Good day everyone, and welcome to Fresh Del Monte Produce's third quarter 2020 earnings conference call. Today's conference call is being broadcast live over the internet and is also being recorded for playback purposes. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. For opening remarks and introductions, I would like to turn today's call over to the Vice President, Investor Relations with Fresh Del Monte Produce, Christine Cannella. Please go ahead, Ms. Cannella.
Thank you, Lindsay. Good morning, everyone, and thank you for joining our third quarter 2020 conference call. As Lindsay mentioned, I'm Christine Cannella, Vice President, Investor Relations with Fresh Del Monte Produce. Joining me in today's discussion, Mohammad Abu-Ghazaleh, Chairman and Chief Executive Officer, and Eduardo Bezerra, Senior Vice President and Chief Financial Officer. I hope that you had a chance to review the press release that was issued earlier this morning via Business Wire. You may also visit the company's website at freshdelmonte.com for a copy of today's release, as well as to register for future distribution. This conference call is being webcast live on our website and will be available for replay after this call. Please note that our press release includes reconciliations of any non-GAAP financial measures we mention today to their corresponding GAAP measures.
I would like to remind you that much of the information we will be speaking to today, including the answers we give in response to your questions, may include forward-looking statements within the provisions of the Federal Securities Safe Harbor laws. We ask that you review the forward-looking statements information included in the press release we issued this morning and in the company's most recent filings with the SEC. With that, I am pleased to turn today's call over to Mohammad.
Thank you, Christine. Good morning, everyone. 2020 is shaping up to be one of the most challenging periods ever for our industry and Fresh Del Monte Produce. The difficulties we experienced in the third quarter of 2020 were driven by the continuing impact of the COVID-19 pandemic, which continued to hinder our performance with decreased demand as a result of mandatory government shutdowns, including schools, restaurants, food service, and business closures being our biggest headwind. These challenges continued to hamper our ability to achieve our financial targets for the third quarter. Net sales for the quarter were $990 million compared with $1.1 billion in the third quarter of 2019. We reported adjusted gross profit of $69 million, compared with $76 million in the third quarter of 2019, with gross profit margin improvements in our fresh and value-added products segment.
Due to the early actions we took by adjusting our business in response to these challenges, we reported adjusted EPS of $0.35 compared with adjusted EPS of $0.38 in the third quarter of 2019. I'm pleased to report that during the quarter, we completed our move to our new Gonzales, California facility. Today, our three Mann Packing facilities and Fresno fresh-cut facility are now operating under one roof, which we anticipate will enable us to improve gross profit in our fresh and value-added products segment by approximately $10 million on an annual basis. A benefit which we expect to achieve over the next 12 months. We also made progress with the optimization plan we announced in the second quarter of 2020, reducing underutilized facilities and land assets. We believe this will allow us to shift assets that better serve the long-term growth of the company.
We identified assets across all of our regions that we plan to sell over the next 12-18 months for the total anticipated cash proceeds of approximately $100 million. Since we last spoke, we added two new containerized vessels to our new fleet, the Del Monte Rose and the Del Monte Harvester, replacing vessels we had previously chartered. This important sustainability initiative reduces our carbon footprint and brings us closer to our 2025 commitment to reduce emissions by 10%. Also, during the quarter, we continued our efforts to diversify our product line and the channels we market our products in. With the launch of our newest product, the Pinkglow Del Monte pineapple. The variety is produced on our farms in Costa Rica. In October, we published an update to our 2018/2019 Corporate Social Responsibility Report that includes progress towards our 2025 commitments.
I encourage you to visit the sustainability section of our website to learn more about our progress. Including our recently announced partnership between our Del Monte Kenya operations and the United Nations Foundation to promote the health and empowerment of women employees and community members, along with the announcement from PR Daily that we were named to receive the Best Green and Environmental Stewardship Award, which we were honored to accept. Today, I'm confident that the decisions made in 2020 will be a driving force behind our future performance. In the third quarter, we demonstrated the value of our business model and generated improved cash flow, and continued to reduce our debt in order to better position us to weather this pandemic and emerge stronger. Now I will turn the call to Eduardo to talk about the third quarter financial results. Eduardo, please.
