FRESH DEL MONTE PRODUCE INC

Previous wording

In addition, the invasion of Ukraine by Russia has led to further economic disruption and, while we do not operate in Ukraine and our operations in Russia are de minimis, the conflict has exacerbated inflationary costs, supply chain and logistical pressures that negatively impacted our business. Similarly, recent shipping disruptions in the Red Sea and surrounding waterways have created logistical pressures that have negatively impacted our business, including impacts to the availability of certain shipping routes resulting in increased shipping times. For example, during the second quarter of 2024, we recorded charges of $0.5 million related to shipments which were disrupted while travelling through the Red Sea. While we have taken actions to divert our shipping routes in order to minimize impacts on our business, we may not be able to mitigate the impact of additional write-offs or longer shipping routes if conditions deteriorate.

Current wording

In addition, the invasion of Ukraine by Russia has led to further economic disruption and, while we do not operate in Ukraine and our operations in Russia are de minimis, the conflict exacerbated inflationary costs, supply chain and logistical pressures that negatively impacted our business. Similarly, recent shipping disruptions in the Red Sea and surrounding waterways have created logistical pressures that have negatively impacted our business, including impacts to the availability of certain shipping routes resulting in increased shipping times. For example, during the second quarter of 2024, we recorded charges of $0.5 million related to shipments which were disrupted while travelling through the Red Sea. During the third quarter of 2024, we received insurance reimbursements of $0.6 million related to this disruption. While we have taken actions to divert our shipping routes in order to minimize impacts on our business, we may not be able to mitigate the impact of additional write-offs or longer shipping routes on our operations if conditions in the regions surrounding the Red Sea deteriorate.

Previous wording

Based on the stabilization of inflation in certain key markets during the latter part of 2023, we do not anticipate further inflation-justified price increases and surcharges in 2024. We are actively monitoring region-specific macroeconomic factors to mitigate increases in our costs, if necessary.

Current wording

Based on the stabilization of inflation in certain key markets during the latter part of 2023, we have not established and do not anticipate further inflation-justified price increases and surcharges in 2024. We are actively monitoring region-specific macroeconomic factors to mitigate increases in our costs, if necessary.

Previous wording

During the second half of 2023, we conducted a strategic review and assessed our operational priorities of our North America operations, including our subsidiary, Mann Packing. Preliminary findings of this review were finalized in the fourth quarter of 2023. We announced in conjunction with our fourth quarter of 2023 earnings that we were exploring strategic alternatives for the business. This process is ongoing and we intend to make a decision by the third quarter of 2024, however there can be no assurance that this process will result in any specific strategic outcome.

Current wording

During the second half of 2023, we conducted a strategic review and assessed our operational priorities of our North America operations, including our subsidiary, Mann Packing. Preliminary findings of this review were finalized in the fourth quarter of 2023. We announced in conjunction with our fourth quarter of 2023 earnings that we were exploring strategic alternatives for the business. After thorough evaluation of potential options, the Company has finalized a number of decisions and begun to take several actions, including the consolidation of a number of Mann Packing operations into a single facility at our Gonzalez facility, which are expected to occur during the fourth quarter of 2024. We believe these actions will allow us to streamline operations, reduce overhead costs, and enhance efficiency. Additionally, subsequent to the end of the third quarter, we agreed to sell certain assets of our Fresh Leaf Farms business, a wholly owned subsidiary of Mann Packing, for approximately $16.5 million. The sale, which is subject to customary closing conditions, is expected to close during the fourth quarter of 2024.

Previous wording

In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $171.7 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

Current wording

In connection with the examination of the tax returns in two foreign jurisdictions, the taxing authorities have issued income tax deficiencies related to transfer pricing aggregating approximately $173.9 million (including interest and penalties) for tax years 2012 through 2016. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

Previous wording

In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $6.9 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the quarter ended June 28, 2024. In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $29.0 million, and a net book value of $4.6 million as of the quarter ended June 28, 2024. The registration of this real estate collateral does not affect our operations in the country.

