- Net sales from continuing operations of $863.3 million increased by 3.6% versus the prior
year; adjusted net sales1 including the divested Snack
Bars business were $906.6 million,
which compares to the Company's sales guidance range of
$950 to $970
million. Adjusted net sales1 were adversely
impacted by approximately $15 million
due to a voluntary product recall and a discrete supply chain
disruption late in the quarter.
- TreeHouse delivered 1% case unit growth in the core retail
business (excluding acquisitions) and outperformed the broader
private brand market in the retail channel. Total volume/mix
(excluding acquisitions) declined 3.4% driven by weakness in
food-away-from-home and co-manufacturing business.
- Net income from continuing operations was $9.8 million compared to net loss from continuing
operations of $(12.0) million in the
prior year.
- Adjusted EBITDA1 from continuing operations of
$89.9 million increased by
$10.3 million versus the prior year;
adjusted EBITDA margin1 from continuing operations was
10.4%.
- Completed the repurchase of approximately $50 million in company shares during the
quarter.
- Subsequent to the end of the quarter, TreeHouse received a
$427.5 million repayment of its
Seller Note from the Meal Preparation divestiture.
- TreeHouse updated its full year adjusted net sales outlook to
$3,435 to $3,465 million reflecting the Snack Bars business
sale, the ongoing impact of a voluntary recall and the continuation
of current consumer demand trends, and reaffirmed its full year
adjusted EBITDA2 outlook from continuing operations of
$360 to $370
million.
OAK
BROOK, Ill., Nov. 6, 2023
/PRNewswire/ -- TreeHouse Foods, Inc. (NYSE: THS) today reported
financial results for the third quarter of 2023.
"We delivered year-over-year net sales and volume growth in the
quarter and outperformed the broader private brand market in the
retail channel, particularly in categories where we have depth,"
said Steve Oakland, Chairman, Chief
Executive Officer, and President. "We're particularly pleased with
the 1% unit growth in our core retail business, despite a voluntary
product recall and a discrete supply chain disruption late in the
quarter. These factors combined with weaker co-manufacturing and
food-away-from-home revenues and lower than anticipated consumption
in select categories resulted in sales below expectations.
Importantly, our TreeHouse team continues to drive supply chain and
TMOS initiatives, to improve our network. We expanded adjusted
gross margin sequentially by 70 basis points and generated a 13%
year-over-year increase in adjusted EBITDA from continuing
operations, in line with the high end of our guidance. We continue
to see the strength of TreeHouse's strategic positioning as a
private brand powerhouse in higher-growth, higher-margin snacking
and beverage categories."
Mr. Oakland continued, "Looking ahead, we're excited at the
opportunity to capitalize on the increasing consumer pivot to
private brands. We believe the actions our team has taken to
strengthen our portfolio and enhance our capabilities, coupled with
the reinvestment opportunities for the Seller Note proceeds,
position us well to continue creating long-term value for our
shareholders."
THIRD QUARTER 2023 FINANCIAL RESULTS
Net Sales — Net sales for the third quarter of 2023 totaled
$863.3 million compared to
$832.9 million for the same period
last year, an increase of $30.4
million, or 3.6%. The change in net sales from 2022 to 2023
was due to the following:
|
|
Three
Months
|
|
Nine
Months
|
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
Pricing
|
|
3.2 %
|
|
10.3 %
|
Volume/mix excluding
acquisitions
|
|
(3.4)
|
|
(3.9)
|
Product
recall
|
|
(0.4)
|
|
(0.1)
|
Total change in organic
net sales1
|
|
(0.6) %
|
|
6.3 %
|
Volume/mix related to
acquisitions
|
|
4.3
|
|
1.6
|
Foreign
currency
|
|
(0.1)
|
|
(0.2)
|
Total change in net
sales
|
|
3.6 %
|
|
7.7 %
|
The net sales increase of 3.6% was primarily driven by the
acquisition of the Coffee Roasting Capability, favorable pricing to
recover commodity inflation, and an increase in retail volume. This
was partially offset by declines in co-manufacturing and
food-away-from-home volume, which is in line with broader
macroeconomic consumption trends. Additionally, supply chain
disruptions, including a voluntary product recall, impacted select
categories.
Gross Profit — Gross profit as a percentage of net sales was
15.9% in the third quarter of 2023, compared to 16.0% in the third
quarter of 2022, a decrease of 0.1 percentage points. The decrease
is primarily due to supply chain disruptions caused by a voluntary
product recall, which resulted in a decrease to our gross profit.
This was partially offset by the Company's pricing actions to
recover commodity and freight inflation experienced in prior
periods, and lower costs from operations resulting from our
investment in our supply chain.
Total Operating Expenses — Total operating expenses were
$103.9 million in the third quarter
of 2023 compared to $138.6 million in
the third quarter of 2022, a decrease of $34.7 million. The decrease is primarily due to
$9.9 million of TSA income,
lower professional fees for strategic growth initiatives, lower
retention bonus and severance expense, and lower freight costs.
Total Other Expense (Income) — Total other expense was
$20.1 million in the third quarter of
2023 compared to $3.5 million in the
third quarter of 2022, an increase of $16.6
million. The increase was primarily due to a $19.1 million change in non-cash mark-to-market
impacts from hedging activities, largely driven by interest rate
swaps, as the favorable increase in the third quarter of 2023 was
not as significant as the increase in the third quarter of 2022.
Additionally, rising interest rates led to higher interest expense,
higher costs in our pension plans, and higher costs with selling
receivables in the Company's Receivables Sales Program. This was
partially offset by $10.9 million of
interest income received from the Company's Note Receivable.
Income Taxes — Income taxes were recognized at an effective rate
of 27.4% in the third quarter of 2023 compared to (30.4)%
recognized in the third quarter of 2022. The change in the
Company's effective tax rate is primarily driven by tax expense
recognized in 2022 related to a valuation allowance recorded
against certain deferred tax assets and the restructuring of
Canadian subsidiaries associated with the divestiture of a
significant portion of the Meal Preparation business.
