EX-99.1 2 ex-991q22016earningsrelease.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

WHITEWAVE FOODS REPORTS STRONG SECOND QUARTER 2016 RESULTS

•
Reported and Constant Currency Net Sales Increased 14%
•
Reported Operating Income Increased 31%; Adjusted Constant Currency Operating Income Increased 26% Behind Further Operating Margin Expansion
•
Reported Diluted Earnings Per Share Increased 38% to $0.29; Adjusted Diluted Earnings per Share, Excluding China Joint Venture Investments, Increased 24% to $0.32
•
Reiterating Full Year 2016 Adjusted Diluted Earnings Per Share Guidance1 of $1.38 to $1.41 and Increasing Constant Currency Adjusted Diluted Earnings Per Share Guidance1 to $1.43 to $1.46, Excluding China Joint Venture Investments
•
Entered Into a Definitive Merger Agreement on July 6, 2016, with Danone for WhiteWave to be Acquired for $56.25 Per Share


DENVER, Colo. - August 9, 2016 - The WhiteWave Foods Company (NYSE: WWAV) today reported financial results for the second quarter ended June 30, 2016.

Financial Summary:
Three Months Ended June 30,
 
In millions, except EPS
2016
 
2015
 
% Change*
 
 
 
 
 
 
 
 
Total Net Sales
 
 
 
 
 
 
Reported
$1,050
 
$924
 
+14%
 
Constant Currency
$1,052
 
$924
 
+14%
 
Organic Constant Currency
$989
 
$924
 
+7%
 
 
 
 
 
 
 
 
Total Operating Income
 
 
 
 
 
 
Reported
$101
 
$77
 
+31%
 
Adjusted
$104
 
$85
 
+23%
 
Adjusted Constant Currency
$107
 
$85
 
+26%
 
 
 
 
 
 
 
 
Net Income
 
 
 
 
 
 
Reported
$52
 
$37
 
+38%
 
Adjusted
$55
 
$44
 
+27%
 
Adjusted, excluding China J.V.
$58
 
$47
 
+24%
 
 
 
 
 
 
 
 
Diluted Earnings per Share (EPS)
 
 
 
 
 
 
Reported
$0.29
 
$0.21
 
+38%
 
Adjusted
$0.31
 
$0.24
 
+27%
 
Adjusted, excluding China J.V.
$0.32
 
$0.26
 
+24%
 
Adj. Constant Currency, excluding China J.V.
$0.33
 
$0.26
 
+28%
 
 
 
 
 
 
 
 
EBITDA
 
 
 
 
 
 
Adjusted
$143
 
$115
 
+24%
 
Adjusted, excluding China J.V.
$146
 
$119
 
+23%
 
Adj. Constant Currency, excluding China J.V.
$149
 
$119
 
+25%
 
*Certain change percentages may not recalculate using the rounded dollar amounts provided
 

WhiteWave’s second quarter 2016 reported diluted earnings per share was $0.29 and adjusted diluted earnings per share was $0.32, excluding operating costs associated with its China joint venture. Including joint venture costs, WhiteWave reported second quarter 2016 adjusted diluted earnings per share of $0.31.

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Net sales for second quarter 2016 were $1.1 billion, a 14 percent increase from net sales of $924 million in second quarter 2015. These results were driven by strong organic growth in both the Americas and Europe segments, as well as contributions from acquisitions.

On a constant currency basis, net sales increased 14 percent in second quarter 2016, when compared to second quarter 2015. Excluding acquisitions, organic constant currency net sales increased 7 percent in second quarter 2016, when compared to second quarter 2015.

Reported operating income for second quarter 2016 increased 31 percent to $101 million compared to second quarter 2015, and on an adjusted basis increased 23 percent to $104 million, compared to $85 million in second quarter 2015. On a constant currency basis, adjusted operating income increased 26 percent in second quarter 2016 over the same period in 2015.

“We are pleased with the double-digit topline growth, continued strong margin expansion and robust earnings growth we generated in the second quarter and for the first half of 2016,” said Gregg Engles, chairman and chief executive officer. “In early July, we entered into a definitive merger agreement to be acquired by Danone. This transaction represents an exciting next chapter of growth for WhiteWave as we bring together two companies with a shared mission of changing the way the world eats for the better.”

AMERICAS FOODS & BEVERAGES SEGMENT
WhiteWave’s Americas Foods & Beverages segment consists of four platforms: Plant-based Foods and Beverages, Fresh Foods, Premium Dairy, and Coffee Creamers and Beverages. In second quarter 2016, net sales for Americas Foods & Beverages were $898 million, an increase of 14 percent over second quarter 2015. Growth in the segment reflects strong organic sales growth and contributions from acquisitions. Excluding acquisitions and the impact of currency translations, organic constant currency net sales in the segment increased 6 percent in second quarter 2016 over second quarter 2015. The organic growth rate for second quarter 2016 increased 7.5 percent excluding the impact of Fresh Foods’ results, which began being included within the segment in 2016. Organic growth in the segment continues to be primarily volume driven.

