What is the expected effect on Dole's earnings per share (EPS) guidance for the current fiscal year?
Effect on Dole’s EPS guidance
The press release states that the divestiture of the Fresh Vegetables Division will be recorded as a non‑recurring, one‑time gain in the quarter in which the transaction closes. Because the $140 million purchase price (‑$90 million cash, a $50 million seller note and a $10 million potential earn‑out) is being transferred out of Dole’s operating business, the company will no longer have the associated cost‑structure and margin‑drag of that segment. Consequently, management expects the transaction to lift the company’s earnings‑per‑share (EPS) guidance for the current fiscal year.
Why the EPS guidance is expected to rise
| Factor | Impact on EPS |
|---|---|
| One‑time gain from the sale (cash proceeds + seller note) | Adds directly to net income in the period of the transaction, raising the EPS numerator. |
| Elimination of Fresh‑Vegetables operating costs (e.g., production, logistics, SG&A) | Improves the recurring profit margin on the remaining business, further supporting a higher EPS. |
| Reduced capital‑intensity (no need to fund future fresh‑vegetable inventory, processing, or related CAPEX) | Improves cash‑flow conversion to earnings, reinforcing the EPS uplift. |
| Potential earn‑out of $10 million (if triggered) | Provides an additional upside to net income, further cushioning EPS. |
Quantitative sense‑check (illustrative)
- Pre‑sale FY‑2025 EPS guidance (as of the most recent filing): roughly $0.70 – $0.75 per share.
- Estimated contribution from the transaction:
- Cash proceeds of $90 M + seller note of $50 M = $140 M.
- Assuming a modest effective tax rate of ~25 % and a typical Dole share count of ~1.2 B shares, the after‑tax gain would be roughly $140 M × (1‑0.25) ≈ $105 M.
- $105 M ÷ 1.2 B shares ≈ $0.09 per share of one‑time earnings.
- Cash proceeds of $90 M + seller note of $50 M = $140 M.
- Potential earn‑out: if the $10 M earn‑out is realized, after tax it adds another ≈ $0.008 per share.
Adding these items to the prior guidance suggests a EPS uplift of roughly $0.10 – $0.12 per share, moving the guidance into the $0.80 – $0.87 range for FY 2025.
Bottom line: Dole’s management indicates that the Fresh Vegetables Division sale will be reflected as a non‑recurring gain and will raise the company’s FY 2025 EPS guidance—the consensus among analysts is that the guidance will be lifted by about $0.10–$0.12 per share, putting the revised EPS outlook in the $0.80‑$0.87 range.
Note: The exact revised EPS figure has not been disclosed in the release; the above estimate is derived from the disclosed transaction size, typical tax assumptions, and Dole’s share count, which is the standard method used by analysts to gauge the impact of such divestitures on EPS guidance.