Net Income (Loss) from Continuing Operations and Adjusted EBITDA
— Net income from continuing operations for the third quarter of
2023 was $9.8 million, compared to net loss from continuing
operations of $12.0 million for the
same period of the previous year. Adjusted EBITDA1 from
continuing operations was $89.9 million in the third quarter of
2023, compared to $79.6 million
in the third quarter of 2022, an increase of $10.3 million. The increase is primarily due
to the Company's pricing actions to recover commodity inflation.
This was partially offset by lower fixed cost absorption and
category mix.
Discontinued Operations — Net loss from discontinued operations
was $2.7 million in the third quarter
of 2023 compared to $78.5 million in the third quarter of 2022,
a decrease of $75.8 million. The
decrease is primarily due to a non-recurring loss on sale of
business of $73.8 million
recognized in the third quarter of 2022 as a result of the
divestiture of a significant portion of the Meal Preparation
business on October 3, 2022.
Net Cash Provided by (Used in) Operating Activities from
Continuing Operations — Net cash provided by operating activities
from continuing operations was $11.0
million in the first nine months of 2023 compared to
$77.1 million net cash used in the
first nine months of 2022, an increase in cash provided of
$88.1 million. The cash flow increase
was primarily attributable to higher cash earnings reflecting the
Company's pricing actions to recover commodity and freight
inflation experienced in prior periods. This was partially offset
by a decrease in cash flows from the Receivables Sales Program due
to reduced factoring utilization.
Share Repurchase — During the third quarter of 2023, the Company
repurchased approximately 1.1 million shares of common stock for a
total of $50.0 million, excluding
excise tax. At the end of the third quarter, the Company had
$216.7 million available under
its share repurchase authorization.
Repayment of Seller Note Credit Agreement — On October 19, 2023, the Company received the
$427.5 million repayment of its
Seller Note Credit Agreement, which included the outstanding
principal balance and accrued interest. The repayment makes the
Company's balance sheet strength an asset, and it is expected to
reduce leverage by more than 1x and enable the Company to deploy
capital for high returns. The Company will follow its disciplined
capital allocation strategy in deploying the proceeds.
OUTLOOK2
TreeHouse today updated its previously-issued full year 2023
guidance:
- Adjusted net sales are now expected between $3,435 to $3,465
million, which represents approximately 4.5% year-over-year
growth at the midpoint. The revised range reflects the divestiture
of the Snack Bars business, the impact of a voluntary product
recall and a discrete supply chain disruption, and a continuation
of current consumer demand trends.
- The Company reaffirmed its adjusted EBITDA range to
$360 to $370
million, up approximately 25% year-over-year at the
midpoint.
- The Company now expects net interest expense to be between
$33 to $38
million. The update reflects the Seller Note repayment in
October 2023 and related decrease in
interest income for the year.
- Capital expenditures are expected to be approximately
$140 million.
With regard to the fourth quarter, the Company noted:
- Adjusted net sales are expected between $910 to $940
million, down approximately 3% at the midpoint
- The year-over-year sales decline is primarily driven by the
expected impact of a voluntary product recall and a discrete supply
chain disruption. Absent these items, combined price and volume mix
is expected to be flat to slightly down as the Company laps its
pricing actions to recover inflation.
- Adjusted EBITDA is expected between $103 to $113
million, down approximately 9% at the midpoint
- The year-over-year adjusted EBITDA decline is primarily driven
by the expected impact of a voluntary product recall and a discrete
supply chain disruption, as well as temporary operating expenses of
approximately $5 to $7 million driven by the expected wind down of
substantial portions of the transition services agreement related
to the Meal Preparation divestiture.
- The Company expects sequential and slight year-over-year
improvement in adjusted gross margin primarily driven by TMOS
and supply chain savings initiatives.
|
|
|
|
|
|
|
|
|
|
|
1
|
Adjusted net sales,
adjusted earnings per diluted share from continuing operations,
adjusted EBIT, adjusted EBITDA, adjusted EBITDAS, adjusted net
income (loss), adjusted EBITDA margin, free cash flow and organic
net sales are non-GAAP financial measures. See "Comparison of
Adjusted Information to GAAP Information" for the definitions of
the Non-GAAP measures, information concerning certain items
affecting comparability, and reconciliations of GAAP to Non-GAAP
measures.
|
2
|
The Company is not able
to reconcile prospective adjusted net sales, adjusted EBITDA from
continuing operations or adjusted EBITDA margin from continuing
operations, which are Non-GAAP financial measures, to the most
comparable GAAP financial measures 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.
|
CONFERENCE CALL WEBCAST
A webcast to discuss the Company's third quarter earnings will
be held at 8:30 a.m. (Eastern Time)
today. The live audio webcast and a supporting slide deck will be
available on the Company's website at
www.treehousefoods.com/investors/investor-overview/default.aspx
DISCONTINUED OPERATIONS
On October 3, 2022, the Company
completed the sale of a significant portion of the Company's Meal
Preparation business, including pasta, pourable and spoonable
dressing, preserves, red sauces, syrup, dry blends and baking, dry
dinners, pie filling, pita chips and other sauces (the
"Transaction"). Beginning in the third quarter of 2022, the
business of the Transaction is presented as discontinued
operations, and, as such, has been excluded from continuing
operations for all periods presented.
On September 29, 2023, the Company
completed the sale of its Snack Bars business (the "Snack Bars
Transaction" or the "Snack Bars Business"). The Snack Bars
Transaction represents a component of the single plan of disposal
from the Company's strategic review process, which also resulted in
the divestiture of a significant portion of the Meal Preparation
business during the fourth quarter of 2022. Beginning in the third
quarter of 2023, the Snack Bars Business is presented as a
component of discontinued operations and has been excluded from
continuing operations for all periods presented.
COMPARISON OF ADJUSTED 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 Condensed Consolidated
Balance Sheets, Condensed Consolidated Statements of Operations,
Condensed Consolidated Statements of Comprehensive Income (Loss),
Condensed Consolidated Statements of Stockholders' Equity, and the
Condensed Consolidated Statements of Cash Flows. As described
further below, the Company believes these measures provide useful
information to the users of the financial statements.
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 acquisitions, 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 Net Sales
Adjusted net sales is defined as net sales excluding the impacts
related to product recall. 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 Net Sales is
presented as continuing operations, discontinued operations, and
total.
