DENVER — Consumer demand for dairy alternatives, organic food and customized coffee drove a 10% surge in sales for the WhiteWave Foods Co. in the recent quarter. The maker of Silk plant-based beverages and International Delight coffee creamers reported better-than-expected earnings, even with higher levels of market investments, currency headwinds and a challenging growing season.
For the first quarter ended March 31, WhiteWave reported net income of $33 million, or 19c per share on the common stock, up 3% from $32 million, or 18c per share, in the prior year period.
Net sales totaled $911 million, up 10% from $830 million the year before, driven by strong growth across the company’s Americas Foods and Beverages and Europe Foods and Beverages segments and the inclusion of So Delicious Dairy Free, which WhiteWave acquired in the fourth quarter of 2014. In constant currency, total net sales rose 13% to $937 million.
Executives describe WhiteWave Foods, whose brands also include Horizon Organic, Earthbound Farm and the recently acquired So Delicious Dairy Free, as a company built around large on-trend categories and brands within the natural and organic segment and beyond.
|Blaine McPeak, president of WhiteWave's Americas Foods and Beverages segment|
“I think our goal is really to drive category growth across all channels, and we feel like each of our categories is properly positioned for a strong future outlook here,” said Blaine McPeak, president of the company’s Americas Foods and Beverages segment, during a May 8 earnings call with financial analysts. “And I think what you’re finding is it’s a broad consumer shift, not just a sub-segment of the population, that’s migrating towards these positive health and wellness trends, or natural and organic trends, or coffee consumption trends. That’s happening across all channels and all consumers.”
Nut milks are one such example of a trending category. WhiteWave’s nut-based products grew 18% in the quarter, behind continued growth in the almond sub-category and the successful introduction of Silk Cashew milk.
“We’re very pleased with the recent launch of our Silk Cashew milk,” said Gregg Engles, chairman and chief executive officer. “It has been the fastest distribution build in Silk history, with an ACV that now stands at over 85%. We’re further expanding our cashew-based offerings to include vanilla and chocolate flavor varieties that are both great-tasting and low in calories.”
During the quarter, the Americas Foods and Beverages segment, which includes plant based foods and beverages, coffee creamers and beverages, and premium dairy, posted net sales of $641 million, an increase of 15% over the prior year, reflecting volume growth, aided by pricing benefits. Each platform drove double-digit sales growth, inclusive of So Delicious’ results. Operating income for the segment increased 12% to $74 million.
Net sales for the Americas Fresh Foods segment, which includes the Earthbound Farm brand, declined 4% to $140 million due to weather conditions that affected the supply of organic leafy greens in the quarter, as well as lower availability of fresh produce. Operating income fell 9% to $8 million, benefitting from supply chain and efficiency improvements.
The Europe Foods and Beverages segment, which includes plant-based foods and beverages sold primarily under the Alpro brand, posted a 4% increase in net sales to $131 million, driven by volume growth across the entire European product portfolio. Operating income for the segment advanced 38% to $14 million, due to continued scale leverage and the divestiture of a lower-margin meat alternatives business at the end of the first quarter of 2014.
For 2015, the company has increased its full-year outlook for net sales to low-double-digit growth on a reported basis, in spite of the continued strengthening of the U.S. dollar. Management expects adjusted operating income growth in the low-teens for the year on a U.S. dollar reported basis. The company also has increased its full-year adjusted diluted earnings per share outlook to $1.10 to $1.14, after an expected 6c dilutive impact from currency translation. The estimates exclude the company’s investment in a plant-based beverage joint venture in China.
“Looking ahead to the remainder of 2015, we will continue to focus on driving growth in our core businesses, launching additional innovative products, further expanding our geographic presence, installing new capacity to support our volume-driven growth, while continuing to pursue additional growth opportunities, both organic and strategic,” Mr. Engles said.WhiteWave’s share price closed 5% higher at $46.10 on May 8, up $2.38 from the previous close.