Dean Foods Reports Strong Third Quarter Results

Third quarter consolidated operating income for the third quarter of 2012 totaled $182 million, compared to a consolidated operating loss of $1.9 billion in the third quarter of 2011. Adjusted third quarter consolidated operating income for the third quarter of 2012 totaled $145 million, a 35 percent increase from the $108 million reported in the third quarter of 2011.

9 Nov 2012 --- Dean Foods Company has announced strong third quarter results driven by continued solid growth across all operating segments. The Company reported third quarter 2012 diluted earnings per share of $0.20, compared to a third quarter 2011 loss per share of $8.39. The prior year third quarter includes a $1.9 billion goodwill impairment charge. On an adjusted basis, third quarter 2012 diluted earnings per share were $0.33, an 83 percent increase from the $0.18 adjusted diluted earnings per share in the prior year's third quarter. 

Third quarter consolidated operating income for the third quarter of 2012 totaled $182 million, compared to a consolidated operating loss of $1.9 billion in the third quarter of 2011. Adjusted third quarter consolidated operating income for the third quarter of 2012 totaled $145 million, a 35 percent increase from the $108 million reported in the third quarter of 2011.

Gregg Engles, Chairman of Dean Foods said: "Today we announced our fifth consecutive quarter of growth, with all of our operating segments continuing to perform well. We have successfully built on the momentum from the first half of the year to deliver 35 percent growth in third quarter adjusted operating income and 83 percent growth in adjusted diluted earnings per share for the quarter. Our strong performance this year has created the flexibility to pursue important strategic actions like the recently completed initial public offering of The WhiteWave Foods Company. It has also driven our expectations for further growth to close out the year."

Net income attributable to Dean Foods totaled $36 million for the third quarter of 2012, compared to a net loss of $1.5 billion in the prior year third quarter. Adjusted net income for the third quarter was $61 million, an 84 percent increase from $33 million in the third quarter of 2011.

Net sales for the third quarter of 2012 totaled $3.1 billion, compared to $3.4 billion of net sales in the third quarter of 2011, reflecting strong sales growth at WhiteWave-Alpro offset by the pass-through of lower commodity costs at Fresh Dairy Direct and Morningstar.
For the third quarter of 2012, the WhiteWave-Alpro segment reported net sales of $598 million, 13 percent higher than third quarter 2011 net sales of $531 million.

Net sales growth was led by the Coffee Creamers and Beverages platform, which includes coffee creamers under the International Delight, Land O Lakes, Silk and Horizon Organic brands, as well as International Delight Iced Coffee. Coffee Creamers and Beverages net sales increased by more than 20 percent in the third quarter of 2012 as compared to the third quarter of 2011. Net sales in the North American Plant-based Foods and Beverages platform, which includes Silk Soymilk, PureAlmond and PureCoconut, increased more than 20 percent in the third quarter, driven primarily by continued strong growth of Silk PureAlmond.  Alpro's European Plant-based Foods and Beverages net sales increased high-single digits on a constant currency basis and declined low-single digits after currency conversion. Net sales in the Premium Dairy platform, which includes Horizon Organic branded milk and other products, increased mid-single digits in the third quarter.

For the quarter, WhiteWave-Alpro operating income was $64 million, a 25 percent increase from the $52 million in the third quarter of 2011.

The consolidated financial statements of The WhiteWave Foods Company will differ from our historically reported WhiteWave-Alpro segment results, as our historical results include adjustments for management and segment reporting purposes.  In addition, The WhiteWave Food Company's consolidated financial statements include certain other adjustments, including the allocation of corporate and shared service costs, which are not reflected in the WhiteWave-Alpro segment results.

Third quarter Fresh Dairy Direct operating income was $94 million, as compared to $75 million in the third quarter of 2011. Third quarter Fresh Dairy Direct adjusted operating income was $100 million, a 32 percent increase from $75 million in the third quarter of 2011.
 
"Fresh Dairy Direct continued to successfully execute our plan in the third quarter, despite rising dairy commodity costs," said Gregg Tanner, Dean Foods Chief Executive Officer. "We have a simplified, focused agenda that maximizes our strengths as a business. Our performance continued to be driven by a focus on three fundamental areas: volume performance versus the industry, price realization to cover commodity inflation, and cost efficiency with an unrelenting continued focus on the quality of our products, the safety of our employees, and the service we provide our customers."

Fresh Dairy Direct volumes continued to outperform the broader industry. Fresh Dairy Direct fluid milk volumes declined 1.4 percent on a year-over-year basis, excluding the impact of divestitures. This compares to the balance of the industry that experienced a volume decline of approximately 3.1 percent on a year-over-year basis, based on USDA data and Company estimates.

The pass-through of lower overall year-over-year commodity costs resulted in Fresh Dairy Direct net sales of $2.2 billion, a 13 percent decrease from $2.5 billion in net sales for the third quarter of 2011. The third quarter 2012 average Class I Mover, a measure of raw milk costs, was $16.55 per hundred-weight, a decrease of 23 percent from the third quarter of 2011, but 6 percent above the second quarter 2012 level.
 
Third quarter 2012 Morningstar volumes increased 6 percent as compared to the third quarter of 2011, reflecting continued strong growth across the away from home channel.  Core volume growth, offset by the pass-through of lower dairy commodity costs, resulted in Morningstar net sales of $338 million, a decrease of 3 percent from the year-ago period. Morningstar operating income increased 54 percent in the third quarter of 2012 to $31 million, from $20 million in the third quarter of 2011.