DEL MONTE CORP (FDP) FY 2024 MD&A

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our financial condition and results of operations should be read in conjunction with the information contained in our consolidated financial statements and the notes thereto. The following discussion includes forward-looking statements that involve certain risks and uncertainties, including, but not limited to, those described in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. Our actual results may differ materially from those discussed below. See “Special Note Regarding Forward-Looking Statements” below and Part I, Item 1A. Risk Factors, of this Annual Report on Form 10-K.

Overview

We are 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 marketer of prepared fruit and vegetables, juices, beverages and snacks in Europe, Africa and the Middle East. We market our products worldwide under the Del Monte® brand, a symbol of product innovation, quality, freshness and reliability since 1892. Our major sales markets are organized as follows: North America, Europe, the Middle East (which includes North Africa) and Asia. Our global sourcing and logistics system allows us to provide regular delivery of consistently high-quality produce and value-added services to our customers. Our major producing operations are located in North, Central and South America, Asia and Africa.

Our business is comprised of three reportable segments, two of which represent our primary businesses of fresh and value-added products and banana, and one that represents our other ancillary businesses.

•Fresh and value-added products - includes pineapples, fresh-cut fruit, fresh-cut vegetables (which includes fresh-cut salads), melons, vegetables, non-tropical fruit (which includes grapes, apples, citrus, blueberries, strawberries, pears, peaches, plums, nectarines, cherries and kiwis), other fruit and vegetables, avocados, and prepared foods (which includes prepared fruit and vegetables, juices, other beverages, and meals and snacks).

•Banana

•Other products and services - includes our third-party freight and logistic services business, our Jordanian poultry and meats business and our biomass initiatives.

Fiscal Year

Our fiscal year end is the last Friday of the calendar year, unless the first Friday subsequent to the end of the calendar year is January 1st (in which case our year end is January 1st). Fiscal year 2024 had 52 weeks and ended on December 27, 2024. Fiscal year 2023 had 52 weeks and ended on December 29, 2023. Fiscal year 2022 had 52 weeks and ended on December 30, 2022.

Current Macroeconomic Environment and Geopolitical Environment

Starting in fiscal year 2021, we began experiencing inflationary and cost pressures due to volatility and disruption in the global economy. These conditions, which increased our production and distribution costs, were driven by a multitude of external factors including rising interest rates, restrictions and economic impacts related to the COVID-19 pandemic, currency fluctuations, supply chain disruptions and geopolitical conflicts. Specifically, costs of packaging materials, fertilizers, labor, fuel, and ocean and inland freight were significantly impacted, and continued to adversely affect our profitability and operating cash flows during 2022 and to a lesser extent during 2023 and 2024.

We continue to actively monitor geopolitical pressures around the world including, among others, the conflicts in the Middle East and other regional or global military conflicts. As a result of these conflicts, recent shipping disruptions in the Red Sea and surrounding waterways have created logistical pressures that have negatively impacted our business, including impacts to the availability of certain shipping routes resulting in increased shipping times. While we have taken actions to divert our shipping routes in order to minimize impacts on our business, we may not be able to mitigate the impact of additional write-offs, higher shipping rates, or longer shipping routes on our operations if conditions in the regions surrounding the Red Sea deteriorate.

Based on the stabilization of inflation in certain key markets during the latter part of 2023, we have not established further inflation-justified price increases and surcharges in 2024. We are actively monitoring region-specific macroeconomic factors to mitigate increases in our costs, if necessary.

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Additionally, President Trump has issued or threatened to issue multiple executive orders directing the United States to impose new tariffs on imports from multiple nations, including jurisdictions we sell into and from which we purchase or source. As a result of the issued and threatened executive orders, we are currently evaluating the potential impact of the announced and threatened tariffs to our business. The actual impact of the new tariffs on our business is subject to a number of factors including the effective date and duration of such tariffs, additional countries included in the scope of tariffs in the future, changes to amounts, potential retaliatory tariffs imposed by other countries, and other variables. If the tariffs are imposed and we are unable to increase our selling prices to our customers, we expect that the estimated decrease in our gross profit in 2025 could be material.

Refer to the “Results of Operations" section below, as well as Part I. Item 1A, Risk Factors of this Annual Report on Form 10-K for further discussion.

Strategic Alternatives for Mann Packing Operation

During the second half of 2023, we conducted a strategic review and assessed our operational priorities of our North America operations, including our subsidiary, Mann Packing. Preliminary findings of this review were finalized in the fourth quarter of 2023. We announced in conjunction with our fourth quarter of 2023 earnings that we were exploring strategic alternatives for the business. After thorough evaluation of potential options, during the second half of 2024, the Company finalized a number of decisions as part of a three-pronged strategy focused on increasing operational efficiency, elevating its product offerings, and divesting non-core assets, which included the sale of certain assets of our Fresh Leaf Farms business, a wholly-owned subsidiary of Mann Packing. The sale of Fresh Leaf Farms was completed in November 2024 resulting in proceeds of $17.6 million, net of $0.8 million of transaction costs. Additionally, during the fourth quarter of 2024, we completed the consolidation of a number of Mann Packing operations into a single facility at our Gonzales, California location. We believe these actions will allow us to streamline operations, reduce overhead costs, and enhance efficiency.

