Dean Foods Management Discusses Q2 2012 Results - Earnings Call Transcript

Dean Foods (DF)

Q2 2012 Earnings Call

August 08, 2012 9:30 am ET

Executives

Barry Sievert - Vice President of Investor Relations

Gregg L. Engles - Chairman, Chief Executive Officer and Chairman of Executive Committee

Shaun P. Mara - Chief Financial Officer and Executive Vice President

Analysts

Alexia Howard - Sanford C. Bernstein & Co., LLC., Research Division

Eric R. Katzman - Deutsche Bank AG, Research Division

Amit Sharma - BMO Capital Markets U.S.

Ryan Oksenhendler - BofA Merrill Lynch, Research Division

Christopher Growe - Stifel, Nicolaus & Co., Inc., Research Division

Judy E. Hong - Goldman Sachs Group Inc., Research Division

Christine McCracken - Cleveland Research Company

Akshay S. Jagdale - KeyBanc Capital Markets Inc., Research Division

Robert Moskow - Crédit Suisse AG, Research Division

David Palmer - UBS Investment Bank, Research Division

Presentation

Operator

Good morning, and welcome to the Dean Foods Company Second Quarter 2012 Earnings Conference Call. Please note that today's call is being recorded and is also being broadcast live over the Internet on Dean's Food's corporate website. This broadcast is the property of Dean Foods, and any redistribution, retransmission or rebroadcast of this call in any from without the express written consent of the company is strictly prohibited.

At this time, I would like to turn the call over for opening remarks to Vice President of Investor Relations, Mr. Barry Sievert. Please go ahead, sir.

Barry Sievert

Thank you, Jennifer, and good morning, everyone. Thanks for joining us for our second quarter earnings conference call. Yesterday, we issued an earnings press release as well as a press release announcing the proposed initial public offering of common stock of the WhiteWave Foods Company, whose business will be comprised of the WhiteWave-Alpro segment. These press releases are available on our website at deanfoods.com. The press releases, which are filed as exhibits to Form 8-Ks, are -- as well as the S-1 filing, are also available on the SEC's website at sec.gov. Also available during this call at the Dean Foods website is a slide presentation, which accompanies today's prepared remarks. A replay of today's call, along with the slide presentation, will be available on our website beginning this afternoon.

The earnings per share, operating income and interest expense information that will be provided today are from continuing operations and have been adjusted to exclude the expenses related to facility closings and reorganizations, expenses related to asset write-downs, expenses related to litigation matters, gains or losses from the divestiture of assets and other nonrecurring items in order to enable you to make a meaningful evaluation of our operating performance between periods. The press release contains a more detailed discussion of the reasons why these items are excluded from the consolidated results, along with reconciliations between GAAP and adjusted earnings and between net cash flow from continuing operations and free cash flow from continuing operations.

We also would like to advise you that all forward-looking statements made on today's call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements will include, among others, disclosure of earnings targets as well as expectations regarding our branding initiatives, expected cost savings, leverage ratios, the proposed IPO and various other aspects of our business. These statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. Information concerning those risks is contained in the company's periodic reports on forms 10-K and 10-Q and in our earnings release.

Participating with me in the prepared section of today's call are Gregg Engles, our Chairman and CEO; and Shaun Mara, our Chief Financial Officer. Gregg will start us off by providing some comments related to the filing of the S-1 for WhiteWave Foods Company, followed by a review of this quarter's results and the current business environment. Then Shaun will offer some additional perspective on our financial results before turning the call back to Gregg for comments on the forward outlook and other closing remarks. We will then open the call for your questions. With that, I will turn the call over to Gregg for his opening remarks. Gregg?

Gregg L. Engles

Thank you, Barry, and good morning, everyone. We're glad you could join us on this important day for Dean Foods.

Yesterday afternoon, we announced strong Q2 results driven by continued growth across each of our 3 operating segments. This continued solid performance has provided us the enhanced financial flexibility necessary to initiate the first step towards separating WhiteWave-Alpro from Dean Foods.

We also filed a registration statement to conduct an initial public offering of up to 20% of the WhiteWave Foods Company, which is comprised of our WhiteWave-Alpro segment. For all of the reasons we've discussed in the past, we continue to believe that this is the right move for our shareholders.

WhiteWave-Alpro and the rest of Dean Foods have distinct product portfolios and business dynamics that require different management styles, operating philosophies, capital structures and levels of investment. As such, we believe the separation of WhiteWave-Alpro from Dean Foods is the next logical step in our journey to create value for our shareholders.

As you'll see in the filing, effective with the IPO, I'll become Chairman and CEO of The WhiteWave Foods Company while remaining Chairman of Dean Foods. Blaine McPeak at WhiteWave Foods and Bernard Deryckere at Alpro will continue to report to me. Kelly Haecker, WhiteWave's CFO, will assume the CFO role at the WhiteWave Foods Company, and Roger Theodoredis will be promoted from General Counsel of WhiteWave to the General Counsel role of the new company.

At the time of the IPO, Gregg Tanner, who is currently the President of Fresh Dairy Direct and our Chief Supply Chain Officer, will be promoted to CEO of Dean Foods. Gregg Tanner has over 30 years of food industry experience and his leadership of Fresh Dairy Direct and our supply chain organization over the past 5 years has been instrumental in the strong return to growth that we have experienced in our largest business. Given his extensive industry experience and proven record at Fresh Dairy Direct, the board and I are fully confident that Gregg is well qualified to assume the CEO role and continue to build on the long-term success of Dean Foods.

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