Chiquita Reports Fourth Quarter and Full-Year 2009 Results
By Chiquita Brands International Inc., PRNEMonday, February 22, 2010
More than doubles profitability with comparable full-year 2009 EPS of US$2.27; GAAP EPS of US$2.02
CINCINNATI, February 23, 2010 - Chiquita Brands International, Inc. (NYSE: CQB) today released financial
and operating results for the fourth quarter and full-year 2009. All figures
in this press release are for continuing operations.
For the full-year 2009, the company reported income on a comparable basis
of US$103 million, or US$2.27 per diluted share, compared to US$49 million,
or US$1.12 per diluted share, for the full-year 2008. On a GAAP basis, the
company reported full-year 2009 income of US$91 million, or US$2.02 per
diluted share, compared to a loss of US$330 million, or (US$7.54) per diluted
share, for the full-year 2008. Net sales were US$3.5 billion in 2009 compared
to US$3.6 billion in 2008.
For the fourth quarter 2009, the company reported a loss on a comparable
basis of US$23 million, or (US$0.52) per diluted share, compared to a loss of
US$33 million, or (US$0.74) per diluted share, in the 2008 period. On a GAAP
basis, the company reported a loss for the fourth quarter 2009 of US$26
million, or (US$0.58) per diluted share, compared to a loss of US$413
million, or (US$9.30) per diluted share in the fourth quarter 2008, including
a US$375 million non-cash goodwill impairment charge. Net sales were US$879
million in the fourth quarter 2009 compared to US$839 million in the 2008
period. The comparable basis amounts for both the full-year and fourth
quarter exclude certain items described below under "Items affecting
comparability."
"We doubled our profitability in 2009 despite the difficult recessionary
environment by focusing on cost control, pricing discipline and relentlessly
executing our initiatives," said Fernando Aguirre, chairman and chief
executive officer. "We are very pleased with the dramatic turnaround in
salads. The sustained profitability of our North America banana business and
structural improvements in our salads business helped diversify our company
in both revenue and profitability, while reducing volatility."
Aguirre added, "We expect to continue improving our profitability as we
target to deliver comparable income of US$110 to US$120 million in 2010,
while growing our revenue between 3 to 5 percent. Our target is to continue
growing both revenue and profits through a combination of pricing discipline,
distribution gains, new products, and a relentless focus on cost control,
while further extending consumer loyalty of our well known premium brands."
2009 FULL-YEAR SUMMARY
(The following table shows adjustments made to "Income (loss) from
continuing operations" and EPS from continuing operations between comparable
and GAAP results. See "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. Exhibit B provides a similar
reconciliation by segment of "Operating income (loss).")
(All amounts in US Dollars)
(in millions, except per Income (loss) per diluted
share amounts) Income (loss) share(1)
2009 2008 2009 2008
---- ---- ---- ----
Comparable results
(Non-GAAP) $103 $49 $2.27 $1.12
European headquarters
relocation (12) (7) (0.27) (0.16)
Goodwill impairment - (375) - (8.56)
Incremental non-cash
interest expense on
Convertible Notes (7) (5) (0.15) (0.12)
Gain (loss) on debt
purchases (0) 14 (0.01) 0.32
Other items 8 (6) 0.17 (0.15)
--- --- ---- -----
Reported results (GAAP) $91 $(330) $2.02 $(7.54)
Table may not total due to rounding.
(1)Shares used for diluted EPS calculation are on an as-reported basis.
Net Sales and Comparable Results: Annual sales decreased 4 percent
year-over-year to $3.5 billion, primarily as a result of the exit, beginning
in the fourth quarter of 2008, from certain unprofitable foodservice volumes
in the North American salad business. Comparable income for the full-year
2009 improved by $54 million, to $103 million, due primarily to increased
network and manufacturing efficiencies in salads and lower net financing
costs, partly offset by higher banana sourcing costs.
