DALLAS, Nov. 9, 2015 /PRNewswire/ -- Dean Foods
Company (NYSE: DF) today reported third quarter 2015 results.
Highlights
- Q3 net income per diluted share was $0.22 and adjusted net income per diluted share
was $0.30.
- Q3 adjusted results reflect the third consecutive quarter of
year-over-year improved results behind solid execution and price
realization.
- Dairy category improves and DairyPure®, the first
and largest fresh, white milk national brand, supports commercial
performance.
- Repurchased approximately $53
million of Dean Foods common stock, or approximately 3.2
million shares, at an average purchase price of $16.73 per share.
- Q4 adjusted diluted earnings are expected to be $0.28 to $0.38 per share.
Chief Executive Officer Gregg
Tanner said, "I'm very pleased with our third quarter
results that demonstrate we are driving the right initiatives and
agenda. We view our portfolio of brands, especially with our
national brands of DairyPure in fresh white milk and TruMoo in
flavored milk, as a competitive advantage that complements our
customer set and leverages the national scale of our network and
one of the nation's largest best-in-class refrigerated direct store
delivery distribution systems. DairyPure has provided our sales
organization with a strong selling story and value proposition to
present to our customers while concurrently allowing us to effect
the successful go-to-market strategy for our national brands this
year. We believe the strong health and wellness credentials in
dairy products, and especially in fresh milk, resonate with
consumers. All together, we believe this is a great business to be
in and one that creates a compelling operating and financial
opportunity."
Third Quarter 2015 Operating Results
Chief Financial Officer Chris
Bellairs said, "With volume performance coming in-line with
our expectations and a continued focus on price realization, we
delivered a third consecutive quarter of year-over-year
improvements to gross profit and operating income. During the
quarter, we repurchased stock while further reducing our leverage,
and year-to-date we've delivered almost $300
million of adjusted EBITDA and over $240 million of free cash flow. We remain focused
on our initiatives and opportunities to grow our brands, reduce our
costs, increase the profitability of this business and create
shareholder value."
Financial Summary
*
|
|
Three Months Ended
September 30
|
|
Nine Months Ended
September 30
|
(In millions,
except per share amounts)
|
|
2015
|
2014
|
|
2015
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
GAAP
|
|
$ 492
|
$ 417
|
|
$1,466
|
$1,232
|
Adjusted
|
|
$ 492
|
$ 417
|
|
$1,465
|
$1,234
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
GAAP
|
|
$ 50
|
$ (1)
|
|
$ 48
|
$ 1
|
Adjusted
|
|
$ 62
|
$ 10
|
|
$ 181
|
$ 11
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
GAAP
|
|
$ 17
|
$ 15
|
|
$ 51
|
$ 45
|
Adjusted
|
|
$ 17
|
$ 15
|
|
$ 49
|
$ 44
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
|
|
|
GAAP
|
|
$ 20
|
$ (16)
|
|
$ (27)
|
$ (26)
|
Adjusted
|
|
$ 28
|
$ (3)
|
|
$ 82
|
$ (20)
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share (EPS)
|
|
|
|
|
|
|
GAAP
|
|
$0.22
|
$(0.17)
|
|
$ (0.29)
|
$ (0.27)
|
Adjusted
|
|
$0.30
|
$(0.03)
|
|
$ 0.87
|
$ (0.21)
|
|
|
|
|
|
|
|
* Adjustments to GAAP
for the impacts of specific transactions and other one-time or
non-recurring items are fully described in the attached
tables.
|
The third quarter 2015 average Class I Mover, a measure of raw
milk costs, was $16.38 per
hundred-weight, a 4% sequential increase from the second quarter of
2015 and a decrease of 30% from the third quarter of 2014. The
Company expects the fourth quarter 2015 average Class I Mover to
approximate $16.22 which represents
about a 1% decline sequentially and a 31% decline year-over-year.
Total volume across all products was 658 million gallons for the
third quarter of 2015, a 2% decline compared to total volume of 673
million gallons in the third quarter of 2014. For the fourth
quarter 2015, as compared to the prior year period, the Company
expects total volumes to decline in the low single digits.
