- Adjusted Quarterly Diluted Earnings per Share Improve 70% to $0.46
- Full Year 2008 Cash Flow from Continuing Operations Reaches $719 million
-
Quarterly Operating Income of $184 million; Adjusted Quarterly Operating
Income of $190 million - Company to Host Investor Meeting on February 26th
DALLAS, Feb. 11 /PRNewswire-FirstCall/ — Dean Foods Company (NYSE: DF)
today announced that the Company earned $0.43 per diluted share from
continuing operations for the quarter ended December 31, 2008, an increase of
79% from the $0.24 per diluted share from continuing operations earned in the
fourth quarter of 2007. Net income from continuing operations for the fourth
quarter of 2008 totaled $67.4 million, compared with $32.6 million in the
prior year’s fourth quarter.
On an adjusted basis (as defined below), fourth quarter diluted earnings
per share were $0.46, a 70% increase over the $0.27 per adjusted diluted share
earned in the prior year’s fourth quarter. Adjusted net income from continuing
operations for the fourth quarter was $71.3 million, compared to adjusted net
income from continuing operations of $37.1 million in the fourth quarter of
2007. The increases in adjusted net income and adjusted earnings per diluted
share were driven by a 31% increase in DSD Dairy segment operating profit, a
14% increase in WhiteWave-Morningstar segment operating profit, and lower
interest expense as a result of the reduction in total debt outstanding,
offset by higher Corporate expense and increased diluted shares outstanding.
“By many measures, the fourth quarter of 2008 was the strongest in our
history,” commented Gregg Engles, Chairman and CEO. “Consolidated adjusted
operating income was 27% above the fourth quarter of 2007. Both business units
turned in solid performances with DSD Dairy operating profit 31% above year
ago levels and WhiteWave-Morningstar operating profit up 14% in the quarter.
Consistent with the trends we were seeing as we exited the third quarter,
commodities continued to be favorable in the fourth quarter, particularly
energy related commodities, which, combined with operational improvements
across the business, bolstered our financial results in the period.”
Summary of Dean Foods Fourth Quarter and Full Year 2008 Segment
and Operating Results
(in millions, except EPS)
% Change % Change
4Q08 from 4Q07 FY 2008 from FY07
---- --------- ------- ---------
DSD Dairy:
Fluid Milk Volume N/A 2.8% N/A 1.5%
Operating Income $165.7 31% $591.3 10%
WhiteWave-Morningstar:
Net Sales $707.9 5% $2,650.0 10%
Operating Income $69.4 14% $205.4 0%
Cons. Adjusted Operating
Income: $190.0 27% $631.5 7%
Adjusted Diluted Earnings
per Share: $0.46 70% $1.30 8%
DEAN FOODS FOURTH QUARTER 2008 CONSOLIDATED RESULTS
Total net sales for the fourth quarter totaled $3.1 billion, 5% below
total net sales in the fourth quarter of 2007. Net sales decreased in the
quarter due to the pass-through of lower overall dairy commodity costs that
were partially offset by acquisition-aided volume growth in the DSD Dairy
segment and continued net sales growth at WhiteWave-Morningstar.
Consolidated operating income in the fourth quarter totaled $183.6
million, an increase of 29% from $142.5 million in the fourth quarter of 2007.
Adjusted fourth quarter consolidated operating income totaled $190.0 million,
an increase of 27% from $149.2 million in the fourth quarter of 2007. The
increase in adjusted consolidated operating income is due to the strong
performance of the DSD Dairy segment, which increased operating profit 31%
over the prior year; and the WhiteWave-Morningstar segment, which increased
operating profit by 14% over the fourth quarter of 2007, partially offset by
increased Corporate expense.
DEAN FOODS FULL YEAR 2008 CONSOLIDATED RESULTS
Net sales for the twelve months ended December 31, 2008 totaled $12.5
billion, an increase of 5% from net sales for the same period last year, due
to stronger volumes in DSD Dairy and increased sales at WhiteWave-Morningstar.
Net income from continuing operations for the full year 2008 totaled
$184.8 million, compared with $130.5 million in the previous year. Diluted
earnings per share from continuing operations for the full year 2008 totaled
$1.21, compared to $0.95 in 2007.
On an adjusted basis (as defined below), net income from continuing
operations for the full year 2008 totaled $199.2 million, compared to $164.5
million in 2007. Adjusted diluted earnings per share from continuing
operations for the full year 2008 totaled $1.30 compared to $1.20 in 2007.