Current wording

In one of the foreign jurisdictions, we are currently contesting tax assessments related to the 2012-2015 audit years and the 2016 audit year in both the administrative court and the judicial court. During 2019 and 2020, we filed actions contesting the tax assessment in the administrative office. Our initial challenge to each of these tax assessments was rejected, and we subsequently lost our appeals at the administrative court. We have subsequently filed actions to contest each of these tax assessments in the country’s judicial courts. In addition, we have filed a request for injunction to the judicial court to stay the tax authorities' collection efforts for these two tax assessments, pending final judicial decisions. The court granted our injunction with respect to the 2016 audit year, however denied our injunction with respect to the 2012-2015 audit years. We timely appealed the denial of the injunction, and on August 10, 2022 the appellate court overturned the denial and granted our injunction for the 2012-2015 audit years with a trial date set for July 4, 2025. Pursuant to local law, we registered real estate collateral with an approximate fair market value of $7.0 million in connection with the grant of the 2016 audit year injunction. This real estate collateral has a net book value of $3.8 million as of the quarter ended September 27, 2024. In addition, in connection with the grant of the 2012-2015 audit year injunction, we registered real estate collateral with an approximate fair market value of $29.4 million, and a net book value of $4.6 million as of the quarter ended September 27, 2024. The registration of this real estate collateral does not affect our operations in the country.

Previous wording

The following summarizes the more significant factors impacting our operating results for the 13-week periods and 26-week periods ended June 28, 2024 (also referred to as the “second quarter of 2024” and "first six months of 2024", respectively) and June 30, 2023 (also referred to as the “second quarter of 2023” and “first six months of 2023,” respectively).

Current wording

The following summarizes the more significant factors impacting our operating results for the 13-week periods and 39-week periods ended September 27, 2024 (also referred to as the “third quarter of 2024” and "first nine months of 2024", respectively) and September 29, 2023 (also referred to as the “third quarter of 2023” and “first nine months of 2023,” respectively).

Previous wording

Net sales - Net sales for the second quarter of 2024 was $1,139.7 million, compared with $1,180.5 million in the second quarter of 2023, and $2,247.5 million for the first six months of 2024 compared with $2,309.0 million for the first six months of 2023. The decrease in net sales for both periods was primarily due to lower banana net sales, driven by lower sales volume and per unit selling prices. The decrease was partially offset by an increase in net sales in the fresh and value-added product segment driven by higher pricing.

Current wording

Net sales for the first nine months of 2024 was $3,267.0 million, compared with $3,312.1 million for the first nine months of 2023. The decrease in net sales for the first nine months of 2024 was primarily due to lower banana net sales due to competitive market pressures. The decrease was partially offset by an increase in net sales in the fresh and value-added product segment driven by higher per unit selling prices and sales volume.

Previous wording

Gross profit - Gross profit for the second quarter of 2024 was $113.2 million, compared with $116.8 million in the second quarter of 2023, and $195.4 million for the first six months of 2024 compared with $213.8 million for the first six months of 2023. Gross profit for both periods was impacted by lower net sales, higher per unit production and procurement costs, which were partly driven by the negative impact of increased weather-related events, mainly high temperatures and low rainfall, in production areas in Central America and the Philippines, and the negative impact of fluctuations in exchange rates partially offset by lower ocean freight costs and higher per unit selling prices in the fresh and value-added product segment.

Current wording

Gross profit for the first nine months of 2024 was $289.2 million compared with $288.2 million for the first nine months of 2023. The increase in gross profit for the nine month period was impacted by higher sales volume and per unit selling prices in the fresh and value-added product segment and lower ocean freight costs partially offset by lower net sales in our banana segment, higher per unit production and procurement costs which were partly driven by the negative impact of increased weather-related events including high temperatures and low rainfall in production areas in Central America and the Philippines, and the negative impact of fluctuations in exchange rates, primarily related to the Costa Rican colon.

Previous wording

Gross profit for the second quarter of 2024 included $1.2 million of other product-related charges primarily related to charges of $0.5 million related to shipment disruptions in the Red Sea and $0.5 million in additional clean-up costs associated with the flooding of a seasonal production facility in Greece during the third quarter of 2023. For the first six months of 2024, gross profit included other product-related charges of $0.2 million, primarily related to the above mentioned charges and $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations, partially offset by $2.2 million related to insurance recoveries associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023. There were no product-related charges during the second quarter of 2023. Gross profit in the first six months of 2023 included $1.8 million of other product-related charges mostly consisting of inventory write-offs in connection with the sale of two distribution centers in Saudi Arabia.