Based on the USDA's recently published category data, fluid milk
volumes improved sequentially from a 2.2% decline in the first
quarter to a 1.3% decline in the second quarter. Quarter-to-date
through August 2015, fluid milk
volumes declined approximately 0.9% year-over-year, on an
unadjusted basis. On this same basis, Dean Foods' share of U.S.
fluid milk volumes increased 10 basis points sequentially to 35.3%
but decreased from 35.9% in the third quarter of 2014.
Tanner added, "The health of the dairy category is probably as
good as it's been in my career at Dean Foods and, among other
things, lower-priced milk in terms of both cost and prices at
retail is helping support that. Likewise, when you look at our
financials, there's clearly more driving our improved results than
just the benefit of cheaper milk. As industry leaders, we are
executing both a focused commercial agenda and a robust cost
productivity agenda. And going forward, we believe there are
significant opportunities to build strong brands, while focusing on
our cost structure and growing our business across multiple
channels, in order to continue to improve our financial
results."
Cash Flow
Net cash provided by continuing operations for the nine months
ended September 30, 2015, totaled
$322 million. Free cash flow provided
by continuing operations, which is defined as net cash provided by
continuing operations less capital expenditures, was $241 million for nine months ended September 30, 2015, a $282
million increase as compared to the prior year period.
Debt
Total debt at September 30, 2015,
net of $64 million cash on hand, was
approximately $777 million. The
Company's funded net debt to EBITDA ratio, on an all cash netted
basis, improved sequentially to 2.09 times at the end of the third
quarter of 2015 with strong operating cash flow and increased
EBITDA.
Share Repurchases
During the third quarter of 2015, the Company utilized
$53 million of cash to repurchase
approximately 3.2 million shares of its common stock at an average
purchase price of $16.73 per share.
After taking into account the repurchases in 2014 and 2015, the
Company has approximately $222
million of share repurchase authorization remaining.
Forward Outlook
"Turning to the forward outlook for the fourth quarter, with the
continuation of commercial and brand initiatives, diligent cost
focus, seasonal demand driving beneficial product mix, and an
overall favorable commodity environment which is supportive, we
expect to close out this year with strong fourth quarter results,"
continued Tanner.
"Including the accretive impact from the share repurchases in
the third quarter, we expect fourth quarter adjusted diluted
earnings of between $0.28 and $0.38
per share, resulting in full year 2015 adjusted diluted earnings
per share of between $1.15 and
$1.25."
"We expect our full year 2015 adjusted EBITDA to be
approximately $400 million and our
full year capital expenditures to be approximately $150 million."
Non-GAAP Financial Measures
In addition to the results prepared in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"), we have
presented certain adjusted financial results and certain other
non-GAAP financial measures, including Adjusted EBITDA and Free
Cash Flow, each as defined below. These non-GAAP financial
measures are from continuing operations and are adjusted to
eliminate the net expenses and net gains related to the items
identified in the "Reconciliation of GAAP to Non-GAAP Information"
tables below. This information is provided to assist investors in
making meaningful comparisons of our operating performance between
periods and to view our business from the same perspective as our
management. Because we cannot predict the timing and amount
of expenses or gains associated with certain non-recurring items;
asset impairment charges; gains or losses related to discontinued
operations and divestitures; facility closing, reorganization and
realignment costs; costs associated with the early retirement of
long-term debt; gains (losses) on the mark-to-market of our
derivative contracts; litigation settlements; incremental non-cash
trademark amortization triggered by the launch of a national fresh
white milk brand; and certain other charges, our management
does not consider these items when evaluating our performance, when
making decisions regarding the allocation of resources, in
determining incentive compensation for management, or in
determining earnings estimates.
We have defined Adjusted EBITDA as net income (loss), which is
the most comparable GAAP financial measure, adjusted for the items
above as well as interest, taxes, depreciation and amortization. We
believe Adjusted EBITDA is a useful measure for analyzing the
performance of our business and is an indicator of our ability to
incur and service indebtedness and generate free cash flow. We also
believe that EBITDA measures are commonly reported and widely used
by investors and other interested parties as measures of a
company's operating performance and debt servicing ability because
such measures assist in comparing performance on a consistent basis
without regard to capital structure, depreciation or amortization
(which can vary significantly) and non-operating factors (such as
historical cost). EBITDA is also a widely-accepted financial
indicator of a company's ability to incur and service indebtedness.
The reconciliation of net income to Adjusted EBITDA for the three
and nine months ended September 30,
2015 and 2014 is included in the tables below.
