OAK BROOK, Ill., Feb. 13, 2020 /PRNewswire/ -- TreeHouse
Foods, Inc. (NYSE: THS) today reported fourth quarter GAAP earnings
per diluted share from continuing operations of $0.27 compared to a GAAP loss per diluted share
from continuing operations of $(0.08)
reported for the fourth quarter of 2018. The Company had adjusted
earnings per diluted share from continuing operations1
of $1.10 in the fourth quarter of
2019 compared to $1.00 in the fourth
quarter of 2018.
"Our 2019 results demonstrated great progress. It's important to
recognize how much we accomplished in the past year - we provided
consistently excellent service for our customers; we designed and
stood up our commercial organization; we completed the majority of
non-core asset sales; and we made great strides toward building our
TreeHouse culture," said Steve
Oakland, Chief Executive Officer and President.
"Our efforts to improve business profitability are reflected in
the full year 2019 results, as adjusted EBIT margin1
expanded 90 basis points to 6.2%, despite revenue that was 6.5%
lower," said Bill Kelley, EVP and
Chief Financial Officer. "Adjusted earnings per share growth of 21%
to $2.39 demonstrates the hard work
we have invested in continuous improvement, ongoing expense
discipline, pricing execution, and debt reduction. Although
underperformance in our Broth business drove a volume shortfall in
the fourth quarter, we remain encouraged by our year-over-year
profitability improvement across the company."
1
|
Adjusted earnings per
diluted share from continuing operations, adjusted EBIT margin from
continuing operations, adjusted EBITDA from continuing operations,
organic net sales, and adjusted EBITDAS from continuing operations
are Non-GAAP financial measures. See "Comparison of Adjusted
Information to GAAP Information" for the definition of the Non-GAAP
measures, information concerning certain items affecting
comparability, and reconciliations of the Non-GAAP measures to the
most directly comparable GAAP measure.
|
OUTLOOK
"We continue to focus on our strategic goals in 2020," continued
Mr. Oakland. "This year, we will continue to drive the organization
toward growth and improved profitability. While our pivot to growth
is taking longer than originally anticipated due to the carryover
impact of business that was lost last year, we believe we have the
right plans in place to demonstrate consistent delivery of top line
growth in the back half of 2020."
The following are TreeHouse's 2020 guidance ranges on a
continuing operations basis:
- Adjusted earnings per diluted share from continuing operations
of $2.40 to $2.65
- Net sales between $4.10 to
$4.40 billion
-
- First half 2020 revenue expected to decline 3% to 5% due to
approximately $175 - $200 million in revenue loss from the prior year
that will carry over into 2020
- Second half 2020 revenue is anticipated to accelerate to 2% to
3% growth driven by innovation and new business wins in Meal
Solutions and Baked Goods
- Adjusted earnings before interest, taxes, depreciation and
amortization ("EBITDA") from continuing operations1
between $480 to $510 million
- Net interest expense between $93
and $97 million
- Effective tax rate of 22% to 24%
- Diluted weighted average shares outstanding of approximately 57
million shares
- Free cash flow of $250 to
$300 million, with the priority for
cash proceeds to reduce debt
In regard to the first quarter of 2020, the Company expects
adjusted earnings per share in the range of $0.20 to $0.30 per
diluted share from continuing operations and net sales in the range
of $0.98 to $1.02 billion.
The Company is not able to reconcile prospective adjusted
earnings per diluted share from continuing operations and
prospective adjusted EBITDA (Non-GAAP) to the most comparable GAAP
financial measure 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.
FOURTH QUARTER 2019 FINANCIAL RESULTS
Net sales for the fourth quarter of 2019 totaled $1,139.5 million compared to $1,193.5
million for the same period last year, a decrease of 4.5%. The
change in net sales from 2018 to 2019 was due to the following:
|
|
Three
Months
|
|
Twelve
Months
|
|
|
Percent
|
Percentage
Change in
Pounds
|
|
Percent
|
Percentage
Change in
Pounds
|
|
|
(unaudited)
|
|
(unaudited)
|
Volume/mix excluding
SKU rationalization
|
|
(4.0)
|
%
|
(5.1)
|
%
|
|
(5.6)
|
%
|
(7.2)
|
%
|
Pricing
|
|
0.2
|
|
—
|
|
|
0.6
|
|
—
|
|
Change in organic net
sales1
|
|
(3.8)
|
%
|
(5.1)
|
%
|
|
(5.0)
|
%
|
(7.2)
|
%
|
SKU
rationalization
|
|
(0.7)
|
|
(0.6)
|
|
|
(1.3)
|
|
(1.3)
|
|
Divestiture
|
|
—
|
|
—
|
|
|
(0.1)
|
|
(0.1)
|
|
Foreign
currency
|
|
—
|
|
—
|
|
|
(0.1)
|
|
—
|
|
Total change in net
sales
|
|
(4.5)
|
%
|
(5.7)
|
%
|
|
(6.5)
|
%
|
(8.6)
|
%
|
Organic net sales decreased 3.8% in the fourth quarter of 2019
compared to the fourth quarter of 2018 driven by:
- Volume/mix was unfavorable 4.0% year-over-year due to decreases
in all segments with the most significant decline in Meal
Solutions, primarily due to lost distribution.
- Pricing was favorable 0.2% in the fourth quarter of 2019
compared to 2018, reflecting pricing actions to recover commodity,
packaging, and freight inflation.
Our efforts to simplify and rationalize low margin SKUs from our
product portfolio contributed 0.7% to the overall year-over-year
decline in net sales, primarily within our Baked Goods segment.