Net Sales

Our net sales are affected by numerous factors, including mainly the balance between the supply of and demand for our products and competition from other fresh produce companies. Our net sales are also dependent on our ability to supply a consistent volume and quality of fresh produce to the markets we serve. As a result of seasonal sales price fluctuations, we have historically realized a greater portion of our net sales and gross profit during the first two calendar quarters of the year. For example, seasonal variations in demand for bananas as a result of increased supply and competition from other fruit are reflected in the seasonal fluctuations of banana prices, with the first six months of each year generally exhibiting stronger demand and higher prices, except in those years where an excess supply exists. In our fresh and value-added products segment, there are seasonal variations in sales of our non-tropical fruit products which reach peak sales season from October to May. The impact of seasonality on our financial results was atypical during fiscal year 2022, particularly in our banana segment, where market conditions led to a more significant portion of our gross profit being generated in the second half of the year when compared with historical results and the results of our fiscal years 2023 and 2024.

Our strategy for net sales growth is focused on protecting and growing our core business as well as driving innovation and expansion of our value-added categories, including through the development of new products and by targeting the convenience store and foodservice trade in our major global markets.

Since our financial reporting currency is the U.S. dollar, our net sales are significantly affected by fluctuations in the value of the currency in which we conduct our sales versus the dollar, with a weaker dollar versus such currencies resulting in increased net sales in dollar terms. Including the effect of our foreign currency hedges, net sales in 2024 were negatively impacted by $19.0 million primarily due to fluctuations in exchange rates versus the Japanese yen and Korean won.

Cost of Products Sold

Cost of products sold is primarily composed of two elements:

Product costs - primarily composed of cultivation (the cost of growing crops), harvesting, packaging, labor, depreciation and farm administration. Product cost for produce obtained from independent growers is composed of procurement and packaging costs.

Logistics costs - includes land and sea transportation and expenses related to port facilities and distribution centers. Sea transportation cost is the most significant component of logistics costs and is comprised of:

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•Ship operating expenses - includes operations, maintenance, depreciation, insurance, fuel (the cost of which is subject to commodity price fluctuations), and port charges.

•Chartered ship costs - includes the cost of chartering the ships, fuel and port charges.

•Container equipment-related costs - includes leasing expense and in the case of owned equipment, also depreciation expense.

•Third-party containerized shipping costs - includes the cost of using third-party shipping in our logistics operations.

In general, changes in our volume of products sold can have a disproportionate effect on our gross profit. Within any particular year, a significant portion of our cost of products sold is fixed, both with respect to our operations and with respect to the cost of produce purchased from independent growers from whom we have agreed to purchase all the products they produce. Accordingly, higher volumes produced on company-controlled farms directly reduce the average per-box cost, while lower volumes directly increase the average per-box cost. In addition, because the volume that will actually be produced on our farms and by independent growers in any given year depends on a variety of factors, including weather, that are beyond our control or the control of our independent growers, it is difficult to predict volumes and per-box costs.

Variations in containerboard prices, which affect the cost of boxes and other packaging materials, and fuel prices can have a significant impact on our product costs and our gross profit. Containerboard, plastic, resin and fuel prices have historically been volatile. Our expenses relating to employee labor are also significant to our product costs and our gross profit, and our ability to control these costs is generally subject to numerous external factors. Also, variations in the production yields, fertilizers and other input costs and the cost to procure products from independent growers can have a significant impact on our costs. Refer to the “Current Macroeconomic Environment and Inflation Impact" section above for further discussion regarding the impact of inflationary cost pressures on our fiscal years 2023 and 2024 financial results.

Since our financial reporting currency is the U.S. dollar, our costs are affected by fluctuations in the value of the currency in which we have significant operations versus the dollar, with lower cost resulting from a stronger U.S. dollar. During 2024, cost of products sold was negatively impacted by approximately $8 million, primarily driven by fluctuations in exchange rates versus the Costa Rican colon.

Income Taxes

The provision for income taxes in 2024 was $29.1 million. Income taxes consist of the consolidation of the tax provisions, computed on a separate entity basis, in each country in which we have operations. Since we are a non-U.S. company with substantial operations outside the United States, a substantial portion of our results of operations is not subject to U.S. taxation. Several of the countries in which we operate have lower tax rates than the United States. We are subject to U.S. taxation on our operations in the United States. From time to time, tax authorities in various jurisdictions in which we operate audit our tax returns and review our tax positions. There are audits presently pending in various countries. There can be no assurance that any tax audits, or changes in existing tax laws or interpretations in countries in which we operate will not result in an increased effective tax rate for us.

In connection with the examination of the tax returns in three foreign jurisdictions, the taxing authorities have issued income tax deficiencies primarily related to transfer pricing aggregating approximately $231.9 million (including interest and penalties) for tax years 2012 through 2021. We strongly disagree with the proposed adjustments and have filed a protest with each of the taxing authorities.

We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. Accordingly, we have not accrued any additional amounts based upon the proposed adjustments. There can be no assurance that these matters will be resolved in our favor, and an adverse outcome of either matter, or any future tax examinations involving similar assertions, could have a material effect on our financial condition, results of operations and cash flows. See Part I, Item 3. Legal Proceedings, of this Annual Report on Form 10-K for more information regarding these matters.

On December 15, 2022, the European Union (EU) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (OECD) Pillar Two Framework which will be effective for the Company for the 2025 fiscal year. A significant number of other countries are expected to also implement similar legislation with varying effective dates in the future. We are

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continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries, however, we may not be able to completely mitigate the impact of the legislation which could have an adverse material effect on our financial condition, results of operations and cash flows.

