The WhiteWave Foods Co. (NYSE: WWAV) today reported strong first quarter 2013 results.
The Company reported first quarter 2013 adjusted diluted earnings per share of $0.16, a 20 percent increase compared to first quarter 2012, despite a higher tax rate. Adjusted net sales for the first quarter of 2013 increased 9 percent to $608 million, compared to adjusted net sales of $557 million in the first quarter of 2012, primarily driven by volume growth across all of the Company’s brands. Consolidated adjusted operating income for the first quarter of 2013 totaled $47 million, representing an increase of 20 percent compared to $39 million in the first quarter of 2012, despite ongoing higher supply chain costs.
“All of our platforms have started the year on very strong footing, with volume growth across all of our categories driving our robust top line performance in the first quarter. Consumers continue to be interested in natural, nutritious, and great tasting products that are responsibly produced. We believe that our on-trend, leading brands, outstanding marketing and best-in-class new products will continue to support our success,” said Gregg Engles, Chairman and Chief Executive Officer.
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 cost centers. 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 first quarter of 2013, net sales for the North America segment were $507 million, a 10 percent increase over the first quarter 2012, led by strong double-digit growth in both Plant-Based Foods and Beverages and Coffee Creamers and Beverages. Operating income for the North America segment increased 8 percent to $56 million for the first 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, Silk PureAlmond® and Silk PureCoconut®, net sales increased 13 percent in the first quarter of 2013 compared to the first quarter of 2012, driven primarily by continued strong growth of Silk PureAlmond® which grew over 55 percent during the first quarter. The overall Plant-based Foods and Beverages category remained strong with over 14 percent category growth in the first quarter of 2013, led by WhiteWave’s Silk® brand which continues to hold the #1 market positions in each of its product subcategories.
Building on the strength of the Silk® brand and a track record of innovation, in the second quarter of 2013, the Company is introducing a Silk PureAlmond® “lights” line that contains a third fewer calories, bringing an additional healthy and delicious option to consumers interested in the wellness benefits of plant-based foods and beverages.
In Premium Dairy, which includes Horizon Organic® branded dairy products, volume growth drove net sales to increase 5 percent in the first quarter of 2013 compared to the first quarter of 2012, in line with the Company’s previously communicated expectations. 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 first quarter, fueled by Horizon Organic®, which outpaced the category growth by 1 percentage point.
The Company continues to expand its Premium Dairy platform with the second quarter 2013 launch of Horizon Organic® DHA Omega-3 enhanced products in single-serve packaging, providing this value-added, healthy alternative for consumers at home, at school and on-the-go.
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 14 percent in the first quarter of 2013 compared to the first quarter of 2012, as a result of volume increases across the portfolio, including strong growth in Iced Coffee. The refrigerated flavored creamer category grew 9 percent during the first quarter, driven by increased coffee consumption and the trend towards flavored, customized beverages.
The Company plans to build on its Coffee Creamers and Beverages platform with a new line of Cold Stone Creamery® inspired flavors, which will bring the taste of the ice cream chain’s desserts to your cup of coffee.
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 7 percent in the first quarter of 2013 compared to the first quarter of 2012, on both a reported and constant currency basis. Operating income in the segment in the first quarter of 2013 increased to $7 million from $4 million in the first quarter of 2012.
Growth in the Europe segment was volume driven, particularly due to strong demand for almond, hazelnut and rice beverages, as well as continuing strong growth in soy yogurt offerings.
The Company expects core growth of its leading brands and recent new product launches to continue to drive a sales growth rate in the high single digits for the second quarter, and growth consistent with previous guidance for the full year 2013. Based upon forecasted sales growth, combined with continued progress on cost efficiency initiatives, management anticipates an adjusted total operating income growth rate in the low to mid-teens for the second 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 now anticipates a tax rate of between 34 and 35 percent for full year 2013.
WhiteWave continues to expect adjusted diluted earnings per share of between $0.68 and $0.72 for full year 2013. For the second quarter, the Company expects adjusted diluted earnings of between $0.14 to $0.16 per share.
“We are pleased with our first quarter results and remain confident in our ability to continue to drive growth in our business,” said Kelly Haecker, Executive Vice President and Chief Financial Officer. “At the same time, we are making excellent progress as we continue to execute on important margin enhancing initiatives, including expanding our capacity to allow us to produce more volume internally at more favorable costs and increasing the efficiency of our supply chain network. As we look to the rest of 2013 and beyond, we remain very positive about the profit growth opportunities across all of our businesses.”
SPIN-OFF BY DEAN FOODS ON MAY 23, 2013
On May 1, 2013, Dean Foods Company (NYSE: DF) announced that its Board of Directors had authorized the distribution of a portion of its remaining interest in WhiteWave to Dean Foods stockholders in the form of a pro rata dividend of shares of WhiteWave Class A and Class B common stock on shares of Dean Foods common stock outstanding at the close of business on May 17, 2013. The distribution will be completed at the close of business on May 23, 2013.
Dean Foods will distribute 47,686,000 shares of WhiteWave Class A common stock and 67,914,000 shares of WhiteWave Class B common stock to Dean Foods stockholders. It is estimated that Dean Foods stockholders will receive 0.256 shares of WhiteWave Class A shares and 0.364 shares of WhiteWave Class B shares for each share of Dean Foods they own, based upon the number of shares of Dean Foods common stock outstanding as of March 31, 2013. The actual distribution ratios will be determined based upon the number of Dean Foods shares outstanding as of May 17, 2013, the record date. Fractional shares of WhiteWave common stock will not be distributed, but will be settled for cash. The distribution has been structured to qualify as a tax-free distribution to Dean Foods stockholders for U.S. federal income tax purposes; cash received in lieu of fractional shares will, however, be taxable.
Once the distribution is complete, Dean Foods will hold 34,400,000 shares of WhiteWave Class A common stock. Dean has stated it expects to dispose of this remaining interest within 18 months of the distribution in one or more debt-for-equity exchanges or other tax-free dispositions. See the Company’s press release dated May 1, 2013, for further details.
"We have incredible brands, engaged and motivated employees, and a strong track record of growing our core businesses and successfully bringing innovative, great-tasting new products to market," Engles said. "WhiteWave is changing what's on retailers' shelves and what people want on their tables for themselves and their families. I am truly excited about WhiteWave's prospects and potential as an independent company."