Dean Foods Q2 2019 Earnings: Reports & Follow-up Perspectives

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The Dean Foods Earnings Call, the public report of the company’s Q2 financial results, took place Tuesday, August 6th, 2019.
Dean Food stakeholders and the financial community had their first widespread engagement with new CEO Eric Beringause, who assumed the roles of CEO and and President on July 29, 2019, only a week before the Earnings Call.
Mr. Beringause warmly greeted those on the call, briefly introduced himself and his background, and noted he was still getting to know the company and help determine his thoughts on specific actions going forward. Fair enough, since he had only been on the job a week.
This Call and webcast, relatively brief (38 minutes compared to the normal hour), yielded no real surprises concerning the challenges of Dean Foods.  The company is still recovering from not only its own distresses, but is a player in a big food sector, which is also facing challenges.
As such, the stock price, which had gained back into the $1.67-$1.70 range in the couple days before the call (following the announcement of the CEO change), has been rolling up and down again this earnings week. This has been normal for several Earnings Call price cycles in recent years.
At this point, it does seem that there is some renewed optimism for the future since Mr. Beringause has taken the reins as leader of the company.  With processing plants from coast-to-coast, the company’s success is critical to many farming and agricultural communities across the United States, the Southeast included.
One observation is that the spectre of the loss of the Walmart business in 2018 is still coloring the thoughts of the financial community.  However, at the current time, talk of a Walmart expansion by building other milk plants appears to be on a backburner.  There is still just the one plant in Fort Wayne which is operated by Walmart, and many sources indicate that milk plant is still experiencing volume and delivery issues, and still trying to get some consistency with operational standards.
Below is a summary of the financial reports and perspectives following the call. As you read the reports below, and if you do Google searches for Dean Foods news, I would caution everyone to make sure you check dates of any report.  These stories are often old news, but they keep popping up in searches.
This Week’s Dean Foods Earnings-Related News:
 

PRESS RELEASE / Earnings Report: Dean Foods Announces Second Quarter 2019 Results

SEC FILING: In keeping with SEC regulations for publicly traded companies
 
TRANSCRIPT:  Dean Foods Earnings Call for Q2, 2019 (in its entirety)
  • READ:  The call lasted 38 minutes and some change, a bit less than the hour which has been the usual length.  At the link above, you can read the transcript (not a hard read) and see the participants listed by name, including financial analysts who are the normal folks who participate in the Q&A following the company statements.
  • AUDIO?  Do you prefer to listen to the call? There is a link within the Transcript page (above)
SLIDES: The graphics from the Earnings Call webcast can be accessed here; graphics illustrate the discussion found in the company presentation portion of the transcript.
COMMENTARIES: (be aware, headlines may not reflect the actual content of the article)
7 Aug, 2019:  “We’d Rather Watch Dean Foods Stock from a Distance,” says Deutsche Bank    –  Content from Tip Ranks, posted on Yahoo Finance
8 Aug, 2019: “CEO with Milk in His Veins Wants to Restore Embattled Dean Foods,”  – by Lydia Mulvaney for Bloomberg, with assistance from Katherine Doherty
  • Beringause’s appointment has “sparked speculation that Dean is moving away from a sale”
  • Beringause: “Clearly, there’s opportunities to grow the business”, without specification
8 Aug 2019:  “Spoiled Milk: Dean Foods”  from Freyr Capital, posted at Seeking Alpha
  • This article does fairly note that part of the problem is with the entire dairy industry: “Dairy industry is helpless with some even attempting to salvage the situation by fighting the “milk” branding of non-dairy alternatives and labeling them ‘fake milk.’ “
  • Some of the comments following this article are a mixed bag, some positive for milk itself, some saying Dean is heading for better days, some critical
9 Aug 2019: “Dean Foods is Pricing Low, But Could this be a Buy-In Op?”  by Maria Ohle for MicroSmallCap.
  • Quotes CFO Jody Macedonia from the Earnings Call Transcript:   “As retailers continue to invest in private-label milk to drive foot traffic, private-label margin over milk is contracted to $1.26 in June matching a historic low[…]As retailers continue to fund pricing promotions to drive traffic into their stores, they’re draining their own profitability. As a result, we believe these margins are unsustainable and expect it to alleviate over time.”
  • Also stated by the author: “With vast industry experience, Beringause may be a knight in shining armor who will know how to turn this company around.”
It has been the recent pattern with Dean Foods that the stock prices have rolled around a bit in the days preceding and following the Earnings Calls. This graphic illustrates the days following Mr. Beringause’s appointment, and then following the Earnings Call when the financials were released to the public.  A  big positive is that, thus far, at the timing of this post, the stock price has not dipped below $1 a share, which was happening frequently earlier this summer (2019).
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In closing, to Dairy Communities and Dean Employees – how we can help:
  • We all need for this company to become more healthy, and increasing sales of existing products is one way for that to happen.  
  • So could we all join in by encouraging our neighbors and friends to buy Dean Foods products? Even by asking them at church or a community meeting is one way to help get the ball rolling. 
  • Let’s do what we can ourselves to help improve the Dean Foods financial picture, and help our futures in the process!
  • Some are already doing this with specific social media posts and consumer interaction, why not get on board and follow their lead?

 

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