Additionally, we believe free cash flow provided by continuing
operations ("Free Cash Flow") is a meaningful non-GAAP measure that
offers supplemental information and insight regarding the liquidity
of our operations and our ability to generate sufficient cash flow
above what is required in our business to sustain our
operations.
We define Free Cash Flow as net cash provided by continuing
operations less cash payments for capital expenditures. A
reconciliation of net cash provided by continuing operations, which
is the most comparable GAAP financial measure to Free Cash Flow is
included in the tables below.
This non-GAAP financial information is provided as additional
information for investors and is not in accordance with, or an
alternative to, GAAP. Additionally, these non-GAAP measures may be
different than similar measures used by other companies. We believe
that the presentation of these non-GAAP financial measures, when
considered together with our GAAP financial measures and the
reconciliations to the corresponding GAAP financial measures,
provides investors with a more complete understanding of the
factors and trends affecting our business than could be obtained
absent these disclosures. A full reconciliation of our
results and financial measures reported in accordance with GAAP for
the three and nine months ended September
30, 2015 and 2014 to the non-GAAP financial measures
described above is set forth herein.
Conference Call/Webcast
A webcast to discuss the Company's financial results and outlook
will be held at 9:00 a.m. ET today
and may be heard live by visiting the "Webcast" section of the
Company's website at http://www.deanfoods.com/. A slide
presentation will accompany the webcast.
About Dean Foods
Dean Foods® is a leading food and beverage company
and the largest processor and direct-to-store distributor of fluid
milk and other dairy and dairy case products in the United States. Headquartered in
Dallas, Texas, the Dean Foods
portfolio includes DairyPure®, the country's first and
largest fresh, white milk national brand, and TruMoo®, the leading
national flavored milk brand, along with well-known regional dairy
brands such as Alta
Dena®, Berkeley Farms®, Country
Fresh®, Dean's®, Garelick Farms®,
LAND O LAKES®* milk and cultured products*, Lehigh
Valley Dairy Farms®, Mayfield®,
McArthur®, Meadow Gold®, Oak
Farms®, PET®**, T.G.
Lee®, Tuscan® and more. In all, Dean
Foods has more than 50 local and regional dairy brands and private
labels. Dean Foods also makes and distributes ice cream, cultured
products, juices, teas, and bottled water. Over 17,000 employees
across the country work every day to make Dean Foods the most
admired and trusted provider of wholesome, great-tasting dairy
products at every occasion. For more information about Dean Foods
and its brands, visit www.deanfoods.com.
*The LAND O LAKES brand is owned by Land O'Lakes, Inc. and is
used by license.
**PET is a trademark of The J.M. Smucker Company and is used by
license.
Some of the statements made 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,
including statements relating to: (1) projected sales (including
specific product lines and the Company as a whole), profit margins,
net income, earnings per share, free cash flow and debt covenant
compliance, (2) the Company's regional and national branding
initiatives, (3) the Company's innovation, research and development
plans and its ability to successfully launch new products or
brands, (4) commodity prices and other inputs and the Company's
ability to forecast or predict commodity prices, milk production
and milk exports, (5) the Company's cost-savings initiatives,
including plant closures and route reductions, and its ability to
achieve expected savings, (6) planned capital expenditures, (7) the
status of the Company's litigation matters, (8) the Company's
plans related to its capital structure, (9) the Company's dividend
policy and (10) possible repurchases of shares of the Company's
common stock. These statements involve risks and uncertainties that
may cause results to differ materially from those set forth in this
press release. Financial projections are based on a number of
assumptions. Actual results could be materially different
than projected if those assumptions are erroneous. The cost
and supply of commodities and other raw materials are determined by
market forces over which the Company has limited or no control.
Sales, operating income, net income, debt covenant compliance,
financial performance and adjusted earnings per share can vary
based on a variety of economic, governmental and competitive
factors, which are identified 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 its products. The
declaration and payment of cash dividends under the Company's
dividend policy remains at the sole discretion of the Board of
Directors or a committee thereof and will depend upon its financial
results, cash requirements, future prospects, restrictions in its
credit agreement and debt covenant compliance, applicable law and
other factors that may be deemed relevant by the Board or such
committee. All forward-looking statements in this press release
speak only as of the date of this press release. The Company
expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect
any change in our expectations with regard thereto or any changes
in the events, conditions or circumstances on which any such
statement is based except as required by law.