Thank you, Mohammad, and good morning. Despite the COVID-19 disruption during the third quarter of 2020, we achieved a net income per diluted share of $0.37 versus net income per diluted share of $0.38 in the third quarter of 2019. Excluding, among other things, the effect of other product-related charges, which resulted in a $2.3 million gross profit impact related to inventory write-offs, we delivered adjusted net income per diluted share of $0.35, compared with adjusted net income per diluted share of $0.38 in the third quarter of 2019. However, I would like to point out that if you apply the adjusted gross profit margin of 7% to the $73 million of net sales impacted by COVID-19, we estimate that we would have delivered an additional $5.8 million in adjusted gross profit.
Additionally, despite the headwinds of the COVID-19 pandemic, we generated $63 million in cash flow from operating activities during the third quarter. We reduced our long-term debt by $76 million since the end of 2019, and we reduced our long-term debt by $24 million compared with the end of the second quarter of 2020. As Mohammad mentioned, we announced a $100 million asset sale program to be completed over the next 12 - 18 months to strengthen our cash flow position, reduce our debt, and continue to reinvest in key areas of growth in our business. Our focus on our value-added business is also progressing well. Measures we have taken over the past year demonstrate the significance of our goals to increase sales revenue, enhance margins, and maintain our track record of improved cash flow generation.
We believe we are on track to realize most of our cost savings actions planned for 2021. With that, I'll now get into the results for the third quarter of 2020. Net sales were $990 million compared with $1.1 billion in third quarter of 2019, with unfavorable exchange rates negatively impacting net sales by $2 million. Adjusted gross profit for the quarter was $69 million, compared to $76 million in the third quarter of 2019. Adjusted operating income for the quarter was $25 million, in line with the prior year period, and adjusted net income was $16 million, compared with $18 million in the third quarter of 2019. In regards to our business segment performance in the third quarter of 2020, in our Fresh and Value Added Product segment, net sales decreased $52 million to $601 million, compared with $653 million in the prior year period.
The decrease was primarily due to lower net sales in our fresh cut vegetable, avocado, fresh cut fruit, vegetable, and prepared product lines, partially offset by an increase in sales of our pineapple and non-tropical product lines. As compared with our third quarter of 2019 performance for the segment, the COVID-19 pandemic affected our net sales of fresh and value-added products by an estimated $56 million during the quarter, driven by reduced demand in our food service channel and shifting demand at retail due to the pandemic. Also, the continuing effect of the November 2019 Mann Packing voluntary product recall affected our net sales in the third quarter of 2020.
Gross profit increased to $54 million compared with $53 million in the third quarter of 2019. Other product-related charges represented $2 million for the segment, primarily related to inventory write-offs of pineapples due to volatile supply and demand conditions, as well as additional cleaning and social distancing protocols associated with the pandemic. In our pineapple product line, net sales were $116 million compared with $102 million in the prior year period, primarily due to higher sales volume in all of our regions, mainly as a result of lower production in the prior year period due to adverse weather conditions in our growing regions. Overall volume increased 15%, unit pricing decreased 1%, and unit cost decreased 1% compared with the prior year period. In our fresh cut fruit product line, net sales were $113 million compared with $145 million in the third quarter of 2019.
The decrease in net sales was primarily due to lower sales volume in North America as a result of the continued impact of the COVID-19 pandemic and a shortage of certain raw materials. Overall volume decreased 11%, unit pricing increased 1%, and unit cost increased 3% compared with the prior year period. In our fresh cut vegetable product line, net sales were $96 million compared with $122 million in the third quarter of 2019. The decrease in net sales were primarily due to the effect of the COVID-19 pandemic, which resulted in a significant reduction of most of our global food service business during the quarter, mainly in our Mann Packing subsidiary. Volume decreased 27%, unit pricing increased 7%, and unit cost increased 15% compared with the prior year period.
