DALLAS, Nov. 7, 2016 /PRNewswire/ -- Dean Foods
Company (NYSE: DF) today reported third quarter 2016
results.
Highlights
- Q3 volume change of -1% year-over-year
represents strongest volume performance in at least 4 years;
continued volume improvement expected in the fourth
quarter
- Q3 net income per diluted share was
$0.16 and adjusted net income per
diluted share was $0.37
- Q4 2016 adjusted diluted earnings per
share(1) are expected to be $0.37
to $0.45
Chief Executive Officer Gregg
Tanner said, "I am extremely pleased with our third quarter
results, which reflect the strongest volume performance we've seen
in years, a disciplined go-to-market strategy and continued focus
on reducing costs. Our entire organization is focused on executing
our strategic plan, and you see that in our results."
Third Quarter 2016 Operating Results
Financial Summary
*
|
|
Three Months
Ended
September 30
|
|
Nine Months
Ended
September 30
|
(In millions,
except per share amounts)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
489
|
|
|
$
|
492
|
|
|
$
|
1,486
|
|
|
$
|
1,466
|
|
Adjusted
|
|
$
|
493
|
|
|
$
|
492
|
|
|
$
|
1,488
|
|
|
$
|
1,465
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
42
|
|
|
$
|
50
|
|
|
$
|
193
|
|
|
$
|
48
|
|
Adjusted
|
|
$
|
69
|
|
|
$
|
62
|
|
|
$
|
223
|
|
|
$
|
181
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
51
|
|
Adjusted
|
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
50
|
|
|
$
|
49
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
15
|
|
|
$
|
20
|
|
|
$
|
87
|
|
|
$
|
(27)
|
|
Adjusted
|
|
$
|
33
|
|
|
$
|
28
|
|
|
$
|
110
|
|
|
$
|
82
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings
(Loss) Per Share (EPS)
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.95
|
|
|
$
|
(0.29)
|
|
Adjusted
|
|
$
|
0.37
|
|
|
$
|
0.30
|
|
|
$
|
1.20
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
* Adjustments to GAAP
due to the exclusion of expenses, gains or losses associated with
certain transactions and other non-recurring items are described
and reconciled to the comparable GAAP amounts in the attached
tables.
|
|
|
(1)
|
Please refer to
"Forward Outlook" and "Non-GAAP Financial Measures" for additional
information. We provide guidance on a non-GAAP basis and are unable
to provide a full reconciliation to GAAP without unreasonable
efforts as we cannot predict the amount or timing of certain
elements which are included in reported GAAP results, including
mark-to-market adjustments of hedging activities, asset impairment
charges, and other non-recurring events or transactions that may
have a significant impact to reported GAAP results.
|
The third quarter 2016 average Class I Mover, a measure of raw
milk costs, was $15.11 per
hundred-weight, an approximately 12% sequential increase from the
second quarter 2016 and a decrease of nearly 8% from the third
quarter 2015. The fourth quarter 2016 average Class I Mover
forecast of $15.96 per hundred-weight
represents an approximately 6% increase sequentially but an
approximately 2% decline year-over-year.
Total volume across all products was 651 million gallons for the
third quarter 2016, a 1.0% decline compared to total volume of 658
million gallons in the third quarter 2015, and represents the
healthiest year-over-year volume performance the Company has
delivered in at least four years. For the
fourth quarter 2016, the Company expects continued improvement in
total volume performance.
Based on fluid milk sales data published by the USDA through
August, fluid milk volumes decreased 0.9% year-over-year in the
third quarter of 2016 on an unadjusted basis. On this same basis,
Dean Foods' share of U.S. fluid milk volumes increased by 60 basis
points sequentially to 35.1% for the quarter-to-date through
August.
Cash Flow
Net cash provided by continuing operations for the nine months
ended September 30, 2016 totaled $185
million. Free cash flow provided by continuing operations,
which is defined as net cash provided by continuing operations less
capital expenditures, was $103
million for the nine months ended September 30, 2016, a
$138 million decrease as compared to
the prior year period. Year-to-date free cash flow is comparable to
the prior year period after reconciling for higher incentive
compensation payouts in the first quarter 2016 and the $56 million associated with the Company's 2014
Federal Tax refund received in the first quarter 2015. Capital
expenditures totaled $36 million for
the quarter.