Reported operating income for the Americas Foods & Beverages segment increased 19 percent in second quarter 2016, compared to the same period in 2015. On an adjusted constant currency basis, segment operating income increased 21 percent, with 70 basis points of operating margin expansion when compared to the prior year period. This increase was driven by continued scale leverage, favorable sales mix, supply chain investments and related efficiencies, and the profit contribution from completed acquisitions.


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Americas Foods & Beverages Segment Summary
$ In millions
Three Months Ended June 30,
 
2016
 
2015
 
% Change*
Reported Net Sales
$898
 
$791
 
+14%
Constant Currency Net Sales
$899
 
$791
 
+14%
Organic Constant Currency Net Sales
$836
 
$791
 
+6%
 
 
 
 
 
 
Reported Segment Operating Income
$106
 
$89
 
+19%
Adj. Segment Operating Income
$105
 
$87
 
+21%
Adj. Constant Currency Segment Op. Income
$106
 
$87
 
+21%
*Certain change percentages may not recalculate using the rounded dollar amounts provided

Plant-based Foods and Beverages
The Americas Plant-based Foods and Beverages platform includes Silk® beverages and yogurts, So Delicious® beverages, frozen desserts and yogurts, and Vega® nutritional protein powders and bars. Net sales for this platform increased 25 percent in second quarter 2016 compared to second quarter 2015. Sales were driven by the contribution of Vega, which was acquired on August 1, 2015, and organic growth.

Organic sales, which exclude Vega, increased mid-single digits on a percentage basis in second quarter 2016, driven by continued strong growth in beverages and yogurts, which was partially offset by softness in So Delicious frozen desserts due to temporary customer service disruptions in the quarter that impacted distribution levels. Nut-based beverages experienced high-single digit percentage growth, with plant-based yogurts growing over 20 percent in the quarter. Vega continued its strong growth plot in second quarter 2016, even while lapping prior period distribution increases. WhiteWave continues to maintain its leadership positions across all plant-based categories in which it participates.

“While our organic growth rate in U.S. plant-based was lower than high-single digits in the quarter due to the impact from the disruption in frozen desserts, we continue to see robust long-term growth opportunities for plant-based foods and beverages,” said Blaine McPeak, executive vice president and chief operating officer. “We have launched a completely new advertising campaign to further broaden consumer awareness of the benefits of plant-based and are very excited with new Silk branding and packaging we are rolling out in the third quarter. We also have several new innovative products and packaging formats in both Silk and Vega that we are introducing over the balance of the year.”

Fresh Foods
The Fresh Foods platform consists of the Earthbound Farm® brand, which includes organic salads, fruits and vegetables. While the platform’s frozen product offerings experienced strong growth in the quarter, net sales declined 2 percent in second quarter 2016 when compared to second quarter 2015, as tighter industry supplies of organic salad could not fully service demand and as the business continues to rebuild its distribution following SAP implementation-related disruptions during fourth quarter 2015.

A larger warehouse for this platform was completed and became operational at the end of second quarter 2016, and is expected to begin providing improved efficiencies over the second half of 2016. Management continues to expect ongoing operating improvements over the balance of the year and net sales growth in this platform for 2016, driven by strong sales growth in fourth quarter 2016.

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Premium Dairy
The Premium Dairy platform includes Horizon Organic® milk and dairy products, macaroni and cheese, and snacks, along with Wallaby® organic yogurts and kefir beverages. Net sales for this platform increased 11 percent in second quarter 2016 compared to second quarter 2015. Increased sales were primarily driven by the inclusion of Wallaby, which was acquired on August 31, 2015, which continued its strong growth trend in the quarter and continues to exceed management’s original expectations.

Organic sales in this platform grew low-single digits as prior period price increases on Horizon milks were completely lapped during second quarter 2016 and conventional milk prices remained at historically low levels.

The recent innovation of Sir BananasTM bananamilks have performed well in test markets and are in the process of being rolled out nationwide. With a broad product portfolio that meets families’ needs for healthy and convenient kids’ meals and snacks, along with planned marketing campaigns, management believes this platform is well positioned for the back-to-school season.

Coffee Creamers and Beverages
The Coffee Creamers and Beverages platform includes coffee creamers and ready-to-drink beverages under the International Delight®, Dunkin Donuts®, Silk and So Delicious brands, as well as half-and-half dairy creamers under the LAND O LAKES® and Horizon Organic brands. Net sales for this platform increased 15 percent in second quarter 2016 compared to second quarter 2015. Organic sales grew in the mid-teens on a percentage basis in second quarter 2016, driven by strong performance across WhiteWave’s broad creamer portfolio, including flavored creamers, plant-based creamers and half-and-half creamers. With increased velocities and strong share performance, WhiteWave continues to grow ahead of the coffee creamers and whiteners categories in which it participates.

Recent innovations in this platform, which include Simply Pure®, an all-natural and simple ingredient creamer, and StokTM, a cold-brew iced coffee beverage available in multi-serve and single-serve formats across traditional retailers and convenience stores, have been performing well. International Delight also recently expanded its larger size offerings to further align with increasing consumer demand for larger package size formats. In addition, a new International Delight advertising campaign launched in early second quarter 2016 is delivering encouraging initial results.