Current wording

Gross profit for the third quarter of 2024 included $0.6 million of other product-related charges, net, primarily as a result of $1.0 million of additional logistic and inventory write-offs incurred as a result of Hurricane Beryl during July 2024, partially offset by $0.6 million of insurance recoveries related to shipment disruptions in the Red Sea during the second quarter of 2024. For the first nine months of 2024, gross profit included other product-related charges, net of $0.8 million, primarily related to the above mentioned charges and $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations and $0.5 million of expenses recorded related to shipment disruptions in the Red Sea, partially offset by $1.7 million related to insurance recoveries associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023. Gross profit for the third quarter of 2023 included $8.4 million of other product-related charges, net, comprised primarily of an inventory write-off and clean-up costs related to the flooding of a seasonal production facility in Greece due to heavy rainstorms. For the first nine months of 2023, other product-related charges, net, also included inventory write-offs of $1.8 million in connection with the sale of two distribution centers in Saudi Arabia.

Previous wording

Selling, general and administrative expenses - Selling, general and administrative expenses for the second quarter of 2024 increased by $3.1 million, or 7%, when compared with the second quarter of 2023, and increased $6.1 million, or 6%, in the first six months of 2024 when compared with the first six months of 2023. The increase in both periods was primarily due to higher employee benefit and professional fees, primarily in North America and higher payroll, marketing and promotional activities in Europe and Africa, partially offset by a reduction in amortization of definite lived intangible assets due to the impairment of the carrying value of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Current wording

Selling, general and administrative expenses - Selling, general and administrative expenses for the third quarter of 2024 decreased by $0.2 million when compared with the third quarter of 2023, and increased $6.0 million in the first nine months of 2024 when compared with the first nine months of 2023. The increase in the nine month period was primarily due to higher professional fees in North America and higher marketing and promotional activities in Europe, partially offset by a reduction in amortization of definite lived intangible assets due to the impairment of the carrying value of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Previous wording

Gain on disposal of property, plant and equipment, net and subsidiary - The gain on disposal of property, plant and equipment, net and subsidiary for the second quarter of 2024 of $3.6 million primarily consisted of the sale of a warehouse in Europe. For the first six months of 2024, gain on disposal of property, plant and equipment, net and subsidiary of $18.3 million also included a $14.7 million gain on the sale of two idle facilities in South America.

Current wording

Gain on disposal of property, plant and equipment, net and subsidiary - The gain on disposal of property, plant and equipment, net and subsidiary for the third quarter of 2024 of $8.2 million primarily consisted of a $7.7 million gain from the sale of a warehouse in Chile and a $0.3 million gain from the sale of an idle packing facility in Costa Rica. For the first nine months of 2024, gain on disposal of property, plant and equipment, net and subsidiary of $26.6 million also included a $14.7 million gain on the sale of two idle facilities in South America and a $3.4 million gain from the sale of a warehouse in Europe.

Previous wording

The gain on disposal of property, plant and equipment, net and subsidiary for the second quarter of 2023 of $6.7 million primarily included a $3.8 million gain on the sale of our plastics business subsidiary in South America and gains on the sales of land assets in South and Central America. Partially offsetting the net gain was a loss on the disposal of low-yielding banana crops in Central America. For the first six months of 2023, gain on disposal of property, plant and equipment, net and subsidiary was $34.2 million and also included a $20.5 million gain on the sale of two distribution centers and related assets in Saudi Arabia and a $7.0 million gain on the sale of an idle production facility in North America.

Current wording

The gain on disposal of property, plant and equipment, net and subsidiary for the third quarter of 2023 of $1.6 million primarily included a gain of $2.4 million related to the sale of a carrier vessel, partially offset by the loss related to the disposals of a farm in the Philippines and a plantation in Costa Rica. For the first nine months of 2023, gain on disposal of property, plant and equipment, net and subsidiary was $35.8 million and also included a $20.5 million gain on the sale of two distribution centers and related assets in Saudi Arabia, a $7.0 million gain on the sale of an idle production facility in North America and a $3.8 million gain on the sale of our plastics business subsidiary in South America and gains on the sales of land assets in South and Central America. Partially offsetting the net gain was a loss on the disposal of low-yielding banana crops in Central America.

Previous wording

Asset impairment and other (credits) charges, net - Asset impairment and other (credits) charges, net of $(1.3) million in the second quarter of 2024 primarily consisted of an insurance reimbursement related to fire damages at a warehouse in South America during the fourth quarter of 2023, partially offset by impairment charges of banana-related fixed assets in the Philippines. For the first six months of 2024, asset impairment and other (credits) charges, net of $1.0 million also included accruals related to (i) a settlement agreement with respect to a litigation matter by a former employee, net of insurance reimbursements and (ii) a reserve recorded due to a potential liability arising from our third-party logistics operations.

