The WhiteWave Foods (WWAV) Gregg L. Engles on Q4 2015 Results - Earnings Call Transcript

| About: WhiteWave Foods (WWAV)

The WhiteWave Foods Co. (NYSE:WWAV)

Q4 2015 Earnings Call

February 11, 2016 10:00 am ET


Dave Oldani - Senior Vice President - Treasurer and Investor Relatons

Gregg L. Engles - Chairman & Chief Executive Officer

Kelly J. Haecker - Chief Financial Officer

Greg Christenson - Chief Financial Officer, Americas Foods & Beverages

Blaine E. McPeak - Chief Operating Officer


Christopher Growe - Stifel, Nicolaus & Co., Inc.

Kenneth B. Goldman - JPMorgan Securities LLC

Matthew C. Grainger - Morgan Stanley & Co. LLC

Andrew Lazar - Barclays Capital, Inc.

Sean P. Naughton - Piper Jaffray & Co (Broker)

Stephanie Benjamin - SunTrust Robinson Humphrey, Inc.

John Joseph Baumgartner - Wells Fargo Securities LLC

Alexia J. Howard - Sanford C. Bernstein & Co. LLC


Good morning, and welcome to The WhiteWave Foods Company's Fourth Quarter and Full Year 2015 Earnings Conference Call. Please note that today's call is being recorded and a presentation webcast is also being broadcast live over the Internet on the Investor Relations section of WhiteWave Foods' corporate website. A replay of today's call will be available on our website approximately two hours after the conclusion of this call.

This broadcast is the property of The WhiteWave Foods Company. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of the company is strictly prohibited.

I would now like to turn the call over to Dave Oldani, Senior Vice President, Treasurer and Investor Relations of The WhiteWave Foods Company. Go ahead, Mr. Oldani.

Dave Oldani - Senior Vice President - Treasurer and Investor Relatons

Good morning, everyone, and thanks for joining us on our fourth quarter and full year 2015 earnings conference call. This morning, we issued our earnings press release, which is available on our website at The release is also furnished as an exhibit to our Form 8-K, which is available on the Securities and Exchange Commission's website at

Accompanying today's prepared remarks is a slide presentation that can be found on the Investor Relations section of The WhiteWave website. We'd like to advise you that all forward-looking statements made on today's call are intended to fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements will include, among others, disclosure of earnings targets, guidance for the first quarter and full year 2016, expectations regarding our branding initiatives, planned investments, our innovation and growth plans, and other various aspects of our business.

These statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. Information concerning those risks is contained in the company's 2014 Form 10-K and in our quarterly reports on Form 10-Q.

We also want to remind you that our presentation on today's call and any accompanying slides is based on our adjusted financial results, which is the same basis that we've used in our past earnings presentation along with certain results presented on a constant-currency basis to allow for meaningful comparisons. Our earnings release posted on our website contains further details of these adjustments along with reconciliations between our GAAP reported results and the results we present on an adjusted basis.

Participating with me in the prepared section of today's call are Gregg Engles, our Chairman and CEO; our current Chief Financial Officer, Kelly Haecker; and Greg Christenson, who will become our Chief Financial Officer effective April 1.

Available to participate in the Q&A portion of the call are Blaine McPeak, our Chief Operating Officer; and Kevin Yost, U.S. Group President of Americas Food & Beverages. Gregg Engles will first provide a review of our results and overall business performance. Kelly Haecker will then offer additional perspective on our Q4 and full year operating results. Greg Christenson will provide comments on our 2016 forward outlook before turning the call back to Gregg Engles for some final remarks. We will then open the call for your questions.

I will now turn the call over to Gregg Engles. Gregg?

Gregg L. Engles - Chairman & Chief Executive Officer

Thanks, Dave. Good morning, everyone, and thank you for joining us today. The fourth quarter of 2015 topped off another record year for WhiteWave. We delivered top line growth of 13% behind strong core growth in our Americas and Europe Foods & Beverages segments and contributions from our recent acquisitions, despite continuing currency headwinds and sales disruptions caused by the SAP implementation in our Fresh Foods segment.

Our net sales also grew 13% for the full year. On a constant currency basis, our top line growth was 15% for the fourth quarter, as well as for the full year. Absent results from acquisitions within the past 12 months, our organic constant currency growth was 9.5% in 2015. With our increasing scale and continued focus on driving operational efficiencies, we levered this strong top line growth into operating income growth of 30% in Q4, and 24% for the full year. On a constant currency basis, operating income grew at over two times our sales growth rate in Q4. This enabled us to improve our operating margins as we delivered almost 100 basis points of constant currency margin improvement in 2015, well exceeding our goal of 75 basis points. We achieved these levels of operating performance while maintaining high levels of marketing investment, as we remain committed to growing our categories and brands for the long-term.

Our strong top line growth and operating leverage, combined with a slightly lower tax rate resulted in Q4 earnings per share of $0.36, exceeding the high end of our guidance by $0.01. Including the cost of our China JV, our earnings per share was $0.34. Currency translation reduced our EPS by $0.01 in Q4, resulting in a $0.05 impact for the full year. Excluding our $13 million of China JV investments this past year and the effects of currency, we grew earnings per share by 24% in 2015, and by 36% in the fourth quarter.

In summary, 2015 was another great year for WhiteWave. Beyond delivering very strong financial results, we completed two highly strategic acquisitions, Vega and Wallaby, and largely finished the integration of So Delicious. We further expanded and improved our manufacturing capabilities, launched several new and innovate products, and opened a new state-of-the-art R&D facility.

Now, let me cover the factors that drove our operating performance. As I noted, even with ongoing currency headwinds, we produced strong top line growth in Q4 with net sales of over $1 billion and full year sales of over $3.8 billion. Another record sales quarter and year for WhiteWave.

Excluding acquisitions and currency conversion, our organic growth rate was over 8% for Q4. Our Americas and Europe grocery businesses excluding fresh foods grew 11% on an organic constant currency basis in the quarter. While we did have some pricing benefits from increases over the past year to offset inflation, primarily in the Horizon Organic business, the majority of our top line growth continues to be volume driven.

Sales in our Americas Foods & Beverages segment increased 18% in Q4 and for the full year behind strong core growth in our plant-based foods and beverages, coffee creamers and premium dairy platforms, along with contributions from So Delicious and the recent additions of Vega and Wallaby. On a constant currency organic basis, this segment's top line grew 9% in the fourth quarter and 10% for all of 2015. These growth rates continue to come from across U.S. retail channels, as well as increasing contributions from the away-from-home channels and our growing businesses in Canada and Latin America.

In our Fresh Foods business, the difficult SAP conversion led to sales disruptions and the inability to completely service our customers. This, combined with the discontinuation of certain fresh food – fruit agreements, led to a 5% sales decline in Q4. This resulted in a 2% decline in revenue for the full year. While we are clearly disappointed with the performance of Fresh Foods in 2015, we remain very positive on future growth opportunities for this business and our Earthbound brand. Once SAP is fully up to speed and our new expanded warehouse opens in Q2, we believe we will have the right foundation and tools in place to fully capitalize on Earthbound's long-term potential.

