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Monica Vicente

Thank you, Mr. Abu-Ghazaleh, and good morning, everyone and thank you for joining us on today's call. I will begin with our financial results for the first quarter of 2025, and then I will share our outlook for the remainder of the year. As Christine mentioned, our press release and our call today include non-GAAP measures. Reconciliations of these non-GAAP financial measures are set forth in the press release and earnings presentation, which is available on our website.
Now let's move on to our financial results for the 1st quarter of 2025.
Net sales were $198 million compared with $108 million in the prior year. The decrease was driven by lower net sales in our banana segment, primarily a result of lower sales volume and the negative impact of fluctuations in exchange rates, partially offset by higher net sales in our fresh and value-added product segment, driven by higher per unit selling prices.
Gross profit for the first quarter of 2025 was $92 million compared with $82 million in the prior year. The increase in gross profit for the quarter was driven by higher net sales in our fresh and value-added product segments partially offset by higher per unit production, procurement, and distribution costs.
Gross margin for the first quarter was 8.4% compared with 7.4% in the prior year. This also reflects a sequential increase from 6.8% in the fourth quarter of 2024.
Adjusted gross profit for the first quarter was $92 million compared with $81 million last year. Operating income for the first quarter of 2025 was $45 million compared with $44 million last year. The increase in operating income was driven by higher gross profit, partially offset by lower gain on disposal of property, plants, and equipment nets. Adjusted operating income was $44 million compared with $31 million in the prior year.
Other expense net for the first quarter was $3 million compared with $8 million in the prior year. The decrease was primarily due to lower foreign currency losses. Net income attributable to fresh Del Monte for the first quarter of 2025 was $31 million compared with $26 million in the prior year.
An adjusted SDP net income was $30 million compared with $16 million last year. A diluted EPS for the first quarter was $0.64 per share, compared with $0.55 in the prior year. Adjust the diluted EPS was $0.63 compared with $0.34 per share last year. Adjusted EBITDA for the first quarter of 2025 was $61 million or 6% of net sales compared with $44 million or 4% in the prior year.
I will now go into more detail on our first quarter 2025 performance for each of our segments, beginning with our fresh and value-added product segment.
Net sales for the first quarter of 2025 were $683 million compared with $677 million in the prior year. The increase in net sales was primarily a result of higher per unit selling prices in our avocado product line, and higher sales volume and per unit selling prices in our fresh cut fruit product line in North America, due to strong market demand.
The increase was partially offset by lower net sales in our fresh cut vegetable and vegetable product lines due to our strategic operational reductions in the fourth quarter of 2024, which also included the sale of certain assets of fresh leaf farms.
Gross profit was $69 million compared with $56 million in the prior year. The increase in gross profit was primarily driven by higher per unit selling prices in our pineapple and melon product lines, partially offset by higher per unit production, procurement, and distribution costs.
Gross margin increased to 10.1% in the first quarter compared with 8.3% in the prior year. This also reflects an improvement from 7.5% in the fourth quarter of 2024 and 9.3% for the full year 2024. We're making solid progress toward our goal of delivering double digit gross margins in the low 10s for this segment as we continue to improve our product mix.
Moving to our banana segment, net sales were $364 million compared with $380 million in the prior year. The decrease in net sales was primarily a result of lower sales volume and per unit selling prices in Asia due to a combination of lower market demand and excess industry supply. Along with lower sales volume in North America due to lower industry supply and weather-related logistic disruptions. Additionally, net sales were negatively impacted by fluctuations in exchange rates due to a weaker EUR and Korean won. The decrease was partially offset by higher per unit selling prices in North America.
Gross profit was $17 million compared with $22 million in the prior year. The decrease in gross profit was driven by lower net sales and higher per unit production and procurement costs. Gross margin decreased to 4.6% compared to 5.7% in the prior year.
Lastly, our other products and services segments. Net sales were $51 million in line with the prior year. Gross profit was $6 million compared with $5 million last year. The increase in gross profit was primarily due to higher per unit selling prices in our poultry and meats business. Gross margin increased to 11.9% compared with 8.9% last year.
Now moving to selected financial results for the first quarter of 2025.
Our income tax provision was $7 million compared with $5 million in the same period last year. The increase in income tax was primarily due to increased earnings in certain higher tax jurisdictions. Our effective tax rate for the first quarter was 18%.
Net cash provided by operating activities for the first quarter of 2025 was $46 million compared with $19 million in the prior year. The increase in net cash provided by operating activities was primarily due to working capital fluctuations, mainly driven by higher levels of accounts payable and accrued expenses, lower levels of accounts receivable, and higher net income. The increase was partially offset by higher levels of inventory when compared to the prior year period.
We ended the first quarter of 2025 with $233 million of long-term debt, and $11 million or 5% reduction from $244 million at fiscal year in 2024. And also, a decrease of 42% compared with the prior year period. Our adjusted leverage ratio is less than one times. Our capital investment for the first three months of 2025 was $10 million compared with $13 million in the prior year.
As announced in our press release, we declared a quarterly cash dividend of $0.30 per share, payable on June 6, 2025, to shareholders of record on May 14, 2025. On an annualized basis, this equates to $1.20 per share, representing a dividend yield of 3.5% based on our current share price. Also, during the first quarter of 2025, we repurchased $7.6 million or 254,000 shares of our common stock at an average price of 2,997. As part of our $150 million share repurchase program.
These actions reflect our commitment to a strong, sustainable dividends and a balanced capital allocation strategy that includes opportunistic share repurchases. As we look ahead, excluding the impact of tariffs and recent macroeconomic developments, we continue to expect full year 2025 results to be in line with the outlook we shared during our year-end earnings call in February. Which reflects our confidence in our strategic initiatives and current visibility into our business.
That said, we continue to closely monitor developments related to the evolving tariff situation or other geopolitical developments that remain fluid at this time.
We reiterate our expectations for the full year of 2025. We expect to see net sales grow 2% year over year. And as far as gross margins by business segments, in our fresh and value-added segment, gross margin is expected to be in the range of 10 to 11%.
In our banana segment, gross margin is expected to be in the historical range of 5 to 7%. For our other products and services segment, gross margin is expected to be in the range of 12 to 14%. As far as our selling general and administrative expenses, we expect that to be in the range of $205 million to $210 million. Our projected cutbacks are expected to be in the range of $80 million to $90 million. And we expect net cash provided by operating activities to be in the range of $180 million to $190 million.
We recognize that the current environment marked by tariffs, global tensions, and possible logistical uncertainties continues to evolve. We have weathered external disruptions before, and our diversified sourcing strategy is designed for resilience. Our product mix remains in demand, and we're focused on long term value creation. The fundamentals of our business have not changed.
This concludes her financial review. We can now turn the call over to Regina.

