DALLAS, May 8, 2018
/PRNewswire/ -- Dean Foods Company (NYSE: DF) today reported first
quarter 2018 results.
Highlights
- Q1 loss per diluted share was $0.00 and adjusted earnings per diluted share was
$0.14; on track to deliver full-year
expectations
- Volume performance and mix in-line with expectations
- Strong execution of SG&A cost reductions as part of the
Company's enterprise-wide cost productivity plan
- Reaffirms full-year 2018 adjusted earnings expectation of
$0.55 to $0.80 per diluted share(1)
Chief Executive Officer Ralph
Scozzafava said, "Our execution in the first quarter was
solid and I'm pleased with our overall progress. Our volume and mix
were in-line with our expectations and the traction that we're
getting across our enterprise-wide cost productivity plan is
ramping up. We took important initial steps to lower our cost base.
The initiatives we executed late last year and in the first quarter
of 2018 are clearly working as evidenced by the benefits reading
through in our results. We will continue to build upon this
momentum to deliver on our target of $150
million in incremental run-rate savings by 2020."
First Quarter
2018 Operating Results
|
|
Financial Summary
*
|
|
Three Months Ended
March 31
|
(In millions,
except per share amounts)
|
|
2018
|
|
2017
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
GAAP
|
|
$
|
449
|
|
|
$
|
462
|
|
Adjusted
|
|
$
|
448
|
|
|
$
|
465
|
|
|
|
|
|
|
Operating
Income(2)
|
|
|
|
|
GAAP
|
|
$
|
15
|
|
|
$
|
4
|
|
Adjusted
|
|
$
|
32
|
|
|
$
|
36
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
GAAP
|
|
$
|
14
|
|
|
$
|
17
|
|
Adjusted
|
|
$
|
14
|
|
|
$
|
16
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
|
GAAP
|
|
$
|
—
|
|
|
$
|
(10)
|
|
Adjusted
|
|
$
|
13
|
|
|
$
|
12
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share (EPS)
|
|
|
|
|
GAAP
|
|
$
|
—
|
|
|
$
|
(0.11)
|
|
Adjusted
|
|
$
|
0.14
|
|
|
$
|
0.13
|
|
|
|
|
|
|
* 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.
|
|
|
(1)
|
Please refer to
"Forward Outlook" and "Non-GAAP Financial Measures" for additional
information. We provide guidance on a non-GAAP basis and are unable
to provide a full reconciliation to GAAP without unreasonable
efforts as we cannot predict the amount or timing of certain
elements which are included in reported GAAP results, including
mark-to-market adjustments of hedging activities, asset impairment
charges, and other non-recurring events or transactions that may
significantly affect reported GAAP results.
|
|
|
(2)
|
Results for the three
months ended March 31, 2017 have been revised to reflect the
retrospective adoption of Accounting Standards Update No. 2017-07,
Compensation — Retirement Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Cost ("ASU 2017-07"). The adoption of ASU
2017-07 resulted in a net increase to previously reported operating
income of $1.1 million for the three months ended March 31, 2017
and a corresponding increase of $1.1 million to other expense for
the three months ended March 31, 2017, with no net impact to net
income (loss) or earnings (loss) per share.
|
Raw milk costs in the first quarter of 2018 of $14.35 per hundred-weight decreased roughly 13%
from the fourth quarter of 2017 and decreased 16% from the first
quarter of 2017.
Cash Flow
Net cash provided by continuing operations for the three months
ended March 31, 2018, totaled $39
million. Free cash flow provided by continuing operations,
which is defined as net cash provided by continuing operations less
capital expenditures, was $22 million
for the three months ended March 31, 2018, a $3 million increase as compared to the prior year
period. Capital expenditures totaled $17
million for the three months ended March 31, 2018.
Debt
Total outstanding debt at March 31, 2018, net of
$28 million cash on hand, was
approximately $884 million. The
Company's net debt to bank EBITDA total leverage ratio, on an
all-cash netted basis, was flat on a sequential basis at 2.68 times
at the end of the first quarter 2018.