Our Europe Foods & Beverages segment continued to deliver – or delivered another robust quarter of growth of constant currency sales of 17% against its strongest growth quarter of 2014. For full year 2015, sales grew 21% on a constant currency basis driven by solid volume growth across all product categories. Due to the sizable appreciation of the U.S. dollar against the euro last year, this strong organic top line translated into 4% growth on a reported basis in 2015.

Let's now look at the performance of our brands for the fourth quarter and full year. Our Americas Plant-based Foods and Beverages business posted another strong performance in Q4 with net sales up 26% behind solid growth across our core portfolio, augmented by the inclusion of So Delicious for one additional month in Q4 and Vega for the entire quarter.

For the full year, sales in this platform increased 29%. Absent these acquisitions, our plant-based platform grew in the high-single digits on an organic constant currency basis for the quarter and for the full year.

Our plant-based platform continues to outpace the mid-single digit growth of the $1.3 billion plant-based beverage category due to a diverse portfolio that extends beyond beverages to include yogurts, frozen desserts, and now nutritionals with the addition of Vega.

All of these adjacent plant-based categories are experiencing strong growth and are still relatively nascent in size when compared to their conventional counterparts providing significant white space for sustainable growth. While it currently represents less than 5% of platform sales, we're pleased by the accelerating growth we see from our plant-based yogurt portfolio. We'll increase our investment in growing and expanding our yogurts in 2016.

Our So Delicious frozen desserts and novelties also continued to experience strong growth, and we look to drive significant growth in this brand as we enter our second year of ownership.

Vega has delivered strong growth since we acquired this brand mid-year. While Vega is not reflected in our prior year results or on a full year basis in 2015, as a reference, it grew more than 50% on a constant currency basis in Q4 with 2015 annual sales in excess of $125 million. We're excited about the growth opportunities for Vega and are investing behind this brand to drive its distribution and bring additional innovation to the plant-based nutritionals category.

Behind our market-leading Alpro brand, our Europe Plant-based Foods & Beverages business produced another year of record results in 2015. On a constant currency basis, net sales grew by 17% in Q4, and were up 21% for the full year. We're particularly pleased with these results when compared against last year's record fourth quarter and full year.

Alpro sales growth continues to be broad-based across its European markets. We also experienced strong growth rates across all of our major product lines with our already sizable nut-based and other ingredient beverages in Europe growing over 65% in the fourth quarter. Our core soy beverages grew by double digits again this past year, and we continue to experience very robust growth in our plant-based yogurts which grew over 20% in 2015 and comprised close to 20% of our total European turnover.

Alpro's strong growth in 2015 and over the past several years has been predominantly volume-driven, creating the need for additional capacity investments to support our continued robust growth expectations for this business.

Overall, we are pleased with the 2015 growth of our plant-based businesses which was delivered in both Europe and the Americas, and we expect it to continue. We have a fantastic pipeline of new and innovative products planned across both continents this year.

We continue to see a robust plot of opportunities for sustainable growth across our diverse plant-based categories, and we will focus on driving the broader plant-based category further beyond dairy milk alternatives in the cereal bowl.

Now, to our Fresh Foods business which comprise our Earthbound Farm brand. We had a difficult and disappointing fourth quarter as our transition to SAP impacted our warehousing and shipping efficiencies, which constrained our ability to fulfill orders and meet sales demand during the quarter.

In addition to the initial sales disruption from this conversion, our lower customer service levels and ensuing reduction in distribution points had an ongoing effect on our sales performance over the balance of the quarter.

The SAP impact combined with our decision earlier this year to exit certain lower margin fresh fruit supply agreements were the primary factors that led to a 5% sales decline in Q4 and a 2% reduction for the full year. The amount of lost product and manual workarounds to improve our shipping levels after the SAP implementation resulted in higher than expected transition cost in the quarter.

After adjusting for these SAP conversion-related costs, operating income in this business was still down 50% in the fourth quarter driven principally by the lower sales and related cost absorption. We have made material improvements to our processes since going live with SAP, but it will continue to experience some higher costs until we're fully online with our new larger warehouse, which is scheduled to open in the latter part of Q2. Although SAP has created some short-term disruptions, we're confident its robust capabilities will support the growth and profit optimization of Americas Fresh Foods for years to come. SAP will also enable deeper integration with our Americas Foods & Beverages operation in order to better leverage our existing capabilities and resources.

While 2015 was a challenging year for this business, we remain optimistic about the longer term growth opportunities in the fresh organic salads category, the Earthbound Farm brand, and the produce section as an increasingly favored destination for health and wellness consumers. Earthbound remains a powerful brand that has led growth and innovation in the organic produce category for 30 years. We believe it provides us a strong platform to build upon.

Turning now to our Premium Dairy platform, where sales were up 22% in the fourth quarter, behind low-teens organic growth plus the addition of Wallaby. For the full year, sales growth was 18% with mid-teens organic growth. Our strong top line results in Premium Dairy continue to be predominantly driven by past pricing actions on organic milk. This is reflected in the broader organic milk category, which was up 7% in 2015 on essentially flat volumes.

Horizon milks continue to outperform the category behind strong value-added offerings like single serve and DHA enhanced milks. Our low-teens organic growth in Q4 was also driven by strong demand for Horizon's other dairy products including butter and cheeses, and an increasing contribution from our Mac & Cheese, and snack offerings. We have now lapped the majority of our past price increases, including another one in Q4. So, while we expect continued healthy organic growth rates in this platform in 2016, the pace of growth will nationally moderate.

We continue to be pleased with Wallaby's performance and growth trajectory. While Wallaby is not included in our year ago results, it grew 30% on a year-over-year basis in Q4, and 22% for the full year. We look to foster Wallaby's growth with our sales, distribution and innovation capabilities, while further integrating this brand into our supply chain to fully leverage its operations among our growing yogurt portfolio. In 2016, we look to grow our Premium Dairy platform through further expansion of our yogurt portfolio, and to broaden Horizon's frame of reference with consumers through innovative new products.

The fourth quarter capped off another strong year in our Coffee Creamers and Beverages platform with 10% sales growth behind high-single digit organic growth and contributions from acquisitions. This resulted in full year sales also growing 10% with high-single digit organic growth as well. Our growth in the fourth quarter continued to be primarily volume driven across our diverse creamers portfolio.

Our Silk and So Delicious plant-based and Horizon Organic half and half creamers continued to see robust growth. And our broadened line of Dunkin' Donuts creamers also showed strong growth in Q4. We were pleased with the performance of our International Delight fall seasonals program, but with the strong early sell-in we experienced, we believe that some sales were pulled forward into Q3.

Our refrigerated creamer portfolio continue to grow ahead of the category growth rate, resulting in continued share gains in Q4. Volume growth continues to outpace dollar growth in the category due to the ongoing migration to larger sizes. This lowers the realized price per ounce, but reflects strong consumer demand. We are excited about the marketing plans we have for creamers in 2016 along with an innovation plot that further broadens our portfolio and aligns with consumers' increasing focus on natural, purer and clean ingredients.

We're pleased with our strong finish to the year and the early results we're seeing from our recent strategic acquisitions of Vega and Wallaby. With that review of our business, I'll turn the call over to Kelly to review our fourth quarter and full year financial results. Kelly?

Kelly J. Haecker - Chief Financial Officer

Thanks, Gregg. Good morning, everyone. As Gregg mentioned, we closed out 2015 with continued strong growth. Net sales in the fourth quarter increased 13% to over $1 billion and marked our second consecutive billion dollar quarter.