Cash, Debt and Liquidity: Cash flow from operations was $135 million for
the full-year 2009, representing a significant improvement from $8 million
for the full-year 2008. At December 31, 2009, cash and equivalents had
increased to $121 million from $77 million and debt had decreased to $656
million from $697 million, marking the fourth straight year of debt
reduction. During January and February 2010, the company purchased $7 million
of its 7-1/2% senior notes in the open market. The company has no more than
$20 million in debt maturities in any year until 2014, maintaining ample
liquidity and financial flexibility.
Banana Segment: Net sales for the segment increased one percent to $2.1
billion, principally as a result of improved local pricing in core European
and North American markets, and higher sales in the Mediterranean and Middle
Eastern markets, partly offset by the effects of lower volume in the U.K. and
France and lower average currency exchange rates. Comparable operating income
declined seven percent to $171 million, compared to $184 million in 2008, as
the effects of lower average European currency exchange rates and higher
banana sourcing costs were not fully offset by the benefits of improved
pricing.
Salads and Healthy Snacks Segment: Net sales decreased 13 percent to $1.1
billion, primarily as a result of exiting certain unprofitable foodservice
volumes in North America beginning in the fourth quarter of 2008. Comparable
operating income significantly improved to $60 million versus a loss of $25
million in 2008, as a result of sustainable cost reductions, such as improved
network and manufacturing efficiencies, and improved pricing.
Other Produce: Net sales for the segment were $253 million compared to
$244 million in 2008. The segment had operating income of $6 million, versus
$10 million in 2008, as a result of lower volumes and margins in melons and
grapes.
Corporate: Corporate expenses were $81 million compared to $66 million in
2008 primarily due to increased incentive compensation accruals and costs
associated with workforce reductions during the first quarter in 2009.
FOURTH QUARTER 2009 RESULTS
(The following table shows adjustments made to "Income (loss) from
continuing operations" and EPS from continuing operations between comparable
and GAAP results. See "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. Exhibit B provides a similar
reconciliation by segment of "Operating income (loss).")
(in millions, except per share Income (loss) per
amounts) Income (loss) diluted share(1)
Q4 2009 Q4 2008 Q4 2009 Q4 2008
------- ------- ------- -------
Comparable results
(Non-GAAP) $(23) $(33) $(0.52) $(0.74)
European headquarters
relocation (1) (5) (0.02) (0.12)
Goodwill impairment - (375) - (8.44)
Incremental non-cash
interest expense on
Convertible Notes (2) (2) (0.04) (0.04)
Gain (loss) on debt
purchases (0) 4 (0.01) 0.10
Other items - (3) - (0.07)
--- --- --- -----
Reported results (GAAP) $(26) $(413) $(0.58) $(9.30)
==== ===== ====== ======
Table may not total due to rounding.
(1) Shares used for diluted EPS calculation are on an as-reported basis.
Net Sales and Comparable Results: Quarterly sales increased five percent
year-over-year to $879 million with higher sales in the banana segment being
partially offset by the lower sales in the North American salad business.
Comparable results for the quarter were a loss of $23 million compared to $33
million in the year-ago period as a result of the significant improvements in
the salads business.
Banana Segment: Net sales for the segment increased 15 percent to $568
million principally as a result of a structural surplus of fruit traded at
lower prices in the Mediterranean markets and higher average European
currency exchange rates. Comparable operating income was $12 million for the
fourth quarter 2009 and $13 million for the fourth quarter 2008. The absence
in 2009 of costs related to flooding in Panama and Costa Rica that occurred
during the fourth quarter of 2008, increased volumes and pricing in North
America and favorable average European currency exchange rates were mostly
offset by lower pricing of bananas in Mediterranean markets.
Salads and Healthy Snacks Segment: Net sales decreased 12 percent to $260
million, primarily due to lower volume. Comparable operating loss was $7
million, compared to $14 million in the year-ago period, as a result of
sustainable cost reductions such as improved network and manufacturing
efficiencies, partly offset by a planned investment in consumer marketing and
lower volumes.
