News Column

WhiteWave Foods Reports Record Second Quarter 2014 Results

August 7, 2014

  • Adjusted Diluted Earnings per Share Increased 42% to $0.23, Excluding China Joint Venture Investments
  • Net Sales Increased 36% to $838 Million; 11% Organic Net Sales Growth, Excluding Results of Earthbound Farm
  • Adjusted Operating Income Grew 53% to $71 Million; Strong Operating Margin Expansion
  • Q3 2014 Guidance of $0.25 to $0.26 Adjusted Diluted Earnings per Share, Excluding Investments in China Joint Venture
  • Full Year 2014 Guidance Range Increased to $0.98 to $1.00 of Adjusted Diluted Earnings per Share, Excluding Investments in China Joint Venture

    DENVER--(BUSINESS WIRE)-- The WhiteWave Foods Company (NYSE:WWAV) today reported record results for the second quarter ended June 30, 2014, driven by continued growth across all platforms.

     
    Financial Summary:Three Months Ended June 30,
    In millions, except EPS2014   2013   % Change*
    Net Sales$838$616 +36%
     
    Operating Income
    GAAP $67$42 +59%
    Adjusted $71$46 +53%
     
    Net Income
    GAAP $34$31 +10%
    Adjusted $40$28 +39%
     
    Diluted Earnings per Share (EPS)
    GAAP $0.19$0.18 +8%
    Adjusted $0.22$0.16 +36%
    Adjusted, excluding China Joint Venture $0.23$0.16 +42%
     
    Shares Outstanding
    Basic 174 173
    Diluted 178 174
     
    *Certain change percentages may not recalculate using the rounded dollar amounts provided
     


    WhiteWave reported second quarter 2014 adjusted diluted earnings per share of $0.23, a 42 percent increase compared to second quarter 2013, excluding investments associated with its China joint venture. Including joint venture investments, WhiteWave reported second quarter 2014 adjusted diluted earnings per share of $0.22.

    Net sales for the second quarter of 2014 were $838 million, a 36 percent increase from net sales of $616 million in the second quarter of 2013. This growth reflects the inclusion of Earthbound Farm and strong organic growth in both the North America and Europe segments. Excluding Earthbound Farm, net sales increased 11 percent due primarily to strong volume growth in both segments.

    Adjusted operating income for the second quarter of 2014 increased 53 percent to $71 million, compared to $46 million in the second quarter of 2013.

    “We continued to experience strong growth across our businesses in the second quarter, with several of our platforms reporting record revenue,” said Gregg Engles, chairman and chief executive officer. “The increasing cost leverage as a result of our growth, along with the benefits we are starting to realize from the investments in our supply chain, led to strong operating margin expansion in the quarter. We are pleased with our performance and believe our innovative, on-trend and market leading brands will continue to fuel our growth, leading us to again increase our EPS guidance for the full year.”

    BASIS OF PRESENTATION

    Certain financial measures in this release are presented on a non-GAAP, adjusted basis. North America segment financial results for the second quarter of 2014 are adjusted to exclude an immaterial gain from the reversal of certain restructuring costs recognized in the fourth quarter of 2013. All other adjustments relate to corporate and other items. See reconciliations at the end of this release for further details and for reconciliations of the non-GAAP measures to GAAP.

    NORTH AMERICA SEGMENT

    WhiteWave’s North America segment consists of four platforms: Plant-based Foods and Beverages, Coffee Creamers and Beverages, Premium Dairy, and Organic Greens and Produce. In the second quarter of 2014, net sales for the North America segment were $710 million, an increase of 38 percent over the second quarter of 2013. Growth in the North America segment reflects the inclusion of Earthbound Farm’s results, and increased net sales across the other North America platforms. Excluding Earthbound Farm, net sales for the second quarter of 2014 increased 8 percent from the second quarter of 2013. Adjusted operating income for the North America segment increased 49 percent to $74 million for the second quarter, compared to the same period in 2013, driven by the addition of Earthbound Farm and by operating margin expansion of 110 basis points from the North America segment’s historical platforms.