EUROPE FOODS & BEVERAGES SEGMENT
The Europe Foods & Beverages segment consists of plant-based foods and beverages that are sold primarily under the Alpro® brand. Net sales in the segment increased 14 percent on a reported basis and 15 percent on a constant currency basis in second quarter 2016 compared to second quarter 2015. Sales growth was driven primarily by increased volumes behind continued strong growth in beverages and plant-based yogurts.

Reported operating income for the Europe Foods & Beverages segment increased 23 percent in second quarter 2016, compared to second quarter 2015. On a constant currency basis, segment operating income increased 38 percent in second quarter 2016,

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with over 250 basis points of operating margin expansion when compared to the prior year period, driven by continued scale leverage, favorable sales mix, increased internal production levels and other operating efficiencies.

Europe Foods & Beverages Segment Summary
$ In millions
Three Months Ended June 30,
 
2016
 
2015
 
% Change*
Reported Net Sales
$151
 
$133
 
+14%
Constant Currency Net Sales
$153
 
$133
 
+15%
 
 
 
 
 
 
Reported Segment Operating Income
$21
 
$17
 
+23%
Constant Currency Segment Op. Income
$23
 
$17
 
+38%
*Certain change percentages may not recalculate using the rounded dollar amounts provided

“We are pleased with the strong second quarter results we achieved on the top and bottom line,” said Greg Christenson, executive vice president and chief financial officer. “We continue to expect strong performance over the second half of 2016 behind continued core growth, additional innovation, and our new branding and marketing campaigns. We continue to forecast increasing operating performance over the back half of the year and expect to deliver on our goals of high-single digit organic constant currency percentage sales growth and at least 75 basis points of constant currency operating margin expansion for 2016.”


OTHER ITEMS
Danone Merger Agreement
Danone S.A. and WhiteWave entered into a definitive merger agreement on July 6, 2016, under which Danone will acquire WhiteWave for $56.25 per share in an all-cash transaction, representing a total enterprise value of approximately $12.5 billion, including debt and other WhiteWave liabilities. The transaction is expected to close by the end of the year, subject to the approval of WhiteWave’s shareholders, regulatory approvals and customary conditions.

IPP Acquisition
WhiteWave completed the acquisition of Innovation Packaging and Process, S.A. DE C.V. (“IPP”) on June 2, 2016, for a purchase price of approximately $18 million in cash. Founded in 2007 and based in San Luis Potosi, Mexico, IPP is an aseptic beverage manufacturer that produces a variety of products for WhiteWave and other parties. The acquisition supports WhiteWave’s growth initiatives in Latin America with internal production capacity.

FORWARD OUTLOOK
While the company expects the merger with Danone to be completed by the end of 2016, the following outlook assumes that WhiteWave remains an independent company through December 31, 2016.

The company provides guidance on a non-GAAP basis and does not reconcile guidance to GAAP as the company cannot predict certain elements which are included in reported GAAP results, including foreign exchange impacts, mark-to-market

5


adjustments of hedging activities, and costs related to merger and acquisition activities that may have a significant impact to reported GAAP results.

WhiteWave continues to expect category and volume growth across its core portfolio and further topline growth in acquired businesses to drive strong net sales growth over the balance of 2016. Despite currency movements since the company previously provided its outlook having an increased negative impact to reported currency net sales growth rates, management continues to expect full year 2016 net sales growth to be 10.5 percent to 11.5 percent in reported currency and 11.0 percent to 12.0 percent on a constant currency basis. Management continues to forecast high single-digit organic net sales percentage growth on a constant currency basis for full year 2016.

The company continues to expect strong adjusted operating income growth during 2016 from the benefits of increased internal production capacity, cost reduction initiatives, further scale leverage, and increasing profit contributions from completed acquisitions while maintaining high levels of marketing investments. For full year 2016, management continues to expect total operating income percentage growth in the high-teens to twenty percent in reported currency and in the low twenties on a constant currency percentage growth basis. Management continues to target 75 basis points of constant currency operating margin expansion for full year 2016.

The company continues to support the ongoing operating investments of its China joint venture behind the development of a plant-based beverages business. Management continues to expect the amount of the company’s investment in 2016 to be between $10 million and $12 million on an after-tax basis, and approximately $0.06 dilutive to full year 2016 adjusted diluted earnings per share. The timing and amount of actual investments made in 2016 may vary by quarter.

Reflecting the company’s second quarter 2016 results, management now expects constant currency adjusted diluted earnings per share of $1.43 to $1.46 for full year 2016, excluding investments in the China joint venture. Due to changes in current foreign exchange rates since providing its previous outlook having a negative impact to reported currency results, management continues to expect adjusted diluted earnings per share of $1.38 to $1.41 in reported currency for full year 2016, excluding investments in the China joint venture.

2016 Forward Outlook Summary
 
 
Full Year 2016
 
 
Reported Currency
 
Constant Currency
Net Sales Growth
 
+ 10.5% - 11.5%
 
+ 11.0% - 12.0%
 
 
 
 
 
 
 
 
 
 
Adjusted Total Operating Income Growth
 
+ High Teens to
Twenty %
 
+ Low Twenties %
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted Earnings Per Share
 
$1.32 - $1.35
 
$1.37 - $1.40
China Joint Venture Impact
 
≈$0.06
 
≈$0.06
 
 
 
 
 
 
 
 
 
 
Adjusted Diluted EPS - Excluding China J.V.
 