Debt
Total outstanding debt at September 30, 2016, net of
$28 million cash on hand, was
approximately $878 million. The
Company's net debt to bank EBITDA total leverage ratio, on an all
cash netted basis, decreased sequentially to 1.92 times at the end
of the third quarter 2016 due to strong free cash flow, increased
bank EBITDA, and the acquisition of the Friendly's ice cream
business, which was completed in June.
Forward Outlook
"For the fourth quarter, with improving volume performance, in
addition to continued pricing and cost discipline, we expect the
fourth quarter to be our eighth consecutive quarter of
year-over-year adjusted operating income improvement. All told, we
expect adjusted diluted earnings of between $0.37 and $0.45 per share," concluded Tanner.
We provide guidance on a non-GAAP basis and are unable to
provide a full reconciliation to GAAP without unreasonable efforts
as we cannot predict the amount or timing of certain elements which
are included in reported GAAP results, including mark-to-market
adjustments of hedging activities, asset impairment charges, and
other non-recurring events or transactions that may have a
significant impact to reported GAAP results.
Non-GAAP Financial Measures
In addition to the results prepared in accordance with U.S.
Generally Accepted Accounting Principles ("GAAP"), we have
presented certain non-GAAP financial measures, including Adjusted
gross profit, Adjusted selling and distribution expenses, Adjusted
general and administrative expenses, Adjusted total operating costs
and expenses, Adjusted operating income, Adjusted interest expense,
Adjusted net income (loss), Adjusted earnings (loss) per diluted
share, Adjusted EBITDA, Free Cash Flow and total leverage ratio,
each as described below.
This non-GAAP financial information is provided as supplemental
information for investors and is not in accordance with, or an
alternative to, GAAP. Additionally, these non-GAAP measures may be
different than similar measures used by other companies.
We believe that the presentation of these non-GAAP financial
measures, when considered together with our GAAP financial measures
and the reconciliations to the corresponding GAAP financial
measures, provides investors with a more complete understanding of
the factors and trends affecting our business than could be
obtained absent these disclosures. Our management uses these
non-GAAP financial measures when evaluating our performance, when
making decisions regarding the allocation of resources, in
determining incentive compensation for management, and in
determining earnings estimates.
A full reconciliation of these non-GAAP financial measures to
the most directly comparable GAAP measures for the three and nine
months ended September 30, 2016 and 2015 is set forth in the
tables herein.
Adjusted Operating Results
We have supplemented the presentation of our reported GAAP gross
profit, selling and distribution expenses, general and
administrative expenses, total operating costs and expenses,
operating income, interest expense, net income (loss) and earnings
(loss) per diluted share, with non-GAAP measures that adjust the
GAAP measures to exclude the impact of the following (as
applicable):
- asset impairment charges;
- incremental non-cash trademark amortization triggered by the
launch of a national fresh white milk brand;
- closed deal costs;
- facility closing, reorganization and realignment costs;
- debt issuance costs;
- costs associated with the early retirement of long-term
debt;
- gains (losses) on the mark-to-market of our derivative
contracts;
- separation costs;
- interest accretion in connection with litigation
settlements;
- gains or losses related to discontinued operations and
divestitures;
- income tax impacts of the foregoing adjustments; and
- adjustments to normalize our income tax expense at a rate of
38%.
We believe these non-GAAP measures provide useful information to
investors by excluding expenses, gains or losses that are not
indicative of the company's core operating performance. In
addition, we cannot predict the timing and amount of gains or
losses associated with such items. We believe these non-GAAP
measures provide more accurate comparisons of our ongoing business
operations and are better indicators of trends in our underlying
business. In addition, these adjustments are consistent with how
management views our business. Management uses these non-GAAP
financial measures in making financial, operating and planning
decisions and evaluating the company's ongoing performance.
Further, adjusted gross profit and adjusted operating income are
used by management to evaluate key performance indicators of brand
mix and low cost, respectively.