In our avocado product line, net sales were $77 million compared with $98 million in the third quarter of 2019, primarily due to lower selling price as a result of normalized industry supply in the market when compared with the prior year period. Volume increased 13%, pricing decreased 31%, and unit cost decreased 37% compared with the prior year period, primarily due to the improved capacity utilization at our new packing facility in Mexico, which opened in December 2019. In our vegetable product line, net sales were $42 million compared with $46 million in the third quarter of 2019, primarily due to lower sales volume as a result of the COVID-19. Volume decreased 13%, unit pricing increased 5%, and unit cost increased 26% compared with the prior year period.
In our non-tropical product line, which includes our grape, berry, apple, citrus, pear, peach, plum, nectarine, cherry, and kiwi product lines, net sales were $38 million compared with $32 million in the third quarter of 2019, primarily due to higher sales volume in Europe as a result of increased demand, along with higher sales volume in the Middle East in developing markets. Also contributing to the increase in net sales was higher selling prices in the Middle East. Volume increased 13%, unit pricing increased 4%, and unit cost increased 7%.
In our prepared food product line, which includes the company's prepared traditional products and meals and snacks product line, the decrease in net sales was primarily due to lower sales in the company's meals and snacks product line, principally due to the impact of COVID-19 pandemic, the continuing impact of the 2019 product recall, and product rationalization efforts in our Mann Packing operations in North America. The decrease was partially offset by higher per-unit selling prices of pineapple concentrate due to lower industry supply and increased per-unit selling prices of canned pineapple products due to increased customer demand.
In our banana segment, net sales decreased $24 million to $362 million compared with $386 million in the third quarter of 2019, primarily due to lower net sales in North America, Europe, and the Middle East as a result of decreased sales volume and lower demand due to COVID-19. The decrease was partially offset by higher net sales in Asia. The COVID-19 pandemic affected banana net sales by an estimated $17 million during the quarter versus our third quarter of 2019 performance for this segment. Overall volume decreased to 4%. Worldwide pricing decreased 3% over the prior year period. Total worldwide banana unit cost decreased to 1%, and gross profit decreased to $11 million compared to in the third quarter of 2019, primarily due to lower selling prices in North America as a result of decreased demand, partially offset by lower cost, mainly lower ocean freight costs.
Other product-related charges represented $400,000 for the segment incurred as a result of the COVID-19 pandemic. Now moving to selected financial data. Selling, general, and administrative expenses decreased to $7 million to $44 million compared with $51 million in the third quarter of 2019. The decrease was primarily due to lower selling and marketing expenses in the Middle East and cost savings initiatives in North America. The foreign currency impact at the gross profit level for the third quarter was unfavorable by $3 million compared with an unfavorable effect of $2 million in the third quarter of 2019. Interest expense net for the third quarter was $5 million compared with $6 million in the third quarter of 2019 due to lower average loan balances and lower interest rates.
The provision for income tax was $5 million during the quarter compared with income tax expense of $3 million in the prior year period. The increase in the provision for income taxes was primarily due to increased earnings in certain higher taxable jurisdictions. For the first nine months of 2020, our net cash provided by operating activities was $174 million compared with net cash provided by operating activities of $130 million in the same period of 2019. The increase was primarily attributable to lower payments of accounts payable and accrued expenses and lower levels of inventory due to our optimization efforts on working capital. The increase was partially offset by lower net income and higher levels of prepaid expenses and other current assets. Total debt decreased from $587 million at the end of 2019 to $511 million at the end of the third quarter of 2020.
As it relates to capital spending, we invested $57 million in capital expenditures in the third quarter of 2020 compared with $23 million in the third quarter of 2019. For the first nine months of 2020, we invested $93 million compared with $94 million in the same period in 2019. Our investments in the third quarter of 2020 included the delivery of two new container vessels, the Del Monte Gold and the Del Monte Rose. We also completed the consolidation of four different facilities into our Mann Packing operations into our new Gonzales, California, facility during the quarter. As announced this morning in our financial results press release, our board of directors declared a quarterly cash dividend of $0.10 per share payable on December fourth, 2020 to shareholders of record on November 11th, 2020.
This is an increase of $0.05 per share from our quarterly cash dividend paid on September fourth, 2020. This concludes our financial review. I can now turn the call over to operator.