$1.38 - $1.41
 
$1.43 - $1.46

CONFERENCE CALL
As a result of its planned merger with Danone S.A., WhiteWave will not host a conference call for its second quarter 2016 financial results.

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ABOUT THE WHITEWAVE FOODS COMPANY
The WhiteWave Foods Company is a leading consumer packaged food and beverage company that manufactures, markets and sells branded plant-based foods and beverages, coffee creamers and beverages, premium dairy products and organic produce. It sells products primarily in North America, Europe and through a joint venture in China. 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. The Company's widely-recognized, leading brands distributed in North America include Silk®, So Delicious® and Vega™ plant-based foods and beverages, International Delight® and LAND O LAKES®* coffee creamers and beverages, Horizon Organic® and Wallaby Organic® premium dairy products and Earthbound Farm® organic salads, fruits and vegetables. Its popular plant-based foods and beverages brands in Europe 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 in the “2016 Guidance Summary” table, and statements relating to, among other things, projections of net sales, operating income, and earnings per share, on a GAAP, adjusted and constant currency basis during full year 2016, the expected timeline for the completion of our merger with Danone S.A., our innovation and marketing plans, the success of our cost improvement and margin expansion initiatives, anticipated profit growth and margin expansion, the expected growth and financial impact of Vega, Wallaby and other business acquisitions, the expected financial impact of our investments in our joint venture in China, and other statements that begin with words such as “believe,” “expect,” “estimates,” “intend,” “forecasts,” “projects” 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. Completion of our contemplated merger with Danone S.A. is subject to stockholder approval and the satisfaction of certain closing conditions, including receipt of required regulatory approvals, and we cannot be certain that we will be able to obtain stockholder approval or satisfy or obtain a waiver of the other conditions. 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, the company’s ability to access capital under its credit facilities or otherwise, the timing of the completion of our contemplated merger with Danone S.A., the disruption to our business caused by the announcement of the contemplated merger and the risk of stockholder litigation relating to the contemplated merger, many of which are beyond the company’s control and which are described in the company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016 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 full year 2016 may be impacted by our ability or inability to effectively integrate and operate acquired businesses, our ability to complete and the timing of the completion of our contemplated merger with Danone S.A., and the amount of our future additional investments in

7


our joint venture in China and expectations for sales and profits or losses in the joint venture. 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.

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 across periods. These adjustments eliminate certain costs and benefits, including corporate costs associated with equity awards granted to certain of our executive officers, employees and directors in conjunction with the company’s initial public offering in October 2012 (the “IPO Grants”); non-recurring transaction and integration costs related to acquisitions and other investments; SAP transition costs; non-cash income or expense related to mark-to-market adjustments on interest rate and commodity hedges and amortization related to foreign exchange contracts; costs incurred to manage, and losses incurred on our investment in the China joint venture; and with respect solely to the adjusted EBITDA calculation, other non-cash charges related to stock-based compensation expense. 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.

Basis of Presentation
Certain financial measures in this release are presented on a non-GAAP basis that includes results provided on a constant currency basis and on an adjusted basis.

Organic Results
Results presented on an organic basis for second quarter 2016 exclude the operating results of Wallaby acquired on August 31, 2015, the operating results of Vega acquired on August 1, 2015, the operating results of EIEIO acquired May 29, 2015 through May 31 2016, and the operating results of IPP acquired on June 2, 2016.

Constant Currency Results
The company determines its constant currency results by dividing or multiplying, as appropriate, the current period local currency results by the currency exchange rates used to translate the company’s financial results in the prior period to determine what the current period U.S. dollar operating results would have been if the currency exchange rate had not changed from the comparable prior period.


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Adjusted Results
Segment financial results for the three and six months ended June 30, 2015 and 2016 in the Americas Foods & Beverages segment are adjusted to exclude the expense related to the mark-to-market adjustment on commodity hedges, acquisition related non-recurring transaction and integration costs, and SAP transition costs. 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.

CONTACTS

Investor Relations:                                
Dave Oldani                                    
+1 (303) 635-4747                                

Media:
Molly Keveney
+1 (303) 635-4529


9


The WhiteWave Foods Company
Condensed Consolidated Statements of Income
(Unaudited, GAAP Basis)
 
 
 
 
 
 
 
 
 
Three months ended June 30,
 
 
 
2016
 
2015
 
 
 
 (In thousands, except share and per share data)
 
 
 
 
 
 
 
Net sales
 
$
1,049,648

 
$
923,632

 
Cost of sales
 
679,240

 
597,474

 
Gross profit
 
370,408

 
326,158

 
Operating expenses:
 
 
 
 
 
Selling, distribution and marketing
 
188,465

 
174,311

 
General and administrative
 
81,115

 
74,845

 
Total operating expenses
 
269,580

 
249,156

 
Operating income
 
100,828

 
77,002

 
Other expense:
 
 
 
 
 