“2008 was a year of tremendous progress,” continued Mr. Engles. “The
business overcame a slow start to post full year adjusted operating income
growth of 7%, marking a solid rebound from 2007’s results and returning the
business to its historical longer-term trend of mid to high single digit
adjusted operating income growth. Fluid milk volumes in the DSD Dairy segment
grew 1.5% and full year segment operating profit increased 10%. Sales at
WhiteWave-Morningstar were 10% higher than the prior year and segment profit
was flat for the year, but improved materially in the fourth quarter.”
“Free cash flow for the year was the highest in our history at $462
million. Our strong cash flow combined with our equity offering in February
2008 led to the reduction of $783 million in debt during the year,
significantly deleveraging the balance sheet. Adjusted diluted earnings per
share for the year were 8% above 2007 results, despite the modest dilution
from our $400 million equity offering in the first quarter.”
DSD DAIRY
DSD Dairy net sales for the fourth quarter were $2.37 billion, a 7%
decrease from $2.56 billion in net sales for the fourth quarter of 2007. The
sales decrease in the quarter was due to the pass-through of lower overall
dairy commodity costs offset somewhat by strong volume growth. The fourth
quarter average Class I mover, which is an indicator of the Company’s raw milk
costs, averaged $16.10 per hundred-weight during the fourth quarter, 23% below
the same period in 2007. DSD Dairy total volumes increased 2.3% in the
quarter. DSD Dairy fluid milk volumes increased by 2.8% in the quarter,
compared to a fluid milk category that was up approximately 0.1% on a year
over year basis; based on USDA data and company estimates.
DSD Dairy operating income in the fourth quarter was $165.7 million, 31%
above the $126.6 million reported in the fourth quarter of 2007. DSD Dairy
results benefitted from declining raw dairy and energy related commodity
costs, strong cost controls, and the benefits of the Company’s ongoing
strategic initiatives.
For the full year, DSD Dairy net sales totaled $9.8 billion, a 4% increase
from 2007 net sales of $9.4 billion. The Class I mover averaged $18.00 per
hundred-weight for the year, down slightly from the $18.14 average price in
2007. Total volumes in the DSD Dairy segment increased 1.7% for the year.
Total year fluid milk volumes increased 1.5% against a category that was
approximately flat on a full year basis. Full year DSD operating income was
$591.3 million, 10% higher than the $538.0 million recorded in the previous
year.
WHITEWAVE-MORNINGSTAR
The WhiteWave-Morningstar segment reported fourth quarter net sales of
$707.9 million, 5% higher than fourth quarter 2007 net sales of $672.1
million. The WhiteWave branded portfolio of products increased sales 8% over
the prior year period to $419.8 million. Net sales of Morningstar’s private
label and foodservice cultured and creamer products increased 1.5% over the
fourth quarter of 2007 to $288.1 million behind continued strong growth in
yogurt, egg nog and cottage cheese sales.
Net sales of Horizon Organic(R) milk increased nearly 15% over the year
ago period even as the organic milk category showed signs of material slowing
within the quarter. Silk(R) net sales increased in the mid single digits, and
were impacted by the slowing of sales growth within the soymilk category, as
well as the decision to exit an unprofitable foodservice business
relationship. International Delight(R) net sales grew in the high single
digits. LAND O’LAKES(R) portfolio net sales were modestly ahead of last year’s
fourth quarter results with particular strength in the creamers business
offset by the loss of a specialty milk customer.
Segment operating income in the fourth quarter for WhiteWave-Morningstar
was $69.4 million, an increase of 14% from $60.9 million in the fourth quarter
of 2007. Segment operating margins were 9.8%, compared to 9.1% in the fourth
quarter of 2007. Segment operating income growth in the quarter was the result
of solid sales growth and operational leverage at WhiteWave combined with
favorable commodity trends at Morningstar and distribution synergies across
the segment. CME butter, a primary input cost for Morningstar, averaged $1.52
per pound in the fourth quarter, 14% above the same period last year, and 6%
below the third quarter of 2008.
