Suiza Foods Corporation (NYSE:SZA), the nation’s leading dairy processor and distributor, today announced sales for the quarter ended June 30, 2000 of $1.4 billion, up 28.2% from $1.1 billion in the same period in 1999. Diluted earnings per share before restructuring costs were $1.06, representing growth of 12.8% over the prior year. Excluding the effects of the sale of the company’s U.S. packaging business sold in July 1999, sales grew 44.3%, and diluted earnings per share before restructuring increased 22.0% over the second quarter of 1999.
Operating income for the quarter increased 25.8% to $103.3 million. Excluding the effects of the sale of the company’s U.S. packaging business, second quarter operating income rose 60.9%. Before restructuring costs and excluding packaging, consolidated operating margins expanded by 36 basis points compared with the second quarter last year. Included in operating income for the quarter was a gain of $3.6 million associated with the curtailment of certain benefit plans.
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“We are pleased to report that for the eighteenth consecutive quarter, Suiza Foods posted record sales and earnings per share,” said Gregg Engles, Chairman and Chief Executive Officer of Suiza Foods. “We also reported healthy operating income growth this quarter, driven by acquisitions, improved operating margin performance and growth in our portfolio of branded products. In the first half of the year, we have generated free cash flow from operations of over $75 million, which was used to fund acquisitions and our ongoing share repurchase program.”
Second quarter diluted cash earnings per share before restructuring totaled $1.22, an increase of 13.0% over last year. Cash earnings per share is defined as earnings per share before goodwill amortization, net of the related income tax effects. Excluding the U.S. packaging business and before restructuring costs, diluted cash earnings per share increased 23.8%.
In the second quarter of 2000, the company recorded a charge of $1.2 million related to plant and administrative restructuring items, equivalent to two cents per share.
SIX MONTH RESULTS
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By GlobalDataSales for the first six months of 2000 totaled $2.8 billion, an increase of 24.5% over last year. Operating income before restructuring costs grew 23.0% to $182.6 million. Diluted earnings per share before restructuring costs totaled $1.77, an increase of 14.2% over last year. Diluted cash earnings per share totaled $2.09, an increase of 14.2%.
Excluding the effects of the sale of the company’s U.S. packaging business, sales rose 39.5%, operating income before restructuring costs increased 60.4% and operating income margin expanded 84 basis points over last year. Diluted earnings per share increased 26.0% and diluted cash earnings per share grew 27.6%.
RECENT DEVELOPMENTS
Most recently, Suiza:
- Fulfilled its $300 million share repurchase authorization and announced board approval to increase the share repurchase authorization by $100 million. Through August 3, 2000, the company had repurchased 2.3 million common shares this year at a total investment of $99.3 million. The company has $56.6 million remaining under its current authorization.
- Announced its investment in Dairy.com, the first business-to-business online vertical exchange focused specifically on serving the dairy industry. Dairy.com is an independent, neutral company that will bring farmers, farm cooperatives, processors and manufacturers together in an electronic marketplace for the exchange of goods and services, supply chain efficiency tools and dairy farm optimization tools. Dairy.com will also provide industry specific information to improve decision-making.
- Closed and fully funded an asset securitization financing totaling $150 million. The proceeds from the new financing were used to pay down higher cost debt.
Suiza Foods Corporation, based in Dallas, is the nation’s leading dairy processor and distributor, producing a full line of company-branded and customer-branded products. National brands include International Delight®, Second Nature®, Naturally Yours®, Mocha Mix®, Sun Soy(TM), kidsmilk(TM), fitmilk(TM) and lifemilk(TM). Regional brands consist of Adohr Farms®, Barbe’s®, Brown’s Dairy(TM), Broughton®, Country Fresh®, Dairymen’s®, Flav-O-Rich®, Lehigh Valley Farms®, London’s®, Meadow Gold®, Model Dairy(TM), Garelick Farms(TM), Oak Farms®, Robinson®, Schepps®, Shenandoah’s Pride®, Suiza(TM), Louis Trauth(TM), Tuscan®, Velda Farms® and West Lynn Creamery®, as well as Celta® in Spain. Suiza also sells products under partner or licensed brands in certain regions, including Borden®, Lactaid®, Foremost® and Pet®. Additionally, the company owns approximately 43% of Consolidated Container Company, one of the nation’s largest manufacturers of rigid plastic containers.
The company’s earnings conference call will be held at 10:00 a.m. eastern time today. The call may be heard live at the company’s Web site at www.suizafoods.com. Real Audio software is required to listen to the call and is available on the Web site. The software takes approximately 15 minutes to download. Replays will be available at the same address for a limited time period.