Interest expense
 
18,437

 
13,933

 
Other expense, net
 
1,289

 
988

 
Total other expense
 
19,726

 
14,921

 
Income before income taxes
 
81,102

 
62,081

 
Income tax expense
 
27,188

 
22,214

 
Income before loss in equity method investments
 
53,914

 
39,867

 
Loss in equity method investments
 
2,145

 
2,423

 
Net income
 
$
51,769

 
$
37,444

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares:
 
 
 
 
 
Basic
 
176,968,212

 
175,317,750

 
Diluted
 
180,731,638

 
180,044,401

 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
Basic
 
$
0.29

 
$
0.21

 
Diluted
 
$
0.29

 
$
0.21

 
 
 
 
 
 


10


The WhiteWave Foods Company
Condensed Consolidated Statements of Income
(Unaudited, GAAP Basis)
 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
 
 
2016
 
2015
 
 
 
 (In thousands, except share and per share data)
 
 
 
 
 
 
 
Net sales
 
$
2,089,343

 
$
1,834,773

 
Cost of sales
 
1,365,168

 
1,200,041

 
Gross profit
 
724,175

 
634,732

 
Operating expenses:
 
 
 
 
 
Selling, distribution and marketing
 
374,309

 
342,072

 
General and administrative
 
165,201

 
145,589

 
Total operating expenses
 
539,510

 
487,661

 
Operating income
 
184,665

 
147,071

 
Other expense:
 
 
 
 
 
Interest expense
 
32,117

 
22,600

 
Other expense, net
 
3,728

 
4,787

 
Total other expense
 
35,845

 
27,387

 
Income before income taxes
 
148,820

 
119,684

 
Income tax expense
 
50,096

 
42,396

 
Income before loss in equity method investments
 
98,724

 
77,288

 
Loss in equity method investments
 
4,355

 
6,497

 
Net income
 
$
94,369

 
$
70,791

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares:
 
 
 
 
 
Basic
 
176,759,289

 
175,007,291

 
Diluted
 
180,595,772

 
179,662,304

 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
Basic
 
$
0.53

 
$
0.40

 
Diluted
 
$
0.52

 
$
0.39

 
 
 
 
 
 


11


The WhiteWave Foods Company
Condensed Consolidated Balance Sheets
(Unaudited, GAAP Basis)
 
 
 
 
 
 
 
June 30, 2016
 
December 31, 2015
 
 
 (In thousands)
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
64,345

 
$
38,610

Trade receivables, net of allowance of $1,812 and $2,127
 
257,877

 
257,548

Inventories
 
295,104

 
270,737

Prepaid expenses and other current assets
 
50,354

 
39,782

Total current assets
 
667,680

 
606,677

Equity method investments
 
26,075

 
30,772

Property, plant, and equipment, net
 
1,165,205

 
1,137,521

Identifiable intangible and other assets, net
 
1,055,590

 
1,038,577

Goodwill
 
1,439,769

 
1,415,322

Total Assets
 
$
4,354,319

 
$
4,228,869

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Accounts payable and accrued expenses
 
$
501,729

 
$
549,713

Current portion of debt and capital lease obligations
 
46,356

 
51,449

Income taxes payable
 
5,954

 
3,043

Total current liabilities
 
554,039

 
604,205

Long-term debt and capital lease obligations, net of debt issuance costs
 
2,102,729

 
2,078,940

Deferred income taxes
 
303,266

 
293,326

Other long-term liabilities
 
46,789

 
41,490

Total Liabilities
 
3,006,823

 
3,017,961

 
 
 
 
 
Common stock
 
1,771

 
1,762

Additional paid-in capital
 
933,653

 
914,975

Retained earnings
 
520,074

 
425,705

Accumulated other comprehensive loss
 
(108,002
)
 
(131,534
)
Total Shareholders' Equity
 
1,347,496

 
1,210,908

Total Liabilities and Shareholders' Equity
 
$
4,354,319

 
$
4,228,869





12


The WhiteWave Foods Company
Condensed Consolidated Statements of Cash Flows
(Unaudited, GAAP Basis)
 
 
 
 
 
 
 
 
 
Six months ended June 30,
 
 
 
2016
 
2015
 
 
 
 (In thousands)
Operating Activities
 
 
 
 
 
Net income
 
$
94,369

 
$
70,791

 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
 
68,388

 
55,337

 
Share-based compensation expense
 
19,262

 
20,433

 
Amortization of debt issuance costs
 
2,215

 
2,017

 
Unrealized gain on derivative instruments
 
(5,003
)
 
(262
)
 
Loss in equity method investments
 
4,355

 
6,497

 
Other
 
8,839

 
12,667

 
Net change in operating assets and liabilities, net of acquisitions
 
(75,879
)
 
(60,617
)
 
  Net cash provided by operating activities
 
116,546

 
106,863

 
 
 
 
 
 
Investing Activities
 
 
 
 
 
Investment in equity method investments
 
—

 
(701
)
 
Payments for acquisitions, net of cash acquired of $835 and $1,530
 
(17,418
)
 
(38,672
)
 
Proceeds from acquisition adjustments
 
—

 
346

 
Payments for property, plant, and equipment
 
(93,082
)
 
(140,637
)
 
Proceeds from sale of fixed assets
 
87

 
8,880

 
Net cash used in investing activities
 
(110,413
)
 
