Dean Foods Co. (NYSE: DF) reported first quarter 2015 results.

Highlights:

Chief Executive Officer Gregg Tanner said, "I'm very pleased with the progress we have made over the last several quarters in support of our long-term, sustainable business model. This past quarter, we continued to deliver sequential improvements to our operational and financial results, and we recapitalized our balance sheet to provide the organization with significant flexibility going forward. We are proud of our track record of innovation and last week's launch of DairyPure, the country's first and largest fresh, white milk national brand, will provide additional benefits to consumers, our category, our customers and our company."  

First quarter 2015 operating results
Chief Financial Officer Chris Bellairs said, "Dean Foods' first quarter results reflect solid execution within an easing commodity environment. In the first quarter, we witnessed retailers lean first and foremost into pricing architectures to restore profitability to dairy products and the dairy case. With volume performance coming in-line with our expectations, significant price realization was the primary driver of sequentially improving results. We believe that we can drive shareholder value as we leverage our improving operating results and free cash flow performance, our enhanced capital structure and the incremental opportunities associated with our new national brand, DairyPure." 

The first quarter 2015 average Class I Mover, a measure of raw milk costs, was $16.79 per hundred-weight, a 29 percent sequential decrease from the fourth quarter of 2014 and a decrease of 25 percent from the first quarter of 2014. Total volume across all products was 662 million gallons for the first quarter of 2015, a 3 percent decline compared to total volume of 685 million gallons in the first quarter of 2014. Based on the USDA's recently published category data, fluid milk volumes improved sequentially from a 3.7 percent decline in the third quarter to a 3.4 percent decline in the fourth quarter. For the month of January 2015, fluid milk volumes declined approximately 3.1 percent year-over-year, on an unadjusted basis. On this same basis, Dean Foods'share of U.S. fluid milk volumes decreased to 35.5 percent, from 35.7 percent in the first quarter of 2014.

Tanner added, "In the longer term, we believe that the execution of our strategy will improve our financial performance, and our innovations will help enhance the already highly regarded perception of our products within the category and in the minds of the consumers. We are reinvigorating the dairy case with our national brands DairyPure and TruMoo while building on the heritage, brand equity and consumer confidence associated with our regional brands. We are also changing the game with operational excellence, disciplined financial stewardship and innovation as we extend our leadership position in the dairy industry."

Cash flow 
Consolidated net cash provided by continuing operations for the three months ended March 31, 2015, totaled $158 million. Free cash flow provided by continuing operations, which is defined as net cash provided by continuing operations less capital expenditures, was $138 million for three months ended March 31, 2015. Free cash flow for the quarter includes $56 million of federal tax refunds.

Debt
During the first quarter, the Company completed its debt refinancing. In February, the Company issued 6.5 percent senior unsecured notes due 2023 with an aggregate principal amount of $700 million. The Company used a portion of the net proceeds of the offering to finance the redemption of its outstanding senior unsecured 7 percent notes due 2016 and used the remaining net proceeds to repay a portion of the outstanding borrowings under the Company's senior secured credit facility and receivables-backed facility. In March, the Company entered into a new five-year $450 million senior secured revolving credit facility.  Concurrently, the Company amended and restated its existing $550 million receivables securitization facility to extend the maturity through March 2018, and conform the covenants to the new senior secured revolving credit facility.

Total debt at March 31, 2015, net of $30 million cash on hand, was approximately $823 million. The Company's maximum senior secured net leverage ratio calculated in accordance with the new $450 million 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 first quarter of 2015. While no longer a financial covenant under the Company's senior secured credit facility, the Company's funded net debt to EBITDA ratio improved over a full turn from Dec. 31, 2014 to 3.35 times at the end of the first quarter of 2015.

Forward outlook
"With expected volume declines of low single digits, and taking normal seasonality and other factors into account, we expect second quarter adjusted diluted earnings of between $0.20 and $0.30 per share," concluded Tanner.