Adjusted EBITDA
Adjusted EBITDA is defined as net income before interest
expense, income tax expense, depreciation and amortization, as
further adjusted to exclude the impact of the adjustments discussed
under "Adjusted Operating Results" above (other than the normalized
income tax rate, as Adjusted EBITDA excludes the full amount of
income tax expense). This information is provided to assist
investors in making meaningful comparisons of our operating
performance between periods and to view our business from the same
perspective as our management. We believe Adjusted EBITDA is a
useful measure for analyzing the performance of our business and is
a widely-accepted indicator of our ability to incur and service
indebtedness and generate free cash flow. We also believe that
EBITDA measures are commonly reported and widely used by investors
and other interested parties as measures of a company's operating
performance and debt servicing ability because such measures assist
in comparing performance on a consistent basis without regard to
capital structure, depreciation or amortization (which can vary
significantly) and non-operating factors (such as historical
cost).
Total Leverage Ratio
Our total leverage ratio is calculated as net debt divided by
Bank EBITDA for the trailing four quarters. Net debt is calculated
as consolidated funded indebtedness in accordance with our credit
agreement, except on an all cash netted basis. Bank EBITDA is
calculated as Adjusted EBITDA, as further adjusted to exclude
certain non-cash and non-recurring or extraordinary expenses as
permitted in calculating covenant compliance under our credit
agreement. Management believes analysts and investors commonly use
our total leverage ratio as an indicator of our ability to service
existing debt and our liquidity.
Free Cash Flow
We define Free Cash Flow as net cash provided by operating
activities from continuing operations less cash payments for
capital expenditures. We believe Free Cash Flow is a meaningful
non-GAAP measure that offers supplemental information and insight
regarding the liquidity of our operations and our ability to
generate sufficient cash flow to, among other things, repay debt,
invest in our business and repurchase shares of our common stock. A
limitation of Free Cash Flow is that it does not represent the
total increase or decrease in the cash balance for the period.
Conference Call/Webcast
A webcast to discuss the Company's financial results and outlook
will be held at 10:00 a.m. ET today
and may be heard live by clicking the earnings button on the
Company's website at http://www.deanfoods.com. A slide presentation
will accompany the webcast.
About Dean Foods
Dean Foods is a leading food and beverage company and the
largest processor and direct-to-store distributor of fresh fluid
milk and other dairy and dairy case products in the United States. Headquartered in
Dallas, Texas, the Dean Foods
portfolio includes DairyPure®, the country's
first and largest fresh, white milk national brand, and
TruMoo®, the leading national flavored milk brand, along
with well-known regional dairy brands such as Alta Dena®, Berkeley
Farms®, Country Fresh®,
Dean's®, Friendly's®,
Garelick Farms®, LAND O LAKES®*
milk and cultured products*, Lehigh Valley Dairy
Farms®, Mayfield®,
McArthur®, Meadow Gold®, Oak
Farms®, PET®**, T.G. Lee®,
Tuscan® and more. In all, Dean Foods has more
than 50 national, regional and local dairy brands as well as
private labels. Dean Foods also makes and distributes ice cream,
cultured products, juices, teas, and bottled water. Almost 17,000
employees across the country work every day to make Dean Foods the
most admired and trusted provider of wholesome, great-tasting dairy
products at every occasion. For more information about Dean Foods
and its brands, visit www.deanfoods.com.
*The LAND O LAKES brand is owned by Land O'Lakes, Inc. and is
used by license.
**PET is a trademark of Eagle Family Foods Group LLC, under
license.
