Del Monte Foods Company (NYSE: DLM) yesterday reported earnings per share, as adjusted, of $0.34, for the fiscal 2001 fourth quarter, an increase of 36.0 percent from $0.25 for the same period in fiscal 2000.
Net sales for the quarter were $389.6 million, an increase of 21.9 percent from $319.7 million for the fourth fiscal quarter of 2000.
Go deeper with GlobalData
Earnings per share for the full 2001 fiscal year, as adjusted, was $0.95. This compares with $1.01, as adjusted, in fiscal 2000. Net sales for the year were $1,512.0 million, an increase of 3.4 percent, compared to $1,462.1 million for fiscal 2000. As adjusted results exclude expenses related to the Company’s May 2001 debt refinancing, special charges related to plant consolidations and other non-recurring items.
“Overall, fiscal 2001, although challenging, was a rewarding year for us,” said Richard G. Wolford, Chairman and Chief Executive Officer. “Consistent with overall industry trends, our retailers continued to reduce their inventory levels while consumption of Del Monte products in the market remained strong. Despite this retail trend, which we believe has leveled off, our top line improved by over three percent due largely to the strategic acquisitions of S&W and Sunfresh, which are performing well. During the year, we also successfully executed sales initiatives in lower margin, non-retail channels to reduce our inventory levels.”
Fourth Quarter Ended June 30, 2001 Financial Highlights
The Company reported net sales of $389.6 million for the fourth quarter of fiscal 2001 compared to net sales of $319.7 million for the fourth fiscal quarter last year. Net income, as adjusted, for the quarter was $18.1 million compared to $13.2 million for the same quarter last year. Earnings per share, as adjusted, for the quarter was $0.34, compared to $0.25 for the fourth quarter of fiscal 2000. EBITDA, as adjusted, for the quarter was $47.3 million compared to $45.4 million in the same quarter last year.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThe increase in net sales for the quarter, when compared to the fourth quarter of fiscal 2000, was due to the acquisitions of the S&W and Sunfresh businesses, as well as increased volumes in both retail and non-retail channels. Earnings per share, as adjusted, reflects these higher volumes and lower income taxes, somewhat offset by higher production costs and an unfavorable sales mix as the Company continued to sell excess inventories by increasing sales through the lower margin non-retail channels.
The Company reported an actual net loss of $11.8 million, or $0.23 per share, for the fourth quarter ended June 30, 2001, compared to net income of $89.7 million, or $1.70 per share, in the prior year period. Actual results for the fourth quarter of fiscal 2000 include the effect of the realization of a portion of the Company’s net deferred tax assets, resulting in a credit to income tax expense of $67.7 million, or $1.28 per common share. Actual results for the fourth quarter of fiscal 2001 include $26.2 million of expenses, net of tax benefit, relating to the Company’s May 2001 debt refinancing.
Fiscal 2001 Financial Highlights
Net sales for fiscal 2001 were $1,512.0 million compared to net sales of $1,462.1 million last year. Net income, as adjusted, for fiscal 2001 was $50.1 million compared to $53.7 million for last year. Earnings per share for the full 2001 fiscal year, as adjusted, was $0.95, compared to $1.01 in fiscal 2000. EBITDA, as adjusted, for fiscal 2001 was $176.9 million compared to $187.4 million for last year.
The increase in net sales for the year, when compared to the prior year, reflects the acquisitions of the S&W and Sunfresh businesses and an increase in non-retail channel sales as the Company sold excess inventories by increasing sales through these channels. Earnings per share, as adjusted, decreased primarily due to higher production costs in the current year, as well as the unfavorable sales mix due to the increased volume in non-retail sales channels, partially offset by lower income taxes.
The Company reported actual net income of $13.8 million, or $0.26 per share, for fiscal 2001 compared to $128.7 million, or $2.42 per share in fiscal 2000. Actual results for fiscal 2000 include the effect of the realization of a portion of the Company’s net deferred tax assets, resulting in a credit to income tax expense of $67.7 million, or $1.27 per common share. Actual results for fiscal 2001 include $26.2 million of fourth quarter expenses, net of tax benefit, relating to the Company’s May 2001 debt refinancing.
Outlook
“In the coming year, we will increase our marketing investment against our existing products and in the introduction of several new products,” said Mr. Wolford. “These efforts will build our business going forward and represent a sound investment despite the impact on fiscal 2002 earnings. We also intend to reduce our debt, in part by reducing our production levels. While this will increase our fixed costs, more importantly, it will reduce our inventories and generate significant cash flow.”
As a result of increases in marketing investments, energy expenses and other operating costs, which will be partially offset by the favorable impact of a July 1 price increase and lower interest expense as the Company reduces its debt, the Company expects adjusted earnings per share for fiscal 2002 earnings to be approximately $0.83 to $0.87.
In May 2000, the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board concluded that certain consumer and trade sales promotion expenses should be classified as a reduction of sales rather than as marketing expenses. The Company will adopt this change effective for its first quarter of fiscal 2002. The Company expects that fiscal 2002 net sales will be approximately 2 percent to 4 percent higher than in fiscal 2001, as restated for these reclassifications. These changes will not affect the Company’s financial position or net earnings.
Del Monte Foods Company, with net sales over $1.5 billion in fiscal 2001, 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 under the Del Monte, Contadina, S&W and Sunfresh brands. The Company also sells its products to the U.S. military, certain export markets, the foodservice industry and food processors. The Company operates twelve production facilities and seven distribution centers in the U.S., has operations in Venezuela and owns Del Monte brand marketing rights in South America.
