Dean Foods Company 2016 Annual Report
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2016 Annual Report Dear Fellow Stockholders: There’s only one thing that excites me more than where Dean Foods is today, and that’s where we’re headed. This dynamic company has many opportunities ahead of it, and I’m humbled and excited to be the one privileged to lead Dean Foods into the future. STRONG PROGRESS IN 2016 TO EXPAND INTO 2017 No one can deny our momentum in 2016. We ended the year with our stock trading near its 52-week high while we continued to return dividends to our shareholders. We invested in the business and took important steps to support our future success. In 2016, we: Invested in the Launched new Acquired Friendly’s® Developed a joint Continued our DairyPure® and products. Ice Cream. venture with strong Food TruMoo® brands. DairyPure Lactose As planned, the Organic Valley®. Service momentum. We supported our Free and Caribou® acquisition of the Known as “Organic This is a growing power brands with & "! ,ƛ""4"/" leading Friendly’s Valley Fresh®, ” the joint channel in the food category-leading two new entries into brand grew our top venture leverages the and beverage industry advertising and built the dairy case. Our line and proved to be strength of the Organic that is now nearly the strategic marketing lactose-free milk marks accretive to earnings Valley brand and its same size as retail. partnerships with the 1%"Ɯ/01"51"+0&,+ while providing a solid high-quality organic We are among the Olympics, DreamWorks of the DairyPure platform for growth in *&)(4&1%1%"0&$+&Ɯ +1 biggest suppliers to the Pictures and Oreo brand into adjacent a strategic category. selling, manufacturing industry’s top players cookies to engage and complementary and distribution and delivered solid our consumers categories while capabilities of top-line growth in 2016. and customers. the Caribou launch Dean Foods. enabled us to compete in the fast-growing iced ,ƛ"" 1"$,/6ǽ NOW, AS WE MOVE INTO 2017, WE WILL BUILD ON THESE SUCCESSES. IN 2017, YOU WILL SEE: • Expansion of the DairyPure line. Our new clean-label sour cream line was created to beat any competitor in taste and texture and began to launch nationwide in January. DairyPure sour cream represents another critical step for us as we venture "6,+!Ɲ2&!*&)(ǽ • Continued category interruption with TruMoo. Meeting the demands of consumers, TruMoo now features No GMO Ingredients. New choices in our ingredients give parents and school nutrition directors further peace of mind and another good reason for choosing TruMoo. • Renewed focus on ice cream. Buoyed by the Friendly’s acquisition, we’re reimagining our ice cream business by enhancing our recipes, improving our packaging, and introducing "5 &1&+$+"4-/,!2 10+!Ɲ3,/0ǽ"4&)))0,"5-+!1%"/" % ,#,2/"+ȉ0+!6Ɯ")!/"*"/6)&+"01,/&+$1%"0""),3"! brands to new areas of the country. PROGRESS ON THE DEAN FOODS STRATEGIC PLAN STRATEGIC PILLARS Our team created a three-year strategic plan to set the direction for the successful future of the company. It is a comprehensive strategy that balances a solid growth agenda with a strong emphasis on productivity. Of Build & Buy Strong Brands course, the primary objective is to deliver shareholder value as well as help Dean Foods become more resistant to extreme commodity increases. We Strengthen put the plan in motion in 2016, and the successes I highlighted fall under Our Private ,+",#Ɯ3"01/1"$& -&))/0ǽ"4,/("!%/!&+ǗǕǖǛ1,Build & Buy Strong Label Business Brands as evidenced by our progress on DairyPure and TruMoo as well as our acquisition of Friendly’s ice cream. We were able to Strengthen Our Drive Operational Private Label Business with some key customer wins. Our relentless focus Excellence on the Drive Operational Excellence pillar of our strategy continues to be a top priority and provides the fuel to drive our plan. We made progress on Enhance Our the Enhance Our Future Capabilities pillar with the addition of several Future Capabilities highly-skilled people, additional training for our leadership team and investment in important technology systems. We were able to take initial Transform steps to Transform Go To Market with the addition of new manufacturing Go To Market and warehouse distribution capabilities. CONCLUSION I see a bright future ahead for Dean Foods. We have And retailers and foodservice customers realize better experienced leaders and hardworking local teams in place today than ever before that we can help them unlock the to drive a strong strategic plan that is the perfect road map power of Dean Foods to reach their full potential. to a successful future. Our products are on trend in today’s Thank you for your continued support and I look forward to rapidly evolving food culture and we really do have what 2017 and beyond. 1,!6ȉ0 ,+02*"/0/"),,(&+$#,/ǿ%")1%6,ƛ"/&+$01%1/" locally sourced with uncluttered ingredient lines and clean Sincerely, labels with ingredients that they can read and understand. Ralph P. Scozzafava We have a powerful direct-to-store delivery system that is second to none in the refrigerated space. Our plant network enables us to be close to the farm and close to the consumer so we can bring the freshest, “farm to table” products to our consumers and retailers shelves every day. 2016 FINANCIAL PERFORMANCE* Adjusted OI Adjusted (SPTT1SPàU Free Cash Flow $293MM $1,985MM $113M Adjusted Return to D i l u t e d E P S Leverage Shareholders $1.57 1.89x YE $58M ȥ)"0"/"#"/1,1%"Ȋ,+Ȓ &++ &)"02/"0ȋ0" 1&,+&+1%"-/"00/")"0"Ɯ)"!05%&&1ǞǞǽǖ1, ,/*ǝȒ!1"! "/2/6ǖǛǾǗǕǖǜǾ #,/*,/"&+#,/*1&,+Ǿ&+ )2!&+$/" ,+ &)&1&,+1,1%"*,01!&/" 1)6 ,*-/)"Ɯ++ &)*"02/"0&+ ,/!+ "4&1% ǽ SETTING THE TABLE DEAN FOODS COMPANY SNAPSHOT Dean Foods is a leading food and beverage company and the largest processor and direct-to-store distributor of dairy products in the country. We produce more than 50 national, regional, local and private-label milk brands as well as leading brands for ice cream, cultured products, creamers, juices, bottled water and more. Dean Foods Our milk comes purchases 10% of from about 1 gallon the U.S. milk supply of milk donated 930,000 every 10 seconds Dairy Category Captain cows $340,000 awarded by Progressive Grocer from about 4,350 farms in scholarships awarded to employees’ children from 2010-2016 2011 2015 2016 2016 launch launch acquisition joint venture Operating 88 16,000+ 33,000 since trademarks held by Dean Foods employees schools served 1925 1,800,000,000 Dean Foods sold almost 1.8 billion individual half pints of TruMoo and DairyPure to schools in 2016. That’s almost 10 million cartons each school day. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ፼ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Fiscal Year Ended December 31, 2016 OR អ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from to Commission File Number 001-12755 Dean Foods Company (Exact name of Registrant as specified in its charter) 16FEB201705234040 Delaware 75-2559681 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2711 North Haskell Avenue Suite 3400 Dallas, Texas 75204 (214) 303-3400 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices) Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Stock, $.01 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ፼ No អ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes អ No ፼ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ፼ No អ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ፼ No អ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ፼ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ፼ Accelerated filer អ Non-accelerated filer អ Smaller reporting company អ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).