Dole plc (NYSE:DOLE) Q3 2022 Earnings Call Transcript

Dole plc (NYSE:DOLE) Q3 2022 Earnings Call Transcript November 17, 2022

Dole plc beats earnings expectations. Reported EPS is $0.14, expectations were $0.1.

Operator: Welcome to the Dole plc Third Quarter 2022 Earnings Conference Call and Webcast. Today’s conference is being broadcast live over the Internet and is also being recorded for playback purposes. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. For opening remarks and introductions, I would now like to turn the call over to Head of Investor Relations with Dole plc, James O’Regan.

James O’Regan: Thank you, Alex. Welcome, everybody, and thank you for taking the time to join our third quarter 2022 earnings conference call. Joining me on the call today is our Chief Executive Officer, Rory Byrne; our Chief Operating Officer, Johan Linden; and our Chief Financial Officer, Jacinta Devine. During this call, we will be referring to presentation slides and supplemental remarks, and these, along with our earnings release, financial statements and other related materials are available on the Investor Relations section of Dole plc website. Please note, our remarks today will include certain forward-looking statements within the provisions of the Federal Securities Safe Harbor Law. These reflect circumstances at the time they are made and the company expressly disclaims any obligation to update or revise any forward-looking statements.

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Actual results or outcomes may differ materially from those that may be expressed or implied due to a wide range of factors, including those set forth in our SEC filings and press releases. Information regarding the use of non-GAAP financial measures may also be found in the press release, which also includes reconciliation to the most comparable GAAP measures. Our financial statements for the third quarter were also filed with the SEC earlier today and contain reported financial information for the quarter ended 30 September, 2022, and 30 September, 2021, and the nine months ended September 30, 2022 and 2021. Our earnings press release and investor presentation also referenced pro forma comparative financial information. This pro forma information illustrates Dole plc’s results for the third quarter and first nine months of 2021 and that the merger IPO and refinancing had occurred on January 1, 2020.

This is consistent with the pro forma financial information presented in the Form F-1 filed with the SEC in connection with the IPO. With that, I am pleased to turn today’s call over to Rory.

Rory Byrne: Thank you, James. Welcome, everybody, and thank you for joining us today. While we are very pleased that the Group’s delivered strong results for the third quarter. On a pro forma comparative basis, excluding the impact of currency translation and Nash M&A activity, revenue increased by approximately 5% as compared to the third quarter of 2021. Adjusted EBITDA of $73 million was ahead of expectations and significantly ahead of the prior year. The significant increase in adjusted EBITDA was driven by a strong performance in our Fresh Fruit segment, offset in part by the ongoing recovery in our Vegetables business and a specific challenge in our Diversified Americas segment in the quarter. Adjusted net income and EPS also increased significantly compared to the prior year, driven by the increase in adjusted EBITDA.

In the third quarter, we continue to have a strong focus operationally on cash flow and we are pleased to announce today a cash dividend for the third quarter of $0.08 per share. This continues our commitment to return cash to shareholders. So turning to slide eight for our operational highlights. In our Fresh Fruit segment, we delivered a strong result for the quarter. North America and commercial cargo operations continue to perform very well with healthy demand, positive market pricing and good shipping rates. In Europe, high shipping rates and adverse currency movements continue to impact on performance, however, we are making good progress in managing these challenges. Supply and demand dynamics in the banana market overall have been unprecedented in 2022 and this remains a key factor as we work towards the end of this year and continue with negotiations for 2023.

Overall, with our diverse sourcing base, our leading customer profile, we believe we are well placed to have a strong finish to 2022 and a positive outlook for 2023 in this division. Our Diversified EMEA segment continued to trade well on a like-for-like basis in Q3, despite increasing inflationary pressures in our core markets, again demonstrating the ability to price dynamically and benefit from product and geographic diversity. Our Diversified Americas segment was impacted by a specific issue at the end of the Chilean grape season in North America, significant supply chain disruptions led to exceptional volume disposals that impacted profitability. The overall scale and range of activity in our Diversified segment reduces the impact of the Chile grape issue when we look at our results on a full year basis, demonstrating again the benefit of a wide range of products and geographies.

