Dean Foods Company Reports Strong Third Quarter Earnings
"We are reporting another strong quarterly performance with continued solid operating income and earnings per share growth," said
Net income for the third quarter totaled
DEAN FOODS CONSOLIDATED
Net sales for the third quarter totaled
Summary of Dean Foods Third Quarter 2009 Operating Results
----------------------------------------------------------
$ millions % change
(except EPS) from prior year
------------ ---------------
Consolidated Adjusted Operating Income: $158.0 +12%
Interest Expense: $59.5 -20%
Consolidated Adjusted Net Income $62.2 +43%
Adjusted Diluted Earnings per Share: $0.34 +21%
Consolidated operating income in the third quarter totaled
FRESH DAIRY DIRECT
Third Quarter 2009 Fresh Dairy Direct Detail
--------------------------------------------
% change
$ millions from prior year
---------- ---------------
Fluid Milk Volume N/A +2.5%
Operating Income $145.7 +4%
Base business volume growth of approximately 1% was augmented by the benefits of recent acquisitions to drive a combined 2.5% growth in fluid milk sales for the third quarter, as compared to the balance of the industry, which was down slightly in the same period, based on Company estimates. Fresh Dairy Direct net sales declined 18% to
Relatively favorable commodities, benefits from cost control efforts, and continued volume growth led to Fresh Dairy Direct operating income growth of 4% in the quarter to
The Class I mover, which is an indicator of the Company's raw milk costs, averaged
WHITEWAVE -
Third Quarter 2009 WhiteWave-Morningstar Detail
------------------------------------------------
% change
Net Sales $ millions from prior year
--------- ---------- ---------------
WhiteWave-Morningstar $709.7 6%
Morningstar $257.6 -12%
WhiteWave/Alpro $452.1 +19%
Operating Income
----------------
WhiteWave-Morningstar $68.6 +66%
Operating income in the third quarter for WhiteWave-Morningstar was
WhiteWave-Morningstar, which includes Alpro, reported third quarter net sales of
Market share increased across all key areas of the branded portfolio during the quarter. Within the branded portfolio, net sales of the WhiteWave creamer portfolio, which includes International Delight® and Land O'Lakes® brands, increased in the mid-single digits driven by strong performance of International Delight CoffeeHouse Inspirations line as well as strong core business growth. Silk soymilk sales increased low-single digits excluding the sales associated with the Company's 2008 strategic decision to exit a certain foodservice business relationship, and were down slightly including the impact. Horizon Organic® milk net sales decreased slightly against a backdrop of a category that was down mid-single digits, with outperformance driven by continued solid growth in value added segments.
CORPORATE AND OTHER EXPENSE
Corporate and Other expense totaled
The Company recognized approximately
CASH FLOW
Net cash provided by continuing operations for the first nine months of 2009 totaled
Capital expenditures for the first nine months of 2009 totaled
"I am extremely pleased with our continued strong cash flow performance," said
Total debt at
FORWARD OUTLOOK
"We continue to make excellent progress against our goal of becoming a leaner, more efficient company," continued Engles. "We expect to achieve our 2009 goal of eliminating
Dairy prices began to rise as we closed out the third quarter and have continued to move higher into the fourth quarter. As always, we are focused on passing through these rising dairy costs. We expect dairy prices will continue a general upward trend through next year and we are building our forward plans accordingly. However, with U.S. and global dairy inventories at relatively high levels, what looks like solid production in Oceana, and continued sluggish global demand, we do not foresee a return in 2010 to the record dairy price levels we experienced over 2007 and 2008. With this in mind, and with the business performing well and our transformation delivering strong benefits, we are looking forward to closing out the year with a solid fourth quarter. We are forecasting fourth quarter adjusted diluted earnings to be at least
Keep in mind due to timing of our equity offering this year, the full year adjusted diluted earnings per share is less than the summation of the four quarters. The difference will likely amount to a penny or two between the addition of the four quarters and the full year EPS number as calculated."
RESULTS FOR THE NINE MONTHS ENDED
Net sales for the nine months ended
On an adjusted basis (as defined below), net income for the nine months ending
COMPARISON OF ADJUSTED INFORMATION TO GAAP INFORMATION
The adjusted financial results contained in this press release are from continuing operations and are adjusted to eliminate the net expense or net gain related to the items identified below. This information is provided in order to allow investors to make meaningful comparisons of the Company's operating performance between periods and to view the Company's business from the same perspective as Company management. Because the Company cannot predict the timing and amount of charges associated with non-recurring items, closed or anticipated to close deal costs, gains or losses on foreign exchange forward contracts or facility closings and reorganizations, management does not consider these costs when evaluating the Company's performance, when making decisions regarding the allocation of resources, in determining incentive compensation for management, or in determining earnings estimates. These costs are not presented in any of the Company's operating segments. This non-GAAP financial information is provided as additional information for investors and is not in accordance with or an alternative to GAAP. These non-GAAP measures may be different than similar measures used by other companies. A full reconciliation for the three and nine month periods ended
For the quarter ended
GAAP operating income is adjusted by:
$6.3 million charge related to announced facility closings, reorganizations and other costs;$10.6 million charge for transaction-related fees on acquisitions that have closed or are anticipated to close; and$3.9 million operating loss reflecting the non-controlling interest in the Hero/WhiteWave joint venture
GAAP net income attributable to
$3.8 million charge (net of income tax) related to announced facility closings, reorganizations and other costs;$8.2 million charge (net of income tax) for transaction-related fees on acquisitions that have closed or are anticipated to close; and$0.6 million loss (net of income tax) related to a foreign currency forward contract entered into in conjunction with our acquisition of theAlpro Division of Vandemoortele , N.V.
