WESTCHESTER, Ill., Aug. 10 /PRNewswire-FirstCall/ -- TreeHouse
Foods, Inc. (NYSE:THS) today announced that income from continuing
operations was $0.21 per diluted share for the quarter ended June
30, 2006, compared to $0.05 per diluted share in the second quarter
of 2005. Results for the 2006 quarter include $0.09 per share of
expense recognized under Statement of Financial Accounting
Standards No. 123R, Share-Based Payment, $0.02 relating to the
previously announced closure of the La Junta, CO pickle factory and
$0.02 per share relating to purchase accounting adjustments
resulting from the previously announced acquisition of the soup and
infant feeding ("SIF") business from Del Monte Foods on April 24,
2006. Results for the second quarter 2005 included expenses of
$0.31 per share related to the spin-off of the company from Dean
Foods, partially offset by $0.05 in one-time gains from legal
settlements and asset sales. Excluding these items, quarterly
earnings per share would have increased to $0.34 per share in 2006
compared to $0.31 per share in 2005. Net sales for the second
quarter of 2006 totaled $232.1 million, an increase of 25.5% over
the second quarter of 2005 reflecting the additional revenues of
soup and infant feeding products. Excluding SIF, revenues increased
2.4%. Pickle revenues increased by 3.7% due to the acquisition of
the Oxford Foods book of business in February 2006. Non-dairy
powdered creamer sales decreased by .8% as private label gains were
offset by branded creamer and ingredient sales declines. Other
product sales grew 5.1% due to higher co-pack revenues in our
refrigerated business. Gross margin for the second quarter was
20.9% compared to 21.9%, with the decrease resulting from lower
overall margins in the soup and infant feeding business compared to
the historical business segments. Excluding SIF, gross margins
increased by 0.1 percentage point to 22.0%. Operating expenses
increased from $31.4 million during the second quarter of 2005 to
$34.5 million. This year's expenses include the addition of the SIF
business ($5.1 million), share based compensation expense ($4.4
million), and plant shutdown costs ($1.0 million). Last year's
expenses included costs related to the spin-off of the business
from Dean Foods ($9.5 million) and gains relating to asset sales
and legal settlements ($2.3 million). After considering these
items, operating expenses in the historical business were lower
this year compared to last year as 2006 had lower branded marketing
expenditures which more than offset higher administrative costs. On
a sequential basis, second quarter 2006 operating expenses improved
to 14.9% of sales compared to 16.4% in the first quarter of this
year due primarily to overhead efficiencies when adding the SIF
business. Commenting on the results, Sam K. Reed, Chairman and CEO,
said, "We continued to increase revenues, adjusted gross margin and
operating income in our legacy private label and foodservice
businesses. Operating performance improved as a combination of
price increases and productivity gains outweighed energy and input
cost inflation. The recently acquired soup and infant feeding
segment showed strong top line growth, even though the quarter
included only nine weeks of their results. We are very pleased with
the positive results in the quarter, especially including the
addition of such a strategically important acquisition as canned
soup." SEGMENT RESULTS Pickle segment net sales for the second
quarter increased by approximately $3.5 million from the prior year
due to both higher pricing and increased volumes from the book of
business acquired from Oxford Foods. These increases offset a
baseline volume reduction of 7.0% led by a decline in non-strategic
regional brands. Adjusted gross margin is gross profit less
delivery and commission costs and is TreeHouse's measure of segment
performance. Excluding Oxford Foods, our pickle margins remained
flat at 14.1%. However, total gross margins in the pickle segment
declined from 14.1% to 13.1% due to selling the higher cost
inventories and production from Oxford Foods during most of the
quarter. Production shifted to our plants late in the quarter so
the margin reduction will not recur. Powder segment sales decreased
by .8% compared to a year ago, as volume declines were largely
offset by price increases. Adjusted gross margins increased from
15.7% to 18.5% as internal cost savings programs and pricing
adjustments offset higher input costs and freight charges. Soup and
Infant Feeding products are new as a result of the acquisition of
this business on April 24, 2006. On a comparative basis to last
year, revenues increased from $37.6 million to $42.7 million or
13.5% primarily due to our arrangements to co-pack certain products
for other food companies. Co-pack revenues are at much lower
margins than typical customer revenues, resulting in lower overall
margins compared to last year. OUTLOOK FOR THE REMAINDER OF 2006
"In the second quarter we successfully completed the acquisition of
the soup and infant feeding business that opens a new strategic
vista for TreeHouse. Additionally, we maintained the discipline and
focus necessary to increase revenues and profitability of our
legacy private label and food service business," said Reed. "We
have been very pleased with the dedication and commitment shown by
our new SIF management team and will continue to focus on
integration activities during the balance of 2006. We have seen
continued price pressures with a variety of key input costs, but we
have managed resourcefully to offset their negative affects. We are
confident that we have sufficient plans in place to meet our goals
for this year, and as such, are confirming our earlier guidance of
earnings per share in the range of $0.86 to $0.91 per share for our
full year results." Conference Call Webcast A webcast to discuss
the company's financial results will be held at 10:00 a.m. (Eastern
Standard Time) today and may be accessed by visiting the "Webcast"
section of the company website at http://www.treehousefoods.com/ .
