Chiquita Brands International Inc. (CQB)
Q4 2012 Results Earnings Call
March 11, 2013 4:30 PM ET
Steve Himes - Director, IR
Ed Lonergan - President and CEO
Brian Kocher - Chief Financial Officer
Bryan Hunt - Wells Fargo
Brett Hundley - BB&T Capital Markets
Mary Gilbert - Imperial Capital, LLC
Carla Casella - J.P. Morgan
Jonathan Feeney - Janney Montgomery Scott
William Reuter - Bank of America Merrill Lynch
Previous Statements by CQB
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At this time, it’s my pleasure to the turn the conference over to Steve Himes. Please go ahead.
Thank you, Catherine. And welcome everyone to Chiquita Brands International’s fourth quarter and year end 2012 earnings conference call. On the call today are Ed Lonergan, President and Chief Executive Officer; and Brian Kocher, Chief Financial Officer.
After today’s prepared remarks we will take questions as time allows. A copy of today’s press release is available on the company’s website at www.chiquita.com, and you may also contact Chiquita’s Investor Relations Department at 980-636-5637 to receive a copy. Our press release includes reconciliations to U.S. GAAP of any non-GAAP financial measures that we mention today.
The 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 statements 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 now, I’d like to turn the call over to Ed.
Thanks, Steve. Good afternoon and thank you all for joining us. We have number of topics we’d like to cover with you today, but I thought it was important to spend a few minutes sharing my impressions after five months here at Chiquita.
As you recall on the last call I’ve been in this role just one month. I’m pleased to report that my optimism for the company formed during my due diligence process has been validated by extensive meetings with our customers, suppliers, employees and the Board. In both one-on-one discussions and large industry conference settings our constituencies share my optimism for the future of Chiquita.
The pieces are largely in place for successful turnaround of this business. We have products that our customers and our consumers want to buy. And global health and wellness trends will further contribute to the desirability of our products overtime. The management team is strong and it’s committed to our strategy and successfully implementing it in the marketplace.
The restructuring that the company announced late last year, has been executed quickly and efficiently, and key efficiency choices are paying dividends as we look to 2013 and beyond. And as Brian will discuss shortly, we now have the financial flexibility to allow us to focus on our businesses and execution of our new strategy.
In my first call in November, I said you can expect our team to make strategic decisions to accomplish the following. First and foremost, to increase revenue and profitability in our core bananas and salads business, with particular focus on creating value for customers and consumers in our space; second, to drive cost out of our value chain to be more competitive in our core markets.
Third, to align our overhead structure to industry benchmarks; fourth, to evaluate and address non-core unprofitable businesses and minimize investment and diversification and innovation outside the core; and lastly to limit our consumer marketing investments to those portfolio products, vehicles and geographies, where we can demonstrate a verifiable business return.
We noted our confidence in the strategy to enable Chiquita over the next two to three to achieve target operating margins of 4% in bananas and 7% to 8% in salads. With five months now under my belt, I can tell you this is undoubtedly the right path to bring Chiquita back to its luster.
I’ve met with employees across the globe, visited our farms and plants, our R&D centers, our ports, our bananas and salads growers, our suppliers and numerous key customers and stakeholders. It’s clear we made the right choices that we have the skills and capabilities to execute against these choices and the passion to deliver.
In December we took an additional step to more sensibly organize the company around our two core businesses. In alignment with the company’s new strategic direction we will consolidate global sales, business unit and food safety capabilities into a single organization under one Chief Operating Officer focused on increasing cash flow and core businesses, and driving value by our customer relationships.
I announced late last year that Brian Kocher will fill this role. The Board and I have complete confidence that Brian is the right person to lead this effort. Thanks to his depth of experience in both the financial and commercial operations of the company across the globe. Brian will continue to serve as the CFO until a replacement is found, that search is underway and we expect to fill the role during Q2.
As we move forward under the new strategy. The company is focused on the right things, capital stewardship, controlled overhead and value chain costs building value for customers and building the team.
I have received consistent feedback from customers that they value Chiquita Brands for our quality, consumer preference and velocity advantage in their stores, and they’re interested in growing their business with Chiquita.