Dean Foods Company Announces Third Quarter Results

Combatting a years-long decline, Dean Foods announced third quarter results this week that saw the company strengthening its volume performance and attempting to right the ship despite year-over-year declines.

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."

In fact, a third quarter volume change of -1% year-over-year represents the strongest volume performance for the company in at least four years, with further improvements expected to follow in the fourth quarter, according to the company’s press release. Dean Foods’ net income per diluted share was $0.16 and adjusted net income per diluted share was $0.37, with fourth quarter adjusted diluted earnings expected to follow at $0.37 to $0.45 per share.

Other highlights from Dean Foods' third quarter report included:

• Total volume across all products was 651 million gallons this quarter, a 1 percent decline from 658 million gallons in the third quarter of 2015
• Average Class I Mover, a measure of raw milk cost, reached $15.11 per hundred-weight, up 12 percent sequential increase from Q2 2016 
• Fourth quarter results are forecast at $15.96 per hundred-weight—a roughly 6% increase sequentially
• Net cash provided by continuing operations for the nine months ended September 30, 2016 reached $185 million
• Free cash flow provided by continuing operations, defined as net cash provided by continuing operations less capital expenditures, was $103 million during this period, $138 million less than the same time last year
• As of September 30, 2016, Dean Foods’ total outstanding debt, not including the company’s $28 million cash on hand, was approximately $878 million
  

Tanner concluded the company’s announcement on a positive note: "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."

Despite overall declines, Dean Foods’ share of U.S. fluid milk volumes increase by 60 basis points to 35.1% for the quarter-to-date through August. According to data published by the USDA on fluid milk sales through August, fluid milk volumes, in general, decreased 0.9% year-over-year in the third quarter of 2016, and Dean Foods faired better than its competitors. 

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