DALLAS, Aug. 8, 2016
/PRNewswire/ -- Dean Foods Company (NYSE: DF) today reported
second quarter 2016 results.
Highlights
- Q2 net income per diluted share was $0.36 and adjusted net income per diluted share
was $0.38, toward the high end of
previous provided guidance
- Q2 operating income of $73
million demonstrates continued year-over-year improvement,
driven by diligent cost focus and pricing discipline
- Acquisition of Friendly's ice cream business completed
June 20
- Q3 2016 diluted earnings per share are expected to be
$0.28 to $0.36; adjusted diluted
earnings per share are expected to be $0.32
to $0.40
Chief Executive Officer Gregg
Tanner said, "Our second quarter performance demonstrates
our continued focus on driving strong operational and financial
performance across all functions. We have a clear strategic vision
for long-term growth, and our entire organization is focused on
executing our agenda."
Second Quarter 2016 Operating Results
Financial Summary
*
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
(In millions,
except per share amounts)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
|
493
|
|
$
|
|
496
|
|
$
|
|
997
|
|
$
|
|
974
|
Adjusted
|
|
$
|
|
490
|
|
$
|
|
496
|
|
$
|
|
995
|
|
$
|
|
973
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
|
73
|
|
$
|
|
57
|
|
$
|
|
151
|
|
$
|
|
(3)
|
Adjusted
|
|
$
|
|
70
|
|
$
|
|
67
|
|
$
|
|
153
|
|
$
|
|
119
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
|
17
|
|
$
|
|
17
|
|
$
|
|
34
|
|
$
|
|
34
|
Adjusted
|
|
$
|
|
17
|
|
$
|
|
17
|
|
$
|
|
33
|
|
$
|
|
33
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
|
33
|
|
$
|
|
27
|
|
$
|
|
73
|
|
$
|
|
(47)
|
Adjusted
|
|
$
|
|
35
|
|
$
|
|
32
|
|
$
|
|
76
|
|
$
|
|
54
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share (EPS)
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
|
0.36
|
|
$
|
|
0.28
|
|
$
|
|
0.79
|
|
$
|
|
(0.50)
|
Adjusted
|
|
$
|
|
0.38
|
|
$
|
|
0.33
|
|
$
|
|
0.83
|
|
$
|
|
0.57
|
|
* Adjustments to GAAP
due to the exclusion of expenses, gains or losses associated with
certain transactions and other non-recurring items are described
and reconciled to the comparable GAAP amounts in the attached
tables.
|
The second quarter 2016 average Class I Mover, a measure of raw
milk costs, was $13.53 per
hundred-weight, an approximately 7% sequential decrease from the
first quarter 2016 and a decrease of nearly 15% from the second
quarter 2015. The third quarter 2016 average Class I Mover forecast
of $15.00 per hundred-weight
represents an approximately 11% increase sequentially but an
approximately 8% decline year-over-year.
Total volume across all products was 632 million gallons for the
second quarter 2016, a 3.2% decline compared to total volume of 653
million gallons in the second quarter 2015. For the third quarter
2016, as compared to the prior year period, the Company expects
total volumes to decline in the low single digits, but improving
versus recent trends.
Based on fluid milk sales data published by the USDA through
May, fluid milk volumes improved sequentially from a 0.6% decline
in the first quarter of 2016 to a 0.1% increase in the second
quarter of 2016 on an unadjusted basis. On this same basis, Dean
Foods' share of U.S. fluid milk volumes decreased by 10 basis
points sequentially to 34.5% for the quarter-to-date through
May.
Cash Flow
Net cash provided by continuing operations for the six months
ended June 30, 2016 totaled
$125 million. Free cash flow provided
by continuing operations, which is defined as net cash provided by
continuing operations less capital expenditures, was $80 million for the six months ended June 30, 2016, a $144
million decrease as compared to the prior year period.
Year-to-date free cash flow is comparable to the prior year period
after reconciling for higher incentive compensation payouts in the
first quarter 2016 and the $56
million associated with the Company's 2014 Federal Tax
refund received in the first quarter 2015. Capital expenditures
totaled $29 million for the quarter.
In the second quarter, the Company executed $25 million in share repurchases, successfully
repurchasing 1.4 million shares, or 1.5% of total shares
outstanding.
