Dean Foods Company Earnings: Margins Suffer Again

S&P 500 (NYSE:SPY) component Dean Foods Company’s (NYSE:DF) fourth quarter loss narrowed, beating estimates. Dean Foods is a food and beverage company in the United States offering dairy and frozen food products.

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Dean Foods Company Earnings Cheat Sheet for the Fourth Quarter

Results: Loss narrowed to $10.5 million (loss of 5 cents per diluted share) from $20.7 million (loss of 11 cents per share) in the same quarter a year earlier.

Revenue: Rose 4.5% to $3.3 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Dean Foods Company reported adjusted net income of 27 cents per share. By that measure, the company beat the mean estimate of 23 cents per share. Analysts were expecting revenue of $3.34 billion.

Quoting Management: “2011 was a year of transition for Dean Foods, and we exited the year much stronger than we entered it,” said Gregg Engles, Chairman and CEO. “After two years of significant pressure on the fluid milk business, our continued efforts to reduce costs and the stabilization of milk costs led to a return to year-over-year profit growth in the fourth quarter at Fresh Dairy Direct. WhiteWave-Alpro posted another quarter and year of solid top and bottom-line growth, driven by strong brands, marketing and innovation in growing categories. Excluding the estimated impact of our divestiture of our private label yogurt business, our Morningstar segment delivered fourth quarter results on par with a year ago, closing out a solid year of growth. On a consolidated basis, results improved as the year progressed and we finished the year with strong fourth quarter consolidated adjusted operating income growth.”

Key Stats:
Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.8 percentage point to 23.3% from the year earlier quarter. Over that time, margins have contracted on average 1.9 percentage points per quarter on a year-over-year basis.

Dean Foods has now topped analyst estimates for the last four quarters.  It beat the mark by 3 cents in the third quarter, by one cent in the second quarter, and by 8 cents in the first quarter.

Revenue has risen the past four quarters. Revenue increased 11.7% to $3.41 billion in the third quarter. The figure rose 11.6% in the second quarter from the year earlier and climbed 2.6% in the first quarter from the year-ago quarter.

Looking Forward: Analysts are pessimistic about the company’s results for the next quarter. The average estimate has fallen for the first quarter of the next fiscal year to 18 cents per share, down from 19 cents seven days ago. The average estimate for the fiscal year has remained at 73 cents per share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com