Dean Foods Company
) reported adjusted earnings of 31 cents per share for the first
quarter of fiscal 2012, beating the Zacks Consensus Estimate of 21
cents a share and well above the year-ago earnings of 14 cents per
share. On a reported basis, including one-time items, the company
registered earnings of 20 cents per share compared with 14 cents in
the prior-year period.
The company exited fiscal 2011 with solid top- and bottom-line
performances, primarily driven by better-than-expected operating
performance at the company's three segments along with better cost
Dean Foods' quarterly net sales grew 5.4% year over year to
$3,214.1 million compared with net sales of $3,049.9 million in
prior-year quarter. The growth was primarily a pass-through of
increased commodity costs at Fresh Dairy Direct-Morningstar to
consumers in the form of higher prices along with volume gain.
Moreover, strong top-line performance at WhiteWave-Alpro also
boosted its revenue growth. The company's quarterly net sales
missed the Zacks Consensus Estimate of $3,108 million.
Since the fourth quarter of 2011, management has decided to
report its financial results in three different segments, i.e.
Fresh Dairy Direct, WhiteWave-Alpro and Morningstar.
Segment-wise, during the reported quarter, Dean Foods' Fresh
Dairy Direct-Morningstar sales increased 4% to $2.3 billion while
WhiteWave-Alpro's sales climbed 13% to $571 million. The company's
Morningstar segment registered year-over-year top-line growth of 5%
to $325 million.
Adjusted operating income for the first quarter increased 42% to
$152 million from the prior-year quarter's $107 million. The
improved results were primarily due to an increase in operating
income of 31%, 18% and 13% at WhiteWave-Alpro, Fresh Dairy Direct
and Morningstar, respectively.
Consequently, Dean Foods' adjusted operating margin for the
quarter expanded 120 basis points to 4.7% compared with 3.5% in the
Dean Foods ended the quarter with cash and cash equivalents of
$130.3 million, long-term debt of $3,817.7 million and
shareholders' equity (deficit) of ($52.7) million. During the
three-month period, the company generated $3.2 million of cash from
Bolstered by better-than-expected first-quarter result,
management raised its fiscal 2012 earnings guidance range between
$1.10 and $1.20, up from 87 cents - 95 cents forecasted earlier.
The current Zacks Consensus Estimate stands at 95 cents per
For the second quarter of fiscal 2012, Dean Foods expects
earnings to be in the range of 28 cents to 33 cents. The current
Zacks Consensus Estimate stands at 22 cents per share.
Dean Foods, which competes with
Kraft Foods Inc
), currently has a Zacks #3 Rank, implying a short-term Hold rating
on the stock. This corresponds with our long-term Neutral
recommendation on the stock.
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