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; changes in our effective tax rate, changes in accounting principals; competition; weather conditions; energy cost and availability; crop yields; raw material costs and availability; the loss of significant customers; changes in business strategy or development plans; debt level; 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 including, without limitation, changes in buying and inventory practices by customers; declines in consumption levels in the Company’s categories; production capacity constraints and other factors. 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 June 30,
(In millions) 2001
Cash and cash equivalents $ 12.4
Trade accounts receivable, net
of allowance 135.8
Inventories 437.5
Total Assets 1,124.1
Accounts Payable and accrued expenses 227.0
Short-term borrowings 0.3
Long-term debt, including current portion 714.0
Stockholders’ equity 24.9
Del Monte Foods Company
(in millions, except share data)
For the Three Months Ended June 30,
As Adjusted(1) Historical
2001 2000 2001 2000
—— —— —— ——
Net Sales $ 389.6 $ 319.7 $ 389.6 $ 319.7
Cost of products sold(2) 268.8 200.2 270.6 200.2
Selling, administrative
and general expenses(3) 82.0 82.1 82.3 79.8
Special changes related
to plant consolidation(4) – – 0.6 1.1
——- ——- ——- ——-
Operating income 38.8 37.4 36.1 38.6
Interest expense 16.3 15.7 16.3 15.7
Other income (0.1) – (0.1) –
——- ——- ——- ——-
Income before taxes
and extraordinary item 22.6 21.7 19.9 22.9
Income tax
expense(benefit)(5) 4.5 8.5 5.5 (67.2)
——- ——- ——- ——-
Income before
extraordinary item 18.1 13.2 14.4 90.1
Extraordinary item,
net of tax benefit(6) – – 26.2 0.4
——- ——- ——- ——-
Net income(loss) $ 18.1 $ 13.2 $ (11.8) $ 89.7
======= ======= ======= =======
Diluted earnings
(loss)per share $ 0.34 $ 0.25 $ (0.23) $ 1.70
Diluted weighted
average shares 52,955,242 52,876,217 52,247,551 52,876,217
(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 & S&W businesses, 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 June 30, 2001 excluded step-up of $1.5 million and other one-time costs.
(3) Selling, administrative and general expenses for the three months ended June 30, 2001 have been adjusted to exclude indirect expenses related to acquisitions.
(4) For the three months ended June 30, 2001 and 2000, special charges related to plant consolidation included accelerated depreciation and other restructuring costs related to the consolidation of certain processing plants.
(5) Income taxes, as adjusted, for the year ended June 30, 2000 included the impact of using a 39.0% tax rate. For the year ended June 30, 2001, as adjusted results included income taxes which resulted in an annualized rate of 28.2% which included the benefit of net operating losses, other tax adjustments and reflects the tax effect of the adjustments described in footnote (1) above.
Income taxes for the historical periods presented above included the benefit of net operating losses, other tax adjustments and the reversal of a valuation allowance primarily in fiscal 2000.
(6) The extraordinary loss consists of prepayment premiums and the related write-off of previously capitalized debt issue costs as a result of the May 2001 debt refinancing and early debt retirement in fiscal 2000.
Del Monte Foods Company
(In millions,
except share data)
For the Year Ended June 30,
As adjusted(1) Historical
2001 2000 2001 2000
Net sales $ 1,512.0 $ 1,462.1 $ 1,512.0 $ 1,462.1
Cost of products sold (2) 1,007.0 920.5 1,009.9 920.5
Selling,
administrative and
general expenses (3) 360.6 386.5 361.0 384.2
Special charges
related to plant
consolidation (4) — — 14.6 10.9
———- ———- ———- ———-
Operating income 144.4 155.1 126.5 146.5
Interest expense 74.6 67.1 74.6 67.1
———- ———- ———- ———-
Other Income (5) — — (4.8) —
———- ———- ———- ———-
Income before taxes and
extraordinary item 69.8 88.0 56.7 79.4
Income tax expense
(benefit) (6) 19.7 34.3 16.7 (53.6)
———- ———- ———- ———-
Income tax before
extraordinary item 50.1 53.7 40.0 133.0
Extraordinary item, net
of tax benefit (7) — — 26.2 4.3
Net income $ 50.1 $ 53.7 $ 13.8 $ 128.7
========== ========== ========== ==========
Diluted earnings
per share $ 0.95 $ 1.01 $ 0.26 $ 2.42
Diluted weighted
average shares 52,767,734 53,097,898 52,767,734 53,097,898
(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 & S&W businesses, 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 year ended June 30, 2001 excluded step-up of $2.6 million and other one-time costs.
(3) Selling, administrative and general expenses for the year ended June 30, 2001 have been adjusted to exclude indirect expenses related to acquisitions.
(4) For the year ended June 30, 2001 and 2000, special charges related to plant consolidation included accelerated depreciation and other restructuring costs related to the consolidation of certain processing plants.
(5) For the year ended June 30, 2001, the reversal of an accrual on a contingent liability was excluded from the as adjusted results.
(6) Income taxes, as adjusted, for the year ended June 30, 2000 included the impact of using a 39.0% tax rate. For the year ended June 30, 2001, as adjusted results included income taxes at an annualized rate of 28.2% which included the benefit of net operating losses, other tax adjustments and reflects the tax effect of the adjustments described in footnote (1) above. Income taxes for the historical periods presented above included the benefit of net operating losses, other tax adjustments and the reversal of a valuation allowance primarily in fiscal 2000.
(7) The extraordinary loss consists of prepayment premiums and the related write-off of previously capitalized debt issue costs as a result of the May 2001 debt refinancing and early debt retirement in fiscal 2000.
