Dole plc — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide a clear set of Q4-only financial results. Amounts below are U.S. dollars unless stated otherwise.
Business context
Dole is a global fresh-produce company sourcing products in more than 30 countries and distributing in more than 75. Its continuing reportable segments are Fresh Fruit, Diversified Fresh Produce—EMEA, and Diversified Fresh Produce—Americas & ROW. Fresh Vegetables is presented as discontinued operations following the planned exit.
Financial performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue, net | $8.245 billion | $8.024 billion |
| Gross profit | $694.2 million | $599.9 million |
| Operating income | $272.2 million | $175.3 million |
| Income from continuing operations | $177.5 million | $168.2 million |
| Net income attributable to Dole plc | $124.1 million | $86.5 million |
| Adjusted EBITDA (non-GAAP) | $385.1 million | $360.4 million |
| Cash provided by continuing operating activities | $298.6 million | $323.6 million |
| Capital expenditures | $78.0 million | $85.6 million |
Calculated gross margin was approximately 8.4%, versus 7.5% in FY2022; operating margin was approximately 3.3%, versus 2.2%. Diluted net income per share attributable to Dole was $1.30, compared with $0.91. Continuing operations’ income-tax expense was $43.6 million, versus a $25.6 million benefit in the prior year; the reported effective tax rate was 21.2%, compared with (18.8)%.
At year-end, cash and cash equivalents were $275.6 million and gross debt was $1.094 billion; net debt was $818.3 million, down from $1.022 billion. Total available liquidity, defined by Dole as cash plus available credit lines, was $997.1 million. The company reported $298.6 million of operating cash flow from continuing operations; discontinued operations used a further $31.1 million of net cash across operating and investing activities.
Changes versus FY2022
- Revenue increased 2.8%, primarily from higher pricing and growth in EMEA and Fresh Fruit, plus acquisitions and favorable currency translation. Americas & ROW revenue declined.
- Gross profit rose 15.7% and operating income rose 55.3%. Operating income included $54.1 million of gains on asset sales, principally Hawaii land; FY2022 asset-sale gains were $11.8 million.
- Adjusted EBITDA increased 6.9%. EMEA Adjusted EBITDA rose 20.3% to $133.6 million; Fresh Fruit rose 1.6% to $208.9 million; Americas & ROW fell 2.7% to $42.6 million.
- Interest expense increased 43.9% to $81.1 million, reflecting higher rates and fees on receivables-sale arrangements. Continuing operating cash flow decreased $25.0 million, with the comparison affected by $167.6 million of incremental proceeds from receivables sales in FY2022.
- Fresh Vegetables’ discontinued-operations loss narrowed to $21.8 million from $56.4 million. Its FY2023 revenue was $1.143 billion; Dole attributed the improved result partly to cessation of depreciation and amortization after held-for-sale classification.
Outlook, risks and unusual items
- Fresh Vegetables exit: The planned $293 million sale to Fresh Express was terminated on March 27, 2024 after regulatory approval was not obtained. Dole says it remains committed to exiting through an alternative process; proceeds, timing, and effects are uncertain. At year-end, held-for-sale assets were $414.5 million and liabilities were $291.3 million. Any proceeds are expected primarily to reduce debt.
- Other subsequent transaction: Dole agreed to sell its 65% stake in Progressive Produce for $120.3 million gross cash proceeds; the transaction closed March 13, 2024.
- Management outlook: No specific FY2024 revenue or earnings guidance is provided in the supplied filing text. Management says expected operating cash flows, available cash and borrowing facilities should fund near-term obligations and future capital needs. Planned 2024 capital expenditures are primarily for logistics, farming, facilities and IT; the amount is not clearly specified.
- Operating environment: Inflationary pressures moderated from 2022 peaks but persisted. Management cites geopolitical disruption, higher interest rates, currency volatility, weather and evolving shipping regulation; it is pursuing price increases and operational efficiencies. Weather, climate change, crop disease including TR4, perishability, logistics costs and commodity prices remain key risks.
- Cyber incident: A February 2023 ransomware incident affected about half of Legacy Dole’s servers and one quarter of its end-user computers, and involved unauthorized access to some employee information. Dole reported minimal operational impact and an $11.0 million total financial impact for FY2023, including discontinued operations; affected systems were restored or rebuilt.
- Debt and sensitivity: Debt is primarily variable-rate, with $700 million of interest-rate swaps converting a portion to fixed rates. Dole estimated a 1 percentage-point increase in rates would increase net interest expense by $7.4 million. It was in compliance with debt covenants at year-end; the maximum leverage covenant was 4.00:1.00.
- Potentially material estimates and contingencies: No goodwill or brand impairment was recorded, but the Fresh Fruit reporting unit, Americas & ROW reporting unit and DOLE brand had only about 4%, 2% and 2% valuation headroom, respectively. A 25-basis-point discount-rate increase would have reduced some headroom to below 1% and triggered an estimated $4.1 million goodwill impairment for Americas & ROW.
- A foreign tax assessment of approximately $20 million, including interest and penalties, remains under appeal; Dole says payment is remote but resolution timing is uncertain. A Shell-related environmental indemnity judgment assigned $133.3 million of cleanup costs to a Dole subsidiary; appeals are pending, with a $26.7 million attorneys’ fee award offsetting the judgment. Dole says the risk from the related cleanup order is remote. The filing also describes DBCP litigation with approximately $17.8 billion in claimed damages, mostly in Nicaragua; management does not expect a material loss. A Hawaii reservoir spillway modification was estimated at about $20 million, but Dole did not record a liability because it did not deem a loss probable.
- Controls and audit: Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2023. The prior manual-journal-entry review material weakness was reported remediated. KPMG issued unqualified opinions on the financial statements and internal control.
Important facts for investors to verify
- Progress and expected price, timing, conditions and debt-reduction proceeds from the alternative Fresh Vegetables exit after the Fresh Express agreement termination.
- Whether FY2023 operating cash generation can support debt service, seasonal working-capital needs, dividends and planned capital spending, particularly given higher interest expense and reliance on receivables sales.
- Developments in the $20 million tax assessment appeal and Shell-related litigation, and any changes to recorded legal or environmental contingencies.
- Changes in valuation assumptions and headroom for goodwill and the DOLE brand, especially if discount rates rise or projected cash flows weaken.
- Ongoing impact of the ransomware incident, including any remediation costs, claims or operational consequences, and progress in sustaining effective financial controls.
- Exposure to crop and weather disruption, shipping and input costs, foreign exchange movements, and the EU maritime emissions trading scheme, which began applying to shipping in 2024.