Current wording

Asset impairment and other charges, net - Asset impairment and other charges, net of $0.2 million in the third quarter of 2024 consisted of property, plant and equipment damage due to heavy wind and rainstorms in Chile during the quarter. For the first nine months of 2024, asset impairment and other charges, net of $1.2 million also included charges related to (i) a settlement agreement with respect to a litigation matter by a former employee, net of insurance reimbursements, (ii) a reserve recorded due to a potential liability arising from our third-party logistics operations, and (iii) impairment charges of banana-related fixed assets in the Philippines, partially offset by an insurance reimbursement related to fire damages at a warehouse in South America.

Previous wording

Operating income -Operating income decreased by $3.9 million in the second quarter of 2024 and decreased by $34.3 million in the first six months of 2024 when compared with the prior-year periods. The decrease in operating income was primarily due to lower gross profit and a higher gain on sale of assets in the prior-year period. The decrease was partially offset by higher asset impairment and other charges in the prior year period.

Current wording

Operating income decreased by $5.9 million in the first nine months of 2024 when compared with the prior-year period. The decrease in operating income was primarily due to the unfavorable impact of the lower gain on disposal of property, plant and equipment and subsidiary, partially offset by higher asset impairment and other charges and lower gross profit in the prior year period.

Previous wording

Interest expense -Interest expense was lower in the second quarter and first six months of 2024 when compared with the respective prior-year periods due to lower average debt balances, partially offset by higher interest rates.

Current wording

Interest expense -Interest expense decreased by $1.6 million in the third quarter of 2024 and by $5.7 million during the first nine months of 2024 when compared with the respective prior-year periods. The decrease during the third quarter of 2024 and the first nine months of 2024 was primarily due to lower average debt balances.

Previous wording

Other (income) expense, net -Other (income) expense, net for the second quarter of 2024 was a gain of $2.3 million compared with a loss of $6.4 million in the second quarter of 2023. The change was primarily due to the equity earnings of an unconsolidated company within the food and nutrition sector and foreign currency gains during the current quarter as compared with foreign currency losses in the prior-year period.

Current wording

Other (income) expense, net -Other (income) expense, net for the third quarter of 2024 was a gain of $0.1 million compared with a loss of $7.1 million in the third quarter of 2023. Other (income) expense, net for the first nine months of 2024 was a loss of $5.2 million compared with a loss of $22.7 million in the third quarter of 2023. The change in both periods was primarily due to the equity earnings of unconsolidated companies within the food and nutrition sector and lower foreign currency losses as compared to the prior-year periods.

Previous wording

Income tax provision - Income tax provision increased to $12.3 million for the second quarter of 2024 compared with $11.3 million for the second quarter of 2023 primarily due to increased earnings in certain higher tax jurisdictions partially offset by the prior year tax effects related to the sale of stock of a subsidiary and asset sales in Saudi Arabia and North America. Income tax provision decreased to $17.6 million for the first six months of 2024 compared with $20.9 million for the first six months of 2023. The decrease in the income tax provision was primarily due to decreased earnings in certain higher tax jurisdictions combined with the prior year tax effects related to the sale of stock of a subsidiary and asset sales in Saudi Arabia and North America.

Current wording

Income tax provision - Income tax provision increased to $7.9 million for the third quarter of 2024 compared with $4.1 million for the third quarter of 2023 and increased to $25.6 million for the first nine months of 2024 compared with $24.9 million for the first nine months of 2023. The increase in both periods is primarily due to increased earnings in certain higher tax jurisdictions partially offset by the prior year tax effects related to the sale of stock of a subsidiary and asset sales in Saudi Arabia and North America.

Previous wording

Net sales for the second quarter of 2024 were $694.1 million, compared with $677.6 million in the prior-year period. The increase in net sales was primarily a result of higher per unit selling prices of avocados and higher sales volume and per unit selling prices of non-tropical fruit. These increases were partially offset by lower net sales of vegetables and fresh-cut fruit due to lower sales volumes.

Current wording

Net sales for the third quarter of 2024 were $623.7 million, compared with $574.0 million in the prior-year period. The increase in net sales was primarily a result of higher sales volume and per unit selling prices of avocado, pineapple, prepared food, and fresh-cut fruit due to strong market demand. These increases were partially offset by lower net sales of vegetables due to lower sales volumes as a result of strategic volume rationalization.

