Dean Foods company reported second quarter 2015 results. Q2 net income per diluted share was $0.28 and adjusted net income per diluted share was $0.33.
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Q2 adjusted results reflect the highest gross profit and per gallon operating income since 2012.
Financial results improved for the fourth consecutive quarter as price realization offset volume deleverage.
Stepped up advertising and marketing supports Q2 launch of DairyPure®, the first and largest fresh, white milk national brand.
Q3 adjusted diluted earnings are expected to be $0.17 to $0.27 per share.
The second quarter 2015 average Class I Mover, a measure of raw milk costs, was $15.82 per hundred-weight, a 6% sequential decrease from the first quarter of 2015 and a decrease of 33% from the second quarter of 2014. Total volume across all products was 653 million gallons for the second quarter of 2015, a 3% decline compared to total volume of 674 million gallons in the second quarter of 2014.
Based on the USDA's recently published category data, fluid milk volumes improved sequentially from a 3.1% decline in the fourth quarter to a 2.2% decline in the first quarter.
Quarter-to-date through May 2015, fluid milk volumes declined approximately 2.5% year-over-year, on an unadjusted basis. On this same basis, Dean Foods' share of U.S. fluid milk volumes decreased to 35.0%, from 35.9% in the second quarter of 2014.
Consolidated net cash provided by continuing operations for the six months ended June 30, 2015, totaled $272 million. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, was $224 million for six months ended June 30, 2015.
Free cash flow includes the impact of lower commodity costs, $56 million of federal tax refunds in respect of 2014 and the third of four annual litigation settlement payments of $19 million.
Total debt at June 30, 2015, net of $106 million cash on hand, was approximately $734 million.
The company's maximum senior secured net leverage ratio calculated in accordance with the senior secured revolving credit facility, which for purposes of calculating indebtedness deducts up to $50 million of cash on hand and excludes borrowings under the receivables securitization facility, was zero times as of the end of the second quarter of 2015.
For the second consecutive quarter, the company's funded net debt to EBITDA ratio, on an all cash netted basis, improved sequentially by over a full turn to 2.30 times at the end of the second quarter of 2015. ■
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