Debt
Total outstanding debt at June 30,
2016, net of $24 million cash
on hand, was approximately $896
million. The Company's net debt to bank EBITDA ratio, on an
all cash netted basis, increased sequentially to 2.00 times at the
end of the second quarter 2016 with strong free cash flow,
increased bank EBITDA, and the acquisition of the Friendly's ice
cream business, which was completed in June.
Forward Outlook
"For the third quarter, with improving volume performance,
continued pricing and cost discipline, and favorable year-over-year
commodity costs, we expect diluted earnings of between $0.28 and $0.36 per share, and adjusted diluted
earnings of between $0.32 and $0.40
per share," concluded Tanner.
Non-GAAP Financial Measures
In addition to the results prepared in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"), we have
presented certain non-GAAP financial measures, including Adjusted
gross profit, Adjusted selling and distribution expenses, Adjusted
general and administrative expenses, Adjusted total operating costs
and expenses, Adjusted operating income, Adjusted interest expense,
Adjusted net income (loss), Adjusted earnings per diluted share,
Adjusted EBITDA, Free Cash Flow and total leverage ratio, each as
described below.
This non-GAAP financial information is provided as supplemental
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. Our management uses these
non-GAAP financial measures when evaluating our performance, when
making decisions regarding the allocation of resources, in
determining incentive compensation for management, and in
determining earnings estimates.
A full reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP measures for the three and six
months ended June 30, 2016 and 2015
is set forth in the tables herein.
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP gross
profit, selling and distribution expenses, general and
administrative expenses, total operating costs and expenses,
operating income, interest expense, net income (loss) and earnings
per diluted share, with non-GAAP measures that adjust the GAAP
measures to exclude the impact of the following (as
applicable):
- asset impairment charges;
- incremental non-cash trademark amortization triggered by the
launch of a national fresh white milk brand;
- 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;
- debt issuance costs;
- gains (losses) on the mark-to-market of our derivative
contracts;
- closed deal costs;
- interest accretion in connection with litigation
settlements;
- income tax impacts of the foregoing adjustments; and
- adjustments to normalize our income tax expense at a rate of
38%.
We believe these non-GAAP measures provide useful information to
investors by excluding expenses, gains or losses that are not
indicative of the company's core operating performance. In
addition, we cannot predict the timing and amount of gains or
losses associated with such items. We believe these non-GAAP
measures provide more accurate comparisons of our ongoing business
operations and are better indicators of trends in our underlying
business. In addition, these adjustments are consistent with how
management views our business. Management uses these non-GAAP
financial measures in making financial, operating and planning
decisions and evaluating the company's ongoing performance.
Further, adjusted gross profit and adjusted operating income are
used by management to evaluate key performance indicators of brand
mix and low cost, respectively.
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest
expense, income tax expense, depreciation and amortization, as
further adjusted to exclude the impact of the adjustments discussed
under "Adjusted Operating Results" above (other than the normalized
income tax rate, as Adjusted EBITDA excludes the full amount of
income tax expense). 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. We believe Adjusted EBITDA is
a useful measure for analyzing the performance of our business and
is a widely-accepted 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).
Total Leverage Ratio
Our total leverage ratio is calculated as net debt divided by
Bank EBITDA for the trailing four quarters. Net debt is calculated
as consolidated funded indebtedness in accordance with our credit
agreement, except on an all cash netted basis. Bank EBITDA is
calculated as Adjusted EBITDA, as further adjusted to exclude
certain non-cash and non-recurring or extraordinary expenses as
permitted in calculating covenant compliance under our credit
agreement. Management believes analysts and investors commonly use
our total leverage ratio as indicators of our ability to service
existing debt and our liquidity.
Free Cash Flow
We define Free Cash Flow as net cash provided by operating
activities from continuing operations less cash payments for
capital expenditures. We believe 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 to, among other things, repay debt,
invest in our business and repurchase shares of our common stock. A
limitation of Free Cash Flow is that it does not represent the
total increase or decrease in the cash balance for the period.