RESULTS OF OPERATIONS

Consolidated Financial Results For the Year Ended December 27, 2024, Compared to the Year Ended December 29, 2023

The following summarizes the more significant factors impacting our operating results for the fiscal year ended December 27, 2024 as compared with the fiscal years ended December 29, 2023 and December 30, 2022.

Net sales - Net sales for 2024 were $4,280.2 million compared with $4,320.7 million in 2023. Net sales were primarily impacted by lower sales volumes and per unit selling prices of banana and the negative impact of exchange rate fluctuations, primarily versus the Japanese yen and Korean won compared with the prior-year period. These were partially offset by higher per unit selling prices and sales volume in our fresh and value-added products segment, primarily related to avocado and pineapple.

Gross profit - Gross profit for 2024 increased by 2% to $357.9 million from $350.7 million in 2023. The increase in gross profit was driven by higher net sales in our fresh and value-added products segment and lower ocean freight costs, partially offset by lower net sales in our banana segment, higher per unit production and procurement costs, and the negative impact of fluctuations in exchange rates, primarily related to the Costa Rican colon and Japanese yen.

Gross profit for 2024 included $1.0 million of other product-related charges primarily related to $1.2 million of severance charges from the outsourcing of certain functions of our fresh and value-added operations, $1.0 million of additional logistic costs and inventory write-offs incurred as a result of Hurricane Beryl during July 2024, partially offset by $1.7 million related to insurance recoveries associated with the flooding of a production facility in Greece during 2023. Gross profit for 2023 included $3.8 million of other product-related charges primarily related to $1.5 million of inventory write-off due to the sale of two distribution centers in Saudi Arabia and $1.4 million of inventory write-off and clean-up cost, net of insurance recoveries, tied to the flooding in Greece.

Selling, general and administrative expenses - Selling, general and administrative expenses increased by $10.2 million when compared with the prior-year period. The increase was primarily due to higher employee benefits, marketing and promotional activities in North America and Europe and administrative costs associated with the creation of our biomass initiatives during 2024, partially offset by a reduction in amortization due to the impairment of customer relationships and trade name intangible assets during the fourth quarter of 2023.

Gain on disposal of property, plant and equipment, net and subsidiary - The gain on disposal of property, plant and equipment, net and subsidiary of $39.5 million during 2024 primarily related to the sale of two idle facilities and a warehouse in Chile, a Canadian distribution center and certain assets of Fresh Leaf Farms, a North American subsidiary in our fresh and value-added products segment. The gain on disposal of property, plant and equipment, net and subsidiary of $37.9 million during 2023 primarily related to the sales of two distribution centers and related assets in Saudi Arabia, an idle facility in North America, our plastics business subsidiary in South America, and two carrier vessels.

Asset impairment and other charges (credits), net - Asset impairment and other charges (credits), net of $4.2 million in 2024 primarily consisted of (1) a $1.8 million settlement agreement with respect to a litigation matter by a former employee, net of insurance reimbursements, (2) $1.5 million of impairment charges of damaged buildings located at farms in Costa Rica, (3) $1.4 million of impairment charges related to goodwill in our vegetable reporting unit, and (4) a $0.5 million reserve recorded due to a potential liability arising from our third-party logistics operations, partially offset by a $2.0 million insurance reimbursement related to fire damages at a warehouse in Chile. Asset impairment and other charges, net of $143.4 million in

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2023 primarily consisted of (1) $109.6 million impairment charges related to customer list and trade name intangible assets and building, land, and land improvements assets in North America related to our fresh and value-added products segment (2) a $21.6 million impairment charge related to goodwill in our prepared foods reporting unit, (3) a $3.7 million impairment charge related to low-yielding banana farms in the Philippines, (4) a $4.4 million impairment charge related to low-yielding deciduous farms in Chile, and (5) $1.3 million of expenses, net of insurance reimbursements, incurred in connection with a cybersecurity incident.

Operating income - Operating income increased by $137.8 million in 2024 when compared with 2023, mainly due to lower asset impairment charges and higher gross profit, partially offset by higher selling, general and administrative expenses.

Interest expense - Interest expense decreased by $5.7 million in 2024 when compared with 2023, primarily due to lower average debt balances.

Other expense, net - Other expense, net, was $8.4 million in 2024 compared with $19.3 million in 2023. The decrease in expense of $10.9 million was mainly driven by equity earnings of unconsolidated companies within the food and nutrition sector.

Income tax provision - Income tax provision was $29.1 million in 2024 compared with $18.1 million in 2023. The increase in the income tax provision of $11.0 million is primarily due to increased earnings in certain higher tax jurisdictions.

Financial Results by Segment

The following table presents net sales and gross profit by segment (U.S. dollars in millions) and gross margin percentage:

Fresh and value-added products

Net sales for 2024 were $2,606.9 million compared with $2,477.8 million in 2023. The increase in net sales was primarily a result of higher per unit selling prices and sales volume of avocado and pineapple due to stronger demand and higher sales volume of melon. The increases were partially offset by lower net sales of vegetable and fresh-cut fruit due to lower sales volume and the unfavorable impact of fluctuations in exchange rates, primarily due to a weaker Japanese yen and Korean won.