Gross profit as a percentage of net sales was 19.8% in the
fourth quarter of 2019, compared to 21.1% in the fourth quarter of
2018, a decrease of 1.3 percentage points. The decrease
is primarily due to unfavorable volume/mix due to lost distribution
and higher period expense associated with a change in regulatory
compliance, partially offset by lower restructuring program
expenses.
Total operating expenses as a percentage of net sales were 17.0%
in the fourth quarter of 2019 compared to 16.6% in the fourth
quarter of 2018, an increase of 0.4 percentage points. The increase
is primarily attributable to the non-cash impairment charge of
$41.1 million related to the
announced sale of the Fridley,
Minnesota and Lodi,
California In-Store Bakery facilities. This increase was
partially offset by lower restructuring program expenses and the
associated cost savings, lower freight costs due to increased
market capacity and a reduction in spot market usage, and lower
variable incentive compensation.
Total other expense decreased by $43.9
million to $12.0 million in
the fourth quarter of 2019 compared to $55.9
million in the fourth quarter of 2018. The decrease is
primarily related to non-cash mark-to-market income from hedging
activities in the fourth quarter of 2019 compared to mark-to-market
expense in the fourth quarter of 2018, driven by interest rate
swaps. Favorable fluctuations in currency exchange rates between
the U.S. and Canadian dollar during the respective periods and
lower interest expense driven by lower net debt and the
year-over-year reduction in LIBOR also contributed to the decrease
in total other expense.
The Company's fourth quarter 2019 effective income tax rate was
23.1% compared to (51.7)% in the fourth quarter of 2018. The change
in the rate year-over-year is primarily due to the overall impact
of discrete items on low fourth quarter income before taxes in 2018
compared to 2019 and the revaluation of attributes and income tax
receivables acquired in previous acquisitions.
Net income from continuing operations for the fourth quarter of
2019 was $15.3 million, compared to net loss from continuing
operations of $4.4 million for the
same period of the previous year. Adjusted EBITDAS1 was
$161.1 million in the fourth
quarter of 2019, an increase of 4.9% compared to the fourth quarter
of 2018. The increase in adjusted EBITDAS was primarily due to cost
savings from TreeHouse 2020 and Structure to Win initiatives, lower
freight costs due to increased market capacity and a reduction in
spot market usage, and lower variable incentive compensation,
partially offset by lower volume.
Net income from discontinued operations of $0.2 million increased $9.7 million in the fourth quarter of 2019
compared to the fourth quarter of 2018. The increase is driven by
the timing of the Snacks division and RTE Cereal divestitures.
Our cash provided by operating activities from continuing
operations was $263.9 million in 2019
compared to $472.1 million in 2018, a
decrease of $208.2 million. The
decrease is primarily attributable to lower accounts payable and
higher incentive compensation payments partially offset by lower
receivables due to higher use of the receivables sales program.
Accounts payable decreased largely due to the settlement of
payables retained as part of the divestiture of the Snacks
division. The Company's working capital management emphasis
continues to be focused on reducing inventory, driving faster
collection of receivables, and extending vendor terms.
The Company's three and twelve months 2019 and 2018 results
included certain items noted below that, in management's judgment,
affect the assessment of earnings period-over-period.
RECONCILIATION OF
DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS TO
ADJUSTED DILUTED EARNINGS PER SHARE FROM CONTINUING
OPERATIONS
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
|
(unaudited)
|
Diluted income (loss)
per share from continuing operations (GAAP)
|
|
$
|
0.27
|
|
|
$
|
(0.08)
|
|
|
$
|
(1.96)
|
|
|
$
|
(0.83)
|
|
Impairment
|
|
0.72
|
|
|
—
|
|
|
2.28
|
|
|
—
|
|
Restructuring
programs
|
|
0.27
|
|
|
0.82
|
|
|
1.87
|
|
|
2.95
|
|
Mark-to-market
adjustments
|
|
(0.12)
|
|
|
0.50
|
|
|
0.83
|
|
|
0.40
|
|
Litigation
matter
|
|
—
|
|
|
—
|
|
|
0.44
|
|
|
—
|
|
Change in regulatory
requirements
|
|
0.16
|
|
|
—
|
|
|
0.26
|
|
|
—
|
|
Multiemployer pension
plan withdrawal
|
|
0.01
|
|
|
—
|
|
|
0.08
|
|
|
—
|
|
Executive management
transition
|
|
0.05
|
|
|
—
|
|
|
0.05
|
|
|
0.23
|
|
Tax
indemnification
|
|
—
|
|
|
(0.09)
|
|
|
0.02
|
|
|
(0.04)
|
|
Acquisition,
integration, divestiture, and related costs
|
|
0.01
|
|
|
0.01
|
|
|
0.01
|
|
|
(0.24)
|
|
Product
recall
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Foreign currency
(gain) loss on re-measurement of intercompany notes
|
|
(0.04)
|
|
|
0.08
|
|
|
(0.09)
|
|
|
0.11
|
|
Debt amendment and
repurchase activity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.12
|
|
Taxes on adjusting
items
|
|
(0.23)
|
|
|
(0.25)
|
|
|
(1.42)
|
|
|
(0.75)
|
|
Dilutive impact of
shares 2
|
|
—
|
|
|
0.01
|
|
|
0.01
|
|
|
0.02
|
|
Adjusted diluted EPS
from continuing operations (Non-GAAP)
|
|
$
|
1.10
|
|
|
$
|
1.00
|
|
|
$
|
2.39
|
|
|
$
|
1.97
|
|
|
2
|
As reported results
for the twelve months ended December 31, 2019 and the three and
twelve months ended December 31, 2018 reflect a loss, all equity
awards were considered anti-dilutive and excluded from the EPS
calculation. The corresponding adjusted amounts, however, reflect
net income and equity awards are considered
dilutive. Accordingly, adjustments are required to reflect
total dilutive shares of 56.5 million compared to basic shares of
56.2 million for the twelve months ended December 31, 2019 and
total dilutive shares of 56.5 million compared to basic shares of
56.0 million for the three and twelve months ended December 31,
2018.