     


    North America Segment Summary

    In millions   Three Months Ended June 30,
    2014   2013   % Change
    Net Sales $710$514 +38%
     
    GAAP Segment Operating Income $74$50 +49%
    Adj. Segment Operating Income $74$50 +49%
     


    Plant-Based Foods & Beverages

    In the North America Plant-based Foods and Beverages platform, which includes Silk® soymilk, almondmilk, coconutmilk, and soy yogurts, net sales increased 13 percent in the second quarter of 2014 compared to the second quarter of 2013. Growth in the platform was driven primarily by the continued strong growth of Silk® almondmilk, which increased sales 45 percent in the second quarter 2014 compared to the same period in 2013. The overall Plant-based Foods and Beverages category remained strong with more than 17 percent category growth in the second quarter 2014. WhiteWave’s Silk® brand has the #1 market position in almond, as well as in all of its other product subcategories.

    Coffee Creamers & Beverages

    In Coffee Creamers and Beverages, which includes coffee creamers and iced coffee under the International Delight®, Dunkin Donuts® and Silk® brands, as well as half and half dairy creamers under the LAND O LAKES® and Horizon Organic® brands, net sales increased 5 percent in the second quarter 2014 compared to the second quarter 2013. Growth was due primarily to increased volumes behind new product introductions and growth of half and half dairy creamers. Volumes in the refrigerated flavored creamer category grew by double-digits in the second quarter, with increased promotional activities lowering the dollar growth of the category to 6 percent.

    Premium Dairy

    In Premium Dairy, Horizon Organic® net sales increased 8 percent in the second quarter of 2014 compared to the second quarter of 2013. Growth in the platform was offset by a 1 percentage point impact from the previously communicated exit of certain private label manufacturing arrangements and discontinuation of servicing a national coffee chain. Volume continued to be the primary sales driver due to continued growth in value-added offerings, such as Horizon Organic® DHA Omega-3 and Horizon Organic® Lactose-Free products, along with some contribution from price increases implemented in the fourth quarter of 2013. The organic milk category grew by 8 percent in the second quarter, with Horizon Organic® maintaining its leading market share.

    Organic Greens & Produce

    In Organic Greens and Produce, Earthbound Farm’s second quarter 2014 net sales were $153 million. Sales were driven primarily by low-double-digit growth in organic packaged salads, which comprises the majority of Earthbound Farm’s business. Organic packaged salads’ share of the total packaged salad category grew by 2 percentage points to 24 percent in the second quarter. Earthbound Farm continues to hold the leading share in the branded organic packaged salad category.

    EUROPE SEGMENT

    The Europe segment consists of a Plant-based Foods and Beverages platform that operates primarily under the Alpro® brand name. Net sales in the segment increased 26 percent on a reported basis in the second quarter of 2014 compared to the second quarter of 2013, and increased 18 percent on a constant currency basis. Operating income in the segment increased 79 percent to $14 million for the second quarter of 2014, compared to the same period in 2013, with operating margin expansion of 323 basis points.

     
    Europe Segment Summary
    In millions   Three Months Ended June 30,
    2014   2013   % Change
    Net Sales $128$102 +26%
     
    Segment Operating Income $14$8 +79%
     


    Net sales growth in Europe was driven by continued strong growth in almond beverages, non-dairy yogurts and creams, as well as low-double-digit growth in soy beverages. Alpro® holds the leading market position across its core Western European geographies, with a composite share of 42 percent.

    FORWARD OUTLOOK

    Management expects net sales growth of approximately 30 percent in the third quarter of 2014, which reflects typical seasonality in Earthbound Farm’s business. Excluding Earthbound Farm, management expects net sales on an organic basis to increase 8 to 9 percent over the balance of 2014. Management continues to expect net sales growth in the low-thirties percent range for full year 2014, consistent with previous guidance.

    Management now expects an adjusted total operating income percentage growth rate in the low to mid-forties for both the third quarter and full year 2014, driven by continued strong volume growth, cost leverage and further progress on cost improvement and margin expansion initiatives.

    Management is forecasting interest expense in the third quarter 2014 to be approximately $8 to $9 million and continues to expect interest expense for the full year to be approximately $30 to $32 million. WhiteWave estimates an annual tax rate of approximately 35 percent for 2014, with potential for variability in quarterly rates.