Previous wording

Gross profit for the first six months of 2024 was $133.9 million, compared with $109.1 million in the prior-year period. The increase in gross profit was primarily driven by higher per unit selling prices and lower ocean freight costs partially offset by higher per unit production and procurement costs of pineapple and avocados and the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon and Mexican peso.

Current wording

Gross profit for the third quarter of 2024 was $63.3 million, compared with $36.2 million in the prior-year period. The increase in gross profit was primarily driven by higher net sales and lower per unit production costs of pineapple and fresh-cut fruit, partially offset by the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon.

Previous wording

Net sales for the second quarter of 2024 were $394.3 million, compared with $448.8 million in the prior-year period. The decrease in net sales was primarily a result of lower sales volume in North America due to competitive market pressures and lower sales volume and per unit selling prices in Asia due to decreased supply from the Philippines and the negative impact of fluctuations in exchange rates, primarily due to a weaker Japanese yen.

Current wording

Net sales for the third quarter of 2024 were $345.3 million, compared with $384.7 million in the prior-year period. The decrease in net sales was primarily a result of lower sales volume in North America due to competitive market pressures and lower sales volume in Asia due to decreased supply from the Philippines as a result of weather-related events, partially offset by higher per unit selling prices in Asia as a result of low supply in the region.

Previous wording

Gross profit for the second quarter of 2024 was $29.8 million, compared with $50.5 million in the prior-year period. The decrease in gross profit was principally driven by lower net sales, higher per unit production and procurement costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower distribution and ocean freight costs. Gross margin decreased to 7.6% compared with 11.3% in the prior-year period.

Current wording

Gross profit for the third quarter of 2024 was $21.3 million, compared with $31.9 million in the prior-year period. The decrease in gross profit was principally driven by lower net sales, higher per unit production costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower per unit ocean freight costs.

Previous wording

Gross profit was $5.5 million for the second quarter of 2024, compared with $4.2 million in the prior-year period. The increase in gross profit was primarily a result of higher per unit selling prices in our poultry and meats business. Gross margin increased to 10.7% from 7.8% in the prior-year period.

Current wording

Gross profit was $9.2 million for the third quarter of 2024, compared with $6.3 million in the prior-year period. The increase in gross profit was primarily a result of higher per unit selling prices and lower per unit production costs in our poultry and meats business. Gross margin increased to 18.2% from 14.2% in the prior-year period.

Previous wording

Net sales for the first six months of 2024 were $1,370.8 million, compared with $1,321.0 million in the prior-year period. The increase in net sales was primarily a result of higher sales volume of pineapples and melons, and higher per unit selling prices of avocados and non-tropical fruit. These increases were partially offset by lower net sales of fresh-cut fruit due to lower sales volumes.

Current wording

Net sales for the first nine months of 2024 were $1,994.6 million, compared with $1,895.0 million in the prior-year period. The increase in net sales was primarily a result of higher sales volume of pineapple and melon, and higher per unit selling prices of avocado and non-tropical fruit due to strong market demand. These increases were partially offset by lower net sales of vegetable and fresh-cut fruit due to lower sales volumes.

Previous wording

Gross profit for the second quarter of 2024 was $77.9 million, compared with $62.1 million in the prior-year period. The increase in gross profit was primarily driven by higher per unit selling prices partially offset by higher per unit production and procurement costs of avocados and the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon and Mexican peso.

Current wording

Gross profit for the first nine months of 2024 was $197.2 million, compared with $145.3 million in the prior-year period. The increase in gross profit was primarily driven by higher net sales partially offset by the negative impact of fluctuations in exchange rates primarily due to a stronger Costa Rican colon and Mexican peso.

Previous wording

Gross profit for the first six months of 2024 included $0.2 million of other product-related charges comprised primarily $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations and $0.5 million of charges related to shipment disruptions in the Red Sea, partially offset by $1.6 million of insurance recoveries, net of expenses, associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023. Gross profit for the first six months of 2023 included $1.7 million of other product-related charges comprised of inventory write-offs due to the sale of two distribution centers in the Saudi Arabia. Gross margin increased to 9.8% compared with 8.3% in the prior-year period.

Current wording

Gross profit for the first nine months of 2024 included $0.8 million of other product-related charges comprised primarily $1.7 million of insurance recoveries, net of expenses, associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023 and $0.6 million of additional logistic and inventory write-offs incurred as a result of Hurricane Beryl during July 2024, partially offset by $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations. Gross profit for the first nine months of 2023 included $10.2 million of other product-related charges comprised of $8.4 million of inventory write-off and clean-up costs tied to the flooding of a seasonal production facility in Greece due to heavy rainstorms and $1.8 million inventory write-off due to the sale of two distribution centers in Saudi Arabia. Gross margin increased to 9.9% from 7.7% in the prior-year period.