Adjusted Earnings Per Diluted Share, Adjusting for Certain
Items Affecting Comparability
Adjusted earnings (loss) per diluted share ("adjusted diluted
EPS") reflects adjustments to GAAP earnings (loss) per diluted
share to identify items that, in management's judgment,
significantly affect the assessment of earnings results between
periods. Adjusted EPS is presented as continuing operations,
discontinued operations, and total. 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 divestiture,
acquisition, integration, and related costs, mark-to-market
adjustments on derivative contracts, foreign currency exchange
impact on the re-measurement of intercompany notes, growth,
reinvestment, and restructuring programs, 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 earnings (loss) per share as presented in the Condensed
Consolidated Statements of Operations, excluding certain items
affecting comparability, to adjusted diluted earnings (loss) per
share is presented below.
Adjusted Net Income (Loss), Adjusted EBIT, Adjusted EBITDA,
Adjusted EBITDAS, Adjusted Net Income (Loss) Margin, Adjusted EBIT
Margin, Adjusted EBITDA Margin, and Adjusted EBITDAS Margin,
Adjusting for Certain Items Affecting Comparability
Adjusted net income (loss) represents GAAP net income (loss) as
reported in the Condensed 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. Adjusted net
income (loss) is presented as continuing operations, discontinued
operations, and total. 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
metric outlined above.
Adjusted EBIT represents adjusted net income (loss) before
interest expense, interest income, and income tax expense. Adjusted
EBITDA represents adjusted net income (loss) before interest
expense, interest income, income tax expense, and depreciation and
amortization expense. Adjusted EBITDAS represents adjusted EBITDA
before non-cash stock-based compensation expense. Adjusted EBIT,
adjusted EBITDA, and adjusted EBITDAS are performance measures
commonly used by management to assess operating performance and
incentive compensation, 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
and as a component of our debt covenant calculations. Adjusted
EBIT, adjusted EBITDA, and adjusted EBITDAS are presented as
continuing operations, discontinued operations, and total.
Adjusted net income (loss) margin, adjusted EBIT margin,
adjusted EBITDA margin, and adjusted EBITDAS margin are calculated
as the respective metric defined above as a percentage of net sales
as reported in the Condensed Consolidated Statements of Operations
for continuing operations and net sales reported in discontinued
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.
Adjusted net income (loss) margin, adjusted EBIT margin, adjusted
EBITDA margin, and adjusted EBITDAS margin are presented as
continuing operations, discontinued operations, and total.
The attached table reconciles the Company's net income (loss) as
presented in the Condensed Consolidated Statements of Operations,
the relevant GAAP measure, to Adjusted net income (loss), Adjusted
EBIT, Adjusted EBITDA, and Adjusted EBITDAS for the three and nine
months ended September 30, 2023 and
2022. 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.
Adjusted Gross Profit from Continuing Operations
Adjusted gross profit from continuing operations is defined as
gross profit from continuing operations adjusted for items that, in
management's judgment, significantly affect the assessment of gross
profit from continuing operations between periods and allows the
reader 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 divestiture, acquisition, integration, and related costs,
mark-to-market adjustments on derivative contracts, foreign
currency exchange impact on the re-measurement of intercompany
notes, growth, reinvestment, and restructuring programs, 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.
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 Condensed Consolidated Statements
of Cash Flows, we also measure free cash flow from continuing
operations, which represents net cash used in 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 public debt, and
repurchasing common stock. A reconciliation between the relevant
GAAP measure of cash used in operating activities from continuing
operations for the nine months ended September 30, 2023 and 2022 calculated according
to GAAP and free cash flow from continuing operations is presented
in the attached tables.
ABOUT TREEHOUSE FOODS
TreeHouse Foods, Inc. is a leading private label food and
beverage manufacturer in North
America. Our purpose is to engage and delight - one customer
at a time. Through our customer focus and category experience, we
strive to deliver excellent service and build capabilities and
insights to drive mutually profitable growth for TreeHouse and for
our customers. Our purpose is supported by investment in depth,
capabilities and operational efficiencies which are aimed to
capitalize on the long-term growth prospects in the categories in
which we operate.
Additional information, including TreeHouse's most recent
statements on Forms 10-Q and 10-K, may be found at TreeHouse's
website, http://www.treehousefoods.com.
Contact:
Investor
Relations
708.483.1331
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 "believe," "estimate,"
"project," "expect," "anticipate," "plan," "intend," "foresee,"