CONTACT: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor
Relations, Scott Vopni,
+1-214-303-3438
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Three months
ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
GAAP
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ 2,033,693
|
|
$ 2,373,280
|
|
$ 2,033,693
|
|
$ 2,373,280
|
|
Cost of
sales
|
|
|
1,541,705
|
|
1,956,480
|
|
1,541,751
|
(d)
|
1,955,822
|
(a)
(d)
|
Gross
profit
|
|
|
491,988
|
|
416,800
|
|
491,942
|
|
417,458
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
347,493
|
|
337,346
|
|
344,584
|
(d)
|
337,319
|
(d)
|
General and
administrative
|
|
|
84,916
|
|
69,728
|
|
84,922
|
(d)
|
69,645
|
(b)
|
Amortization of
intangibles
|
|
|
6,401
|
|
714
|
|
783
|
(a)
|
714
|
|
Facility
closing and reorganization costs
|
|
|
2,709
|
|
2,805
|
|
-
|
(b)
|
-
|
(b)
|
Impairment of
long-lived assets
|
|
|
-
|
|
7,400
|
|
-
|
|
-
|
(a)
|
Total operating
costs and expenses
|
|
|
441,519
|
|
417,993
|
|
430,289
|
|
407,678
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
|
|
50,469
|
|
(1,193)
|
|
61,653
|
|
9,780
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
17,003
|
|
15,233
|
|
16,785
|
(d)
|
14,807
|
(d)
|
Other income,
net
|
(964)
|
|
(487)
|
|
(964)
|
|
(487)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations before income taxes
|
34,430
|
|
(15,939)
|
|
45,832
|
|
(4,540)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit)
|
|
|
14,197
|
|
(803)
|
|
17,415
|
(e)
|
(1,725)
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
20,233
|
|
(15,136)
|
|
28,417
|
|
(2,815)
|
|
Loss from
discontinued operations, net of tax
|
|
-
|
|
(836)
|
|
-
|
|
-
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
|
$ 20,233
|
|
$ (15,972)
|
|
$ 28,417
|
|
$
(2,815)
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
93,255
|
|
93,797
|
|
93,255
|
|
93,797
|
|
Diluted
|
|
|
93,816
|
|
93,797
|
|
93,816
|
|
93,797
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
0.22
|
|
$
(0.16)
|
|
$
0.30
|
|
$
(0.03)
|
|
Loss from
discontinued operations
|
|
|
-
|
|
(0.01)
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
0.22
|
|
$
(0.17)
|
|
$
0.30
|
|
$
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
0.22
|
|
$
(0.16)
|
|
$
0.30
|
|
$
(0.03)
|
|
Loss from
discontinued operations
|
|
|
-
|
|
(0.01)
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
0.22
|
|
$
(0.17)
|
|
$
0.30
|
|
$
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
GAAP
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ 6,099,161
|
|
$ 7,108,189
|
|
$ 6,099,161
|
|
$ 7,108,189
|
|
Cost of
sales
|
|
|
4,633,223
|
|
5,876,126
|
|
4,634,410
|
(d)
|
5,874,582
|
(a)
(d)
|
Gross
profit
|
|
|
1,465,938
|
|
1,232,063
|
|
1,464,751
|
|
1,233,607
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
|
1,023,769
|
|
1,011,657
|
|
1,022,066
|
(d)
|
1,011,597
|
(b)
(d)
|
General and
administrative
|
|
|
259,635
|
|
212,804
|
|
259,653
|
(d)
|
209,092
|
(b)
|
Amortization of
intangibles
|
|
|
15,313
|
|
2,175
|
|
2,273
|
(a)
|
2,175
|
|
Facility
closing and reorganization costs
|
|
|
9,362
|
|
4,510
|
|
-
|
(b)
|
-
|
(b)
|
Litigation
settlements
|
|
|
-
|
|
(2,521)
|
|
-
|
|
-
|
(d)
|
Impairment of
long-lived assets
|
|
|
109,910
|
|
7,400
|
|
-
|
(a)
|
-
|
(a)
|
Other operating
income
|
|
|
-
|
|
(4,535)
|
|
-
|
|
-
|
(a)
|
Total operating
costs and expenses
|
|
|
1,417,989
|
|
1,231,490
|
|
1,283,992
|
|
1,222,864
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
47,949
|
|
573
|
|
180,759
|
|
10,743
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
50,505
|
|
45,477
|
|
49,435
|
(d)
|
43,976
|
(d)
|
Loss on early
retirement of debt
|
|
|
43,609
|
|
-
|
|
-
|
(c)
|
-
|
|
Other income,
net
|
|
|
(1,704)
|
|
(760)
|
|
(1,704)
|
|
