Dean Foods Gains 3% Following Earnings Beat, Encouraging Outlook

February 21, 2016

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Shares of Dean Foods Co (NYSE: DF) were trading higher by more than 3 percent on Monday after the company reported its fourth quarter results.

Dean Foods said that it earned $0.36 per share in the fourth quarter on revenue of $2.023 billion. Wall Street analysts were expecting the company to earn $0.34 per share on revenue of $2.07 billion.

Adjusted net income for the quarter rose to $33 million from $7 million in the same quarter a year ago. The company attributed its fourth consecutive quarter of year-over-year improved results due to “solid execution and price realization” in addition to improvements in the overall health of the dairy sector.

Dean Foods noted that the Class I Mover, a measure of raw milk costs, was $16.34 per hundred-weight, marking a 0.2 percent decrease from the prior quarter and a 31 percent decrease from the same quarter a year ago. On a full year basis, the average Class I Mover was also $16.34 – a 30 percent decrease compared to the full year 2014.

Total volume across all products totaled 658 million gallons for the quarter, marking a 3.6 percent decline from the same quarter a year ago. Total 2015 volumes also fell by 3.1 percent to 2.6 billion gallons. In addition, the company’s market share of U.S. fluid milk fell 50 percent sequentially and 90 basis points year-over-year to 34.7 percent.

Chief Executive Officer Gregg Tanner said, “The fourth quarter marked the successful completion of a very strong year. I’m very pleased with the sequential improvement we saw in our operational and financial performance from Q3 to Q4. I believe the 2015 financial results demonstrate that we’re driving the right initiatives and agenda. As I look to the future, I believe our financial position and the momentum of our strong operating performance will allow us to continue to grow our business and create shareholder value.”

Looking forward to fiscal 2016, Dean Foods expects to earn $0.32 to $0.42 per share. Wall Street analysts were already expecting the company to earn $0.32 per share in the coming year. Dean Foods added that the first quarter 2016 average Class I Mover of $14.49 represents an approximate 11 percent decline sequentially and 14 percent decline year-over-year.