Previous wording

Net sales for the first six months of 2024 were $773.8 million, compared with $873.9 million in the prior-year period. The decrease in net sales was primarily a result of lower volume in North America due to competitive market pressures and service level issues in the first two months of the year, and lower sales volume and per unit selling prices in Asia due to a decrease in supply from the Philippines and the negative impact of fluctuations in exchange rates primarily due to a weaker Japanese yen.

Current wording

Net sales for the first nine months of 2024 were $1,119.1 million, compared with $1,258.6 million in the prior-year period. The decrease in net sales was primarily a result of lower volume in North America due to competitive market pressures and service level issues in the first two months of the year, lower sales volume in Asia due to a decrease in supply from the Philippines, and the negative impact of fluctuations in exchange rates due to a weaker Japanese Yen and Korean Won.

Previous wording

Gross profit for the first six months of 2024 was $51.5 million, compared with $93.7 million in the prior-year period. The decrease in gross profit was primarily a result of lower net sales, higher per unit production costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower distribution and ocean freight costs. Gross margin decreased to 6.7% compared with 10.7% in the prior-year period.

Current wording

Gross profit for the first nine months of 2024 was $72.8 million, compared with $125.7 million in the prior-year period. The decrease in gross profit was primarily a result of lower net sales, higher per unit production costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower distribution and ocean freight costs.

Previous wording

Net sales for the first six months of 2024 were $102.9 million, compared with $114.1 million in the prior-year period. The decrease in net sales was primarily due to the sale of our plastics subsidiary during the prior-year period and lower net sales of our third-party ocean freight services as a result of lower rates driven by a competitive market environment.

Current wording

Net sales for the first nine months of 2024 were $153.3 million, compared with $158.5 million in the prior-year period. The decrease in net sales was primarily due to the sale of our plastics subsidiary during the prior-year period, partially offset by an increase in net sales in our poultry and meats business driven by an increase in per unit selling prices.

Previous wording

Gross profit for the first six months was $10.0 million compared with $11.0 million in the prior-year period. The decrease in gross profit was primarily a result of lower rates in our third-party ocean freight services. Gross margin increased to 9.7% from 9.6% in the prior-year period.

Current wording

Gross profit for the first nine months was $19.2 million compared with $17.2 million in the prior-year period. The increase in gross profit was primarily a result of higher net sales and lower per unit product costs in our poultry and meat business, partially offset by lower rates in our third-party ocean freight services. Gross margin increased to 12.5% from 10.9% in the prior-year period.

Previous wording

Fresh Del Monte Produce Inc. is a holding company whose only significant asset is the outstanding capital stock of our subsidiaries that directly or indirectly own all of our assets. We conduct all of our business operations through our subsidiaries. Accordingly, as of June 28, 2024, our principal sources of liquidity were (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities, including $750 million associated with our amended senior unsecured revolving credit facility, with an available capacity of approximately $499 million and (iii) existing cash and cash equivalents of $37.8 million. The loan commitments under our credit facilities can be used for working capital or other general corporate purposes. On a long-term basis, we will continue to rely on our credit facilities for any long-term funding not provided by cash generated from operations of our subsidiaries.

Current wording

Fresh Del Monte Produce Inc. is a holding company whose only significant asset is the outstanding capital stock of our subsidiaries that directly or indirectly own all of our assets. We conduct all of our business operations through our subsidiaries. Accordingly, as of September 27, 2024, our principal sources of liquidity were (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities, including $750 million associated with our amended senior unsecured revolving credit facility, with an available capacity of approximately $512 million and (iii) existing cash and cash equivalents of $50.8 million. The loan commitments under our credit facilities can be used for working capital or other general corporate purposes. On a long-term basis, we will continue to rely on our credit facilities for any long-term funding not provided by cash generated from operations of our subsidiaries.

Previous wording

Net cash provided by operating activities was $143.7 million for the first six months of 2024 compared with $132.7 million for the first six months of 2023, an increase of $11.0 million. The increase was primarily attributable to working capital fluctuations, mainly driven by higher levels of accounts payable and accrued expenses, mainly driven by the timing of period end payments to suppliers, and lower levels of accounts receivable driven by the timing of collections of accounts receivable. The impact of these changes were partially offset by lower net income during the first six months of 2024 as compared to the first six months of 2023.

