Dean Foods Conference Call Highlights

Dean Foods

reported its third quarter earnings on Monday. Shares of the company are up 14 percent. Below are some key highlights from its conference call: • This morning, we reported third quarter results that were above our previously articulated guidance range of $0.05 to $0.15 adjusted diluted net loss per share. • For the quarter, we reported adjusted operating income of $10 million and a $0.03 adjusted diluted net loss per share. • As we indicated in our quarterly call in August, we expected the third quarter to be a microcosm of the full year. • This year was clearly being the most difficult operating environment we've ever experienced as a company. And so we remain rigorous in our focus on the things we control: price realization, cost productivity and volume and margins that deliver an appropriate return. • Total volumes in the third quarter were 673 million gallons, which represents a 2% year-over-year decline due to the partial loss of private label business • With a significant customer and declines within our Class II products. Excluding the loss RFP business, total volumes declined 1%. As of the end of the third quarter, we have now lapped the RFP impact. • Specifically, within fluid milk, volumes on an unadjusted basis, which does not normalize for the number and quality of days between periods, declined 1%. • Excluding the significantly diminished impact of the RFP, our fluid milk volumes for the third quarter decreased 0.6% year-over-year. • As of the end of the third quarter, total net debt outstanding was $948 million, up from $927 million at the end of Q2. Guidance: • This morning, we reported third quarter results that were above our previously articulated guidance range of $0.05 to $0.15 adjusted diluted net loss per share. • For the quarter, we reported adjusted operating income of $10 million and a $0.03 adjusted diluted net loss per share. • While both metrics were down considerably from year ago results, given the continued challenges facing the dairy industry due to the dairy commodity complex. • At retail, our brands average $4.08 per gallon in both Q2 and Q3, up $0.31 versus Q3 2013. • Additionally, the price gap between our brands and private label expanded 6% year-over-year from $0.62 to $0.66 this year. • All told, we expect Q4 EPS of $0.05 to $0.15 per share, resulting in full year loss per share of between $0.06 and $0.16. • We expect full year adjusted EBITDA to be between $193 million and $208 million, resulting in an increase to our leverage ratio in Q4. • But we will continue to drive improved efficiency and capability across the organization to begin rebuilding our P&L in 2015 and position the company for long-term success.