Other Produce: Net sales increased five percent to $51 million and
comparable operating income was less than $1 million compared to $2 million
in the year-ago period.
2010 OUTLOOK
The company expects to deliver improved full-year results in 2010, on a
comparable basis versus 2009, through growth, profit-improvement and cost
reduction initiatives, despite challenges from a relatively weak global
economy. For the full-year 2010, the company is targeting revenue growth of 3
to 5 percent and an improvement in comparable income of $110 to $120 million
or, on a GAAP basis after non-cash interest expense, net income of $102 to
$112 million. The company's target excludes any unforeseen weather or event
risks; major currency fluctuations and any potential impact from the expected
change in the EU banana tariff import regime. In addition, the company
expects that the quarterly flow of earnings will differ from 2009, with first
half results lower than the record levels achieved in 2009, primarily as the
company increases its investment in consumer marketing earlier in the year.
The company expects income from operations in the Banana segment to grow
modestly as it implements volume growth initiatives through expansion into
new channels and geographies. Sourcing and production costs are expected to
be higher in 2010 compared to the year-ago period due to increased fuel
related and purchased fruit costs, partially offset by improved productivity
from owned operations. Banana pricing is expected to remain relatively stable
in North America, while local European banana pricing is less certain and is
dependent on many industry factors, including competitive supplies and
average European currency exchange rates relative to the U.S. dollar.
In the Salads and Healthy Snacks segment, the company expects to sustain
the profit-improvement and cost-reduction initiatives that significantly
improved the efficiency of its manufacturing and distribution network during
2009. In addition, the company expects to increase its investments in
consumer marketing and innovation to strengthen the company's long-term
competitive position by extending consumer loyalty and preference for its
branded products.
In addition to the company's overall business outlook, the following
chart summarizes management's estimates of certain key items for 2010:
(in millions) FY 2009 FY 2010
Actual Estimate
------ --------
Capital Expenditures $68 $70-80
Depreciation & Amortization $63 $60-65
Gross Interest Expense (1) $62 $56-61
Net Interest Expense (1) $56 $48-53
(1) Interest expense includes the impact of adoption in 2009 of an
accounting standard that changed the method used to account for the
company's Convertible Notes, which adds non-cash interest expense of
$7 million in 2009 and $8 million in 2010.
CONFERENCE CALL
Chiquita will hold a conference call for investors to discuss its results
at 4:30 p.m. EST today. Access to a live audio web cast is available at
www.chiquitabrands.com and a replay will be available until March 10.
Toll-free telephone access will be available by dialing +1-877-591-4953 in
the United States and +1-719-325-4770 from international locations and
providing the conference code 4698260. 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 4698260.
NON-GAAP MEASUREMENTS
The company reports its financial results in accordance with generally
accepted accounting principles in the United States of America (U.S. GAAP).
In an effort to provide investors with additional information regarding the
company's results and to provide more meaningful year-over-year comparisons
of the company's financial performance, as well as the 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. The differences between the U.S.
GAAP and non-GAAP financial measures are reconciled in the text of this press
release and are more fully described below in "Items affecting
comparability." 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.
ITEMS AFFECTING COMPARABILITY
(See Exhibit B for Reconciliation of GAAP and Non-GAAP Operating
Information)
Full-Year and Fourth Quarter 2009 & 2008 Items
- European headquarters relocation: In the fourth quarter of 2008, the
company committed to relocate its European headquarters from Belgium to
Switzerland in order to optimize the company's long-term tax structure.
The relocation, which is now complete, resulted in one-time costs of
approximately $19 million, of which $1 million and $5 million were
recognized in the fourth quarters of 2009 and 2008, respectively. In
total, $12 million was recognized in 2009 and $7 million was recognized
in 2008. As shown in Exhibit B, restructuring related costs are
included under GAAP as a component of operating income, but are not
allocated to the reportable segments.