Our third quarter performance in Fresh Vegetables remained disappointing and while we are making progress on our turnaround plan, it is slower than we would like. Category demand was softer in Q3 and ongoing inflation continues in important cost areas. In addition, we faced higher sourcing costs due to weather-related events in key California and growing regions, which impacted the entire industry. More positively, however, our detailed turnaround plan is beginning to yield benefits. From a volume perspective, we recently achieved a number of important customer wins as we look to build back up our volume base for 2023. In all major area — areas of operation, we have developed detailed profit improvement plans and we are monitoring these closely.

We continue to explore all strategic alternatives for this segment and expect to see recovery in 2023. With that, I will hand you over to Jacinta to give the financial review.

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Jacinta Devine: Thank you, Rory. Good morning and good afternoon. Please turn to slide 10. As Rory mentioned, we delivered a strong performance for the third quarter when compared to the prior year. Revenue for the third quarter decreased marginally against the pro forma comparative, driven by negative FX movements and the impact of M&A in our Diversified EMEA segment, and lower volumes in our Vegetable segment. On a like-for-like basis, revenue increased 5%, driven by inflation justified price increases. Adjusted EBITDA for the third quarter increased 26% to $73 million, with the increase driven by a strong performance in the Fresh Fruit segment. Similar to Q2, foreign currency translation impacted results by $4 million and stripping this out, adjusted EBITDA increased 32% on a like-for-like basis.

Turning to slide 11. Adjusted net income was $13.5 million for the third quarter, significantly ahead of the prior year. The increase was driven by higher adjusted EBITDA, which offset an increase in interest expense. Adjusted fully diluted EPS for the quarter was $0.14, compared to $0.07 in prior year and $0.03 on a pro forma comparative basis, again driven by the increase in adjusted EBITDA. I will now provide some more detail on each of the individual segments, starting with Fresh Fruit on slide 13. We continue to see good momentum in this segment, with revenue for the third quarter increasing 11.7% compared to the pro forma comparative. The increase was driven by higher worldwide pricing and commercial cargo and higher volumes of bananas in North America.

This was partially offset by lower volumes for bananas in Europe and Latin America. Adjusted EBITDA increased 200% from $17 million to $51 million for the quarter driven by higher revenue. Moving to Diversified Fresh Produce EMEA on slide 14. As with prior quarters, revenue in this segment continues to be impacted by foreign currency translation. On a like-for-like basis, revenue increased 4%, driven by a strong performance across the division and overall higher pricing. Similarly, adjusted EBITDA decreased on a reported basis due to foreign currency translation. However, on a like-for-like basis, adjusted EBITDA increased slightly by 0.1%. Then turning to Diversified Fresh Produce Americas and Rest of World. Revenue for the third quarter increased 5.8%, continuing the good momentum seen in the first half of the year.

The increase was driven by higher overall average selling prices, particularly in North American market for avocados, potatoes and onions. Our results in this segment were impacted by a difficult end of Chilean grape season in North America, leading to a loss in the quarter. Then finally, turning to Fresh Vegetables. Lower volumes contributed to a 5% reduction in revenue for the quarter. The segment continues to recover from the impact of the value-added salad recall and plant suspensions at the outset of the year, as well as lower category demand. Lower revenue, along with persistent inflation, input costs and specific industry-wide weather challenges in California growing regions led to an adjusted EBITDA loss of $9 million for the quarter.

Now turning to slide 17. Capital expenditures for the third quarter were $27 million and we now have invested $67 million year-to-date spread over reinvestments in farms and glasshouses in our growing regions, the acquisition of an additional farm in Peru and efficiencies in logistics, warehousing and processing closer to the markets. We are now expecting capital expenditure of $95 million for the year, a reduction of $15 million from our previous guidance. The reduction follows the reassessment of capital projects within the Group. Working capital remains elevated, mainly due to the precautionary measures taken earlier in the year to build up inventories and also due to the inflationary impact of input costs. We expect to see this unwind due to the normal seasonal working capital effects at this time of the year.