For the full year, sales increased 13% to over $3.8 billion. This top line growth was driven by strong organic growth in both our Americas and Europe Foods & Beverages businesses aided by acquisition contributions and partially offset by the impact of our SAP conversion in Fresh Foods along with unfavorable currency translation that reduced our overall growth rate by 2 points in Q4 as well as for the full year.

Despite lower profit in Fresh Foods and ongoing currency headwinds, the strong operating performance in our Americas and Europe Foods & Beverages segments drove consolidated segment operating income growth of 26% in Q4 to a record-high $131 million.

For the full year, consolidated segment operating income increased $455 million, up 22% from the prior year. On a constant currency basis, our consolidated segment operating income increased 29% in Q4 with over 140 basis points of margin expansion. And for the full year, total segment operating income increased 25%, with constant currency margins expanding over 90 basis points.

Our Americas Foods & Beverages segment operating income increased 36% in Q4 and 26% for the full year driven by strong growth in all our core brands, a favorable sales mix, and the profit contributions from our recent acquisitions of Vega and Wallaby. Our operating performance in this segment was notably impacted in 2015 by currency translation primarily due to our expanding scale in Canada as operating income increased 40% on a constant currency basis in Q4 and over 30% for the full year.

Driven by our growing scale and supply chain investments, we continue to generate strong operating leverage in Americas Foods & Beverages with operating margins increasing 185 basis points on a reported basis in Q4. After adjusting for currency impacts, margins expanded over 220 basis points in the quarter and over 120 basis points for the full year.

The turbulence Gregg mentioned in our SAP conversion in Fresh Foods resulted in about $12 million of temporary transition cost in the fourth quarter, which was higher than we had expected. These costs were driven by three major factors. The largest of which was about $6 million in finished goods and raw inventory obsolescence, which was product that we could not ship or utilize during our transition due to the warehousing and shipping bottlenecks we experienced.

About another $4 million was for higher warehousing, both internal and external, and other labor costs associated with the temporary workarounds we put in place to compensate for the system constraints in order to restore shipping rates and customer service levels. The balance of the cost consisted of disposed crops that we could not process through our production facility.

We expect to continue to steadily reduce these temporary SAP-related costs over the first half of 2016 with the expectation that they will largely be eliminated after our new warehouse comes online in Q2. Even after adjusting the specific SAP transition costs we incurred in the fourth quarter, operating income in this business was down 50% driven by lower sales and related cost absorption as we made no adjustments to our top line for lost volumes related to the SAP conversion. This led to an operating income decline of 11% for the full year in Fresh Foods.

Our Europe Foods & Beverages segment continued to produce strong operating results with 21% operating income growth in Q4 and 29% for the full year along with solid operating margin expansion as a result of increased scale and a favorable pound sterling to euro exchange rate. We have been experiencing and we expect to continue to incur some higher third-party distribution and warehousing costs until we complete several capacity expansion projects in Europe. We expect the most significant projects will be completed around the middle of 2017.

Accordingly, while we expect healthy levels of operating income growth from our European operations, we do expect operating – we do not expect operating margins, however, to expand during this timeframe as we incur higher costs from temporarily relocating our warehousing to offsite storage with associated higher storage and transportation costs.

Also, favorability in the pound sterling to euro exchange rate which aided reported gross margin in this segment over the past year has now turned and will most likely create a bit of a headwind in 2016. Overall, we are very pleased with the increased level of segment operating performance we delivered on a consolidated basis, both in Q4 and full year 2015.

Now, looking at our consolidated P&L for the fourth quarter and the full year. As I noted, 2015 was another strong growth year with sales up 13% for both Q4 and the full year even after a lower Fresh Foods top line and meaningful currency headwinds.

We converted this top line growth into higher growth down our P&L, generating 30% total operating income growth in Q4 and 24% growth for the full year. On a constant currency basis, our total operating income margin expanded over 160 basis points in Q4 and nearly 100 basis points for the full year, exceeding our stated goal of 75 basis points of expansion for 2015 even while maintaining high levels of marketing investments behind our brands and categories.

Below operating income, annual interest expense of $57 million was slightly below our expectations due to lower-than-planned capital investments and free cash flow generation in the fourth quarter. This level of interest is notably higher on a year-over-year basis as a result of our continued investments in growth capital and the financing of acquisitions along with an overall higher average interest rate due to the $500 million senior notes we issued in September of 2014.

Our 33% tax rate came in a little better than expected, principally due to the passing of legislation in late Q4 that permanently extended certain domestic tax credits. Our tax rate benefited from these credits in Q4, and we expect that to continue in 2016 and beyond.

Our strong operating performance, combined with slightly lower interest expense and taxes resulted in Q4 earnings per share of $0.36 exceeding the high end of our guidance by $0.01. This represents EPS growth of 31% over last year. On a constant currency basis, our EPS grew 36% as translation had a $0.01 negative impact to our EPS in the fourth quarter. After including $3 million of operating investment in our China joint venture, our EPS was $0.34 in the quarter.

For the entire year, EPS totaled $1.19, up 19% from the prior year and up 24% in constant currency before a $0.05 full-year impact from currencies. After $13 million of investments in our China JV, our EPS was $1.12 for 2015.

Capital expenditures totaled roughly $260 million for the year below our expectation due primarily to a shift in the timing of expenditures on certain projects into 2016.

In sum, we're very pleased with the overall operating results we delivered in the fourth quarter and for the full year as well as the progression of our quarterly earnings growth throughout the year.

Before I turn the call over to Greg Christenson, I'd like to spend just a moment highlighting the reduction in our leverage profile over the past couple of quarters. We have historically operated with a leverage ratio below 3.5 times on a net-debt-to-EBITDA basis as defined by our credit agreements. We are comfortable increasing our leverage profile in conjunction with the appropriate strategic opportunities like Vega and Wallaby with a clear goal of reducing our leverage back down to our historical operating profile.

Pro forma for the acquisitions of Vega and Wallaby, our Q2 leverage ratio stood at roughly 4.5 times. We've now reduced our leverage roughly a half turn over the second half of the year to just below four times at the end of Q4. Absent any strategic activities, we intend to further delever during 2016, and expect to end the year with leverage around 3.5 times or less. We recently increased availability under our senior credit facilities and extended all related maturities, continuing to ensure that our balance sheet is capable of supporting all of our growth initiatives.

With that review of our financial performance, I will now turn the call over to Greg Christenson to provide WhiteWave's outlook for 2016. Greg?

Greg Christenson - Chief Financial Officer, Americas Foods & Beverages

Thanks, Kelly. Good morning, everyone. Let me start by saying how excited I am to be here today. Kelly has built an excellent foundation for The WhiteWave that I can build upon. I look forward to helping WhiteWave in its next chapter of growth. I will begin by framing up the main factors that are driving our outlook and growth expectations for 2016.

We enter this year in a great position. We continue growth across all across categories and brands behind the ongoing tailwinds of increasing consumer desire for quality foods and beverages that support healthier diets and lifestyles. We project another year of strong operating performance across our core businesses along with increasing contributions from our acquisitions over the past year.

While we expect some pricing benefits, we continue to see volume growth as our main top line driver with organic growth from our existing products along with incremental contributions from an excellent pipeline of new innovations planned for 2016.