Forward Outlook
"As we move forward in 2018, we are focused on executing our
commercial agenda and cost productivity initiatives that will drive
our strategic plan. We have been successful in driving early
results in the administrative area against our enterprise-wide
productivity plan with more work to be done. We will now begin the
next phase by right-sizing our network to better match volume. We
will incur transitory costs as the execution of our plans will lag
the exit of specific customer volume and have firm plans in place
to remove the fixed costs from our system within this year. We are
also implementing plans to mitigate expected headwinds in non-dairy
input costs while executing our strategic initiatives. I'm
confident in our ability to execute these actions, and we are
therefore reaffirming our full-year adjusted diluted earnings per
share range of $0.55 to $0.80. Our full-year free cash flow and capital
expenditure guidance remains unchanged," concluded Scozzafava.
We provide guidance on a non-GAAP basis and are unable to
provide a full reconciliation to GAAP without unreasonable efforts
as we cannot predict the amount or timing of certain elements which
are included in reported GAAP results, including mark-to-market
adjustments of hedging activities, asset impairment charges, and
other non-recurring events or transactions that may significantly
affect reported GAAP results.
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 income (loss) from continuing operations, adjusted net
income (loss), adjusted earnings (loss) from continuing operations
per diluted share, adjusted earnings (loss) 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 months
ended March 31, 2018, and 2017, 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
(loss) 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;
- closed deal costs;
- facility closing, reorganization and realignment costs;
- debt issuance costs;
- costs associated with the early retirement of long-term
debt;
- gains (losses) on the mark-to-market of our derivative
contracts;
- costs associated with our enterprise-wide cost productivity
plan;
- separation costs;
- gains or losses related to discontinued operations and
divestitures;
- litigation settlements (including any related interest
accretion);
- income tax impacts of the foregoing adjustments; and
- adjustments to normalize our income tax expense at a rate of
26.5%.
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 ongoing operating performance. In
addition, we cannot predict the timing and amount of gains or
losses associated with certain of these 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
adjustments for incremental trademark amortization and interest
expense and the normalized income tax rate, as Adjusted EBITDA
excludes the full amount of these expenses). 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 an indicator 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 clicking the earnings button on 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. Approximately
16,000 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 Eagle Family Foods Group LLC, under
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), total volume, 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 enterprise-wide cost productivity plan
and other cost saving 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, including its most recent Forms 10-K and 10-Q.
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, Reace
Smith, +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 March 31
|
|
2018(1)
|
|
2017(1)(2)
|
Net sales
|
$
|
1,980,507
|
|
|
$
|
1,995,686
|
|
Cost of
sales
|
1,532,004
|
|
|
1,533,467
|
|
Gross
profit
|
448,503
|
|
|
462,219
|
|
Operating costs and
expenses:
|
|
|
|
Selling and
distribution
|
345,996
|
|
|
345,063
|
|
General and
administrative
|
75,522
|
|
|
98,664
|
|
Amortization of
intangibles
|
5,078
|
|
|
5,155
|
|
Facility closing and
reorganization costs, net
|
8,462
|
|
|
9,286
|
|
Equity in (earnings)
loss of unconsolidated affiliate
|
(1,900)
|
|
|
—
|
|
Total operating costs
and expenses
|
433,158
|
|
|
458,168
|
|
Operating
income
|
15,345
|
|
|
4,051
|
|
Other
expense:
|
|
|
|
Interest
expense
|
14,033
|
|
|
17,464
|
|
Other expense,
net
|
470
|
|
|
143
|
|
Total other
expense
|
14,503
|
|
|
17,607
|
|
Income (loss) before
income taxes
|
842
|
|
|
(13,556)
|
|
Income tax expense
(benefit)
|
1,107
|
|
|
(3,797)
|
|
Net loss
|
$
|
(265)
|
|
|
$
|
(9,759)
|
|
Average common
shares:
|
|
|
|
Basic
|
91,192
|
|
|
90,710
|
|
Diluted
|
91,192
|
|
|
90,710
|
|
Basic income (loss)
per common share:
|
|
|
|
Net loss
|
$
|
—
|
|
|
$
|
(0.11)
|
|
Diluted income (loss)
per common share:
|
|
|
|
Net loss
|
$
|
—
|
|
|
$
|
(0.11)
|
|
|
|
(1)
|
Results for the three
months ended March 31, 2018 reflect the adoption of Accounting
Standards Codification Topic 606, Revenue from Contracts with
Customers ("ASC 606"). Historically, we presented sales of excess
raw materials as a reduction of cost of sales within our unaudited
Condensed Consolidated Statements of Operations. On a prospective
basis, effective January 1, 2018, in connection with the adoption
of ASC 606, we began reporting sales of excess raw materials within
the net sales line of our unaudited Condensed Consolidated
Statements of Operations. Sales of excess raw materials included in
net sales were $151.8 million in the three months ended
March 31, 2018. Sales of excess raw materials included as a
reduction to cost of sales were $171.0 million in the three months
ended March 31, 2017. This change in presentation has no net
impact on gross profit.
