(Source: PRNewswire)
PLANO, Texas, Aug. 13 /PRNewswire-FirstCall/ -- Dr Pepper Snapple Group, Inc. (NYSE: DPS) reported second quarter 2009 earnings of $0.62 per share. The company reported earnings of $0.42 per share in the prior year period, or $0.60 per share excluding certain items. Year-to-date the company reported earnings of $1.14 per share compared to $0.80 per share in the prior year period. Excluding net gains related to the Hansen contract termination settlement and the sale of certain distribution rights in the current year and restructuring, transaction and separation-related costs in the prior year, the company reported year-to-date earnings of $0.99 per share compared to $1.01 per share in the prior year period.
For the second quarter, reported net sales were down 4%. Excluding the loss of Hansen product distribution and on a currency neutral basis, net sales increased 3% reflecting solid pricing actions and 3% sales volume growth offset by negative mix from higher carbonated soft drink (CSD) concentrate and value juice sales. Segment operating profit, as adjusted, increased 16% reflecting lower commodity and fuel costs, operating benefits from higher volumes and a strong cost control focus. Reported income from operations was $297 million.
DPS President and CEO Larry Young said, "Our results continue to show the strength of our brands and the flexibility of our balanced routes to market. Despite a challenging macroeconomic backdrop, each of our segments posted solid net sales gains, grew liquid refreshment beverages value share and added new points of distribution. Our continuous improvement mindset and strong cost control focus, coupled with better than expected input costs, resulted in double-digit growth in segment operating profit on a comparable, currency neutral basis.
"As we look ahead, we remain confident that our advantaged portfolio will continue to deliver industry leading results. With a less onerous input cost environment, we will take full advantage of marketplace investment opportunities to support the long term health of our brands and will leverage our productivity office to drive further efficiencies in our business."
Earnings per share__ Second Quarter__ Year-to-Date
reconciliation__ -------------- ------------
Percent__ Percent
2009__ 2008 Change__ 2009__ 2008 Change
---- ---- ------ ---- ---- ------
Reported earnings per
share__ $0.62__ $0.42__ 48__ $1.14__ $0.80__ 43
Items affecting
comparability
-__ Net gain on Hansen
termination and sale
of certain
distribution rights__ -__ -__ (0.15)__ -
-__ Transaction and
separation costs__ -__ 0.05__ -__ 0.05
-__ Bridge loan fees
and expenses__ -__ 0.06__ -__ 0.06
-__ Separation-related
tax__ -__ 0.04__ -__ 0.04
Restructuring costs__ -__ 0.03__ -__ 0.06
--- ---- --- --- ---- ---
EPS excluding certain
items__ $0.62__ $0.60__ 3__ $0.99__ $1.01__ (2)
--------------------- ----- ----- --- -----__ ----- ---
Volume (BCS), sales volume, net sales and segment operating profit, as adjusted, in the tables and commentary below exclude the loss of Hansen product distribution and are on a currency neutral basis. For a reconciliation of non-GAAP to GAAP measures see pages A- 5 and A-6 accompanying this release.
Summary of 2009 results__ As reported__ As adjusted
-----------__ -----------
(Percent change)__ Second__ Year-to-__ Second__ Year-to-
Quarter__ Date__ Quarter__ Date
----------- --------__ -----------__ --------
Volume (BCS)__ 3__ 4__ 4__ 4
----------- --- --- --- ---
Net Sales__ (4)__ (3)__ 3__ 4
--------- --- --- --- ---
Segment Operating
Profit__ 5__ 7__ 16__ 17
----------------- --- --- --- ---
BCS - bottler case sales
Volume (BCS)
For the quarter, BCS volume increased 4% with CSDs growing 4% and non-carbonated beverages (NCB) growing 3%.
In CSDs, Dr Pepper volume was up 4%. "Core 4" brands - 7UP, Sunkist, A&W and Canada Dry - were down 2%. 7UP, Canada Dry and A&W were each down less than 1% and Sunkist declined high single digits. Expanded third party bottler distribution added 11 million cases to Crush, more than doubling this business. Fountain/foodservice volume declined less than 1% despite a 2% decline in quick service restaurant (QSR) foot traffic.