(760)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations before income taxes
|
|
|
(44,461)
|
|
(44,144)
|
|
133,028
|
|
(32,473)
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense (benefit)
|
|
|
(17,562)
|
|
(18,253)
|
|
50,551
|
(e)
|
(12,339)
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
(26,899)
|
|
(25,891)
|
|
82,477
|
|
(20,134)
|
|
Loss from
discontinued operations, net of tax
|
|
-
|
|
(836)
|
|
-
|
|
-
|
(d)
|
Gain (loss) on
sale of discontinued operations
|
|
(89)
|
|
1,154
|
|
-
|
(d)
|
-
|
(d)
|
Net income
(loss)
|
|
|
$ (26,988)
|
|
$ (25,573)
|
|
$ 82,477
|
|
$ (20,134)
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common
shares:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
93,951
|
|
93,917
|
|
93,951
|
|
93,917
|
|
Diluted
|
|
|
93,951
|
|
93,917
|
|
94,456
|
(f)
|
93,917
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per common share:
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
(0.29)
|
|
$
(0.28)
|
|
$
0.88
|
|
$
(0.21)
|
|
Income from
discontinued operations
|
|
|
-
|
|
0.01
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
(0.29)
|
|
$
(0.27)
|
|
$
0.88
|
|
$
(0.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per common share:
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
|
$
(0.29)
|
|
$
(0.28)
|
|
$
0.87
|
|
$
(0.21)
|
|
Income from
discontinued operations
|
|
|
-
|
|
0.01
|
|
-
|
|
-
|
|
Net income
(loss)
|
|
|
$
(0.29)
|
|
$
(0.27)
|
|
$
0.87
|
|
$
(0.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Computation of
Adjusted EBITDA
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$ 28,417
|
|
$ (2,815)
|
|
$ 82,477
|
|
$ (20,134)
|
Interest
expense
|
|
16,785
|
|
14,807
|
|
49,435
|
|
43,976
|
Income tax
expense (benefit)
|
|
17,415
|
|
(1,725)
|
|
50,551
|
|
(12,339)
|
Depreciation
and amortization
|
|
37,903
|
|
39,491
|
|
114,782
|
|
117,609
|
Adjusted
EBITDA
|
|
|
$ 100,520
|
|
$ 49,758
|
|
$ 297,245
|
|
$ 129,112
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
ASSETS
|
|
2015
|
|
2014
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
63,767
|
|
$
16,362
|
|
|
|
|
|
|
Other current
assets
|
|
1,005,239
|
|
1,163,698
|
|
|
|
|
|
|
Total current
assets
|
|
|
1,069,006
|
|
1,180,060
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
1,137,991
|
|
1,172,596
|
|
|
|
|
|
|
Intangibles and
other assets, net
|
|
289,814
|
|
416,980
|
|
|
|
|
|
|
Total
Assets
|
|
|
$ 2,496,811
|
|
$ 2,769,636
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Total current
liabilities, excluding debt
|
|
|
$ 756,804
|
|
$
793,753
|
|
|
|
|
|
|
Total long-term
debt, including current portion
|
|
840,766
|
|
917,179
|
|
|
|
|
|
|
Other long-term
liabilities
|
|
363,188
|
|
431,386
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
536,053
|
|
627,318
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
|
$ 2,496,811
|
|
$ 2,769,636
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Cash Flows (GAAP
Basis)
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
September
30,
|
Operating
Activities
|
2015
|
|
2014
|
|
Net cash
provided by operating activities
|
$ 322,028
|
|
$ 48,071
|
|
|
|
|
|
Investing
Activities
|
|
|
|
Payments for
property, plant and equipment
|
(80,629)
|
|
(89,486)
|
Proceeds from
sale of fixed assets
|
15,822
|
|
18,688
|
|
Net cash used
in investing activities
|
(64,807)
|
|
(70,798)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
Net proceeds
from debt
|
393,671
|
|
79,212
|
Early
retirement of long-term debt
|
(476,188)
|
|
-
|
Premiums paid
on early retirement of debt
|
(37,309)
|
|
-
|
Payments of
financing costs
|
(16,836)
|
|
(3,233)
|
Common stock
repurchase
|
(53,010)
|
|
(25,000)
|
Cash dividends
paid
|
(19,784)
|
|
(19,654)
|
Issuance of
common stock, net of share repurchases for withholding
taxes
|
891
|
|
5,296
