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Exhibit 99.1

 

LOGO     NEWS RELEASE
 

 

Contact:    

 

 

Barry Sievert

Vice President, Investor Relations                 (214) 303-3437

DEAN FOODS REPORTS FIRST QUARTER 2011 RESULTS

First Quarter Diluted Earnings per Share of $0.14; Adjusted Diluted Earnings per Share of $0.14

Continued Strong Growth at WhiteWave-Alpro Results in 8% Segment Operating Income Growth

Fresh Dairy Direct-Morningstar Continues to Face Challenges, But Business Trends Improving

Second Quarter Guidance of $0.15-$0.20 per Adjusted Diluted Share

Full Year Guidance Increased to $0.67-$0.75 per Adjusted Diluted Share

DALLAS, May 10, 2011 – Dean Foods Company (NYSE: DF) today announced that the Company earned $0.14 per diluted share, as compared to first quarter 2010 earnings of $0.24 per diluted share. On an adjusted basis, first quarter 2011 diluted earnings per share were $0.14, compared to $0.23 per diluted share earned in the prior year’s first quarter.

For the first quarter of 2011, the net income attributable to Dean Foods totaled $25 million, compared to net income of $43 million in the prior year’s first quarter. Adjusted net income for the first quarter was $25 million, compared to adjusted net income of $43 million in the first quarter of 2010.

“Overall, the business is off to a stronger start than we had anticipated and we are somewhat encouraged as we look to the balance of the year,” said Gregg Engles, Chairman and CEO. “While we have a long way to go at Fresh Dairy Direct-Morningstar, I am cautiously optimistic that the trajectory of our business is upward and that we are on a path for continued strong progress as we move through the balance of the year. In our other major segment, WhiteWave-Alpro continued to perform well, with both strong top and bottom-line growth against a tough overlap and unfavorable holiday calendar.”

CONSOLIDATED NET SALES

Net sales for the first quarter totaled $3.05 billion, compared to $2.96 billion of net sales in the first quarter of 2010. Net sales for the first quarter increased due to strong sales growth at WhiteWave-Alpro and the pass-through of higher overall dairy commodity costs that were partially offset by soft volumes at Fresh Dairy Direct-Morningstar.

 

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CONSOLIDATED OPERATING INCOME

Consolidated operating income in the first quarter totaled $106 million, compared to $120 million in the first quarter of 2010. First quarter consolidated adjusted operating income totaled $107 million, compared to $123 million in the first quarter of 2010. The decline in first quarter consolidated adjusted operating income was due to a $15 million decline in operating income at Fresh Dairy Direct-Morningstar and a $5 million increase in Corporate expense, offset by $3 million of operating income growth at WhiteWave-Alpro.

Summary of Dean Foods First Quarter 2011 Operating Results

 

     Q1 2011
$  millions
(except EPS)
     Y/Y
Change
 

Consolidated Adjusted Operating Income:

   $ 107         -14

Interest Expense:

   $ 65         +12

Consolidated Adjusted Net Income

   $ 25         -42

Adjusted Diluted Earnings per Share:

   $ 0.14         -39

FRESH DAIRY DIRECT-MORNINGSTAR

Fresh Dairy Direct-Morningstar fluid milk volumes decreased by 2.4% in the first quarter, compared to industry overall that experienced a volume decline of approximately 1.2% on a year over year basis, based on USDA data and Company estimates. Total volumes from the segment declined 3.8% from the first quarter of 2010, including approximately 0.5% from the divestiture of the Mountain High yogurt business. The soft volume in the quarter was offset by the pass-through of higher average commodity costs in the quarter resulting in Fresh Dairy Direct-Morningstar net sales of $2.54 billion, a 2% increase from $2.49 billion in net sales for the first quarter of 2010. The first quarter average Class I mover was $16.44 per hundred-weight, 3% below the previous quarter and 12% above the first quarter of 2010.