- Incremental non-cash interest expense on Convertible Notes: As
previously disclosed, the company retrospectively adopted new
accounting standards related to its convertible debt instruments. These
new standards changed the method of accounting for, and increased the
amount of reported GAAP interest expense on, the company's $200 million
of 4.25% Convertible Senior Notes. In determining earnings on a
comparable basis for 2009 and 2008, the company excluded the additional
non-cash interest expense that results from the application of these
new accounting standards to highlight the change in accounting method
and how it affects comparability between years. This higher non-cash
interest expense was $2 million for both the fourth quarters in 2009
and 2008, and was $7 million and $5 million, respectively, for the
full-years 2009 and 2008.
- Goodwill impairment: The non-cash Fresh Express goodwill impairment
charge of $375 million in the fourth quarter 2008 was the result of the
company's impairment analysis. Under GAAP, the impairment is included
in the Salads and Healthy Snacks segment before an income tax benefit
of approximately $1 million.
- Gain (loss) on debt repurchases: In the fourth quarter 2009, the
company recognized a loss of less than $1 million on the repurchase of
debt and in the same period in 2008, the company recognized a gain of
$4 million in "(Loss) gain on debt extinguishment, net" under GAAP. The
full year GAAP results include less than $1 million of losses and $14
million of gains in 2009 and 2008, respectively, for open-market
repurchases of senior notes.
- Other Items:
- Ivory Coast Sale: In the first quarter 2009, the company sold its
operations in the Ivory Coast, which resulted in a pre-tax gain of
approximately $4 million under GAAP, which is excluded in 2009
comparable figures for the banana segment. Another $4 million of
income tax benefits that were recognized under GAAP are also
excluded from comparable income, because income taxes are not
allocated to the reportable segments.
- Resolution of tax items: Results for 2008 include $9 million of
other income, and $3 million in related tax expense, from the
resolution of claims and the receipt of refunds of certain non-
income taxes paid between 1980 and 1990. These items are included
under GAAP as other income and income tax expense, which are below
operating income; they are not allocated to the reportable segments.
- Deferred financing fees: Results for 2008 include $9 million of
deferred financing fee write-offs reported in interest expense in
2008 as a result of the company's debt refinancing.
- U.K. asset impairment: Fourth quarter 2008 results included a $3
million impairment charge related to the closure of a U.K. ripening
center, which is included under GAAP in the banana segment.
About Chiquita Brands International, Inc.
Chiquita Brands International, Inc. (NYSE: CQB) is a leading
international marketer and distributor of high-quality fresh and value-added
food products - from energy-rich bananas and other fruits to nutritious
blends of convenient green salads. The company markets its healthy, fresh
products under the Chiquita(R) and Fresh Express(R) premium brands and other
related trademarks. With annual revenues of $3.5 billion, Chiquita employs
approximately 21,000 people and has operations in nearly 80 countries
worldwide. For more information, please visit our corporate web site at
www.chiquita.com.