Our sizable and growing business in Canada will have an unfavorable impact on the underlying growth rates that we expect for our Americas Foods & Beverages segment due to material weakening of the Canadian dollar to start 2016. However, we expect our America Foods & Beverages segment which will now include Americas Fresh Foods results beginning in 2016 to deliver low double-digit sales growth driven by solid core growth and impact of our recent acquisitions.

We expect the growth in our Fresh Foods platform to be fairly muted over the first half of the year as we need to regain distribution loss during our SAP transition and open our new warehouse in Q2, before the full potential of our new systems can be unlocked.

We expect strong core organic growth from our Europe Foods & Beverages segment with mid-teens constant currency growth driven primarily by higher volumes. The strengthening of the U.S. dollar may diminish some of this growth rate in our reported results.

When it comes to operating cost, we will continue to maintain high levels of marketing behind brand building, driving increased consumer awareness, supporting the launch of new products in 2016. We foresee modestly inflationary commodity environment this year with overlaps being the highest during the first half.

In the beginning of 2016, we will incur front-ended loaded expenses related to capacity expansion in Europe. We remain focused on improving our supply chain and expect continued margin improvement the balance of the year from additional capacity coming online in both North America and Europe that will benefit our cost structure, as well as positive impact from our ongoing cost improvement programs and increasing levels of contribution from completed acquisitions during the year.

On the corporate expense line, we estimate annual costs to be around $90 million. This amount includes approximately $5 million to support our China joint venture, as well as the full annual incremental cost related to our 2015 acquisitions.

Consistent with prior years, corporate expense will be the highest in the first quarter due to the timing of incentive compensation grants with annual balance being relatively even over the remaining quarters. As a result of these factors, we are forecasting operating income growth to be the lowest in Q1 and then increasing throughout the balance of the year with our strongest performance over the back half of the year. We continue to target at least 75 basis points of constant currency operating margin expansion in 2016.

With incremental debt due to our recent acquisitions, we forecast interest expense of $70 million to $75 million based upon the forward outlook of interest rates. We expect Q1 to range from $13 million to $15 million due to the benefit of an annual interest rate rebate we anticipate to receive on certain loans outstanding, with the remaining quarterly amounts being relatively even.

We expect our tax rates to range from 33% to 34% in 2016. With some variability by quarter, our Q1 rate will likely be at the high end of this range. We continue to invest behind our joint venture in China and develop its plant-based business. Included in our corporate-related costs, total investment for 2016 will be about $0.06 of EPS or the equivalent of about $10 million to $12 million, a relatively modest level of investment.

With respect to capital spending, we'll make additional investments in 2016 to improve our supply chain efficiency and further expand our capacity in order to support our growth and maintain an optimal balance between internal production and co-packed volumes. In addition to new filling lines and processing equipments, our plans include creating new warehouse for Fresh Foods, beginning to build a new automated warehouse at our largest plant in Europe and other manufacturing network improvements.

Based on these plans and the shifting of some 2015 projects into 2016, we project capital expenditures to be in the range of $325 million to $350 million. Like last year, about 90% of our capital investments are to support growth. After taking these factors into consideration, we anticipate constant currency net sales growth to be between 12% and 13% in the first quarter with 11% to 12% growth expected for the full year.

Based on current foreign exchange rates, we expect these growth rates to be translated on a U.S. dollar reported basis into 11% to 12% growth in the first quarter and 10% to 11% for the full year. This guidance includes expectations of high single-digit organic constant growth for the full year. As noted, we expect operating income growth to be the lowest in the first quarter. As a result, we are forecasting mid-teens constant currency operating growth in the Q1. We expect operating income to increase over the balance of the year resulting in high teens to low 20%s growth for the full year on a constant currency basis.

Based on current exchange rates, we expect these percentage growth rates for operating income to be in the low double digits in Q1 and in the mid to high teens for the full year on a U.S.-reported basis.

Based on these strong growth expectations, we expect to achieve from $1.33 to $1.37 in U.S. dollar reported adjusted diluted earnings per share for the full year 2016. And we expect about a $0.06 EPS investment for the year in our China joint venture. On a current – constant currency basis, this would equate to $1.38 to $1.42 adjusted diluted earnings per share or to an EPS growth of 16% to 19% for the full year, excluding China.

For the first quarter, we anticipate generating adjusted diluted earnings per share excluding China of between $0.25 and $0.26 on a reported basis and between $0.26 and $0.27 adjusted for currency. We expect our China investment to be approximately $0.02 per share in Q1.

In summary, we're very optimistic about our continued growth outlook and entered 2016 with great momentum, focused on making the necessary investments in our business to create future shareholder value. We look forward to delivering another strong year of growth in 2016.

With that, I will now turn the call back to Kelly. Kelly?

Kelly J. Haecker - Chief Financial Officer

Thanks, Greg. On a personal note, as you all know, I'll be stepping down from my position and leaving the company at the end of March. After a nearly 30-year career, including the last 10 years at WhiteWave, I've chosen to measurably slow my pace and spend more time with my wonderful family. I wanted to take a moment to thank all of my amazing and talented colleagues and friends at WhiteWave for the incredible journey. It has been a privilege to work alongside you.

While I'm proud of all that we've accomplished together over the past 10 years, I'm even more excited about the future of WhiteWave, which I believe continues to remain exceptionally bright. I'll leave this role with great confidence in knowing that WhiteWave will not miss a beat under Greg Christenson's leadership.

Greg succeeded me three years ago as the finance leader in Americas Foods & Beverages and quickly demonstrated his strong business and finance acumen partnering with Blaine to drive consistently strong results in that segment. He did so while building a talented finance organization capable of supporting WhiteWave's continued growth. I have no doubt Greg is the perfect leader to pick up where I am leaving off. I look forward to seeing WhiteWave benefit even more from his strong leadership.

With that, I'll turn the call back to Gregg Engles.

Gregg L. Engles - Chairman & Chief Executive Officer

Thank you, Greg, and thank you, Kelly. Before I wrap up today's prepared remarks, I do want to say a few words about Kelly Haecker on the occasion of his last WhiteWave earnings call. Kelly is an extraordinary executive, an extraordinary human being and has been an extraordinary partner to the entire WhiteWave management team as we have built this company. Kelly joined us 10 years ago in the early days of WhiteWave. He was the key architect of many fundamental strengths of our business including our basic management processes, our robust systems environment and our culture of hard work, rigorous analysis, transparency and honesty.

Many of you on the call today have experienced and benefited from Kelly's encyclopedic knowledge of the business and his transparent approach to investor relations. He brought those same qualities to work every day. The first to arrive and the last to leave many days, Kelly sweated all the details and always sought the truth in his quest to make the business better. Always pleasant, fun and engaging, he never brought his ego to work. He brought out the best in all of those around him. As a devoted husband and father of three daughters, Kelly, has decided to invest more in his personal life and lessen his career for a while. As husbands, wives, fathers, and mothers we support and applaud his decision. But as colleagues, we're saddened for the team, but thrilled for Kelly.

We are all grateful that Kelly hired Greg Christenson three years ago and prepared him so effectively for his role. We all look forward to working with Greg to continue to build WhiteWave in the years to come. Those of you coming to CAGNY will have the opportunity to wish Kelly farewell, and to welcome Greg to the team. Please make sure to take the opportunity to do so.