However, we do still see a higher underlying level of working capital this year compared to prior years. Our net leverage at the end of the quarter was 3.4 times. We expect leverage to decrease further in the final quarter of 2022 as seasonal working capital outflows unwind. Turning to slide 18. We also continue to focus on our disappointing share price and believe that our valuable strategic asset base has not been fully recognized. To highlight this, we have included a slide in our investor presentation, setting out a sum of the parts valuation approach using a two-division structure. The asset division more than covers the total debt, while the operating division currently generates adjusted EBITDA of $230 million to $250 million on a debt free basis after charging a proxy lease payment to service the debt.

This is one example of the real value in Dole that we believe has not been reflected in our current share price. Now I will hand you back to Rory, who will give an update on our full year outlook and closing remarks.

Rory Byrne: Thank you, Jacinta. While the economic environment does remain dynamic as we progress towards the end of 2022 and we continue to see positive trends and some ongoing challenges, it’s clear that the global economy is difficult with inflation and interest rates have continued to rise. We remain highly focused on operating efficiencies, capital discipline and seeking price increases to compensate for cost increases. We believe we are well positioned with a broad portfolio of healthy and nutritious products in an industry that does continue to be underpinned by strong fundamentals. However, we now expect our full year adjusted EBITDA to be at the lower end of the previously guided range due to the ongoing challenges in our Fresh Vegetable segment, which has slowed its recovery, as well as the specific Q3 issue at the end of the Chilean grape season in North America.

In conclusion, we remain positive on our medium- to long-term outlook and are intensely focused on our short-term priorities for the remainder of 2022 and into 2023. Our principal priorities are clearly the turnaround of our value-added salads business, focusing on cost control and operating efficiencies across all our businesses, including the ongoing synergy projects, continuing with a disciplined approach to capital. Before I conclude, I would like to highlight that in the first nine months of the year, three out of our four segments have performed well, especially considering the complex operating environment and we are very focused on the turnaround of our Fresh Vegetables business. I want to finish by thanking again our committed team for their ongoing efforts to drive our business forward and also by thanking our critical partners and customers for their ongoing support, which allows us to look to the future with great confidence.

So, with that, I will hand back to the Operator and we can open the line for questions. Thank you.

Q&A Session

Operator: Thank you. Our first question today comes from Adam Samuelson from Goldman Sachs. Your line is open.

Adam Samuelson: Yes. Thank you. Good morning, everyone.

Rory Byrne: Good morning, Adam.

Adam Samuelson: Good morning. So I guess, first question, as we think about kind of the performance in the quarter and the outlook. In Fresh Vegetables, can we maybe talk about from where we are ending the third quarter with at the EBITDA loss, and help us think about the trajectory and pathway and what has to happen for that to be a positive EBITDA contributor, if not in the fourth quarter and certainly in calendar 2023?

Johan Linden: Yeah. Maybe I can take that one, Rory. So we are very happy with the work that the division is doing right now. We are focusing on servicing the customers, because we know good service then leads to new customer contracts and much easier pricing discussions and we are focusing and doing good progress on our turnaround plan and we are executing on that plan. And there’s a lot of different facets to that plan. It’s about reviewing all the costs that we are having. It’s reviewing all the pricing that we have with customers. We are looking at our SKUs, so we have the right SKUs considering that we are potentially entering into a recession. We know it’s high inflation out there, so people are looking for more value, high value or affordable products.

And we are looking at discussions with the customers to see if we can increase some of the volumes, but we are also looking at the structure, including our own capacity. But what has happened in the end of Q3 and which will impact Q4 is that there has been a complete crop failure in the industry. This is not a Dole isolated incident. This goes across the whole industry, where almost 30% to 40% of all the iceberg remain has failed and that is due to an extreme heat that we had in the beginning or late summer beginning of the fall followed by rain. That crop failure, combined with market being somewhat soft for value-added products, value-added is a little bit higher, has put the quarter to become challenging. But this doesn’t change how we look at 2023 going forward.