"should," "would," "could," 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, 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: risks related to the impact that
the divestiture of a significant portion of our Meal Preparation
Business or any such divestiture might have on the Company's
operations; disruptions or inefficiencies in our supply chain
and/or operations; loss of key suppliers; raw material and
commodity costs due to inflation; labor strikes or work stoppages;
multiemployer pension plans; labor shortages and increased
competition for labor; success of our growth, reinvestment, and
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; competition; our ability to execute on our
business strategy; our ability to continue to make acquisitions and
execute on divestitures or effectively manage the growth from
acquisitions; impairment of goodwill or long lived assets; changes
and developments affecting our industry, including customer
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; shareholder activism; disruptions in
or failures of our information technology systems; changes in
weather conditions, climate changes, and natural disasters; 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 this Quarterly Report on Form 10-Q, our Annual Report
on Form 10-K for the year ended December 31,
2022, and from time to time in our filings with the
Securities and Exchange Commission ("SEC"). 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.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited, in
millions, except per share data)
|
|
|
|
September 30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
19.7
|
|
$
43.0
|
Receivables,
net
|
|
165.5
|
|
158.8
|
Inventories
|
|
618.7
|
|
554.0
|
Prepaid expenses and
other current assets
|
|
32.1
|
|
23.2
|
Assets of discontinued
operations
|
|
—
|
|
60.4
|
Total current
assets
|
|
836.0
|
|
839.4
|
Property, plant, and
equipment, net
|
|
719.1
|
|
641.6
|
Operating lease
right-of-use assets
|
|
198.1
|
|
184.4
|
Goodwill
|
|
1,823.4
|
|
1,817.6
|
Intangible assets,
net
|
|
268.1
|
|
296.0
|
Note receivable,
net
|
|
425.2
|
|
427.0
|
Other assets,
net
|
|
48.6
|
|
47.9
|
Total
assets
|
|
$
4,318.5
|
|
$
4,253.9
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
543.1
|
|
$
618.7
|
Accrued
expenses
|
|
178.7
|
|
208.5
|
Current portion of
long-term debt
|
|
0.5
|
|
0.6
|
Total current
liabilities
|
|
722.3
|
|
827.8
|
Long-term
debt
|
|
1,550.7
|
|
1,394.0
|
Operating lease
liabilities
|
|
170.4
|
|
159.1
|
Deferred income
taxes
|
|
108.9
|
|
108.7
|
Other long-term
liabilities
|
|
70.4
|
|
77.3
|
Total
liabilities
|
|
2,622.7
|
|
2,566.9
|
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, 55.3 and 56.1
shares outstanding as of September 30, 2023 and December 31, 2022,
respectively
|
|
0.6
|
|
0.6
|
Treasury
stock
|
|
(183.7)
|
|
(133.3)
|
Additional paid-in
capital
|
|
2,218.4
|
|
2,205.4
|
Accumulated
deficit
|
|
(256.4)
|
|
(302.0)
|
Accumulated other
comprehensive loss
|
|
(83.1)
|
|
(83.7)
|
Total stockholders'
equity
|
|
1,695.8
|
|
1,687.0
|
Total liabilities and
stockholders' equity
|
|
$
4,318.5
|
|
$
4,253.9
|
TREEHOUSE FOODS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in
millions, except per share data)
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net sales
|
|
$
863.3
|
|
$
832.9
|
|
$
2,520.8
|
|
$
2,340.4
|
Cost of
sales
|
|
725.8
|
|
700.0
|
|
2,096.5
|
|
1,993.0
|
Gross profit
|
|
137.5
|
|
132.9
|
|
424.3
|
|
347.4
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
|
44.5
|
|
51.7
|
|
128.9
|
|
166.9
|
General and
administrative
|
|
47.5
|
|
51.6
|
|
154.8
|
|
160.5
|
Amortization
expense
|
|
12.0
|
|
11.9
|
|
36.1
|
|
35.7
|
Other operating
(income) expense, net
|
|
(0.1)
|
|
23.4
|
|
(0.3)
|
|
66.4
|
Total operating
expenses
|
|
103.9
|
|
138.6
|
|
319.5
|
|
429.5
|
Operating income
(loss)
|
|
33.6
|
|
(5.7)
|
|
104.8
|
|
(82.1)
|
Other (income)
expense:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
20.9
|
|
17.5
|
|
57.9
|
|
51.2
|
Interest
income
|
|
(10.8)
|
|
(0.1)
|
|
(36.2)
|
|
(4.4)
|
Loss on foreign
currency exchange
|
|
3.7
|
|
2.9
|
|
0.7
|
|
3.0
|
Other expense
(income), net
|
|
6.3
|
|
(16.8)
|
|
9.8
|
|
(80.4)
|
Total other expense
(income)
|
|
20.1
|
|
3.5
|
|
32.2
|
|
(30.6)
|
Income (loss) before
income taxes
|
|
13.5
|
|
(9.2)
|
|
72.6
|
|
(51.5)
|
Income tax expense
(benefit)
|
|
3.7
|
|
2.8
|
|
20.0
|
|
(2.6)
|
Net income (loss) from
continuing operations
|
|
9.8
|
|
(12.0)
|
|
52.6
|
|
(48.9)
|
Net loss from
discontinued operations
|
|
(2.7)
|
|
(78.5)
|
|
(7.0)
|
|
(74.0)
|
Net income
(loss)
|
|
$
7.1
|
|
$
(90.5)
|
|
$
45.6
|
|
$
(122.9)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - basic:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.18
|
|
$
(0.21)
|
|
$
0.94
|
|
$
(0.87)
|
Discontinued
operations
|
|
(0.05)
|
|
(1.40)
|
|
(0.12)
|
|
(1.32)
|
Earnings (loss) per
share basic (1)
|
|
$
0.13
|
|
$
(1.61)
|
|
$
0.81
|
|
$
(2.19)
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - diluted:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.17
|
|
$
(0.21)
|
|
$
0.93
|
|
$
(0.87)
|
Discontinued
operations
|
|
(0.05)
|
|
(1.40)
|
|
(0.12)
|
|
(1.32)
|
Earnings (loss) per
share diluted (1)
|
|
$
0.13
|
|
$
(1.61)
|
|
$
0.80
|
|
$
(2.19)
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
55.9
|
|
56.1
|
|
56.1
|
|
56.0
|
Diluted
|
|
56.4
|
|
56.1
|
|
56.7
|
|
56.0
|
|
(1) The sum of
the individual per share amounts may not add due to
rounding.