|
FOURTH QUARTER 2019 SEGMENT RESULTS
|
|
Three Months Ended
December 31,
|
|
|
Baked
Goods
|
|
Beverages
|
|
Meal
Solutions
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(unaudited,
dollars in millions)
|
Net sales
|
|
$
|
406.5
|
|
|
$
|
425.2
|
|
|
$
|
268.0
|
|
|
$
|
286.6
|
|
|
$
|
465.0
|
|
|
$
|
481.7
|
|
Direct operating
income
|
|
53.9
|
|
|
53.0
|
|
|
44.2
|
|
|
51.0
|
|
|
63.9
|
|
|
67.6
|
|
Direct operating
income percent
|
|
13.3
|
%
|
|
12.5
|
%
|
|
16.5
|
%
|
|
17.8
|
%
|
|
13.7
|
%
|
|
14.0
|
%
|
The change in net sales from the fourth quarter of 2018 to the
fourth quarter of 2019 was due to the following:
|
|
Three Months Ended
December 31,
|
|
|
Baked
Goods
|
|
Beverages
|
|
Meal
Solutions
|
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
|
(unaudited,
dollars in millions)
|
2018 Net
Sales
|
|
$
|
425.2
|
|
|
|
|
$
|
286.6
|
|
|
|
|
$
|
481.7
|
|
|
|
SKU
rationalization
|
|
(7.7)
|
|
|
(1.8)
|
%
|
|
(0.1)
|
|
|
—
|
%
|
|
(0.2)
|
|
|
(0.1)
|
%
|
Volume/mix excluding
SKU rationalization
|
|
(12.5)
|
|
|
(3.0)
|
|
|
(7.7)
|
|
|
(2.7)
|
|
|
(27.3)
|
|
|
(5.6)
|
|
Pricing
|
|
1.5
|
|
|
0.4
|
|
|
(10.8)
|
|
|
(3.8)
|
|
|
11.2
|
|
|
2.3
|
|
Foreign
currency
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4)
|
|
|
(0.1)
|
|
2019 Net
Sales
|
|
$
|
406.5
|
|
|
(4.4)
|
%
|
|
$
|
268.0
|
|
|
(6.5)
|
%
|
|
$
|
465.0
|
|
|
(3.5)
|
%
|
Baked Goods
Net sales in the Baked Goods segment decreased $18.7 million, or 4.4%, in the fourth quarter of
2019 compared to the fourth quarter of 2018. The change in
net sales was due to unfavorable volume/mix mostly from lost
distribution related to In-Store Bakery, Bars, and Crackers, and
the efforts to simplify and rationalize low margin SKUs. Partially
offsetting the overall decline in net sales was a pricing increase
of $1.5 million, or 0.4%, driven by
pricing actions taken to recover commodity, freight, and packaging
inflation, partially offset by increased trade spend.
Direct operating income as a percentage of net sales increased
0.8 percentage points in the fourth quarter of 2019 compared to the
fourth quarter of 2018. This increase was primarily driven by cost
savings due to TreeHouse 2020 and Structure to Win initiatives and
lower freight costs due to increased market capacity and reduced
spot market usage. These improvements were partially offset by
lower volumes and higher period expense.
Beverages
Net sales in the Beverages segment decreased $18.6 million, or 6.5%, in the fourth quarter of
2019 compared to the fourth quarter of 2018. The change in net
sales was due to unfavorable pricing and trade attributable to
competitive pressure in Single Serve Beverages and unfavorable
volume/mix primarily due to lost distribution mostly related to
Single Serve Beverages, Broth, and Powdered Creamers.
Direct operating income as a percentage of net sales decreased
1.3 percentage points in the fourth quarter of 2019 compared to the
fourth quarter of 2018. The decrease primarily resulted from
unfavorable pricing and trade attributable to continued competitive
pressure in Single Serve Beverages. These declines were
partially offset by lower freight costs due to increased market
capacity and reduced spot market usage, and lower selling, general,
and administrative expenses driven by cost savings due to Structure
to Win initiatives.
Meal Solutions
Net sales in the Meal Solutions segment decreased $16.7 million, or 3.5%, in the fourth quarter of
2019 compared to the fourth quarter of 2018. The change in net
sales was due to unfavorable volume/mix primarily from lost
distribution related to Pasta and Pickles and unfavorable foreign
currency. These declines were partially offset by lower trade spend
and pricing actions taken to recover commodity, freight, and
packaging inflation.
Direct operating income as a percentage of net sales decreased
0.3 percentage points in the fourth quarter of 2019 compared to the
fourth quarter of 2018. The decrease was primarily due to
unfavorable volume/mix mostly due to lost distribution partially
offset by reduced trade spend and pricing actions taken to recover
commodity, freight, and packaging inflation.