Gross profit for 2024 was $243.3 million compared with $167.3 million in 2023. The increase in gross profit was primarily driven by higher net sales and lower per unit production costs of pineapple, fresh-cut fruit and fresh-cut vegetables, partially offset by the negative impact of fluctuations in exchange rates, primarily due to a stronger Costa Rican colon. Gross margin increased to 9.3% compared with 6.8% in the prior-year period.

Gross profit in the fresh and value-added products segment included $0.6 million of other product-related charges in 2024 primarily related to $1.2 million of severance charges from the outsourcing of certain functions within our operations, $0.6 million of additional logistic expenses and inventory write-offs incurred as a result of Hurricane Beryl during July 2024, and $0.2 million of inventory write-offs related to flooding damage at melon farms in Costa Rica, partially offset by $1.7 million of insurance recoveries, net of expenses, associated with the flooding of a production facility in Greece. Gross profit in the fresh and value-added products segment included $3.7 million of other product-related charges in 2023 primarily related to $1.5 million of inventory write-off due to the sale of two distribution centers in Saudi Arabia and $1.4 million of inventory write-off and clean-up cost, net of insurance recoveries, tied to the flooding of a seasonal production facility in Greece.

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Banana

Net sales for 2024 were $1,475.9 million compared with $1,638.2 million in 2023. The decrease in net sales was driven by lower sales volumes in North America due to competitive market pressures, lower sales volume in Asia due to decreased supply from the Philippines as a result of weather-related events and the negative impact of fluctuations in exchange rates primarily due to a weaker Japanese yen and Korean won.

Gross profit for 2024 was $86.8 million compared with $163.3 million in 2023. The decrease in gross profit was primarily driven by lower net sales, higher per unit production costs, and the negative impact of fluctuations in exchange rates due to a stronger Costa Rican colon, partially offset by lower per unit ocean freight and distribution costs.

Gross profit in the bananas segment included $0.4 million of other product-related charges, primarily as a result of additional logistic expenses and inventory write-offs incurred as a result of Hurricane Beryl during July 2024. Gross margin decreased to 5.9% compared with 10.0% in the prior-year period.

Other products and services

Net sales for 2024 were $197.4 million compared with $204.7 million in 2023. The decrease in net sales was primarily due to the sale of our plastics subsidiary during the prior-year period and lower net sales in our third-party ocean freight services as a result of lower rates and volume, partially offset by an increase in net sales in our poultry and meats business driven by an increase in per unit selling prices.

Gross profit for 2024 was $27.8 million compared to $20.1 million in 2023. The increase in gross profit was primarily a result of higher net sales and lower per unit production costs in our poultry and meats business, partially offset by lower rates in our third-party ocean freight services. Gross margin increased to 14.1% from 9.8% in the prior-year period.

Results of Operations - For the Year Ended December 29, 2023, Compared to the Year Ended December 30, 2022

For a comparison of our results of operations for the year ended December 29, 2023, compared to the year ended December 30, 2022, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 29, 2023, filed with the SEC on February 26, 2024, which is incorporated herein by reference.

LIQUIDITY AND CAPITAL RESOURCES

Fresh Del Monte Produce Inc. is a holding company whose only significant asset is the outstanding capital stock of our subsidiaries that directly or indirectly own all of our assets. We conduct all of our business operations through our subsidiaries. Accordingly, as of December 27, 2024, our principal sources of liquidity are (i) cash generated from operations of our subsidiaries, (ii) our combined $806 million of credit facilities with an available capacity of approximately $539 million and (iii) existing cash and cash equivalents of $32.6 million. The loan commitments under our credit facilities can be used for working capital or other general corporate purposes. On a long-term basis, we will continue to rely on our credit facilities for any long-term funding not provided by cash generated from operations of our subsidiaries.

Our principal uses of liquidity are paying the costs associated with our operations, paying dividends, and making capital expenditures to increase our productivity and expand our product offerings and geographic reach. We may also, from time to time, prepay outstanding indebtedness on our credit facilities, repurchase and retire ordinary shares of our common stock or acquire assets or businesses that we believe are complementary to our operations.

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A summary of our cash flows is as follows (U.S. dollars in millions):

Operating activities

Net cash provided by operating activities was $182.5 million for 2024 compared with $177.9 million for 2023, an increase of $4.6 million. The increase in net cash provided by operating activities was principally attributable to current year working capital fluctuations, primarily a result of higher levels of accounts payable and accrued expenses compared to the prior year due to the timing of period end payments to suppliers.

Working capital was $599.8 million at December 27, 2024 compared with $603.7 million at December 29, 2023, a decrease of $3.9 million. The decrease in working capital was mainly due to lower levels of (i) other accounts receivable and (ii) raw materials and packaging supplies inventory. Partially offsetting this decrease in working capital was a (a) decrease in current maturities of operating leases, (b) an increase in trade accounts receivable and (c) growing crops inventory.

