Del Monte Foods Company Reports Fiscal 2008 Second Quarter Results.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- Del Monte Foods Del Monte Foods (NYSE: DLM) is an American food production and distribution company based in San Francisco, California. It offers canned goods in Del Monte, S&W and Contadina brands, pet foods under Kibbles n' Bits, 9Lives, Pounce, Milk-Bone and several premium brands, Company (NYSE NYSE See: New York Stock Exchange : DLM See ILM. DLM - Distributed Lock Manager on distributed VMS systems. ): Announcement Highlights * Second quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight growth of 5.0% primarily reflects volume growth from new and existing products. * Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $0.13 (includes $0.01 for transformation) compares to $0.12 in Q2F07 (which included $0.06 for transformation, integration, and purchase accounting). * F08 net sales growth guidance of 5%-7% above F07 net sales of $3.4 billion maintained. * Diluted EPS from continuing operations guidance reduced from the low end of $0.70-$0.74 (including $0.08 for transformation) to $0.64-$0.68 (including $0.08 for transformation), primarily reflecting higher than originally anticipated costs. Del Monte Foods Second Quarter Results Del Monte Foods today reported net sales for the second quarter fiscal 2008 of $938.1 million compared to $893.5 million last year, an increase of 5.0%. Income from continuing operations was $26.7 million, or $0.13 earnings per share from continuing operations (EPS), compared to $23.7 million, or $0.12 EPS in the previous year. Results for the second quarter fiscal 2008 include $0.01 of transformation-related expense, as compared to second quarter fiscal 2007 results, which included $0.06 of transformation-related expense, purchase accounting impact, and integration expense. "We delivered solid top-line performance, driven primarily by strength in new products and organic growth," said Richard G. Wolford, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Del Monte Foods. "However, our bottom-line continued to be pressured by aggressive cost increases, primarily in raw products, due to increased demand for alternative fuels and challenging fishing conditions. Looking forward, this severe industry-wide cost environment is expected to continue with costs increasing at rates greater than originally anticipated. Reflecting these higher costs, we are lowering our earnings estimate for the fiscal year. Our team continues to execute against our pricing actions and cost reduction programs as we work to meet these challenges. We remain confident in our continued strong cash flow and our commitment to return value to shareholders; accordingly we initiated our recently announced three-year, $200 million share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. authorization The right or permission to use a system resource; the process of granting access. See access control. ." The 5.0% increase in net sales was driven primarily by new product growth in both Consumer Products and Pet Products, as well as volume growth primarily in Consumer Products. Second quarter EPS of $0.13 was up $0.01 from second quarter fiscal 2007 EPS of $0.12. The quarter benefited from the absence of 3 cents of purchase accounting and integration related to the Meow Mix and Milk-Bone acquisitions as well as 2 cents of lower transformation expense. Net pricing actions and lower interest expense also contributed to the increase versus last year. The quarter was negatively impacted by significant year-over-year increases in inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. and other operational costs, particularly in fish and pet ingredient costs. As part of the Company's three-year, $200 million share repurchase authorization, the Company repurchased approximately 238,000 shares of the Company's common stock for approximately $2.5 million during the second quarter. The Company began purchasing shares under this authorization in mid-October 2007. Reportable Segments - Second Quarter Results Consumer Products For the second quarter, Consumer Products net sales were $593.5 million, an increase of 4.8% from net sales of $566.5 million in the prior year period. The increase in Consumer Products net sales was due primarily to increased fruit sales, driven by lower-margin sales in non-retail channels due to better fruit yields and new products, partially offset by increased investment to support new fruit products. Increased vegetable sales and higher sales in South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. also contributed to net sales growth. These gains were partially offset by lower StarKist seafood seafood Edible aquatic animals excluding mammals, but including both freshwater and ocean creatures. Seafood includes bony and cartilaginous fishes, crustaceans, mollusks, edible jellyfish, sea turtles, frogs, sea urchins, and sea cucumbers. sales, primarily due to lower chunk light halves sales. Consumer Products operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. decreased 13.1% from $52.6 million in the second quarter fiscal 2007 to $45.7 million in the second quarter fiscal 2008. The decline was primarily driven by StarKist seafood, where the Company experienced higher fish costs and lower volume. Pet Products For the second quarter, Pet Products net sales were $344.6 million, an increase of 5.4% over net sales of $327.0 million in the prior year period. The increase was driven primarily by new product growth, including Meow Mix Market Select Cups and 9Lives Daily Essentials. Existing volume growth also contributed to the net sales growth. Pet Products operating income decreased 10.4% from $53.7 million in second quarter fiscal 2007 to $48.1 million in second quarter fiscal 2008. The decline in operating