First Quarter 2011 Fresh Dairy Direct-Morningstar Summary

 

     Q1 2011
$ millions
     Y/Y
Change
 

Fluid Milk Volume

     —           -2.4

Operating Income

   $ 111         -12

Class I Mover

   $ 16.44/cwt.         +12

Class II Butterfat

   $ 2.21/lb.         +49

 

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Fresh Dairy Direct-Morningstar operating income in the first quarter was $111 million, a decrease of 12% from the $127 million reported in the first quarter of 2010. Volume weakness across the portfolio and continued pricing pressure offset strong progress on the Company’s cost reduction initiatives to result in the decline in operating income in the quarter.

WHITEWAVE – ALPRO

For the first quarter of 2011, the WhiteWave-Alpro segment reported net sales of $507 million, 7% higher than first quarter 2010 net sales of $474 million due to continued strong growth across the product portfolio. Among the key brands at WhiteWave-Alpro, net sales of Horizon Organic® branded milk increased slightly more than 20% in the first quarter. Branded creamer sales, which includes both International Delight® and Land O’Lakes® creamers, increased in the mid-single digits on continued strength behind International Delight innovation, despite an unfavorable holiday calendar in the quarter. Silk® sales increased mid-single digits on continued strength of Silk PureAlmond® and Silk PureCoconut®. Alpro sales increased mid-single digits in the quarter on a constant currency basis, as well as after currency translation.

First Quarter 2011 WhiteWave-Alpro Summary

 

Net Sales

   Q1 2011
$ millions
     Y/Y
Change
 

WhiteWave-Alpro

   $ 507         +7

Operating Income

             

WhiteWave-Alpro

   $ 48         +8

Segment adjusted operating income in the first quarter for WhiteWave-Alpro was $47.9 million, an increase of 8% from $44.5 million in the first quarter of 2010.

CORPORATE EXPENSE

First quarter 2011 Corporate expense totaled $52.6 million, compared to $47.9 million in the first quarter of 2010.

SELLING, GENERAL AND ADMINISTRATIVE

Reducing selling, general and administrative (SG&A) expense is an area of focus for the Company in 2011. Management now expects to more than double its previous target of a $30 million reduction in the Company’s SG&A expense run-rate from 2010 levels by year end. As part of this effort, the Company eliminated 140 positions in these areas early in the second quarter.

 

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CASH FLOW

Net cash provided by continuing operations for the three months ended March 31, 2011 totaled $37 million, compared to $70 million in the first quarter of 2010. Free cash flow provided by operations, which is defined as net cash provided by continuing operations less capital expenditures, totaled ($3) million for the first three months of 2011, compared to $24 million over the same period in 2010. A reconciliation between net cash provided by continuing operations and free cash flow provided by continuing operations is provided in the tables below. For the full year, the Company expects free cash flow from operations to exceed $200 million.

Capital expenditures totaled $40 million, compared to $46 million in the first quarter of 2010. Total debt outstanding, net of cash on hand, decreased by $95 million during the first quarter. Debt repayment in the first quarter was augmented by the receipt of proceeds from the sale of the Mountain High yogurt business. Total debt at March 31, 2011, net of $109 million in cash on hand, was $3.88 billion. The Company’s funded debt to EBITDA ratio, as defined by its credit agreements, was 5.14x as of the end of the first quarter versus a maximum leverage covenant ratio of 5.75x. The current maximum leverage ratio remains in effect until March of 2012, when it steps down to 5.50x. The Company continues to focus on reducing its overall leverage and expects to exit 2011 with a leverage ratio of 4.75x or below.

FORWARD OUTLOOK

Significant challenges remain in the Fresh Dairy Direct-Morningstar business. Pricing on private label milk processing has been reset to lower levels and will continue to negatively impact year-over-year comparisons through the first half of the year. Additionally, volumes across the conventional milk industry are expected to remain soft over the coming quarters. Also, the restoration of incentive compensation to target levels will remain a headwind throughout the year.