For the quarter ended
$9.0 million charge ($5.7 million net of income tax) related to previously announced facility closings, reorganizations and other costs.
For the nine months ended
GAAP operating income is adjusted by the following:
$26.0 million charge related to announced facility closings, reorganizations and other costs;$21.3 million charge for transaction-related fees on acquisitions that have closed or are anticipated to close; and$8.6 million operating loss reflecting the non-controlling interest in the Hero/WhiteWave joint venture
GAAP net income attributable to
$16.0 million charge (net of income tax) related to announced facility closings, reorganizations and other costs;$14.7 million charge (net of income tax) for transaction-related fees on acquisitions that have closed or are anticipated to close; and$2.6 million gain (net of income tax) related to a foreign currency forward contract entered into in conjunction with our acquisition of theAlpro Division of Vandemoortele , N.V.
For the nine months ended
$16.4 million charge ($10.2 million net of income tax) related to previously announced facility closings, reorganizations and other costs; and$0.6 million charge ($0.4 million net of income tax) related to non-recurring special dividend costs.
INDUCEMENT GRANT
In addition, the Company announced today that it agreed to grant stock options ("Options") to purchase an aggregate of 97,656 shares of common stock and 52,778 restricted stock units ("RSUs") to a newly hired, non-executive officer employee, of which 48,828 Options and 40,278 RSUs were granted in
CONFERENCE CALL WEBCAST
A webcast to discuss the Company's financial results and outlook will be held at
ABOUT
FORWARD-LOOKING STATEMENTS
Some of the statements in this press release are "forward-looking" and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These "forward-looking" statements include statements relating to, among other things, projected sales, operating income, net income, adjusted diluted earnings per share, debt covenant compliance, expected financial performance and capital structure. These statements involve risks and uncertainties that may cause results to differ materially from the statements set forth in this press release. The Company's ability to meet targeted financial and operating results, including targeted sales, operating income, net income and earnings per share depends on a variety of economic, competitive and governmental factors, including raw material availability and costs, the demand for the Company's products, the Company's ability to integrate its acquisitions and the Company's ability to access capital under its credit facilities or otherwise, many of which are beyond the Company's control and which are described in the Company's filings with the
CONTACT: Corporate Communications,
(Tables to follow)
DEAN FOODS COMPANY
Condensed Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $2,773,507 $3,194,669 $8,157,731 $9,374,188
Cost of sales 1,985,539 2,462,949 5,846,803 7,214,574
--------- --------- --------- ---------
Gross profit 787,968 731,720 2,310,928 2,159,614
Operating costs and
expenses 644,547 590,946 1,798,548 1,718,148
Facility closings,
reorganizations and
other costs 6,303 8,960 25,965 16,370
----- ----- ------ ------
Operating income 137,118 131,814 486,415 425,096
Interest expense 59,509 74,709 187,774 235,026
Other (income) expense, net 493 (242) (4,354) 515
--- ----- ------- ---
Income from continuing
operations before
income taxes 77,116 57,347 302,995 189,555
Income taxes 30,012 19,544 118,137 72,095
------ ------ ------- ------
Income from continuing
operations 47,104 37,803 184,858 117,460
Loss from discontinued
operations, net of tax - (51) (238) (51)
--- ---- ----- ----
Net income 47,104 37,752 184,620 117,409
Net loss attributable to
noncontrolling interest 2,549 - 5,422 -
----- --- ----- ---
Net income attributable
to Dean Foods Company $49,653 $37,752 $190,042 $117,409
======= ======= ======== ========
Average common shares:
Basic 180,352 153,137 167,757 147,688
Diluted 183,066 157,286 170,693 152,435
Net Income attributable to
Dean Foods Company per share:
Basic $0.28 $0.25 $1.13 $0.80
Diluted $0.27 $0.24 $1.11 $0.77
DEAN FOODS COMPANY
Segment Information
(Unaudited)
(In thousands)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Net sales:
Fresh Dairy Direct $2,061,652 $2,523,357 $6,217,604 $7,432,072
WhiteWave-Morningstar 709,704 671,312 1,936,281 1,942,116
Corporate and other 2,151 - 3,846 -
----- --- ----- ---
Total $2,773,507 $3,194,669 $8,157,731 $9,374,188
========== ========== ========== ==========