Investing activities

Net cash provided by investing activities was $20.4 million for 2024 compared with $56.4 million for 2023. Net cash provided by investing activities for 2024 primarily consisted of proceeds from the sale of property, plant and equipment and subsidiary of $74.4 million, primarily relating to the sale of three facilities in South America, a distribution center in Canada, and certain assets of Fresh Leaf Farms, a North American subsidiary in our fresh-cut vegetable business, and $5.7 million of insurance recoveries received for damage to property, plant and equipment associated with the flooding of a production facility in Greece during 2023. Partially offsetting the net cash provided by investing activities were capital expenditures of $51.7 million and $8.0 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Net cash provided by investing activities for 2023 primarily consisted of proceeds from the sale of property, plant and equipment and subsidiary of $119.9 million, primarily relating to the sale of two distribution centers in Saudi Arabia, an idle production facility in North America, land in South and Central America, and proceeds from the sale of our plastics business subsidiary in South America for total purchase consideration of $16.5 million, of which we received $14.0 million. The remaining $2.5 million, which includes $0.5 million of post-closing adjustments, will be received in three successive semi-annual installments. Two of these installments, amounting to $1.8 million, were received during 2024. Partially offsetting the net cash provided by investing activities were capital expenditures of $57.7 million and $5.3 million in investments in unconsolidated companies in the food and nutrition sector that align with our long-term strategy and vision.

Capital expenditures related to the fresh and value-added products segment accounted for $35.5 million, or 69%, of our 2024 capital expenditures and $31.3 million, or 54%, of our 2023 capital expenditures. During 2024 capital expenditures primarily related to (1) improvements to our pineapple operations in Central America, Kenya and the Philippines and (2) improvements and enhancements to our production facilities in North America and Europe. During 2023, capital expenditures primarily related to (1) improvements and enhancements to our production facilities in North America, Europe, Asia, and the Middle East; (2) improvements to our pineapple operations in Central America and Kenya; and (3) operational investments in automation and data-driven technology, mainly in North America.

Capital expenditures related to the banana segment accounted for $13.7 million, or 26%, of total 2024 capital expenditures and $12.8 million, or 22%, of total 2023 capital expenditures. During 2024, these capital expenditures primarily related to

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improvements to our production operations in Central America and port facilities in North America. During 2023, these capital expenditures primarily related to improvements to our production operations in Central America.

Capital expenditures related to the other products and services segment accounted for $2.5 million, or 5%, of our 2024 capital expenditures and $13.6 million, or 24%, of our 2023 capital expenditures. During 2024 these capital expenditures primarily related to our biomass initiatives. During 2023, these capital expenditures primarily related to improvements to our Jordanian poultry operations.

Capital expenditures for 2025 are expected to be approximately $80 million to $90 million, primarily consisting of (1) upgrades to our pineapple production operations in Central America and the Philippines and (2) investments to improve and expand our fresh-cut and prepared foods operations in Africa. We expect to fund these capital expenditures which primarily relate to our fresh and value-added and banana segments through operating cash flows and borrowings under our credit facility.

Financing Activities

Net cash used in financing activities was $209.9 million for 2024 and $213.5 million for 2023. Net cash used in financing activities for 2024 primarily consisted of (i) net payments on long-term debt of $155.9 million, (ii) dividends paid of $47.8 million, and (iii) payment of deferred financing costs of $2.2 million in conjunction with the February amendment of our Second Amended and Restated Credit Agreement. Net cash used in financing activities for 2023 primarily consisted of (i) net payments on long-term debt of $139.8 million, (ii) dividends paid of $35.9 million, (iii) distributions to noncontrolling interests of $17.9 million, including a distribution to our minority partner in Saudi Arabia in connection with the sale of the two distribution centers completed in the first quarter of 2023, (iv) repurchase and retirement of ordinary shares of $11.8 million and (v) a $5.2 million payment to acquire the remaining 25% interest in one of our Mann Packing subsidiaries, as the noncontrolling shareholder exercised its put option during the second quarter of 2023.

Debt Instruments and Debt Service Requirements

On October 1, 2019, we and certain of our subsidiaries entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with the financial institutions and other lenders named therein, including Bank of America, N.A. as administrative agent and BofA Securities, Inc. as sole lead arranger and sole bookrunner. The Second A&R Credit Agreement provided for a five-year, $0.9 billion syndicated senior unsecured revolving credit facility maturing on October 1, 2024. The Second A&R Credit Agreement was subsequently amended on December 30, 2022, to replace the Eurocurrency Rate with the Term Secured Overnight Financing Rate ("Term SOFR") effective January 3, 2023.

On February 21, 2024, we entered into Amendment No. 2 to the Second Amended and Restated Credit Agreement (the "2024 Amended Credit Facility") which amends and restates the Second A&R Credit Agreement. The 2024 Amended Credit Facility provides for a five-year, $0.75 billion syndicated senior unsecured revolving credit facility ("Amended Revolving Credit Facility") and extends the existing maturity date to February 21, 2029. Amounts borrowed under the revolving credit facility accrue interest at a rate equal to the Term SOFR rate plus a margin that ranges from 1.0% to 1.625% based on our Consolidated Leverage Ratio (as defined in the 2024 Amended Credit Facility). In addition, we pay a fee on unused commitments at a rate equal to 0.150% to 0.250% based on our Consolidated Leverage Ratio. The 2024 Amended Credit Facility also permits, under certain conditions, $200 million of Permitted Receivables Financing (as defined in the 2024 Amended Credit Facility). We intend to use funds borrowed under the Amended Revolving Credit Facility from time to time for general corporate purposes, working capital, capital expenditures and other permitted investment opportunities.

