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Chiquita Moncler goose Men jackets rouald Collar Buttons black Brands International Management Discusses Q3 2013 Results Good day, miami heat jerseys and welcome to the Chiquita Brands Third Quarter 2013 Earnings Conference Call. Today s conference is being recorded. And at this time, I would to turn the conference over to Mr. Steve Himes. Please go ahead, sir.Thank you, Kayla. Welcome to Chiquita Brands International s Third Quarter 2013 Earnings Conference Call. On the call today are Ed Lonergan, President and Chief Executive Officer; Brian Kocher, Chief Operating Officer; and Rick Frier, Chief Financial Officer. After today s prepared remarks, we will take questions as time allows. And you may also contact Chiquita s Investor Relations Department at (980) 636 5637 to receive a copy. GAAP of any non GAAP financial measures that we mention today. This call contains forward looking statements, regarding operating performance or industry developments, and any such statements are intended to fall within the Safe Harbor provided under the securities laws. Factors that could cause results to differ materially are described in the forward looking statement section of today s press release and in Chiquita s SEC filings, including its annual report on Form 10 K and quarterly reports on Form 10 Q. And with that, I d like to turn the call over to Ed.Thanks, Steve. Good morning, and thank you all for joining us. Our third Moncler Men down Jackets button no hat orange quarter results reflect continued focused execution against our return to the core strategy in both Bananas and the Salads business. For the third quarter in 2013, we re reporting $18 million of adjusted EBITDA versus a $1 million loss in the year ago quarter. We remain confident in the key planks of our turnaround strategy. We ve kept the promises made when we announced the restructuring and we ve demonstrated progress against the priorities discussed in the last few earnings calls. We ve increased both revenue and profitability in our Bananas business. In North America, we have profitably grown both volume and value shares, thanks to velocity improvement at current customers and in new contract wins.North American volume gains remain strong through the quarter and pricing overall was only marginally lower a year ago, primarily reflecting the impact of the wholesale segment weekly pricing market. Pricing showed sequential improvement versus the year to date overall. We delivered significant third quarter favorable pricing variances in our European Banana business. This reflected both improved annual contract pricing in the North and the benefits of balanced supply in the weekly pricing markets through summer. As we ve said previously, we continue to prioritize pricing over volume in both our core European and the Mediterranean markets.In the third quarter, supply and demand of bananas remained balanced longer than typical, well into July and August and we held high season pricing longer than is typical in Europe and the Med. Of course, performance in the weekly markets varies with banana supply and this summer presented an atypical situation in the South from which we benefited. Toward the end of the quarter, supply moved from balanced to excess. And in September, we began to see the negative impact of increasing supply and seasonally lower demand on market pricing, quite rapidly eroding the realization per box we had enjoyed in the early months of the quarter. Brian will talk to us in more detail about the relatively balanced supply of bananas that existed through most of the first 3 quarters of 2013 adjusted in September. And we re currently in an excess supply situation that we believe will last through most of the fourth quarter.Our tropical value chain efficiency actions continue to deliver as planned with owned farm productivity up 15% year on year and shipping enhancements performing to plan. We are on track to deliver at least $35 million in annualized savings from these key elements of our turnaround plan.We ll always be subject to the volatility of selling agricultural products such as bananas. Nonetheless, we believe we understand the actions required to react speedily to market conditions and operate our business efficiently in difficult, as well as good banana markets.Our Salad business continues to build momentum and we exited and we are excited to be growing again at Fresh Express. In fact, for the first time since 2007, we are leading retail value added salad category growth. In Q3, we grew retail value added Salads volumes 7.5% year over year, driven by improved velocity at existing customers and new customer acquisitions in both branded and private label products.As discussed in our last call, we continue to experience transition cost from our Midwest plant consolidation and increased raw product sourcing costs, which have impacted segment profitability. Both of these issues have presented headwinds throughout the year and will impact Q4. Although we expect these salad headwinds to abate substantially in