Segment operating
income (loss):
Fresh Dairy Direct $145,664 $140,444 $495,948 $425,606
WhiteWave-Morningstar 68,611 41,321 204,092 136,012
Corporate and Other (70,854) (40,991) (187,660) (120,152)
-------- -------- --------- ---------
Subtotal 143,421 140,774 512,380 441,466
Facility closings,
reorganizations and
other costs (6,303) (8,960) (25,965) (16,370)
------- ------- -------- --------
Total operating
income $137,118 $131,814 $486,415 $425,096
======== ======== ======== ========
DEAN FOODS COMPANY
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
September 30, December 31,
ASSETS 2009 2008
------ ---- ----
Cash and cash equivalents $38,563 $35,979
Other current assets 1,478,819 1,445,214
--------- ---------
Total current assets 1,517,382 1,481,193
Property, plant and equipment, net 2,030,694 1,821,892
Intangibles and other assets 4,081,898 3,737,107
--------- ---------
Total Assets $7,629,974 $7,040,192
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Total current liabilities, excluding debt $1,157,398 $1,111,741
Total long-term debt, including current portion 4,202,119 4,489,251
Other long-term liabilities 990,831 880,966
Dean Foods stockholders' equity 1,261,221 558,234
Noncontrolling interest 18,405 -
------ ---
Total stockholders' equity 1,279,626 558,234
--------- -------
Total Liabilities and Stockholders' Equity $7,629,974 $7,040,192
========== ==========
DEAN FOODS COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine months ended
September 30,
Operating Activities 2009 2008
-------------------- ---- ----
Net cash provided by continuing operations $502,700 $458,723
Net cash used in discontinued operations (238) (463)
----- -----
Net cash provided by operating activities $502,462 $458,260
Investing Activities
--------------------
Additions to property, plant and equipment (171,276) (171,008)
Payments for acquisitions, net of cash received (491,700) (75,200)
Proceeds from sale of fixed assets 5,791 7,121
----- -----
Net cash used in investing activities (657,185) (239,087)
Financing Activities
--------------------
Net repayment of debt (301,876) (653,119)
Issuance of common stock 450,385 418,746
Capital contribution from noncontrolling interest 8,788 -
Other - 7,365
--- -----
Net cash used in financing activities 157,297 (227,008)
------- ---------
Effect of exchange rate changes on cash and
cash equivalents 10 -
Increase in cash and cash equivalents 2,584 (7,835)
Beginning cash balance 35,979 32,555
------ ------
Ending cash balance $38,563 $24,720
======= =======
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Reconciliation of GAAP to adjusted operating income
GAAP operating income $137,118 $131,814 $486,415 $425,096
Adjustments:
Facility closings,
reorganizations
and other costs 6,303 8,960 25,965 16,370
Closed deal costs 10,646 - 21,304 -
Operating loss from
noncontrolling interest
in joint venture 3,894 - 8,585 -
----- --- ----- ---
Adjusted operating income $157,961 $140,774 $542,269 $441,466
======== ======== ======== ========
Reconciliation of GAAP to adjusted net income attributable to Dean Foods
Company
GAAP net income attributable
to Dean Foods Company $49,653 $37,752 $190,042 $117,409
Adjustments, net of tax:
Facility closings,
reorganizations
and other costs 3,833 5,740 16,049 10,195
Closed deal costs 8,179 - 14,678 -
(Gain)/loss on foreign
currency hedge 554 - (2,561) -
Debt refinancing and special
dividend costs - - - 354
--- --- --- ---
Adjusted net income attributable
to Dean Foods Company $62,219 $43,492 $218,208 $127,958
======= ======= ======== ========
Reconciliation of GAAP to adjusted diluted earnings per share
GAAP diluted earnings per share 0.27 $0.24 $1.11 $0.77
Adjustments, net of tax
Facility closings,
reorganizations
and other costs 0.02 0.04 0.10 0.07
Closed deal costs 0.05 - 0.09 -
(Gain)/loss on foreign
currency hedge - - (0.02) -
--- --- ------ ---
Adjusted diluted earnings
per share $0.34 $0.28 $1.28 $0.84
===== ===== ===== =====
Computation of Free Cash Flow provided by continuing operations
Net cash provided by continuing
operations $152,916 $143,419 $502,700 $458,723
Additions to property, plant and
equipment (70,180) (65,246) (171,276) (171,008)
-------- -------- --------- ---------
Free cash flow provided by
continuing operations $82,736 $78,173 $331,424 $287,715
======= ======= ======== ========
SOURCE:
Corporate Communications
Marguerite Copel
+1-214-721-1273
or
Investor Relations
Barry Sievert
+1-214-303-3438
Contact:
Investors:
Barry Sievert
Investor Relations
(214) 303-3437
Media:
Marguerite Copel
Corporate Communications
(214) 721-1273
SOURCE Dean Foods Company