YEAR TO DATE 2019 SEGMENT RESULTS
|
Twelve Months
Ended December 31,
|
|
Baked
Goods
|
|
Beverages
|
|
Meal
Solutions
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(unaudited,
dollars in millions)
|
Net sales
|
$
|
1,465.2
|
|
|
$
|
1,551.4
|
|
|
$
|
952.4
|
|
|
$
|
1,008.4
|
|
|
$
|
1,871.3
|
|
|
$
|
2,028.0
|
|
Direct operating
income
|
161.4
|
|
|
142.9
|
|
|
167.0
|
|
|
180.3
|
|
|
227.1
|
|
|
253.5
|
|
Direct operating
income percent
|
11.0
|
%
|
|
9.2
|
%
|
|
17.5
|
%
|
|
17.9
|
%
|
|
12.1
|
%
|
|
12.5
|
%
|
The change in net sales from 2018 to 2019 was due to the
following:
|
Twelve Months
Ended December 31,
|
|
Baked
Goods
|
|
Beverages
|
|
Meal
Solutions
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
Dollars
|
|
Percent
|
|
(unaudited,
dollars in millions)
|
2018 Net
sales
|
$
|
1,551.4
|
|
|
|
|
$
|
1,008.4
|
|
|
|
|
$
|
2,028.0
|
|
|
|
SKU
rationalization
|
(39.8)
|
|
|
(2.6)
|
%
|
|
(5.2)
|
|
|
(0.6)
|
%
|
|
(15.2)
|
|
|
(0.7)
|
%
|
Volume/mix excluding
SKU rationalization
|
(69.8)
|
|
|
(4.5)
|
|
|
(27.4)
|
|
|
(2.7)
|
|
|
(159.3)
|
|
|
(7.9)
|
|
Pricing
|
24.8
|
|
|
1.6
|
|
|
(23.4)
|
|
|
(2.3)
|
|
|
26.1
|
|
|
1.3
|
|
Divestiture
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.5)
|
|
|
(0.2)
|
|
Foreign
currency
|
(1.4)
|
|
|
(0.1)
|
|
|
—
|
|
|
—
|
|
|
(3.8)
|
|
|
(0.2)
|
|
2019 Net
sales
|
$
|
1,465.2
|
|
|
(5.6)
|
%
|
|
$
|
952.4
|
|
|
(5.6)
|
%
|
|
$
|
1,871.3
|
|
|
(7.7)
|
%
|
CONFERENCE CALL WEBCAST
A webcast to discuss the Company's fourth quarter earnings and
its outlook will be held at 9:00 a.m.
(Eastern Time) today. The live audio webcast and a
supporting slide deck will be available on the Company's website at
http://www.treehousefoods.com/investors/investor-overview/default.aspx.
DISCONTINUED OPERATIONS
Beginning in the third quarter of 2019, the Company determined
that both its Snacks division and its RTE Cereal business met the
discontinued operations criteria and as such, both businesses have
been excluded from continuing operations and segment results for
all periods presented.
ASSETS HELD FOR SALE
During the fourth quarter of 2019, the Company reached the
decision to sell two of its In-Store Bakery facilities located in
Fridley, Minnesota and
Lodi, California. These two
facilities are within the Baked Goods reporting segment. The
Company determined the associated assets met the held for sale
accounting criteria as of December 31,
2019 and were classified accordingly in the Consolidated
Balance Sheets. These two facilities did not meet the criteria to
be presented as a discontinued operation.
COMPARISON OF NON-GAAP INFORMATION TO GAAP INFORMATION
The Company has included in this release measures of financial
performance that are not defined by GAAP ("Non-GAAP"). A Non-GAAP
financial measure is a numerical measure of financial performance
that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in
accordance with GAAP in the Company's Consolidated Balance Sheets,
Consolidated Statements of Operations, Consolidated Statements of
Comprehensive Income (Loss), Consolidated Statements of
Stockholders' Equity, and the Consolidated Statements of Cash
Flows. The Company believes these measures provide useful
information to the users of the financial statements as we also
have included these measures in other communications and
publications.
For each of these Non-GAAP financial measures, the Company
provides a reconciliation between the most directly comparable GAAP
measure and the Non-GAAP measure, an explanation of why management
believes the Non-GAAP measure provides useful information to
financial statement users, and any additional purposes for which
management uses the Non-GAAP measure. This Non-GAAP financial
information is provided as additional information for the financial
statement users and is not in accordance with, or an alternative
to, GAAP. These Non-GAAP measures may be different from similar
measures used by other companies.
Organic Net Sales
Organic Net Sales is defined as net sales excluding the impacts
of SKU rationalization, divestitures, and foreign currency. This
information is provided in order to allow investors to make
meaningful comparisons of the Company's sales between periods and
to view the Company's business from the same perspective as Company
management.
Adjusted Earnings Per Diluted Share from Continuing
Operations, Adjusting for Certain Items Affecting
Comparability
Adjusted earnings per diluted share from continuing operations
("adjusted diluted EPS") reflects adjustments to GAAP income (loss)
per diluted share from continuing operations to identify items
that, in management's judgment, significantly affect the assessment
of earnings results between periods. This information is provided
in order to allow investors to make meaningful comparisons of the
Company's earnings performance between periods and to view the
Company's business from the same perspective as Company management.
As the Company cannot predict the timing and amount of charges that
include, but are not limited to, items such as acquisition,
integration, divestiture, and related costs, mark-to-market
adjustments on derivative contracts, foreign currency exchange
impact on the re-measurement of intercompany notes, restructuring
programs, impairment of assets, and other items that may arise from
time to time that would impact comparability, management does not
consider these costs when evaluating the Company's performance,
when making decisions regarding the allocation of resources, in
determining incentive compensation, or in determining earnings
estimates. The reconciliation of the GAAP measure of diluted income
(loss) per share from continuing operations as presented in the
Consolidated Statements of Operations, excluding certain items
affecting comparability, to adjusted diluted earnings per share
from continuing operations is presented above.