|
TREEHOUSE FOODS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in
millions)
|
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
(loss)
|
|
$
45.6
|
|
$
(122.9)
|
Net loss from
discontinued operations
|
|
(7.0)
|
|
(74.0)
|
Net income (loss) from
continuing operations
|
|
52.6
|
|
(48.9)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
105.7
|
|
103.6
|
Stock-based
compensation
|
|
19.1
|
|
15.2
|
Unrealized gain on
derivative contracts
|
|
(1.5)
|
|
(79.3)
|
Deferred income
taxes
|
|
1.7
|
|
5.7
|
Deferred TSA
income
|
|
(12.3)
|
|
—
|
Other
|
|
0.9
|
|
6.8
|
Changes in operating
assets and liabilities, net of acquisitions and
divestitures:
|
|
|
|
|
Receivables
|
|
(5.6)
|
|
(6.1)
|
Inventories
|
|
(32.4)
|
|
(190.0)
|
Prepaid expenses and
other assets
|
|
(1.4)
|
|
22.0
|
Accounts
payable
|
|
(90.5)
|
|
110.5
|
Accrued expenses and
other liabilities
|
|
(25.3)
|
|
(16.6)
|
Net cash provided by
(used in) operating activities - continuing operations
|
|
11.0
|
|
(77.1)
|
Net cash used in
operating activities - discontinued operations
|
|
(0.7)
|
|
(37.0)
|
Net cash provided by
(used in) operating activities
|
|
10.3
|
|
(114.1)
|
Cash flows from
investing activities:
|
|
|
|
|
Additions to property,
plant, and equipment
|
|
(74.3)
|
|
(54.2)
|
Additions to intangible
assets
|
|
(2.8)
|
|
(6.2)
|
Proceeds from sale of
fixed assets
|
|
—
|
|
4.8
|
Acquisitions, net of
cash acquired
|
|
(102.2)
|
|
—
|
Net cash used in
investing activities - continuing operations
|
|
(179.3)
|
|
(55.6)
|
Net cash provided by
(used in) investing activities - discontinued operations
|
|
45.5
|
|
(36.8)
|
Net cash used in
investing activities
|
|
(133.8)
|
|
(92.4)
|
Cash flows from
financing activities:
|
|
|
|
|
Borrowings under
Revolving Credit Facility
|
|
2,692.3
|
|
326.9
|
Payments under
Revolving Credit Facility
|
|
(2,537.0)
|
|
(326.9)
|
Payments on financing
lease obligations
|
|
(0.4)
|
|
(1.0)
|
Payment of deferred
financing costs
|
|
—
|
|
(2.7)
|
Payments on Term
Loans
|
|
—
|
|
(14.3)
|
Repurchases of common
stock
|
|
(50.0)
|
|
—
|
Payments related to
stock-based award activities
|
|
(6.2)
|
|
(3.8)
|
Net cash provided by
(used in) financing activities - continuing operations
|
|
98.7
|
|
(21.8)
|
Net cash used in
financing activities - discontinued operations
|
|
—
|
|
(0.3)
|
Net cash provided by
(used in) financing activities
|
|
98.7
|
|
(22.1)
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
1.5
|
|
(2.5)
|
Net decrease in cash
and cash equivalents
|
|
(23.3)
|
|
(231.1)
|
Add: Cash and cash
equivalents of discontinued operations, beginning of
period
|
|
—
|
|
4.1
|
Less: Cash and cash
equivalents of discontinued operations, end of period
|
|
—
|
|
(2.8)
|
Cash and cash
equivalents, beginning of period
|
|
43.0
|
|
304.5
|
Cash and cash
equivalents, end of period
|
|
$
19.7
|
|
$
74.7
|
|
|
|
|
|
|
|
|
Nine Months
Ended
September 30,
|
|
|
2023
|
|
2022
|
Supplemental cash
flow disclosures:
|
|
|
|
|
Interest
paid
|
|
$
75.7
|
|
$
51.0
|
Net income taxes paid
(refunded)
|
|
17.5
|
|
(2.3)
|
|
|
|
|
|
Non-cash investing
activities:
|
|
|
|
|
Accrued purchase of
property and equipment
|
|
$
32.6
|
|
$
21.5
|
Accrued other
intangible assets
|
|
0.3
|
|
1.2
|
Right-of-use assets
obtained in exchange for lease obligations
|
|
40.5
|
|
77.2
|
Note receivable
purchase price adjustment reduction
|
|
(5.1)
|
|
—
|
Note receivable
increase from paid in kind interest
|
|
3.2
|
|
—
|
Deferred payment from
acquisition of seasoned pretzel capability
|
|
4.0
|
|
—
|
The reconciliation of adjusted diluted EPS, excluding certain
items affecting comparability, to the relevant GAAP measure of
diluted EPS as presented in the Condensed Consolidated Statements
of Operations, is as follows:
TREEHOUSE FOODS,
INC. RECONCILIATION OF DILUTED EARNINGS (LOSS) PER SHARE
TO ADJUSTED DILUTED EARNINGS PER SHARE
|
|
|
|
|
Three Months
Ended
September 30,
2023
|
|
Nine Months
Ended
September 30,
2023
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
(unaudited)
|
|
(unaudited)
|
Diluted EPS
(GAAP)
|
|
|
$
0.17
|
|
$
(0.05)
|
|
$
0.13
|
|
$
0.93
|
|
$
(0.12)
|
|
$
0.80
|
(Gain) loss on sale of
business
|
(1)
|
|
—
|
|
(0.03)
|
|
(0.03)
|
|
—
|
|
0.03
|
|
0.03
|
Growth, reinvestment,
restructuring programs & other
|
(2)
|
|
0.17
|
|
—
|
|
0.17
|
|
0.60
|
|
—
|
|
0.60
|
Product recall and
related costs
|
(3)
|
|
0.20
|
|
—
|
|
0.20
|
|
0.20
|
|
—
|
|
0.20
|
Divestiture,
acquisition, integration, and related costs
|
(4)
|
|
0.09
|
|
—
|
|
0.09
|
|
0.24
|
|
—
|
|
0.24
|
Foreign currency loss
(gain) on re-measurement of intercompany notes
|
(5)
|
|
0.04
|
|
—
|
|
0.04
|
|
—
|
|
—
|
|
—
|
Mark-to-market
adjustments
|
(6)
|
|
0.04
|
|
—
|
|
0.04
|
|
(0.03)
|
|
—
|
|
(0.03)
|
Tax
indemnification
|
(7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(0.02)
|
|
(0.01)
|
Shareholder
activism
|
(8)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.01
|
Central services and
conveyed employee costs
|
(9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Litigation
matter
|
(10)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Taxes on adjusting
items
|
|
|
(0.14)
|
|
—
|
|
(0.14)
|
|
(0.24)
|
|
0.02
|
|
(0.23)
|
Adjusted diluted EPS
(Non-GAAP)
|
|
|
$
0.57
|
|
$
(0.08)
|
|
$
0.50
|
|
$
1.70
|
|
$
(0.09)
|
|
$
1.61
|
The sum of the individual per share amounts may not add due to
rounding.