    Management now expects to deliver adjusted diluted earnings per share between $0.98 and $1.00 for full year 2014, an increase from its previously forecasted range of $0.95 to $0.98, excluding investments in its joint venture in China. Management still anticipates the joint venture in China will result in a reduction of approximately $0.05 per diluted earnings per share in 2014, as operating investments in the joint venture are expected to increase somewhat in the second half of the year. For the third quarter, management expects adjusted diluted earnings per share to range between $0.25 to $0.26, excluding a reduction of approximately $0.02 diluted earnings per share from estimated China joint venture investments. The China joint venture is in the process of being commercialized and there are numerous factors that may impact the amount of WhiteWave’s estimated investment on a quarterly basis, as well as for the full year.

    WhiteWave continues to project capital expenditures will be approximately $275 million for the full year 2014. Timing of capital projects may vary and impact the amount of investments actually made in 2014.

    “Our second quarter 2014 results reflected strong operating performance all around,” said Kelly Haecker, executive vice president and chief financial officer. “We delivered another quarter of robust topline growth, driven by strong organic growth in North America and Europe, as well as the addition of Earthbound Farm. We are pleased with Earthbound Farm’s solid results, and we now expect this acquisition to deliver at least $0.09 of accretion in 2014. In the quarter, we delivered strong margin expansion across our segments driven primarily by the continued cost leverage from our growth, coupled with the benefits from our past capital investments that are beginning to yield results, as well as some benefits from past pricing actions. We remain focused on increasing our sales and improving our cost structure and look forward to continuing to build on our strong momentum over the balance of the year.”

    CONFERENCE CALL WEBCAST

    A live webcast to discuss WhiteWave’s financial results and outlook will be held at 10 am Eastern time today, August 7, 2014 and may be heard by visiting the “Investor Relations” section of the WhiteWave website at www.whitewave.com/investors. A slide presentation and schedule reconciling GAAP to non-GAAP financial information will be available on our website and will accompany the webcast. The webcast replay of the call will be available for approximately 45 days on the Investor Relations section of the WhiteWave website.

    EXPLANATION OF NON-GAAP FINANCIAL MEASURES

    In addition to the results prepared in accordance with GAAP, we have presented certain non-GAAP financial measures, including adjusted financial information for the periods presented, such as operating income, EBITDA, net income and diluted earnings per share. We present these non-GAAP measures in order to facilitate meaningful evaluation of our operating performance between periods. These adjustments include certain corporate costs associated with equity awards granted to certain of our executive officers, employees and directors in conjunction with our Company’s initial public offering in October 2012 (the “IPO Grants”), non-recurring transaction costs related to acquisitions and other investments, non-recurring transition costs related to our separation from Dean Foods Company, the elimination of a gain recognized from the reversal of restructuring costs, and the elimination of non-cash income or expense related to mark-to-market adjustments on interest rate hedges. These adjustments are intended to provide greater transparency of underlying profit trends and to allow investors to evaluate our business on the same basis as our management, which uses these non-GAAP measures in making financial and operating decisions and evaluating the Company’s performance. These adjustments are not necessarily indicative of what our actual financial performance would have been during the periods presented and should be viewed in addition to, and not as an alternative to, the Company’s results prepared in accordance with GAAP. Further details regarding these adjustments are included in the tables below and may be found in a reconciliation schedule posted on the Investor Relations section of the Company’s website.

    ABOUT THE WHITEWAVE FOODS COMPANY

    The WhiteWave Foods Company is a leading consumer packaged food and beverage company that manufactures, markets, distributes, and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products and organic produce throughout North America and Europe. WhiteWave is focused on providing consumers with innovative, great-tasting food and beverage choices that meet their increasing desires for nutritious, flavorful, convenient, and responsibly-produced products. WhiteWave’s widely-recognized, leading brands distributed in North America include Silk® plant-based foods and beverages, International Delight® and LAND O LAKES® coffee creamers and beverages, Horizon Organic® premium dairy products and Earthbound Farm® certified organic salads, fruits and vegetables. Its popular European brands of plant-based foods and beverages include Alpro® and Provamel®. To learn more about WhiteWave, visit www.whitewave.com.

    *The LAND O LAKES brand is owned by Land O’Lakes, Inc. and is used by license.