Some of the statements made in this press release are
"forward-looking" and are made pursuant to the safe harbor
provision of the Private Securities Litigation Reform Act of 1995,
including statements relating to: (1) our financial forecast,
including projected sales (including specific product lines and the
Company as a whole), total volume, price realization, profit
margins, net income, earnings per share, free cash flow, our
leverage ratio, and debt covenant compliance, (2) the Company's
regional and national branding and marketing initiatives, (3) the
Company's innovation, research and development plans and its
ability to successfully launch new products or brands, (4)
commodity prices and other inputs and the Company's ability to
forecast or predict commodity prices, milk production and milk
exports, (5) the Company's cost-savings initiatives, including
plant closures and route reductions, and its ability to achieve
expected savings, (6) planned capital expenditures, (7) the status
of the Company's litigation matters, (8) the Company's plans
related to its capital structure, (9) the Company's dividend
policy, (10) possible repurchases of shares of the Company's common
stock, and (11) potential acquisitions. These statements involve
risks and uncertainties that may cause results to differ materially
from those set forth in this press release, including the risks
disclosed by the Company in its filings with the Securities and
Exchange Commission. Financial projections are based on a number of
assumptions. Actual results could be materially different
than projected if those assumptions are erroneous. The cost
and supply of commodities and other raw materials are determined by
market forces over which the Company has limited or no control.
Sales, operating income, net income, debt covenant compliance,
financial performance and earnings per share can vary based on a
variety of economic, governmental and competitive factors, which
are identified in the Company's filings with the Securities and
Exchange Commission. The Company's ability to profit from its
branding and marketing initiatives depends on a number of factors
including consumer acceptance of its products. The
declaration and payment of cash dividends under the Company's
dividend policy remains at the sole discretion of the Board of
Directors and will depend upon its financial results, cash
requirements, future prospects, restrictions in its credit
agreement and debt covenant compliance, applicable law and other
factors that may be deemed relevant by the Board. All
forward-looking statements in this press release speak only as of
the date of this press release. The Company expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any such statements to reflect any change
in its expectations with regard thereto or any changes in the
events, conditions or circumstances on which any such statement is
based except as required by law.
CONTACT: Corporate Communications, Jamaison Schuler, +1-214-721-7766; or Investor
Relations, Sherri Baker,
+1-214-303-3438
DEAN FOODS
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
|
|
|
Three Months
Ended September
30
|
|
Nine Months
Ended September
30
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
1,964,601
|
|
|
$
|
2,033,693
|
|
|
$
|
5,692,217
|
|
|
$
|
6,099,161
|
|
Cost of
sales
|
1,475,826
|
|
|
1,541,705
|
|
|
4,206,121
|
|
|
4,633,223
|
|
Gross
profit
|
488,775
|
|
|
491,988
|
|
|
1,486,096
|
|
|
1,465,938
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
Selling and
distribution
|
341,477
|
|
|
347,493
|
|
|
1,005,514
|
|
|
1,023,769
|
|
General and
administrative
|
90,840
|
|
|
84,916
|
|
|
262,605
|
|
|
259,635
|
|
Amortization of
intangibles
|
5,151
|
|
|
6,401
|
|
|
15,596
|
|
|
15,313
|
|
Facility closing and
reorganization costs, net
|
9,297
|
|
|
2,709
|
|
|
9,063
|
|
|
9,362
|
|
Impairment of
intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
109,910
|
|
Total operating costs
and expenses
|
446,765
|
|
|
441,519
|
|
|
1,292,778
|
|
|
1,417,989
|
|
Operating
income
|
42,010
|
|
|
50,469
|
|
|
193,318
|
|
|
47,949
|
|
Other (income)
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
16,564
|
|
|
17,003
|
|
|
50,270
|
|
|
50,505
|
|
Loss on early
retirement of long- term debt
|
—
|
|
|
—
|
|
|
—
|
|
|
43,609
|
|
Other income,
net
|
(1,178)
|
|
|
(964)
|
|
|
(4,385)
|
|
|
(1,704)
|
|
Total other
expense
|
15,386
|
|
|
16,039
|
|
|
45,885
|
|
|