Adam Samuelson: Okay. And just to be clear and I know you are not giving guidance, but can you help maybe give some parameters on how you would be thinking about 2023?

Johan Linden: No. I don’t think we

Rory Byrne: Yeah. I

Johan Linden: Yeah. Go ahead, Rory.

Rory Byrne: I think — yeah. I think it’s a little early to give a more comprehensive update on 2023, Adam. And I think what we will do is as we finish out the year, more logical and sensible from an investor perspective to give a more comprehensive update in the next quarter on where we see 2023. On an overall basis, as Johan says, we are just getting a run of bad luck in this division and certainly, the current production issues at in Salinas in California have been very unhelpful, but the underlying work with the new management that we put in place, with the some of the legacy produce guys going over to help out to get — to assist beyond. We have a very good management team and that they just needed a little bit more impetus and help to get over the hump at the moment. We are making good progress on all the profit improvement plans and we will update on the next call on our view on 2023.

Adam Samuelson: Okay. And then if I can just ask a separate question, because in the slide that you did introduce this kind of asset-light kind of some of the parts. Is it a sale-leaseback type transaction or is that some sort of corporate split to effectuate that kind of earnings profile under serious consideration at this juncture, and if not, just help us think about what would get you to that point probably ?

Rory Byrne: Yeah. I mean, it’s really just to illustrate to investors the very valuable long-term assets that we do have in this business. We see them as integral to our existing business. So we don’t actually have any plans to separate them or do a sale and leaseback of those assets and they are very important to us. We do — you look around at some of the farm REITs particularly in the U.S. farm REITs. They have very high valuations and people are seeing the value in long-term farming and other assets. And in this slide, we are just — at a macro level, just setting it out for investors, look, this is what you own. You have some good net assets in the long-term asset division and you have got some asset-light, debt-free EBITDA with a significant amount and that it should attract a significantly greater value.

But in the short-term, we are not actually thinking about splitting the company. We like having the two pieces together, but you can actually look at them as two separately valuable businesses, only the one ownership structure.

Adam Samuelson: All right. That’s really helpful. I will pass it on. Thanks.

Rory Byrne: Thanks, Adam.

Operator: Our next question comes from Roland French from Davy. Your line is open.

Roland French: Thank you. Hi, everybody. I hope you are doing well. And I have a couple of questions as well, if I could. And maybe just starting on the banana business and maybe an update on, in terms of color around contracting since we last spoke, i.e., I guess, how have interactions gone across Europe and North America, as well as maybe just some color around the supply situation, has it gotten better, worse, remained the same? So that’s the first question on banana contracting. And then maybe just on the cost environment, I know in the outlook, you talked about currently seeing some positive trends, and I guess, your caveat that with some further challenges. Just maybe kind of breaking that out in context of some of your key cost buckets?

And then, finally, and somewhat related, just on the supply chain, I know it’s clearly been friction in the last 12 months, 18 months, 24 months to generally how the supply chain has improved or has disproved since we last talked?

Rory Byrne: Maybe, Johan, you take the first and I will pick up the other two.

Johan Linden: All right. So when it comes to bananas, it’s been an absolutely interesting year. We started out having one view on how the year would develop and everything changed when Russia decided to invade Ukraine. And what happened then is that, we had a lot of demand destructions, so demand fell off. We had to readjust supply. Cost for important input materials went up, fertilizers, but actually, also paper, the box that we are using and FX collapsed, the euro collapsed. We have been able to perform well under, although, taking this backdrop we have performed very well within the division. We are now entering in the most intense negotiation period where we are negotiating with the customers. And as we did on the last call — as we said on the last call, we expect the supply situation to become tight and it has become tight.