    FORWARD-LOOKING STATEMENTS

    Some of the statements in this press release are “forward-looking” and are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These “forward-looking” statements include statements under the heading “Forward Outlook” and statements relating to, among other things, projections of net sales growth, operating income, net income and earnings per share, on an adjusted and GAAP basis, our innovation plans, the success of our cost improvement and margin expansion initiatives, anticipated profit growth and margin expansion, the expected financial impact of our acquisition of Earthbound Farm, the expected impact and timing of additional investments in our joint venture in China and commencement of operations, and other statements that begin with words such as “believe,” “expect,” “intend” or “anticipate.” These statements involve risks and uncertainties that may cause results to differ materially from the statements set forth in this press release. Financial projections are based on a number of assumptions, and actual results could be materially different than projected if those assumptions are erroneous. The Company’s ability to meet targeted financial and operating results depend on a variety of economic, competitive, and governmental factors, including raw material availability and costs, the demand for the Company’s products, and the Company’s ability to access capital under its credit facilities or otherwise, many of which are beyond the Company’s control and which are described in the Company’s 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2014 and in our quarterly reports on Form 10-Q. The Company’s ability to profit from its branding initiatives depends on a number of factors, including consumer acceptance of the Company’s products. Our growth plans depend, in part, on our ability to innovate successfully and on a cost-effective basis. Our financial outlook for the third quarter and full year 2014 may be impacted by our ability or inability to effectively integrate and operate our Earthbound Farm business acquired on January 2, 2014, and the amount of our future additional investments in our joint venture in China and timeline for the joint venture to commence operations. The Company’s expected operating income growth will depend in part on its ability to cost effectively expand capacity. The forward-looking statements in this press release speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to such statements to reflect any change in its expectations with regard thereto or any changes in the events, conditions or circumstances on which any such statement is based.

       
    The WhiteWave Foods Company

    Condensed Consolidated Statements of Operations

    (Unaudited, GAAP Basis)
     
    Three months ended June 30,
      2014     2013  
    (In thousands, except share and per share data)
     
    Net sales $ 837,926 $ 600,827
    Sales to related parties - 15,163
    Transitional sales fees   -     -  
    Total net sales 837,926 615,990
    Cost of goods sold   552,666     391,777  
    Gross profit 285,260 224,213
    Operating expenses:
    Selling, distribution, and marketing 156,910 138,346
    General and administrative 61,630 43,913
    Asset disposal and exit costs   (55 )   -  
    Total operating expenses   218,485     182,259  
    Operating income 66,775 41,954
    Other expense (income):
    Interest expense 7,512 4,737
    Other expense (income), net   3,548     (8,173 )
    Total other expense (income)   11,060     (3,436 )
    Income before income tax 55,715 45,390
    Income tax expense   20,766     14,181  
    Income before income (loss) in investment in unconsolidated entity 34,949 31,209
    Income (loss) in investment in unconsolidated entity   (542 )   -  
    Net income $ 34,407   $ 31,209  
     
    Average common shares:
    Basic 173,966,917 173,005,352
    Diluted 177,589,222 173,909,653
     
    Net income per share:
    Basic $ 0.20 $ 0.18
    Diluted $ 0.19 $ 0.18
     
       
    The WhiteWave Foods Company

    Condensed Consolidated Statements of Operations

    (Unaudited, GAAP Basis)
     
    Six months ended June 30,
      2014     2013  
    (In thousands, except share and per share data)
     
    Net sales $ 1,668,149 $ 1,185,335
    Sales to related parties - 37,062
    Transitional sales fees   -     1,837  
    Total net sales 1,668,150 1,224,234
    Cost of goods sold   1,109,675     781,478  
    Gross profit 558,474 442,756
    Operating expenses:
    Selling, distribution, and marketing 304,301 264,284
    General and administrative 133,916 94,525
    Asset disposal and exit costs   (703 )   -  
    Total operating expenses   437,514     358,809  
    Operating income 120,960 83,947
    Other expense (income):
    Interest expense 13,234 9,461
    Other expense (income), net   4,356     (8,393 )
    Total other expense   17,590     1,068  
    Income before income tax 103,370 82,879
    Income tax expense   36,061     27,672  
    Income before income (loss) in investment in unconsolidated entity 67,309 55,207
    Income (loss) in investment in unconsolidated entity   (542 )   -  
    Net income $ 66,767   $ 55,207  
     
    Average common shares:
    Basic 173,796,646 173,002,691
    Diluted 177,200,630 173,567,934
     