The 2024 Amended Credit Facility provides for an accordion feature that permits us, without the consent of the other lenders, to request that one or more lenders provide us with increases in revolving credit facility or term loans up to an aggregate of $300 million (“Incremental Increases”). The aggregate amount of Incremental Increases can be further increased to the extent that after giving effect to the proposed increase in revolving credit facility commitments or term loans our Consolidated Leverage Ratio, on a pro forma basis, would not exceed 2.75 to 1.00. Our ability to request such increases or term loans is subject to our compliance with customary conditions set forth in the 2024 Amended Credit Facility including compliance, on a pro forma basis, with certain financial covenants and ratios. Upon our request, each lender may decide, in its sole discretion, whether to increase all or a portion of its revolving credit facility commitment or provide term loans.

The 2024 Amended Credit Facility contains similar financial covenants to those included within the Second A&R Credit Agreement. Specifically, it requires us to maintain 1) a Consolidated Leverage Ratio of not more than 3.75 to 1.00 at any time during any period of four consecutive fiscal quarters, subject to certain exceptions and 2) minimum Consolidated Interest Coverage Ratio of not less than 2.25 to 1.00 as of the end of any fiscal quarter. Additionally, it requires us to comply with certain other covenants, including limitations on capital investments, the amount of dividends that can be paid in the future, the

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amounts and types of liens and indebtedness, material asset sales, and mergers. Under the 2024 Amended Credit Facility, we are permitted to declare or pay cash dividends in any fiscal year up to an amount that does not exceed the greater of (i) an amount equal to (1) the greater of (A) 50% of the Consolidated Net Income (as defined in the 2024 Amended Credit Facility) for the immediately preceding fiscal year or (B) $25 million (the "Base Dividend Basket") plus (2) commencing in the fiscal year ending December 26, 2025 any portion of the Base Dividend Basket not used in the immediately preceding fiscal year, or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of declaration or payment) to exceed 3.50 to 1.00. It also provides an allowance for stock repurchases to be an amount not exceeding the greater of (i) (A) $50,000,000 (the "Base Redemption Basket") plus (B) commencing in the fiscal year ending December 26, 2025, any portion of the Base Redemption Basket not used in the immediately preceding fiscal year or (ii) the greatest amount which would not cause the Consolidated Leverage Ratio (determined on a pro forma basis as of the date of such repurchase) to exceed 3.50 to 1.00. As of December 27, 2024, we were in compliance with all the covenants contained in the 2024 Amended Credit Facility.

In addition to the indebtedness under our 2024 Amended Credit Facility, our material cash requirements include contractual obligations from other working capital facilities and lease obligations. Refer to Note 11 "Debt" in the Notes to the Consolidated Financial Statements under Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K for more information regarding these material cash requirements.

As of December 27, 2024, we had $539.2 million of borrowing availability under committed working capital facilities, primarily under the Amended Revolving Credit Facility.

We believe that our cash on hand, borrowing capacity available under our Amended Revolving Credit Facility, and cash flows from operations for the next twelve months will be sufficient to service our outstanding debt during the next twelve months. However, we cannot predict whether future developments associated with the current economic environment will materially adversely affect our long-term liquidity position. Our liquidity assumptions, the adequacy of our available funding sources, and our ability to meet our Amended Revolving Credit Facility covenants are dependent on many additional factors, including those set forth in Part I. Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

Derivatives

We are exposed to fluctuations in currency exchange rates against the U.S. dollar on our results of operations and financial condition and we mitigate that exposure by entering into foreign currency forward contracts. Certain of our subsidiaries periodically enter into foreign currency forward contracts in order to hedge portions of forecasted sales or cost of sales denominated in foreign currencies, which generally mature within one year. The fair value of our derivatives related to our foreign currency cash flow hedges was a net asset position of $0.3 million as of December 27, 2024 compared to a net liability position of $0.3 million as of December 29, 2023 due to the relative strengthening or weakening of exchange rates when compared to the contracted rates.

We are exposed to fluctuations in variable interest rates on our results of operations and financial condition, and we mitigate that exposure by entering into interest rate swaps from time to time. During 2018, we entered into interest rate swaps in order to hedge the risk of the fluctuation on future interest payments related to a portion of our variable rate borrowings through 2028. On July 19, 2024, we agreed to terminate our outstanding interest rate swap agreement in exchange for $7.3 million, net of fees of $0.2 million. The fair value of the derivatives related to our interest rate swap cash flow hedges was an asset position of $7.9 million as of December 29, 2023. Based on our assessment that the originally hedged cash flows associated with our variable rate borrowings remain probable, the proceeds received as a result of the termination of our outstanding interest rate swap agreement will remain in accumulated other comprehensive loss and be reclassified to earnings through interest expense over the remaining life of the hedged debt. At December 27, 2024, $5.5 million remained in accumulated other comprehensive loss related to the terminated interest rate swap, of which $2.7 million is expected to be reclassified to earnings through interest expense over the next twelve months.

We enter into derivative instruments with counterparties that are highly rated and do not expect a deterioration of our counterparty’s credit ratings; however, the deterioration of our counterparty’s credit ratings would affect the Consolidated Financial Statements in the recognition of the fair value of the hedges that would be transferred to earnings as the contracts settle. We expect that $0.3 million of the net fair value of designated hedges recognized as a net gain in accumulated other comprehensive loss will be transferred to earnings during the next 12 months along with the earnings effect of the related forecasted transactions.

