Image source: WhiteWave Foods. 

WhiteWave Foods (NYSE:WWAV) has already committed to be acquired by Danone, but investors may be eyeing its third-quarter earnings report released Wednesday as the stock still actively traded.

The parent of Silk soy milk and other alternative foods has ridden a wave of healthy eating to solid growth, but during the recent period, performance was stunted by troubles by problems in its Fresh Foods division.

WhiteWave results: The raw numbers

MetricQ3 2016 ActualsQ3 2015 Actuals Growth (YOY)
Revenue $1.05 billion $1 billion 5%
Adjusted net income $64 million $57 million 13%
Earnings per share $0.35 $0.31 12%

YOY = year over year. Data source: WhiteWave press release.

What happened with WhiteWave this quarter

  • Growth slowed significantly because of trouble with its fresh-produce brand, Earthbound Farm, whose revenue declined 13% because of supply chain-related constraints and other issues.
  • As a result, organic constant currency net sales growth was just 2% in the quarter. The quarter's results includes the addition of Wallaby yogurt and Vega plant-based nutrition products, both of whose acquisitions were completed last August.
  • Without the problems at Earthbound Farm, organic constant currency growth would have been 5%, and total revenue growth 8%.
  • The results marked the company's slowest revenue growth in its history as a publicly traded company.
  • Its China joint venture continues to be a headwind, contributing a $3 million net loss. 

What management had to say 

CEO Gregg Engles acknowledged execution issues, saying: "We are pleased with our third-quarter results, despite some execution challenges and a difficult industry backdrop in the quarter. The growth potential of our categories remains robust, and we are committed to delivering strong financial results for full year 2016."

Engles also addressed the upcoming merger with Danone and the benefits of teaming up with the global packaged-foods giant, saying: "We continue to move toward closing our merger with Danone. Danone is the ideal strategic partner to enhance our growth trajectory and the global reach of our brands, and to support WhiteWave's mission to change the way the world eats for the better, which uniquely aligns with Danone's mission to bring health through food to as many people as possible."

Looking forward

Danone agreed to buy WhiteWave for $56.25 a share, so the stock should remain range-bound until the deal closes, which is expected to come in the first quarter of 2017. The stock has steadily fallen since the acquisition was announced in July and trades below $54 as of writing.

In its full-year guidance, management projected revenue growth of 8.5%-9.5%, or 9.5%-10.5% in constant currency. Both figures are down from its prior guidance, as the Earthbound Farm challenges put a dent in full-year projections. It also sees organic, constant currency revenue growth up in the mid-single digits. 

On the bottom line, management expects adjusted operating income growth of 16%-18% and adjusted EPS of $1.36-$1.38, which compares with a prior range of $1.43-$1.46.

For investors, the company's fourth-quarter results should make little difference. Shareholders approved the Danone merger on Oct. 4, and there are few obstacles to the deal's closing as negotiated in a few months. The 4% premium in the buyout price today is a good reason to hold on until the closing.

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