    Net income per share:
    Basic $ 0.38 $ 0.32
    Diluted $ 0.38 $ 0.32
     
         
    The WhiteWave Foods Company
    Consolidated Balance Sheets
    (Unaudited, GAAP Basis)
     
    June 30, 2014December 31, 2013
    (In thousands)
    ASSETS
    Cash and cash equivalents $ 65,953 $ 101,105
    Trade receivables, net of allowance 185,113 146,864
    Inventories 188,234 158,569
    Deferred income taxes 30,404 26,588
    Prepaid expenses and other current assets   42,992     23,095  
    Total current assets 512,696 456,221
    Investment in unconsolidated entity 46,365 -
    Property, plant, and equipment, net 904,685 659,683
    Identifiable intangible and other assets, net 648,505 394,937
    Goodwill   999,633     772,343  
    Total Assets $ 3,111,884   $ 2,283,184  
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Accounts payable and accrued expenses $ 431,085 $ 357,106
    Current portion of debt and capital lease obligations 24,191 15,000
    Income taxes payable   1,946     14,294  
    Total current liabilities 457,222 386,400
    Long-term debt and capital lease obligations 1,300,387 647,650
    Deferred income taxes 263,356 237,765
    Other long-term liabilities   45,254     49,930  
    Total Liabilities   2,066,219     1,321,745  
    Common stock 1,741 1,735
    Additional paid-in capital 868,199 851,017
    Retained Earnings 183,894 117,127
    Accumulated other comprehensive loss   (8,169 )   (8,440 )
    Total Shareholders' Equity   1,045,665     961,439  
    Total Liabilities and Shareholders' Equity $ 3,111,884   $ 2,283,184  
     
       
    The WhiteWave Foods Company
    Condensed Consolidated Statements of Cash Flows
    (Unaudited, GAAP Basis)
     
    Six months ended June 30,
      2014     2013  
    (In thousands)

    Operating Activities

    Net income $ 66,767 $ 55,207
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 54,868 39,975
    Share-based compensation expense 15,426 10,093
    Amortization of debt issuance costs 1,448 1,207
    Other adjustments (1,359 ) 9,812
    Net change in operating assets and liabilities, net of acquisition   (19,401 )   (60,552 )

    Net cash provided by operating activities

      117,749     55,742  
     

    Investing Activities

    Investment in unconsolidated entity (47,285 ) -
    Payments for acquisition, net of cash acquired $5,638 (603,373 ) -
    Payments for property, plant, and equipment (139,850 ) (53,021 )
    Proceeds from sale of fixed assets   122     61,956  
    Net cash provided by (used in) investing activities   (790,386 )   8,935  
     

    Financing Activities

    Distributions to Dean Foods, net - (871 )
    Proceeds from the issuance of debt 500,000 -
    Other debt related activity 139,282 (58,950 )
    Other financing activities   (2,392 )   (16 )
    Net cash provided by (used in) financing activities   636,890     (59,837 )
    Effect of exchange rate changes on cash and cash equivalents   595     (2,100 )
    Increase (Decrease) in cash and cash equivalents (35,152 ) 2,740
    Cash and cash equivalents, beginning of period   101,105     69,373  
    Cash and cash equivalents, end of period $ 65,953   $ 72,113  
     
                 
    The WhiteWave Foods Company

    GAAP to Non-GAAP Reconciliation

    (Unaudited)
     
    Three months ended June 30, 2014 Three months ended June 30, 2013
    GAAP Adjustments Adjusted GAAP Adjustments Adjusted
    (In thousands, except share and per share data)
     