About TreeHouse Foods TreeHouse is a food manufacturer servicing
primarily the retail grocery and foodservice channels. Its products
include pickles and related products; non-dairy powdered coffee
creamer; private label soup and infant feeding products, and other
food products including aseptic sauces, refrigerated salad
dressings, and liquid non-dairy creamer. TreeHouse believes it is
the largest manufacturer of pickles and non-dairy powdered creamer
in the United States based on sales volume. FORWARD LOOKING
STATEMENTS This press release contains "forward-looking
statements." Forward-looking statements include all statements that
do not relate solely to historical or current facts, and can
generally be identified by the use of words such as "may,"
"should," "could," "expects," "seek to," "anticipates," "plans,"
"believes," "estimates," "intends," "predicts," "projects,"
"potential" or "continue" or the negative of such terms and other
comparable terminology. These statements are only predictions. The
outcome of the events described in these forward-looking statements
is subject to known and unknown risks, uncertainties and other
factors that may cause the company or its industry's actual
results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity,
performance or achievement expressed or implied by these
forward-looking statements. TreeHouse's Form 10-K for the year
ended December 31, 2005 discusses some of the factors that could
contribute to these differences. You are cautioned not to unduly
rely on such forward-looking statements, which speak only as of the
date made, when evaluation the information presented in this
presentation. The company expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein, to reflect any change
in its expectations with regard thereto, or any other change in
events, conditions or circumstances on which any statement is
based. FINANCIAL INFORMATION TREEHOUSE FOODS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share
data) Three Months Ended Six Months Ended June 30 June 30 2006 2005
2006 2005 (unaudited) (unaudited) Net sales $232,118 $185,008
$404,842 $351,383 Cost of sales 183,595 144,544 315,929 273,075
Gross profit 48,523 40,464 88,913 78,308 Operating expenses:
Selling and distribution 18,847 16,675 32,897 30,780 General and
administrative 14,797 5,662 28,566 9,239 Management fee paid to
Dean Foods 1,470 2,940 Other Operating expense, net 7,135 7,279
Amortization expense 845 414 1,309 828 Total operating expenses
34,489 31,356 62,772 51,066 Operating income 14,034 9,108 26,141
27,242 Other (income) expense: Interest expense, net 3,252 172
3,413 365 Other (income) expense, net - (5) - (66) Total other
(income) expense 3,252 167 3,413 299 Income from continuing
operations before income taxes 10,782 8,941 22,728 26,943 Income
taxes 4,182 7,404 8,722 14,024 Income from continuing operations
6,600 1,537 14,006 12,919 Loss from discontinued operations, net of
tax (6) (256) (13) (595) Net income $6,594 $1,281 $13,993 $12,324
Weighted average common shares: Basic 31,145 30,801 31,121 30,801
Diluted 31,231 31,060 31,224 31,060 Basic earnings per common
share: Income from continuing operations $0.21 $0.05 $0.45 $0.42
Loss from discontinued operations, net of tax (0.00) (0.01) (0.00)
(0.02) Net income $0.21 $0.04 $0.45 $0.40 Diluted earnings per
common share: Income from continuing operations $0.21 $0.05 $0.45
$0.42 Loss from discontinued operations, net of tax (0.00) (0.01)
(0.00) (0.02) Net income $0.21 $0.04 $0.45 $0.40 Supplemental
Information: Depreciation and Amortization 6,251 4,125 10,766 8,256
Expense under FAS123R, before tax 4,423 - 9,239 - Segment
Information: Pickle Segment Net Sales 98,291 94,798 172,432 168,001
Adjusted Gross Margin 12,877 13,354 24,710 23,621 Adjusted Gross
Margin Percent 13.1% 14.1% 14.3% 14.1% Powder Segment Net Sales
60,775 61,289 127,613 125,838 Adjusted Gross Margin 11,226 9,614
24,385 20,816 Adjusted Gross Margin Percent 18.5% 15.7% 19.1% 16.5%
Soup & Infant Feeding Segment Net Sales 42,659 - 42,659 -
Adjusted Gross Margin 4,355 - 4,355 - Adjusted Gross Margin Percent
10.2% - 10.2% -
http://www.newscom.com/cgi-bin/prnh/20050726/CGTREELOGO
http://photoarchive.ap.org/ DATASOURCE: TreeHouse Foods, Inc.
CONTACT: Investor Relations, +1-708.483.1300 ext 1344 Web site:
http://www.treehousefoods.com/
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