“In this environment, we are focused on three fundamental things to improve the business,” said Mr. Engles. “First, we have stepped up our agenda to reduce costs and improve profitability. Second, because input cost volatility is here to stay, we are focused on pricing to offset inflation through efficient pricing mechanisms. We are working hard to maintain, and where necessary, improve our pricing tools. Third, to offset soft volumes at Fresh Dairy Direct-Morningstar, we are pursuing new business. Beginning in the second quarter, we should begin to see this new business volume mitigate some of the fluid milk volume weakness we’ve experienced recently. I’m encouraged by the progress we’ve made so far this year across these three fronts. We hope to drive improving results though the balance of the year and enter 2012 with renewed momentum.

“Looking ahead at the balance of the year, many challenges remain, but our ability to overcome them continues to improve.

 

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“All told, we expect second quarter adjusted diluted earnings to be between $0.15 and $0.20 per share. Based on our performance in the first quarter, as well as our expectations for the second, we have raised our full year guidance to between $0.67 and $0.75 per adjusted diluted share.”

INDUCEMENT GRANTS

The Company also announced today that it granted stock options (“Options”) to purchase an aggregate of 28,852 shares of common stock and 32,460 restricted stock units (“RSUs”) in November 2010 to two newly hired, non-executive officer employees in connection with their employment with the Company. The Company also announced that it granted 20,485 Options and 7,764 RSUs in February 2011 to an executive officer employee per the terms of the letter agreement executed in connection with his employment with the Company in June 2010. The Options described above have an exercise price equal to the fair market value of Dean Foods stock at the close of business on the grant date, and vest in three equal annual installments, beginning on the first anniversary of the date of grant, expiring on the tenth anniversary of the date of grant. The RSUs described above vest in three equal annual installments, beginning on the first anniversary of the date of grant. All awards described above were approved by the Compensation Committee of the Company’s Board of Directors without stockholder approval as “inducement grants,” as such term is defined by the New York Stock Exchange.

CONFERENCE CALL WEBCAST

A webcast to discuss the Company’s financial results and outlook will be held at 9:30 a.m. ET today and may be heard live by visiting the “Webcast” section of the Company’s website at www.deanfoods.com/investors. A slide presentation will accompany the webcast.

ABOUT DEAN FOODS

Dean Foods is one of the leading food and beverage companies in the United States and a European leader in branded soy foods and beverages. The Company’s Fresh Dairy Direct-Morningstar segment is the largest U.S. processor and distributor of milk, creamer, and cultured dairy products. These offerings are marketed under more than 50 local and regional dairy brands, as well as through private labels. The WhiteWave-Alpro segment produces and sells an array of branded dairy, soy and plant-based beverages and foods. WhiteWave brands, including Silk(R) soy and almond milk, Horizon Organic(R) milk and dairy products, International Delight(R) coffee creamers, and LAND O LAKES(R) creamers, are category leaders and consumer favorites. Alpro is the pan-European leader in branded soy food products.

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, cost reduction strategies, divestitures and expected financial performance. 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 cost reductions, 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, 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 Securities and Exchange Commission. The Company’s ability to profit from its branding initiatives depends on a number of factors including consumer acceptance of the Company’s products. The forward-looking statements in this press release speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.

 

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CONTACT: Corporate Communications, Marguerite Copel, +1-214-721-7766; or Investor Relations, Barry Sievert, +1-214-303-3438

(Tables to follow)

# # #

 

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DEAN FOODS COMPANY

Condensed Consolidated Income Statements

(Unaudited)

(In thousands, except per share data)

 

     GAAP     ADJUSTED        
     Three months ended     Three months ended        
     March 31,     March 31,        
     2011     2010     2011           2010        

Net sales

   $   3,049,854      $   2,961,143      $   3,049,854        $   2,961,143     

Cost of sales

     2,299,572        2,213,349        2,299,572          2,213,349     
                                    

Gross profit

     750,282        747,794        750,282          747,794     

Operating costs and expenses:

            

Selling and distribution

     485,802        472,727        485,802          472,727     

General and administrative

     164,662        150,965        156,811        (a)        150,965     

Amortization of intangibles

     2,738        2,863        2,738          2,863     

Facility closing and reorganization costs

     10,643        1,551        —          (b)        —          (b)   

Other operating income

     (19,490     —          —          (a)        —       

Loss attributable to non-controlling interest in Hero JV

     —          —          (1,837     (c)        (2,214     (c)   
                                    