    Total net sales $ 837,926 $ - $ 837,926 $ 615,990 $ - $ 615,990
    Cost of goods sold   552,666     -     552,666     391,777     -     391,777
    Gross profit 285,260 - 285,260 224,213 - 224,213
    Operating expenses:
    Selling, distribution, and marketing 156,910 - 156,910 138,346 - 138,346
    General and administrative 61,630 (3,888 ) (a) 57,742 43,913 (4,160 ) (a) 39,753
    Asset disposal and exit costs   (55 )   55   (b)   -     -     -   (b)   -
    Total operating expenses   218,485     (3,833 )   214,652     182,259     (4,160 )   178,099
    Operating income 66,775 3,833 70,608 41,954 4,160 46,114
    Other expense (income):
    Interest expense 7,512 - 7,512 4,737 - 4,737
    Other expense (income), net   3,548     (3,555 ) (c)   (7 )   (8,173 )   8,173   (c)   -
    Total other expense (income)   11,060     (3,555 )   7,505     (3,436 )   8,173     4,737
    Income before net loss in investment in unconsolidated entity 55,715 7,388 63,103 45,390 (4,013 ) 41,377
    Income tax expense 20,766 2,078 (d) 22,844 14,181 (1,300 ) (d) 12,881
    Income (loss) in investment in unconsolidated entity   (542 )   -     (542 )   -     -     -
    Net income $ 34,407   $ 5,310   $ 39,717   $ 31,209   $ (2,713 ) $ 28,496
    Earnings per Share:
    Basic $ 0.23 (h) $ 0.16 (h)
    Diluted $ 0.22 (h) $ 0.16 (h)
    Weighted Average Shares Outstanding:
    Basic 173,966,917 173,005,352
    Diluted 177,589,222 173,909,653
     
    Adjusted net income excluding joint venture activities:
    Adjusted net income 39,717 28,496
    Corporate related joint venture expenses, net of tax 1,182 (e) - (e)
    Net loss in investment in unconsolidated entity   542   (f)   - (f)
    Adjusted net income excluding joint venture activities $ 41,441   $ 28,496
    Adjusted earnings per share excluding joint venture activities:
    Basic $ 0.24 $ 0.16
    Diluted $ 0.23 $ 0.16
     
                 
    The WhiteWave Foods Company

    GAAP to Non-GAAP Reconciliation

    (Unaudited)
     
    Three months ended June 30, 2014 Three months ended June 30, 2013
    GAAP Adjustments Adjusted GAAP Adjustments Adjusted
    (In thousands) (In thousands)
    Income statement amounts by segment:
    Total net sales
    North America $ 709,521 $ - $ 709,521 $ 513,829 $ - $ 513,829
    Europe   128,405     -     128,405     102,161     -   102,161  
    Total $ 837,926   $ -   $ 837,926   $ 615,990   $ - $ 615,990  
     
    Operating income
    North America $ 74,052 $ (55 ) (b) $ 73,997 $ 49,688 $ - (b) $ 49,688
    Europe   14,013     -     14,013     7,847     -   7,847  
    Total consolidated segment operating income   88,065     (55 )   88,010     57,536     -   57,536  
    Corporate and other   (21,290 )   3,888   (a)   (17,402 )   (15,582 )   4,160 (a)   (11,422 )
    Total operating income $ 66,775   $ 3,833   $ 70,608   $ 41,954   $ 4,160 $ 46,114  
     
       
    The WhiteWave Foods Company
    Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
    (Unaudited)
     
    Three months ended June 30,
      2014   2013  
    (In thousands)
    Net income $ 34,407 $ 31,209
    Interest expense, net 7,512 4,737
    Income tax expense 20,766 14,181
    Depreciation and amortization   27,735   19,981  
    EBITDA $ 90,420 $ 70,108
    Transaction, asset disposal & transition costs (a), (b) 948 1,901
    Mark to market adjustments on economic hedges (gains)/losses (c) 3,555 (8,173 )
    IPO grants & non-cash stock-based compensation (a), (g)   6,438   3,615  
    Adjusted EBITDA $ 101,361 $ 67,451  
     
    Corporate related joint venture expenses (e) 1,854 -
    Net loss in investment in unconsolidated entity (f)   542   -  
    Adjusted EBITDA excluding joint venture activities $ 103,757 $ 67,451  
     
               
    The WhiteWave Foods Company

    GAAP to Non-GAAP Reconciliation

    (Unaudited)
     
    Six months ended June 30, 2014 Six months ended June 30, 2013
    GAAP Adjustments Adjusted GAAP Adjustments Adjusted
    (In thousands, except share and per share data)
     
