Dean Foods Company (NYSE: DF) today announced its first quarter earnings and an enhancement to its business unit structure to further the Company’s strategy to focus on high margin value-added branded products.
First quarter sales increased 5.3% to a record $1,054.3 million, compared to $1,001.3 million in the first quarter of fiscal 2000. Earnings per share increased 5.7% to a record 74 cents per diluted share, versus 70 cents per diluted share last year. Net income was $26.4 million in the first quarter of fiscal 2001 compared to $27.8 million in the first quarter of fiscal 2000, as improved operating results were offset by higher interest expense to finance acquisitions in a consolidating industry.
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“Our first quarter earnings were driven by improved operating results in our Dairy and Specialty Foods divisions,” stated Howard Dean, Chairman and Chief Executive Officer. “Operating earnings in the newly formed National Refrigerated Products Division, formed by combining Dean’s national branded products from our former Dairy and Specialty segments, reflect investment of approximately $6 million for launches of new products during the first quarter.”
Dean Foods’ first quarter results included the following highlights:
- Fluid milk operations benefited from steady margins and improved performance at the Barber and Berkeley acquisitions.
- Ice cream earnings were impacted by lower volumes due to a cooler than normal summer and a lower level of promotional activity in several key markets.
- Expanded fluid milk brand sales in the major California market and successfully introduced Mayfield brand ice cream into new Southeastern markets.
- Improved results in the pickles operation due to better crop conditions and lower promotional activity by the branded leader.
- Successful launch of new products in the National Refrigerated Products Division including Dips-For-OneTM, which achieved a fifty percent penetration of the grocery channel in the quarter.
- Advertising, promotion and other introductory cost spending of $6 million behind National Refrigerated Products introductions of Dips-For-One(TM), Marie’s pourable salad dressings, Intermediate Shelf Life Chugs and the Land O’Lakes Grip ‘N Go single serve product.
- Closed the acquisitions of the Nalley’s pickles business and Land O’Lakes Upper Midwest fluid milk operations.
Dean Foods also announced that the Company realigned its business unit structure and formed a new unit focused on refrigerated national dairy and related brands.
Under this new structure, Dean Foods’ largest unit continues to be the Dairy Division, which will serve national and regional dairy customers through its system of direct route sales. This division will continue to be led by Eric Blanchard. The second largest unit is the Specialty Foods Division, which combines the Pickles business with non-dairy creamer products, aseptic products, ingredient products and the Company’s transportation group, all of which were part of the former Specialty segment. This division will be led by Jim Greisinger, who previously headed the Pickles division.
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By GlobalDataThe third unit is the newly formed National Refrigerated Products Division, and will be led by Lou Nieto, who was previously the Company’s senior marketing executive. National Refrigerated Products includes national brands such as Intermediate Shelf Life Milk Chugs, Land O’ Lakes Grip ‘N Go, Dean’s dips, including Dips-For-OneTM, Marie’s refrigerated salad dressings, White Wave soy products, including the Silk(TM) brand of soymilk, and other owned and licensed national brands. Responsibility for developing Extended Shelf Life products for national warehouse distribution will move from the Dairy Division to the National Refrigerated Products Division.
“The creation of the National Refrigerated Products Division under an experienced marketing executive like Lou Nieto will accelerate our strategy to drive national brands. Our regional brands will continue to drive Dean’s growth in the core dairy business. Increasing our focus on national brands will drive incremental growth as we market existing and develop new value-added, national products,” said Howard Dean.
“Our customers have told us that they want a more efficient way of dealing with Dean Foods,” said Richard Bailey, Dean Foods’ President. “This new structure will provide that capability as we create supply-chain efficiencies for our products.” Bailey added that as part of the realignment, Dean will implement a brand management system in the National Refrigerated Products Division to more effectively leverage its national brand opportunities. In addition, Bailey said the Company intends to substantially increase marketing expenditures to further invest in its national brands.
“The new structure is about increasing overall market penetration, increasing revenue growth, enhancing shareholder value and providing our employees with additional opportunities to grow with the Dean Foods organization,” said Bailey.
Mr. Dean concluded, “We are confident that our focused product and marketing plans for the year, and improved execution in the marketplace through our newly formed National Refrigerated Products Division, will enable us to deliver much improved results this year.”
Dean Foods is one of the nation’s leading dairy processors and distributors producing a full line of branded and private label products, including fluid milk, ice cream and extended shelf life products, which are sold under the Dean’s and other strong regional brand names. Dean Foods is the industry leader in other food products including pickles, powdered non-dairy coffee creamers, aseptically packaged foodservice products, and refrigerated dips and salad dressings.
Certain statements in this press release are forward-looking as defined by the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this press release. These risks include, but are not limited to, the ability to integrate acquisitions, adverse weather conditions resulting in poor harvest conditions, raw milk and resin costs, interest rate fluctuations, competitive pricing pressures, the effectiveness of marketing and cost-management programs and shifts in the market demand.