Current wording

Net cash provided by operating activities was $187.2 million for the first nine months of 2024 compared with $180.1 million for the first nine months of 2023, an increase of $7.1 million. The increase was primarily attributable to (i) higher net income during the first nine months of 2024 as compared to the first nine months of 2023 and (ii) proceeds received during the third quarter of 2024 as a result of the termination of our interest rate swap. The increase was partially offset by the impact of working capital fluctuations, primarily related to larger decreases in inventory and accounts payable in the prior year as a result of a strategic increase in inventory levels at the end of fiscal year 2022 in order to secure costs and availability.

Previous wording

At June 28, 2024, we had working capital of $572.2 million, compared with $603.7 million at December 29, 2023, a decrease of $31.5 million. The decrease in working capital was primarily due to (i) a decrease in growing crop and finished goods inventory, primarily due to seasonal variations and (ii) an increase in income taxes and other taxes payable due to increased earnings in certain higher tax jurisdictions in the current period. Partially offsetting the decrease in working capital was (a) higher levels of trade accounts receivable due to seasonal variations and (b) lower levels of accounts payable and accrued expenses, mainly driven by the timing of period end payments to suppliers.

Current wording

At September 27, 2024, we had working capital of $609.4 million, compared with $603.7 million at December 29, 2023, an increase of $5.7 million. The increase in working capital was primarily due to (i) an increase in assets held for sale, primarily related to a distribution facility in North America, certain assets of Fresh Leaf Farms business and idle land in Europe which are expected to be sold during the next twelve months and (ii) an increase in cash and cash equivalents. Partially offsetting the increase in working capital was (a) an increase in income taxes and other taxes payable due to increased earnings in certain higher tax jurisdictions in the current period and (b) lower levels in inventory, primarily related to a decrease in growing crop inventory, primarily due to seasonal variations.

Previous wording

Net cash provided by investing activities for the first six months of 2024 was $1.6 million, compared with net cash provided by investing activities of $73.7 million for the first six months of 2023. Net cash provided by investing activities for the first six months of 2024 primarily consisted of proceeds from the sale of property, plant and equipment of $21.1 million which mainly related to the sale of two facilities in South America, insurance recoveries received for damage to property, plant and equipment of $5.7 million primarily associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, and installment payments received from the sale of our plastics business subsidiary in South America during the prior year.

Current wording

Net cash provided by investing activities for the first nine months of 2024 was $1.0 million, compared with net cash provided by investing activities of $69.9 million for the first nine months of 2023. Net cash provided by investing activities for the first nine months of 2024 primarily consisted of proceeds from the sale of property, plant and equipment, and subsidiary of $35.6 million which mainly related to the sale of three facilities in South America, insurance recoveries received for damage to property, plant and equipment of $5.7 million primarily associated with damages tied to the flooding of a seasonal production facility in Greece during the third quarter of 2023, and installment payments received from the sale of our plastics business subsidiary in South America during the prior year.

Previous wording

Partially offsetting the net cash provided by investing activities for the first six months of 2024 were capital expenditures of $20.7 million which mainly included expenditures related to investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and improvements to our pineapple operations in Kenya. Net cash provided by investing activities for the first six months of 2024 is also offset by $4.5 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Current wording

Partially offsetting the net cash provided by investing activities for the first nine months of 2024 were capital expenditures of $34.1 million which mainly included expenditures related to investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and improvements to our pineapple operations in Central America and Kenya. Net cash provided by investing activities for the first nine months of 2024 is also offset by $6.2 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Previous wording

Net cash provided by investing activities for the first six months of 2023 primarily consisted of proceeds from the sale of property, plant and equipment of $96.8 million which mainly related to the sales of two distribution centers in Saudi Arabia and an idle production facility in North America, and land assets in South and Central America. Partially offsetting the net cash provided by investing activities were capital expenditures of $18.9 million which mainly related to (i) improvements to our pineapple operations in Central America and Kenya, (ii) investments in our operations and production facilities in North America benefiting both our fresh and value-added products and banana segments, including expenditures related to automation and technology initiatives, and (iii) improvements to our value-added production facilities in Europe and the Middle East. Net cash used in investing activities for the first six months of 2023 also reflects $3.7 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Current wording