|
|
|
Three Months
Ended
September 30,
2022
|
|
Nine Months
Ended
September 30,
2022
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
(unaudited)
|
|
(unaudited)
|
Diluted EPS
(GAAP)
|
|
|
$
(0.21)
|
|
$
(1.40)
|
|
$
(1.61)
|
|
$
(0.87)
|
|
$
(1.32)
|
|
$
(2.19)
|
Loss on sale of
business
|
(1)
|
|
—
|
|
1.31
|
|
1.31
|
|
—
|
|
1.31
|
|
1.31
|
Growth, reinvestment,
restructuring programs & other
|
(2)
|
|
0.40
|
|
0.02
|
|
0.42
|
|
1.18
|
|
0.09
|
|
1.26
|
Product recall and
related costs
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Divestiture,
acquisition, integration, and related costs
|
(4)
|
|
0.15
|
|
0.17
|
|
0.31
|
|
0.33
|
|
0.55
|
|
0.88
|
Foreign currency loss
on re-measurement of intercompany notes
|
(5)
|
|
0.03
|
|
0.06
|
|
0.09
|
|
0.02
|
|
0.05
|
|
0.07
|
Mark-to-market
adjustments
|
(6)
|
|
(0.30)
|
|
—
|
|
(0.30)
|
|
(1.41)
|
|
—
|
|
(1.41)
|
Tax
indemnification
|
(7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Shareholder
activism
|
(8)
|
|
0.01
|
|
—
|
|
0.01
|
|
0.04
|
|
—
|
|
0.04
|
Central services and
conveyed employee costs
|
(9)
|
|
0.38
|
|
(0.38)
|
|
—
|
|
1.15
|
|
(1.15)
|
|
—
|
Litigation
matter
|
(10)
|
|
—
|
|
—
|
|
—
|
|
0.01
|
|
—
|
|
0.01
|
Taxes on adjusting
items
|
|
|
(0.10)
|
|
0.05
|
|
(0.05)
|
|
(0.14)
|
|
0.17
|
|
0.03
|
Adjusted diluted EPS
(Non-GAAP)
|
|
|
$
0.36
|
|
$
(0.17)
|
|
$
0.18
|
|
$
0.31
|
|
$
(0.30)
|
|
$
—
|
The sum of the individual per share amounts may not add due to
rounding.
During the three and nine months ended September 30, 2023 and 2022, the Company entered
into transactions that affected the year-over-year comparison of
its financial results from continuing operations as follows:
(1)
|
For the three and nine
months ended September 30, 2023, the Company recognized an expected
gain on disposal of the Snack Bars Business of $1.2 million.
Additionally, loss on disposal adjustments related to the sale of a
significant portion of the Meal Preparation business of
$(0.7) million and $2.8 million were recognized for the three
and nine months ended September 30, 2023, respectively. For the
three and nine months ended September 30, 2022, the Company
recognized an expected loss on disposal of a significant portion of
the Meal Preparation business of $73.8 million.
|
|
|
(2)
|
The Company's growth,
reinvestment, and restructuring activities are part of an
enterprise-wide transformation to improve long-term growth and
profitability for the Company.
|
|
|
(3)
|
On September 22, 2023,
the Company initiated a voluntary recall of broth products produced
at its Cambridge, Maryland facility. These broth products may have
the potential for non-pathogenic microbial contamination due to
lack of sterility assurance. The Company recognized costs of $8.7
million which include, but are not limited to, a product recall
liability recognized for logistics costs and product returns, plant
shutdown costs, and inventory write-offs for the three and nine
months ended September 30, 2023. Additionally, the Company
recognized an inventory write-off of $2.5 million for a packaging
quality matter for the three and nine months ended September 30,
2023.
|
|
|
(4)
|
Divestiture,
acquisition, integration, and related costs represent costs
associated with completed and potential divestitures, completed and
potential acquisitions, and the related integration of the
acquisitions.
|
|
|
(5)
|
The Company has foreign
currency denominated intercompany loans and incurred foreign
currency gains/losses to re-measure the loans at quarter end. These
amounts are non-cash and the loans are eliminated in
consolidation.
|
|
|
(6)
|
The Company's
derivative contracts are marked-to-market each period. The non-cash
unrealized changes in fair value recognized in Other expense
(income), net within the Condensed Consolidated Statements of
Operations are treated as Non-GAAP adjustments. As the contracts
are settled, realized gains and losses are recognized, and only the
mark-to-market impacts are treated as Non-GAAP
adjustments.
|
|
|
(7)
|
Tax indemnification
represents the non-cash write off of indemnification assets that
were recorded in connection with acquisitions from prior
years. These write-offs arose as a result of the related
uncertain tax position being released due to the statute of
limitation lapse or settlement with taxing authorities.
|
|
|
(8)
|
The Company incurred
fees related to shareholder activism which include directly
applicable third-party advisory and professional service
fees.
|
|
|
(9)
|
As a result of the sale
of a significant portion of the Meal Preparation business in the
fourth quarter of 2022, the Company identified two items affecting
comparability – 1) central service costs and 2) conveyed employee
costs.
1) The Company has
historically provided central services to the Meal Preparation
business including, but not limited to, IT and financial shared
services, procurement and order processing, customer service,
warehousing, logistics, and customs. These costs were historically
incurred by TreeHouse and include employee and non-employee
expenses to support the services. There were no costs for the three
and nine months ended September 30, 2023. For three and nine months
ended September 30, 2022, central service costs were approximately
$13.4 million and $40.2 million, respectively.
2) Conveyed employee
costs represent compensation costs for employees that were not
historically dedicated to the sold business and transferred to the
buyer after the sale. There were no costs for the three and nine
months ended September 30, 2023. For the three and nine months
ended September 30, 2022, conveyed employee costs were
approximately $8.1 million and $24.8 million,
respectively.
|
|
|
(10)
|
During the nine months
ended September 30, 2022, the Company recognized $0.4 million
incremental expense for the settlement payment of the $9.0 million
accrual related to a litigation matter challenging wage and hour
practices at three former manufacturing facilities in
California.
|
The tax impact on adjusting items is calculated based upon the
tax laws and statutory tax rates applicable in the tax jurisdiction
of the underlying Non-GAAP adjustments.
The following table reconciles the Company's net income (loss)
to adjusted net income (loss), adjusted EBIT, adjusted EBITDA,
and adjusted EBITDAS for the three and nine months ended
September 30, 2023 and 2022:
TREEHOUSE FOODS,
INC.