Now, to wrap-up. We're pleased with our Q4 results and the strong growth we delivered on both the top and the bottom line in 2015. We enter 2016 focused on making WhiteWave even better, through improved innovation capabilities and investments in brand building, continued margin expansion behind appropriate investments in our supply chain. Further expansion of both the channel and geographic reach of our brands, and increased leverage of our brand portfolio to develop deeper strategic relationships with our customers, which in turn will increase our exposure and relevance to our consumers.

Our goal for each of these initiatives is to drive continued earnings growth and increase value to all of our stakeholders. We're delighted to be presenting at CAGNY next Thursday, so that we can tell you more about our great businesses, exciting upcoming innovations, and other growth opportunities. We hope to see you there in person, but if you cannot attend please listen to the webcast that will be available on our website.

Finally, I'd like to thank everyone at WhiteWave for their dedication which made delivering our 2015 results possible. We appreciate your continued commitment to our mission of changing the way the world eats for the better. Together, we can continue to make WhiteWave an even better company.

Thank you again for joining us this morning, and I'll now ask the operator to open up the call for your questions. Operator?

Question-and-Answer Session


Our first question comes from Chris Growe from Stifel. Your line is open.

Christopher Growe - Stifel, Nicolaus & Co., Inc.

Hi. Good morning.

Gregg L. Engles - Chairman & Chief Executive Officer

Good morning, Chris.

Christopher Growe - Stifel, Nicolaus & Co., Inc.

Good morning. And, Kelly, I wish you all the best and look forward to seeing you next week at CAGNY. Gregg, the time you spoke the stock just kept improving; maybe you should just round up the hour here speaking about the business. And my question really is around the strong revenue growth outlook for 2016. A little pressure from Earthbound it sounds like, maybe a little less growth from Horizon.

So, in thinking about the high single-digit revenue growth for the year, it seems like Europe will remain pretty strong. And is it plant-based beverages kind of the main piece of the Americas division do you think that will help contribute to the organic revenue growth for the year?

Gregg L. Engles - Chairman & Chief Executive Officer

I'll let Blaine give you more color, Blaine and Kevin, but what I'd say is that we really expect a pretty balanced growth profile across the business. So, we unfortunately have relatively soft comps in Earthbound. And once we get through the opening of the new warehouse and improve our ability to actually fulfill the demand that we have, we expect to see year-on-year growth in the Earthbound business.

Our Coffee Creamers and Beverages business is just an outstanding business that continues to show high single-digit to low double-digit growth depending upon the quarter, and we expect a significant year again for our Coffee Creamers and Beverages business. We have a fantastic set of brands and innovation plot, I think, best in the world in our plant-based segment. So, we have – if you've been to the grocery store, we have some great new innovation out in terms of our beverages business in both Silk and So Delicious, with our Nutchello offerings and our new premium plastic bottles. We have excellent plans for continuing to grow that business, and actually really starting to grow in a meaningful business that business in the away-from-home channels.

We have an excellent plot of innovation in our Premium Dairy business. And while we are lapping price increases which we expect will slow the category, we believe that in the back half we have a really nice plot of innovation in our Premium Dairy business. So, it's really across the board, and Europe remains a – just an extraordinary business that has grown at rates that really I think people struggled to wrap their heads around for the last several years given the overall conditions in Europe. And we continue to see a robust plot of organic growth in the European marketplace. So, we have a really, really fine business here that is a well-balanced business across all of its platforms, and we're excited about 2016.

Blaine, do you want to add any color to that?

Blaine E. McPeak - Chief Operating Officer

I guess the only thing I'd add is that I think we've got a very, very strong outlook. I think, all these categories continue to be relatively nascent for a variety of different reasons. And we'll continue to have very strong focus on building the strength of the categories. We got powerful brands here with strong share positions and industry leading levels of investment.

As Gregg spoke, we've got a nice robust pipeline, which we'll share more at CAGNY. And I continue to be very excited about new acquisitions that we've brought into this company, the potential that they bring be it either into new territories like Vega or strengthening our portfolio in yogurt like we've done with Wallaby. And this expansion in channels is a ripe opportunity for us, and the adjacent geographies of Canada and Latin America continue to provide just a great opportunity for us going forward. So, I'm excited about the potential. I think, it's reflected in the guidance we provided here, and I look forward to bringing it to life.

Christopher Growe - Stifel, Nicolaus & Co., Inc.

Okay. Thank you for that detailed answer. I'll put – pass it on. Thank you.


Our next question comes from Ken Goldman from JPMorgan. Your line is open.

Kenneth B. Goldman - JPMorgan Securities LLC

Hi. Two from me, if I can. Good morning, everyone. Number one, it looks like Blue Diamond again is doing much better in almond milk. I realized Silk started with something like a 100% share a few years ago, but I'm curious when you think we'll see this pattern of share losses, whether it's to private label or to a brand to may be slow down and reverse a little bit.

Blaine E. McPeak - Chief Operating Officer

Hey. Good morning, Ken. This is Blaine. We came off of a year in the quarter here where we reported high-single-digit, organic constant currency growth across plant-based. And I'm incredibly pleased with that, and I'm very pleased with how our share has held up during that time. And I want to give context around that. So, the category here continued to grow in that mid-single-digit category. When I talk about the category, I mean the beverage category. And that's been relatively consistent here throughout both the third quarter and the fourth quarter. We've referenced about the expansion of private label that really began in the first quarter of 2015. And we've really seen that share basis in nut-based beverages really plateau kind of in that 13% to 14% territory, and it's been hanging in that range for several quarters now.

So, I'm very encouraged about our share and how it's held up both for the full year as well as for the fourth quarter, and it did so in the fourth quarter, even though, we pulled back some of our promotional efforts in favor of category building advertising. So, it's important though that we do not get caught up in looking at almond. We have talked about how we need to reframe, how we think about describing both almond and cashew as nut-based, and our share was impacted in overall nut-based by something like 60 basis points for the year off of a base that's just under 50% share in nut-based.

So, as we've talked, we were excited about Cashewmilk launch in 2015. It represents about 4% of the – four percentage of the overall category. But there has been some cannibalization, it has been on our almond business, and it's not the best way to look at it just on an almond business, you need to aggregate the two together.

So, I'm pleased with that. And I'm really excited about, thinking about this as a broader platform than just beverages. So, while we see mid-single digit growth here in the beverage arena, we have very, very strong growth in the other plant-based categories. Double-digit growth across creamers, yogurts and frozen. And we have a very, very strong share position in every one of those categories as well. So, I'm encouraged by what we battled through here in 2015. I think, we've got continued development of the beverage category. We've got some exciting new categories here with respect to frozen yogurt and coffee creamers, and I think, we've got a very, very good innovation plot across all of those.

Kenneth B. Goldman - JPMorgan Securities LLC

And that's very helpful. And if I can ask one more. Obviously, it's been a difficult run for a bunch of the higher growth, higher multiple stocks, I'm thinking, WhiteWave, Hain, and many others. As you look, I guess, this is for Gregg to add smaller companies to your portfolio. Are you finding that the reduced multiples for public companies that that's making private companies less eager to sell? I guess, the thinking is maybe their valuations are going to be based on those of public peers, and therefore maybe a little disappointing versus what they thought six months ago. And I'm asking because I recall this lack of sort of seller interest for TreeHouse's ability to deal – do deals for a while. So, I guess, I'm curious if the same is true in your case or whether the deal market is still pretty robust out there.