In NCBs, Hawaiian Punch volume increased 18% on continued strong promotional activities. Pressure on the company's premium products continued with volume down 12%. Snapple declined 15%, but improved sequentially following its restage and strong media support. Mott's juices and sauces increased 8% driven by promotional activity.
By geography, U.S. and Canada volume increased 4%, and in Mexico and the Caribbean, volume declined 1%.
Across all measured channels, as reported by The Nielsen Company, the company grew U.S. CSD dollar share 1.0 percentage point and flavored CSD dollar share by 1.4 percentage points year-to-date.
Sales volume
For the quarter, sales volume increased 3% and was 1 percentage point below BCS volume. Year-to-date sales volume and BCS volume increased 4% each.
2009 Segment results
(Percent Change)__ As reported
-----------
Second Quarter__ Year-to-Date
--------------__ ------------
Sales__ Net__ Sales__ Net
Volume__ Sales__ SOP__ Volume__ Sales__ SOP
------ ----- --- ------ -----__ ---
Beverage Concentrates__ 4__ 4__ 6__ 5__ 6__ 12
--------------------- --- --- --- --- --- ---
Packaged Beverages__ 1__ (4)__ 18__ 2__ (4)__ 13
------------------ --- --- --- --- --- ---
Latin America
Beverages__ (1)__ (23)__ (57)__ (1)__ (23)__ (55)
------------- --- --- --- --- --- ---
Total__ 2__ (4)__ 5__ 4__ (3)__ 7
------------- --- --- --- --- --- ---
2009 Segment results
(Percent Change)__ As adjusted
-----------
Second Quarter__ Year-to-Date
--------------__ ------------
Sales__ Net__ Sales__ Net
Volume__ Sales__ SOP__ Volume__ Sales__ SOP
------ ----- --- ------ -----__ ---
4__ 6__ 8__ 5__ 8__ 14
Beverage Concentrates__ --- --- --- --- --- ---
---------------------
Packaged Beverages__ 3__ 3__ 36__ 4__ 3__ 30
------------------ --- --- --- --- --- ---
Latin America
Beverages__ (1)__ 3__ (20)__ 0__ 2__ (18)
------------- --- --- --- --- --- ---
Total__ 3__ 3__ 16__ 4__ 4__ 17
------------- --- --- --- --- --- ---
SOP - Segment Operating Profit
Beverage Concentrates
Net sales for the quarter increased 6% reflecting sales volume growth led by expanded Crush distribution. Mid-single-digit price increases taken at the beginning of the year were partially offset by higher fountain/foodservice contractual discounts and increased marketplace spending. Segment operating profit increased 8% reflecting net sales growth and cost efficiencies.
Packaged Beverages
Net sales for the quarter increased 3% reflecting sales volume growth and solid pricing actions across CSDs, Snapple, and Mott's, partially offset by negative product mix. The improvement in sales volume was driven by double-digit growth in Hawaiian Punch and high- single-digit growth in Mott's, partially offset by double-digit declines in premium-priced beverages. Segment operating profit increased 36% reflecting net sales growth; lower packaging, ingredient and fuel costs; continued operating efficiencies; and strong cost controls.
Latin America Beverages
Net sales for the quarter increased 3% reflecting favorable channel mix and the impact of company-owned route expansion, partially offset by declines in Squirt. Segment operating profit decreased 20% reflecting higher selling and distribution costs related to channel mix and new routes partially offset by net sales growth.
Corporate and other items
For the quarter, corporate costs totaled $61 million reflecting higher stand-alone costs, including stock-based compensation expenses, as well as productivity office investments and the absence of certain credits in the prior year. These cost increases were offset by $8 million of unrealized commodity-related mark-to-market gains. Corporate costs in 2008 were $64 million, including $20 million related to one-time transaction and separation-related costs.
Net interest expense decreased $31 million reflecting the absence of bridge loan fees and expenses and related party interest income both in the prior year.
The effective tax rate was 36.7%. This included a tax expense of $3 million related to certain tax items indemnified by Cadbury.
Cash flow
Year-to-date, the company generated $371 million of cash from operating activities, including a $27 million contribution to its pension plan. Year-to-date net capital spending totaled $134 million. The company repaid $125 million of principal of its floating rate term loan in the quarter. Year-to-date, the company made optional principal repayments of $280 million covering substantially all of its 2010 obligations.