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 fresh
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®, Friendly'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
national, regional and local dairy brands as well as private
labels. Dean Foods also makes and distributes ice cream, cultured
products, juices, teas, and bottled water. Almost 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 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) our financial forecast,
including projected sales (including specific product lines and the
Company as a whole), price realization, profit margins, net income,
earnings per share, free cash flow, our leverage ratio and debt
covenant compliance, (2) the Company's regional and national
branding and marketing 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, (10) possible
repurchases of shares of the Company's common stock, and (11)
potential acquisitions. These statements involve risks and
uncertainties that may cause results to differ materially from
those set forth in this press release, including the risks
disclosed by the Company in its filings with the Securities and
Exchange Commission. 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 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 and marketing 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 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. 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 its 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, Sherri Baker,
+1-214-303-3438
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
1,848,788
|
|
$
|
2,014,706
|
|
$
|
3,727,616
|
|
$
|
4,065,468
|
Cost of
sales
|
|
1,355,535
|
|
1,519,065
|
|
2,730,295
|
|
3,091,518
|
Gross
profit
|
|
493,253
|
|
495,641
|
|
997,321
|
|
973,950
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
331,150
|
|
338,092
|
|
664,037
|
|
676,276
|
General and
administrative
|
|
86,614
|
|
87,243
|
|
171,765
|
|
174,719
|
Amortization
of intangibles
|
|
4,120
|
|
8,206
|
|
10,445
|
|
8,912
|
Facility
closing and reorganization costs, net
|
|
(1,400)
|
|
5,408
|
|
(234)
|
|
6,653
|
Impairment of
intangible assets
|
|
—
|
|
—
|
|
—
|
|
109,910
|
Total
operating costs and expenses
|
|
420,484
|
|
438,949
|
|
846,013
|
|
976,470
|
Operating income
(loss)
|
72,769
|
|
56,692
|
|
151,308
|
|
(2,520)
|
Other (income)
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
16,830
|
|
16,974
|
|
33,706
|
|
33,502
|
Other income,
net
|
|
(2,210)
|
|
(294)
|
|
(3,207)
|
|
(740)
|
Loss on early
retirement of long-term debt
|
—
|
|
—
|
|
—
|
|
43,609
|
Income (loss) from
continuing operations before income taxes
|
|
58,149
|
|
40,012
|
|
120,809
|
|
(78,891)
|
Income tax expense
(benefit)
|
|
24,778
|
|
13,493
|
|
48,237
|
|
(31,759)
|
Income (loss) from
continuing operations
|
|
33,371
|
|
26,519
|
|
72,572
|
|
(47,132)
|
Loss on sale of
discontinued operations, net of tax
|
|
—
|
|
—
|
|
—
|
|
(89)
|
Net income
(loss)
|
|
$
|
33,371
|
|
$
|
26,519
|
|
$
|
72,572
|
|
$
|
(47,221)
|
|
|
|
|
|
|
|
|
|
Average common
shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
91,245
|
|
94,386
|
|
91,407
|
|
94,308
|
Diluted
|
|
91,680
|
|
94,900
|
|
91,995
|
|
94,308
|
|
|
|
|
|
|
|
|
|
Basic earnings
per common share:
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
$
|
0.37
|
|
$
|
0.28
|
|
$
|
0.79
|
|
$
|
(0.50)
|
Loss
from discontinued operations
|
|
—
|
|
—
|
|
—
|
|
—
|
Net
income (loss)
|
$
|
0.37
|
|
$
|
0.28
|
|
$
|
0.79
|
|
$
|
(0.50)
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per common share:
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations
|
|
$
|
0.36
|
|
$
|
0.28
|
|
$
|
0.79
|
|
$
|
(0.50)
|
Loss
from discontinued operations
|
|
—
|
|
—
|
|
|
—
|
|
—
|
Net
income (loss)
|
$
|
0.36
|
|
$
|
0.28
|
|
$
|
0.79
|
|
$
|
(0.50)
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(In
thousands)
|
|
|
ASSETS
|
|
June 30,
2016
|
|
December 31,
2015
|
Cash and cash
equivalents
|
|
$
|
|
|
23,810
|
|
$
|
|
|
60,734
|
Other current
assets
|
|
950,661
|
|
1,016,829
|
Total
current assets
|
|
974,471
|
|
1,077,563
|
Property, plant
and equipment, net
|
|
1,153,061
|
|
1,174,137
|
Intangibles and
other assets, net
|
|
409,814
|
|
268,463
|
Total
Assets
|
|
$
|
|
|
2,537,346
|
|
$
|
|
|
2,520,163
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Total current
liabilities, excluding debt
|
|
$
|
|
|
642,208
|
|
$
|
|
|
760,402