At this time, if you would like to ask a question, please press star one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Jonathan Feeney with Consumer Edge. Sir, your line is now open.
Thanks so much. Good morning. My first question is a pretty detailed one. Of the announced non-strategic divestitures, I'm sorry if you already mentioned this, is there any general gross profit or operating profit or cash cost to the losses of those assets that are presumably associated with business? That'd be my first question. My second question would be just an update on how much of the struggles in the banana businesses where you do business. It looks like a lot of the problem was concentrated in North America is due to competitive activity, and how much of this is due to just dynamics of demand in the category of food away from home and different purchasing patterns? Thank you.
Thank you, Jonathan. Good morning. Regarding the assets issue, these assets actually that we want to dispose of or sell are actually assets that are sitting underutilized, or lands that we have had for so many years that we never used in terms of agriculture. Just to give you an example, for instance, we have a piece of land in Chile, which we acquired sometime in the late 1980s, early 1990s, for about $250,000. Today, we are selling this land for over $11 million, that piece of same land, which is in the northern part of Chile. This actually I bought many years ago for an agricultural project that we never used for, and then sat there for a long time. The same thing applies for many other lands that we have in different parts of the world, and particularly in Chile and Uruguay.
Some of these assets are really underutilized or not utilized at all. Some facilities that we have vacated because we consolidated the operation, rather in two or three facilities under one roof, like we are doing for instance, right now in California, by putting three, four different facilities under one roof in Gonzales, California, which means that we have so many assets that we can sell. If you look across the world, over the years, we have had so many assets that we have accumulated. I believe that they are very valuable assets that we really don't need, and that doesn't affect our business in any way whatsoever. On the contrary, it might leverage our business in a better way. As far as the banana is concerned, the banana, it's a very big mess. Let me put it that way.
Banana production and oversupply is coming to an extreme in the world, and especially from Ecuador. There is so much bananas around that nobody knows what to do with it, not only in North America, but all over the world. Other countries are producing, new countries that have not been on the map, like Vietnam, Laos, Cambodia. All these countries are newcomers to the market. They are exporting mainly to China. China used to buy more fruit from Ecuador and Central America. Now they have more fruit coming from these new countries. All in all, I don't see the banana to come back to where it used to be a few years back, where demand and supply used to be more or less in line. I believe today, banana will be a business that we need to continue with.
The margins will be small, with the proper planning and proper management of this segment, I believe we are the best, really, to manage. We are very confident about our future banana business because we are taking a different model in approaching the markets and the sourcing of this fruit. Bottom line, that it's a difficult business. It's not easy. I see many people will be really suffering and probably getting out of the business in the next few months or year. As far as Del Monte is concerned, I'm very confident and have big confidence that we will override this crisis, and will come out in better shape than what it used to be even two, three years ago.
Jonathan, just to complement what the chairman mentioned, it's very important to highlight that although the prices are very unstable in the market, all the investments that we have done in the recent years, and the important one being the new vessels, it's really to drive our lower cost position that we can really navigate strongly through this, let's say, oversupply in the marketplace, so that we can really have, let's say, a better cost position in all of these geographies to be able to face that. Once these move on, we expect that to be accretive to our margin going forward.
Thank you both, as always.
Thank you, Jonathan.
Again, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Mitch Pinheiro with Sturdivant . Your line is now open.
Yeah. Good morning.
Good morning.
Just to follow up on Jon's question regarding the banana business. Mohammad, you said it's a difficult business. It's always been a difficult business, and there always seems to be oversupply, and demand has been relatively stable. You always have these bouts with the ups and downs in this business. Is there anything different today, just in terms of your comments saying it's difficult? Anything different than the usually difficult business historically?
No, nothing difficult except that as we see now in the last, I would say 12 months or 10 months, there is a lot more supply than what it used to be. Coupled with the present market conditions because of the pandemic, less consumption, food services almost dead, schools, all these convenience stores, everything is disrupted. On top of the additional volume that Ecuador has produced and the optimum conditions for production in the other countries as well, we didn't have any kind of climatic, let's say, disorders or disasters, during this year, thanks God. That means that there is more supply and the trees are giving at optimum level. The business hasn't changed except that there is more supply, and we have the pandemic issues that surround this business.
