- 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
UPDATE – posted 6:35 pm Tues, Nov. 12: “Emergency Relief Has Been Requested. A Hearing will be Conducted on this Matter on November 13, 2019 at 2:30 pm [CST] in Houston Tex.” This information per court documents, TXSB.
Dean Foods, the nation’s largest processor of fluid milk, has filed Chapter 11 Bankruptcy in the Southern District of Texas. According to a company news release, Dean Foods states the company is working toward an ‘orderly and efficient sale of the Company.”
In the same release, Dean Foods also states it is “engaged in advanced discussions with Dairy Farmers of America, Inc. (“DFA) regarding a potential sale of substantially all assets of the Company. If the parties ultimately reach agreement on the terms of a sale, such transaction would be subject to regulatory approval and would be subject to higher or otherwise better offers in the bankruptcy.”
Related to the announcement, Dean Foods cancelled its regular Quarterly Earnings Call, which was scheduled to occur at 9:00 am on the morning of Nov. 12.
Information about the actions and proceedings can be accessed at http://www.deanfoodsrestructuring.com.
The major concern for dairy farm communities – especially the farmers, and related agribusinesses and community small businesses across the country who serve those farmers – will be how independent dairy farms, who ship directly to Dean Foods plants, will be affected, treated, and compensated during the Bankruptcy proceedings. Those detailed answers are not available at the time of this initial posting (11:50 am, EST, Nov. 12).
At this time, there are more unanswered questions than answers, and no doubt there will be many anxious farmers and co-ops around the country who depend on milk checks from Dean Foods. It will take time for accurate answers and solutions to be found as this process works through the reorganizational Bankruptcy process.
For now, here are some FAQ sheets, as posted at http://www.deanfoodsrestructuring.com:
Here is the related News Release as posted at http://www.deanfoodsrestructuring.com:
As the news broke on the morning of November 12, here are some additional links from financial news outlets:
From ‘Seeking Alpha’: Initial (breaking) News Release – Dean Foods Files Chapter 11; posted at 7:09 am – with a link to the news release below:
From ‘Seeking Alpha’: Dean Foods Company Initiates Voluntary Reorganization with New Financial Support from Existing Lenders, a posting with these bullets:
- Company secures commitments for $850 Million in DIP Financing to Support Operations
- In Advanced Discussions with Dairy Farmers of America Regarding a Potential Sale
- Business Continues Regular Operations; Customer Receiving Uninterrupted Supply of Dairy Products as Normal
From ‘Seeking Alpha’: Dean Foods EPS misses by $0.72 – posted at $9.38 am
More information will be posted as it becomes available.
In a bold move, the largest processor and direct store distributor of fluid milk in the United States has decided to leave its membership in the International Dairy Foods Association (IDFA), due to differences of opinion with the organization on the labeling of plant-based beverages.
Announcing their decision, Dean Foods issued the following statement:
“Dean Foods has been a strong supporter of the International dairy Foods Association (IDFA) for many years, however, we have reached a point where one of our key priorities is no longer shared by the entire IDFA organization. More specifically, as one of the largest dairy processors in the country, we are proud of the role we play in providing one of the most nutritious products in the grocery store – milk – to consumers around the nation. With this in mind, we believe it is wrong that many plant-based products are currently marketed using milk’s good name, yet are lacking several of the inherent nutrients of their dairy counterparts. Unfortunately, IDFA has been unable to reach consensus and take a stance on this important issue.”
“As a result, we have decided that we can no longer financially support an organization that is not behind one of our core priorities We’ll instead divert our advocacy resources to pursuing accurate product labeling for the benefit of the dairy industry, including farmers, processors, and consumers around the country. We have appreciated IDFA’s support over the years and wish the organization and its member companies the best.”
Eric Beringause, Dean Foods President and CEO, stated the following:
“There are plant-based products called “milk” on grocery store shelves today that don’t include a single drop of dairy. Even worse, consumers are being misled into believing that these imitation products are as healthy as their dairy counterparts. It is time we stood up for the dairy industry, for our nation’s dairy farmers, for the integrity of our milk products, and for the families who rely on them for adequate nutrition.