Adjusted Net Income from Continuing Operations, Adjusted EBIT
from Continuing Operations, Adjusted EBITDA from Continuing
Operations, Adjusted EBITDAS from Continuing Operations, Adjusted
Net Income Margin from Continuing Operations, Adjusted EBIT Margin
from Continuing Operations, Adjusted EBITDA Margin from Continuing
Operations, and Adjusted EBITDAS Margin from Continuing Operations,
Adjusting for Certain Items Affecting Comparability
Adjusted net income from continuing operations represents GAAP
net income (loss) from continuing operations as reported in the
Consolidated Statements of Operations adjusted for items that, in
management's judgment, significantly affect the assessment of
earnings results between periods as outlined in the adjusted
diluted EPS section above. This information is provided in order to
allow investors to make meaningful comparisons of the Company's
earnings performance between periods and to view the Company's
business from the same perspective as Company management. This
measure is also used as a component of the Board of Directors'
measurement of the Company's performance for incentive compensation
purposes and is the basis of calculating the adjusted diluted EPS
from continuing operations metric outlined above.
Adjusted EBIT from continuing operations represents adjusted net
income from continuing operations before interest expense, interest
income, and income tax expense. Adjusted EBITDA from continuing
operations represents adjusted net income from continuing
operations before interest expense, interest income, income tax
expense, and depreciation and amortization expense. Adjusted
EBITDAS from continuing operations represents adjusted EBITDA from
continuing operations before non-cash stock-based compensation
expense. Adjusted EBIT from continuing operations, adjusted EBITDA
from continuing operations, and adjusted EBITDAS from
continuing operations are performance measures commonly used by
management to assess operating performance, and the Company
believes they are commonly reported and widely used by investors
and other interested parties as a measure of a company's operating
performance between periods.
Adjusted net income margin from continuing operations, adjusted
EBIT margin from continuing operations, adjusted EBITDA margin from
continuing operations, and adjusted EBITDAS margin from continuing
operations are calculated as the respective metric defined above as
a percentage of net sales as reported in the Consolidated
Statements of Operations adjusted for items that, in management's
judgment, significantly affect the assessment of earnings results
between periods as outlined in the adjusted diluted EPS from
continuing operations section above.
A full reconciliation between the relevant GAAP measure of
reported net income (loss) from continuing operations for the three
and twelve month periods ended December 31,
2019 and 2018 calculated according to GAAP, adjusted net
income from continuing operations, adjusted EBIT from continuing
operations, adjusted EBITDA from continuing operations, and
adjusted EBITDAS from continuing operations is presented in the
attached tables. Given the inherent uncertainty regarding adjusted
items in any future period, a reconciliation of forward-looking
financial measures to the most directly comparable GAAP measure is
not feasible.
Free Cash Flow from Continuing Operations
In addition to measuring the Company's cash flow generation and
usage based upon the operating, investing, and financing
classifications included in the Consolidated Statements of Cash
Flows, we also measure free cash flow from continuing operations
which represents net cash provided by operating activities from
continuing operations less capital expenditures. The Company
believes free cash flow is an important measure of operating
performance because it provides management and investors a measure
of cash generated from operations that is available for mandatory
payment obligations and investment opportunities such as funding
acquisitions, repaying debt, repurchasing outstanding senior debt,
and repurchasing common stock. A reconciliation between the
relevant GAAP measure of cash provided by operating activities for
the twelve months ended December 31,
2019 and 2018 calculated according to GAAP and free cash
flow is presented in the attached tables.
ABOUT TREEHOUSE FOODS
TreeHouse Foods, Inc. is a leading manufacturer and distributor
of private label packaged foods and beverages in North America. We have over 40 production
facilities across the United
States, Canada and
Italy, and our vision is to be the
undisputed solutions leader for custom brands for our
customers. Our product portfolio includes shelf stable,
refrigerated, frozen and fresh products, including baked goods
(cookies, crackers, pretzels, refrigerated dough, frozen waffles,
in-store bakery products and snack bars); beverages (broth, single
serve hot beverages, ready-to-drink coffee, creamers and powdered
drinks); and meal solutions (dressings, hot cereal, macaroni and
cheese, pasta, pickles, sauces and side dishes). We have a
comprehensive offering of packaging formats and flavor profiles,
and we also offer natural, organic and preservative-free
ingredients across almost our entire portfolio. Our purpose
is to make high quality food and beverages affordable to all.
Additional information, including TreeHouse's most recent Forms
10-Q and 10-K, may be found at TreeHouse's website,
http://www.treehousefoods.com.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking" statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements and other information are
based on our beliefs, as well as assumptions made by us, using
information currently available. The words "anticipate," "believe,"
"estimate," "project," "expect," "intend," "plan," "should," and
similar expressions, as they relate to us, are intended to identify
forward-looking statements. Such statements reflect our current
views with respect to future events and are subject to certain
risks, uncertainties, and assumptions. Should one or more of these
risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially
from those described herein as anticipated, believed, estimated,
projected, expected, or intended. We do not intend to update these
forward-looking statements following the date of this press
release.
Such forward-looking statements, because they relate to future
events, are by their very nature subject to many important factors
that could cause actual results to differ materially from those
contemplated by the forward-looking statements contained in this
press release and other public statements we make. Such factors
include, but are not limited to: the success of our restructuring
programs, our level of indebtedness and related obligations;
disruptions in the financial markets; interest rates; changes in
foreign currency exchange rates; customer concentration and
consolidation; raw material and commodity costs; competition; our
ability to continue to make acquisitions in accordance with our
business strategy; changes and developments affecting our industry,
including consumer preferences; the outcome of litigation and
regulatory proceedings to which we may be a party; product recalls;
changes in laws and regulations applicable to us; disruptions in or
failures of our information technology systems; labor strikes or
work stoppages; and other risks that are set forth in the Risk
Factors section, the Legal Proceedings section, the Management's
Discussion and Analysis of Financial Condition and Results of
Operations section, and other sections of our Annual Report on Form
10-K for the year ended December 31,
2018, and from time to time in our filings with the
Securities and Exchange Commission. 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 press
release. TreeHouse 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.