Net cash provided by investing activities for the first nine months of 2023 primarily consisted of proceeds from the sale of property, plant and equipment, and subsidiary of $115.5 million which mainly related to the sales of two distribution centers in Saudi Arabia, an idle production facility in North America, and land assets in South and Central America and proceeds from the sale of our plastic business subsidiary in South America for total purchase consideration of $17.0 million, of which we received $14.0 million. The remaining $3.0 million will be received in three equal and semi-annual installments, subject to customary post-closing adjustments, including $1.8 million received during the first nine months of 2024. Partially offsetting the net cash provided by investing activities were capital expenditures of $40.7 million which mainly related to (i) improvements to our pineapple operations in Central America and Kenya, (ii) investments in our operations and production facilities in North

Previous wording

Net cash used in financing activities for the first six months of 2024 was $144.3 million, compared with $180.2 million for the first six months of 2023. Net cash used in financing activities for the first six months of 2024 primarily consisted of net repayments on debt of $115.0 million and dividends paid of $23.9 million.

Current wording

Net cash used in financing activities for the first nine months of 2024 was $172.1 million, compared with $191.2 million for the first nine months of 2023. Net cash used in financing activities for the first nine months of 2024 primarily consisted of net repayments on debt of $130.4 million and dividends paid of $35.9 million.

Previous wording

Net cash used in financing activities for the first six months of 2023 primarily consisted of (i) net repayments on debt of $139.3 million, (ii) distributions to noncontrolling interests of $17.8 million, including a distribution to our minority partner in Saudi Arabia in connection with the sale of the two distribution centers completed in the first quarter of 2023, (iii) dividends paid of $16.8 million, and (iv) a $5.2 million payment to acquire the remaining 25% interest in one of our Mann Packing subsidiaries, as the noncontrolling shareholder exercised its put option during the second quarter of 2023. The transaction was treated as an equity transaction, with the differential between the redeemable noncontrolling interest carrying amount on our Consolidated Balance Sheet and the cash purchase price being recognized as an increase in shareholders' equity.

Current wording

Net cash used in financing activities for the first nine months of 2023 primarily consisted of (i) net repayments on debt of $138.8 million, (ii) dividends paid of $26.4 million, (iii) distributions to noncontrolling interests of $17.9 million, including a distribution to our minority partner in Saudi Arabia in connection with the sale of the two distribution centers completed in the first quarter of 2023, and (iv) a $5.2 million payment to acquire the remaining 25% interest in one of our Mann Packing subsidiaries, as the noncontrolling shareholder exercised its put option during the second quarter of 2023. The transaction was treated as an equity transaction, with the differential between the redeemable noncontrolling interest carrying amount on our Consolidated Balance Sheet and the cash purchase price being recognized as an increase in shareholders' equity.

Previous wording

As of June 28, 2024, we had $499.3 million unused borrowing capacity, net of letters of credit and guarantees, primarily under the 2024 Amended Credit Facility.

Current wording

As of September 27, 2024, we had $511.7 million unused borrowing capacity, net of letters of credit and guarantees, primarily under the 2024 Amended Credit Facility.

Previous wording

A discussion of our critical accounting policies and estimates can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K for the fiscal year ended December 29, 2023. There were no material changes to these critical accounting policies or estimates during the second quarter of 2024.

Current wording

A discussion of our critical accounting policies and estimates can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our Form 10-K for the fiscal year ended December 29, 2023. There were no material changes to these critical accounting policies or estimates during the third quarter of 2024.

Previous wording

Our results of operations and financial condition are exposed to fluctuations in currency exchange rates against the U.S. dollar, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies which generally expire within one year. During the quarter ended June 28, 2024, we entered into a foreign currency collar contract to hedge portions of our cost of sales denominated in the Kenyan shilling. A foreign currency collar consists of a written call option and a purchased put option to sell the foreign currency at a range of predetermined exchange rates. A foreign currency collar guarantees that the exchange rate of the currency will not fluctuate beyond the range of the options’ strike prices. The fair value of our foreign currency cash flow hedges was a net asset position of $1.8 million as of June 28, 2024 compared to a net liability position of $0.3 million as of December 29, 2023 due to the relative strengthening or weakening of exchange rates when compared to contracted rates.

Current wording

Our results of operations and financial condition are exposed to fluctuations in currency exchange rates against the U.S. dollar, and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies which generally expire within one year. The fair value of our foreign currency cash flow hedges was a net liability position of $2.2 million as of September 27, 2024 compared to a net liability position of $0.3 million as of December 29, 2023 due to the relative strengthening or weakening of exchange rates when compared to contracted rates.