income was driven by higher costs, primarily due to raw product cost increases related to the pervasive impact associated with increased demand for alternative fuels. On a year-over-year basis, market input costs in Pet Products have rapidly accelerated, including fats and oils, corn, soy and wheat. Partially offsetting higher costs were the positive impact of net pricing and lower SG&A expense (driven by the absence of purchase accounting impact and integration expense related to the Meow Mix and Milk-Bone acquisitions). [TABLE OMITTED] Del Monte Foods Six Months Ended October 28, 2007 Results The Company reported net sales for the first half of fiscal 2008 of $1,691.6 million compared to $1,567.6 million last year, an increase of 7.9%. Income from continuing operations was $30.2 million, or $0.15 EPS, compared to $31.1 million, or $0.15 EPS in the previous year. Results for the first half of fiscal 2008 include $0.02 of transformation-related expenses, as compared to the first half of fiscal 2007 results, which included $0.06 of transformation-related expense, $0.03 of integration expense, and $0.02 of purchase accounting impact. The 7.9% increase in net sales was driven primarily by volume gains, reflecting solid growth from new products across both Pet Products and Consumer Products, a full quarter impact of the Meow Mix and Milk-Bone acquisitions in the first quarter of fiscal 2008 versus the prior year, as well as existing Consumer Products and Pet Products volume growth. First half EPS of $0.15 was flat versus first half fiscal 2007 EPS of $0.15. Benefiting EPS in the first half of fiscal 2008 was the absence of 5 cents of purchase accounting and integration related to the acquisitions as well as 4 cents of lower transformation expense, as compared to the first half of the prior year. The severe impact of higher inflationary and other operational costs as well as higher SG&A (driven primarily by absence of the prior year gain on the fiscal 2007 sale of the S&W beans perpetual PERPETUAL. That which is to last without limitation as to time; as, a perpetual statute, which is one without limit as to time, although not expressed to be so. license) were only partially offset by higher volume and net pricing actions. [TABLE OMITTED] Outlook Third Quarter Fiscal 2008 For the fiscal 2008 third quarter, the Company expects to deliver sales growth of approximately 5% to 7% over net sales of $907.2 million in the third quarter of fiscal 2007. Diluted EPS from continuing operations is expected to be approximately $0.22 to $0.26, including $0.03 of transformation-related expense, as compared to $0.22 in the third quarter of fiscal 2007, which included $0.04 of transformation-related expense, purchase accounting impact, and integration expense. Benefiting the third quarter fiscal 2008 is an expected gain The expected gain (or expected return) is the weighted-average most likely outcome in gambling, probability theory, economics or finance. Discrete scenarios In gambling and probability theory, there is usually a discrete set of possible outcomes. from the recent sale of S&W trademark and related assets in the Eastern Hemisphere Eastern Hemisphere Part of the Earth east of the Atlantic Ocean. It includes Europe, Asia, Australia, and Africa. Longitudes 20° W and 160° E are often considered its boundaries. . Factors Impacting Third Quarter Guidance(1) [TABLE OMITTED] Fiscal 2008 For fiscal 2008, the Company continues to expect sales growth of 5% to 7% over fiscal 2007 net sales of $3,414.9 million. Fiscal 2008 net sales growth is expected to be driven by growth across both the Company's Consumer Products and Pet Products segments. The Company now expects diluted EPS from continuing operations of $0.64 to $0.68 (including $0.08 of transformation-related expenses). This compares to previous EPS guidance at the low end of $0.70 to $0.74 (including $0.08 of transformation-related expenses). The Company is reducing its EPS expectations due to input costs (particularly fish, fats and oils, transportation, and resin-based packaging costs) which have continued to escalate es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. to greater-than-anticipated levels. The Company reported $0.55 diluted EPS from continuing operations in fiscal 2007, which included $0.19 of transformation-related expense, purchase accounting impact and integration expense. [TABLE OMITTED] The Company reiterated its target for fiscal 2008 cash provided by operating activities, less cash used in investing activities, which continues to be in the range of $180 to $200 million. Operating Income and EPS Impact of Transformation, Integration, and Purchase Accounting Factors by Reportable Segment [TABLE OMITTED] [TABLE OMITTED] 1 May not sum due to rounding. Webcast Information Del Monte Foods will host a live audio webcast, accompanied by a slide presentation, to discuss its fiscal 2008 second quarter results and third quarter and full year outlook at 7:00 a.m. PT (10:00 a.m. ET) today. To access the live webcast and slides, go to www.delmonte.com, click on the Investor Tab and under Events click Q2 Fiscal 2008 Del Monte Foods Earnings Conference Call. Printable print·a·ble adj. 1. Capable of being printed or of producing a print: printable negatives. 2. Fit for publication: printable language. slides are expected to be available in advance of the call. Historical, quarterly results can be accessed at http://investors.delmonte.com. The audio portion of the webcast may also be accessed during the call (listen-only mode) as follows: 1-888-788-9432 (1-210-795-9068 outside the U.S. and Canada), verbal code: Del Monte Foods. The webcast and slide presentation will be available online following the presentation. About Del Monte Foods Del Monte Foods is one of the country's largest and most well known producers, distributors and marketers of premium quality, branded food and pet products for the U.S. retail market, generating more than $3.4 billion in net sales in fiscal 2007. With a powerful portfolio of brands including Del Monte Monte (Italian, Portuguese and Spanish meaning mount) may refer to various things: Monte is the name of several places: In Brazil
