Dreyer’s Grand Ice Cream, Inc. (NNM:DRYR) today announced results for the first quarter ended March 31, 2001. The Company reported a $(.17) loss per diluted common share in the quarter compared to net income of $.08 per diluted common share for the first quarter of 2000. The loss, which is in the range previously disclosed by the Company, was due largely to the effect of higher commodity costs, particularly for dairy ingredients.
Net loss for the first quarter was $(4,886,000), or $(.17) per diluted common share, compared with net income of $2,386,000, or $.08 per diluted common share, in the first quarter of 2000.
Consolidated sales for the thirteen-week period ended March 31, 2001, were $272,029,000, an increase of 13 percent over sales of $240,419,000 in the first quarter of 2000. Sales of the Company’s branded products increased three percent for the quarter to $178,032,000. Price increases on premium ice cream implemented in the fourth quarter of 2000, especially in the West, dampened sales on those products in January and February. However, premium dollar sales recovered in March, growing by about 15 percent versus prior year, and total sales grew by about 19 percent for the month.
Sales of partner brands, products distributed for other manufacturers, increased 38 percent in the quarter, driven largely by the acquisition of independent distributors in 2000 and by increased sales of Ben & Jerry‘s Homemade, Inc. superpremium products. The Company began distributing Ben & Jerry’s products to a larger distribution territory during the month of March and is now the distributor of Ben & Jerry’s products for the grocery channel in all of Dreyer’s company-operated markets across the country. As a result of these factors, partner brand sales accounted for 35 percent of sales, up from 28 percent of sales in the same quarter of 2000.
The Company’s gross profit decreased by $2,563,000 to $54,652,000, representing a 20 percent gross margin for the first quarter compared with a 24 percent gross margin in the same quarter of 2000. The cost of cream, the Company’s primary ingredient, and the cost of certain other ingredients, including vanilla and other flavorings, rose sharply during the quarter. The impact of the change in dairy raw material costs for the quarter was a $5.0 million pre-tax cost versus last year. Gross margin was also affected by integration and other costs associated with recent acquisitions, higher energy costs and increased distribution expenses incurred in the rollout of additional distribution territories for Ben & Jerry’s products.
Selling, general and administrative expenses increased by 14 percent, or $7,458,000, for the first quarter to $59,036,000, or 22 percent of sales, virtually unchanged from the same quarter of last year. The increase in SG&A expenses reflects higher promotion expenses and increases in other overhead costs.
T. Gary Rogers, chairman and chief executive officer of Dreyer’s, had the following comments on the quarterly results: “Our first quarter loss is in line with the disclosure we made earlier in April. While ingredient and energy costs are depressing our earnings in the near term, we are encouraged by strong sales growth in March and April. We believe that our current cost problems will subside and will not affect our core strategy of leveraging our brand leadership and distribution clout to build a preeminent company. We continue to gain competitive advantage from these two fundamental elements of our strategy and believe that this period of uncertainty is likely to further accelerate the consolidation already underway in our industry and ultimately strengthen our position as the nation’s leading brand.”
Dreyer’s Grand Ice Cream, Inc. manufactures and distributes a full spectrum of premium and superpremium ice creams. The Company’s product lines are marketed under the Dreyer’s brand name throughout the thirteen western states, Texas and certain markets in the Far East, and under the Edy’s name throughout the remainder of the United States. Taken together, Dreyer’s and Edy’s is the best-selling brand of packaged ice cream and other premium frozen dairy dessert products in the country. Brands currently manufactured and distributed by Dreyer’s include Homemade, Whole Fruit Sorbet, Starbucks®, Godiva®, Dreamery(TM), M&M/Mars and Healthy Choice®. For more information on the Company and its products, please visit the Dreyer’s website at www.icecream.com.
Certain statements contained in this press release, the forthcoming conference call, simultaneous webcast and audio replay are forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company’s actual actions or results to differ materially from those contained in the forward-looking statements. Specific factors that might cause such a difference include, but are not limited to, the following: the Company’s ability to achieve efficiencies in its manufacturing and distribution operations without negatively affecting sales; the cost of energy used in manufacturing and distribution; the cost of dairy raw materials and other commodities used in the Company’s products; competitors’ marketing and promotion responses; market conditions affecting the prices of the Company’s products; the Company’s ability to increase sales of its own branded products; and responsiveness of both the trade and consumers to the Company’s new products and marketing and promotional programs.
Dreyer’s Grand Ice Cream, Inc.
First Quarter 2001
Consolidated Financial Statements
Consolidated Statement of Operations
(In thousands, except per share amounts, unaudited)
Thirteen Weeks Ended
Mar. 31, 2001 Mar. 25, 2000
Sales $ 272,029 $ 240,419
Other income 239 1,328
Costs and expenses:
Cost of goods sold 217,377 183,204
Selling, general and
administrative 59,036 51,578
Interest, net of amounts
capitalized 3,014 2,658
(Loss) income before tax
(benefit) provision (7,159) 4,307
Income tax (benefit) provision (2,727) 1,641
Net (loss) income (4,432) 2,666
Preferred dividends and
accretion 454 280
Net (loss) income available to
common stockholders $ (4,886) $ 2,386
shares outstanding-diluted 28,370 34,358
Net (loss) income per
common share-diluted $ (.17) $ .08
Dividends per common share $ .06 $ .03
Condensed Consolidated Balance Sheet
Mar. 31, 2001 Dec. 30, 2000
Cash and cash equivalents $ 2,459 $ 2,721
Receivables 131,984 96,120
Inventories 78,356 68,801
Prepaid expenses and other 12,059 11,534
Total current assets 224,858 179,176
Property, plant and equipment, net 190,022 190,833
Goodwill, distribution rights and other
intangibles, net 93,643 92,892
Other assets 4,607 5,550
Total assets $ 513,130 $ 468,451
Liabilities and Stockholders’ Equity
Accounts payable and accrued
liabilities $ 121,686 $ 105,019
Current portion of long-term debt 11,643 15,043
Total current liabilities 133,329 120,062
Long-term debt, less current portion 155,114 121,214
Deferred income taxes 26,235 26,263
Total liabilities 314,678 267,539
Redeemable preferred stock 100,646 100,540
Stockholders’ equity 97,806 100,372
Total liabilities and stockholders’
equity $ 513,130 $ 468,451