Chiquita Brands International, Inc : Chiquita Reports First Quarter 2013 Results
(Thomson Reuters ONE) -
CHIQUITA REPORTS FIRST QUARTER 2013 RESULTS
GAAP net income of $2 million compared to GAAP net loss of $11 million for the
first quarter of 2012
Adjusted EBITDA([1]) of $39 million compared to Adjusted EBITDA of $28 million
for the first quarter of 2012
CHARLOTTE, N.C. - May 7, 2013 - Chiquita Brands International, Inc. (NYSE: CQB)
today released financial and operating results for the first quarter of 2013.
The company reported GAAP net income of $2 million for the period compared to
GAAP net loss of $11 million for the first quarter of 2012. The company also
reported Comparable operating income([1]) of $23 million compared to $13 million
for the same period of 2012.
"We continue to execute against our previously announced restructuring plans and
strategy to focus on our core products," said Ed Lonergan, Chiquita's president
and chief executive officer. "We are pleased that our first quarter results
reflect the initial benefits from these strategic decisions and actions. The
improvements overcame euro exchange rates that negatively impacted this quarter
by $12 million after hedging, and we view these results as a clear sign of the
progress we are making and a good first step toward achieving our long-term
financial targets."
Lonergan continued, "Performance in our core businesses continues to improve.
In both our North American bananas business and our salad business, we have
responsibly increased segment shares with new contracts and through improved
velocity with existing customers. In Europe, we have continued to prioritize
profitable contracts and have shed arrangements that did not meet our profit
targets. We also continue to focus on improving productivity and remaining
disciplined in our value chain and overhead spending. With the recently
announced addition of Rick Frier to our management team, we believe that we have
the pieces in place to execute our strategy and achieve our long-term financial
goals."
[1]Amounts exclude certain items described below under "Non-GAAP Measurements
and Items Affecting Comparability."
2013 FIRST QUARTER SUMMARY
The following table shows adjustments and reconciling items made to "Operating
income (loss)," a GAAP measure, to calculate "Comparable operating income" and
"Adjusted EBITDA." See "Non-GAAP Measurements and Items Affecting Comparability"
below for descriptions of items excluded on a comparable basis, including
descriptions of how these items affect the results of reportable segments.
--------------------------
Operating Income (loss)
--------------------------
(in millions) 2013 2012
------------ -----------
Operating income (loss) (U.S. GAAP) $ 25 $ (0)
Unrealized foreign currency hedging gain (1) (3) -
Headquarters relocation 0 4
Exit activities 1 4
Shipping reconfiguration - 6
------------ -----------
Comparable operating income (Non-GAAP) 23 13
Depreciation and amortization 16 16
------------ -----------
Adjusted EBITDA (Non-GAAP) $ 39 $ 28
------------ -----------
Columns may not total due to rounding.
(1) Unrealized foreign currency hedging gain is included in "Net sales" under
U.S. GAAP
Bananas: Comparable net sales decreased 3 percent to $505 million primarily due
to reduced volumes in Europe, a result of the strategic decision to prioritize
price over volume, negative impacts from the net hedged euro rate, and lower
prices in North America. These factors were partially offset by higher local
currency pricing in Europe and increased volume sales of bananas in North
America. Improvements in sourcing and logistics cost related to Chiquita's
value chain restructuring more than offset the decrease in sales, and Comparable
operating income increased to $27 million in the first quarter of 2013 from $25
million in the same period of 2012.
Salads and Healthy Snacks: Net sales increased 1 percent to $240 million as
foodservice and healthy snack sales offset lower sales of retail value-added
salads. Comparable operating income was $8 million for the first quarter of
2013, versus $2 million Comparable operating income in the same period of 2012,
principally due to the savings from restructuring activities, deferrals in
marketing expenditures and exiting non-core businesses, which more than offset
increased industry costs in the quarter.
Selling, general, and administrative (SG&A): SG&A decreased 21 percent to $54
million in the first quarter of 2013 as a result of the restructuring
initiatives announced in August 2012 and the timing of marketing expenditures.
Cash, debt and liquidity: Cash flow from operations was $15 million for the
first quarter of 2013 compared to $13 million for the first quarter of 2012. At
March 31, 2013, cash and equivalents were $52 million, and the company had $74
million of availability under its ABL facility.
OUTLOOK
The company is already seeing tangible progress from its restructuring
initiatives, although there remain important risks and opportunities for the
balance of the year. Opportunities that are expected to improve results in
2013 include:
* Banana contract wins that are driving U.S. market share growth in 2013
* Private label salad wins that commenced shipments in Q1 2013, replacement of
low value salad contracts with contracts that improve mix and overall
profitability and new customer wins in Q1 that will begin in Q2
* Agricultural practice and logistics interventions in the second half of
2012 that met efficiency and productivity expectations in Q1 and are
expected to continue to deliver expectations through the year
* Benefits of the 2012 SG&A restructuring
* Consolidation of the Midwest salad facilities near Chicago that will be
completed in Q3 and should begin to drive operating cost savings towards the
end of 2013
Certain risks exist in the balance of 2013. Banana supply trends out of Latin
America are expected to remain balanced with demand through the first half of
the year and then are likely to exceed demand in the second half of 2013, which
would put pressure on pricing. Sourcing costs are expected to increase. As
part of the company's risk management strategy downside currency risk has been
largely mitigated through mid-2014; however, at the current euro currency
exchange rate, the 2013 hedges would continue to negatively impact results.