|
Other
|
186
|
|
332
|
|
Net cash
provided by (used in) financing activities
|
(208,379)
|
|
36,953
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
(1,437)
|
|
(607)
|
|
|
|
|
|
Increase in
cash and cash equivalents
|
47,405
|
|
13,619
|
Cash and cash
equivalents, beginning of period
|
16,362
|
|
16,762
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
$ 63,767
|
|
$ 30,381
|
|
|
|
|
|
|
|
|
|
|
Computation
of Free Cash Flow provided by (used in) continuing
operations:
|
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
$ 322,028
|
|
$ 48,071
|
Payments for
property, plant and equipment
|
(80,629)
|
|
(89,486)
|
|
|
|
|
|
Free cash flow
provided by (used in) continuing operations
|
$ 241,399
|
|
$(41,415)
|
DEAN FOODS
COMPANY
|
Reconciliation
of GAAP to Adjusted Earnings
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
|
Other
|
|
Income
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
|
adjustments
|
|
tax
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
$ 58,796
|
|
$
-
|
|
$
-
|
|
|
$
2,857
|
|
$
-
|
|
$ 61,653
|
Facility
closing and reorganization costs
|
|
(2,709)
|
|
-
|
|
2,709
|
|
|
-
|
|
-
|
|
-
|
Amortization of
intangibles
|
|
(5,618)
|
|
5,618
|
|
-
|
|
|
-
|
|
-
|
|
-
|
Total operating
income
|
|
50,469
|
|
5,618
|
|
2,709
|
|
|
2,857
|
|
-
|
|
61,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
17,003
|
|
-
|
|
-
|
|
|
(218)
|
|
-
|
|
16,785
|
Other income,
net
|
|
(964)
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
(964)
|
Income tax
expense
|
|
14,197
|
|
-
|
|
-
|
|
|
-
|
|
3,218
|
|
17,415
|
Income from
continuing operations
|
|
20,233
|
|
5,618
|
|
2,709
|
|
|
3,075
|
|
(3,218)
|
|
28,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ 20,233
|
|
$
5,618
|
|
$
2,709
|
|
|
$
3,075
|
|
$ (3,218)
|
|
$ 28,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$ 0.22
|
|
$
0.06
|
|
$
0.03
|
|
|
$
0.03
|
|
$ (0.04)
|
|
$ 0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
September 30,
2014
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
|
Other
|
|
Income
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
|
adjustments
|
|
tax
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
$ 9,012
|
|
$
213
|
|
$
83
|
|
|
$
472
|
|
$
-
|
|
$ 9,780
|
Facility
closing and reorganization costs
|
|
(2,805)
|
|
-
|
|
2,805
|
|
|
-
|
|
-
|
|
-
|
Impairment of
long-lived assets
|
|
(7,400)
|
|
7,400
|
|
-
|
|
|
-
|
|
-
|
|
-
|
Total operating
income (loss)
|
|
(1,193)
|
|
7,613
|
|
2,888
|
|
|
472
|
|
-
|
|
9,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
15,233
|
|
-
|
|
-
|
|
|
(426)
|
|
-
|
|
14,807
|
Other income,
net
|
|
(487)
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
(487)
|
Income tax
expense (benefit)
|
|
(803)
|
|
-
|
|
-
|
|
|
-
|
|
(922)
|
|
(1,725)
|
Income (loss)
from continuing operations
|
|
(15,136)
|
|
7,613
|
|
2,888
|
|
|
898
|
|
922
|
|
(2,815)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
|
(836)
|
|
-
|
|
-
|
|
|
836
|
|
-
|
|
-
|
Net
loss
|
|
$ (15,972)
|
|
$
7,613
|
|
$
2,888
|
|
|
$
1,734
|
|
$ 922
|
|
$ (2,815)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss
per share
|
|
$ (0.17)
|
|
$
0.08
|
|
$
0.03
|
|
|
$
0.02
|
|
$ 0.01
|
|
$ (0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Reconciliation
of GAAP to Adjusted Earnings
|
(Unaudited)
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
Loss on
early
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
retirement
of
|
|
Other
|
|
Income
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
debt
|
|
adjustments
|
|
tax
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
$ 180,261
|
|
$
-
|
|
$
-
|
|
$
-
|
|
$
498
|
|
$
-
|
|
$ 180,759
|
Facility
closing and reorganization costs
|
|
(9,362)
|
|
-
|
|
9,362
|
|
-
|
|
-
|
|
-
|
|
-
|
Impairment of