Total operating costs and expenses

     644,355        628,106        643,514          624,341     
                                    

Operating income

     105,927        119,688        106,768          123,453     

Interest expense

     65,270        58,069        65,270          58,069     

Other income, net

     (48     (181     (45       (181  
                                    

Income from continuing operations before income taxes

     40,705        61,800        41,543          65,565     

Income taxes

     17,323        21,987        16,734        (d)        22,576        (d)   
                                    

Income from continuing operations

     23,382        39,813        24,809          42,989     

Gain on sale of discontinued operations, net of tax

     —          1,837        —            —          (e)   

Loss from discontinued operations, net of tax

     —          (733     —            —          (e)   
                                    

Net income

     23,382        40,917        24,809          42,989     

Net loss attributable to non-controlling interest

     1,881        2,237        —          (c)        —          (c)   
                                    

Net income attributable to Dean Foods Company

   $ 25,263      $ 43,154      $ 24,809        $ 42,989     
                                    

Average common shares:

            

Basic

     182,817        181,235        182,817          181,235     

Diluted

     183,293        183,344        183,293          183,344     

Basic earnings per common share:

            

Income from continuing operations attributable to Dean Foods Company

   $ 0.14      $ 0.23      $ 0.14        $ 0.24     

Income from discontinued operations attributable to Dean Foods Company

     —          0.01        —            —       
                                    

Net income attributable to Dean Foods Company

   $ 0.14      $ 0.24      $ 0.14        $ 0.24     
                                    

Diluted earnings per common share:

            

Income from continuing operations attributable to Dean Foods Company

   $ 0.14      $ 0.23      $ 0.14        $ 0.23     

Income from discontinued operations attributable to Dean Foods Company

     —          0.01        —            —       
                                    

Net income attributable to Dean Foods Company

   $ 0.14      $ 0.24      $ 0.14        $ 0.23     
                                    

 

* See notes to Earnings Release Tables

 

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DEAN FOODS COMPANY

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

     March 31,
2011
     December 31,
2010
 

ASSETS

     

Cash and cash equivalents

   $ 108,609       $ 92,007   

Other current assets

     1,709,936         1,724,209   
                 

Total current assets

     1,818,545         1,816,216   

Property, plant and equipment, net

     2,071,703         2,113,391   

Intangibles and other assets

     4,026,951         4,027,060   
                 

Total Assets

   $   7,917,199       $   7,956,667   
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Total current liabilities, excluding debt

   $ 1,276,528       $ 1,266,715   

Total long-term debt, including current portion

     3,988,930         4,067,525   

Other long-term liabilities

     1,068,805         1,108,359   

Total Dean Foods Company stockholders’ equity

     1,567,361         1,499,525   

Non-controlling interest

     15,575         14,543   
                 

Total stockholders’ equity

     1,582,936         1,514,068   
                 

Total Liabilities and Stockholders’ Equity

   $ 7,917,199       $ 7,956,667   
                 

 

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DEAN FOODS COMPANY

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Three months ended March 31,  
     2011     2010  

Operating Activities

    

Net cash provided by continuing operations

   $ 37,183      $ 70,276   

Net cash provided by discontinued operations

     —          1,238   
                

Net cash provided by operating activities

     37,183        71,514   

Investing Activities

    

Payments for property, plant and equipment

     (40,411     (45,992

Proceeds from divestitures

     91,780        —     

Proceeds from sale of fixed assets

     1,807        3,053   
                

Net cash provided by (used in) continuing operations

     53,176        (42,939

Net cash used in discontinued operations

     —          (83
                

Net cash provided by (used in) investing activities

     53,176        (43,022

Financing Activities

    

Net repayment of debt

     (79,037     (28,496

Issuance of common stock, net

     (580     (1,423

Capital contribution from non-controlling interest

     2,913        3,260   

Other

     —          193   
                

Net cash used in financing activities

     (76,704     (26,466

Effect of exchange rate changes on cash and cash equivalents

     2,947        (1,143
                

Increase in cash and cash equivalents

     16,602        883   

Cash and cash equivalents, beginning of period

     92,007        45,190   
                

Cash and cash equivalents, end of period

   $ 108,609      $ 46,073   
                

Computation of Free Cash Flow provided by continuing operations

    