|
CONSOLIDATED
BALANCE SHEETS
|
(In millions, except
per share data)
|
|
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
(Unaudited)
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
202.3
|
|
|
$
|
164.3
|
|
Receivables, net of
allowance for doubtful accounts of $0.9 and $1.0
|
|
270.6
|
|
|
351.3
|
|
Inventories
|
|
544.0
|
|
|
615.6
|
|
Prepaid expenses and
other current assets
|
|
44.5
|
|
|
61.0
|
|
Assets held for
sale
|
|
27.0
|
|
|
—
|
|
Assets of
discontinued operations
|
|
131.1
|
|
|
485.8
|
|
Total current
assets
|
|
1,219.5
|
|
|
1,678.0
|
|
Property, plant, and
equipment, net
|
|
1,045.2
|
|
|
1,142.3
|
|
Operating lease
right-of-use assets
|
|
175.3
|
|
|
—
|
|
Goodwill
|
|
2,107.3
|
|
|
2,107.9
|
|
Intangible assets,
net
|
|
554.7
|
|
|
656.4
|
|
Other assets,
net
|
|
37.4
|
|
|
44.7
|
|
Total
assets
|
|
$
|
5,139.4
|
|
|
$
|
5,629.3
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
508.4
|
|
|
$
|
577.9
|
|
Accrued
expenses
|
|
273.2
|
|
|
252.5
|
|
Current portion of
long-term debt
|
|
15.3
|
|
|
1.2
|
|
Liabilities of
discontinued operations
|
|
16.5
|
|
|
6.0
|
|
Total current
liabilities
|
|
813.4
|
|
|
837.6
|
|
Long-term
debt
|
|
2,091.7
|
|
|
2,297.4
|
|
Operating lease
liabilities
|
|
158.5
|
|
|
—
|
|
Deferred income
taxes
|
|
101.5
|
|
|
166.1
|
|
Other long-term
liabilities
|
|
143.4
|
|
|
168.2
|
|
Total
liabilities
|
|
3,308.5
|
|
|
3,469.3
|
|
Commitments and
contingencies
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, par
value $0.01 per share, 10.0 shares authorized, none
issued
|
|
—
|
|
|
—
|
|
Common stock, par value $0.01
per share, 90.0 shares authorized, 56.2 and
56.0 shares
issued and outstanding, respectively
|
|
0.6
|
|
|
0.6
|
|
Treasury
stock
|
|
(83.3)
|
|
|
(83.3)
|
|
Additional paid-in
capital
|
|
2,154.6
|
|
|
2,135.8
|
|
(Accumulated deficit)
Retained earnings
|
|
(157.0)
|
|
|
204.0
|
|
Accumulated other
comprehensive loss
|
|
(84.0)
|
|
|
(97.1)
|
|
Total stockholders'
equity
|
|
1,830.9
|
|
|
2,160.0
|
|
Total liabilities and
stockholders' equity
|
|
$
|
5,139.4
|
|
|
$
|
5,629.3
|
|
|
|
|
|
|
TREEHOUSE FOODS,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In millions, except
per share data)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Net sales
|
|
$
|
1,139.5
|
|
|
$
|
1,193.5
|
|
|
$
|
4,288.9
|
|
|
$
|
4,587.8
|
|
Cost of
sales
|
|
914.4
|
|
|
942.0
|
|
|
3,492.1
|
|
|
3,695.6
|
|
Gross
profit
|
|
225.1
|
|
|
251.5
|
|
|
796.8
|
|
|
892.2
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
65.7
|
|
|
81.7
|
|
|
256.9
|
|
|
328.5
|
|
General and
administrative
|
|
53.3
|
|
|
55.7
|
|
|
253.2
|
|
|
264.4
|
|
Amortization
expense
|
|
17.7
|
|
|
20.0
|
|
|
74.1
|
|
|
80.2
|
|
Asset
impairment
|
|
41.1
|
|
|
—
|
|
|
129.1
|
|
|
—
|
|
Other operating
expense, net
|
|
15.4
|
|
|
41.1
|
|
|
99.6
|
|
|
135.7
|
|
Total operating
expenses
|
|
193.2
|
|
|
198.5
|
|
|
812.9
|
|
|
808.8
|
|
Operating income
(loss)
|
|
31.9
|
|
|
53.0
|
|
|
(16.1)
|
|
|
83.4
|
|
Other expense
(income):
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
23.9
|
|
|
25.3
|
|
|
102.4
|
|
|
107.8
|
|
(Gain) loss on
foreign currency exchange
|
|
(2.2)
|
|
|
3.6
|
|
|
(3.5)
|
|
|
8.6
|
|
Other expense
(income), net
|
|
(9.7)
|
|
|
27.0
|
|
|
40.8
|
|
|
24.6
|
|
Total other
expense
|
|
12.0
|
|
|
55.9
|
|
|
139.7
|
|
|
141.0
|
|
Income (loss) before
income taxes
|
|
19.9
|
|
|
(2.9)
|
|
|
(155.8)
|
|
|
(57.6)
|
|
Income tax expense
(benefit)
|
|
4.6
|
|
|
1.5
|
|
|
(45.5)
|
|
|
(11.4)
|
|
Net income (loss)
from continuing operations
|
|
$
|
15.3
|
|
|
$
|
(4.4)
|
|
|
$
|
(110.3)
|
|
|
$
|
(46.2)
|
|
Net income (loss)
from discontinued operations
|
|
0.2
|
|
|
(9.5)
|
|
|
(250.7)
|
|
|
(18.2)
|
|
Net income
(loss)
|
|
$
|
15.5
|
|
|
$
|
(13.9)
|
|
|
$
|
(361.0)
|
|
|
$
|
(64.4)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.27
|
|
|
$
|
(0.08)
|
|
|
$
|
(1.96)
|
|
|
$
|
(0.83)
|
|
Discontinued
operations
|
|
—
|
|
|
(0.17)
|
|
|
(4.46)
|
|
|
(0.33)
|
|
Net earnings (loss)
per share basic (1)
|
|
$
|
0.27
|
|
|
$
|
(0.25)
|
|
|
$
|
(6.42)
|
|
|
$
|
(1.15)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.27
|
|
|
$
|
(0.08)
|
|
|
$
|
(1.96)
|
|
|
$
|
(0.83)
|
|
Discontinued
operations
|
|
—
|
|
|
(0.17)
|
|
|
(4.46)
|
|
|
(0.33)
|
|
Net earnings (loss)
per share diluted (1)
|
|
$
|
0.27
|
|
|
$
|
(0.25)
|
|
|
$
|
(6.42)
|
|
|
$
|
(1.15)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
56.3
|
|
|
56.0
|
|
|
56.2
|
|
|
56.0
|
|
Diluted
|
|
56.6
|
|
|
56.0
|
|
|
56.2
|
|
|
56.0
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$
|
53.3
|
|
|
$
|
57.4
|
|
|
$
|
210.6
|
|
—
|
|
$
|
225.2
|
|
Stock-based
compensation expense, before tax
|
|
5.1
|
|
|
3.8
|
|
|
22.6
|
|
—
|
|
30.7
|
|
|
|
(1)
|
The sum of the
individual per share amounts may not add due to
rounding.