Forward-looking Statements
This press release contains certain statements, including 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; unusual weather
events, conditions or crop risks; 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 December 31, Year Ended December 31,
------------------------- ----------------------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $879 $839 $3,470 $3,609
---- ---- ------ ------
Operating expenses:
Cost of sales 769 746 2,891 3,068
Selling, general and
administrative 112 104 374 378
Depreciation 13 15 53 63
Amortization 3 2 10 10
Equity in earnings of
investees (1) (3) (17) (10)
European headquarters
relocation 1 5 12 7
Goodwill impairment - 375 - 375
--- --- --- ---
898 1,245 3,323 3,890
--- ----- ----- -----
Operating income (loss) (18) (405) 147 (281)
Interest income 2 2 6 7
Interest expense(1) (15) (17) (62) (81)
(Loss) gain on debt
extinguishment, net (0) 4 (0) 14
Other income(2) - - - 9
--- --- --- ---
Income (loss) from
continuing operations
before taxes (31) (416) 91 (332)
Income tax benefit(3) 5 3 0 2
--- --- --- ---
Income (loss) from
continuing operations (26) (413) 91 (330)
Income (loss) from
Discontinued operations (1) (1) (1) 1
--- --- --- ---
Net income (loss) $(27) $(413) $90 $(329)
==== ===== === =====
Basic earnings per share:
Continuing operations $(0.58) $(9.30) $2.05 $(7.54)
Discontinued operations (0.02) (0.02) (0.02) 0.03
----- ----- ----- ----
$(0.60) $(9.32) $2.03 $(7.51)
====== ====== ===== ======
Diluted earnings per
share:
Continuing operations $(0.58) $(9.30) $2.02 $(7.54)
Discontinued operations (0.02) (0.02) (0.02) 0.03
----- ----- ----- ----
$(0.60) $(9.32) $2.00 $(7.51)
====== ====== ===== ======
Shares used to calculate
basic earnings per share 44.8 44.4 44.6 43.7
Shares used to calculate
diluted earnings per
share 44.8 44.4 45.2 43.7
Table may not total due to rounding.
(1) 2008 amounts differ from those previously reported due to the
adoption of new accounting standards related to the Convertible
Notes.
(2) Other income includes the resolution of a claim related to a
non-income tax refund. An offsetting $3 million of related expense
is included in "Income tax benefit."
(3) "Income tax benefit" includes benefits of $7 million and $5 million
quarters-ended December 31, 2009 and 2008, and $16 million and $17
million full-year 2009 and 2008, respectively, primarily from the
resolution of tax contingencies in various jurisdictions and the
release of valuation allowances.
Exhibit B:
CHIQUITA BRANDS INTERNATIONAL, INC.
RECONCILIATION OF GAAP AND NON-GAAP INFORMATION
OPERATING INCOME (LOSS) - FOURTH QUARTER & FULL YEAR
(Unaudited - in millions)
Salads
& Operating
Healthy Other Restruc- income
Bananas Snacks Produce Corporate turing (loss)
------- -------- ------- --------- -------- ---------
YTD 2009
Reconciliation
---------------
Comparable results
(Non-GAAP) $171 $60 $6 $(81) $- $156
Gain on
divestitures 4 - - - - 4
Restructuring
related costs - - - - (12) (12)
--- --- --- --- --- ---
Reported results
(GAAP) $174 $60 $6 $(81) $(12) $147
==== === === ==== ==== ====
Q4 2009
Reconciliation
---------------
Comparable results
(Non-GAAP) $12 $(7) $1 $(24) $- $(17)
Restructuring
related costs - - - - (1) (1)
--- --- --- --- --- ---
Reported results
(GAAP) $12 $(7) $1 $(24) $(1) $(18)
=== === === ==== === ====
YTD 2008
Reconciliation
---------------
Comparable results
(Non-GAAP) $184 $(25) $10 $(66) $- $104
Goodwill
impairment - (375) - - - (375)
Restructuring
related costs - - - - (7) (7)
Other items (3) - - - - (3)
--- --- --- --- --- ---
Reported results
(GAAP) $181 $(400) $10 $(66) $(7) $(281)
==== ===== === ==== === =====
Q4 2008
Reconciliation
---------------
Comparable results
(Non-GAAP) $13 $(14) $2 $(23) $- $(22)
Goodwill
impairment - (375) - - - (375)
Restructuring
related costs - - - - (5) (5)
Other items (3) - - - - (3)
--- --- --- --- --- ---
Reported results
(GAAP) $10 $(389) $2 $(23) $(5) $(405)
Table may not total due to rounding.
Exhibit C:
CHIQUITA BRANDS INTERNATIONAL, INC.