(170,784
)
 
 
 
 
 
 
Financing Activities
 
 
 
 
 
Debt related activities
 
16,485

 
37,661

 
Other financing activities
 
(495
)
 
7,299

 
Net cash provided by financing activities
 
15,990

 
44,960

 
Effect of exchange rate changes on cash and cash equivalents
 
3,612

 
(3,871
)
Increase (decrease) in cash and cash equivalents
 
25,735

 
(22,832
)
Cash and cash equivalents, beginning of period
 
38,610

 
50,240

Cash and cash equivalents, end of period
 
$
64,345

 
$
27,408

 
 
 
 
 
 



13


The WhiteWave Foods Company
GAAP to Non-GAAP Reconciliation
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2016
 
Three months ended June 30, 2015
 
 
 
GAAP
 
Adjustments
 
Adjusted
 
GAAP
 
Adjustments
 
Adjusted
 
 
 
 (In thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net sales
$
1,049,648

 
$
—

 
$
1,049,648

 
$
923,632

 
$
—

 
$
923,632

 
 
Cost of sales
679,240

 
(2,665
)
(a)(b)
676,575

 
597,474

 
1,210

(b)
598,684

 
 
Gross profit
370,408

 
2,665

 
373,073

 
326,158

 
(1,210
)
 
324,948

 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, distribution, and marketing
188,465

 
5,727

(b)
194,192

 
174,311

 
3,019

(b)
177,330

 
 
General and administrative
81,115

 
(6,297
)
(a)
74,818

 
74,845

 
(12,004
)
(a)
62,841

 
 
Total operating expenses
269,580

 
(570
)
 
269,010

 
249,156

 
(8,985
)
 
240,171

 
 
Operating income
100,828

 
3,235

 
104,063

 
77,002

 
7,775

 
84,777

 
 
Other expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
18,437

 
—

 
18,437

 
13,933

 
—

 
13,933

 
 
Other expense, net
1,289

 
(1,289
)
(c)
—

 
988

 
(988
)
(c)
—

 
 
Total other expense
19,726

 
(1,289
)
 
18,437

 
14,921

 
(988
)
 
13,933

 
 
Income before income taxes
81,102

 
4,524

 
85,626

 
62,081

 
8,763

 
70,844

 
 
Income tax expense
27,188

 
897

(d)
28,085

 
22,214

 
2,582

(d)
24,796

 
 
Income before loss in equity method investments
53,914

 
3,627

 
57,541

 
39,867

 
6,181

 
46,048

 
 
Loss in equity method investments
2,145

 
—

 
2,145

 
2,423

 
—

 
2,423

 
 
Net income
$
51,769

 
$
3,627

 
$
55,396

 
$
37,444

 
$
6,181

 
$
43,625

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
$
0.31

 
 
 
 
 
$
0.25

 
 
Diluted
 
 
 
 
$
0.31

 
 
 
 
 
$
0.24

 
 
Weighted Average Common Shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
176,968,212

 
 
 
 
 
175,317,750

 
 
Diluted
 
 
 
 
180,731,638

 
 
 
 
 
180,044,401

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income excluding China joint venture activities:
 
 
 
 
 
 
 
 
 
Adjusted net income
 
 
 
 
55,396

 
 
 
 
 
43,625

 
 
Corporate related joint venture expenses, net of tax
 
722

(e)
 
 
 
 
762

(e)
 
Loss in China joint venture equity method investment
 
1,893

(f)
 
 
 
 
2,219

(f)
 
Adjusted net income excluding China joint venture activities
 
$
58,011

 
 
 
 
 
$
46,606

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted earnings per share excluding China joint venture activities:
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
$
0.33

 
 
 
 
 
$
0.27

 
 
Diluted
 
 
 
 
$
0.32

 
 
 
 
 
$
0.26

 

14


The WhiteWave Foods Company
GAAP to Non-GAAP Reconciliation
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2016
 
Three months ended June 30, 2015
 
GAAP
 
Adjustments
 
Adjusted
 
GAAP
 
Adjustments
 
Adjusted
 
 (In thousands)
Income statement amounts by segment:
 
 
 
 
 
 
 
 
 
 
 
Total net sales:
 
 
 
 
 
 
 
 
 
 
 
Americas Foods & Beverages
$
898,456

 
$
—

 
$
898,456

 
$
791,015

 
$
—

 
$
791,015

Europe Foods & Beverages
151,192

 
—

 
151,192

 
132,617

 
—

 
132,617

Total net sales
$
1,049,648

 
$
—

 
$
1,049,648

 
$
923,632

 
$
—

 
$
923,632

 
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Americas Foods & Beverages
$
105,920

 
$
(550
)
(a)(b)
$
105,370

 
$
89,144

 
$
(1,777
)
(b)
$
87,367

Europe Foods & Beverages
20,506

 
—

 
20,506

 
16,744

 
—

 
16,744

Total reportable segment operating income
126,426

 
(550
)
 
125,876

 
105,888

 
(1,777
)
 
104,111

Corporate and other
(25,598
)
 
3,785

(a)
(21,813
)
 
(28,886
)
 