Net cash provided by continuing operations

   $ 37,183      $ 70,276   

Net additions to property, plant and equipment

     (40,411     (45,992
                

Free cash flow provided by continuing operations

   $ (3,228   $ 24,284   

 

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DEAN FOODS COMPANY

Segment Information and Reconciliation of GAAP to Adjusted Earnings

(Unaudited)

(In thousands)

 

    Three months ended
March 31, 2011
 
    GAAP     Asset write-down
& (Gain)  Loss on
sales of assets (a)
    Facility Closing &
Reorganization
Costs (b)
    Non-Controlling
Interest in

Hero JV (c)
    (Income) Loss
Discontinued
Operations (e)
    Adjusted  

Segment operating income (loss):

           

Fresh Dairy Direct - Morningstar

  $   111,482      $ —        $ —        $ —        $ —        $   111,482   

Whitewave - Alpro

    46,091        —          —          1,837        —          47,928   

Corporate

    (60,493     7,851        —          —          —          (52,642

Facility closing and reorganization costs

    (10,643     —          10,643        —          —          —     

Other income

    19,490        (19,490     —          —          —          —     
                                               

Total operating income

  $ 105,927      $ (11,639   $ 10,643      $ 1,837      $ —        $ 106,768   
                                               

Net income attributable to Dean Foods Company (d)

  $ 25,263      $ (7,003   $ 6,549      $ —        $ —        $ 24,809   
                                               

Diluted earnings per share

  $ 0.14      $ (0.04   $ 0.04      $ —        $ —        $ 0.14   
                                               
    Three months ended
March 31, 2010
 
    GAAP     Asset write-down
& (Gain) Loss on
sales of assets (a)
    Facility Closing &
Reorganization
Costs (b)
    Non-Controlling
Interest in

Hero JV (c)
    (Income) Loss
Discontinued
Operations (e)
    Adjusted  

Segment operating income (loss):

           

Fresh Dairy Direct - Morningstar

  $ 126,771      $ —        $ —        $ —        $ —        $ 126,771   

Whitewave - Alpro

    42,325        —          —          2,214        —          44,539   

Corporate

    (47,857     —          —          —          —          (47,857

Facility closing and reorganization costs

    (1,551     —          1,551        —          —          —     

Other income

    —          —          —          —          —          —     
                                               

Total operating income

  $ 119,688      $ —        $ 1,551      $ 2,214      $ —        $ 123,453   
                                               

Net income attributable to Dean Foods Company (d)

  $ 43,154      $ —        $ 939      $ —        $ (1,104   $ 42,989   
                                               

Diluted earnings per share

  $ 0.24      $ —        $ —        $ —        $ —        $ 0.24   
                                               

 

* See notes to Earnings Release Tables

 

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For the three months ended March 31, 2011 and 2010, the adjusted results and certain other non-GAAP financial measures differ from the Company’s results under GAAP by excluding the following:

 

  (a) The adjustment reflects the elimination of a net gain resulting from the gain on sale of our Mountain High yogurt operations, which closed on February 1, 2011, offset by charges recorded in conjunction with the pending sale of our fluid milk operations at our manufacturing facility in Waukesha, Wisconsin as a result of the settlement, subject to court approval, of the Department of Justice civil action related to our acquisition of Foremost Farms, as well as the pending sale and cease of use of certain Corporate assets.

 

  (b) The adjustment reflects the elimination of charges related to announced facility closings and reorganization costs.

 

  (c) The results of operations for the Hero/WhiteWave joint venture have been consolidated for financial reporting purposes. The adjustment reflects the operating loss attributable to the 50% interest in the Hero/WhiteWave joint venture that we do not own.

 

  (d) The adjustment reflects the income tax impact for income from continuing operations before income taxes adjustments (a) through (c).

 

  (e) The adjustment reflects the elimination of discontinued operations, net of tax.

 

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