Question and Answer Session

Operator

We will now begin the question-and-answer session. Our first question will come from the line of Mitchell Pinheiro with Sturdivant & Company. Please go ahead.

Mitchell Pinheiro

Yeah, hi, good Morning. Can you hear me?

Mohammad Abu-Ghazaleh

Good morning. Yes, we can hear you.

Mitchell Pinheiro

Great. Good morning. So, Mohammed, I was wondering if you could talk a little bit about the produce category, and your categories within that, what you're seeing in terms of demand, we are obviously the consumer is under pressure, but what are you seeing in your categories relative to that.
And what you expect here in the next quarter or so.

Mohammad Abu-Ghazaleh

What we see is a very, continuous solid demand in our sector, which is the fresh produce, the fruits or vegetables. We don't see any kind of reductions in in demand or consumption. I believe this will continue as we are very kind of basic reasonably priced, segment in terms of cost.
So, I'm confident that this is not going to change. As a matter of fact, disruption that is happening right now in the market sometimes opens opportunities for us which we are looking at and maybe a good time for probably, picking up some good opportunities there.

Mitchell Pinheiro

So yeah, I mean it's interesting, what do you, are you seeing significant players, in the industry having sort of logistic issues that you're going to take advantage of or is it, more broadly, just some of the weaker players, sort of more broadly having issues.

Mohammad Abu-Ghazaleh

I you definitely nailed it, but actually, with this kind of environment that we are going through, the disruptions, be it on the logistic side on all fronts really have put, I would say put small, medium sized companies or operators at a disadvantage because of the hardships that is being created by these disruptions. So, in our case, yes, we are very flexible. We're very agile.
We can adapt to this situation. Our logistical, full integration from the supply chain gives us a very big leverage in terms of being able to move forward without any disruptions or interruptions in our operations, and that's the most important thing is that your customers' demands or your customer requirements are fulfilled on time without any interruptions, and that's really the big element here in this situation is between somebody that can deliver, on time and in full and someone that cannot do that. So, you are right, what you just mentioned is very true.

Mitchell Pinheiro

Let me ask, so with regard to the 10% baseline tariffs, what's happening in the market, are we seeing. Producers such as yourself and retailers passing it through to the consumer, is, there any part of the of the of the sales processes seeing any particular.
Group eating some of the tariffs to keep prices low or you're going to pass it all through.

