Fresh Del Monte Produce Inc. Announces $150 Million Share Repurchase Program and Increases Quarterly Dividend as Part of Its Capital Allocation Strategy

Rhea-AI Summary

Fresh Del Monte Produce (NYSE: FDP) has announced a significant capital allocation strategy update, featuring a $150 million share repurchase program with no time deadline and a 20% increase in quarterly dividend from $0.25 to $0.30 per share. The next dividend payment is scheduled for March 28, 2025, for shareholders of record as of March 10, 2025.

The share repurchase program will be executed through open market transactions in compliance with Rule 10b-18, privately negotiated transactions, or other legally compliant methods. The company will fund these repurchases through cash on hand, operational cash flow, and its revolving credit facility. All repurchased shares will be retired.

Chairman and CEO Mohammad Abu-Ghazaleh emphasized that this initiative is part of a broader strategy focusing on strategic growth investments, maintaining a strong balance sheet, and returning capital to shareholders.

Positive

• New $150 million share repurchase program announced
• 20% increase in quarterly dividend (from $0.25 to $0.30)
• Flexible repurchase timeline with no deadline constraints
• Multiple funding sources available for repurchase program

Negative

• Potential reduction in cash reserves and available credit facility
• Reduced financial flexibility for future strategic investments

Insights

Financial Analyst

The simultaneous announcement of a $150 million share repurchase program and a 20% dividend increase represents a substantial shift in Fresh Del Monte's capital allocation strategy, signaling robust financial health and strong cash flow generation capabilities. The dividend increase from $0.25 to $0.30 per share quarterly is particularly noteworthy in the fresh produce industry, where margins are typically thin and cash flow can be volatile due to agricultural risks and commodity price fluctuations.

The open-ended nature of the share repurchase program, without a fixed deadline, provides strategic advantages:

• Management can opportunistically execute buybacks when valuations are attractive
• The company maintains flexibility to adjust to market conditions and operational needs
• The program can be sustained through various business cycles

The multi-source funding approach through cash on hand, operational cash flow, and credit facility demonstrates prudent financial planning. This structure ensures the company can maintain its operational investments while executing the shareholder return program. With a market capitalization of approximately $1.47 billion, the $150 million authorization represents roughly 10% of the company's market value, a meaningful percentage that could significantly enhance shareholder value through reduced share count and increased earnings per share.

The timing of this announcement, coupled with the substantial dividend increase, suggests management's confidence in sustainable cash flow generation and operational stability. For a company operating in the agricultural sector, where weather events and market volatility can impact performance, this level of commitment to shareholder returns indicates strong underlying business fundamentals and effective risk management practices.

CORAL GABLES, Fla.--(BUSINESS WIRE)-- Fresh Del Monte Produce Inc. (NYSE: FDP) (the “Company”) today announced that its Board of Directors (the “Board”) has approved a $150 million share repurchase program, reinforcing its balanced capital allocation strategy. Additionally, the Board has announced an increase in the quarterly dividend from $0.25 to $0.30. The next quarterly dividend will be paid on March 28, 2025, to shareholders of record on March 10, 2025.

"This repurchase authorization is part of our broader capital allocation framework, which prioritizes investing in strategic growth opportunities, maintaining a strong balance sheet, and returning capital to shareholders through dividends and share repurchases," said Mohammad Abu-Ghazaleh, Chairman and CEO of Fresh Del Monte Produce.

The new plan has no time deadline and will continue until otherwise modified or terminated by the Company’s Board at any time in its sole discretion. Share repurchases may be made from time to time and the actual amount repurchased will depend on a variety of factors including stock price, market conditions, regulatory and legal requirements, cash flow and liquidity needs and other factors. Ordinary Shares may be repurchased through open market repurchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in privately negotiated transactions and or in such other manner as will comply with the terms of applicable federal and state securities laws and regulations. Repurchases will be funded from cash on hand, cash flow from operations and availability under the Company's revolving credit facility. All Ordinary Shares repurchased will be retired.

About Fresh Del Monte Produce Inc.

Fresh Del Monte Produce Inc. is one of the world’s leading vertically integrated producers, marketers, and distributors of high-quality fresh and fresh-cut fruit and vegetables, as well as a leading producer and distributor of prepared food in Europe, Africa, and the Middle East. Fresh Del Monte Produce Inc. markets its products worldwide under the DEL MONTE® brand (under license from Del Monte Foods Corporation II Inc.), a symbol of product innovation, quality, freshness, and reliability for over 135 years. The company also markets its products under the MANN® brand and other related trademarks. Fresh Del Monte Produce Inc. is not affiliated with certain other Del Monte companies around the world, including Del Monte Foods, Inc., the U.S. subsidiary of Del Monte Pacific Limited, Del Monte Canada, or Del Monte Asia Pte. Ltd. Fresh Del Monte Produce Inc. is the first global marketer of fruits and vegetables to commit to the “Science Based Targets” initiative. In 2022, 2023, and 2024 Fresh Del Monte Produce was ranked as one of "American's Most Trusted Companies" by Newsweek based on an independent survey rating companies on three different touchpoints, including customer trust, investor trust, and employee trust. The company was also named a Humankind 100 Company for two consecutive years by Humankind Investments, which recognizes companies that substantially impact areas such as access to food and clean water, healthcare, and digital services. Fresh Del Monte Produce Inc. is traded on the NYSE under the symbol FDP.

Forward-looking Information

This press release contain “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “feel,” “intend,” “plan,” “predict,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements in this press release include statements regarding (1) the Company new broader capital allocation framework and (2) its intent to effect stock repurchases. These forward-looking statements reflect our current views about future events and involve estimates and assumptions which may be affected by risks and uncertainties in our business, as well as other external factors, which could cause future results to materially differ from those expressed or implied in any forward-looking statement. With respect to the Company’s capital allocation priorities and repurchases under the Company’s stock repurchase programs, the amount of shares repurchased, if any, and the timing of such repurchases will depend on, among other things, (i) general macroeconomic, industry and company financial conditions that could cause the Board to change priorities within its capital allocation framework or the timing and amount of stock repurchases, (ii) the market price of the Company’s common stock, prevailing from time to time, (iii) the nature of other investment opportunities presented to the Company from time to time, (iv) the Company’s cash flows from operations, (v) compliance with debt covenants and (vi) availability and cost of credit.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250224863261/en/

For information, contact:

Christine Cannella

Vice President Investor Relations

ccannella@freshdelmonte.com

Source: Fresh Del Monte Produce Inc.

FAQ

What is the size of Fresh Del Monte's (FDP) new share repurchase program?

Fresh Del Monte Produce announced a $150 million share repurchase program with no time deadline.

How much did Fresh Del Monte (FDP) increase its quarterly dividend?

Fresh Del Monte increased its quarterly dividend by 20%, from $0.25 to $0.30 per share.

When will Fresh Del Monte (FDP) pay its next increased dividend?

The next dividend payment will be made on March 28, 2025, to shareholders of record as of March 10, 2025.

How will Fresh Del Monte (FDP) fund its share repurchase program?

The repurchase program will be funded through cash on hand, cash flow from operations, and availability under the company's revolving credit facility.

What methods will Fresh Del Monte (FDP) use for share repurchases?

The company will conduct repurchases through open market transactions under Rule 10b-18, privately negotiated transactions, and other legally compliant methods.