We’re exploring every potential avenue for ensuring imitation products are labeled properly, and we welcome others to join us in this effort.”
Beringause, who assumed the reins as CEO of Dean Foods on July 29, came with the reputation of having a record of transformation. In an industry crying for a renewal of sales for ‘nature’s most nearly perfect beverage,’ this decision may be a step in restoring real milk’s identity and reducing consumer confusion.
This move should be well-received by thousands of dairy farmers and industry stakeholders who have been demanding proper labeling of dairy products for years, and who have been seeking a ‘big-player’ advocate with an even bigger voice.
Dean Foods, on behalf of the nation’s dairy farm families, we look forward to working with you to advance the cause of proper labeling in keeping with standards of identity.
Eric Beringause is the new CEO and President of Dean Foods, the nation’s largest processor and distributor of fresh fluid milk and dairy case products. He replaces Ralph Scozzafava, who has stepped down. Beringause’s tenure began on July 29, 2019.
Mr. Beringause brings over 30 years of experience in the dairy, consumer products, and food processing industries to his new position. Most recently, he was the CEO of Gehl Foods, the nation’s largest processor of nacho cheese. Through his career, he has worked for a variety of companies such as Nestle, ConAgra, Alcoa, and Pillsbury. His work portfolio includes private-label and branded products.
As the nation’s largest processor of fluid milk, the performance of Dean Foods in turns affects the fortunes of tens of thousands of dairy farms and regional farm economies across the United States.
It is no secret that the dairy industry itself, as well as Dean Foods, has seen its fair share of difficulties in the past two years; Mr. Beringause faces daunting challenges in turning the company around. Jim Turner, non-executive chairman of the Dean Foods Board, expresses confidence Beringause is the person for the job in a news release: “He has a long track record of creating value in dairy and consumer products companies, as well as a unique combination of turnaround and operational expertise.”
Upon the news of the CEO change late on Friday afternoon, July 26, Dean Foods stock rose in off-market trading over the weekend, rolled a bit during the day on Monday, July 29, and at the close of business, closed up 2 cents/share from Friday afternoon’s closing value of $1.25. On Tuesday, July 30th, the stock had climbed again to $1.36 at closing.
Following is the original news release, along with some additional public information about Mr. Beringause:
The original news release from PR Newswire:
DALLAS, July 26, 2019 /PRNewswire/ — Dean Foods Company (DF) today announced that Eric Beringause has been appointed President and Chief Executive Officer and a member of the Dean Foods Board of Directors, effective July 29, 2019. Beringause succeeds Ralph Scozzafava, who has stepped down as CEO and resigned from his position on the Board.
Beringause brings to Dean Foods more than 30 years of transformational leadership and operational experience at a broad range of blue-chip brands in the food, beverage and consumer products industries, including expertise in food processing and branded and contract manufacturing. Most recently, he served as CEO of Gehl Foods, LLC, a market-leading producer of dairy-based beverages and food products. Prior to that, he served as CEO of Advanced Refreshment LLC, one of the largest U.S. producers of private-label bottled water and water-based beverages, and as CEO of Sturm Foods, Inc., a leader in private-label food products, specialty food brands and contract manufacturing. Earlier in his career, Beringause held various business development, finance, and sales and marketing roles at Alcoa Consumer Products, Gerber Infant & Baby Products, ConAgra, Inc./Grist Mill, Nestle, Inc., Nabisco Brands and The Pillsbury Company.
“We believe Eric is the right leader to drive the transformation of the business as the Company continues to execute on its enterprise-wide cost productivity plan and its previously announced exploration of strategic alternatives,” said Jim Turner, Non-Executive Chairman of the Dean Foods Board. “He has a long track record of creating value in dairy and consumer products companies, as well as a unique combination of turnaround and operational expertise.”
“I am honored to join Dean Foods at this important juncture,” said Beringause. “Dean Foods is the nation’s largest dairy processor and a leader in the industry, and I am excited to work with the Board and management team to leverage our scale and substantial assets to realize the significant opportunities available to transform our company. My top priority will be to ensure we have the right footprint and strategies in place to drive sustainable growth and profitability for the benefit of our shareholders, employees, customers and other stakeholders.”