Q1 2014. Operations at the new salad facility are normalizing in the current quarter and the plant is expected to perform to design productivity in 2014. On the supply side, sourcing quality and yield has been impacted by adverse growing conditions throughout the year, most recently affecting iceberg lettuce. We are deploying enhanced growing strategies in leafy greens to mitigate these kinds of agricultural risks. This, combined with the substantially improved apple crop will provide benefits to the Salad and Healthy Snacks segment in 2014.In all aspects of our business, we remain focused on disciplined resource management. SG and operating efficiency interventions are delivering returns in line with expectations. SG spend year to date is 7.7% of sales. We remain on track to deliver our $25 million annual savings commitment and to deliver annual SG below 8% of sales, while rebuilding the variable compensation spending pools.The headwinds we are experiencing from both core businesses will challenge Q4 and will likely result in EBITDA from the second half of 2013 between 20% and 25% of annual EBITDA versus the roughly 1/3 that we expected in our plan. This contrasts to an average of 12% in the most recent 5 years.Overall, contract renewals and efficiency actions are progressing as planned. We continue to gain new business in North American Salads and Bananas and we re better utilizing the multiple grades of bananas produced on our own farms to play more completely in the distribution of our European retail partners. We remain focused on efficiency actions both in our organizing structure and in our operations and sourcing. And we remain focused on delivering premium value for our customers from our premium brands. Lastly, we are delivering our 4% target EBIT margin in Bananas and remain on an appropriate glide path to deliver our target EBIT margin of 7% to 8% for Salads by the end of 2015. With that, I want to turn the call over to Brian to discuss our operations.Thanks, Ed. As we described on our last quarter call, the banana market we saw unfolding early in the third quarter was more stable than we usually experience during the summer. Weather conditions limited supply from certain countries, including Ecuador, and we experienced balanced supply and demand Moncler eric Men down jackets no Hat black in July and August. We delivered 13% year over year local currency pricing improvements in Europe in the quarter. This reflects the continued impact of North Europe annual contract improvement versus 2012 and optimized price volume trade offs in our weekly price markets due to the balanced supply we experienced in the front end of the quarter. As Ed mentioned, toward the end of the quarter, we began to see the negative impacts of increasing supply on market pricing and volumes sold.Increased supply came from both Ecuador and Central America and came in a season when demand typically lags due to availability of alternate fruits. Demand has also been impacted by turmoil in the Med trading markets, which have traditionally absorbed excess fruit in the second half. In particular, Syria, Egypt and Libya have been less reliable outlets this year forcing more fruit into the remaining markets. This has impacted pricing in the Med trading markets to an extent we have not seen since 2009 as well as impacting pricing in core European and North American wholesale markets. We anticipate that there will be excess fruit in the market through the balance of the year. We expect this to negatively impact weekly pricing markets through Q4. While we have maintained and even stretched the price premium with customers that recognize our brand, quality and service advantages, the overall weekly trading market in the Med is paying sharply moncler outlet uk online lower prices for bananas today than they were in August, which causes us to revise our outlook for the balance of the year as Ed mentioned earlier.Our North American Banana business performed well in the quarter. Chiquita continued to experience significant year over year volume growth from existing customers and new contracts. Volumes were up 11% and retail measured value share is up more than 11% or 360 basis points since last year. North American demand remained strong through the quarter. Our banana value chain efficiency actions continue to deliver as planned. In addition to increased own farm productivity, we continue to see savings on logistics, primarily from shipping rotation enhancement and improved backhaul efficiency.Lastly, this is an important time of the year as we renew many of our customer contracts. The process is proceeding as planned. Globally, we are focused on aligning with customers that appreciate our differentiated quality, service and innovation and are willing to reward us for value creation. We have exited some low value contracts in the face of competitor discounting, but more than replaced that volume with incremental business at value enhancing customers.Turning to Salads. We continue to build sales momentum in the third quarter. The overall prepackaged Salad segment