For the full year, WhiteWave-Morningstar net sales were $2.65 billion, a
10% increase over $2.41 billion in net sales in fiscal 2007. Included in this
result, WhiteWave net sales increased 12% to $1.53 billion in 2008 from total
net sales of $1.37 billion in 2007 and Morningstar sales increased 8% to $1.12
billion from $1.04 billion in 2007. Full year 2008 operating income for
WhiteWave-Morningstar was $205 million, roughly equal to 2007 full year
segment operating income, reflecting the difficult commodity environment at
Morningstar for much of 2008 and the continued challenges in the organic milk
category that have masked operational improvements in the business,
particularly at WhiteWave.
CORPORATE EXPENSE
Corporate and other expenses totaled $45.1 million, compared to $38.3
million in the fourth quarter of 2007. The increase in the quarter reflects
the continued balancing of tight cost controls with strategic investments in
building capabilities and the impact of expensing $6.3 million of transaction
related costs. For the full year 2008, Corporate and other expenses totaled
$165.2 million, compared to $153.2 million in 2007.
CASH FLOW
Net cash provided by continuing operations for the twelve months ended
December 31, 2008 totaled $719 million, compared to $350 million in 2007. The
increase in net cash provided by continuing operations is due primarily to
higher operating results and decreased working capital requirements.
Free cash flow provided by operations in the twelve months ended December
31, 2008 totaled $462 million, a $353 million increase over the $109 million
in 2007. A reconciliation between net cash provided by continuing operations
and free cash flow provided by continuing operations is provided below.
Capital expenditures for the full year 2008 totaled $257 million, compared
to $241 million in 2007.
Through the twelve months ended December 31, 2008, total debt outstanding
decreased by $783 million. Total debt at December 31, 2008, net of $36 million
in cash on hand, was approximately $4.45 billion. The Company’s funded debt to
EBITDA ratio, as defined by its credit agreements, declined to 4.92x as of the
end of the fourth quarter. This compares to a current bank covenant
requirement of 5.75x and a year end 2009 step-down in the covenant requirement
to 5.0x funded debt to EBITDA.
FORWARD OUTLOOK
“We feel very good about our overall performance in the fourth quarter and
the strong recovery of the business in 2008,” stated Jack Callahan, Chief
Financial Officer. “We have significant momentum in our business as we enter
2009. For the first quarter, we are off to a strong start and are expecting
adjusted diluted earnings of at least $0.38 per share. For the full year, we
remain very confident in our expectations for delivering mid-teens EPS growth
in 2009, which implies adjusted diluted earnings of at least $1.50 per share
in 2009. While we have clear tailwinds due to favorable commodities at the
moment, real concerns remain. We believe it is prudent to be conservative on
our full year outlook due the unpredictable commodity volatility, continuing
competitive pressures, an extraordinarily troubled economy, an increase in
pension expense of approximately five cents per share versus 2008 and an
investment of approximately six cents per share in the Fruit2Day joint
venture. We will update you in more detail regarding 2009 and our longer-term
outlook at our investor conference in two weeks.”
INVESTOR DAY
The Company also announced today that it will be hosting an all-day
investor meeting in New York on February 26th. At the meeting, members of Dean
Foods executive leadership team will be providing additional insight into the
Company’s strategic growth plan, focusing on the businesses’ operational and
financial plans and benchmarks for achieving growth. For more information on
attending the meeting, please contact Dean Foods investor relations department
at 214-303-3438. The meeting will also be webcast at
www.deanfoods.com/investors.
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 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 twelve month periods ended December 31, 2008 and 2007
calculated according to GAAP and on an adjusted basis is attached.
For the quarter ended December 31, 2008, the adjusted results reported
above differ from the Company’s results under GAAP by excluding the following
facility closing, reorganization, and other nonrecurring charges:
- $6.4 million charge ($3.9 million net of income tax) related to
previously announced facility closings and reorganization costs.
For the quarter ended December 31, 2007, the adjusted results reported
above differ from the Company’s results under GAAP by excluding the following
facility closing reorganization and other nonrecurring charges:
- $6.7 million charge ($4.1 million net of income tax) related to the
realignment of the DSD Dairy’s finance and accounting organization,
workforce reduction activities in the former DSD Dairy’s operations
and previously announced facility closings; and - $0.6 million charge ($0.4 million net of income tax) related to
non-recurring special dividend costs.
For the year ended December 31, 2008, the adjusted results reported above
differ from the Company’s results under GAAP by excluding the following
facility closing, reorganization, and other nonrecurring charges:
- $22.8 million charge ($14.0 million net of income tax) related to
previously announced facility closings and reorganization costs; and - $0.6 million charge ($0.4 million net of income tax) related to
non-recurring special dividend costs.
