DALLAS, Feb. 26, 2018 /PRNewswire/ -- Dean Foods Company reported fourth quarter and full year 2017 results.
Highlights
- Adjusted earnings in line with guidance; excludes tax reform benefit of $44 million
- Q4 net income from continuing operations per diluted share was $0.54 and adjusted net income from continuing operations per diluted share was $0.25
- Full year net income from continuing operations per diluted share was $0.52 and adjusted net income from continuing operations per diluted share was $0.80
- Executing commercial agenda of strategic plan to Win in Private Label and Build and Buy Strong Brands
- Aggressive approach to Driving Operational Excellence through an enterprise-wide cost productivity plan targeting an incremental $150 million in annual run-rate savings by 2020; in advanced stages of design and initial execution across all areas of the company
- Improving capabilities through investments in people, technology and infrastructure
- Full year 2018 adjusted diluted earnings per share are expected to be $0.55 to $0.80 (1)
Chief Executive Officer Ralph Scozzafava said, "In 2017, we navigated a rapidly-changing industry landscape and a dynamic retail environment. As we saw the marketplace challenges on volume and mix building, we directed our focus on improving our execution in securing branded and private label volume and immediately began taking steps to lower our overall cost base. Some of these actions are already gaining momentum and contributed to our fourth quarter 2017 financial results. These actions become a critical path in our go-forward commercial agenda as well as an aggressive enterprise-wide cost productivity program in 2018 and beyond."
Business Updates
The Company announced plans for executing an enterprise-wide cost productivity program to secure incremental savings in 2018 and beyond. The Company completed the assessment phase and is in the advanced stages of designing, and in some cases implementing, the planned savings initiatives. The productivity plan focuses on three key areas:
- Rescaling the supply chain involves consolidating and right-sizing its manufacturing capacity to better match volume as well as adjust for expected changes in 2018. The Company is taking a holistic approach to its supply chain network, evaluating opportunities across the country in both operations and logistics. The Company plans to consolidate its plant network while maintaining quality, value and service and expects to implement the changes in phases beginning in 2018 and with targeted completion in 2019.
- Optimizing spend management utilizing coordinated procurement efforts across the entire enterprise in all key categories. The Company plans to better leverage its size and scale for efficiencies across all facets of spend in addition to expanding its cost control efforts across all product and indirect spend categories.
- The Company is taking further steps to integrate its operating model to drive organizational effectiveness while also reducing its general and administrative costs across the enterprise. The Company plans to implement a flatter, leaner and more agile organizational structure to enhance decision making and help build functional competencies that will increase effectiveness with customers and suppliers. The Company completed the first phase of this general and administrative focused reduction in the fourth quarter of 2017 and first quarter of 2018 with further actions planned over the coming months.
The accumulation of the new efforts, coupled with the ongoing work of the Company's base cost productivity initiatives, will generate savings in 2018 that the Company expects will begin to mitigate some of the anticipated impact from volume deleverage and non-dairy input cost inflation. A portion of these savings are expected to impact 2018 with further and larger savings in 2019 and beyond. The progression of these savings is contemplated in the Company's 2018 full-year guidance.