|
Total long-term
debt, including current portion
|
|
908,754
|
|
834,573
|
Other long-term
liabilities
|
|
405,677
|
|
379,684
|
Total
stockholders' equity
|
|
580,707
|
|
545,504
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
|
|
2,537,346
|
|
$
|
|
|
2,520,163
|
DEAN FOODS
COMPANY
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
Six months ended
June 30,
|
Operating
Activities
|
|
2016
|
|
2015
|
Net cash provided by
operating activities
|
|
$
|
125,319
|
|
$
|
271,771
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Payments for
property, plant and equipment
|
|
(45,752)
|
|
(48,051)
|
Payments for
acquisitions, net of cash acquired
|
|
(157,321)
|
|
—
|
Proceeds from sale of
fixed assets
|
|
10,711
|
|
12,815
|
Net cash used
in investing activities
|
|
(192,362)
|
|
(35,236)
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Net proceeds
from debt
|
|
72,405
|
|
394,099
|
Early
retirement of long-term debt
|
|
—
|
|
(476,188)
|
Premiums paid
on early retirement of long-term debt
|
|
—
|
|
(37,309)
|
Payments of
financing costs
|
|
—
|
|
(15,091)
|
Repurchase of
common stock
|
|
(25,000)
|
|
—
|
Cash dividends
paid
|
|
(16,514)
|
|
(13,212)
|
Issuance of
common stock, net of share repurchases for withholding
taxes
|
|
(646)
|
|
939
|
Other
|
|
699
|
|
199
|
Net cash
provided by (used in) financing activities
|
|
30,944
|
|
(146,563)
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
$
|
(825)
|
|
$
|
(644)
|
Change in cash
and cash equivalents
|
|
$
|
(36,924)
|
|
$
|
89,328
|
Cash and cash
equivalents, beginning of period
|
|
60,734
|
|
16,362
|
Cash and cash
equivalents, end of period
|
|
$
|
23,810
|
|
$
|
105,690
|
DEAN FOODS
COMPANY
|
Reconciliation of
Non-GAAP Financial Measures
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three months
ended
June 30, 2016
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
|
493,253
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
(3,120)
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
490,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
331,150
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,564
|
|
—
|
|
—
|
|
336,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
86,614
|
|
—
|
|
(4,083)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
82,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs and
expenses
|
420,484
|
|
(3,384)
|
|
(4,083)
|
|
1,400
|
|
—
|
|
5,564
|
|
—
|
|
—
|
|
419,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
72,769
|
|
3,384
|
|
4,083
|
|
(1,400)
|
|
—
|
|
(8,684)
|
|
—
|
|
—
|
|
70,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
16,830
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(218)
|
|
—
|
|
16,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
33,371
|
|
3,384
|
|
4,083
|
|
(1,400)
|
|
—
|
|
(8,684)
|
|
218
|
|
3,592
|
|
34,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
|
0.36
|
|
$
|
|
0.04
|
|
$
|
|
0.05
|
|
$
|
|
(0.02)
|
|
$
|
|
—
|
|
$
|
|
(0.09)
|
|
$
|
|
—
|
|
$
|
|
0.04
|
|
$
|
|
0.38
|
|
|
|
|
|
Three months
ended
June 30, 2015
|
|
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
495,641
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
—
|
|
$
|
|
140
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
495,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
338,092
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,196
|
|
—
|
|
—
|
|
340,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
87,243
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(6)
|
|
—
|
|
87,237
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs and
expenses
|
438,949
|
|
(7,422)
|
|
—
|
|
(5,408)
|
|
—
|
|
2,196
|
|
(6)
|
|
—
|
|
428,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
56,692
|
|
7,422
|
|
—
|
|
5,408
|
|
—
|
|
(2,056)
|
|
6
|
|
—
|
|
67,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
16,974
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(426)
|
|
—
|
|
16,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
26,519
|
|
7,422
|
|
—
|
|
5,408
|
|
—
|
|
(2,056)
|
|
432
|
|
(5,971)
|
|
31,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
0.28
|
|
$
|
|
0.08
|
|
$
|
|
—
|
|
$
|
|
0.05
|
|
$
|
—
|
|
$
|
|
(0.02)
|
|
$
|
|
—
|
|
$
|
|
(0.06)
|
|
$
|
|
0.33
|
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Reconciliation of
Non-GAAP Financial Measures
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
|
Six months
ended
June 30, 2016