For the year ended December 31, 2007, the adjusted results reported above
differ from the Company’s results under GAAP by excluding the following
facility closing, reorganization, and other nonrecurring charges:
- $36.1 million charge ($22.0 million net of income tax) related to the
realignment of our DSD Dairy’s finance and accounting organization,
the DSD Dairy’s management realignment, workforce reduction activities
in the former DSD Dairy’s operations, and previously announced
facility closings, as well as the sale of our tofu business; and - $19.8 million charge ($12.0 million net of income tax) related to
non-recurring special dividend costs, including the write-off of
finance costs resulting from the completion of our new senior credit
facility.
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 site at www.deanfoods.com/investors. There will be a
slide presentation along with the webcast.
ABOUT DEAN FOODS
Dean Foods is one of the leading food and beverage companies in the United
States. The Company’s DSD Dairy segment is the largest processor and
distributor of milk and other dairy products in the country, with products
sold under more than 50 familiar local and regional brands and a wide array of
private labels. The Company’s WhiteWave-Morningstar segment markets and sells
a variety of nationally branded dairy and dairy-related products, such as
Silk(R) soymilk and cultured soy products, Horizon Organic(R) milk and other
dairy products, International Delight(R) coffee creamers, LAND O’LAKES(R)
creamers and other fluid dairy products. Our WhiteWave-Morningstar segment’s
Rachel’s Organic(R) dairy products brand is the fourth largest organic yogurt
brand in the United Kingdom. Additionally, our WhiteWave-Morningstar segment
markets and sells private label cultured and extended shelf life dairy
products through our Morningstar platform.
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 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 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.
CONTACT: Corporate Communications, Marguerite Copel, +1-214-721-1273; or
Investor Relations, Barry Sievert, +1-214-303-3438
(Tables to follow)
DEAN FOODS COMPANY
Condensed Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
Net sales $3,080,425 $3,231,713 $12,454,613 $11,821,903
Cost of sales 2,294,785 2,528,776 9,509,359 9,084,318
--------- --------- --------- ---------
Gross profit 785,640 702,937 2,945,254 2,737,585
Operating costs
and expenses 595,658 553,718 2,313,806 2,147,879
Facility closings,
reorganizations
and other costs 6,388 6,718 22,758 36,109
----- ----- ------ ------
Operating income 183,594 142,501 608,690 553,597
Interest expense 73,054 88,818 308,080 319,657
Debt refinancing
and special
dividend costs - 592 - 19,787
Other (income)
expense 418 (124) 933 (316)
--- ---- --- ----
Income from
continuing
operations before
income taxes 110,122 53,215 299,677 214,469
Income taxes 42,742 20,650 114,837 84,007
------ ------ ------- ------
Income from
continuing
operations 67,380 32,565 184,840 130,462
Income (loss) from
discontinued
operations,
net of tax (1,019) 70 (1,070) 891
------ --- ------ ---
Net income $66,361 $32,635 $183,770 $131,353
======= ======= ======== ========
Basic earnings
per share:
Income from
continuing
operations $0.44 $0.25 $1.24 $1.00
Income (loss)
from
discontinued
operations (0.01) - (0.01) 0.01
----- --- ----- ----
Net income $0.43 $0.25 $1.23 $1.01
===== ===== ===== =====
Basic average
common shares 153,967 131,630 149,267 130,311
Diluted earnings
per share:
Income from
continuing
operations $0.43 $0.24 $1.21 $0.95
Income (loss)
from
discontinued
operations (0.01) - (0.01) 0.01
----- --- ----- ----
Net income $0.42 $0.24 $1.20 $0.96
===== ===== ===== =====
Diluted average
common shares 156,127 137,787 153,396 137,292
DEAN FOODS COMPANY
Segment Information
(Unaudited)
(In thousands)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
Net sales:
DSD Dairy $2,372,550 $2,559,617 $9,804,622 $9,411,103
WhiteWave-
Morningstar 707,875 672,096 2,649,991 2,410,800
------- ------- --------- ---------
Total $3,080,425 $3,231,713 $12,454,613 $11,821,903
========== ========== =========== ===========
Segment operating
income (loss):
DSD Dairy $165,708 $126,616 $591,314 $537,963
WhiteWave-
Morningstar 69,370 60,887 205,382 204,951
Corporate / Other (45,096) (38,284) (165,248) (153,208)
------- ------- -------- --------
