Dreyer’s Grand Ice Cream, Inc. (Nasdaq:DRYR) today announced results for the second quarter ended June 30, 2001. The company earned $.20 per diluted common share in the quarter compared with earnings of $.35 per diluted common share for the second quarter of 2000. The decrease in earnings was due largely to the effect of higher commodity costs, particularly for dairy ingredients.
Operating Results
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Consolidated sales for the thirteen weeks ended June 30, 2001 were $384,833,000, an increase of 19 percent over sales of $323,820,000 in the second quarter of 2000. Net income for the second quarter was $7,041,000, or $.20 per diluted common share, a $5,475,000 decrease from net income of $12,516,000, or $.35 per diluted common share, in the second quarter of 2000.
Consolidated sales for the twenty-six weeks ended June 30, 2001 were $656,862,000, an increase of 16 percent over sales of $564,239,000 in the same period last year. The company recorded year-to-date net income of $2,609,000, or $.07 per diluted common share, a $12,573,000 decrease from net income of $15,182,000, or $0.44 per diluted common share, in the same period of 2000.
Sales of the company’s branded products increased four percent in the quarter. The increase was led by sales of premium Dreyer’s and Edy’s Grand Ice Cream, Whole Fruit Bars and the Dreyer’s and Edy’s “better for you” portfolio, while sales of the company’s superpremium portfolio decreased slightly compared to the same quarter in 2000.
Sales of partner brands, products distributed for other manufacturers, increased 56 percent and accounted for 38 percent of sales in the quarter. The increase was driven largely by the acquisition of independent distributors in 2000 and by increased sales of Ben & Jerry’s Homemade, Inc. superpremium products. The company expanded its distribution of Ben & Jerry’s products in the grocery channel to all of Dreyer’s company-operated markets in March 2001.
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By GlobalDataGross profit increased by $1,860,000 to $90,881,000 in the quarter, representing a 24 percent gross margin for the period compared with a 27 percent gross margin in the second quarter of 2000. The cost of cream, the company’s primary ingredient, continued to rise and remained at comparatively high levels during the quarter, resulting in a $10.0 million pre-tax cost impact versus the same quarter 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 for the second quarter to $77,096,000 but, at 20 percent of sales, were one percentage point lower than in the same quarter of 2000. The increase in SG&A expenses primarily reflects trade and consumer promotion spending and to a lesser extent increases in administrative expenses.
Chairman’s Comments
T. Gary Rogers, Chairman and Chief Executive Officer of Dreyer’s, had the following comments on the quarterly results: “The price of dairy raw materials rose and remained high for the first half of 2001 despite a more-than-adequate supply of milk and plentiful inventories of butter and cheese. We continue to believe that the current price of cream is economically unjustified and will eventually decrease. However, high dairy costs have resulted in substantial price increases across the entire ice cream category. Consumer resistance to these price increases has resulted in a decline in category volume following several years of steady growth. Although this has had an effect on our sales growth, the strength of our brands and the power of our distribution system have allowed us to continue growing in the face of these adversities. We continue to gain competitive advantage from these two fundamental elements of our strategy and believe that we will be well-positioned as the industry emerges from this short-term cycle.”
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 brand 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 websites at www.dreyersinc.com and www.dreyers.com.
Forward-Looking Statements
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 at the time such statements are made in a press release, conference call or webcast, or are recorded for later audio replay. Such known and unknown risks and uncertainties 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.
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Condensed Consolidated Statement of Income
(In thousands, except per share amounts — unaudited)
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 30, June 24, June 30, June 24,
2001 2000 2001 2000
——– ——– ——– ——–
Revenues:
Sales $384,833 $323,820 $656,862 $564,239
Other income 930 1,801 1,169 3,129
——– ——– ——– ——–
385,763 325,621 658,031 567,368
——– ——– ——– ——–
Costs and expenses:
Cost of goods sold 293,952 234,799 511,329 418,003
Selling, general
and administrative 77,096 67,627 136,132 119,205
Interest, net of
amounts capitalized 3,264 2,975 6,278 5,633
——– ——– ——– ——–
374,312 305,401 653,739 542,841
——– ——– ——– ——–
Income before income
tax provision 11,451 20,220 4,292 24,527
Income tax provision 4,410 7,704 1,683 9,345
——– ——– ——– ——–
Net income 7,041 12,516 2,609 15,182
Preferred dividends
and accretion 106 280 560 560
——– ——– ——– ——–
Net income available
to common stockholders $ 6,935 $ 12,236 $ 2,049 $ 14,622
======== ======== ======== ========
Weighted-average
common shares
outstanding (diluted) 36,107 35,454 36,194 34,855
======== ======== ======== ========
Net income per
common share (diluted) $ .20 $ .35 $ .07 $ .44
======== ======== ======== ========
Dividends per
common share $ .06 $ .03 $ .12 $ .06
======== ======== ======== ========
Condensed Consolidated Balance Sheet
(In thousands)
June 30, 2001 Dec. 30, 2000
————- ————-
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 5,251 $ 2,721
Receivables 155,550 95,663
Inventories 84,866 68,801
Prepaid expenses and other 11,921 11,534
——– ——–
Total current assets 257,588 178,719
Property, plant and equipment, net 196,328 190,833
Goodwill, distribution rights and
other intangibles, net 94,799 92,892
Other assets 6,240 6,007
——– ——–
Total assets $554,955 $468,451
======== ========
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued
liabilities $152,205 $105,019
Current portion of long-term
debt 11,643 15,043
——– ——–
Total current liabilities 163,848 120,062
Long-term debt, less current
portion 161,371 121,214
Deferred income taxes 26,281 26,263
——– ——–
Total liabilities 351,500 267,539
Redeemable preferred stock — 100,540
Stockholders’ equity 203,455 100,372
——– ——–
Total liabilities and
stockholders’ equity $554,955 $468,451
======== ========
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