Dreyer’s Grand Ice Cream, Inc. (NNM:DRYR) today announced results for the third quarter ended September 29, 2001. The company earned $.17 per diluted common share in the quarter compared with earnings of $.31 per diluted common share for the third quarter of 2000. The decrease in earnings largely reflects the effect of higher commodity costs, particularly for dairy ingredients.
Operating Results
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Consolidated sales for the thirteen weeks ended September 29, 2001 were $419,911,000, an increase of 22 percent over sales of $345,017,000 in the third quarter of 2000. Net income for the third quarter was $6,048,000, or $.17 per diluted common share, a $4,942,000 decrease from net income of $10,990,000, or $.31 per diluted common share, in the third quarter of 2000.
Consolidated sales for the thirty-nine weeks ended September 29, 2001 were $1,076,773,000, an increase of 18 percent over sales of $909,256,000 in the same period last year. The company recorded year-to-date net income of $8,657,000, or $.24 per diluted common share, a $17,515,000 decrease from net income of $26,172,000, or $0.75 per diluted common share, in the same period of 2000.
Sales of the company’s branded products increased nine percent in the quarter. The increase was led by sales of premium Dreyer’s and Edy’s Grand Ice Cream, sales of the company’s superpremium portfolio, most notably Dreamery and Whole Fruit Sorbet, and Whole Fruit Bars.
Sales of partner brands, products distributed for other manufacturers, increased 51 percent and accounted for 38 percent of sales in the quarter. The increase continues to be 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 $5,504,000 to $98,744,000 in the quarter, representing a 24 percent gross margin for the period compared with a 27 percent gross margin in the third quarter of 2000. The cost of cream, the company’s primary ingredient, continued to rise during the quarter resulting in a $12.0 million pre-tax cost impact versus the same quarter last year, and a $27.0 million year-to-date impact versus prior year.
Selling, general and administrative expenses increased by 20 percent, or $14,416,000, for the third quarter to $87,012,000, representing a slight decrease as a percent of sales from the same quarter of last year. The dollar 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: “We are very encouraged by the current trends in our business. Clearly, our third quarter results suffered from the continuing effects of the extraordinary spike in butter costs this year, and from the impact of related ice cream industry price increases on consumer demand. However, our sales, particularly in company brands, enjoyed a strong recovery in August and September, and that trend has continued into the fourth quarter. At the same time, the price of butter, which determines our dairy costs, has dropped by almost 45 percent since late September, reflecting the artificial nature of the previous price level. The combination of strengthening sales and sharply declining dairy costs increases our confidence that we will end 2001 with a very strong base for profit growth in 2002 and beyond.”
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. Other 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.
For further information contact: William C. Collett 510/601-4339
Condensed Consolidated Statement of Income
(In thousands, except per share amounts – unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
Sep. 29, Sep. 23, Sep. 29, Sep. 23,
2001 2000 2001 2000
Revenues:
Sales $419,911 $345,017 $1,076,773 $909,256
Other income 1,029 531 2,198 3,660
——- ——- ——— ——-
420,940 345,548 1,078,971 912,916
Costs and expenses:
Cost of goods
sold 321,167 251,777 832,496 669,780
Selling, general
and administrative 87,012 72,596 223,144 191,801
Interest, net of
amounts
capitalized 2,814 3,420 9,092 9,053
——- ——- ——— ——-
410,993 327,793 1,064,732 870,634
Income before income
tax provision 9,947 17,755 14,239 42,282
Income tax provision 3,899 6,765 5,582 16,110
Net income 6,048 10,990 8,657 26,172
Preferred dividends
and accretion – 280 560 840
Net income available
to common
stockholders $6,048 $10,710 $ 8,097 $ 25,332
====== ======= ======= ========
Weighted average
common shares
outstanding
– diluted 36,221 35,407 36,218 35,092
====== ====== ====== ========
Net income
per common share
– diluted $ .17 $ .31 $ .24 $ .75
======== ======== ======== ========
Dividends per
common share $ .06 $ .03 $ .18 $ .09
======== ======== ========= =========
Condensed Consolidated Balance Sheet
(In thousands)
Sep. 29, 2001 Dec. 30, 2000
————- ————-
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 2,529 $ 2,721
Receivables 149,210 95,012
Inventories 81,489 68,801
Prepaid expenses and other 10,345 11,534
—— ——
Total current assets 243,573 178,068
Property, plant and
equipment, net 195,387 190,833
Goodwill, distribution
rights and other
intangibles, net 94,903 92,892
Other assets 5,842 6,658
—— ——
Total assets $539,705 $468,451
======== ========
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and
accrued liabilities $148,167 $105,019
Current portion of long-term
debt – 15,043
—— ——
Total current liabilities 148,167 120,062
Long-term debt, less current
portion 156,771 121,214
Deferred income taxes 26,322 26,263
—— ——
Total liabilities 331,260 267,539
Redeemable preferred stock – 100,540
Stockholders’ equity 208,445 100,372
——- ——-
Total liabilities and
stockholders’ equity $539,705 $468,451
======== ========