9,552

(a)
(19,334
)
Total operating income
$
100,828

 
$
3,235

 
$
104,063

 
$
77,002

 
$
7,775

 
$
84,777


                    
The WhiteWave Foods Company
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
 
 
 
 
 
 
 
 
Three months ended June 30,
 
 
 
2016
 
2015
 
 
 
 (In thousands)
 
Net income
 
$
51,769

 
$
37,444

 
Interest expense, net
 
18,437

 
13,933

 
Income tax expense
 
27,188

 
22,214

 
Depreciation and amortization
 
34,948

 
27,807

 
EBITDA
 
$
132,342

 
$
101,398

 
Transaction, integration & transition costs
 
10,043

(a)
5,214

(a)
Mark to market adjustments on hedging transactions
 
(5,897
)
(b)(c)
(3,240
)
(b)(c)
IPO grants & non-cash stock-based compensation
 
6,492

(a)(g)
12,049

(a)(g)
Adjusted EBITDA
 
$
142,980

 
$
115,421

 
 
 
 
 
 
 
Corporate related joint venture expenses
 
$
1,076

(e)
$
1,172

(e)
Loss in China joint venture equity method investment
 
1,893

(f)
2,219

(f)
Adjusted EBITDA excluding China joint venture activities
 
$
145,949

 
$
118,812

 

15




The WhiteWave Foods Company
GAAP to Non-GAAP Reconciliation
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2016
 
Six months ended June 30, 2015
 
 
 
GAAP
 
Adjustments
 
Adjusted
 
GAAP
 
Adjustments
 
Adjusted
 
 
 
 (In thousands, except share and per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net sales
$
2,089,343

 
$
—

 
$
2,089,343

 
$
1,834,773

 
$
—

 
$
1,834,773

 
 
Cost of sales
1,365,168

 
(6,732
)
(a)(b)
1,358,436

 
1,200,041

 
1,443

(b)
1,201,484

 
 
Gross profit
724,175

 
6,732

 
730,907

 
634,732

 
(1,443
)
 
633,289

 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, distribution, and marketing
374,309

 
5,950

(b)
380,259

 
342,072

 
3,608

(b)
345,680

 
 
General and administrative
165,201

 
(8,914
)
(a)
156,287

 
145,589

 
(17,507
)
(a)
128,082

 
 
Total operating expenses
539,510

 
(2,964
)
 
536,546

 
487,661

 
(13,899
)
 
473,762

 
 
Operating income
184,665

 
9,696

 
194,361

 
147,071

 
12,456

 
159,527

 
 
Other expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
32,117

 
—

 
32,117

 
22,600

 
—

 
22,600

 
 
Other expense, net
3,728

 
(3,727
)
(c)
1

 
4,787

 
(4,787
)
(c)
—

 
 
Total other expense
35,845

 
(3,727
)
 
32,118

 
27,387

 
(4,787
)
 
22,600

 
 
Income before income taxes
148,820

 
13,423

 
162,243

 
119,684

 
17,243

 
136,927

 
 
Income tax expense
50,096

 
3,962

(d)
54,058

 
42,396

 
5,463

(d)
47,859

 
 
Income before loss in equity method investments
98,724

 
9,461

 
108,185

 
77,288

 
11,780

 
89,068

 
 
Loss in equity method investments
4,355

 
—

 
4,355

 
6,497

 
—

 
6,497

 
 
Net income
$
94,369

 
$
9,461

 
$
103,830

 
$
70,791

 
$
11,780

 
$
82,571

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
$
0.59

 
 
 
 
 
$
0.47

 
 
Diluted
 
 
 
 
$
0.57

 
 
 
 
 
$
0.46

 
 
Weighted Average Common Shares:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
176,759,289

 
 
 
 
 
175,007,291

 
 
Diluted
 
 
 
 
180,595,772

 
 
 
 
 
179,662,304

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income excluding China joint venture activities:
 
 
 
 
 
 
 
 
 
 
Adjusted net income
 
 
 
 
103,830

 
 
 
 
 
82,571

 
 
Corporate related joint venture expenses, net of tax
 
1,259

(e)
 
 
 
 
1,041

(e)
 
Loss in China joint venture equity method investment
 
3,887

(f)
 
 
 
 
6,157

(f)
 
Adjusted net income excluding China joint venture activities
 
$
108,976

 
 
 
 
 
$
89,769

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted earnings per share excluding China joint venture activities:
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
$
0.62

 
 
 
 
 
$
0.51

 
 
Diluted
 
 
 
 
$
0.60

 
 
 
 
 
$
0.50

 

16


The WhiteWave Foods Company
GAAP to Non-GAAP Reconciliation
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended June 30, 2016
 
Six months ended June 30, 2015
 
GAAP
 
Adjustments
 
Adjusted
 
GAAP
 
Adjustments
 
Adjusted
 
 (In thousands)
Income statement amounts by segment:
 
 
 
 
 
 
 
 
 
 
 
Total net sales:
 
 
 
 
 
 
 
 
 
 
 
