WESTCHESTER, Ill., Nov. 8 /PRNewswire-FirstCall/ -- TreeHouse
Foods, Inc. (NYSE:THS) today announced that net income rose 27.9%
to $0.34 per diluted share for the quarter ended September 30, 2007
compared to $0.26 per share for the third quarter of 2006. Last
year's results included unusual items such as plant shutdown costs
($0.01) which were offset by a gain on the sale of assets from a
previously closed distribution center ($0.03). Excluding these
unusual items in 2006, the current year's results would have been
an increase of 41.7% from last year's adjusted earnings per diluted
share of $0.24. Commenting on the results, Sam K. Reed, Chairman
and CEO, said, "We are pleased that our third quarter results
showed continued improvement in gross margins despite ever
increasing input costs. Our pricing initiatives have been
successful in offsetting input cost inflation, and we have
successfully completed the integration of our DeGraffenreid and San
Antonio Farms acquisitions." Adjusted operating earnings before
interest, taxes, depreciation, amortization and unusual items
(adjusted EBITDA, as defined below, and reconciled to net earnings,
the most directly comparable GAAP measure, on the attached
schedule) increased to $33.8 million in the quarter compared to
$28.6 million in the same period last year. The 18.3% increase is
due primarily to improved operating margins and a full quarter of
results from the acquired San Antonio Farms business. Net sales for
the third quarter of 2007 totaled $272.0 million, an increase of
8.1% over the third quarter of 2006, reflecting growth from the
Company's acquisition of San Antonio Farms and DeGraffenreid, LLC
in the second quarter of 2007. Pickle revenues increased by 3.6%
due to the addition of the DeGraffenreid acquisition, while
non-dairy powdered creamer sales increased 9.6% over the same
period last year due primarily to higher selling prices. Soup and
Infant Feeding ("SIF") revenues increased by 1.6% over the third
quarter of 2006. Other product sales increased 32.8% as the results
included a full quarter of San Antonio Farms. Gross margin for the
third quarter was 21.6% compared to 21.5% last year as significant
increases in commodity costs were offset by increased pricing.
Operating costs of $36.8 million were down slightly from last year
as lower stock option expenses, partially offset by higher
amortization of intangibles associated with new acquisitions, more
than offset one time gains on sales of assets last year. As a
percent of revenues, operating expense decreased from 14.7% last
year to 13.5% in the third quarter of 2007. Net interest expense in
the quarter was $5.0 million compared to $4.5 million last year due
to higher bank debt used to fund the San Antonio Farms and
DeGraffenreid, LLC acquisitions. Commenting further on the results,
David B. Vermylen, President and COO said, "Despite ever increasing
input costs, we managed to continue to improve both our sequential
and year over year gross margins. Our focus on managing our
operating costs resulted in a further decrease in spending as a
percent of total revenue. While we see no end in sight to rising
commodity costs, we will endeavor to further improve our margins
through pricing and cost controls." SEGMENT RESULTS TreeHouse's
measure of segment performance is adjusted gross margin. Adjusted
gross margin is gross profit less delivery and commission costs.
Pickle segment net sales were $81.4 million for the third quarter,
an increase of 3.6% from the third quarter last year due to
additional revenues from the DeGraffenreid acquisition. Adjusted
gross margins in the quarter improved by 270 basis points to 13.8%
compared to 11.1% last year and 11.2% in the second quarter of 2007
as higher cucumber costs were more than offset by price increases.
Powder segment sales increased by 9.6% compared to the same quarter
a year ago due to higher selling prices and increased sales
volumes. Adjusted gross margins in the quarter improved to 20.2%
compared to 18.6% last year and 19.4% in the second quarter of
2007, reflecting a pass through of higher input costs, especially
nonfat dry milk. SIF revenues for the third quarter were $80.0
million, an increase of 1.6% over last year's third quarter. Higher
selling prices more than offset lower unit sales as unseasonably
warm weather has delayed the start of the key soup shipping season.