|
|
|
(2)
|
Results for the three
months ended March 31, 2017 have been revised to reflect the
retrospective adoption of ASU 2017-07. The adoption of ASU 2017-07
resulted in a net increase to previously reported operating income
of $1.1 million for the three months ended March 31, 2017 and a
corresponding increase of $1.1 million to other expense, net for
the three months ended March 31, 2017, with no net impact to net
loss or loss per share.
|
DEAN FOODS
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
March 31,
2018
|
|
December 31,
2017
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
28,125
|
|
|
$
|
16,512
|
|
Other current
assets
|
|
973,998
|
|
|
1,003,367
|
|
Total current
assets
|
|
1,002,123
|
|
|
1,019,879
|
|
Property, plant and
equipment, net
|
|
1,056,036
|
|
|
1,094,064
|
|
Intangibles and other
assets, net
|
|
386,555
|
|
|
389,886
|
|
Total
|
|
$
|
2,444,714
|
|
|
$
|
2,503,829
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Total current
liabilities, excluding debt
|
|
$
|
625,173
|
|
|
$
|
671,070
|
|
Total long-term debt,
including current portion
|
|
907,200
|
|
|
913,199
|
|
Other long-term
liabilities
|
|
261,981
|
|
|
263,613
|
|
Total stockholders'
equity
|
|
650,360
|
|
|
655,947
|
|
Total
|
|
$
|
2,444,714
|
|
|
$
|
2,503,829
|
|
DEAN FOODS
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
Three Months Ended
March 31
|
|
|
2018
|
|
2017
|
Operating
Activities
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
38,953
|
|
|
$
|
27,556
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Payments for
property, plant and equipment
|
|
(16,508)
|
|
|
(8,372)
|
|
Proceeds from sale of
fixed assets
|
|
4,179
|
|
|
1,001
|
|
Net cash used in
investing activities
|
|
(12,329)
|
|
|
(7,371)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Net proceeds from
(repayment of) debt
|
|
(6,274)
|
|
|
4,700
|
|
Payments of financing
costs
|
|
—
|
|
|
(1,709)
|
|
Cash dividends
paid
|
|
(8,218)
|
|
|
(8,178)
|
|
Issuance of common
stock, net of share repurchases for withholding taxes
|
|
(519)
|
|
|
(1,396)
|
|
Net cash used
in financing activities
|
|
(15,011)
|
|
|
(6,583)
|
|
Change in cash and
cash equivalents
|
|
11,613
|
|
|
13,602
|
|
Cash and cash
equivalents, beginning of period
|
|
16,512
|
|
|
17,980
|
|
Cash and cash
equivalents, end of period
|
|
$
|
28,125
|
|
|
$
|
31,582
|
|
DEAN FOODS
COMPANY
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES*
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
Three Months Ended
March 31, 2018
|
|
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of assets
|
|
Facility
closing
and
reorganization
costs, net
|
|
Mark-to-
market
on derivative
contracts
|
|
Cost
productivity
plan
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
Adjusted*
|
Gross
profit
|
$
|
448,503
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(445)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
448,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
345,996
|
|
|
—
|
|
|
—
|
|
|
(402)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
345,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
