Dean Foods Turns To Profit, But Results Miss Estimates

(RTTNews) - Dairy company Dean Foods Co. (DF) reported Tuesday a profit for the fourth quarter compared to a loss last year, despite lower volumes and high raw milk prices, reflecting net sales growth and narrower loss on early retirement of debt.

However, both adjusted earnings per share and quarterly net sales missed analysts' expectations. The company also provided earnings guidance for the first quarter, in line with Street view.

"Our customers include many of the largest and best food retailers and foodservice companies and distributors in the country. We believe our relative scale affords us sustainable cost, service, and quality advantages allowing us to more effectively service these customers versus our competitors," CEO Gregg Tanner said in a statement.

Dallas, Texas-based Dean Foods reported net income of $5.28 million or $0.06 per share for the fourth quarter, compared to a net loss of $37.68 million or $0.40 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $7.08 million or $0.08 per share, compared to $17.12 million or $0.18 per share in the year-ago quarter.

On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter increased to $2.40 billion from $2.30 billion in the same quarter last year, but missed ten Wall Street analysts' consensus estimate of $2.43 billion.

Total volume across all products declined 2 percent to 683 million gallons from last year.

Dean Foods' share of U.S. fluid milk sales volume in the fourth quarter grew to 35.6 percent from 35.4 percent in the prior-year quarter. Industry fluid milk volumes declined about 4.5 percent year-over-year in the quarter on an unadjusted basis, based on USDA data and company estimates.

Average Class I Mover, a measure of raw milk costs, increased 18 percent to $23.59 per hundred-weight from a year ago.

"Fluid milk costs remained elevated during the quarter and continued to negatively impact the overall health of the category by causing volume declines beyond what we would consider a normal trajectory for the category," added Tanner

Loss on early retirement of debt for the quarter was $1.44 million, compared to $63.38 million last year.

Looking ahead to the first quarter, Dean Foods expects adjusted earnings in a range of $0.12 to $0.22 per share. Analysts expect the company to report earnings of $0.22 per share for the quarter.

Dean Foods said it expects 2015 financial results to be substantially better than 2014 based on the the multiple inherent benefits that come with cheaper raw milk and after it removed the structural costs from its system.

"Full year results are reflective of just how difficult an operating environment we've been in, but after another quarter of sequentially improving gross profit and operating income per gallon, and with what we're seeing so far this year, we believe that we have the business headed in the right direction," CFO Chris Bellairs added.

In Tuesday's regular trading session, DF is currently trading at $15.94, down $2.12 or 11.71% on a volume of 1.38 million shares. In the past 52-week period, the stock has been trading in a range of $12.62 to $19.74.