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed
deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
|
997,321
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
(2,587)
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
994,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
664,037
|
|
—
|
|
—
|
|
—
|
|
—
|
|
8,242
|
|
—
|
|
—
|
|
672,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
171,765
|
|
—
|
|
(4,083)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
167,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs and
expenses
|
846,013
|
|
(8,973)
|
|
(4,083)
|
|
234
|
|
—
|
|
8,242
|
|
—
|
|
—
|
|
841,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
151,308
|
|
8,973
|
|
4,083
|
|
(234)
|
|
—
|
|
(10,829)
|
|
—
|
|
—
|
|
153,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
33,706
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(436)
|
|
—
|
|
33,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
72,572
|
|
8,973
|
|
4,083
|
|
(234)
|
|
—
|
|
(10,829)
|
|
436
|
|
1,405
|
|
76,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
$
|
|
0.79
|
|
$
|
|
0.10
|
|
$
|
|
0.04
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
(0.12)
|
|
$
|
|
—
|
|
$
|
|
0.02
|
|
$
|
|
0.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months
ended
June 30, 2015
|
|
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed
deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
$
|
|
973,950
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
—
|
|
$
|
|
(1,141)
|
|
$
|
|
—
|
|
$
|
—
|
|
$
|
|
972,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
676,276
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1,206
|
|
—
|
|
—
|
|
677,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
174,719
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
12
|
|
—
|
|
174,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
costs and
expenses
|
976,470
|
|
(117,332)
|
|
—
|
|
(6,653)
|
|
—
|
|
1,206
|
|
12
|
|
—
|
|
853,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income (loss)
|
(2,520)
|
|
117,332
|
|
—
|
|
6,653
|
|
—
|
|
(2,347)
|
|
(12)
|
|
—
|
|
119,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
33,502
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(852)
|
|
—
|
|
32,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(47,221)
|
|
117,332
|
|
—
|
|
6,653
|
|
43,609
|
|
(2,347)
|
|
929
|
|
(64,895)
|
|
54,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings (loss) per share (h)
|
$
|
|
(0.50)
|
|
$
|
|
1.25
|
|
$
|
|
—
|
|
$
|
|
0.06
|
|
$
|
0.46
|
|
$
|
|
(0.02)
|
|
$
|
|
0.01
|
|
$
|
|
(0.69)
|
|
$
|
|
0.57
|
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Reconciliation of
Non-GAAP Financial Measures*
|
(Unaudited)
|
(In thousands,
except ratio data)
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months ended
June 30,
|
|
Trailing twelve
months ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Reconciliation of Net Income to Adjusted
EBITDA and
|
|
|
|
|
|
|
|
|
|
|
Bank
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
33,371
|
|
$
|
26,519
|
|
$
|
72,572
|
|
$
|
(47,221)
|
|
$
|
111,283
|
Interest
expense
|
|
16,830
|
|
16,974
|
|
33,706
|
|
33,502
|
|
|
67,017
|
Income tax
expense (benefit)
|
|
24,778
|
|
13,493
|
|
48,237
|
|
(31,759)
|
|
|
74,767
|
Depreciation
and amortization
|
|
41,403
|
|
46,405
|
|
85,029
|
|
84,302
|
|
|
172,058
|
Asset
write-downs and (gain) loss on sale of assets (a)
|
|
—
|
|
—
|
|
—
|
|
109,910
|
|
|
—
|
Closed deal
costs (b)
|
|
4,083
|
|
—
|
|
4,083
|
|
—
|
|
|
4,083
|
Facility
closing and reorganization costs, net (c)
|
|
(1,400)
|
|
5,408
|
|
(234)
|
|
6,653
|
|
|
12,957
|
Loss on early
retirement of debt (d)
|
|
—
|
|
—
|
|
—
|
|
43,609
|
|
|
—
|
Mark-to-market
on derivative contracts (e)
|
|
(8,684)
|
|
(2,056)
|
|
(10,829)
|
|
(2,347)
|
|
|
(2,513)
|
Other
adjustments (f)
|
|
—
|
|
6
|
|
—
|
|
77
|
|
|
344
|
Adjusted
EBITDA
|
|
$
|
110,381
|
|
$
|
106,749
|
|
$
|
232,564
|
|
$
|
196,726
|
|
|
439,996
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
share-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
8,750
|
Bank
EBITDA
|
|
|
|
|
|
|
|
|
|
$
|
448,746
|
|
|
|
|
|
June 30,
2016
|
Reconciliation of net debt and total
leverage ratio
|
|
|
Total long-term
debt, including current portion
|
|
$
|
908,754
|
Unamortized
discounts and debt issuance costs
|
|
10,862
|
Cash and cash
equivalents
|
|
(23,810)
|
Net
debt
|
|
$
|
895,806
|
Bank
EBITDA
