August 30, 2019

Dean Foods announces second quarter 2019 results

The second quarter results of Dean Foods, the biggest processor of fresh fluid milk in the United States, primarily reflect volume pressure associated with the overlap of certain customers exiting the company's system last year and an accelerated decline in the conventional white milk category, the company said. 

Dean Foods also experienced higher dairy commodity inflation, which it expects to significantly increase throughout the remainder of 2019.

The company reported positive quarterly free cash flow in the second quarter driven by working capital management.  However, given the company's expectations for continued volume pressure and higher input costs, Dean Foods now expects to be a net user of cash for full year 2019.

Newly appointed president and chief executive officer Eric Beringause said: "Dean Foods is committed to providing consumers with wholesome, nutritious products they need to live healthy and happy lives and I am enthusiastic about joining as CEO.  Since stepping into the role last week, I am taking a fresh look at the direction of the business. I am committed to thoroughly and swiftly evaluating every aspect of the company and its operations. I look forward to working closely with our talented team as we consider new ways to drive Dean Foods forward to profitable growth."

The company's executive vice president and chief financial officer, Jody Macedonio, stated: "Second quarter adjusted results mark the steady progression in our business transformation as we move past the inflection point in the fourth quarter of 2018 and delivered sequential improvement in both the first and second quarters of this year. We are actively implementing our enterprise-wide cost productivity program to address the deleverage from the volume decline and higher dairy commodity inflation. We expect our initiatives to accelerate during the second half of this year as we continue to reset our cost base and drive supply chain productivity to be more agile and cost-efficient.  As we implement these initiatives, we will continue to focus on maintaining the highest levels of quality, service and value that we deliver to our customers, which is paramount to our success."

Macedonio added: "As previously announced, we successfully increased our borrowing base availability to US$265 million under our senior secured revolving credit facility by completing post-closing appraisal work. This increases our financial flexibility and further enhances our liquidity.  We are pleased with this commitment from our lenders which demonstrates their support and confidence in Dean Foods.  In addition, our existing US$450 million accounts receivable securitisation facility provides us with another source of flexible, low-cost access to capital. Together, these facilities provide us with the resources to continue to execute our priorities as we take meaningful actions to drive our plan forward and transform our company to more effectively compete in a challenging market environment."

According to Dean Foods, its full year 2019 capital expenditures remain on-track in the range of US$95 million to US$110 million

- Dean Foods