Adjusted gross margins for the quarter were 15.0%, down slightly
from the second quarter margins of 15.8% as production was adjusted
to offset the lower than expected sales. Last year's third quarter
margins were 16.9% and reflected the benefits of favorable
manufacturing variances. ACQUISITION ACTIVITY The Company announced
on October 15, 2007 it had completed the purchase of E.D. Smith
Income Fund ("E.D. Smith"). E.D. Smith is the leading supplier of
private label salad dressings in Canada and the U.S. It also
markets E.D. Smith branded jams, jellies and pie fillings and other
private label products in Canada. The company markets and
distributes its products to the food retail and foodservice markets
in Canada and the U.S. As announced on June 25, 2007, TreeHouse
agreed to acquire all of the operating assets of E.D. Smith for
CAN$9.15 per share or approximately $220 million, plus the
assumption of approximately $100 million in existing net debt and
transaction costs. The all cash transaction was financed through
borrowings under TreeHouse's existing $600 million credit facility.
For the 12 months ending December 31, 2007, E.D. Smith is expected
to generate revenues of approximately $300 million. E.D. Smith
operates production facilities in Winona, Ontario; Seaforth,
Ontario; Cambridge, Ontario and North East, Pennsylvania, and
employs approximately 800 people. The E.D. Smith headquarters will
remain in Winona, Ontario. OUTLOOK FOR THE REMAINDER OF 2007 "We
had a very good third quarter, the result of our continued focus on
managing our core businesses and rapidly integrating our new
businesses. Our pricing programs initiated earlier in the year
began to reap the benefits as expected in the third quarter. As we
stated earlier, much of the benefit from pricing will come in the
fourth quarter. Although we are buoyed by the strong third quarter,
the escalation in input costs shows no abatement," said Reed.
"Consequently, we are narrowing the range of full year earnings per
share guidance to $1.29 to $1.32 before acquisitions from our
previous guidance of $1.29 to $1.34. This results in a fourth
quarter estimate of $0.42 to $0.45 per share, an increase of over
40% from the fourth quarter of 2006. We are reaffirming our prior
estimates that new acquisitions will have a dilutive effect on full
year earnings of $0.07 per share due to one time accounting and
integration costs." COMPARISON OF ADJUSTED INFORMATION TO GAAP
INFORMATION The adjusted financial results contained in this press
release are from continuing operations and are adjusted to
eliminate the net expense or net income related to items identified
below. This information is provided in order to allow investors to
make meaningful comparisons of the Company's operating performance
between periods and to view the Company's business from the same
perspective as company management. Because the Company cannot
predict the timing and amount of charges associated with
non-recurring items or facility closings and reorganizations,
management does not consider these costs when evaluating the
Company's performance, when making decisions regarding the
allocation of resources, in determining incentive compensation for
management, or in determining earnings estimates. These costs are
not recorded in any of the Company's operating segments. Adjusted
EBITDA represents net income before net interest expense, income
tax expense, depreciation and amortization expense, stock option
expense and non-recurring items. Adjusted EBITDA is a performance
measure and liquidity measure used by our management, and we
believe is commonly reported and widely used by investors and other
interested parties, as a measure of a company's operating
performance and ability to incur and service debt. This non-GAAP
financial information is provided as additional information for
investors and is not in accordance with or an alternative to GAAP.