Supply has come down, probably, even a little bit further than we have expected. So right now we are in a situation when we are going out to meet customers where we feel relatively comfortable that we will be able to pass on the cost increases that we have, just because of the tight supply situation. Of course, this is also, to a certain extent, complicating the negotiations that we have with our suppliers, but I think, if you put them all together, we are ending up in a good position here looking into the next year.

Rory Byrne: And then just following on with our other couple of questions, Roland, I mean, on the cost environment, it’s very hard to call whether inflation has peaked or not peaked. We have seen this week, some of the European countries inflation rates were slightly down. But on the other hand, the U.K. rate of inflation was considerably up, but something like 45-year highs as you will know. So, I think, in some of our segments, we are seeing some easing of inflation, but it’s a little bit early to call. And in terms of the supply chain, I mean, obviously, at the end of the second quarter, we had some really significant strong impact because of port congestion that have an unfortunate and big impact on our Chilean grape business where ships were part of the ports for just too long to hold the quality of the fruit and discharge they were for supermarket programs and lots of knock-on consequences.

But we are seeing some easing of port congestion, particularly in some of the areas of the U.S. And then fuel is a little bit better, shipping if there are some evidence that shipping rates are maybe coming off their highs, but we have yet to see it come through in a material way. So it’s just — I mean, I think, supply chain is better than it has been, and hopefully, will settle down, and costs are, probably, a little too early to call whether we hit the peak or not.

Roland French: Okay. Great. And maybe just a quick follow-up, how seasonal is the Chilean grape business?

Rory Byrne: It’s very seasonal. I mean, it just runs for a number of months really from the early part of the year.

Roland French: Okay. Great. Thanks so much. Best of luck.

Rory Byrne: Thanks, Roland.

Operator: We now turn to Ben Bienvenu from Stephens. Your line is open.

Ben Bienvenu: Yeah. Thanks so much. Good morning.

Rory Byrne: Good morning, Ben.

Ben Bienvenu: I want to ask about the comments you made on pricing. You noted that you expect to make continued pricing increases as we move forward in Ontario. Are there categories in which you feel like you have more opportunity to take price versus others and what are you seeing so far the prospective consumer reaction to pricing increases you have taken?

Rory Byrne: Yeah. I mean, obviously, you look at our most important category being bananas and it’s starting from a low base. And so, I think, there’s a willingness to acknowledge cost increases, which can then get reflected in price increases to the consumer and there have been some ups and downs, as Johan described in terms of availability of supply. But I don’t think we are seeing any fundamental change in consumer demand. I think pricing in some of the other higher priced categories, you look at mangos, papayas, organics products like that can be a little bit harder to get through significant price increase without affecting somewhat demand in those categories. But we stand back from it, though, and we don’t, I mean, there can be ups and downs and it varies quite a bit across all our different markets, even within Europe there are different supply/demand and consumer demand.

If you look at Spain versus Sweden, Ireland versus Holland, it does vary a lot. But standing back from us, we do not see any fundamental shift in the consumer desire to ease high quality fruits and vegs that we supply.

Ben Bienvenu: Okay. Great. And then my second question is just related to M&A. Can you talk a little bit about what the environment offers you, are there particular opportunities that you are looking at that you are excited about or focused on and if you could kind of characterize the robustness of the pipeline that you have ahead of you, that would be helpful?

Rory Byrne: Yeah. I mean, obviously, with the year that we had, Ben, a huge and overwhelming focus of the entire management team is to try and get the Veg division turned around and we keep an eye on what’s happening in the M&A world. We know who the interesting companies are in the different segments, whether that’s berries or bananas or distribution or avocados, so we have got a very good database. And I think one of the interesting things about M&A is, if you look at the three divisions being Fresh Fruit, our Diversified in Americas and Diversified in Europe, very much all of our competitor companies are performing similarly well. So I am not see any fundamental change in the value of those companies. So we are not seeing any decline in sales or anything, any great opportunities to buy any companies cheaply, because the sector is actually doing well and it’s a little bit unfortunate for us, we have got the one division that we have got more work to do to fix.

