Dean Foods (DF) reported a wider loss from continuing operations for the third quarter as the dairy, food and beverages company closed and consolidated seven plants, and incurred higher than expected transitory costs. The company’s stock plunged over 24% in the afternoon trade after the bottom line missing consensus estimates and full-year guidance cut.
Loss from continuing operations was $26.65 million or $0.29 per share wider than last year’s loss of $9.97 million or $0.11 per share. On an adjusted basis, loss per share was $0.28 compared to EPS of $0.20 a year ago. Net sales declined 2.2% year-over-year to $1.89 billion.
The results for the quarter included the first full quarter of anticipated volume exiting its system amplified by incremental short-term costs associated with plant consolidations. The company incurred significant transitory costs related to ramping up receiving plant locations while also experiencing deleverage as volume exited the closing facilities.
Dean Foods said the residual transitory costs associated with its plant consolidation efforts, retailers continued investment in private label and higher than expected transportation-related inflation prompted the company to lower its guidance.
For the full year 2018, the company lowered its adjusted EPS guidance to the range of $0.10 to $0.30 from the previous estimate range of $0.32 to $0.52. Capital expenditure outlook was cut to the range of $100 million to $120 million from the prior range of $125 million to $150 million. Cash flow forecast was reduced to the range of $30 million to $50 million from the previous range of $40 million to $60 million.
Total outstanding debt at September 30, 2018, net of $22 million cash on hand, was about $870 million. The company’s net debt to bank EBITDA total leverage ratio, on an all-cash netted basis, was 3.60 times at the end of the third quarter of 2018.
Shares of Dean Foods opened Wednesday’s regular session lower and remained in grounded throughout the day. The stock has fallen over 37% in the past year and over 50% in the year so far.