is growing and we are now leading that growth. Retail salad volumes increased 7.5% from the year ago quarter, which represents the second Moncler down Vest Women hat button purple consecutive quarter of year over year retail volume growth. We see volume gains from improved velocity at existing customers and from new customer acquisitions in both branded and private label products. We have, as a result, added approximately $4 million annualized value added salad cases to our base volume in 2013.We re also demonstrating category leadership in launching several successful new kit products and single serve multi packs. These products were introduced late in Q3 at moncler ladies jacket accretive margins and with promising early sell through results.On the cost side, as Ed mentioned earlier, we continued to experience setbacks from our Midwest plant consolidation and raw product sourcing, which have impacted Salad segment profitability. Both have presented headwinds throughout the year. Transition costs at our Midwest facilities are in excess of plan and Rick will discuss the context of those charges on a quarterly and annual basis.On a positive note, we have finished all the line transitions. We are beginning to see improvement in yields and labor cost at the facility. And each week, the Midwest facility relies less on the balance of our manufacturing network to produce its own sales demand. We do expect the plant to operate at plan in 2014 and expect the efficiencies of a single operation versus 4 separate facilities to enhance our bottom line.We also expect to incur above plan lettuce expenditures through the fourth quarter due to unfavorable growing conditions in the regions from which we source iceberg. This has impacted yields as much as 30% versus our expectation and contributed to substantial price pressure on the few available excess fields. The Chicago plant transition and the leafy green quality and yield impacts throughout the year have had substantial have substantially impacted our results.While we are not satisfied with our current cost structure in this business, the retail moncler varsity jacket value added salad s top line growth is promising. We see improvements in our healthy snacking pricing and cost situation and we will cycle out the Chicago transition cost in 2014 and begin to reap the efficiency benefits from improved throughput in our plants.Using learnings from 2013, we also expect to mitigate some of the volatility from raw products supply disruptions, thanks to improvements in our raw product planning, regional growing strategy and varietal plannings. I ll now turn the call over to Rick to run through our financial results.Thanks, Brian. For the third quarter 2013, we are reporting comparable sales of $725 million versus $714 million in 2012, an increase of 1.5%. Sales were almost 4% ahead of last year if normalized for $12 million of revenues related to exit of non core businesses and the $4 million negative impact of euro hedges implemented to protect downside risk in 2013 during a relatively low euro exchange rate environment last year. Q3 GAAP net loss was $18 million versus a loss of $67 million last year. Adjusted EBITDA was $18 million versus a $1 million loss a year ago.The 3 biggest drivers of growth in adjusted EBITDA in the quarter were higher pricing in our European banana markets, reduced banana value chain cost and reduced SG expenses. EBITDA would have been higher without the impacts related to the Midwest plant consolidation, which decreased profitability by approximately Moncler goose jackets Men adour Belt Collar deep green $7 million. And higher normal costs associated with Salad s raw products supply. As Ed mentioned, SG restructuring benefits continue be recognized. We are confident we will achieve the $25 million of SG savings we committed in our plan. Third quarter SG at 8.4% improved 140 basis points year on year. Year to date, SG represents 7.7% of sales, 100% basis 100 basis point reduction and we remain on track to deliver SG below 8% on sales for the year.Looking at our segments, we are reporting $458 million of comparable sales in our Banana segment compared to $446 million in the third quarter of 2012. This represents an increase of 2.6% and includes approximately $6 million of positive variance related to increases in euro exchange rates, net of hedging losses. The change in sales reflects higher local pricing in Europe and higher banana sales volumes in North America, partially offset by lower volume sales in Europe and the Middle East. Comparable operating income in the third quarter of 2013 was $20 million compared to a loss of $2 million in 2012. The increase was primarily the result of higher sales and lower logistic costs.In the Salad business, sales were flat compared to Q3 of last year at $239 million. Higher volume sales of retail value added salads were offset by lower processed fruit ingredient sales in the quarter and the exit of a European healthy snacking business at the end of the second quarter of 2013

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