In 1995, the brand was acquired by Del Monte. ([R]), 9Lives([R]),Milk-Bone([R]), Pup-Peroni([R]), Meaty Bone([R]), Snausages([R]) and Pounce([R]), Del Monte products are found in nine out of ten U.S. households. The Company also produces, distributes and markets private label food and pet products. For more information on Del Monte Foods Company (NYSE: DLM) visit the Company's website at www.delmonte.com. Del Monte. Nourishing nour·ish tr.v. nour·ished, nour·ish·ing, nour·ish·es 1. To provide with food or other substances necessary for life and growth; feed. 2. Families. Enriching Lives. Every Day.(TM) Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains forward-looking statements conveying management's expectations as to the future based on plans, estimates and projections at the time the Company makes the statements. Forward-looking statements involve inherent risks and uncertainties and the Company cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include statements related to future financial operating results and related matters, including the expected cost environment (including fish, fats and oils, transportation, and resin-based packaging costs), expected impact of pricing actions, expected costs of the transformation plan, and expected impact of cost reduction programs and initiatives. Factors that could cause actual results to differ materially from those described in this press release include, among others: general economic and business conditions; cost and availability of inputs, commodities, ingredients and other raw materials, including without limitation, energy (including natural gas), fuel, packaging, grains (including corn), meat by-products Meat by-products are ground and cleaned slaughtered meat carcass parts such as necks, feet, undeveloped eggs, bones, heads, and intestines (and a small amount of feathers in the case of chicken meat). (including fats and oils) and tuna tuna or tunny, game and food fishes, the largest members of the family Scombridae (mackerel family) and closely related to the albacore and bonito. They have streamlined bodies with two fins, and five or more finlets on the back. ; the accuracy of our assumptions regarding costs and other matters; our ability to increase prices and manage the price gap between our products and competing private label products; our ability to reduce costs; logistics and other transportation-related costs; our pet food and pet snacks recall which began in March 2007 or other product recalls; our debt levels and ability to service and reduce our debt; reduced sales, disruptions, costs or other charges to earnings or expenses that may be generated by our strategic plan and transformation plan efforts; timely launch and market acceptance of new products; competition, including pricing and promotional spending levels by competitors; efforts to improve the performance and market share of our businesses; changes in U.S., foreign or local tax laws and effective rates; effectiveness of marketing and trade promotion programs; changing consumer and pet preferences; the loss of significant customers or a substantial reduction in orders from these customers or the bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most of any such customer; availability, terms and deployment of capital; interest rate fluctuations; product liability claims and other litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; reliance on certain third-parties, including co-packers, our broker and third-party distribution centers or managers; acquisitions, if any, including identification of appropriate targets and successful integration of any acquired businesses; weather conditions; crop yields; any acceleration of our departure from Terminal Island, CA; changes in, or the failure or inability to comply with, U.S., foreign and local governmental regulations, including environmental regulations and import/export regulations or duties; wage rates; industry trends, including changes in buying, inventory and other business practices by customers; public safety and health issues; and other factors. These factors and other risks and uncertainties are described in more detail, from time to time, in the Company's filings with the Securities and Exchange Commission, including its annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and most recent quarterly report on Form 10-Q Form 10-Q See 10-Q. . Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company does not undertake to update any of these statements in light of new information or future events. Under the Company's $200 million, three-year stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. authorization, repurchases of the Company's common stock may be made from time to time through a variety of methods, including open market purchases, privately negotiated transactions, and block transactions. Del Monte Foods Company has no obligation to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares under the authorization. The Company may suspend or discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: repurchases at any time. Our declaration of future dividends, if any, is subject to final determination by our Board of Directors each quarter after its review of our then-current strategy, applicable debt covenants, and financial performance and position, among other things. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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