75,522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,133)
|
|
|
(188)
|
|
|
—
|
|
|
71,201
|
|
Amortization of
intangibles
|
5,078
|
|
|
(3,935)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,143
|
|
Equity in (earnings)
loss of unconsolidated affiliate
|
(1,900)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,900)
|
|
General and
administrative and other
|
78,700
|
|
|
(3,935)
|
|
|
—
|
|
|
—
|
|
|
(4,133)
|
|
|
(188)
|
|
|
—
|
|
|
70,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
433,158
|
|
|
(3,935)
|
|
|
(8,462)
|
|
|
(402)
|
|
|
(4,133)
|
|
|
(188)
|
|
|
—
|
|
|
416,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
15,345
|
|
|
3,935
|
|
|
8,462
|
|
|
(43)
|
|
|
4,133
|
|
|
188
|
|
|
—
|
|
|
32,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(265)
|
|
|
3,935
|
|
|
8,462
|
|
|
(43)
|
|
|
4,133
|
|
|
188
|
|
|
(3,535)
|
|
|
12,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (g)
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.09
|
|
|
$
|
—
|
|
|
$
|
0.05
|
|
|
$
|
—
|
|
|
$
|
(0.04)
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2017
|
|
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of assets
|
|
Facility
closing
and
reorganization
costs, net
|
|
Mark-to-
market
on derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
Adjusted*
|
|
|
Gross
profit(1)
|
$
|
462,219
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,209
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
465,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution(1)
|
345,063
|
|
|
—
|
|
|
—
|
|
|
(1,142)
|
|
|
—
|
|
|
—
|
|
|
343,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative(1)
|
98,664
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,250)
|
|
|
—
|
|
|
84,414
|
|
|
|
Amortization of
intangibles
|
5,155
|
|
|
(3,935)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,220
|
|
|
|
General and
administrative and other(1)
|
103,819
|
|
|
(3,935)
|
|
|
—
|
|
|
—
|
|
|
(14,250)
|
|
|
—
|
|
|
85,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses(1)
|
458,168
|
|
|
(3,935)
|
|
|
(9,286)
|
|
|
(1,142)
|
|
|
(14,250)
|
|
|
—
|
|
|
429,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income(1)
|
4,051
|
|
|
3,935
|
|
|
9,286
|
|
|
4,351
|
|
|
14,250
|
|
|
—
|
|
|
35,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
17,464
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,080)
|
|
|
—
|
|
|
16,384
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(9,759)
|
|
|
3,935
|
|
|
9,286
|
|
|
4,351
|
|
|
15,330
|
|
|
(11,149)
|
|
|
11,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (g)
|
$
|
(0.11)
|
|
|
$
|
0.04
|
|
|
$
|
0.10
|
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
|
$
|
(0.12)
|
|
|
$
|
0.13
|
|
|
|
|
|
(1)
|
Results for the
quarter ended March 31, 2017 have been revised to reflect the
retrospective adoption of ASU 2017-07. The adoption of ASU 2017-07
resulted in a net increase to previously reported operating income
of $1.1 million for the three months ended March 31, 2017 and a
corresponding increase of $1.1 million to other expense, net for
the three months ended March 31, 2017, with no net impact to net
loss or loss per share.