But we are keeping our eyes on the opportunities that are out there. Short-term, we have got probably some different priorities in terms of just getting more confidence with investors, delivering the numbers, getting the business back on track and we have ongoing discussions with our M&A pipeline and at appropriate time, we think we can add in interesting pieces to the Group.

Ben Bienvenu: Okay. Great. Thanks so much.

Rory Byrne: Thank you, Ben.

Operator: Our next question comes from Christopher Barnes from Deutsche Bank. Your line is open.

Christopher Barnes: Hi. Thanks for the question. Rory, I just wanted to pick up on a line that you just mentioned on the consumer. So with the recession risk still palpable, inflation is still high in absolute terms, are you noticing any like shifts in consumer behavior, whether that’s trading down, shifting the shopping channels that they are in. I think you mentioned that there’s still a propensity to consume, which is great. But has there been any shift whether in North America and Europe that’s concerning you from a consumer behavior perspective?

Rory Byrne: I mean, obviously, all of the points you make, Christopher, are absolutely right. I mean inflation nervousness, lack of disposable income. I mean, thankfully, fruit and veg tend to be low down the list of discretionary items that people stop buying them. I mean we have seen it’s actually difficult to measure it. But, I mean, we haven’t seen any material change in consumer behavior. Now some of the higher priced categories that I mentioned might be under a little more pressure, that it’s not a material shift in demand where consumers are not continuing to buy things like mango and papayas that might be a little bit higher price per kilo. So we don’t — we look back, some of the businesses have been around long enough, we have seen periods of difficult economies in the past.

You go back to the European financial crisis back in end of the 2000. It’s a short-term dips and some demand from consumers, maybe some of the discounters who offer a narrower range and not to go to — the people do think about them a little bit more in this period. But we are not really concerned that there’s any kind of fundamental shift in consumer behavior towards Fresh Fruit and Vegetable consumption.

Christopher Barnes: Okay. Thanks. That’s helpful. And then, I just wanted to — I know you are not guiding for 2023, just given where we are, but like just since — it’s since mid-November, like, is there anything you can share on performance like quarter-to-date across the divisions, like, it sounds like Fresh Vegetables is going to be a little bit weaker than you anticipated. But how — like how should we think about the other businesses just into 4Q

Rory Byrne: Yeah.

Christopher Barnes: considering the range that you have guided?

Rory Byrne: Yeah. We are pretty happy with the other three divisions. Obviously, if we look at our European business and the biggest impact is really the FX ratio. You look at things like our currencies like the euro year-on-year 11% depreciation, the Swedish kroner, which is important to us, a 17% year-on-year movement against the dollar. So when you are retranslating and reporting in dollars, that has quite a material impact on your numbers. And I guess, even on a day-to-day trading basis when you are importing as we do into euro markets and CK markets with the currency that’s significantly weaker and adding in inflationary pressures, it does put a little bit of pressure on those business, but nothing material. So we are pretty happy with our Diversified businesses.

Our Fresh Fruit business, we have got a really, really strong position in the banana and pineapple business, number one guy in North America. We have got a list customer base. We are really appreciative of the support we get from our customers. We work hard to make sure we meet all the service levels and requirements. And we have done that right through COVID times, right through supply complication times and our customers, I think, appreciate that and we work hard with them then to make sure that the cost chain items are appropriately reflected in the price. So with the exception of the Vegetable business and foreign exchange and we are feeling pretty good.

Christopher Barnes: Okay. Great. Thanks. I will pass it on.

Operator: Our next question comes from Ken Zaslow from Bank of Montreal. Your line is open.

Ken Zaslow: Hey, guy. How are you?

Rory Byrne: Good, Ken.

Ken Zaslow: Just two questions. My first one is, when you are talking about the Chilean grape crop and then you talked about the extreme heat and the iceberg, you said that contained to this quarter, does it not impact next year? On the remote — remain — on the weather side, you said, it — your outlook for 2023 would not change on that. Is there a reason why a 30% to 40% change, is it seasonal, is there something to think about? I mean it sounds like Chilean crop is seasonal? And then I have a second question.