    Total net sales $ 1,668,149 $ - $ 1,668,149

    $

    1,224,234

    $ - $ 1,224,234
    Cost of goods sold   1,109,675     -     1,109,675     781,478     -     781,478  
    Gross profit 558,474 - 558,474 442,756 - 442,756
    Operating expenses:
    Selling, distribution, and marketing 304,301 - 304,301 264,284 - 264,284
    General and administrative 133,916 (14,449 ) (a) 119,467 94,525 (9,639 ) (a) 84,886
    Asset disposal and exit costs   (703 )   703   (b)   -     -     -   (b)   -  
    Total operating expenses   437,514     (13,746 )   423,768     358,809     (9,639 )   349,170  
    Operating income 120,960 13,746 134,706 83,947 9,639 93,586
    Other expense (income):
    Interest expense 13,234 - 13,234 9,461 - 9,461
    Other expense (income), net   4,356     (4,356 ) (c)   -     (8,393 )   8,149   (c)   (244 )
    Total other expense (income)   17,590     (4,356 )   13,234     1,068     8,149     9,217  
    Income before net loss in investment in unconsolidated entity 103,370 18,102 121,472 82,879 1,490 84,369
    Income tax expense 36,061 6,394 (d) 42,455 27,672 596 (d) 28,268
    Income (loss) in investment in unconsolidated entity   (542 )   -     (542 )   -     -     -  
    Net income $ 66,767   $ 11,708   $ 78,475   $ 55,207   $ 894   $ 56,101  
    Earnings per Share:
    Basic $ 0.45 (h) $ 0.32 (h)
    Diluted $ 0.44 (h) $ 0.32 (h)
    Weighted Average Shares Outstanding:
    Basic 173,796,646 173,002,691
    Diluted 177,200,630 173,567,934
     
    Adjusted net income excluding joint venture activities:
    Adjusted net income 78,475 56,101
    Corporate related joint venture expenses, net of tax 1,935 (e) - (e)
    Net loss in investment in unconsolidated entity   542   (f)   -   (f)
    Adjusted net income excluding joint venture activities $ 80,952   $ 56,101  
    Adjusted earnings per share excluding joint venture activities:
    Basic $ 0.47 $ 0.32
    Diluted $ 0.46 $ 0.32
     
               
    The WhiteWave Foods Company

    GAAP to Non-GAAP Reconciliation

    (Unaudited)
     
    Six months ended June 30, 2014 Six months ended June 30, 2013
    GAAP Adjustments Adjusted GAAP Adjustments Adjusted
    (In thousands) (In thousands)
    Income statement amounts by segment:
    Total net sales
    North America $ 1,414,123 $ - $ 1,414,123 $ 1,020,847 $ - $ 1,020,847
    Europe   254,026     -     254,026     203,387     -   203,387  
    Total $ 1,668,149   $ -   $ 1,668,149   $ 1,224,234   $ - $ 1,224,234  
     
    Operating income
    North America $ 148,627 $ (703 ) (b) $ 147,924 $ 105,899 $ - (b) $ 105,899
    Europe   24,409     -     24,409     14,551     -   14,551  
    Total consolidated segment operating income   173,036     (703 )   172,333     120,450     -   120,450  
    Corporate and other   (52,076 )   14,449   (a)   (37,627 )   (36,503 )   9,639 (a)   (26,864 )
    Total operating income $ 120,960   $ 13,746   $ 134,706   $ 83,947   $ 9,639 $ 93,586  
     
         
    The WhiteWave Foods Company
    Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
    (Unaudited)
     
    Six months ended June 30,
      2014   2013  
    (In thousands)
    Net income $ 66,767 $ 55,207
    Interest expense, net 13,234 9,461
    Income tax expense 36,061 27,672
    Depreciation and amortization   54,868   39,975  
    EBITDA $ 170,930 $ 132,315
    Transaction, asset disposal & transition costs (a), (b) 7,590 5,015
    Mark to market adjustments on economic hedges (gains)/losses (c) 4,356 (8,149 )
    IPO grants & non-cash stock-based compensation (a), (g)   18,870   11,375  
    Adjusted EBITDA $ 201,746 $ 140,556  
     
    Corporate related joint venture expenses (e) 2,979 -
    Net loss in investment in unconsolidated entity (f)   542   -  
    Adjusted EBITDA excluding joint venture activities $ 205,267 $ 140,556  
     


    The adjusted results differ from WhiteWave’s results under GAAP due to the following:

    (a) The adjustment reflects:

    i. Elimination of stock compensation expense for the IPO grants.

  • $2.9 million for the three months ended June 30, 2014.
  • $2.3 million for the three months ended June 30, 2013.
  • $6.2 million for the six months ended June 30, 2014.
  • $4.7 million for the six months ended June 30, 2013.

    ii. Elimination of non-recurring transaction costs related to acquisitions and other investments.

