Del Monte Foods Company (NYSE: DLM), today reported earnings per share, as adjusted, of $0.24 for the third quarter of fiscal 2001. This compares with $0.23, as adjusted, in the third quarter of fiscal 2000. Net sales for the quarter were $383.4 million, compared to $353.4 million in the comparable prior year period.
The increase in net sales for the quarter was due to increased sales in both retail and non-retail channels. Earnings per share, as adjusted, reflect these higher volumes, somewhat offset by higher production costs and an unfavorable mix as the Company continued to sell excess inventories by increasing sales through the lower margin non-retail channels.
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“Overall, we are pleased with the results for the quarter,” said Richard G. Wolford, Chairman and Chief Executive Officer. “Our revenues were up 8.5% over the third quarter of last year. Consumer purchases of Del Monte products continue to be strong with vegetable consumption up 5%, and solid tomatoes up 14%. Like other grocery manufacturers, however, our shipments to our trade customers lagged consumer purchases as retailers continued to reduce their inventory levels.
“During the quarter, we were also very pleased to complete our acquisition of S&W, which is consistent with our strategy to grow with premium branded businesses that expand our markets and leverage our selling and operating infrastructure. The S&W acquisition is expected to be accretive to earnings per share and EBITDA beginning in fiscal 2002.”
Net income, as adjusted, for the quarter was $12.8 million compared to $12.0 million for the same quarter last year. EBITDA, as adjusted, for the quarter was $44.3 million compared to $43.4 million in the same quarter last year.
As adjusted results exclude special charges related to plant consolidations and other non-recurring items and use an income tax rate of 32.1% compared to the 39.0% rate used last year. The Company’s effective income tax rate for this year includes the benefit of net operating losses and other tax adjustments.
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By GlobalDataActual diluted earnings per share for the third quarter ended March 31, 2001 were $0.20 per share compared to $0.18 per share in last year’s third quarter, and net income was $10.7 million compared to $9.3 million last year.
Nine Months Ended March 31, 2001
Net sales for the first nine months of fiscal 2001 were $1,122.4 million compared to net sales of $1,142.4 million for the same period last year. Net income, as adjusted, for the first nine months was $32.0 million compared to $40.5 million for the first nine months of last year. Earnings per share, as adjusted, for the first nine months of fiscal 2001 were $0.61, compared to $0.76 for the first nine months of fiscal 2000. EBITDA, as adjusted, for the first nine months of fiscal 2001 was $129.6 million compared to $142.0 million for the comparable period last year.
The decline in net sales for the nine months, when compared to the prior year period, reflects the impact of unusually high Y2K-related sales volumes in the first half of fiscal 2000. Earnings per share, as adjusted, decreased primarily due to lower volumes and higher production costs in the current year.
Actual diluted earnings per share for the first nine months of fiscal 2001 were $0.49 per share compared to $0.73 per share in the prior year period, and net income was $25.6 million compared to $39.0 million last year.
Outlook
For the full fiscal year 2001, the Company continues to expect that net sales will be approximately 2% to 4% higher than in fiscal 2000, including the impact of the March 2001 acquisition of S&W (or 1% to 2% excluding S&W). Adjusted earnings per share for fiscal 2001 are expected to be approximately $0.83 to $0.90 (or $0.88 to $0.92 excluding S&W). Adjusted EBITDA is expected to range from $173 million to $179 million for the full year (or $175 million to $179 million excluding the impact of S&W).
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 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 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.
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 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
(In millions) March 31,
2001
———
Cash and cash equivalents $8.9
Trade accounts receivable, net of allowance 140.3
Inventories 535.2
Total assets 1,192.0
Accounts payable and accrued expenses 272.1
Short-term borrowings 167.5
Long-term debt, including current portion 558.1
Stockholders’ equity 36.5
Del Monte Foods Company
(In millions, except share data)
For the Three Months Ended March 31,
As Adjusted (1) Historical
2001 2000 2001 2000
—- —- —- —-
Net sales $383.4 $353.3 $383.4 $353.3
Cost of products sold(2) 257.1 224.3 257.3 224.3
Selling, administrative
and general expenses 89.7 92.6 89.7 92.6
Special charges related
to plant consolidation(3) – – 1.5 2.4
——– ——— ——- ——-
Operating income 36.6 36.4 34.9 34.0
Interest expense 18.8 16.6 18.8 16.6
Other expense – 0.2 – 0.2
——– ——- ——— ——-
Income before taxes and
extraordinary item 17.8 19.6 16.1 17.2
Income taxes(4) 5.0 7.6 5.4 4.0
——- ——- ——- ——-
Income before
extraordinary item 12.8 12.0 10.7 13.2
Extraordinary item, net
of tax benefit – – – 3.9
Net income available to
common shares $12.8 $12.0 $10.7 $9.3
===== ===== ===== ====
Diluted earnings per
common share $0.24 $0.23 $0.20 $0.18
Weighted average
shares 53,014,103 53,004,443 53,014,103 53,004,443
(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 March 31, 2001 excluded step-up of
$0.2 million.
(3) For the three months ended March 31, 2001 and 2000, special
charges related to plant consolidation included accelerated
depreciation and other restructuring costs related to the
consolidation of certain processing plants.
(4) Income taxes, as adjusted, for the three months ended March
31, 2000 included the impact of using a 39.0% tax rate. For
the three months ended March 31, 2001, as adjusted results
included income taxes at an annualized rate of 32.1%, which
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
and other tax adjustments.
Del Monte Foods Company
(In millions, except share data)
For the Nine Months Ended March 31,
As Adjusted (1) Historical
2001 2000 2001 2000
—- —- —- —-
Net sales $1,122.4 $1,142.4 $1,122.4 $1,142.4
Cost of products sold(2) 738.2 720.3 739.3 720.3
Selling, administrative
and general expenses(3) 278.6 304.4 278.7 304.4
Special charges related
to plant consolidation(4) – – 14.0 9.8
——– ——– ——– ——-
Operating income 105.6 117.7 90.4 107.9
Interest expense 58.3 51.2 58.3 51.2
Other expense/(income)(5) 0.1 0.2 (4.7) 0.2
——- ——- ——- ——-
Income before taxes and
extraordinary item 47.2 66.3 36.8 56.5
Income taxes (6) 15.2 25.8 11.2 13.6
—— —— —— ——
Income before
extraordinary item 32.0 40.5 25.6 42.9
Extraordinary item, net
of tax benefit – – – 3.9
Net income available to
common shares $32.0 $40.5 $25.6 $39.0
===== ===== ===== =====
Diluted earnings per
common share $0.61 $0.76 $0.49 $0.73
Weighted average
shares 52,692,344 53,147,206 52,692,344 53,147,206
(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 nine months ended March 31, 2001 excluded step-up of
$1.1 million.
(3) Selling, administrative and general expenses for the nine
months ended March 31, 2001 have been adjusted to exclude
indirect expenses related to the acquisition of Sunfresh.
(4) For the nine months ended March 31, 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 nine months ended March 31, 2001, the reversal of an
accrual on a contingent liability was excluded from the as
adjusted results.
(6) Income taxes, as adjusted, for the nine months ended March 31,
2000 included the impact of using a 39.0% tax rate. For the
nine months ended March 31, 2001, as adjusted results included
income taxes at an annualized rate of 32.1%, which 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 and other tax
adjustments.