Gregg L. Engles - Chairman & Chief Executive Officer

Well, first of all, I would say that the universe of companies in this better-for-you clean label arena is still – it's still a robust environment, right? There's – and that's driven by underlying consumer interest in these propositions. So, there are companies that are starting and companies that are growing and experiencing success in the consumer marketplace. So, the universe of companies that might be of interest to us is remains attractive.

On the other hand, deals get made when buyers' and sellers' expectations around value are about the same. And when you get a significant change in valuation in the public marketplaces, it almost inevitably flows through the valuations in the private marketplace. But it doesn't flow through instantaneously, and it takes time for people's expectations to adjust around what an appropriate valuation multiple will be, and that's, I think, particularly true when multiples are moving down. It happens a little faster when multiples are moving up.

And so, yeah, I think, it would be natural to expect that it will take a little time for valuation expectations to adjust, and I think, it'll take time for people to come to believe that this change in high valuation or high growth company multiples is permanent, right? I think that's true both in the public marketplace and in the private marketplace.

So, I think, people just don't know what to expect right now. And when people don't know what to expect around valuations, it's going to be more difficult to make deals. But deals will be made. Every seller is a unique seller. Every seller will have a unique point of view around value. And every buyer will have a unique point of view around what the discounted cash flow valuation is with a particular target.

So, I don't think the deal environment is going to come to a screeching halt. But I do think your observation is correct that in broad lines, it's going to take a while for seller's and buyer's expectations to converge, and it's going to take some stability in the public markets as well.

Kenneth B. Goldman - JPMorgan Securities LLC

Thank you. See you next week.

Gregg L. Engles - Chairman & Chief Executive Officer



Our next question comes from Matthew Grainger from Morgan Stanley. Your line is open.

Matthew C. Grainger - Morgan Stanley & Co. LLC

Hi. Good morning. Thanks to everyone. And, Kelly, best of luck and hope you enjoy all the time with your family.

Kelly J. Haecker - Chief Financial Officer

Thanks, Matt.

Matthew C. Grainger - Morgan Stanley & Co. LLC

So, Gregg, you mentioned that within Europe, soy is still growing double digit and the nut-based products are, in aggregate, growing around 20%. So, I guess, do you foresee that the mix of products across the plant-based category in Europe specifically might remain more skewed towards soy than we've seen in North America or does this imply that there's still a fairly long runway of time over which household penetration on the nut-based products can continue to build?

Gregg L. Engles - Chairman & Chief Executive Officer

Yeah. Just to clarify the numbers, the nut-based and other ingredients segment in 2015 grew 65%, not 20%. The...

Matthew C. Grainger - Morgan Stanley & Co. LLC

Got it.

Gregg L. Engles - Chairman & Chief Executive Officer beverage business grew double digits. And the yoghurt business grew in excess of 20%. So, really strong aggregate growth across the portfolio in Europe. And I think, I've said this many times and I continue to believe it to be true that the evolution of the plant-based beverage category in Europe simply lags that of the United States in terms of the nut-based beverage penetration. And so, that would lead one to believe that we have some extended period of time ahead of us of robust growth in the nut-based categories in the aggregate of the marketplace.

One of the differences, however, between the European market evolution and that of the U.S. is that all of the nut-based and other ingredient growth in Europe has been on top of continued growth, and in fact has revitalized growth in soy beverages in Europe. So, it has brought a lot of attention to the broader dairy alternatives category. The, I think, pan-European nature of the Alpro brand and our marketing around that has facilitated a more synergistic market reaction than what we've seen in the U.S. marketplace.

So, soy beverages continue to grow. They're still our largest business. They're growing double digits. And so, we see a very, very healthy top line algorithm in the European marketplace. Now, it's growing of a much large base, it will inevitably slow as household penetration reflects the more inclined consumers to come into the franchise. It will be harder to recruit consumers as household penetration grows out incremental consumers. And it will flow where you're seeing that in our projections for 2016 versus 2015 of sort of 20% growth in the aggregate in 2015 and mid-teens growth in 2016, and that's what you should expect. But we have very, very healthy category in Europe, and Alpro is the clear brand and product leader in that marketplace.

We do have investments that we've got to make in Europe. So, our business over the last three years has grown well in excess of 50% in volume. And we've got to add capacity in order to supply that volume, and that's going to impose some costs on us in the P&L where we've completely outsourced our warehousing from our large factory in Europe in order to demolish our existing – one of our existing warehouses and build on that site a large automated warehouse.

Part of the drag in Q1 is that we will write-off the – what's on the balance sheet for that warehouse that's being demolished in Europe in Q1 and take that charge to our P&L, but we're also going to experience some of the costs from externalizing our warehouse, while we engage in this construction project on our site. But that's great news. The news is that we have to make these investments in order to supply burgeoning amounts of volume in our business, and we're really excited about that.

Matthew C. Grainger - Morgan Stanley & Co. LLC

Okay. Thank you, Gregg, and thanks for clarifying on the numbers as well.

Gregg L. Engles - Chairman & Chief Executive Officer



Our next question comes from Andrew Lazar from Barclays. Your line is open.

Andrew Lazar - Barclays Capital, Inc.

Good morning, everybody.

Gregg L. Engles - Chairman & Chief Executive Officer

Good morning, Andrew.

Andrew Lazar - Barclays Capital, Inc.

Kelly, good luck to you as well. And I guess with three daughters at home, some might say you might need every bit of it?

Kelly J. Haecker - Chief Financial Officer

You know all too well. Thanks, Andrew.

Andrew Lazar - Barclays Capital, Inc.

Yes, indeed. Just two quick things from me, if I could, and I apologize if I missed this because I've been juggling some calls. The move of putting Fresh Foods into, I guess, Americas Foods & Beverages, if it wasn't explained, can you explain that a little bit? I guess, typically as analysts, obviously, we always love to have more detail and more things broken out rather than less. So, if you could give a perspective on that, then I've just got a quick follow-up.

Gregg L. Engles - Chairman & Chief Executive Officer

Yeah, Andrew. Just frankly, this reflects the way we're intending to manage this business. With the announcement that we made and the organizational changes with Blaine taking over as the Chief Operating Officer, ultimately, Kevin Yost taking responsibility for the direct management of the entire sort of U.S. businesses inclusive of Earthbound, we'll begin to manage these more as a consolidated group of businesses benefiting the – Earthbound being – having the opportunity to benefit from the increased level of scale and capabilities and organizational might that we have across the entire Americas Foods & Beverages business. So, it just really reflects a function of how we'll manage this business going forward.

What you should expect to see in terms of our communications on Earthbound Farm will be a level of disclosure that mirrors what you now see on the rest of our U.S. portfolio, whether that's plant-based beverages, Coffee Creamers and Beverages, our Premium Dairy, where we'll be planning to continue to articulate a sales growth perspective. But from this point forward, at least, as long as we continue to manage this business as one unit, under Kevin Yost, we'll be combining the two in every other sense in one segment.