long-lived assets
|
|
(109,910)
|
|
109,910
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Amortization of
intangibles
|
|
(13,040)
|
|
13,040
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income
|
|
47,949
|
|
122,950
|
|
9,362
|
|
-
|
|
498
|
|
-
|
|
180,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
50,505
|
|
-
|
|
-
|
|
-
|
|
(1,070)
|
|
-
|
|
49,435
|
Loss on early
retirement of debt
|
|
43,609
|
|
-
|
|
-
|
|
(43,609)
|
|
-
|
|
-
|
|
-
|
Other income,
net
|
|
(1,704)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,704)
|
Income tax
expense (benefit)
|
|
(17,562)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
68,113
|
|
50,551
|
Income (loss)
from continuing operations
|
|
(26,899)
|
|
122,950
|
|
9,362
|
|
43,609
|
|
1,568
|
|
(68,113)
|
|
82,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
discontinued operations, net of tax
|
|
(89)
|
|
-
|
|
-
|
|
-
|
|
89
|
|
-
|
|
-
|
Net income
(loss)
|
|
$ (26,988)
|
|
$
122,950
|
|
$
9,362
|
|
$
43,609
|
|
$
1,657
|
|
$ (68,113)
|
|
$ 82,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share (f)
|
|
$
(0.29)
|
|
$
1.31
|
|
$
0.10
|
|
$
0.46
|
|
$
0.02
|
|
$ (0.73)
|
|
$
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
September 30,
2014
|
|
|
|
|
|
|
|
Asset
write-downs
|
|
Facility
closing,
|
|
Loss on
early
|
|
|
|
|
|
|
|
|
|
|
and (gain) loss
on
|
|
reorganization
and
|
|
retirement
of
|
|
Other
|
|
Income
|
|
|
|
|
|
|
sale of
assets
|
|
realignment
costs
|
|
debt
|
|
adjustments
|
|
tax
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
Foods
|
|
$ 5,427
|
|
$
1,491
|
|
$
3,822
|
|
$
-
|
|
$
3
|
|
$
-
|
|
$ 10,743
|
Facility
closing and reorganization costs
|
|
(4,510)
|
|
-
|
|
4,510
|
|
-
|
|
-
|
|
-
|
|
-
|
Litigation
settlements
|
|
2,521
|
|
-
|
|
-
|
|
-
|
|
(2,521)
|
|
-
|
|
-
|
Impairment of
long-lived assets
|
|
(7,400)
|
|
7,400
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Other operating
income
|
|
4,535
|
|
(4,535)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Total operating
income
|
|
573
|
|
4,356
|
|
8,332
|
|
-
|
|
(2,518)
|
|
-
|
|
10,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
45,477
|
|
-
|
|
-
|
|
-
|
|
(1,501)
|
|
-
|
|
43,976
|
Other income,
net
|
|
(760)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(760)
|
Income tax
expense (benefit)
|
|
(18,253)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5,914
|
|
(12,339)
|
Income (loss)
from continuing operations
|
|
(25,891)
|
|
4,356
|
|
8,332
|
|
-
|
|
(1,017)
|
|
(5,914)
|
|
(20,134)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
discontinued operations, net of tax
|
|
318
|
|
-
|
|
-
|
|
-
|
|
(318)
|
|
-
|
|
-
|
Net
loss
|
|
$ (25,573)
|
|
$
4,356
|
|
$
8,332
|
|
$
-
|
|
$
(1,335)
|
|
$ (5,914)
|
|
$ (20,134)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss
per share
|
|
$
(0.27)
|
|
$
0.04
|
|
$
0.09
|
|
$
-
|
|
$
(0.01)
|
|
$ (0.06)
|
|
$
(0.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* See notes to
Earnings Release Tables
|
For the three and
nine months ended September 30, 2015 and 2014, the adjusted results
and certain other non-GAAP financial measures differ from the
Company's results under GAAP due to the exclusion of net gains or
net losses associated with certain non-recurring items, including
facility closing, reorganization and realignment costs; costs
associated with the early retirement of long-term debt; (gains)
losses on the mark-to-market of our derivative contracts;
litigation settlements, and discontinued operations, as well as
certain asset impairment and amortization charges. These
adjustments are made to facilitate meaningful comparisons of our
operating performance between periods as the Company cannot predict
the timing and amount of charges associated with such
items.
