Dole (NYSE:DOLE) Reports Q1 In Line With Expectations

Radek Strnad /
2024/05/15 6:15 am EDT

Fresh produce company Dole (NYSE:DOLE) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 6.6% year on year to $2.12 billion. It made a non-GAAP profit of $0.43 per share, improving from its profit of $0.34 per share in the same quarter last year.

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Dole (DOLE) Q1 CY2024 Highlights:

  • Revenue: $2.12 billion vs analyst estimates of $2.12 billion (small beat)
  • Adjusted EBITDA: $110.1 million vs analyst estimates of $99.4 million (10.8% beat)
  • EPS (non-GAAP): $0.43 vs analyst estimates of $0.31 (38.3% beat)
  • Full year guidance: adjusted EBITDA to be similar to full year 2023 (in line)
  • Gross Margin (GAAP): 9.2%, up from 9% in the same quarter last year
  • Free Cash Flow was -$53.19 million, down from $123.4 million in the previous quarter
  • Market Capitalization: $1.16 billion

1 Dole plc reports its financial results in accordance with U.S. Generally Accepted Accounting Principles ("GAAP").

Cherished for its delicious, world-famous pineapples and Hawaiian roots, Dole (NYSE:DOLE) is a global agricultural company specializing in fresh fruits and vegetables.

Perishable Food

The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.

Sales Growth

Dole is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.

As you can see below, the company's revenue has declined over the last three years, dropping 2.6% annually. This is among the worst in the consumer staples industry, where demand is typically stable.

Dole Total Revenue

This quarter, Dole grew its revenue by 6.6% year on year, and its $2.12 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 2.7% over the next 12 months, a deceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Dole burned through $53.19 million of cash in Q1, representing a negative 2.5% free cash flow margin. The company shifted to cash flow negative from cash flow positive in the same quarter last year, which caught our eye as we'd like consumer staples companies to have more consistent performance.

Dole Free Cash Flow Margin

Over the last eight quarters, Dole has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 3.1%, subpar for a consumer staples business. Furthermore, its margin has averaged year-on-year declines of 1.3 percentage points over the last 12 months.

Key Takeaways from Dole's Q1 Results

We were impressed by how significantly Dole blew past analysts' operating margin and adjusted EBITDA expectations this quarter. Full year adjusted EBITDA was in line with expectations, showing that the company is on track. On the other hand, its gross margin missed analysts' expectations. Overall, we think this was a fine quarter. The stock is flat after reporting and currently trades at $12.3 per share.

Dole may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.