These non-GAAP measures may be different than similar measures used
by other companies. A full reconciliation table between earnings
for the three and nine month periods ended September 30, 2007 and
September 30, 2006 calculated according to GAAP and adjusted EBITDA
is attached. CONFERENCE CALL WEBCAST A webcast to discuss the
Company's financial results will be held at 9:00 a.m. (Eastern
Standard Time) today and may be accessed by visiting the "Investor
Overview" page through the "Investor Relations" menu of the
Company's 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, salad dressings and sauces; jams,
jellies and pie fillings under the E.D. Smith brand name; infant
feeding products; salsa and Mexican sauces; 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," "will"
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,
2006 and subsequent quarterly reports on Form 10-Q discuss 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 evaluating 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 Nine Months Ended September 30
September 30 2007 2006 2007 2006 (unaudited) (unaudited) Net sales
$271,951 $251,684 $786,966 $656,526 Cost of sales 213,219 197,494
622,538 513,423 Gross profit 58,732 54,190 164,428 143,103
Operating expenses: Selling and distribution 21,459 20,183 64,408
53,080 General and administrative 13,716 16,469 39,338 43,078 Other
operating (income) expense - net 2 (712) (309) 1,245 Amortization
expense 1,616 966 3,926 2,275 Total operating expenses 36,793
36,906 107,363 99,678 Operating income 21,939 17,284 57,065 43,425
Other expense: Interest expense 4,991 4,556 12,850 8,393 Interest
income - (94) (58) (518) Total other expense 4,991 4,462 12,792
7,875 Income from continuing operations before income taxes 16,948
12,822 44,273 35,550 Income taxes 6,380 4,554 16,899 13,276 Income
from continuing operations 10,568 8,268 27,374 22,274 Loss from
discontinued operations, net of tax - (10) (30) (23) Net income
$10,568 $8,258 $27,344 $22,251 Weighted average common shares:
Basic 31,202 31,202 31,202 31,145 Diluted 31,290 31,277 31,305
31,234 Basic earnings per common share: Income from continuing
operations $0.34 $0.26 $0.88 $0.71 Loss from discontinued
operations, net of tax - - - - Net income $0.34 $0.26 $0.88 $0.71
Diluted earnings per common share: Income from continuing
operations $0.34 $0.26 $0.87 $0.71 Loss from discontinued
operations, net of tax - - - - Net income $0.34 $0.26 $0.87 $0.71
Supplemental Information: Depreciation and Amortization 8,439 7,252
24,292 18,018 Expense under FAS123R, before tax 3,432 4,756 10,221
13,995 Segment Information: Pickle Segment Net Sales 81,375 78,528
248,111 250,960 Adjusted Gross Margin 11,209 8,684 29,781 33,394
Adjusted Gross Margin Percent 13.8% 11.1% 12.0% 13.3% Powder
Segment Net Sales 70,019 63,860 207,475 191,473 Adjusted Gross
Margin 14,119 11,863 39,162 36,248 Adjusted Gross Margin Percent
20.2% 18.6% 18.9% 18.9% Soup & Infant Feeding Segment Net Sales
79,960 78,736 227,023 121,395 Adjusted Gross Margin 11,994 13,301
34,586 17,656 Adjusted Gross Margin Percent 15.0% 16.9% 15.2% 14.5%
The following table reconciles our net income to adjusted EBITDA
for the three and nine months ended September 30, 2007 and 2006:
TREEHOUSE FOODS, INC. RECONCILIATION OF REPORTED INCOME TO ADJUSTED
EBITDA (In thousands) Three Months Ended Nine Months Ended
September 30 September 30 2007 2006 2007 2006 (unaudited)
(unaudited) Net income as reported $10,568 $8,258 $27,344 $22,251
Net interest expense 4,991 4,462 12,792 7,875 Income taxes 6,380
4,554 16,900 13,276 Discontinued operations - 10 35 23 Depreciation
and amortization 8,439 7,252 24,292 18,018 Stock option expense
3,432 4,756 10,221 13,995 Plant shut-down costs & asset sales 2
(712) (274) 1,245 Adjusted EBITDA $33,812 $28,580 $91,310 $76,683
http://www.newscom.com/cgi-bin/prnh/20050726/CGTREELOGO
http://photoarchive.ap.org/ DATASOURCE: TreeHouse Foods, Inc.
CONTACT: Investor Relations of TreeHouse Foods, Inc.,
+1-708-483-1300, Ext. 1331 Web site: http://www.treehousefoods.com/
Copyright
Treehouse Foods (NYSE:THS)
Historical Stock Chart
From May 2024 to Jun 2024
Treehouse Foods (NYSE:THS)
Historical Stock Chart
From Jun 2023 to Jun 2024