The WhiteWave Foods Company (WWAV, Financial) is a consumer packaged food and beverage company that manufactures and sells foods and beverages, coffee creamers and beverages, dairy products and organic produce. Its primary markets are in North America, Europe and through a joint venture in China.
WhiteWave's goal is to provide innovative, great-tasting food and beverage choices that meet consumer desires for nutritious, flavorful and convenient products. Its widely recognized brands sold in North America include Silk, So Delicious and Vega foods and beverages, International Delight and Land O'Lakes coffee creamers and beverages, Horizon Organic and Wallaby Organic dairy products and Earthbound Farm organic salads, fruits and vegetables. Its popular plant-based foods and beverages brands in Europe include Alpro and Provamel.
The company reported a strong second quarter and its EPS and revenue exceeded expectations. The company boasts of double-digit topline growth, continued strong margin expansion and robust earnings in the current quarter.
Strong second quarter
The company reported diluted earnings per share were 29 cents and adjusted diluted earnings per share were 32 cents in the second quarter, excluding operating costs associated with its China joint venture. Including joint venture costs, WhiteWave reported second quarter adjusted diluted earnings per share of 31 cents.
Net sales during the second quarter were $1.1 billion, a 14% increase from $924 million in the prior-year quarter.
On a constant currency basis, net sales increased by 14% from the prior-year quarter.
Excluding acquisitions, organic constant currency net sales increased by 7% from the prior-year quarter.
Reported operating income during the second quarter increased by 31% and was $101 million. Reported operating income on an adjusted basis increased by 23% and was $104 million ($85 million in the prior-year quarter).
On a constant currency basis, adjusted operating income increased by 26% from the prior-year quarter.
Segmentwise performance
Americas Foods & Beverages segment: In the second quarter, net sales for Americas Foods & Beverages were $898 million (an increase of 14% from the prior-year quarter).
Organic constant currency net sales in the segment increased by 6%.
Reported operating income for the Americas Foods & Beverages segment increased by 19% in second quarter. On an adjusted constant currency basis, segment operating income increased by 21%.
Europe Foods & Beverages segment: Net sales in the segment increased by 14% on a reported basis and 15% on a constant currency basis in the second quarter when compared to the prior-year quarter.
Reported operating income for the Europe Foods & Beverages segment increased by 23% in second quarter.
On a constant currency basis, segment operating income increased by 38%.
Expectations for 2016
| Ă‚ | Range |
| Net Sales growth in reported currency | To be between 10.5% and 11.5% |
| Net Sales growth on constant currency basis | To be between 11.0% and 12.0% |
| Ă‚ | Management continues to target 75 basis points of constant currency operating margin expansion for full-year 2016. |
| Constant currency adjusted diluted earnings per share | To be between $1.43 and $1.46 |
| Adjusted diluted earnings per share | To be between $1.38 and $1.41 in reported currency |
Sustainability Initiatives
The company conforms to strict practices of transparency. Since 2006, the company has reduced greenhouse gas emissions by 32% per pound of product. Over the past two years, WhiteWave has reduced water use by 6% per pound of product and waste to landfill resource intensity by 52%. By 2025, WhiteWave plans to further reduce energy use, greenhouse gas emissions, water use and waste to landfill per pound of product by 20% from a 2013 baseline.
In the year 2015, it diverted 78% of its waste from landfills through recycling, composting and reuse efforts. In the same year it balanced 45% of its global manufacturing water use through a partnership with the Bonneville Environmental Foundation to restore critically dewatered rivers and water systems across the U.S. Since 2009, WhiteWave’s water efforts have replenished more than 1.9 billion gallons of water. (Source: Company Website)
Focus
- Increased internal production capacity.
- Cost reduction initiatives.
- Further scale leverage.
- Maintaining high levels of marketing investments.
Conclusion
It is constantly pushing itself toward the better. “Share What We Do Well” is one of its six core values, and it is interwoven throughout WhiteWave’s long-term growth plan. In 2015, the company donated more than 2% of pretax profits through cash and products to nonprofit organizations.
It ensures that people have access to healthy, nutritious foods and beverages, and it supports local food bank partners that are part of the Feeding America network through food donations, financial contributions and employee volunteerism. It has launched a completely new advertising campaign to further broaden consumer awareness of the benefits of plant-based products and plans to launch new Silk branding and packaging.
It 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. The company reported strong second quarter with increased EPS and revenue. It is on a growing spree and I think that adding this company will reap shareholder benefits.
Disclosure: I do not hold any position in the company.
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