Rory Byrne: Okay. On the Chilean one, it was actually nothing to do particularly with the crop, but the logistical issues that we had, which meant that ships and large volumes of products couldn’t get discharged in the right time, and obviously, you are dealing with a perishable product. And then it gets delayed and then the subsequent season product starts to arrive into the market at the same time. So we are working on it. It was just exceptionally unusual this year. So we are working on the basis that those supply chain disruptions going into 2023 will not reoccur and we don’t expect them to reoccur and we are going to — we are looking at how we manage that to avoid the same magnitude of problem problems that we had at the end of the season.

And then, I mean, the iceberg situation and the weather situation, I mean, it is a very unusual situation in terms of the crop failure that Johan has described. We haven’t seen such a dramatic one in quite a while. But I think it’s an unusual set of weather circumstances has been partly responsible for it. But we see some other areas of production that can compensate for that and that it don’t repeat that crop later going into 2023. I don’t understand further you want to add on that one, Johan, that might help can understand a little better?

Johan Linden: Yeah. No. The crop failure was at the tail end of the California season and we are now moving into the Arizona or we are in Arizona. It will have a little bit of an impact in the Arizona season just because we were starting them a little bit earlier than expected, but we should have cycled out of that coming into January 2023?

Ken Zaslow: Okay. My second and far more important question is, I hear you on the asset value and how you think about it. My question is, if you were to look back a year and now and look forward three years, do you think your earnings power has changed based on the environment that we are in, do you think it stays where you would have thought it would be, and can you give the pluses and minuses of how that will kind of emerge given your opinion?

Rory Byrne: Yeah. I think if we look back over the last year, I have said a couple of times on the call, our three segments from Fresh Fruits and our two Diversified businesses, you stand back and you say they have performed pretty solidly, other European business on a like-for-like basis. We are pretty happy with a few ups and downs here, but they are balancing out and against the backdrop of most unusual economic environment, pretty much all of us on this call will have lived in life to see the war in Europe with the Russian-Ukrainian situation, the disruption logistics caused by COVID is still enduring. So I think with that backdrop really performed. Our Fresh Fruit business, given our market position and given our diversity of sourcing our shipping capacity, our infrastructural capacity, our management capacity within that division, I think, we are feeling pretty good that those three divisions can continue to perform and we can hopefully build our profitability by bringing even more so the two groups — two legacy groups together.

The big problem has been the Vegetable division and we are really focused on the turnaround plan. I think, Johan, described recently, we just can’t catch a break at the moment on that division and the unfortunate crop failure situation where you have got lower volumes going into plants that depend on higher volumes to cover fixed costs and maybe just make our turnaround plan delays implementation. But we are doing well. We are picking up volume. We have got some great work going on in terms of all different aspects of the business from operational efficiency, to cost efficiency, to management, food safety or every single area is under the microscope. So I am giving that we are — given the business backdrop and the world backdrop and we need maybe the exchange rate moves a little bit between the euro and dollar, and then we got really lucky maybe somehow really Russia can be convinced to step back from the Ukraine.

And I think even from a psychological point of view, if somebody could do would change just economies just from people thinking that less emphasis about where the world is. So some of those macro effects, obviously, outside of our control, but overall, we are not feel bad about life, so we are looking forward to the future pretty positively.

Ken Zaslow: Great. I appreciate it. Thank you.

Rory Byrne: Thank you, Ken.

Operator: This concludes our Q&A. I will now hand over to Rory Byrne, CEO, for final remarks.

Rory Byrne: Okay. So thank you everybody for joining us today. I think it’s a good Q3 numbers for us, a huge improvement on the prior year. Three out of our four divisions performing very well, a little bit unlucky in our Fresh Vegetables division, but we get there. So I think we have just got to check a more medium to longer term view and we have got a great business. It’s a really fantastic product market position, some fantastic geographic positions and we look to the future with confidence. So thank you very much.

Operator: Today’s call is now concluded.