Milling & Baking News Corporate Profiles - 2019 - 71

Dean Foods Co.
Dairy company files for Chapter 11 bankruptcy
ean Foods Co., a Dallas-based company
battling in a slumping milk category and
suffering financial losses, on Nov. 12 initiated Chapter 11 reorganization proceedings
in the Southern District of Texas. Dean Foods
and Dairy Farmers of America were discussing
a potential sale of substantially all the assets of
the company.
"The actions we are announcing today are
designed to enable us to continue serving our
customers and operating as normal as we work
toward the sale of our business," said Eric Beringause, who joined Dean Foods as president
and chief executive officer on July 29. "We have
a strong operational footprint and distribution
network, a robust portfolio of leading national
brands and extensive private label capabilities,
all supported by approximately 15,000 dedicated
employees around the country. Despite our best
efforts to make our business more agile and costefficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption."
Dean Foods has received a commitment of
about $850 million in debtor-in-possession financing from certain existing lenders, including
Rabobank.
The board of directors in February began

a review of strategic alternatives, including
a possible sale. On Sept. 6, the board said it
would allow Mr. Beringause to lead a standalone plan, but on Nov. 12 the board cancelled
an earnings call and announced the bankruptcy
plans.
Dean Foods' stock price closed at 80c per
share on Nov. 11 on the New York Stock Exchange, which compared to a 52-week high of
$6.27.
Based in Kansas City, Kas., Dairy Farmers of
America is a farmer-owned global food company with more than 14,000 members.
The origin of Dean Foods dates to 1925
when Samuel E. Dean Sr. purchased the Pecatonica Marketing Co., an evaporated milk processing facility in Illinois. Today, Dean Foods'
portfolio includes brands such as DairyPure
white milk, TruMoo flavored milk, and regional
brands Dean's and Friendly's.
Dean Foods suffered a loss of $127 million

in the six-month period ended June 30, 2019,
which compared with a loss of $40 million in
the same time of the previous fiscal year. Overall, Dean Foods lost $327 million in 2018.
The overall fluid milk category, which has
declined by about 2% annually in recent years,
continued to be pressured by low retail prices
on private label milk and accelerated dairy
commodity inflation, said Jody L. Macedonio, chief financial officer and executive vicepresident, in an Aug. 6 earnings call. Class 1
raw milk costs in the second quarter were up
about 12% versus the year-ago quarter and
6% versus the first quarter, she said.
"Earlier in the year, we implemented net
pricing actions to help offset some of this inflation," Ms. Macedonio said. "Moving forward,
we'll continue to explore other initiatives, including product mix opportunities, to further
mitigate inflationary pressure."
Dean Foods had total net debt of $968
million on June 30. The company this year
increased its borrowing base availability to
$265 million under its senior secured revolving credit facility by completing postclosing appraisal work. The company also has a
$450 million accounts receivable securitization
facility. CP

Chief executive officer -
Eric Beringause

Dean Foods Co.
net income (loss)

Dean Foods Co. net sales

Dean Foods Co. share price

per share
$8

$120

2016

Corporate Profiles

$62

2017

-$327

2018

in millions

$6
$4

$7,710

2016

$7,795

2017

$7,755

2018

$2
$0
Oct.
2018

Dec.

Milling & Baking News * Food Business News * Baking & Snack * Meat+Poultry * Pet Food Processing

Feb. April
2019

June

Aug.

Oct.

November 2019 / 71

Milling & Baking News Corporate Profiles - 2019

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - 2019