SUIZA FOODS CORPORATION
Condensed Balance Sheet
(in thousands)
June 30, December 31,
ASSETS 2000 1999
—— ————– —————
Cash and cash equivalents $ 69,304 $ 25,155
Other current assets 698,334 614,252
————– —————
Total current assets 767,638 639,407
Property, plant & equipment 985,313 758,485
Intangibles & other assets 1,923,283 1,261,030
————– —————
Total Assets $ 3,676,234 $ 2,658,922
============== ===============
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total current liabilities $ 623,303 $ 479,117
Long term debt 1,279,860 689,397
Other long-term liabilities 88,019 81,181
Mandatorily redeemable TIPES 583,796 683,505
Minority interest in subsidiaries 497,824 141,750
Stockholders’ equity:
Common stock 284 293
Additional paid-in capital 230,556 275,527
Retained earnings 373,685 314,590
Other comprehensive income (1,093) (6,438)
————– —————
Total stockholders’ equity 603,432 583,972
————– —————
Total Liabilities and
Stockholders’ Equity $ 3,676,234 $ 2,658,922
============== ===============
SUIZA FOODS CORPORATION
(Dollars in thousands, except per share data)
Three months ended
June 30,
——————————-
2000 1999
————– —————
Net sales $ 1,434,354 $ 1,118,844
Cost of sales 1,074,136 855,895
————– —————
Gross profit 360,218 262,949
Operating costs and expenses 255,712 176,119
Plant and administrative
restructuring costs 1,190 4,671
————– —————
Operating income 103,316 82,159
Interest expense & financing charges
on preferred securities 35,309 24,881
Equity in earnings of unconsolidated
affiliates (3,535)
Other (income) expense (528) 406
————– —————
Income before income taxes and
minority interest 72,070 56,872
Income taxes 27,700 22,092
Minority interest 10,837 2,633
————– —————
Net income before extraordinary
items 33,533 32,147
Extraordinary gain
————– —————
Net income $ 33,533 $ 32,147
============== ===============
Net income before nonrecurring
items $ 34,352 $ 35,014
============== ===============
Diluted EPS before nonrecurring
items $ 1.06 $ 0.94
============== ===============
Diluted cash EPS before nonrecurring
items $ 1.22 $ 1.08
============== ===============
Basic earnings per share:
Income before extraordinary items $ 1.16 $ 0.95
Extraordinary gain — —
————– —————
Net income $ 1.16 $ 0.95
============== ===============
Basic average common shares
(000’s) 28,897 33,730
Diluted earnings per share:
Income before extraordinary items $ 1.04 $ 0.87
Extraordinary gain — —
————– —————
Net income $ 1.04 $ 0.87
============== ===============
Diluted average common shares
(000’s) 37,322 43,806
Summary Financial Information:
Depreciation $ 24,052 $ 22,226
Amortization $ 13,609 $ 10,296
Six months ended
June 30,
——————————-
2000 1999
————– —————
Net sales $ 2,828,495 $ 2,272,030
Cost of sales 2,128,118 1,776,522
————– —————
Gross profit 700,377 495,508
Operating costs and expenses 517,785 347,002
Plant and administrative
restructuring costs 2,964 4,671
————– —————
Operating income 179,628 143,835
Interest expense & financing charges
on preferred securities 70,940 50,471
Equity in earnings of unconsolidated
affiliates (5,404)
Other (income) expense (1,075) (101)
————– —————
Income before income taxes and
minority interest 115,167 93,465
Income taxes 43,879 36,103
Minority interest 17,161 4,342
————– —————
Net income before extraordinary
items 54,127 53,020
Extraordinary gain 4,968
————– —————
Net income $ 59,095 $ 53,020
============== ===============
Net income before nonrecurring
items $ 55,626 $ 55,887
============== ===============
Diluted EPS before nonrecurring
items $ 1.77 $ 1.55
============== ===============
Diluted cash EPS before nonrecurring
items $ 2.09 $ 1.83
============== ===============
Basic earnings per share:
Income before extraordinary items $ 1.87 $ 1.57
Extraordinary gain 0.17 —
————– —————
Net income $ 2.04 $ 1.57
============== ===============
Basic average common shares
(000’s) 28,984 33,686
Diluted earnings per share:
Income before extraordinary items $ 1.73 $ 1.48
Extraordinary gain 0.13 —
————– —————
Net income $ 1.86 $ 1.48
============== ===============
Diluted average common shares
(000’s) 37,470 43,846
Summary Financial Information:
Depreciation $ 48,097 $ 42,750
Amortization $ 26,885 $ 20,452