So, we'll have two segments then going forward beginning in – with Q1 reporting for 2016, and Americas Foods & Beverages segment comprised with everything in the U.S., and in Canada, in Mexico and then Europe as a separate segment continuing the way it's currently constructed today.

Andrew Lazar - Barclays Capital, Inc.

Okay. Thanks for that. And then, Gregg, the recent announcement around the addition of the Board member from Evercore got a decent amount of attention at least among the buy side – our buy side counterparts. And I guess, if we could, just would love to hear the rationale from you behind that particular appointment. And I'll pass on. Thank you.

Gregg L. Engles - Chairman & Chief Executive Officer

Yeah. Tony Magro is the newest addition to our Board. We added Tony Vernon effective January 1, who is the former CEO of Kraft. All of you probably know Tony very well. But Tony Magro is a close advisor to this company, who's advised us for over 30 years. He knows the company incredibly well and has been intimately knowledgeable about every strategic development that has happened in this business. And Tony is coming to the beginning of winding down of his active career as an investment banker. And we wanted to preserve the benefit of Tony's knowledge and understanding of not only our company, but also the capital markets in terms of his input to the Board and to the management, in terms of the further evolution of our business. So, Tony is just an incredibly experienced guy. He doesn't join our Board as an investment banker, he joins our Board as a longstanding advisor and confidant to the management team and somebody with great understanding of an important part of the environment in which we operate, which is the U.S. global capital markets and the global strategic environment. So, we think he'll be incredible, valuable member of our Board going forward.

Andrew Lazar - Barclays Capital, Inc.

Great. Thanks for that and see you next week.

Gregg L. Engles - Chairman & Chief Executive Officer



Our next question comes from Sean Naughton from Piper Jaffray. Your line is open.

Sean P. Naughton - Piper Jaffray & Co (Broker)

Hi. Good morning. And thanks for taking the questions. Just on the recent acquisitions with Vega and Wallaby, understanding that these are relatively small today, but can you just walk us through some of the expansion plans for these brands, new product introductions, when we should expect to see those and how your conversations are going with retail buyers and how these products are being accepted on the shelf in some of these new locations? Thanks.

Gregg L. Engles - Chairman & Chief Executive Officer

Sure. Good morning. I think both of these are different, but very, very attractive for different reasons. When you take a look at a Wallaby business here, you have to step back and take a look at kind of our broader strategy here which is in a very, very short period of time, we've assembled a nice portfolio of yogurt brands and business that has strong growth opportunity going forward. So, we play in premium segments both plant-based and organic. And we believe that those two segments have tremendous runway. They're underdeveloped today with respect to penetration, with respect to distribution.

And by adding Wallaby here, we added nice scale to our portfolio. It enhances our conversations with customers, enhances our overall manufacturing footprint here by adding a West Coast facility, which over time not only adds capacity, it adds capability, it adds cost efficiencies over time. We have the number one brand in the natural channel here overall that has very, very limited distribution than any other types of channels. And I think, it's going to be an add here that continues to build our portfolio, a growth portfolio in yogurt that we fundamentally believe in the broad category, as well as these segments, and that we just have a tremendous brand with tremendous food credentials that we see plenty of innovation opportunities with.

When we bought this business, it was in the third quarter of last year, the team had some – a couple distribution expansion wins that they've had in a very short period of time. But we'll have to watch that as we go into the second half of 2016, which is really when the next opportunities persist. So, excited about that and the breadth it provides to Silk, So Delicious, and Horizon yogurts.

When you think about Vega, Vega was a bit of a different move for us. It migrated our company into a new category, a category that has consistency with their overall framework here of believing in plant-based nutrition. This is a very large category when you think about, a nutritionals category, which would encompass nutrition bars, nutrition powders, nutrition ready-to-drink shakes here, and that's a large segment. It's over $8 billion, it's kind of a high single low double-digit grower.

Plant-based remains underdeveloped, but it continues to grow at a faster pace there. And with Vega, we have a very strong brand here. It's number one in Canada, and it has a strong position in the specialty channels here in the United States, and it's underdeveloped. So, it's underdeveloped with respect to brand awareness, overall distribution. And we think, it has tremendous runway as well with respect to innovation.

So, we've inherited a nice team there. We're going to be managing this business separately, some selective areas where we see some opportunity to leverage the broader skills of the Foods & Beverages group here in the U.S. I've seen an early emergence of a pretty strong pipeline. So I'm excited to see what this business can do in the future. I think in the prepared remarks we talked about relative size of it and relative growth that we've seen so far this year, and I'm excited about seeing the potential growth Vega brings to the company as a new brand and as a new platform in categories for growth.

Sean P. Naughton - Piper Jaffray & Co (Broker)

And just if I can quickly follow up. Is there anything in terms of capacity or supply constraints on either one of these brands that would really impact them from the opportunity or ability to continue to grow at these high levels? Thank you.

Blaine E. McPeak - Chief Operating Officer

No, I don't see that in the immediate term here. As a matter of fact, with the addition of Wallaby here, it's really added additional capacity for us in the yogurt arena, new capabilities as well and a much stronger footprint. Overall, it plays in the organic milk market, which we have a very, very strong presence there with our Horizon brand. And that might make things a little bit tighter where we're going to have to balance that as we go forward here, and look at a broader lens with respect to organic milk supply. But broadly speaking, I think we've got a decent amount of runway here and I don't foresee any capacity issues really with respect to Vega.

Sean P. Naughton - Piper Jaffray & Co (Broker)

Thank you.


Our next question comes from Bill Chappell from SunTrust. Your line is open.

Stephanie Benjamin - SunTrust Robinson Humphrey, Inc.

Hi. This is actually Stephanie on for Bill. Thanks for the question. And Kelly, from both Bill and myself, enjoy your retirement and we all look forward to seeing you next week at CAGNY.

Kelly J. Haecker - Chief Financial Officer

Thanks, Stephanie. See you then.

Stephanie Benjamin - SunTrust Robinson Humphrey, Inc.

Yes. And just my question is looking actually at your Horizon brand, your snacks or really your non-dairy offerings really continue to outperform, up 20% plus. Could you provide any color on your plans in 2016 for these products, whether we'll continue to see a more gradual rollout or should we start to see kind of an acceleration in distribution? Thanks.

Gregg L. Engles - Chairman & Chief Executive Officer

Good morning. Well, when we take a look at the broader Horizon business, we are incredibly pleased with what we saw in 2015. It had some of the strongest growth across our company with growth in the teens here. And that's off of an organic milk category that's growing high-single digits. We've talked a lot about the elements of pricing there. But despite all, several price increases over really an 18-month period of time, this business has held up a very strong share position in the organic milk category and we couldn't be happier with that.

At the same time, we are seeing these extra adjacencies really contribute to our top line growth perspective. You've mentioned one there with the center store launches that we're really a couple years into the making here. We participated in macaroni and cheese, we participated in cookies, crackers and some on-the-go lunchbox pouches for kids. And our distribution is kind of in that 40% to 50% range here. So I think there may be some upside there. But we're really going to focus on velocities and continuing to build the strength of that portfolio as well as some selective innovation here, in particular, in the mac and cheese area we're excited to launch on-the-go microwaveable cups under the Horizon brand.

And beyond that, we see nice runway as well in other adjacent dairy categories, be that cheese or butter or yogurt, and we've seen nice, strong growth in those areas, double-digit growth, that's been additive to our top line profile as well. So I think it all reflects that we have a very, very strong brand that has great credence with moms, and we continue to look to build upon the strength in the core milk category as well as expand that a little bit further in others.

