TreeHouses’ Net Sales Plunge 10% in Q3

TreeHouse Foods, Inc. today reported third quarter GAAP earnings per fully diluted share of $0.10 compared to GAAP earnings of $0.50 reported for the third quarter of 2017. The Company reported adjusted earnings per fully diluted share of $0.62 in the third quarter of 2018 compared to adjusted earnings per share of $0.67 for the third quarter of 2017.

Steve Oakland, Chief Executive Officer and President

“Our Q3 results represent the third quarter in a row of delivering upon our financial commitments,” said Steve Oakland, Chief Executive Officer and President. “I continue to be impressed by the effort our organization is putting forth to deliver sequential operational progress and improve our business for the long-term. Our TreeHouse 2020 and Structure to Win (SG&A) initiatives and goals, which aim to properly align our cost structure across the business, remain on track as we continue the process of defining how we can best position ourselves to capitalize on private label growth across the food and beverage landscape.”

“I’m pleased with the quality of our results this quarter, as we delivered $0.62 in adjusted EPS, despite incurring higher expenses related to the hurricanes,” said Matthew Foulston, EVP and Chief Financial Officer. “Revenue decline in the quarter of 7.5% (excluding SKU rationalization impact of 2.3% and McCann’s divestiture of 0.2%) was slightly greater than anticipated, as favorable pricing of 1.7% was offset by volume/mix declines primarily within the Snacks and Meals divisions. Pricing fully covered higher commodity, packaging, and freight costs, and through the end of the third quarter we have more than achieved our full year Structure to Win goal of $30 million in savings.”

Highlights included:

  • Third quarter 2018 earnings per fully diluted share was $0.10 compared to earnings per fully diluted share of $0.50 for the same period in 2017.
  • Third quarter 2018 adjusted earnings per fully diluted share was $0.62, $(0.05) below third quarter 2017.
  • Third quarter 2018 net sales decreased (10.0)% compared to the same period last year; a decrease of (7.5)% compared to the same period last year, excluding the impact of SKU rationalization (2.3)% and the McCann’s divestiture (0.2%).
  • Third quarter 2018 adjusted earnings per fully diluted share of $0.62 was above the top end of the Company’s guidance range of $0.50 to $0.60.
  • TreeHouse further narrows 2018 guidance range for adjusted earnings per fully diluted share of $2.05 to $2.25.

OUTLOOK

“Our retail partners are passionate and committed to growing their private label presence, and I believe we have a wonderful opportunity to leverage the leadership positions we enjoy in our categories. Meanwhile, we must remain intently focused on outstanding customer service and operational excellence,” continued Mr. Oakland.  “Our work to reinvigorate the strategic planning process, to allocate our resources according to our customers’ strategies and to refine our priorities continues to advance, and I look forward to communicating more details around our strategy, portfolio, and vision in December at our Investor Day.”

The Company further narrowed its 2018 guidance for adjusted earnings per fully diluted share to $2.05 to $2.25 and anticipates fourth-quarter earnings in the range of $0.88 to $1.08 per fully diluted share. TreeHouse noted that while pricing related to Canadian tariffs is in place and will be reflected in the fourth quarter results, the Company does expect some ongoing headwind in the fourth quarter related to the impact of the hurricanes on both the operations and crop sourcing.

The Company is not able to reconcile adjusted earnings per fully diluted share (non-GAAP) to projected reported diluted earnings per share without unreasonable effort due to the inherent uncertainty and difficulty of predicting the occurrence, financial impact, and timing of certain items impacting GAAP results.  These items include, but are not limited to, mark-to-market adjustments of derivative contracts, foreign currency exchange on the re-measurement of intercompany notes, or other non-recurring events or transactions that may significantly affect reported GAAP results.

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.