volume of 1.6 million cases for 2013.
Chiquita's goal is to achieve operating margins of 4 percent in Bananas and 7 to
8 percent in Salads in the next two to three years.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
The company reports its financial results in accordance with generally accepted
accounting principles in the United States of America (U.S. GAAP). To provide
investors with additional information regarding the company's results, more
meaningful year-on-year comparisons of the company's core financial performance,
and measures that management uses to evaluate the company's performance against
internal budgets and targets, the company reports certain financial measures
defined as non-GAAP measures by the Securities and Exchange Commission. This
press release uses non-GAAP measures of comparable operating income (loss) and
Adjusted EBITDA. Non-GAAP financial measures should be considered in addition
to, and not instead of, U.S. GAAP financial measures, and may differ from non-
GAAP measures and may not be compared to similar measures disclosed by other
issuers, because not all issuers calculate these measures in the same way. The
adjustments between the U.S. GAAP and non-GAAP financial measures listed below
are excluded from comparable operating income because they are unusual and/or
infrequent in nature and are consistent with the company's internal reporting
and measurement of financial performance.
Quarter
Quarter Ended Ended Year Ended Year Ended
December December
December 31, 2012 31, 2011 December 31, 2012 31, 2011
Low High Low High
Operating income
(U.S. GAAP) $ (233) $ (188) $ (12) $ (281) $ (236) $ 34
Estimated
goodwill
and trademark
impairment 205 170 - 207 172 -
Danone JV
investment
impairment 2 2 - 30 30 -
Restructuring and
exit activities 4 4 4 28 28 7
Headquarters
relocation 2 2 6 19 19 6
Reserve for
(recovery of)
grower advances (0) (0) (0) (2) (2) 32
Comparable
operating
income (loss)
(Non-GAAP) $ (20) $ (10) $ (2) $ 1 $ 11 $ 78
Depreciation and
amortization 17 17 16 63 63 61
Adjusted EBITDA
(Non-GAAP) $ (3) $ 7 $ 14 $ 64 $ 74 $ 139
Columns may not total due to rounding.
* Estimated goodwill and trademark impairment: The fourth quarter of 2012
includes an estimated $150 - 175 million non-cash goodwill impairment and an
estimated $20-30 million non-cash impairment charge to the Fresh Express
trademark based on the fourth quarter impairment analyses, as described
above. These impairment charges remain subject to finalization. The
impairment charges do not consider the company's assessment of whether
valuation allowances may be required to reduce U.S. deferred income tax
assets. In the third quarter of 2012, the company also impaired $2 million
of goodwill related to a non-core healthy snacking business in Europe.
* Danone JV investment impairment: In the third quarter of 2012, the company
recognized $28 million charge to fully impair its 49% equity-method
investment and to record probable funding obligations to the Danone JV,
which are excluded from comparable results. In the fourth quarter of 2012,
changes in the estimated funding obligations resulted in the recognition of
an additional charge of $2 million. The company has fully accrued its
obligations to fund the Danone JV, which are limited to an aggregate ?14
million ($18 million) without unanimous consent of the owners.
* Restructuring and exit activities:
* Restructuring: In August 2012, Chiquita announced a restructuring
supporting the goal of increasing profitability in its core businesses,
resulting in at least $60 million of annual savings beginning in 2013.
The company recognized $2 million and $16 million of restructuring
expenses in the fourth quarter and year ended December 31, 2012,
respectively. These restructuring costs included $2 million and $11
million of severance expenses in the fourth quarter and year ended
December 31, 2012, respectively. Planned restructuring activities are
substantially complete, but cash payments related to the restructuring
plan are expected to continue through 2014, primarily related to
severance payments to the former Chief Executive Officer.
* Shipping reconfiguration: During the third quarter of 2011, the company
initiated a reconfiguration of its European shipping system which is
expected to provide more than $12 million of annualized cost savings,
net of transition costs that include expected losses on subleased
vessels removed from service in 2011 and 2012. Comparable operating
income excludes a charge of $6 million in the first quarter of 2012 and
$4 million in the fourth quarter of 2011 for net losses expected on
certain ship sublease contracts. These sublease losses will not recur in
2013 since the primary leases for vessels that expired in 2012 were not
renewed.
