- Tuesday, Nov. 12th: Bankruptcy documents filed
- Wednesday, Nov. 13th: Court pleadings and Orders entered for ongoing operations
- Wednesday, Nov. 13th: By close of day, over 125 document filed on court’s docket in less than 48 hours.
- Thursday, Nov. 14th: Word received farmers would receive payment for their previous month’s milk.
- Monday, Nov. 18th: Payments expected to be delivered to farmers
- 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
- Most of food sector is off in recent financial reports
- Sales of Dean Foods dairy products are still good – Sales of $1.93 Billion for the Quarter actually beat a $1.91 Billion Estimate
- Future: unknown; don’t give up hope – engage in a productive discussion
- Initial Stock Prices and reaction after call: Dean Foods stock has traded in the $4 to $4.50 range for a couple of months (early 2019). It was near $4.50 early Tuesday, Nov. 26 (the day before the earnings call), then dived under $3.90 for a bit of time on Wed. Nov. 27 (day of the call) and closed at $3.92. On Thursday, Feb. 28, 2019, (day after earnings call), the stock closed at back over $4 at $4.01. These highs and lows are par for the course after an earnings report.
Feb. 14, 2019: Dean Foods’ Great Brands Are on Track for a Profitable 2019
Feb. 27, 2019 – 6:45 am: News Release of Fourth Quarter and FY 18 Results
Relationship between Dean and Land-O-Lakes: Dean Foods (publicly traded) and Land-O-Lakes (a co-op) are separate companies, and neither owns the other, but there is a business relationship. Land-O-Lakes sold its Fluid Milk division to Dean Foods in 2000. The Land-O-Lakes brand, presumingly through an ongoing license agreement, appears on milk cartons in the upper midwest. And with Land-O-Lakes owning Purina and Winfield Crops, Land-O-Lakes still serves farms across the country shipping milk to Dean Foods plants.
May 2, 2019: “Dean Foods Company (DF) Stock May Not Offer Adequate Shelter”, written by Rob Hiassen, and posted at FinBulletin. com
Directly from the article: Institutional investors currently hold around $140 million or 92.2% in DF stock. Look at its top three institutional owners: Blackrock Inc. owns $24.27 million in Dean Foods Company, which represents roughly 18.24% of the company’s market cap and approximately 17.34% of the institutional ownership. Similar statistics are true for the second largest owner, Vanguard Group Inc, which owns 9,845,854 shares of the stock are valued at $16.74 million. The third largest holder is Dimensional Fund Advisors Lp, which currently holds $12.95 million north of this stock and that ownership represents nearly 9.74% of its market capitalization.
COMPARE all of the above to this: ABOUT A YEAR AGO: On April 19, 2018 – the stock was $8.95, and this article was written, April 17th: Is Dean Foods Company (NYSE: DF) Cheap for a Reason? from Simply Wall Street
Where Do We Go from Here?
That, literally, is a Billion $$$ question, with the implications that our farms, processing jobs, related agribusiness, and extended rural communities are all at stake.
How can we help the Dean Foods situation and the Dean Foods brand in our own communities?
What, generally, do you see as an answer to Dean Foods future?
If a sale occurs, do you have any idea who are the buyers you would be OK with, and buyers you would definitely not want to control our futures?
What are you yourself willing to do to promote the sale of milk (and specific milk brands which we can trace to our farms) to keep sales alive, and perhaps even recapture from plant-based beverages? (Note: I am not suggesting criticizing checkoff efforts with this question.)
What are you willing to do yourself – or invest in time wise or monetarily wise – to protect your future?