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Other

We are involved in several legal and environmental matters that, if not resolved in our favor, could require significant cash outlays and could have a material adverse effect on our results of operations, financial condition and liquidity. See Part I, Item 1. Business Overview under “Environmental Proceedings” and Part I, Item 3. Legal Proceedings and Note 16, “Commitments and Contingencies” to the Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Commitments and Contractual Obligations

The following details information with respect to our contractual obligations as of December 27, 2024.

(1) We utilize a variable interest rate on our long-term debt, and for presentation purposes we have used an assumed average rate of 4.3%.

We have agreements to purchase the entire or partial production of certain products of our independent growers primarily in Guatemala, Ecuador, Philippines, Costa Rica, Colombia, and Chile that meet our quality standards. Total purchases under these agreements amounted to $643.4 million for 2024, $631.6 million for 2023, and $625.9 million for 2022.

Liquidity and Capital Resources - For the Year Ended December 29, 2023, Compared to the Year Ended December 30, 2022

For a comparison of our liquidity and capital resources for the year ended December 29, 2023, compared to the year ended December 30, 2022, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 29, 2023, filed with the SEC on February 26, 2024, which is incorporated herein by reference.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In applying accounting principles, it is often required to use estimates. These estimates require the application of judgment and affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. Although we believe our estimates are reasonable and appropriate, material changes in certain estimates that we use could potentially affect, by a material amount, our consolidated financial position and results of operations. We have identified several estimates which are listed below as being critical because they require management to make particularly difficult, subjective, and complex judgments about matters that are inherently uncertain. As a result, there is a likelihood that materially different amounts would be reported under different conditions or using different assumptions.

All of our significant accounting policies are discussed in Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements under Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

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Goodwill and Indefinite-Lived Intangible Assets

Goodwill represents the excess of the purchase price of an acquired entity over the fair value of the net tangible and identifiable intangible assets acquired and liabilities assumed in a business combination. We assess goodwill at the reporting unit level on an annual basis as of the first day of our fourth quarter, or more frequently if events or changes in circumstances suggest that goodwill may not be recoverable. In performing our annual goodwill impairment test, we may start with an optional qualitative assessment as allowed for under the accounting guidance. As part of the qualitative assessment, we evaluate all events and circumstances, including both positive and negative events, in their totality, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we bypass the qualitative assessment, or if the qualitative assessment indicates that a quantitative analysis should be performed, we perform a quantitative test for impairment by comparing the fair value of each reporting unit to its carrying value, including the associated goodwill. In performing our quantitative test, we estimated the fair value of these reporting units by using the income approach. The income approach provides an estimate of fair value by measuring estimated annual cash flows over a discrete projection period and applying a present value discount rate to the cash flows. The present value of the estimated annual cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the reporting unit. The discount rates are determined using the weighted average cost of capital for the risk of achieving the projected cash flows. If the carrying amount of the reporting unit exceeds the estimated fair value, an impairment charge is recorded to reduce the carrying value to the estimated fair value.

Our projections include several significant estimates and assumptions by management related to forecasts of future sales volume and pricing, cost of sales, expenses, tax rates, capital spending and the weighted-average cost of capital. Significant judgment is involved in estimating inputs used in the discounted cash flow estimates and, as a result, they include inherent uncertainties. These uncertainties are a result of management establishing expectations based on historical experience about customer demand, macroeconomic trends for the markets in which our reporting units operate, and expectations for investments in maintaining and expanding infrastructure, among other inputs. As of the date of our 2024 impairment testing, the related cash flows were discounted using rates ranging from 8.0% to 11.0% for our reporting units and we used long-term growth rates from 0.0% to 3.0%. Changes in these estimates, many of which fall under Level 3 within the fair value measurement hierarchy, could change our conclusion regarding the impairment of goodwill assets and potentially reduce the carrying value of goodwill on our balance sheet and reduce our income in the year in which it is recorded.

As part of the 2004 Del Monte Foods acquisition, we also acquired perpetual, royalty-free licenses to use the Del Monte® brand for processed and/or canned food in more than 100 countries throughout Europe, Africa, the Middle East and certain Central Asian countries. We can also produce, market and distribute certain prepared food products in North America based on our agreement with Del Monte Pacific utilizing the Del Monte® brand. This indefinite-lived intangible asset is not amortized but is reviewed for impairment as of the first day of the fourth quarter of each fiscal year, or sooner if impairment indicators arise. We generally estimate the fair value of our indefinite-lived intangible assets using a royalty savings method which estimates the value of trade names and trademarks by capitalizing the estimated royalties saved based on our ownership of the assets. The royalty savings method requires significant estimates and judgments by management, including estimates of future sales, tax rates and the weighted-average cost of capital. Additionally, management assumptions are used in determining an appropriate royalty rate which requires management to identify comparable companies and assessment of return attributable to other tangible and intangible assets.

The fair value of our vegetable reporting unit declined as a result of underperformance in our vegetable business in North America and reduction in forecasted cash flows as a result of recent underperformance of the reporting unit. Based on our projections, the carrying amount of our vegetable reporting unit exceeded its fair value as of the date of our 2024 annual impairment test and we recorded a non-cash goodwill impairment charge of $1.4 million, representing the entire goodwill assigned to the vegetable reporting unit. The results of our impairment test for the remaining reporting units resulted in the fair value of each reporting unit exceeding its respective carrying amount as of the assessment date.