These expectations do not include any unforeseen weather, event risks or major
currency fluctuations.
Management's estimates of certain financial items are as follows:
+---------------------------------+---------+---+-----------+
| (in millions) | Q1 2013 | | FY 2013 |
| | Actual | | Estimated |
+---------------------------------+---------+---+-----------+
| Capital expenditures | $10 | | $50-60 |
+---------------------------------+---------+---+-----------+
| Depreciation & amortization | 16 | | 60-65 |
+---------------------------------+---------+---+-----------+
| Gross interest expense [1] | 15 | | 50-55 |
+---------------------------------+---------+---+-----------+
| Cash payments for interest [2] | 9 | | 40-45 |
+---------------------------------+---------+---+-----------+
( )
[1] Interest expense includes the impact of accounting standards that added non-
cash interest expense of $3 million for first quarter of 2013 and $2 million for
the first quarter of 2012.
[2] Cash paid for interest excludes $12 million of fees incurred in the first
quarter refinancing that will be amortized to interest expense over the life of
the new debt.
CONFERENCE CALL
Chiquita will hold a conference call for investors to discuss its results at
9:00 a.m. EDT today. Access to a live audio webcast is available at
http://investors.chiquita.com. Toll-free telephone access will be available by
dialing 1-888-428-9470 in the United States and +1-719-325-2295 from
international locations and providing the conference code 9957960. To access
the telephone replay, dial 1-888-203-1112 from the United States and
+1-719-457-0820 from international locations and enter the confirmation
code 9957960.
CONTACTS:
Steve Himes, 980-636-5636, shimes(at)chiquita.com, (Investors and Analysts)
Tiffany Breaux, 980-636-5029, tbreaux(at)chiquita.com, (Media)
NON-GAAP MEASUREMENTS AND ITEMS AFFECTING COMPARABILITY
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 non-GAAP measures as
defined by the Securities and Exchange Commission. This press release uses non-
GAAP measures of Comparable operating income, Comparable operating margin,
Comparable net sales 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 that other companies use. 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.
* Headquarters relocation: In November 2011, the company announced its plan
to relocate its corporate headquarters to Charlotte, North Carolina. Of the
$30 million of one-time costs expected to be incurred, $4 million was
incurred in the first quarter of 2012 and less than $1 million in the first
quarter of 2013. The relocation is substantially complete and the company
expects only minor remaining costs and capital expenditures to be recognized
through 2013. Relocation costs are excluded from comparable reporting of
Corporate costs.
* Shipping reconfiguration: During the third quarter of 2011, the company
initiated a reconfiguration of its European shipping system which provided
more than $12 million of annualized cost savings, net of transition costs
that included expected losses on subleased vessels removed from service in
2011 and 2012. Comparable operating income of the Banana segment excludes a
charge of $6 million in the first quarter of 2012 for net losses on certain
ship sublease contracts. These sublease losses will not recur in 2013 since
primary leases for vessels expiring at the end of 2012 were not renewed.
* Exit activities: In the first quarter of 2013, Comparable operating income
of the Salads and Healthy Snacks segments excludes $1 million of severance
expenses related to discontinued products. During the first quarter of
2012, the company recognized $4 million for asset write-off and severance
for discontinued product items and other restructuring-related severance; of
these items, $2 million was excluded from the Comparable operating income of
the Salads and Healthy Snacks segment, and $2 million was excluded from the
Comparable operating income of the Other Produce segment.
* Unrealized foreign currency hedging gain: On February 5, 2013 in
conjunction with the debt refinancing, the company transferred certain
currency option contracts to counterparties within its current bank group.
The transfer resulted in the termination of hedge accounting for these
currency option contracts that will all settle by the end of the third
quarter of 2013. Changes in the fair value of these contracts until
February 5, 2013 were deferred in Accumulated other comprehensive income,
and the changes in the fair value subsequent to that date will be recognized
currently in Net sales. Termination of hedge accounting does not change the
economic intention or cash flow of the option contracts. In the first
quarter of 2013, the company recognized $3 million of gains in Net sales
associated with changes in the fair value of these option contracts, which
were excluded from the comparable results of the Bananas segment.