92,410
|
|
Income (loss) from
continuing operations before income taxes
|
26,624
|
|
|
34,430
|
|
|
147,433
|
|
|
(44,461)
|
|
Income tax expense
(benefit)
|
12,098
|
|
|
14,197
|
|
|
60,335
|
|
|
(17,562)
|
|
Income (loss) from
continuing operations
|
14,526
|
|
|
20,233
|
|
|
87,098
|
|
|
(26,899)
|
|
Loss on sale of
discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(89)
|
|
Net income
(loss)
|
$
|
14,526
|
|
|
$
|
20,233
|
|
|
$
|
87,098
|
|
|
$
|
(26,988)
|
|
Average common
shares:
|
|
|
|
|
|
|
|
Basic
|
90,423
|
|
|
93,255
|
|
|
91,077
|
|
|
93,951
|
|
Diluted
|
90,965
|
|
|
93,816
|
|
|
91,695
|
|
|
93,951
|
|
Basic income (loss)
per common share:
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.96
|
|
|
$
|
(0.29)
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
(loss)
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.96
|
|
|
$
|
(0.29)
|
|
Diluted income (loss)
per common share:
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.95
|
|
|
$
|
(0.29)
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income
(loss)
|
$
|
0.16
|
|
|
$
|
0.22
|
|
|
$
|
0.95
|
|
|
$
|
(0.29)
|
|
DEAN FOODS
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
September 30,
2016
|
|
December 31,
2015
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
28,158
|
|
|
$
|
60,734
|
|
Other current
assets
|
|
991,584
|
|
|
1,016,829
|
|
Total current
assets
|
|
1,019,742
|
|
|
1,077,563
|
|
Property, plant
and equipment, net
|
|
1,144,733
|
|
|
1,174,137
|
|
Intangibles and
other assets, net
|
|
403,177
|
|
|
268,463
|
|
Total
|
|
$
|
2,567,652
|
|
|
$
|
2,520,163
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Total current
liabilities, excluding debt
|
|
$
|
681,361
|
|
|
$
|
760,402
|
|
Total long-term
debt, including current portion
|
|
896,082
|
|
|
834,573
|
|
Other long-term
liabilities
|
|
400,320
|
|
|
379,684
|
|
Total
stockholders' equity
|
|
589,889
|
|
|
545,504
|
|
Total
|
|
$
|
2,567,652
|
|
|
$
|
2,520,163
|
|
DEAN FOODS
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
Nine Months
Ended September
30
|
|
|
2016
|
|
2015
|
Operating
Activities
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
|
184,618
|
|
|
$
|
322,028
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Payments for
property, plant and equipment
|
|
(81,305)
|
|
|
(80,629)
|
|
Payments for
acquisitions, net of cash acquired
|
|
(157,321)
|
|
|
—
|
|
Proceeds from sale of
fixed assets
|
|
13,742
|
|
|
15,822
|
|
Net cash used in
investing activities
|
|
(224,884)
|
|
|
(64,807)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Net proceeds
from debt
|
|
58,822
|
|
|
393,671
|
|
Early
retirement of long-term debt
|
|
—
|
|
|
(476,188)
|
|
Premiums paid
on early retirement of long-term debt
|
|
—
|
|
|
(37,309)
|
|
Payments of
financing costs
|
|
—
|
|
|
(16,836)
|
|
Repurchase of
common stock
|
|
(25,000)
|
|
|
(53,010)
|
|
Cash dividends
paid
|
|
(24,681)
|
|
|
(19,784)
|
|
Issuance of
common stock, net of share repurchases for withholding
taxes
|
|
(775)
|
|
|
891
|
|
Other
|
|
678
|
|
|
186
|
|
Net cash
provided by (used in) financing activities
|
|
9,044
|
|
|
(208,379)
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
$
|
(1,354)
|
|
|
$
|
(1,437)
|
|
Change in cash
and cash equivalents
|
|
$
|
(32,576)
|
|
|
$
|
47,405
|
|
Cash and cash
equivalents, beginning of period
|
|
60,734
|
|
|
16,362
|
|
Cash and cash
equivalents, end of period
|
|
$
|
28,158
|
|
|
$
|
63,767
|
|
DEAN FOODS
COMPANY
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
|
Three Months Ended
September 30, 2016
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
Gross
profit
|
$
|
488,775
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,382
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
493,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
341,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
793
|
|
|
—
|
|
|
—
|
|
|
342,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
90,840
|
|
|
—
|
|
|
(350)
|
|
|
—
|
|
|
—
|
|
|
(10,125)
|
|
|
—
|
|
|
80,365
|
|
Amortization of
intangibles
|
5,151
|
|
|
(3,935)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,216
|
|
General and
administrative, including Amortization of intangibles
|
95,991
|
|
|
(3,935)
|
|
|
(350)
|
|
|
—
|
|
|
—
|
|
|
(10,125)
|
|
|
—
|
|
|
81,581
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
446,765
|
|
|
(3,935)
|
|
|
(350)
|
|
|
(9,297)
|
|
|
793
|
|
|
(10,125)
|
|
|
—
|
|
|