|
The following table reconciles the Company's net income (loss)
from continuing operations to adjusted net income from continuing
operations, adjusted EBIT from continuing operations, adjusted
EBITDA from continuing operations, and adjusted EBITDAS from
continuing operations for the three and twelve months ended
December 31, 2019 and 2018.
TREEHOUSE FOODS,
INC.
|
RECONCILIATION OF
NET INCOME (LOSS) FROM CONTINUING OPERATIONS TO ADJUSTED NET
INCOME, ADJUSTED EBIT, ADJUSTED EBITDA, AND ADJUSTED EBITDAS FROM
CONTINUING OPERATIONS
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
(unaudited in
millions)
|
Net income (loss)
from continuing operations (GAAP)
|
|
|
|
$
|
15.3
|
|
|
$
|
(4.4)
|
|
|
$
|
(110.3)
|
|
|
$
|
(46.2)
|
|
Impairment
|
|
(1)
|
|
|
41.1
|
|
|
—
|
|
|
129.1
|
|
|
—
|
|
Restructuring
programs
|
|
(2)
|
|
|
15.5
|
|
|
46.6
|
|
|
105.4
|
|
|
166.7
|
|
Mark-to-market
adjustments
|
|
(3)
|
|
|
(6.6)
|
|
|
28.3
|
|
|
47.0
|
|
|
22.5
|
|
Litigation
matter
|
|
(4)
|
|
|
—
|
|
|
—
|
|
|
25.0
|
|
|
—
|
|
Change in regulatory
requirements
|
|
(5)
|
|
|
9.2
|
|
|
—
|
|
|
14.7
|
|
|
—
|
|
Multiemployer pension
plan withdrawal
|
|
(6)
|
|
|
0.2
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
Executive management
transition
|
|
(7)
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
13.0
|
|
Tax
indemnification
|
|
(8)
|
|
|
(0.2)
|
|
|
(4.9)
|
|
|
1.6
|
|
|
(2.0)
|
|
Acquisition,
integration, divestiture, and related costs
|
|
(9)
|
|
|
0.4
|
|
|
0.6
|
|
|
0.6
|
|
|
(13.5)
|
|
Product
recall
|
|
(10)
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
Foreign currency
(gain) loss on re-measurement of intercompany notes
|
|
(11)
|
|
|
(2.4)
|
|
|
4.3
|
|
|
(5.0)
|
|
|
6.2
|
|
Debt amendment and
repurchase activity
|
|
(12)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
Less: Taxes on
adjusting items
|
|
|
|
(12.9)
|
|
|
(14.1)
|
|
|
(80.5)
|
|
|
(42.0)
|
|
Adjusted net income
from continuing operations (Non-GAAP)
|
|
|
|
62.5
|
|
|
56.4
|
|
|
135.1
|
|
|
111.5
|
|
Interest expense
(excluding debt amendment and repurchase activity)
|
|
|
|
23.9
|
|
|
25.3
|
|
|
102.4
|
|
|
105.4
|
|
Interest
income
|
|
|
|
(0.2)
|
|
|
—
|
|
|
(4.8)
|
|
|
(3.8)
|
|
Income tax expense
(benefit)
|
|
|
|
4.6
|
|
|
1.5
|
|
|
(45.5)
|
|
|
(11.4)
|
|
Add: Taxes on
adjusting items
|
|
|
|
12.9
|
|
|
14.1
|
|
|
80.5
|
|
|
42.0
|
|
Adjusted EBIT from
continuing operations (Non-GAAP)
|
|
|
|
103.7
|
|
|
97.3
|
|
|
267.7
|
|
|
243.7
|
|
Depreciation and
amortization
|
|
(13)
|
|
|
52.8
|
|
|
52.6
|
|
|
206.8
|
|
|
209.1
|
|
Adjusted EBITDA from
continuing operations (Non-GAAP)
|
|
|
|
156.5
|
|
|
149.9
|
|
|
474.5
|
|
|
452.8
|
|
Stock-based
compensation expense
|
|
(14)
|
|
|
4.6
|
|
|
3.7
|
|
|
21.6
|
|
|
20.5
|
|
Adjusted EBITDAS from
continuing operations (Non-GAAP)
|
|
|
|
$
|
161.1
|
|
|
$
|
153.6
|
|
|
$
|
496.1
|
|
|
$
|
473.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
margin from continuing operations
|
|
|
|
5.5
|
%
|
|
4.7
|
%
|
|
3.1
|
%
|
|
2.4
|
%
|
Adjusted EBIT margin
from continuing operations
|
|
|
|
9.1
|
%
|
|
8.2
|
%
|
|
6.2
|
%
|
|
5.3
|
%
|
Adjusted EBITDA
margin from continuing operations
|
|
|
|
13.7
|
%
|
|
12.6
|
%
|
|
11.1
|
%
|
|
9.9
|
%
|
Adjusted EBITDAS
margin from continuing operations
|
|
|
|
14.1
|
%
|
|
12.9
|
%
|
|
11.6
|
%
|
|
10.3
|
%
|
|
|
|
|
Location
in
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
|
|
Consolidated
Statements of
Operations
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
(unaudited in
millions)
|
(1)
|
|
|