Subtotal 189,982 149,219 631,448 589,706
Facility closings,
reorganizations and
other costs (6,388) (6,718) (22,758) (36,109)
------ ------ ------- -------
Total operating
income $183,594 $142,501 $608,690 $553,597
======== ======== ======== ========
DEAN FOODS COMPANY
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
December 31, December 31,
ASSETS 2008 2007
------ ---- ----
Cash and cash equivalents $35,979 $32,555
Other current assets 1,445,214 1,499,429
--------- ---------
Total current assets 1,481,193 1,531,984
Property, plant and equipment, net 1,821,892 1,798,378
Intangibles and other assets 3,737,107 3,702,994
--------- ---------
Total Assets $7,040,192 $7,033,356
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Total current liabilities,
excluding debt $1,111,741 $907,270
Total long-term debt, including
current portion 4,489,251 5,272,351
Other long-term liabilities 880,966 802,468
Total stockholders' equity 558,234 51,267
------- ------
Total Liabilities and Stockholders'
Equity $7,040,192 $7,033,356
========== ==========
DEAN FOODS COMPANY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twelve months ended
December 31,
Operating Activities 2008 2007
-------------------- ---- ----
Net cash provided by continuing operations $719,258 $350,250
Net cash used in discontinued operations (1,304) -
------ ---
Net cash provided by operating activities $717,954 $350,250
Investing Activities
--------------------
Additions to property, plant and equipment (256,965) (241,448)
Cash outflows for acquisitions and investments,
net of cash received (95,851) (132,204)
Net proceeds from divestitures - 1,536
Proceeds from sale of fixed assets 11,329 20,192
------ ------
Net cash used in investing activities (341,487) (351,924)
Net cash provided by discontinued operations - 10,705
--- ------
Net cash used in investing activities $(341,487) $(341,219)
Financing Activities
--------------------
Proceeds from the issuance (repayment) of debt (800,287) 1,899,920
Payments of financing costs - (31,281)
Issuance of common stock, net 419,663 48,114
Payment of special cash dividend - (1,942,738)
Tax savings on share-based compensation 7,581 18,369
----- ------
Net cash used in financing activities (373,043) (7,616)
-------- ------
Increase in cash and cash equivalents 3,424 1,415
Beginning cash balance 32,555 31,140
------ ------
Ending cash balance $35,979 $32,555
======= =======
DEAN FOODS COMPANY
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ----
Reconciliation of GAAP
to adjusted operating
income from
continuing operations
GAAP operating income
from continuing
operations $183,594 $142,501 $608,690 $553,597
Adjustment:
Facility closings,
reorganizations
and other costs 6,388 6,718 22,758 36,109
----- ----- ------ ------
Adjusted operating
income from
continuing operations $189,982 $149,219 $631,448 $589,706
======== ======== ======== ========
Reconciliation of GAAP
to adjusted net income
from continuing
operations
GAAP net income
from continuing
operations $67,380 $32,565 $184,840 $130,462
Adjustments, net of tax:
Facility closings,
reorganizations
and other costs 3,892 4,121 14,037 21,965
Debt refinancing
and special
dividend costs - 383 353 12,036
--- --- --- ------
Adjusted net income
from continuing
operations $71,272 $37,069 $199,230 $164,463
======= ======= ======== ========
Reconciliation of GAAP
to adjusted diluted
earnings per share
GAAP diluted earnings
per share from continuing
operations $0.43 $0.24 $1.21 $0.95
Adjustments, net of tax
Facility closings,
reorganizations
and other costs 0.03 0.03 0.09 0.16
Debt refinancing and
special dividend costs - - - 0.09
--- --- --- ----
Adjusted diluted earnings
per share from
continuing operations $0.46 $0.27 $1.30 $1.20
===== ===== ===== =====
Computation of Free Cash
Flow provided by operations
Net cash provided by
continuing operations $260,535 $129,561 $719,258 $350,250
Additions to property,
plant and equipment (85,957) (76,256) (256,965) (241,448)
------- ------- -------- --------
Free cash flow provided
by continuing
operations $174,578 $53,305 $462,293 $108,802
======== ======= ======== ========
SOURCE Dean Foods Company
CONTACT:
Corporate Communications, Marguerite Copel
+1-214-721-1273
or
Investor Relations
Barry Sievert
+1-214-303-3438
both of Dean Foods Company
Web Site:
http://www.deanfoods.com
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