423,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
42,010
|
|
|
3,935
|
|
|
350
|
|
|
9,297
|
|
|
3,589
|
|
|
10,125
|
|
|
—
|
|
|
69,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
16,564
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
14,526
|
|
|
3,935
|
|
|
350
|
|
|
9,297
|
|
|
3,589
|
|
|
10,125
|
|
|
(8,392)
|
|
|
33,430
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.16
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.10
|
|
|
$
|
0.04
|
|
|
$
|
0.11
|
|
|
$
|
(0.09)
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2015
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
Gross
profit
|
$
|
491,988
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(46)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
491,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
347,493
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,909)
|
|
|
—
|
|
|
—
|
|
|
344,584
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
84,916
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
84,922
|
|
Amortization of
intangibles
|
6,401
|
|
|
(5,618)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
783
|
|
General and
administrative, including Amortization of intangibles
|
91,317
|
|
|
(5,618)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
85,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
441,519
|
|
|
(5,618)
|
|
|
—
|
|
|
(2,709)
|
|
|
(2,909)
|
|
|
6
|
|
|
—
|
|
|
430,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
50,469
|
|
|
5,618
|
|
|
—
|
|
|
2,709
|
|
|
2,863
|
|
|
(6)
|
|
|
—
|
|
|
61,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
17,003
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(218)
|
|
|
—
|
|
|
16,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
20,233
|
|
|
5,618
|
|
|
—
|
|
|
2,709
|
|
|
2,863
|
|
|
212
|
|
|
(3,218)
|
|
|
28,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.22
|
|
|
$
|
0.06
|
|
|
$
|
—
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
—
|
|
|
$
|
(0.04)
|
|
|
$
|
0.30
|
|
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
(In thousands,
except per share data)
|
|
|
|
Nine Months Ended
September 30, 2016
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
Gross
profit
|
$
|
1,486,096
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,795
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,487,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
1,005,514
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,035
|
|
|
—
|
|
|
—
|
|
|
1,014,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
262,605
|
|
|
—
|
|
|
(4,433)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,125)
|
|
|
—
|
|
|
248,047
|
|
Amortization of
intangibles
|
15,596
|
|
|
(12,908)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,688
|
|
General and
administrative, including Amortization of intangibles
|
278,201
|
|
|
(12,908)
|
|
|
(4,433)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,125)
|
|
|
—
|
|
|
250,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expense
|
1,292,778
|
|
|
(12,908)
|
|
|
(4,433)
|
|
|
(9,063)
|
|
|
—
|
|
|
9,035
|
|
|
(10,125)
|
|
|
—
|
|
|
1,265,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
193,318
|
|
|
12,908
|
|
|
4,433
|
|
|
9,063
|
|
|
—
|
|
|
(7,240)
|
|
|
10,125
|
|
|
—
|
|
|
222,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
50,270
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(436)
|
|
|
—
|
|
|
49,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
87,098
|
|
|
12,908
|
|
|
4,433
|
|
|
9,063
|
|
|
—
|
|
|
(7,240)
|
|
|
10,561
|
|
|
(6,987)
|
|
|
109,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.95
|
|
|
$
|
0.14
|
|
|
$
|
0.05
|
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
$
|
(0.08)
|
|
|
$
|
0.12
|
|
|
$
|
(0.08)
|
|
|
$
|
1.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2015
|
|
|
|
Asset write-
downs
and (gain)
loss on
sale of
assets
|
|
Closed deal
costs
|
|
Facility
closing
and
reorganization
costs, net
|
|
Loss on
early
retirement
of debt
|
|
Mark-to-
market
on
derivative
contracts
|
|
Other
adjustments
|
|
Income
tax
|
|
|
|
GAAP
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
Adjusted*
|
Gross
profit
|
$
|
1,465,938
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,187)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,464,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
1,023,769
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,703)
|
|
|
—
|
|
|
—
|
|
