USA: Del Monte Foods Company reports first quarter fiscal 2001 results
"Our sales and earnings were as expected. Comparisons with fiscal 2000 are difficult due to last year's Y2K disruptions," said Richard G. Wolford, Chairman and Chief Executive Officer. "The business continues to be healthy, as demonstrated by the increase in market shares in each of our three key businesses. We also made significant progress this quarter towards our strategic initiative of leveraging our brand beyond the canned food aisle. With the acquisition of Sunfresh, Del Monte has expanded its presence in the fast-growing packaged produce segment and enhanced its ability to introduce new products and packaging to meet the needs of today's consumers."
The Company reported net sales of $310.8 million for the first quarter of fiscal 2001 compared to net sales of $333.7 million for the first fiscal quarter last year. EBITDA for the quarter, adjusted for special charges and non-recurring items, was $33.8 million compared to $36.6 million in the same quarter last year.
The decline in net sales for the first quarter primarily reflects the impact of unusually high sales in the first quarter of fiscal 2000 resulting from Y2K-related sales.
The income tax rate was 36.0% for the first quarter of this year compared to a normalized income tax rate of 39.0% for the first quarter of last year. The Company's effective income tax rate for the first quarter of this year, excluding plant consolidation charges and non-recurring items, includes the benefit of net operating losses and other tax adjustments.
Actual (unadjusted) diluted earnings per share for the first quarter ended September 30, 2000 was $0.12 per share compared to $0.13 per share in last year's first quarter, and net income was $6.4 million compared to $6.9 million last year.
Looking forward for the full fiscal year 2001, the Company continues to expect top line growth of 4 to 6%. The Company's earnings in fiscal 2001 will be impacted by increased interest expense and fixed cost penalties, as production volumes are reduced to decrease inventory levels. In addition, the Company experienced increased production costs during the summer 2000 pack, primarily due to unusual weather conditions which lowered fruit recoveries, together with higher energy costs. However, EPS is expected to be essentially flat as compared to fiscal 2000.
Del Monte Foods Company, with net sales of approximately $1.5 billion in fiscal 2000, is the largest producer and distributor of premium quality, branded processed fruit, vegetable and tomato products in the United States. The Del Monte brand was introduced in 1892 and is one of the best known brands in the United States. Del Monte products are sold through national grocery chains, independent grocery stores, warehouse club stores, mass merchandisers, drug stores and convenience stores. The Company also sells its products to the U.S. military, certain export markets, the foodservice industry and food processors. The Company operates fourteen production facilities and seven distribution centers in the U.S., has operations in Venezuela and owns Del Monte brand marketing rights in South America.
Del Monte Foods will host its quarterly conference call today at 8:00 a.m. (PDT) to discuss the Company's financial results.
This call will be webcast live and may be accessed on the Company's investor relations home page at www.delmonte.com.
This press release contains forward-looking statements conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve inherent risks and uncertainties and the Company cautions you that a number of important factors could cause actual results to differ materially from those contained in such statements. These factors include, among others: general economic and business conditions; competition; weather conditions; crop yields; raw material costs and availability; the loss of significant customers; changes in business strategy or development plans; availability, terms and deployment of capital; availability of qualified personnel; inability to increase prices; changes in, or failure or inability to comply with, governmental regulations, including, without limitation, environmental regulations; industry trends; production capacity constraints and other factors. These factors are described in more detail in the Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the fiscal year ended June 30, 2000. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
Selected Balance Sheet Data
(In millions) September 30,
Cash and cash equivalents $ 7.7
Trade accounts receivable, net of allowance 128.0
Total assets 1,421.0
Accounts payable and accrued expenses 399.0
Short-term borrowings 271.6
Long-term debt, including current portion 569.5
Stockholders' equity 17.1
Del Monte Foods Company
(In millions, except share data)
For the Three Months Ended September 30,
As Adjusted (1) Historical
2000 1999 2000 1999
---- ---- ---- ----
Net sales $ 310.8 $ 333.7 $ 310.8 $ 333.7
Cost of products sold (2) 204.4 211.5 204.6 211.5
and general expenses (3) 81.1 94.2 81.2 94.2
Special charges related
to plant consolidation (4) -- -- 0.7 3.0
Operating income 25.3 28.0 24.3 25.0
Interest expense 18.9 16.3 18.9 16.3
Other income (5) 0.1 -- (4.7) --
Income before taxes 6.3 11.7 10.1 8.7
Income taxes (6) 2.3 4.6 3.7 1.8
Net income available
to common shares $ 4.0 $ 7.1 $ 6.4 $ 6.9
per common share $ 0.08 $ 0.13 $ 0.12 $ 0.13
Shares 52,571,470 53,564,778 52,571,470 53,564,778
(1) In order to provide comparability among all periods presented, the
Company's historical results have been adjusted to exclude special
charges related to plant consolidation and non-recurring items.
(2) In accordance with purchase accounting rules applied to the
acquisition of the Sunfresh business, inventory was increased to
market value. This inventory step-up resulted in one-time charges
to cost of products sold as the inventory on hand at the
acquisition date was sold. Results, as adjusted, for the three
months ended September 30, 2000 excluded step-up of $0.2 million.
(3) Selling, administrative and general expenses for the three months
ended September 30, 2000 have been adjusted to exclude indirect
expenses related to the acquisition of Sunfresh.
(4) For the three months ended September 30, 2000 and 1999, special
charges related to plant consolidation included accelerated
depreciation and other restructuring costs related to the
consolidation of certain processing plants.
(5) For the three months ended September 30, 2000, the reversal of an
accrual on a contingent liability was excluded from the as
(6) Income taxes, as adjusted, for the three months ended September
30, 1999 included the impact of using a 39.0% tax rate. Income
taxes for all other periods presented above included the benefit
of net operating losses and other tax adjustments
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