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 and 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 nearly 70 countries
worldwide. For more information, please visit the corporate web site at
www.chiquita.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain statements, including in the "Outlook"
section, 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 its
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 its ability to
achieve the cost savings and other benefits anticipated from the restructuring;
unusual weather events, conditions or crop risks; continued ability to access
the capital and credit markets on commercially reasonable terms and comply with
the terms of its debt instruments; access to and cost of financing; and the
outcome of pending litigation and governmental investigations involving the
company, as well as the legal fees and other costs incurred in connection with
such items.
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.
# # #
Exhibit A:
CHIQUITA BRANDS INTERNATIONAL, INC.
CONSOLIDATED INCOME STATEMENT
(Unaudited - in millions, except per share amounts)
Quarter Ended
March 31,
------------------
2013 2012
------------------
Net sales $ 774 $ 793
Operating expenses:
Cost of sales 679 705
Selling, general and administrative 54 68
Depreciation 14 13
Amortization 2 2
Equity in loss of investees 0 2
Restructuring and relocation costs 0 4
------------------
Operating income (loss) 25 (0)
Interest income 1 1
Interest expense (15) (11)
Gain/(loss) on debt extinguishment, net (6) 0
Other income/(expense), net 1 0
------------------
Income (loss) before taxes 6 (10)
Income tax (3) (1)
------------------
Net income (loss) $ 2 $ (11)
------------------
Diluted earnings per share:
Basic earnings per share $ 0.05 $ (0.24)
Diluted earnings per share $ 0.05 $ (0.24)
Shares used to calculate basic
earnings per share 46.4 45.8
Shares used to calculate diluted
earnings per share 47.0 45.8
Columns may not total due to rounding.
Exhibit B:
CHIQUITA BRANDS INTERNATIONAL, INC.
OPERATING STATISTICS
(Unaudited - in millions, except for percentages and exchange rates)
Quarter Ended Percent
March 31, Change
2013 2012 vs. 2012
-----------------------------
Comparable net sales by segment [1]
Bananas $505 $520 (3.0)%
Salads and Healthy Snacks 240 238 0.9%
Other Produce 26 35 (26.0)%
-----------------------------
$771 $793 (2.9)%
Comparable operating income (loss) [1]
Bananas $27 $25 7.9%
Salads and Healthy Snacks 8 2 NM
Other Produce (0) (4) NM
Corporate (11) (10) (14.3)%
-----------------------------
$23 $13 78.3%
Comparable operating margin by segment [1]
Bananas 5.3% 4.8% 0.5 pts
Salads and Healthy Snacks 3.2% 0.9% 2.3 pts
Other Produce (1.4)% (12.4)% 10.9 pts
SG&A as a percent of sales 6.9% 8.5% (1.6) pts
Company banana sales volume
(40 lb. boxes)
North America 17.5 15.8 10.8%
Core European markets[2] 9.1 10.5 (13.3)%
Mediterranean & Middle East 4.1 4.3 (4.9)%
Banana Pricing
North America (3.3)%
Core European markets[2]
U.S. Dollar 5.9%
Local 5.0%
Mediterranean & Middle East 0.5%
Retail value-added salads
Volume (12-count cases) 11.7 12.3 (4.6)%
Pricing 3.3%
Euro average exchange rate, spot (dollars per $1.32 $1.31 1.1%
euro)
Euro average exchange rate, hedged $1.28 $1.34 (4.9)%
(dollars per euro)
NM - Not meaningful
Columns may not total due to rounding.
[1] See description of reconciling items between GAAP and comparable basis
figures in this press release under "Non-GAAP measurements and Items Affecting
Comparability."
[2] The company's core European markets include the 27 member states of the
European Union, Switzerland, Norway and Iceland.
Exhibit C:
EUROPEAN CURRENCY
YEAR-ON-YEAR CHANGE - FAVORABLE (UNFAVORABLE)
2013 vs. 2012
(Unaudited - in millions)
Currency Impact (Euro/Dollar) Q1
Revenue $2
Local costs (0)
Hedging([1]) (11)
Unrealized foreign currency hedging gain ([2]) 3
Balance sheet translation([3]) (3)
-------
Net European currency impact $(9)
-------
Columns may not total due to rounding.
[1] First quarter hedging loss was $6 million in 2013 versus gains of $4
million recognized in the same period of 2012.
[2] Hedge accounting was terminated for certain currency hedges that were
transferred to banks participating in the company's ABL Credit Facility. These
unrealized gains were recognized in "Net sales" in the first quarter of 2013 for
positions originally intended to hedge sales in the second and third quarters of
2013. Termination of hedge accounting does not change the economic purpose or
effect to reduce uncertainty in the U.S. dollar realization of euro-denominated
sales, but does result in unrealized changes in fair value of these hedge
positions to be recognized currently in "Net sales" until the hedge positions
settle.
[3] First quarter balance sheet translation was a loss of $2 million in 2013
versus a gain of $1 million in the same period of 2012.
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#1699741]
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Datum: 07.05.2013 - 14:06 Uhr
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