RECONCILIATION OF
NET INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS), ADJUSTED EBIT,
ADJUSTED EBITDA, AND ADJUSTED EBITDAS
(Unaudited, in
millions)
|
|
|
|
|
|
Three Months Ended
September 30, 2023
|
|
Nine Months Ended
September 30, 2023
|
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
|
(unaudited, in
millions)
|
Net income (loss)
(GAAP)
|
|
|
|
$
9.8
|
|
$
(2.7)
|
|
$
7.1
|
|
$
52.6
|
|
$
(7.0)
|
|
$
45.6
|
(Gain) loss on sale of
business
|
|
(1)
|
|
—
|
|
(1.9)
|
|
(1.9)
|
|
—
|
|
1.6
|
|
1.6
|
Growth, reinvestment,
restructuring programs & other
|
|
(2)
|
|
9.7
|
|
—
|
|
9.7
|
|
33.9
|
|
—
|
|
33.9
|
Product recall and
related costs
|
|
(3)
|
|
11.2
|
|
—
|
|
11.2
|
|
11.2
|
|
—
|
|
11.2
|
Divestiture,
acquisition, integration, and related costs
|
|
(4)
|
|
4.9
|
|
0.1
|
|
5.0
|
|
13.5
|
|
0.1
|
|
13.6
|
Foreign currency loss
(gain) on re-measurement of intercompany notes
|
|
(5)
|
|
2.5
|
|
—
|
|
2.5
|
|
(0.2)
|
|
—
|
|
(0.2)
|
Mark-to-market
adjustments
|
|
(6)
|
|
2.0
|
|
—
|
|
2.0
|
|
(1.5)
|
|
—
|
|
(1.5)
|
Tax
indemnification
|
|
(7)
|
|
—
|
|
—
|
|
—
|
|
0.3
|
|
(1.1)
|
|
(0.8)
|
Shareholder
activism
|
|
(8)
|
|
—
|
|
—
|
|
—
|
|
0.3
|
|
—
|
|
0.3
|
Central services and
conveyed employee costs
|
|
(9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Litigation
matter
|
|
(10)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Less: Taxes on
adjusting items
|
|
|
|
(7.7)
|
|
0.2
|
|
(7.5)
|
|
(13.7)
|
|
1.2
|
|
(12.5)
|
Adjusted net income
(loss) (Non-GAAP)
|
|
|
|
32.4
|
|
(4.3)
|
|
28.1
|
|
96.4
|
|
(5.2)
|
|
91.2
|
Interest
expense
|
|
|
|
20.9
|
|
—
|
|
20.9
|
|
57.9
|
|
—
|
|
57.9
|
Interest
income
|
|
|
|
(10.8)
|
|
—
|
|
(10.8)
|
|
(36.2)
|
|
—
|
|
(36.2)
|
Income taxes
|
|
|
|
3.7
|
|
(0.5)
|
|
3.2
|
|
20.0
|
|
(1.0)
|
|
19.0
|
Add: Taxes on adjusting
items
|
|
|
|
7.7
|
|
(0.2)
|
|
7.5
|
|
13.7
|
|
(1.2)
|
|
12.5
|
Adjusted EBIT
(Non-GAAP)
|
|
|
|
53.9
|
|
(5.0)
|
|
48.9
|
|
151.8
|
|
(7.4)
|
|
144.4
|
Depreciation and
amortization
|
|
|
|
36.0
|
|
1.0
|
|
37.0
|
|
105.7
|
|
3.0
|
|
108.7
|
Adjusted EBITDA
(Non-GAAP)
|
|
|
|
89.9
|
|
(4.0)
|
|
85.9
|
|
257.5
|
|
(4.4)
|
|
253.1
|
Stock-based
compensation expense
|
|
(11)
|
|
3.6
|
|
—
|
|
3.6
|
|
12.1
|
|
—
|
|
12.1
|
Adjusted EBITDAS
(Non-GAAP)
|
|
|
|
$
93.5
|
|
$
(4.0)
|
|
$
89.5
|
|
$
269.6
|
|
$
(4.4)
|
|
$
265.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
margin
|
|
|
|
1.1 %
|
|
(6.7) %
|
|
0.8 %
|
|
2.1 %
|
|
(5.8) %
|
|
1.7 %
|
Adjusted net income
(loss) margin
|
|
|
|
3.8 %
|
|
(10.7) %
|
|
3.1 %
|
|
3.8 %
|
|
(4.3) %
|
|
3.5 %
|
Adjusted EBIT
margin
|
|
|
|
6.2 %
|
|
(12.4) %
|
|
5.4 %
|
|
6.0 %
|
|
(6.1) %
|
|
5.5 %
|
Adjusted EBITDA
margin
|
|
|
|
10.4 %
|
|
(9.9) %
|
|
9.5 %
|
|
10.2 %
|
|
(3.6) %
|
|
9.6 %
|
Adjusted EBITDAS
margin
|
|
|
|
10.8 %
|
|
(9.9) %
|
|
9.9 %
|
|
10.7 %
|
|
(3.6) %
|
|
10.0 %
|
|
|
|
|
Three Months Ended
September 30, 2022
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
|
(unaudited, in
millions)
|
Net (loss) income
(GAAP)
|
|
|
|
$ (12.0)
|
|
$ (78.5)
|
|
$ (90.5)
|
|
$ (48.9)
|
|
$
(74.0)
|
|
$
(122.9)
|
Loss on sale of
business
|
|
(1)
|
|
—
|
|
73.8
|
|
73.8
|
|
—
|
|
73.8
|
|
73.8
|
Growth, reinvestment,
restructuring programs & other
|
|
(2)
|
|
22.4
|
|
1.2
|
|
23.6
|
|
66.4
|
|
4.9
|
|
71.3
|
Product recall and
related costs
|
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Divestiture,
acquisition, integration, and related costs
|
|
(4)
|
|
8.2
|
|
9.4
|
|
17.6
|
|
18.4
|
|
31.0
|
|
49.4
|
Foreign currency loss
on re-measurement of intercompany notes
|
|
(5)
|
|
1.8
|
|
3.2
|
|
5.0
|
|
1.4
|
|
2.7
|
|
4.1
|
Mark-to-market
adjustments
|
|
(6)
|
|
(17.1)
|
|
(0.1)
|
|
(17.2)
|
|
(79.4)
|
|
(0.1)
|
|
(79.5)
|
Tax
indemnification
|
|
(7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
0.1
|
Shareholder
activism
|
|
(8)
|
|
0.4
|
|
—
|
|
0.4
|
|
2.1
|
|
—
|
|
2.1
|
Central services and
conveyed employee costs
|
|
(9)