As a result of the sale of certain assets of Fresh Leaf Farms, a wholly owned subsidiary of the Company, goodwill related to our fresh-cut reporting unit was allocated based on the relative fair value of the disposal group and the portion of the reporting unit to be retained based on our assessment that the disposal group met the criteria of a business in accordance with Accounting Standards Codification 805 - Business Combinations. The fair value of the portion of the fresh-cut reporting unit retained was determined based on a discounted cash flow analysis, which included estimates of future sales volume and pricing, cost of sales, expenses, tax rates, capital spending, and the weighted-average cost of capital. As a result of the relative fair value calculation, $4.0 million of goodwill was allocated to the disposal group and included in the carrying basis of the assets sold during the fourth quarter of 2024.

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Although we believe that our estimates and judgments used in performing our impairment tests are reasonable, if our reporting units do not perform to expected levels, the related goodwill and the Del Monte® trade names and trademarks may be at risk for additional impairment in the future. Management has identified the fair value of the banana reporting unit's goodwill, prepared reporting unit's goodwill and the Del Monte® prepared foods reporting unit’s trade names and trademarks to be at a higher risk of sensitivity to differences between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of these assets based on the percentage by which their respective fair value exceeded the carrying value as of the date of our annual impairment test. The following table highlights the sensitivities of the goodwill and indefinite-lived intangible assets at risk as of December 27, 2024 (U.S. dollars in millions):

As of December 27, 2024, we are not aware of any additional items or events, other than the impairment recorded in our vegetable reporting unit during the fourth quarter of 2024, that would cause an adjustment to the carrying value of our goodwill and indefinite-lived intangible assets.

Impairment of Long-Lived Assets

We review long-lived assets (or asset groups) with identifiable cash flows for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of an asset may not be recoverable. Once a triggering event has occurred, the impairment test performed is based on whether the Company’s intent is to hold the asset for continued use or to hold the asset for sale. The impairment test for assets held for use requires a comparison of the estimated undiscounted cash flows expected to be generated over the useful life of the significant asset of an asset group to the carrying amount of the asset group. An asset group is generally established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and could include assets used across multiple businesses. In the event the carrying amount of an asset group exceeds the estimated undiscounted future cash flows, an impairment would be measured as the difference between the fair value of the asset group and the carrying amount of the asset group. The fair value of an asset is measured by either determining the expected future discounted cash flows of the asset group or by independent appraisal. Determining whether a long-lived asset group is impaired requires various estimates and assumptions by management, including assessment of whether a triggering event has occurred, the identification of asset groups, forecasts of future sales volume and pricing, cost of sales, expenses, tax rates, capital spending and the weighted-average cost of capital. These estimates, many of which fall under Level 3 within the fair value measurement hierarchy, determine whether impairments have been incurred and quantify the amount of any related impairment charges.

Certain definite-lived intangible assets related to our fresh and value-added products segment are sensitive to changes in estimated cash flows. During the fourth quarter of 2023, we identified factors which indicated the carrying amounts of certain fresh and value-added assets associated with Mann Packing may not be recoverable. These factors included (1) a sustained decline in actual and projected sales and gross margins, (2) conclusions reached from management's strategic review of Mann Packing finalized in the fourth quarter and (3) impairment charges of goodwill in our prepared foods reporting unit which is included within our fresh and value-added products segment. Based on the results of our recoverability test performed, we determined the carrying amounts of certain fresh and value-added assets exceeded their fair values and we recorded non-cash impairment charges of $109.6 million, including impairment charges to customer relationships intangible assets of $88.6 million, trade names of $8.3 million, and building, land and land improvements of $12.7 million. To the extent that future developments result in estimated cash flows that are less than currently estimated levels, it could lead to further impairment of these or other long-lived assets.

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Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year end, based on enacted tax laws and statutory tax rates applicable to the year in which the differences are expected to affect taxable income. In calculating our effective income tax rate as part of our deferred income taxes, we make judgments regarding certain tax positions, including the timing and amount of deductions and allocation of income among various tax jurisdictions with disparate tax laws. Valuation allowances are established when it is deemed more likely than not that some portion or all of the deferred tax assets will not be realized. We review the realizability of our deferred tax asset valuation allowances on a quarterly basis or whenever events or changes in circumstances indicate that a review is required.

The assessment of realizability is dependent upon management’s estimates and assumptions, including an estimate of future reversals of existing taxable temporary differences, forecasted future taxable income, and the implementation and success of any tax planning strategies that may be employed to prevent an operating loss or tax credit carryforward from expiring unused. To the extent that results differ from our original or adjusted estimates, the effect will be recorded in the provision for income taxes in the period that the matter is resolved.

Additionally, as a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. Our determinations regarding the recognition of income tax expenses or benefits as a result of these matters are made in consultation with outside tax and legal counsel, where appropriate, and are based upon the merits of our tax positions in consideration of applicable tax statutes in the associated jurisdictions. Given the uncertainties associated with these matters, the tax benefits ultimately realized by the Company may differ from those recognized in our future financial statements based on a number of factors, including the Company’s success in supporting its filing positions with taxing authorities. See Note 9, “Income Taxes” to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data for additional discussion.

New Accounting Pronouncements

For a description of new applicable accounting pronouncements, refer to Note 2, “Summary of Significant Accounting Policies” to the Consolidated Financial Statements included in Part II, Item 8. Financial Statements and Supplementary Data.

Off-Balance Sheet Arrangements

We are not involved in any off-balance sheet arrangements.