Mohammad Abu-Ghazaleh

Well, we've been mitigating this in a very friendly and cooperative way with our buyers, and in order not really to negatively impact, the consumers in a way. So, we are working very closely with our buyers to mitigate this tariff increase, which I believe for the best for the good of buyers and sellers as well. So yes, we are mitigating this with our buyers.

Mitchell Pinheiro

Okay. And then, you mentioned in the prepared remarks or on the slides that part of the margin driver in fresh and value added was pineapple, I guess in melons. I was curious how you were doing in Avocado.

Mohammad Abu-Ghazaleh

Avocado is doing very well as Christine mentioned, and this category is growing and we are diversifying our sourcing as well from Peru, from Colombia and other places. So, this I believe that this segment of the business is to keep growing, going forward. But it's not only pineapple and avocados and fresh cut. We do have other items right now. They are maybe small, not to mention them, in any significant manner, but they are started to be becoming very important also.
A part of our portfolio, I mean, on the logistic side, this is one side on all new businesses that we are just in the infancy stage, on the residues on other as we go forward, quarter after quarter and year after year, this will be very meaningful going forward and we cannot just say right now what we are doing, but everything that will happen in the next few quarters will be announced and will be, kind of highlighted to the market because there are many things in the pipeline that is already started, and probably in one way or the other that ramping up and some of it probably a little, like on the bio fertilizers, like even on conventional fertilizers that we started, working on production and distribution.
We are talking here about, margins in the high 20s and things like that. So these businesses, as they grow and they are growing, will have a significant and very impactful, results going forward in the future.

Mitchell Pinheiro

Okay and then are we at point and fresh cut? Where you've absorbed a lot of that newer capacity you added and that we should see more stable and increasing sort of margins as you leverage those fixed costs here are we at that point where you're beyond, even some volume disruptions that you can still maintain pretty strong margins in that area.

Mohammad Abu-Ghazaleh

Yeah, I think we do. I believe that our our fresh cut fruit operation is getting stronger year after year, and with our rationalization and increased efficiency, and better sourcing, that gives us a leverage to continue performing similarly or even better going, forward in the future. So I'm not very concerned about the fresh cut. I think, just to give you an example with our fresh guacamole, which we started, let's say less than a year ago, we are having double digit growth every quarter over quarter, I mean, it's, we cannot cope even with demand.

Mitchell Pinheiro

Last question was on, the pineapple business obviously, it's your core business and what drives everything at your firm, at your company, but why could you just go back, obviously pineapples have been in sort of short supply for a little bit, but what was driving that and how long does it take for supplies to normalize from this point?

Mohammad Abu-Ghazaleh

Let's put it in another way. Maybe consumption is increasing, and demand is increasing, and that's why we see now more or less the supply is a little bit shorter than the demand. I'm not saying, drastically shorter, but a little bit shorter than demand. I think the major factor here is that the demand and consumption is increasing. If you look at the price of pineapples compared to any other fruit on the shelf, be it apple, be it grapes, be it berries, or any other fruit you will realize that the cost of pineapple compared to the rest is quite favorable. It's very still inexpensive to as a family, as a household, I would take a pineapple that can feed the whole family, maybe for 2 days rather than having GBP2 of apples or oranges that will cost me three times as much. So, I believe this is one of the factors why we see more consumption of pineapple.
Aside from the young generation realizing that the health benefits of pineapple as well is extremely high, compared to other fruits. So, I think there are several factors playing here. One is the price compared to others as well as the, all the health and wellness benefits coming from pineapple rather than other foods.

Mitchell Pinheiro

I also think your holo glow is a fantastic pineapple variety, and I think that in and of itself getting that kind of quality of pineapple, would also induce demand continued purchasing of that of that product. So, ko kudos to you.
Yeah, kudos to you for the innovation and that your other pink glow and ruby glow and other innovations. That's all I have here. But thank you for your time and the.

Mohammad Abu-Ghazaleh

Thank you, Mitchell. I appreciate it.

Monica Vicente

Thank you very much for your comment.

Operator

(Operator Instructions)
That will conclude our question-and-answer session, and I will now hand the call back over to Mr. Mohammad Abu-Ghazaleh for closing remarks.

Mohammad Abu-Ghazaleh

Thank you so much. I would like to thank everyone today for having to be with us here and hope to talk to you on better news on our next quarter.
Thank you. Have a good day.

Operator

(Operator Instructions)