|
|
|
(a)
|
The adjustment
reflects the elimination of the following:
|
|
|
i.
|
In conjunction with
our decision to launch DairyPure in the first quarter of 2015, we
changed certain of our indefinite-lived assets to finite-lives
resulting in a triggering event for impairment testing purposes. As
a result, we recorded a non-cash charge of $109.9 million ($68.7
million net of tax) related to the impairment of certain intangible
assets during the first quarter of 2015. In addition, we recorded
amortization expense on these finite-lived trademarks of $5.6
million and $13.0 million for the three and nine months ended
September 30, 2015;
|
|
|
ii.
|
Asset impairment
charges on certain fixed assets and indefinite lived intangible
assets. We evaluate our long-lived assets for impairment when
circumstances indicate that their carrying value may not be
recoverable. Indicators of impairment could include, among other
factors, significant changes in the business environment or the
planned closure of a facility;
|
|
|
iii.
|
Accelerated
depreciation related to machinery and equipment at certain of our
production facilities as a result of revisions made to the
estimated remaining useful lives due to our evaluation of the
impact that we expect changes in our business to have on estimated
future cash flows at those production facilities; and
|
|
|
|
|
|
iv.
|
Other operating
income related to the final disposal of assets associated with the
closure of one of our production facilities.
|
|
|
|
|
|
(b)
|
The adjustment
reflects the elimination of severance charges and non-cash asset
impairments related to approved facility closings and restructuring
plans, as well as other organizational realignment
activities.
|
|
|
|
|
|
(c)
|
During the first
quarter of 2015, we retired the remaining outstanding principal
amount of $476.2 million of our 2016 senior notes. As a result, we
recorded a $38.3 million pre-tax loss on the early extinguishment
of debt in the first quarter of 2015, which consisted of debt
redemption premiums of $37.3 million, a write-off of unamortized
debt issue costs of $0.8 million and a write-off of the remaining
bond discount and interest rate swaps of $0.2 million. In addition,
in conjunction with the execution of a new credit agreement and the
amendment our receivables-backed facility in the first quarter of
2015, we wrote off unamortized debt issue costs related to the
prior facilities of $5.3 million. The adjustment reflects the
elimination of these losses.
|
|
|
(d)
|
The adjustment
reflects the elimination of the following:
|
|
|
i.
|
The (gain) loss on
the mark-to-market of our commodity derivative contracts. Effective
January 1, 2014, we de-designated all open commodity derivative
positions that were previously designated as hedges. As of the
de-designation date, all commodities contracts are now marked to
market in our statement of operations during each reporting period
and a derivative asset or liability is recorded on our balance
sheet;
|
|
|
ii.
|
Interest accretion in
connection with our previously disclosed dairy farmer class action
lawsuit filed in the United States District Court for the Eastern
District of Tennessee. The Court granted final approval of
the settlement agreement on June 15, 2012;
|
|
|
iii.
|
A reduction in a
litigation settlement liability due to plaintiff class "opt-outs"
of $2.5 million during the nine months ended September 30, 2014;
and
|
|
|
iv.
|
A taxing authority
settlement of certain contingent obligations that we retained in
connection with prior discontinued operations.
|
|
|
(e)
|
The adjustment
reflects the income tax impact of adjustments (a) through (d) and
to reflect our adjusted tax rate at 38%, which we believe
represents our normalized long-term effective tax rate as a U.S.
domiciled business.
|
|
|
(f)
|
The adjustment
reflects an add-back of the dilutive shares, which were
anti-dilutive for GAAP purposes.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dean-foods-announces-third-quarter-2015-results-300174445.html
SOURCE Dean Foods Company