The Company’s quarterly earnings conference call will be held today at 8:00 a.m. Central Time. The call may be heard live at the Company’s web site, www.deanfoods.com, using RealPlayer7 Basic software. The basic version of RealPlayer7 may be downloaded at no charge from www.real.com/products/player/index.html prior to the call. Please allow approximately 15 minutes to download the software. Replays will be available at the same internet address for a limited time period.
DEAN FOODS COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTERS ENDED
AUGUST 27, 2000 AND AUGUST 29, 1999
(Unaudited)
(In Millions, Except for Per Share Amounts)
First Quarter Ended
Aug. 27, Aug. 29, Change
2000 1999 %
Net sales $1,054.3 $1,001.3 5.3%
Costs of products sold 801.0 762.0 (5.1)%
Delivery, selling and
administrative expenses 194.5 182.5 (6.6)%
Operating earnings 58.8 56.8 3.5%
Interest expense, net of interest income 16.1 11.2 (43.8)%
Income before income taxes 42.7 45.6 (6.4)%
Provision for income taxes 16.3 17.8 8.4%
Net income $26.4 $27.8 (5.0)%
Income per share:
Basic $.74 $.71 4.2%
Diluted $.74 $.70 5.7%
Weighted average common shares:
Basic 35.5 39.3 (9.7)%
Diluted 35.8 39.9 (10.3)%
DEAN FOODS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(In Millions)
August 27, August 29,
2000 1999
ASSETS
Current Assets:
Cash and temporary cash investments $29.7 $20.8
Accounts and notes receivable, net of
allowance for doubtful accounts 326.3 295.4
Inventories 229.2 210.0
Other current assets 86.9 90.9
Total current assets 672.1 617.1
Property, Plant and Equipment, net 889.9 773.8
Other Assets 713.4 588.5
Total Assets $2,275.4 $1,979.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term obligations $3.4 $2.5
Accounts payable and accrued expenses 429.1 397.7
Dividends payable 8.1 8.7
Federal and state income taxes 56.8 47.5
Total current liabilities 497.4 456.4
Long-Term Obligations 964.5 657.8
Deferred Liabilities 136.2 128.2
Shareholders' Equity 677.3 737.0
Total Liabilities and
Shareholders' Equity $2,275.4 $1,979.4
DEAN FOODS COMPANY
BUSINESS SEGMENT INFORMATION
FOR THE QUARTERS ENDED
AUGUST 27, 2000 AND AUGUST 29, 1999
(Unaudited)
(In Millions)
NEW SEGMENTS National
Specialty Refrigerated
Dairy Foods Products Corp. Consolidated
Fiscal 2001
Net sales $788.8 $181.2 $84.3 $ - $1,054.3
Operating earnings $41.7 $23.0 $4.3 $(10.2) $58.8
Fiscal 2000
Net sales $763.8 $170.6 $66.9 $ - $1,001.3
Operating earnings $39.9 $20.2 $8.3 $(11.6) $56.8
PRIOR SEGMENTS
Dairy Specialty Pickles Corp. Consolidated
Fiscal 2001
Net sales $846.6 $105.2 $102.5 $ - $1,054.3
Operating earnings $43.2 13.1 $13.0 $(10.5) $58.8
Fiscal 2000
Net sales $806.2 $99.9 $95.2 $ - $1,001.3
Operating earnings $42.9 $15.5 $10.2 $(11.8) $56.8
DEAN FOODS COMPANY
NEW BUSINESS SEGMENT HISTORICAL INFORMATION
(Unaudited)
(In Millions, Except for ROS %)
Full Year Fiscal Year 2000
Fiscal 1999 * Q1 Q2 Q3 Q4** Full Year
Net Sales
Dairy $2,817.7 $763.8 $808.6 $739.7 $758.5 $3,070.6
Specialty Foods 669.8 170.6 184.5 166.4 189.6 711.1
National
Refrigerated
Products 267.6 66.9 73.9 70.7 72.4 283.9
Consolidated $3,755.1 $1,001.3 $1,067.0 $976.8 $1,020.5 $4,065.6
Operating Earnings
Dairy $99.8 $39.9 $31.1 $32.3 $44.6 $147.9
Specialty Foods 86.2 20.2 25.0 18.6 17.7 81.5
National
Refrigerated
Products 20.5 8.3 10.0 9.7 9.5 37.5
Corporate (35.1) (11.6) (9.7) (6.1) (10.8) (38.2)
Consolidated $171.4 $56.8 $56.4 $54.5 $61.0 $228.7
ROS %
Dairy 3.5% 5.2% 3.8% 4.4% 5.9% 4.8%
Specialty Foods 12.9% 11.8% 13.6% 11.2% 9.3% 11.5%
National
Refrigerated
Products 7.7% 12.4% 13.5% 13.7% 13.1% 13.2%
Consolidated 4.6% 5.7% 5.3% 5.6% 6.0% 5.6%
* Fiscal 1999 excludes $18.1 million pre-tax plant closure charge
recorded in the divisions as follows:
Dairy $ 8.9
Specialty Foods $ 9.2
