The WhiteWave Foods Co. (NYSE: WWAV) reported strong second quarter 2013 results. The Company reported second quarter 2013 results consistent with preliminary results released on July 15, 2013. For the second quarter of 2013, the Company reported adjusted diluted earnings per share of $0.16, a 28 percent increase compared to second quarter 2012. Net sales for the second quarter of 2013 were $616 million, a 10 percent increase from adjusted net sales of $558 million in the second quarter of 2012, driven primarily by volume growth across the Company’s North America and Europe segments. Consolidated adjusted operating income for the second quarter of 2013 totaled $46 million, representing an increase of 16 percent compared to $40 million in the second quarter of 2012, after increased marketing investments and despite ongoing higher supply chain costs.
“All of our platforms continue to deliver strong volume growth, which drove robust topline performance for the second quarter,” said Gregg Engles, chairman and CEO of WhiteWave. “We are pleased with our initial results as a standalone company, and remain focused on continuing to drive topline growth, further optimizing our cost structure and developing innovative products that will change the way the world eats for the better.”
Basis of presentation
Financial results for 2012 are presented on a pro forma adjusted basis and financial results for 2013 are presented on an adjusted basis; however, 2013 financial results for the North America and Europe segments are not adjusted, as all 2013 adjustments relate to Corporate and other items. See reconciliations at the end of this release for further details.
North America segment
The Company’s North America segment is comprised of our Plant-based Foods and Beverages, Premium Dairy, and Coffee Creamers and Beverages platforms. In the second quarter of 2013, net sales for the North America segment were $514 million, a 10 percent increase over the second quarter 2012, led by strong double-digit growth in both Plant-Based Foods and Beverages and Coffee Creamers and Beverages. Growth in the North America segment continues to be propelled by strong categories, effective marketing investments, and new product innovations. Operating income for the North America segment increased 9 percent to $50 million for the second quarter of 2013, compared to the same period in 2012.
Plant-Based Foods & Beverages
In the North America Plant-based Foods and Beverages platform, which includes Silk® soymilk, almond milk, and coconut milk, net sales increased 12 percent in the second quarter of 2013 compared to the second quarter of 2012, driven primarily by continued strong growth of Silk almond milk which grew over 50 percent during the second quarter. The overall Plant-based Foods and Beverages category remained strong with over 14 percent category growth in the second quarter of 2013. Almond now represents a majority of the overall plant-based foods and beverages category with an estimated 55% share. WhiteWave’s Silk® brand continues to hold the #1 market positions in each of its product subcategories.
In Premium Dairy, which includes Horizon Organic® branded dairy products, volume growth drove net sales to increase 6 percent in the second quarter of 2013 compared to the second quarter of 2012. Growth continues to be driven by single-serve and DHA Omega-3 products, as well as increases in core half-gallon offerings. The organic milk category grew by 4 percent during the second quarter, driven by Horizon Organic®, which outpaced the category growth by 2 percentage points.
Coffee Creamers & Beverages
In Coffee Creamers and Beverages, which includes coffee creamers under the International Delight® and LAND O LAKES® brands, as well as International Delight Iced Coffee®, net sales increased 12 percent in the second quarter of 2013 compared to the second quarter of 2012, due in part to strong growth in club stores, foodservice, convenience stores and other away-from-home channels. The refrigerated flavored creamer category grew 8 percent during the second quarter, driven by continued increases in coffee consumption and coffee flavoring trends.
The Company plans to build on its Coffee Creamers and Beverages platform with a new line of Green Mountain Coffee® branded iced latte. This iced coffee is packaged in a unique carafe shaped bottle for the coffee consumer interested in a stronger, great-tasting premium iced coffee option.
The Company’s Europe segment is comprised of its European Plant-based Foods and Beverages platform, which operates primarily under the Alpro® name. Net sales in the segment increased 13 percent in the second quarter of 2013 compared to the second quarter of 2012, on both a reported and constant currency basis. Operating income in the segment increased 12 percent to $8 million for the second quarter of 2013, compared to the same period in 2012.
Growth in the Europe segment was driven by strong volume growth of products launched in the prior year, including almond and hazelnut beverages, along with continued growth in non-dairy yogurt offerings. Volume growth in the Europe segment continues to be strongest in its core Northern European geographies.
The Company expects core growth of its leading brands, along with recent innovations, to continue to drive a sales growth rate in the high single digits for the third quarter. Consistent with previous guidance, the Company expects a high single digit growth rate for the full year 2013. Driven by topline growth, management anticipates an adjusted total operating income growth rate in the low to mid-teens for the third quarter 2013. On a full year basis for 2013, the Company expects an adjusted total operating income growth rate in the mid-teens, in line with its previous guidance.
The Company continues to estimate approximately $55 million in corporate costs for full year 2013, and capital expenditures in a range of $150 million to $160 million for 2013, consistent with its prior estimates. Management anticipates a tax rate of approximately 34 percent for the balance of the year, and a similar rate for full year 2013.
The Company expects adjusted diluted earnings of between $0.17 to $0.18 per share for the third quarter. For the full year 2013, the Company now anticipates adjusted diluted earnings per share of between $0.69 and $0.72.
“We are pleased with the strong second quarter results we achieved despite ongoing higher supply chain costs largely attributable to our current capacity constraints,” said Kelly Haecker, Executive Vice President and Chief Financial Officer. “We are making steady progress on the capacity expansion plans we previously communicated in order to lower these costs over time. We remain very encouraged by the profit growth opportunities in all of our businesses as we look to the second half of 2013 and beyond.”