OPERATING STATISTICS - FOURTH QUARTER & FULL YEAR
(Unaudited - in millions, except for percentages and exchange rates)
Percent Change Percent Change
Quarter Ended Increase Year ended Increase
December 31, (Decrease) December 31, (Decrease)
2009 2008 vs. 2008 2009 2008 vs. 2008
---- ---- -------- ---- ---- --------
Net sales by
segment
Bananas $568 $496 14.5% $2,082 $2,060 1.0%
Salads and
Healthy Snacks 260 295 (11.7)% 1,136 1,305 (13.0)%
Other Produce 51 48 5.4% 253 244 3.8%
--- --- --- --- --- ---
Total net
sales $879 $839 4.8% $3,470 $3,609 (3.8)%
Comparable
segment
operating
income
(loss)(1)
Bananas $12 $13 (3.7)% $171 $184 (7.3)%
Salads and
Healthy Snacks (7) (14) (52.7)% 60 (25) N/A
Other Produce 1 2 (73.5)% 6 10 (44.3)%
Corporate (24) (23) 4.4% (81) (66) 23.5%
--- --- --- --- --- ----
Total operating
income
(loss) $(17) $(22) 20.1% $156 $104 49.5%
Comparable
operating
margin by
segment
Bananas 2.2% 2.6% (0.4) pts 8.2% 8.9% (0.7)pts
Salads and
Healthy Snacks (2.5)% (4.7)% 2.2 pts 5.3% (1.9)% 7.2pts
Other Produce 1.0% 4.1% (3.1) pts 2.2% 4.1% (1.9)pts
SG&A as a percent
of sales 12.8% 12.3% 0.5 pts 10.8% 10.5% 0.3pts
Company banana
sales volume
(40 lb. boxes)
North America 16.3 15.7 3.8% 63.3 62.2 1.8%
Europe & Middle
East
Core European
markets(2) 11.0 12.4 (11.3)% 44.5 49.2 (9.6)%
Mediterranean
& Middle East 10.3 5.3 94.3% 24.1 15.4 56.5%
Banana Pricing
North America 0.6% 3.8%
Core European
markets(2)
U.S. Dollar 12.5% (0.4)%
Local 0.9% 5.2%
Fresh Express-
branded retail
value-added
salads
Volume (12-
count cases) 14.5 15.3 (5.2)% 63.4 64.3 (1.4)%
Pricing(3) (0.9)% 0.4%
Euro average
exchange rate,
spot (dollars
per euro) $1.48 $1.32 12.1% $1.39 $1.47 (5.4)%
Euro average
exchange rate,
hedged (dollars
per euro) $1.45 $1.35 7.4% $1.38 $1.45 (4.8)%
Table may not total due to rounding.
(1) See detailed description of reconciling items between GAAP and
comparable basis figures in Exhibit B and in the text of this press
release under the heading titled "Items affecting comparability."
(2) The company's core European Markets include the 27 member states
of the European Union, Switzerland, Norway and Iceland.
(3) Pricing is for Fresh Express-branded products only, and includes
fuel and regulatory surcharges.
Exhibit D:
EUROPEAN CURRENCY
YEAR-OVER-YEAR CHANGE - FAVORABLE (UNFAVORABLE)
2009 vs. 2008
(Unaudited - in millions)
Currency Impact (Euro/Dollar) Q4 YTD
--- ---
Revenue $22 $(70)
Local Costs (8) 19
Hedging(1) (7) 8
Balance sheet translation(2) (4) (1)
--- ---
Net European currency impact $3 $(45)
Table may not total due to rounding.
(1) Hedging costs were $3 million in the fourth quarter of 2009 and a
gain of $4 million in the fourth 2008. Hedging costs for full-year
2009 were $1 million compared to costs of $9 million for full-year
2008.
(2) Balance sheet translation for the fourth quarter of 2009 was a loss
of $3 million compared to a gain of $2 million in the fourth quarter
of 2008. Balance sheet translation for full-year 2009 was a loss of
$2 million compared to zero for 2008.
Ed Loyd, +1-513-784-8935, eloyd at chiquita.com
Tags: Chiquita Brands International Inc., Cincinnati, February 23, Ohio, Western Europe