|
|
448,746
|
Total
leverage ratio
|
|
2.00
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30,
|
|
|
|
|
|
|
2016
|
|
2015
|
Reconciliation of
Free Cash Flow provided by (used in) continuing
operations
|
|
|
|
|
Net cash
provided by operating activities
|
|
$
|
125,319
|
|
$
|
271,771
|
Payments for
property, plant and equipment
|
|
(45,752)
|
|
(48,051)
|
Free Cash
Flow provided by continuing operations
|
|
$
|
79,567
|
|
$
|
223,720
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
Reconciliation of
Non-GAAP Financial Measures*
|
(Unaudited)
|
|
|
|
Three months
ended
September 30,
2016
|
Reconciliation of
Diluted Adjusted Earnings Per Share Guidance
|
|
|
|
Diluted GAAP Earnings
per share guidance
|
$0.28 -
$0.36
|
Trademark
amortization (a)
|
0.03
|
Facility closing and
reorganization costs, net (c)
|
0.01
|
Mark-to-market on
commodity derivative contracts (e)
|
—
|
Diluted Adjusted
Earnings per share guidance
|
$0.32 -
$0.40
|
* See Notes to
Earnings Release Tables
|
Notes to Earnings
Release Tables
|
|
|
|
For the three and six
months ended June 30, 2016 and 2015, the adjusted results and
certain other non-GAAP financial measures differ from the Company's
results under GAAP due to the exclusion of expenses, gains or
losses associated with certain transactions and other non-recurring
items that we believe are not indicative of our core operating
results. For additional information on our non-GAAP financial
measures, see the section entitled "Non-GAAP Financial Measures" in
this release.
|
|
|
|
|
(a)
|
In conjunction with
our decision to launch DairyPure in the first quarter of 2015, we
reclassified certain of our indefinite-lived trademarks to
finite-lived, resulting in a triggering event for impairment
testing purposes. The related adjustment reflects the elimination
of the following:
|
|
|
i.
|
A non-cash charge of
$109.9 million ($68.7 million net of tax) in the first quarter of
2015 related to the impairment of certain intangible assets, and
$7.4 million of related amortization expense in the second quarter
of 2015; and
|
|
|
ii.
|
Amortization expense
recorded on these finite-lived trademarks of $3.4 million and $9.0
million for the three and six months ended June 30, 2016,
respectively.
|
|
|
(b)
|
The adjustment
reflects the elimination of $4.1 million in expenses related to the
acquisition of Friendly's Ice Cream Holdings Corp. completed on
June 20, 2016.
|
|
|
(c)
|
The adjustment
reflects the elimination of severance charges and non-cash asset
impairments, net of (gains) losses on related asset sales, for
approved facility closings and restructuring plans.
|
|
|
(d)
|
During the first
quarter of 2015, we redeemed the remaining outstanding principal
amount of $476.2 million of our 2016 senior notes. The
adjustment reflects the related elimination of the
following:
|
|
|
i.
|
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; and
|
|
|
ii.
|
In conjunction with
the execution of our current credit agreement and the amendment of
our receivables-backed facility in the first quarter of 2015, the
write-off of unamortized debt issue costs related to our previous
credit facility of $5.3 million.
|
|
|
(e)
|
The adjustment
reflects the elimination of the (gain) loss on the mark-to-market
of our commodity derivative contracts. All of our commodity
derivative contracts are marked to market in our statement of
operations during each reporting period with a corresponding
derivative asset or liability on our balance sheet.
|
|
|
(f)
|
The adjustment
reflects the elimination of the following:
|
|
|
i.
|
Interest accretion in
connection with the settlement of a 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
and the final installment payment was made in June of 2016;
and
|
|
|
ii.
|
A taxing authority
settlement of certain contingent obligations that we retained in
connection with prior discontinued operations.
|
|
|
(g)
|
The adjustment
reflects the income tax impact of adjustments (a) through (f) and
an adjustment to our income tax expense (benefit) to reflect income
tax at a tax rate of 38%, which we believe represents our
normalized long-term effective tax rate as a U.S. domiciled
business.
|
|
|
(h)
|
Includes an
adjustment to diluted shares outstanding to reflect an add-back of
approximately 454 thousand 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-second-quarter-2016-results-300310099.html
SOURCE Dean Foods Company