Turner continued, “On behalf of the entire Board, I want to thank Ralph for his service and contributions to Dean Foods over the past five years. We appreciate his dedication to the Company and we wish him all the best in the future.”
Upcoming Webcast of Second Quarter 2019 Earnings Conference Call
The Company will host a live webcast of its second quarter 2019 earnings conference call on Tuesday, August 6 at 9:00 a.m. Eastern Time. The webcast is expected to last approximately one hour and will be accessible by visiting http://www.deanfoods.com/our-company/investor-relations/ and by clicking “Webcasts.”
The webcast will be accessible on most operating systems and browsers. A webcast replay will be available for approximately 45 days following the event within the Investor Relations section of the Company’s website.
About Dean Foods:
Dean Foods is a leading food and beverage company and the largest processor and direct-to-store distributor of fresh fluid milk and other dairy and dairy case products in the United States. Headquartered in Dallas, Texas, the Dean Foods portfolio includes DairyPure®, the country’s first and largest fresh, national white milk brand, and TruMoo®, the leading national flavored milk brand, along with well-known regional dairy brands such as Alta Dena®, Berkeley Farms®, Country Fresh®, Dean’s®, Friendly’s®, Garelick Farms®, LAND O LAKES®* milk and cultured products, Lehigh Valley Dairy Farms®, Mayfield®, McArthur®, Meadow Gold®, Oak Farms®, PET®**, T.G. Lee®, Tuscan® and more. Dean Foods also has a joint venture with Organic Valley®, distributing fresh organic products to local retailers. In all, Dean Foods has more than 50 national, regional and local dairy brands as well as private labels. Dean Foods also makes and distributes ice cream, cultured products, juices, teas, and bottled water. Approximately 15,000 employees across the country work every day to make Dean Foods the most admired and trusted provider of wholesome, great-tasting dairy products at every occasion. For more information about Dean Foods and its brands, visit www.deanfoods.com.
*The LAND O LAKES brand is owned by Land O’Lakes, Inc. and is used by license.
**PET is a trademark of Eagle Family Foods Group LLC, under license.
CONTACT: Investor Relations/External Communications, Suzanne Rosenberg, +1 214-303-3438. Media please contact +1 214-721-7766 or firstname.lastname@example.org
Additional Background Information about Mr. Beringause:
Vassar: Mr. Beringause serves on the Board of Trustees of Vassar College, from whom he received his undergraduate degree. A biography can be read on Vassar’s website, or is posted here:
Giving Back: Related to experiences and friendships which began with a summer job while at Vassar, Mr. Beringause has been a huge supporter of an effort which builds up the Navajo nation, assists the Student Conservation Association, and involves telecommunications – all at the same time. And he believes that teaching the ‘why’ is important. Learn more in “That Vassar Serendipity – Three Alums Find a Common Cause,” a part of the Vassar “Stories” series.
Management Board of CP Kelco / a Division of Huber: Mr. Beringause is a member of the Management Board of CP Kelco, a consumer products division of Huber, which processes .nature-based’ ingredients for the food industry.
From FoodDive – a perspective on the circumstances which led to this change:
Dean Foods Replaces CEO with Eric Beringause amid Continued Struggles; by Lilliana Byington for Food Dive. Insights from this article’s author describe the company’s struggles, the challenges ahead, and Beringause’s record.
In recent years, opinions about Dean Foods and its future have been offered by every level of the dairy supply chain from dairy farmers to financial outlets to board rooms across the nation. A change has occurred. The entire dairy economy will benefit from a healthy and vibrant Dean Foods. We are hoping that Mr. Beringause is indeed, the leader with the skills to build a positive future – many dairy communities will be counting on it.
- 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?
(Note: some updates have been added after initial posting on March 1, 2019)
(NOTE: This is an evolving story affecting Dean Plants across the country. Sources are a variety of public information and anonymous sources. Updates will be made as warranted).
Dean Foods will be closing 7 processing plants in seven states in the next months, with the plants located in Kentucky, Georgia, Pennsylvania, Massachusetts, Illinois, Michigan and Minnesota.
