Dean Foods Q2 EPS $0.36, operating income $73 million
Staff Writer |
Dean Foods reported second quarter 2016 results. Net income per diluted share was $0.36 and adjusted net income per diluted share was $0.38, toward the high end of previous provided guidance.
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Q2 operating income of $73 million demonstrates continued year-over-year improvement, driven by diligent cost focus and pricing discipline. Acquisition of Friendly's ice cream business completed June 20.
Q3 2016 diluted earnings per share are expected to be $0.28 to $0.36; adjusted diluted earnings per share are expected to be $0.32 to $0.40.
Total volume across all products was 632 million gallons for the second quarter 2016, a 3.2% decline compared to total volume of 653 million gallons in the second quarter 2015. For the third quarter 2016, as compared to the prior year period, the company expects total volumes to decline in the low single digits, but improving versus recent trends.
Based on fluid milk sales data published by the USDA through May, fluid milk volumes improved sequentially from a 0.6% decline in the first quarter of 2016 to a 0.1% increase in the second quarter of 2016 on an unadjusted basis. On this same basis, Dean Foods' share of U.S. fluid milk volumes decreased by 10 basis points sequentially to 34.5% for the quarter-to-date through May.
Net cash provided by continuing operations for the six months ended June 30, 2016 totaled $125 million. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, was $80 million for the six months ended June 30, 2016, a $144 million decrease as compared to the prior year period.
Year-to-date free cash flow is comparable to the prior year period after reconciling for higher incentive compensation payouts in the first quarter 2016 and the $56 million associated with the company's 2014 Federal Tax refund received in the first quarter 2015.
Capital expenditures totaled $29 million for the quarter. In the second quarter, the company executed $25 million in share repurchases, successfully repurchasing 1.4 million shares, or 1.5% of total shares outstanding.
Total outstanding debt at June 30, 2016, net of $24 million cash on hand, was approximately $896 million.
The company's net debt to bank EBITDA ratio, on an all cash netted basis, increased sequentially to 2.00 times at the end of the second quarter 2016 with strong free cash flow, increased bank EBITDA, and the acquisition of the Friendly's ice cream business, which was completed in June. ■
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