Americas Foods & Beverages
$
1,793,218

 
$
—

 
$
1,793,218

 
$
1,571,388

 
$
—

 
$
1,571,388

Europe Foods & Beverages
296,125

 
—

 
296,125

 
263,385

 
—

 
263,385

Total net sales
$
2,089,343

 
$
—

 
$
2,089,343

 
$
1,834,773

 
$
—

 
$
1,834,773

 
 
 
 
 
 
 
 
 
 
 
 
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Americas Foods & Beverages
$
201,635

 
$
5,437

(a)(b)
$
207,072

 
$
170,850

 
$
(209
)
(a)(b)
$
170,641

Europe Foods & Beverages
35,710

 
—

 
35,710

 
31,108

 
—

 
31,108

Total reportable segment operating income
237,345

 
5,437

 
242,782

 
201,958

 
(209
)
 
201,749

Corporate and other
(52,680
)
 
4,259

(a)
(48,421
)
 
(54,887
)
 
12,665

(a)
(42,222
)
Total operating income
$
184,665

 
$
9,696

 
$
194,361

 
$
147,071

 
$
12,456

 
$
159,527


                    
The WhiteWave Foods Company
Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
 
 
 
 
 
 
 
 
Six months ended June 30,
 
 
 
2016
 
2015
 
 
 
 (In thousands)
 
Net income
 
$
94,369

 
$
70,791

 
Interest expense, net
 
32,117

 
22,600

 
Income tax expense
 
50,096

 
42,396

 
Depreciation and amortization
 
68,388

 
55,337

 
EBITDA
 
$
244,970

 
$
191,124

 
Transaction, integration & transition costs
 
17,790

 (a)
7,705

(a)
Mark to market adjustments on hedging transactions
 
(5,004
)
(b)(c)
(261
)
(b)(c)
IPO grants & non-cash stock-based compensation
 
19,515

(a)(g)
25,515

(a)(g)
Adjusted EBITDA
 
$
277,271

 
$
224,083

 
 
 
 
 
 
 
Corporate related joint venture expenses
 
$
1,888

(e)
$
1,601

(e)
Loss in China joint venture equity method investment
 
3,887

(f)
6,157

(f)
Adjusted EBITDA excluding China joint venture activities
 
$
283,046

 
$
231,841

 


17


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 IPO grants.
•
$0.4 million for the three months ended June 30, 2016
•
$6.8 million for the three months ended June 30, 2015
•
$0.6 million for the six months ended June 30, 2016
•
$9.8 million for the six months ended June 30, 2015

ii.
Elimination of non-recurring purchase accounting adjustments, transaction and integration costs related to merger and acquisition activities and other investments.
Americas Foods & Beverages
•
$5.1 million in SAP implementation related costs and $1.6 million of other transaction and integration costs related to acquisitions for the three months ended June 30, 2016
•
$2.5 million transaction and integration costs related to acquisitions for the three months ended June 30, 2015
•
$12.1 million in SAP implementation related costs and $2.1 million of other transaction and integration costs related to acquisitions for the six months ended June 30, 2016
•
$4.8 million transaction and integration costs related to acquisitions for the six months ended June 30, 2015

Corporate
•
$3.4 million in transaction costs related to merger and acquisition activities for the three months ended June 30, 2016
•
$2.7 million in transaction costs related to acquisitions for the three months ended June 30, 2015
•
$3.6 million in transaction costs related to merger and acquisition activities for the six months ended June 30, 2016
•
$2.9 million in transaction costs related to acquisitions for the six months ended June 30, 2015

(b)
The adjustment reflects elimination of the income related to the mark-to-market adjustment on commodity hedges.
•
$7.2 million for the three months ended June 30, 2016
•
$4.2 million for the three months ended June 30, 2015
•
$8.7 million for the six months ended June 30, 2016
•
$5.1 million for the six months ended June 30, 2015

(c)
The adjustment reflects elimination of the expense related to the mark-to-market adjustment on interest rate hedges and amortization of forward points on foreign exchange contracts.
•
$1.3 million for the three months ended June 30, 2016
•
$1.0 million for the three months ended June 30, 2015
•
$3.7 million for the six months ended June 30, 2016
•
$4.8 million for the six months ended June 30, 2015

(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 income before taxes.

(e)
The adjustment reflects the elimination of costs incurred to manage our China Joint Venture investment.
•
$1.1 million ($0.7 million, net of tax) for the three months ended June 30, 2016
•
$1.2 million ($0.8 million, net of tax) for the three months ended June 30, 2015
•
$1.9 million ($1.3 million, net of tax) for the six months ended June 30, 2016
•
$1.6 million ($1.0 million, net of tax) for the six months ended June 30, 2015

(f)
The adjustment reflects the elimination of the loss incurred on the investment in the China Joint Venture.
•
$1.9 million for the three months ended June 30, 2016
•
$2.2 million for the three months ended June 30, 2015
•
$3.9 million for the six months ended June 30, 2016
•
$6.2 million for the six months ended June 30, 2015

(g)
The adjustment reflects non-cash related stock-based compensation expense, excluding amounts already included in IPO grants.
•
$6.1 million for the three months ended June 30, 2016
•
$5.3 million for the three months ended June 30, 2015
•
$18.9 million for the six months ended June 30, 2016
•
$16.0 million for the six months ended June 30, 2015


18