Dole, a maker of packaged juices and fruit drinks with its headquarters in central Florida, raised $100 million on the New York Stock Exchange to finance an expansion after it got oversubscribed for IPOs. The company hired JPMorgan Chase & Co. to help find deals that will allow them to cut costs by 20 percent or more from next year’s levels.,
Dole Looks for Deals and Operational Efficiency After NYSE Listing is a company that has recently been listed on the New York Stock Exchange. The company’s stock price is at $2.04 as of today, with a market cap of $3 billion.
After merging with Total Produce PLC and listing on the New York Stock Exchange, Dole, the fruit and vegetable firm best known for its banana brand, is scouring the market for possible acquisition prospects and seeking to simplify its operations.
In 2018, the firm that used to be known as Dole Food Co. decided to sell itself to Total Produce, which bought a 45 percent share in the company. Total Produce purchased the balance of the firm in July, and the merged company became Dole PLC, which started trading on the stock exchanges in August.
Dole received slightly under $400 million in additional stock from its first public offering, which it utilized to pay down expensive debt and rebuild its balance sheet. A term loan and a revolving credit facility totaled $1.44 billion in additional funding for the firm.
Dole’s chief financial officer, Frank Davis.
Dole PLC (photo)
“Dole was severely leveraged and had a lot of costly debt,” said Chief Financial Officer Frank Davis, who formerly worked for Total Produce’s finance department.
The merged firm generated pro-forma sales of $9 billion in 2020, while the company forecasts revenue of $9.2 billion to $9.4 billion in 2021. Mr. Davis said Dole, which had $4.7 billion in total assets at the end of September, is trying to expand its company, potentially via bolt-on acquisitions.
According to Mr. Davis, Total Produce, which was created in 2006 after a split from banana producer Fyffes PLC, has made over 100 acquisitions since its start, frequently by purchasing a minority share and gradually increasing it. Dole is currently scouring the market for targets in the United States and other countries, with a focus on assets in fast-growing areas such as avocados and berries.
Mr. Davis said the business expects to generate $30 million to $40 million in yearly savings in areas like procurement and shipping over the next three to five years. The savings will not come from layoffs among the business’s more than 40,000 employees, according to the company. Dole expects to save $40 million per year in interest payments as a result of its recent refinancing.
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According to Mr. Davis, the company’s leverage ratio, which is measured as the ratio of net debt to profits before interest, taxes, depreciation, and amortization, was 2.76 times at the end of the third quarter, down from more than 5 times when Total Produce became an investor. According to him, the merged corporation aims for a leverage ratio of roughly 3 times.
Mr. Davis said, “We have substantial space to be able to undertake deals.” At the end of September, the company’s net debt was $1.13 billion, down from $1.51 billion at the end of March.
According to Roland French, an equities analyst at Davy Research, the research arm of the wealth management firm Davy Group, Dole would likely operate as a consolidator in a fragmented industry.
Mr. French said, “The IPO deal enabled the firm to de-lever the Dole balance sheet, which is a significant aspect of the growth narrative in terms of driving future M&A.” Dole will benefit from improved freight and procurement prices as well as revenue synergies as a result of becoming a part of a larger company, he noted.
Dole, like other food companies, is dealing with rising labor and transport expenses. If inflation continues, the firm, which has hiked prices on select salads and fresh vegetables, is mulling further hikes, according to its finance head. Mr. Davis said, “Everyone in the larger business is experiencing this.”
Dole owns 13 ships, including the Aztec.
Dole PLC (photo)
The corporation owns and runs 11 of the 13 container ships used to carry bananas, pineapples, and other goods.
“We aren’t as vulnerable as others since we own and operate our own fleet of ships and containers,” the CFO said, adding that the business would continue to look for methods to offset recent cost hikes.
Warehouses in California’s Inland Empire are an important part of the supply chain in the United States. This Christmas season, low warehouse vacancy rates in the region, along with port delays, are creating a perfect storm of issues. Sam Rosenthal/Getty Images
Nina Trentmann can be reached at Nina.Trentmann@wsj.com.
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