- First: No really horrible news for farms or local business, or even Dean’s resulted from the Q1 call, which I consider a positive, given the company’s downward trending stock prices of late.
- Second: Stock value was generally up for the day, with market share price at $1.75 at the time of close of business on May 7th.
- Third: No immediate transitions or sales of the company were announced (as of that day), even though it is no secret the company is exploring options. Whatever the company’s eventual decisions, there is no doubt that local communities and farm economies across the country will be impacted – but no one knows if that will be in a harmful or helpful manner at this writing.
- Fourth: The world of food in general – and dairy companies in particular – is fast-changing, so any news today may be very different a week from now.
- May 6, 2019: Dean Has Got Milk but Few Growth Prospects as it Hunts for Buyer, by Lydia Mulvany and Katherine Doherty for Bloomberg
- May 6, 2019: Dean Foods Falters from More Concentrated Milk Market – authored by Heather Haddon, for the Wall Street Journal: (and in case you can’t get to the online edition, here’s a photo of the article as it appeared in print)
- May 7, 6:58 am, by Seeking Alpha: Dean Foods Misses Q1 Estimates – notes that sales declined in 9% in Q1 2019, and to this blogger’s understanding, the comparison point is Q1 in 2018 (will verify). Remember, in 2018, the company still had branded shelf space in Walmarts in several states in the projected distribution radius of the new Walmart plant at Fort Wayne, Indiana.
- May 7, 10:23 am (after the call): Dean Says It’s Turning the Corner with Dairy Drain Set to End – by Lydia Mulvany and Katherine Doherty for Bloomberg – authors note the report was a ‘mixed bag,’ stated the company’s bonds gained on Tuesday (the day of the call) after ‘tumbling since late February.’
- Dean Foods Company SEC Filing – Current report (8-K) May 7, 2018 (Financial Statement)
- A Transcript of the Entire Call – posted by Seeking Alpha – access at this link (21 pages if you print, follow a link to an audio recording): includes the opening statement by Dean Foods officials, including CEO Ralph Scozzafava, and a Q&A Session with Financial Analysts from well-known companies
- Slides – played in conjunction with the Dean Foods officials portions of the call, includes graphs and charts further explaining the verbal points – access at this link
And then following the call:
May 7th, Afternoon: From the Dallas News: “Dean Foods posts Wider Losses Than Expected in first quarter amid Conversations with Potential Buyers.”
- “On a call with analysts frustrated with a lack of details around when the company could turn a financial corner, Dean Foods also reiterated that it’s looking at strategic alternatives to accelerate its business transformation and enhance its value.”
- “When asked whether the company was in talks with any potential buyers for the company, Scozzafava said it’s possible the company could do nothing.
- “We’ve been in conversations with some folks, and we’ll leave it at that . . . we are very open minded and exploring some things,” Scozzafava said.
May 7th, Afternoon: Dean Foods (DF) Reports Q1 Loss, Misses Revenue Estimates from Zacks Equity Research, a financial publication.
“Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Food-Dairy Products is currently in the bottom 8% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.”
- CEO Ralph Scozzafava notes that a cost productivity plan and improvements in free cash flow provide optimistic things about the quarter
- Scozzafava: “We believe we have passed the inflection point in our transformation, as many of the initiatives we implemented over the past 12 months are now beginning to take hold.”
- Scozzafava (when asked about a potential sale): “It’s very possible that we won’t do anything, and we’ll continue to execute the plant that we have, which we’re very happy with, and we’ll continue to make progress on it. “So look, we’ve been in conversations with some folks, and we’ll leave it at that.”
- Notes this from Wells-Fargo Analyst John Baumgartner: “The outlook features some positives (seq. EBIT improvement, positive FCF, new business wins), but we think weak volumes, expansive price gaps, and inflationary price basis to dairy costs maintain DF in a vulnerable position.”
- “Wells-Fargo has a Market Perform rating and a target price of $2 on Dean Foods.”
- Moore observes that stock has an (average analyst) potential target price of $3.47 share, thus a potential to rise 98.29% increase from recent ranges of $1.57 to $1.71.
- Trading volume was considered high