Stephanie Benjamin - SunTrust Robinson Humphrey, Inc.

Got it. Thanks so much.


Our next question comes from John Baumgartner from Wells Fargo. Your line is open.

John Joseph Baumgartner - Wells Fargo Securities LLC

Thank you. Good morning. Thanks for the question. Gregg, I'd like to ask about your expectations for non-measured channels in 2016 and maybe specific to Canada and Latin America. How would you describe your capacity to continue to meet that growth through, I guess, exports as opposed to adopting some sort of relationship that you have in China?

Blaine E. McPeak - Chief Operating Officer

Good morning, John. This is Blaine. And just to give you a little bit of context on it. So pretty consistent with what we saw throughout the majority of 2015, in the fourth quarter we saw just under two points of incremental growth that came in unmeasured channels. I think for planning purposes to assume anywhere between one point and two points continues to be appropriate there. And that really reflects what you referenced there with respect to geographies, it also reflects what we see in the away-from-home marketplace here, which continues to grow in the double-digit territory off of a fairly sizeable base and a very, very strong position in particular in coffee creaming.

I think as you'll see at CAGNY, we're excited to continue to expand that portfolio and really think about better-for-you beverages with the expansion of both Horizon and Silk into single-serve formats there, which we're excited about the potential that that provides. It might be a little bit slower going in the beginning, but great long-term potential. And as you referenced here between Latin America and Canada, we're excited about what we have in terms of growth there. There are two different opportunities really. Canada, we've been in for many years and have seen just a material step-up in our share position over the past really five years moving from kind of the mid-20%s share basis to the mid-40%s share basis here and very pleased with the growth that we've seen there.

And in Latin America, we're relatively nascent today predominantly in the Mexico marketplace. We've just been in that market for a couple of years, and we have good distribution in the modern trade. This is predominantly led by the Silk brand, but we're kind of recognizing that this is a great growth opportunity in Mexico and potentially the broader Latin American countries as well. And we're beginning to commit more resources, both in terms of people. We plan to add more local talent to these marketplaces to reflect that expertise. And we plan to begin to invest more on the marketing side to drive overall awareness of the proposition of plant based and of the brand Silk. And we're really, really excited about it, and we'll share more at CAGNY.

John Joseph Baumgartner - Wells Fargo Securities LLC

Okay. And then just a follow-up. In terms of the U.S. plant-based yogurt, your outlook there for 2016, it looks like you ended 2015 with ACVs about 30%. Do you have a sense for where ACV might end this year and maybe some early observations from the relaunch?

Blaine E. McPeak - Chief Operating Officer

Yes, John. I think from our lens, the distribution would be kind of in that mid-40%s would be what we would show here. And I think our focus here is to growing scale and expanding distribution out dramatically isn't necessarily the plan. The plan here is about making certain that we have distribution in the highest potential plant-based markets where Silk has a nice strength and where we believe that we can have a very strong partnership with our retail partners to really build out this sub-segment of plant-based brands and I'd take that even further to other premium segments like organic as well.

And so while we'll see some expansion, I think, in distribution and it might be less in ACV and more in scope of distribution in terms of number of items, I won't expect a massive step-up in distribution, but we are going to continue to focus on velocity. We have some nice new adds here with respect to innovation. We're launching Silk in a large-sized cup in both the plain and vanilla varieties. And we are undergoing a fairly material transformation of the So Delicious offering here in terms of improved product, improved packaging, improved graphics and looking at how we modify our overall go-to-market model there for So Delicious. So I think we've got a nice footprint not only in plant-based but in organic as well, and we have high expectations for continuing to grow that business.

John Joseph Baumgartner - Wells Fargo Securities LLC

Great. Thanks, Blaine.


Ladies and gentlemen, we only have time for one more question. Our final question comes from Alexia Howard from Bernstein. Your line is open.

Alexia J. Howard - Sanford C. Bernstein & Co. LLC

Good morning, everyone.

Gregg L. Engles - Chairman & Chief Executive Officer

Good morning, Alexia.

Alexia J. Howard - Sanford C. Bernstein & Co. LLC

Can I home in on Horizon Organic a little bit here? You've had supply constraints in the last year or so. That seems to be easing off. But how fast can you grow that volume going forward? I understand you have 700 farmers. Obviously, price growth is likely to slow as we move through the course of the year. I am just trying to get a read on what's the right organic sales growth algorithm and particularly around the volume side with that brand. Thank you very much.

Blaine E. McPeak - Chief Operating Officer

Hi. Good morning, Alexia. Sounds like you have a pretty good handle on it. I think we've proven over many years here that we've been fairly adept at how to manage through different supply, different demand dynamics across this business. We have a very, very strong brand, we have a very strong farmer network, as you referenced, of 700 family farmers. We continue to focus on growing that supply bases overall, and we're conscious that over the past 12 months, we have seen more of the growth in the category respond on the price side versus the volume side. But it's been a nice surprise to see the relative elasticity of this category. And we remain focused on continuing to grow the milk supply. It will be important for both Horizon as well as Wallaby here with respect to organic dairy yogurt.

And as we've mentioned that we've had a teens growth rate here through 2015. We do expect that to moderate more into the higher-single digits in the first half of the year and probably more into that mid-single-digit territory as we think about the latter half. And beyond that, we've got plenty of ideas here to continue to expand both within the Horizon brand outside of milk. So I think we're going to be more focused on how do we drive milk while also expanding the adjacencies here in dairy, the adjacencies in kids' meals, kids' snacks to continue to keep that brand robust across the board.

Alexia J. Howard - Sanford C. Bernstein & Co. LLC

Great. And as a super quick follow-up, can you quantify how big that center-of-store sub-segment of premium dairy or whatever we're calling it is in dollar terms? Thank you very much and I will pass it on.

Blaine E. McPeak - Chief Operating Officer

Yes. I would characterize it as generally it's clearly a nice growth avenue for us here. And that's contributing growth to the overall premium dairy business that we have here. But, I think, overall, when you think about having the meals business, which is macaroni and cheese, it's a snacks business, which is the cookies and crackers. And it also includes all of our single-serve milks which are center-of-store and ambient as well. You're looking at a $200 million business here that we've built over time inclusive of that. And it's growing at an accretive growth rate across the board. So we're pleased with what we have here. We've got a lot to build. It goes well beyond the snacks and meals and encompasses our entire ambient platform as well.

Alexia J. Howard - Sanford C. Bernstein & Co. LLC

Great. Thank you very much. And Kelly, see you at CAGNY next week. Thank you.

Kelly J. Haecker - Chief Financial Officer

Thanks, Alexia. See you then.


Ladies and gentlemen, that concludes our question-and-answer session. I would now like to turn the call over to Mr. Gregg Engles for closing remarks.

Gregg L. Engles - Chairman & Chief Executive Officer

Well, thank you operator. And thank you everyone for joining us on the call this morning. We appreciate your interest in The WhiteWave Foods Co. and we look forward to telling you more about our business plans, exciting new innovations and continued growth opportunities next week at CAGNY where we'll present on Thursday, February 18. Have a great day and we look forward to seeing you next week.


Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone, have a great day.

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