Impairment
|
|
Asset
impairment
|
|
$
|
41.1
|
|
|
$
|
—
|
|
|
$
|
129.1
|
|
|
$
|
—
|
|
(2)
|
|
|
Restructuring
programs
|
|
Other operating
expense, net
|
|
14.9
|
|
|
40.9
|
|
|
99.3
|
|
|
149.1
|
|
|
|
|
|
Cost of
sales
|
|
0.6
|
|
|
4.7
|
|
|
4.4
|
|
|
13.3
|
|
|
|
|
|
General and
administrative
|
|
—
|
|
|
1.0
|
|
|
1.7
|
|
|
4.3
|
|
(3)
|
|
|
Mark-to-market
adjustments
|
|
Other expense
(income), net
|
|
(6.6)
|
|
|
28.3
|
|
|
47.0
|
|
|
22.5
|
|
(4)
|
|
|
Litigation
matter
|
|
General and
administrative
|
|
—
|
|
|
—
|
|
|
25.0
|
|
|
—
|
|
(5)
|
|
|
Change in regulatory
requirements
|
|
Cost of
sales
|
|
7.4
|
|
|
—
|
|
|
11.4
|
|
|
—
|
|
|
|
|
|
Selling and
distribution
|
|
1.6
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
|
|
|
General and
administrative
|
|
0.2
|
|
|
—
|
|
|
0.5
|
|
|
—
|
|
(6)
|
|
|
Multiemployer pension
plan withdrawal
|
|
Cost of
sales
|
|
0.2
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
(7)
|
|
|
Executive management
transition
|
|
General and
administrative
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
|
13.0
|
|
(8)
|
|
|
Tax
indemnification
|
|
Other expense
(income), net
|
|
(0.2)
|
|
|
(4.9)
|
|
|
1.6
|
|
|
(2.0)
|
|
(9)
|
|
|
Acquisition,
integration, divestiture, and related costs
|
|
General and
administrative
|
|
0.1
|
|
|
0.4
|
|
|
0.3
|
|
|
(0.1)
|
|
|
|
|
|
Other operating
expense, net
|
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
|
(13.4)
|
|
(10)
|
|
|
Product
recall
|
|
General and
administrative
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
(11)
|
|
|
Foreign currency
(gain) loss on re-measurement of intercompany notes
|
|
(Gain) loss on
foreign currency exchange
|
|
(2.4)
|
|
|
4.3
|
|
|
(5.0)
|
|
|
6.2
|
|
(12)
|
|
|
Debt amendment and
repurchase activity
|
|
General and
administrative
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
|
|
|
Other expense
(income), net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
|
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
(13)
|
|
|
Depreciation included
as an adjusting item
|
|
Cost of
sales
|
|
0.5
|
|
|
4.0
|
|
|
2.2
|
|
|
12.1
|
|
|
|
|
|
General and
administrative
|
|
—
|
|
|
0.8
|
|
|
1.6
|
|
|
4.1
|
|
(14)
|
|
|
Stock-based
compensation expense included as an adjusting item
|
|
General and
administrative
|
|
0.5
|
|
|
0.1
|
|
|
1.0
|
|
|
10.3
|
|
TREEHOUSE FOODS,
INC.
|
CASH FLOW KEY
METRICS
|
|
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
|
(In
millions)
|
Net Cash Flows
Provided By (Used In):
|
|
|
|
|
Operating activities
- from continuing operations
|
|
$
|
263.9
|
|
|
$
|
472.1
|
|
Investing activities
- from continuing operations
|
|
(139.3)
|
|
|
(142.4)
|
|
Financing activities
- from continuing operations
|
|
(206.9)
|
|
|
(311.0)
|
|
Cash flows from
discontinued operations
|
|
115.0
|
|
|
15.2
|
|
TREEHOUSE FOODS,
INC.
|
RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES - CONTINUING OPERATIONS
TO FREE CASH FLOW FROM CONTINUING OPERATIONS
|
|
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
|
(In
millions)
|
Cash flow provided by
operating activities - continuing operations
|
|
$
|
263.9
|
|
|
$
|
472.1
|
|
Less: Capital expenditures
|
|
(146.8)
|
|
|
(177.4)
|
|
Free cash flow from
continuing operations
|
|
$
|
117.1
|
|
|
$
|
294.7
|
|
View original
content:http://www.prnewswire.com/news-releases/treehouse-foods-inc-delivers-fourth-quarter-2019-results-within-guidance-range-issues-2020-guidance-for-adjusted-earnings-per-diluted-share-of-2-40-to-2-65--301004218.html
SOURCE TreeHouse Foods, Inc.