|
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES*
|
(Unaudited)
|
(In thousands,
except ratio data)
|
|
|
|
Three Months Ended
March 31
|
|
Trailing
Twelve
Months Ended
March 31,
|
|
|
2018
|
|
2017
|
|
2018
|
Reconciliation of
Net Income (Loss) to Adjusted EBITDA and Bank EBITDA
|
Net income
(loss)
|
|
$
|
(265)
|
|
|
$
|
(9,759)
|
|
|
$
|
71,082
|
|
Interest
expense
|
|
14,033
|
|
|
17,464
|
|
|
61,530
|
|
Income tax
expense (benefit)
|
|
1,107
|
|
|
(3,797)
|
|
|
(21,275)
|
|
Depreciation
and amortization
|
|
39,441
|
|
|
41,881
|
|
|
163,372
|
|
Asset
write-downs and loss on sale of assets
|
|
—
|
|
|
—
|
|
|
27,818
|
|
Closed deal
costs
|
|
—
|
|
|
—
|
|
|
372
|
|
Facility
closing and reorganization costs, net (b)
|
|
8,462
|
|
|
9,286
|
|
|
24,089
|
|
Mark-to-market
on derivative contracts (c)
|
|
(43)
|
|
|
4,351
|
|
|
(1,578)
|
|
Discontinued
operations
|
|
—
|
|
|
—
|
|
|
(14,166)
|
|
Cost
productivity plan (d)
|
|
4,133
|
|
|
—
|
|
|
9,871
|
|
Other
adjustments (e)
|
|
188
|
|
|
14,250
|
|
|
3,398
|
|
Adjusted
EBITDA
|
|
$
|
67,056
|
|
|
$
|
73,676
|
|
|
324,513
|
|
|
|
|
|
|
|
|
Non-cash
share-based compensation expense
|
|
|
|
|
|
5,050
|
|
Bank
EBITDA
|
|
|
|
|
|
$
|
329,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2018
|
Reconciliation of
net debt and total leverage ratio
|
Total long-term debt,
including current portion
|
$
|
907,200
|
|
Unamortized
debt issuance costs
|
5,397
|
|
Cash and cash
equivalents
|
(28,125)
|
|
Net debt
|
$
|
884,472
|
|
Bank
EBITDA
|
329,563
|
|
Total
leverage ratio
|
2.68
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31
|
|
|
|
|
2018
|
|
2017
|
Reconciliation of
Free Cash Flow provided by continuing operations
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
|
|
$
|
38,953
|
|
|
$
|
27,556
|
|
Payments for
property, plant and equipment
|
|
|
|
(16,508)
|
|
|
(8,372)
|
|
Free Cash
Flow provided by continuing operations
|
|
|
|
$
|
22,445
|
|
|
$
|
19,184
|
|
|
* See Notes to
Earnings Release Tables
|
Notes to Earnings Release Tables
For the three months ended March 31, 2018, and 2017, 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 ongoing operating results. For additional information on our
non-GAAP financial measures, see the section entitled "Non-GAAP
Financial Measures" in this release.
- 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 amortization expense recorded on these finite-lived trademarks
of $3.9 million for each of the three
months ended March 31, 2018, and 2017.
- 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.
- 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.
- The adjustment reflects the elimination of certain direct
expenses incurred as a result of our enterprise-wide cost
productivity plan. The charges were $4.1
million for the three months ended March 31, 2018.
- The adjustment reflects the elimination of the following:
- A charge related to litigation settlements reached in the three
months ended March 31, 2017;
- The write off of unamortized deferred financing costs of
$1.1 million in connection with the
January 4, 2017 amendments to our
senior secured revolving credit facility and receivables
securitization facility in the three months ended March 31,
2017; and
- Separation charges related to the previously disclosed
departures of certain executive officers.
- The adjustment reflects the income tax impact of adjustments
(a) through (e) and an adjustment to our income tax expense to
reflect income tax at a tax rate of 26.5% and 38% for the three
months ended March 31, 2018, and 2017, respectively, which we
believe represents our normalized effective tax rate as a U.S.
domiciled business. The reduction in our normalized effective tax
rate beginning in 2018 is associated with the December 22, 2017, enactment of the Tax Cuts and
Jobs Act.
- Includes an adjustment to diluted shares outstanding to reflect
an add-back of approximately 174,000 dilutive shares and 566,000
dilutive shares for the three months ended March 31, 2018, and
2017, respectively, which were anti-dilutive for GAAP
purposes.
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SOURCE Dean Foods Company