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Investors Moo: Shares Of Deans Foods Tank As Management Blames High Milk Prices For Weak Q1

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Dean Foods (NYSE: DF) on Thursday reported first quarter 2014 results.

CEO Gregg Tanner commented, "We entered 2014 facing substantial margin pressure in our milk business as Class I raw milk prices have continued to reach all-time new highs and for the quarter were 22 percent higher than last year. We reported first quarter results that were below our previously articulated adjusted diluted earnings per share guidance range of approximately break-even with $0.03 of potential risk or benefit.

"We estimate that during the quarter we had a negative impact associated with weather disruptions, in the form of lost school milk business and incremental costs of approximately $4 million or $0.03 of diluted earnings per share. Despite this challenging quarter, we are actively working to extend our competitive advantages through aggressively reducing costs and enhancing our strengths and capabilities."

Summary of 1Q14 Results

The company reported first quarter EPS of $(0.05) versus the estimated $0.01, down 116 percent from 1Q13.

  • Revenue came in slightly ahead of $2.27 billion estimate at $2.30 billion.
  • Operating income totaled $5 billion. Dean Foods reported $7 million in 2014 adjusted operating income, compared with $74 million in the same period in 2013.
  • First quarter net sales were $2.3 billion.
  • Free cash flow from continued operations came in at $5 million, or $11 million on an adjusted basis.
  • Total debt as of March 31, 2014 was $906 million.


Dean Foods is looking for second quarter EPS to be within $(0.02) and $(0.08), versus the $0.13 analyst estimate.

  • Management lowered FY2014 guidance from $0.73-$0.86 to $0.60, versus the $0.76 analyst estimate.
  • The company maintained its prior adjusted free cash flow guidance of at least $125 million and full year capital expenditure at $150 to $175 million.

Stock Action

Shares of Dean Foods closed at $15.35 on Wednesday. In pre-market trading on Thursday, the stock held at $14.16 before jumping to $15.33 around 8:38 a.m. EST. Shares opened at $14.79 and jumped 1.7 percent to $15.09 after 9:35 a.m. EST before trending lower for the day.

Dean Foods is currently trading at $14.58, down 5.28 percent.

Posted-In: First Quarter ResultsEarnings News Guidance Management


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