  • $0.2 million for the three months ended June 30, 2014.
  • $nil million for the three months ended June 30, 2013.
  • $7.4 million for the six months ended June 30, 2014.
  • $nil million for the six months ended June 30, 2013.

    iii. Elimination of non-recurring transition costs related to the separation from Dean Foods Company.

  • $0.8 million for the three months ended June 30, 2014.
  • $1.3 million for the three months ended June 30, 2013.
  • $0.9 million for the six months ended June 30, 2014.
  • $4.3 million for the six months ended June 30, 2013.

    iv. Elimination of non-recurring transaction costs related to the July 2013 registered public offering by Dean Foods Company of WhiteWave shares.

  • $nil million for the three months ended June 30, 2014.
  • $0.6 million for the three months ended June 30, 2013.
  • $nil million for the six months ended June 30, 2014.
  • $0.6 million for the six months ended June 30, 2013.

    (b) The adjustment reflects elimination of a gain recognized from the reversal of restructuring costs incurred in the fourth quarter of 2013 in connection with the sale of the dairy farm in Idaho.

  • $0.1 million for the three months ended June 30, 2014.
  • $nil million for the three months ended June 30, 2013.
  • $0.7 million for the six months ended June 30, 2014.
  • $nil million for the six months ended June 30, 2013.

    (c) The adjustment reflects elimination of the (income) expense related to the mark-to-market adjustment on interest rate hedges.

  • $3.6 million for the three months ended June 30, 2014.
  • ($8.2) million for the three months ended June 30, 2013.
  • $4.4 million for the six months ended June 30, 2014.
  • ($8.1) million for the six months ended June 30, 2013.

    (d) Income tax in the adjustments columns represent the adjustment to income tax expense required to arrive at an adjusted effective tax rate on adjusted net income.

    (e) The adjustment reflects the elimination of administrative costs incurred to manage the China Joint Venture investment, net of tax.

  • $1.2 million for the three months ended June 30, 2014.
  • $nil million for the three months ended June 30, 2013.
  • $1.9 million for the six months ended June 30, 2014.
  • $nil million for the six months ended June 30, 2013.

    (f) The adjustment reflects the elimination of the net loss incurred on the investment in the China Joint Venture.

  • $0.5 million for the three months ended June 30, 2014.
  • $nil million for the three months ended June 30, 2013.
  • $0.5 million for the six months ended June 30, 2014.
  • $nil million for the six months ended June 30, 2013.

    (g) The adjustment reflects non-cash related stock-based compensation expense, excluding amounts already included in IPO grants.

  • $3.6 million for the three months ended June 30, 2014.
  • $1.4 million for the three months ended June 30, 2013.
  • $12.7 million for the six months ended June 30, 2014.
  • $6.7 million for the six months ended June 30, 2013.

    (h) On May 23, 2013, Dean Foods distributed to its stockholders an aggregate of 47,686,000 shares of our Class A common stock and 67,914,000 shares of our Class B common stock as a pro rata dividend on shares of Dean Foods common stock outstanding. For 2013 quarter-to-date, the number of shares used to compute basic earnings per share is 173,005,352, which is comprised of 58,185,066 shares of Class A common stock and 114,820,286 shares of Class B common stock on a weighted average basis. For 2013 year-to-date, the number of shares used to compute basic earnings per share is 173,002,691, which is comprised of 40,689,730 shares of Class A common stock and 132,312,961 shares of Class B common stock on a weighted average basis. The number of shares used to compute diluted earnings per share includes the dilutive impact of stock options and RSUs. The number of shares used to compute diluted earnings per share includes the dilutive impact of stock options and RSUs. In May 2014, the Company’s sole outstanding class of capital stock was reclassified as common stock.

    For the three months and six months ended June 30, 2014, the number of shares used to compute basic earnings per share is 173,966,917 and 173,796,646 respectively, which is comprised entirely of common stock on a weighted average basis. The number of shares used to compute diluted earnings per share includes the dilutive impact of stock options and RSUs.




    WhiteWave Foods Company

    Investor Relations:

    Dave Oldani, +1-303-635-4747

    or

    Media:

    Molly Keveney, +1-303-635-4529

    Source: WhiteWave Foods Company


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