|
1,022,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
259,635
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
259,653
|
|
Amortization of
intangibles
|
15,313
|
|
|
(13,040)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,273
|
|
General and
administrative, including Amortization of intangibles
|
274,948
|
|
|
(13,040)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
261,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
1,417,989
|
|
|
(122,950)
|
|
|
—
|
|
|
(9,362)
|
|
|
—
|
|
|
(1,703)
|
|
|
18
|
|
|
—
|
|
|
1,283,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
47,949
|
|
|
122,950
|
|
|
—
|
|
|
9,362
|
|
|
—
|
|
|
516
|
|
|
(18)
|
|
|
—
|
|
|
180,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
50,505
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,070)
|
|
|
—
|
|
|
49,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(26,988)
|
|
|
122,950
|
|
|
—
|
|
|
9,362
|
|
|
43,609
|
|
|
516
|
|
|
1,141
|
|
|
(68,113)
|
|
|
82,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share (h)
|
$
|
(0.29)
|
|
|
$
|
1.31
|
|
|
$
|
—
|
|
|
$
|
0.10
|
|
|
$
|
0.46
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.73)
|
|
|
$
|
0.87
|
|
|
* See Notes to
Earnings Release Tables
|
DEAN FOODS
COMPANY
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES*
|
(Unaudited)
|
(In thousands,
except ratio data)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September
30
|
|
Nine Months
Ended September
30
|
|
Trailing
Twelve
Months Ended September
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
Reconciliation of
Net Income to Adjusted EBITDA and Bank EBITDA
|
Net income
(loss)
|
|
$
|
14,526
|
|
|
$
|
20,233
|
|
|
$
|
87,098
|
|
|
$
|
(26,988)
|
|
|
$
|
105,578
|
|
Interest
expense
|
|
16,564
|
|
|
17,003
|
|
|
50,270
|
|
|
50,505
|
|
|
66,578
|
|
Income tax expense
(benefit)
|
|
12,098
|
|
|
14,197
|
|
|
60,335
|
|
|
(17,562)
|
|
|
72,668
|
|
Depreciation and
amortization
|
|
43,406
|
|
|
43,521
|
|
|
128,435
|
|
|
127,822
|
|
|
171,941
|
|
Asset write-downs and
(gain) loss on sale of assets (a)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,910
|
|
|
—
|
|
Closed deal costs
(b)
|
|
350
|
|
|
—
|
|
|
4,433
|
|
|
—
|
|
|
4,433
|
|
Facility closing and
reorganization costs, net (c)
|
|
9,297
|
|
|
2,709
|
|
|
9,063
|
|
|
9,362
|
|
|
19,545
|
|
Loss on early
retirement of debt (d)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43,609
|
|
|
—
|
|
Mark-to-market on
derivative contracts (e)
|
|
3,589
|
|
|
2,863
|
|
|
(7,240)
|
|
|
516
|
|
|
(1,787)
|
|
Other adjustments
(f)
|
|
10,125
|
|
|
(6)
|
|
|
10,125
|
|
|
71
|
|
|
10,475
|
|
Adjusted
EBITDA
|
|
$
|
109,955
|
|
|
$
|
100,520
|
|
|
$
|
342,519
|
|
|
$
|
297,245
|
|
|
449,431
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
8,716
|
|
Bank
EBITDA
|
|
|
|
|
|
|
|
|
|
$
|
458,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2016
|
Reconciliation of
net debt and total leverage ratio
|
|
Total long-term debt,
including current portion
|
$
|
896,082
|
|
Unamortized discounts
and debt issuance costs
|
9,952
|
|
Cash and cash
equivalents
|
(28,158)
|
|
Net debt
|
$
|
877,876
|
|
Bank
EBITDA
|
458,147
|
|
Total
leverage ratio
|
1.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Reconciliation of
Free Cash Flow provided by continuing operations
|
|
Net cash provided by
operating activities
|
$
|
184,618
|
|
|
$
|
322,028
|
|
Payments for
property, plant and equipment
|
(81,305)
|
|
|
(80,629)
|
|
Free Cash
Flow provided by continuing operations
|
$
|
103,313
|
|
|
$
|
241,399
|
|
|
|
|
|
|
|
|
|
* See Notes to
Earnings Release Tables
|
Notes to
Earnings Release Tables
|
|
For the three and
nine months ended September 30, 2016 and 2015, the adjusted
results and certain other non-GAAP financial measures differ from
the Company's results under GAAP due to the exclusion of expenses,
gains or losses associated with certain transactions and other
non-recurring items that we believe are not indicative of our core
operating results. For additional information on our non-GAAP
financial measures, see the section entitled "Non-GAAP Financial
Measures" in this release
|
|
|
(a)
|
In conjunction with
our decision to launch DairyPure in the first quarter of 2015, we
reclassified certain of our indefinite-lived trademarks to
finite-lived, resulting in a triggering event for impairment
testing purposes. The related adjustment reflects the elimination
of the following:
|
|
|
|
i.
