Dean Foods' Q3 Loss Smaller Than Expected
11 Nov 2014 --- Dean Foods has reported a third quarter 2014 diluted loss from continuing operations attributable to Dean Foods of $0.16 per share, compared to third quarter 2013 diluted income of $4.35 per share. On an adjusted basis, the third quarter 2014 diluted loss from continuing operations was $0.03 per share, compared to third quarter 2013 adjusted earnings of $0.12 per share.
Third quarter 2014 operating loss totaled $1 million, compared to third quarter 2013 operating income of $23 million. Third quarter 2014 adjusted operating income totaled$10 million, compared to adjusted operating income of $42 million in the year-ago period.
"Given the continued challenges facing the dairy industry due to the dairy commodity environment, we are encouraged by the sequential improvement of our operating results which we believe reflects the success of our current business efforts," said Gregg Tanner, Chief Executive Officer of Dean Foods. "This year has clearly been the most difficult operating environment we've ever experienced as a company. And so, we remain rigorous in our focus on the things that we control: price realization, cost productivity and volume at margins that deliver an appropriate return."
Chris Bellairs, Chief Financial Officer of Dean Foods, added, "Against the backdrop of this difficult environment, we are seeing positive signs of progress resulting from the focused efforts of our employees to drive improvement throughout all aspects of our operations."
"In the third quarter, these efforts allowed us to deliver sequentially improving adjusted operating income. We believe they will pave the way for us to begin rebuilding our profitability in 2015 and position us for long term success," added Tanner.
Net loss attributable to Dean Foods totaled $16 million for the third quarter of 2014 compared to $415 million of net income attributable to Dean Foods for the year-ago period. On an adjusted basis, third quarter net loss attributable to Dean Foods totaled $3 million, compared to $11 million of net income attributable to Dean Foods for the third quarter of 2013.
Net sales for the third quarter of 2014 totaled $2.4 billion, compared to $2.2 billion of net sales in the third quarter of 2013.
Dean Foods' unadjusted fluid milk volumes declined 1% on a year-over-year basis. This quarter's volumes reflect the last of the negative impacts of the RFP-driven volume loss from a significant customer in 2013. Excluding the impact of the RFP, Dean Foods' fluid milk volumes decreased 0.6% in the quarter.
The USDA has not published category data for any of the months in the third quarter.
"Our visibility into our share performance is hampered by USDA data now lagging longer than usual. But, when published, we believe the USDA data will show that the category continued to decline in the third quarter," added Tanner. "With our volume performance in the third quarter, if the USDA data were to report a category decline of 3% our share would approximate 35.6%. This would represent a 0.7% increase in our share of the fluid milk category since bottoming out in the third quarter of 2013, at 34.9%. With pricing actions beginning to take effect we may have experienced a sequential decline in our share, which was 35.9% in the second quarter."
The third quarter 2014 average Class I Mover, a measure of raw milk costs, was $23.51per hundred-weight, an increase of 24% from the third quarter of 2013. The third quarter 2014 average was the second highest quarterly Class I Mover average in the history of the U.S. dairy industry, just less than one percent below the second quarter of 2014. The Company anticipates the elevated Class I Mover trend to continue and the fourth quarter average to be among the highest averages ever.