* Other exit activities: In the fourth quarter of 2012, $2 million of
estimated lease exit expense, net of estimated future sublease income,
is excluded from comparable operating income. The full year 2012
comparable operating income also excludes $1 million of expense to close
a research and development facility and $4 million of expense from asset
write-offs and severance for discontinued products, and other
restructuring-related severance. In the second quarter of 2011, $2
million of severance costs to realign the company's salad overhead costs
and to embed its global innovation and marketing functions into its
business units is excluded from comparable operating income.
* Headquarters relocation: In November 2011, Chiquita announced its plan to
relocate its corporate headquarters from Cincinnati, Ohio to Charlotte,
North Carolina. Costs related to the relocation were $2 million and $19
million in the fourth quarter and year ended December 31, 2012,
respectively, and $6 million in the quarter ended December 31, 2011.
Relocation costs are excluded from comparable operating income. The company
also incurred $5 million of capital expenditures during 2012 related to the
relocation. The relocation is substantially complete, but the company
expects remaining relocation cost and capital expenditures to be less than
$1 million to be recognized through 2013. The company expects to recapture
a significant portion of the relocation costs through state, local and other
incentives through 2022. Beginning in 2013 we expect to generate $4 million
of annual savings from the benefits of consolidation of locations, the
consolidation of approximately 100 positions previously spread across the
U.S., lower rent and reduced travel expenses.
* Reserve for (Recovery of) Grower Advances: In the second quarter of 2011,
the company reserved $32 million for the expected remaining carrying value
of advances made to a Chilean grower. In 2012, the company recovered $2
million of these advances through the bankruptcy process and continues to
seek additional recoveries. The reserve and the recovery are excluded from
comparable operating income.
Contacts:
Steve Himes, 980-636-5636, shimes(at)chiquita.com (Investors & Analysts)
Tiffany Breaux, 980-636-5029, tbreaux(at)chiquita.com (Media)
ABOUT CHIQUITA BRANDS INTERNATIONAL, INC.
Chiquita Brands International, Inc. (NYSE: CQB) is a leading international
marketer and distributor of nutritious, high-quality fresh and value-added food
products - from energy-rich bananas, blends of convenient green salads, other
fruits to healthy snacking products. The company markets its healthy, fresh
products under the Chiquita® and Fresh Express® premium brands and other related
trademarks. With annual revenues of more than $3 billion, Chiquita employs
approximately 20,000 people and has operations in approximately 70 countries
worldwide. For more information, please visit our corporate web site at
www.chiquita.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain statements that are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of Chiquita, including: the
customary risks experienced by global food companies, such as prices for
commodity and other inputs, currency exchange rate fluctuations, industry and
competitive conditions (all of which may be more unpredictable in light of
continuing uncertainty in the global economic environment), government
regulations, food safety issues and product recalls affecting the company or the
industry, labor relations, taxes, political instability and terrorism;
challenges in implementing the relocation of the company's corporate
headquarters, and other North American corporate functions, to Charlotte, North
Carolina; challenges in implementing restructuring and leadership changes
announced in August and October 2012 including the company's ability to achieve
the cost savings and other benefits anticipated from the restructuring; unusual
weather events, conditions or crop risks; the company's continued ability to
access the capital and credit markets on commercially reasonable terms and
comply with the terms of its credit agreements; access to and cost of financing;
and the outcome of pending litigation and governmental investigations involving
our company, as well as the legal fees and other costs incurred in connection
with these items.
Additionally, the company has not finalized its financial statement closing
process for the fourth quarter and full year 2012, including its calculations
and accounting judgments related to income taxes. Because the fourth quarter and
full-year have only recently ended, the information in this press release is
preliminary and based upon information available to the company as of the date
of this press release. During the course of the company's closing process, items
may be identified that would require the company to make adjustments, which may
be material, and as a result, the estimates and rates included in this press
release are subject to risks and uncertainties, including possible adjustments
to the preliminary operating results.
Any forward-looking statements made in this press release speak as of the date
made and are not guarantees of future performance. Actual results or
developments may differ materially from the expectations expressed or implied in
the forward-looking statements, and the company undertakes no obligation to
update any such statements. Additional information on factors that could
influence Chiquita's financial results is included in its SEC filings, including
its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Chiquita Brands International, Inc via Thomson Reuters ONE
[HUG#1673433]
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Datum: 28.01.2013 - 13:25 Uhr
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News-ID 223535
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