I believe going forward in the year ahead, hopefully once that pandemic, we are over with what we are facing today, banana will become better. Like Eduardo just mentioned, we are taking so many actions to really bring the business into a kind of a different path by we having new vessels, which will be the best. It is the state of the art of any vessel on that route, and this will be only for North America. This will be not only cost effective, but also logistically will be the best that you can find. At the same time, we are optimizing and rationalizing our supply and demand in terms of not taking additional risks that we shouldn't take.
That's why I'm very hopeful and very confident that we will be able to achieve even better results than what we are seeing today, even though we have so much challenges and so much headwind with the banana oversupply worldwide. That's a fact. One of the unfortunate, which I discussed before, is that our business has been contaminated with other businesses that using bananas as a means to transport. Unfortunately, this has also added to the challenges in this business.
Yeah. When I watch the European banana prices, they've been awfully weak. I imagine that's where a lot of the excess supply is also heading into. When I look at the USDA, the prices for bananas in North America, the retail price was actually up 10% in the third quarter. You're not seeing any of that benefit because you've contracted prices earlier in the year. Is that correct?
No. Look, North America is a contract. 90% of our volumes in North America, and that applies to us and applies to competition as well. 90% of our volumes are contracted to the buyers, to retailers, and others. We don't have that kind of volatility on the prices during the year, except for the spot market. What really hurts us is that when the markets are soft, like we have been seeing for the last three, four months, during the summer months, and even as we speak today, that the retailers are not being able to absorb the contractual volumes that they have contracted for.
What happens is that they come back to you and say, "Please reduce my volumes by, let's say, instead of 100 loads, give me only 90 or 85 or 80 loads." You end up with additional fruit that there is no home for it except the spot market. That's really what hurts. You see? This is something that you cannot stuff it down the throat of the retailer on one side. At the same time, we have to live with it and go to either the spot market or going to other markets, which really underpays and suffers a lot more than selling it in North America. That's actually what is happening right now.
Just I'm sorry. Go ahead.
To complement a little bit. If you look to the export prices from Ecuador, they are at a historical low level currently. That's a very important element on the equation that shows exactly what Mohammad mentioned about the oversupply and the, let's say, the concentration of the demand in the retailer. It caused all of the companies trying to get a stake there, and that's also put pressure on the volumes that get into the retailers.
Okay. Thank you. Just one more banana question. Do you have any update on the Panama disease? Is there any further spread? Do you feel like it's a little bit under control? Anything, any actions that you've been taking in your own facilities?
No. The Panama disease is status quo. We haven't seen anything abnormal in any of our plantations or other plantations. As far as we speak, it's under control. It doesn't happen overnight. This takes years. If there is anything to flare up, it doesn't happen overnight. It takes years for it to expand or to go to other areas. As we speak, there is nothing really to mention, Mitch.
Okay. Then my final question, and I'll get back in the queue, but you've done a nice job on de-leveraging here, and with the asset sales and other things, it's going to further de-lever. That kind of sets you up, at least the balance sheet, with some dry powder. Do you have an appetite for acquisitions at the moment? What's your feeling there?
No, I don't think we are looking at acquisitions. We did an acquisition a couple of year, two, three years back, which is the Mann acquisition, where we are now, and we are driving that acquisition to become very profitable and consolidating this business, as we spoke earlier. At this moment, our focus will be to reduce our debt and increase dividends.
Okay. Thanks for your time.
Thank you.
Again, ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. There are no further questions in queue at this time. I'll turn the call back over to Mr. Mohammad Abu-Ghazaleh for closing comments.
I would like to thank everyone today for attending this call. I know it is hard for everyone today with the pandemic and the way we are conducting our lives, but we will endure and overcome, I hope. Well, I'm assuring you that Fresh Del Monte is on the right track, and we will be delivering as we go, good results and better results every time we speak, God willing. Thank you very much, and have a good day. Bye.
This concludes today's conference call. You may now disconnect.