|
A non-cash
charge of $109.9 million ($68.7 million net of tax) in the first
quarter of 2015 related to the impairment of certain intangible
assets, and related amortization expense of $5.6 million and $13.0
million for the three and nine months ended September 30,
2015, respectively; and
|
|
|
|
ii.
|
Amortization expense
recorded on these finite-lived trademarks of $3.9 million and $12.9
million for the three and nine months ended September 30,
2016, respectively.
|
|
|
(b)
|
The adjustment
reflects the elimination of expenses related to the acquisition of
Friendly's Ice Cream Holdings Corp. completed on June 20, 2016 of
$0.4 million and $4.4 million for the three and nine months ended
September 30, 2016, respectively.
|
|
|
(c)
|
The adjustment
reflects the elimination of severance charges and non-cash asset
impairments, net of (gains) losses on related asset sales, for
approved facility closings and restructuring plans.
|
|
|
(d)
|
During the first
quarter of 2015, we redeemed the remaining outstanding principal
amount of $476.2 million of our 2016 senior notes. The
adjustment reflects the related elimination of the
following:
|
|
|
|
i.
|
A $38.3 million
pre-tax loss on the early extinguishment of debt in the first
quarter of 2015, which consisted of debt redemption premiums of
$37.3 million, a write-off of unamortized debt issue costs of $0.8
million, and a write-off of the remaining bond discount and
interest rate swaps of $0.2 million; and
|
|
|
|
ii.
|
In conjunction with
the execution of our current credit agreement and the amendment of
our receivables-backed facility in the first quarter of 2015, the
write-off of unamortized debt issue costs related to our previous
credit facility of $5.3 million.
|
|
|
(e)
|
The adjustment
reflects the elimination of the (gain) loss on the mark-to-market
of our commodity derivative contracts. All of our commodity
derivative contracts are marked to market in our statement of
operations during each reporting period with a corresponding
derivative asset or liability on our balance sheet.
|
|
|
(f)
|
The adjustment
reflects the elimination of the following:
|
|
|
|
i.
|
Interest accretion in
connection with the settlement of a previously disclosed dairy
farmer class action lawsuit
filed in the United States District Court for the Eastern District
of Tennessee. The Court granted final
approval of the settlement agreement on June 15, 2012 and the final
installment payment was made in June of
2016;
|
|
|
|
ii.
|
Interest expense on
uncertain tax positions that we retained in connection with prior
discontinued operations;
and
|
|
|
|
iii.
|
Separation charge of
$10.1 million recorded in the third quarter of 2016 in connection
with the Company's
CEO succession plan.
|
|
|
(g)
|
The adjustment
reflects the income tax impact of adjustments (a) through (f) and
an adjustment to our income tax expense (benefit) to reflect income
tax at a tax rate of 38%, which we believe represents our
normalized long-term effective tax rate as a U.S. domiciled
business.
|
|
|
(h)
|
Includes an
adjustment to diluted shares outstanding to reflect an add-back of
approximately 505 thousand dilutive shares, which were
anti-dilutive for GAAP purposes.
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/dean-foods-announces-third-quarter-2016-results-300358054.html
SOURCE Dean Foods Company