News of the plant closings began to emerge through local news outlets in some of the cities involved through the day Tuesday, May 22nd, yet, at this posting, there are yet no official statements from Dean Foods corporate officials.
This announcement follows the jolting announcement in early March that over 100 farmers in 8 states, marketing milk as Dean Dairy Direct (independent producers, meaning not members of a co-op or marketing agency) producers, would have their contracts terminated as of May 31, 2018. At this point, many of those farmers have found new markets, several elected to disperse their herds, with several still struggling to find a market and income source for their farm’s milk.
The navigation of stormy, wind-tossed oceans of milk in the overflowing worldwide dairy milkshed has led to the announcement that these processing plants will be shutting their doors during the late summer and fall. Intense competition to find a processing market/plant for milk, exacerbated by declining milk consumption the world over, has converged in a perfect storm of farmers getting caught in the crosshairs with no markets for their milk, along with employees in processing plants losing their jobs as well.
Competition for the prime retail real estate of grocery store shelf space is also a factor in these events.
In the southeast, the two Dean Foods plant closures at Braselton, GA and Louisville, KY follow the early May announcement of the closure of a Fulton, Ky plant, owned by Prairie Farms. In that event, processing operations will cease, but the facility will remain a distribution center, with 12 of 52 employees remaining.
An anonymous Dean Foods source says that “no more farmer/producer contract terminations via letters from Dean Foods are expected in the near future.” However, we all know that increasing consumption of fluid milk is the quickest way to stabilize the future of all dairy farms across America.
The Dean plants said to be closed are:
- Livonia, MI [Country Fresh brand]
- Thief River Falls, MN [Land O Lakes brand] (Local news, not confirmed, 100 jobs)
- Huntley, IL [Dean Foods brand] (2014 Dean’s CEO Quality Award for Fluid Milk)
- Lynn, MA [Garelick Farms brand] (News report: Over 100 employees affected)
- Erie, PA [Meadowbrook brand]
- (News report: not initially confirmed by Deans)
- (News report: Member of founding family not bitter)
- News report: (Processes gallons & half-gallons, 120 employees)
- Braselton, GA [Mayfield brand] (2015 Dean’s CEO Quality Award Recipient) (Visitors Center closed in 2014, reopened, Over 1 million folks a year to learn) (Reports from anonymous employees who received notices)
- Louisville, KY [Dean’s brand] News report link to WKYT) “That loss will cut production at the company’s Louisville plant, which will shut down.”
This announcement is only one in a series of cost-cutting measures Dean Foods has taken over the past several years. A PET milk plant in Richmond, VA was closed in the fall of 2017. In a Food Business News report of March 1, 2018, phrases such as “increasing competition,’ ‘6% decline in volume,’ and ‘reset cost structure,’ were signals more changes are to come.
The Louisville plant closure comes as no surprise, due to its distribution overlap into Indiana of retail centers to be served from the new Walmart milk processing plant opening in Fort Wayne, IN. However, the opening of that Walmart plant has now been pushed to late summer, for a variety of reasons. A recent report by Sherry Bunting, which appeared in the Farmers Exchange, features an interview with a Walmart spokesperson on that project’s status.
The closure of the Braselton, GA, Mayfield plant, may have come as a bit of surprise to some folks. In 2016, this display in the Visitor’s Center relayed some stats which were current at that time, however, today’s employee count is closer to 150. It is not known if this includes distribution networks.
Dean Foods, as of an annual Dairy Foods (magazine) report, last published in the August 2017 edition, is the United States second largest milk processor, with Nestle being #1.
As is common with any company treading in difficult waters, reports of a sale of the company, or of a merger and acquisition, are commonplace. Sometimes they prove to be nothing, sometimes they prove to be true, and only time will tell which is the case with Dean’s. It truly will be in the best interest of the United States dairy industry for the company to stabilize, due to the number of farms for which it provides a market, and for the number of employees in plants across the country.
The hardest truth of all of this is that ultimately, farmers in local regions, the rural economies that depend on a viable market for those farmers, and employees at plants, are the ones suffering the most from battles at all levels of the worldwide milkshed.
Updates, and corrections if needed, will occur as more news becomes available.