|
|
21.5
|
|
(21.5)
|
|
—
|
|
65.0
|
|
(65.0)
|
|
—
|
Litigation
matter
|
|
(10)
|
|
—
|
|
—
|
|
—
|
|
0.4
|
|
—
|
|
0.4
|
Less: Taxes on
adjusting items
|
|
|
|
(5.1)
|
|
2.7
|
|
(2.4)
|
|
(7.9)
|
|
9.7
|
|
1.8
|
Adjusted net income
(loss) (Non-GAAP)
|
|
|
|
20.1
|
|
(9.8)
|
|
10.3
|
|
17.5
|
|
(16.9)
|
|
0.6
|
Interest
expense
|
|
|
|
17.5
|
|
5.3
|
|
22.8
|
|
51.2
|
|
11.4
|
|
62.6
|
Interest
income
|
|
|
|
(0.1)
|
|
—
|
|
(0.1)
|
|
(4.4)
|
|
—
|
|
(4.4)
|
Income taxes
|
|
|
|
2.8
|
|
(0.2)
|
|
2.6
|
|
(2.6)
|
|
2.4
|
|
(0.2)
|
Add: Taxes on adjusting
items
|
|
|
|
5.1
|
|
(2.7)
|
|
2.4
|
|
7.9
|
|
(9.7)
|
|
(1.8)
|
Adjusted EBIT
(Non-GAAP)
|
|
|
|
45.4
|
|
(7.4)
|
|
38.0
|
|
69.6
|
|
(12.8)
|
|
56.8
|
Depreciation and
amortization
|
|
|
|
34.2
|
|
17.2
|
|
51.4
|
|
103.6
|
|
52.9
|
|
156.5
|
Adjusted EBITDA
(Non-GAAP)
|
|
|
|
79.6
|
|
9.8
|
|
89.4
|
|
173.2
|
|
40.1
|
|
213.3
|
Stock-based
compensation expense
|
|
(11)
|
|
3.8
|
|
0.7
|
|
4.5
|
|
10.7
|
|
2.2
|
|
12.9
|
Adjusted EBITDAS
(Non-GAAP)
|
|
|
|
$ 83.4
|
|
$
10.5
|
|
$ 93.9
|
|
$ 183.9
|
|
$
42.3
|
|
$ 226.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
margin
|
|
|
|
(1.4) %
|
|
(16.8) %
|
|
(7.0) %
|
|
(2.1) %
|
|
(5.7) %
|
|
(3.4) %
|
Adjusted net income
(loss) margin
|
|
|
|
2.4 %
|
|
(2.1) %
|
|
0.8 %
|
|
0.7 %
|
|
(1.3) %
|
|
— %
|
Adjusted EBIT
margin
|
|
|
|
5.5 %
|
|
(1.6) %
|
|
2.9 %
|
|
3.0 %
|
|
(1.0) %
|
|
1.6 %
|
Adjusted EBITDA
margin
|
|
|
|
9.6 %
|
|
2.1 %
|
|
6.9 %
|
|
7.4 %
|
|
3.1 %
|
|
5.9 %
|
Adjusted EBITDAS
margin
|
|
|
|
10.0 %
|
|
2.3 %
|
|
7.2 %
|
|
7.9 %
|
|
3.3 %
|
|
6.2 %
|
The following table reconciles the Company's net sales to
adjusted net sales for the three and nine months ended September 30, 2023 and 2022:
TREEHOUSE FOODS,
INC.
RECONCILIATION OF
NET SALES TO ADJUSTED NET SALES
(Unaudited, in
millions)
|
|
|
|
|
|
Three Months Ended
September 30, 2023
|
|
Nine Months Ended
September 30, 2023
|
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
863.3
|
|
$
40.3
|
|
$
903.6
|
|
$ 2,520.8
|
|
$
121.1
|
|
$ 2,641.9
|
Product recall and
related costs
|
|
(3)
|
|
3.0
|
|
—
|
|
3.0
|
|
3.0
|
|
—
|
|
3.0
|
Adjusted net
sales
|
|
|
|
$
866.3
|
|
$
40.3
|
|
$
906.6
|
|
$ 2,523.8
|
|
$
121.1
|
|
$ 2,644.9
|
|
|
|
|
Three Months Ended
September 30, 2022
|
|
Nine Months Ended
September 30, 2022
|
|
|
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
Continuing
Operations
|
|
Discontinued
Operations
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
$
832.9
|
|
$
466.6
|
|
$ 1,299.5
|
|
$ 2,340.4
|
|
$
1,297.1
|
|
$ 3,637.5
|
Product recall and
related costs
|
|
(3)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted net
sales
|
|
|
|
$
832.9
|
|
$
466.6
|
|
$ 1,299.5
|
|
$ 2,340.4
|
|
$
1,297.1
|
|
$ 3,637.5
|
The following table reconciles the Company's gross profit from
continuing operations as presented in the Condensed Consolidated
Statements of Operations, the relevant GAAP measure, to Adjusted
gross profit from continuing operations for the three and nine
months ended September 30, 2023 and
2022:
TREEHOUSE FOODS,
INC.
RECONCILIATION OF
GROSS PROFIT FROM CONTINUING OPERATIONS TO ADJUSTED GROSS PROFIT
FROM CONTINUING OPERATIONS
(Unaudited, in
millions)
|
|
|
|
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
(unaudited, in
millions)
|
Net sales
|
|
|
|
$
863.3
|
|
$
832.9
|
|
$
2,520.8
|
|
$
2,340.4
|
Cost of
sales
|
|
|
|
725.8
|
|
700.0
|
|
2,096.5
|
|
1,993.0
|
Gross profit
|
|
|
|
137.5
|
|
132.9
|
|
424.3
|
|
347.4
|
Gross profit as a
percentage of net sales
|
|
|
|
15.9 %
|
|
16.0 %
|
|
16.8 %
|
|
14.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Product recall and
related costs
|
|
(3)
|
|
11.2
|
|
—
|
|
11.2
|
|
—
|
Divestiture,
acquisition, integration, and related costs
|
|
(4)
|
|
1.0
|
|
—
|
|
1.0
|
|
1.6
|
Central services and
conveyed employee costs
|
|
(9)
|
|
—
|
|
5.0
|
|
—
|
|
14.9
|
Adjusted gross profit
from continuing operations
|
|
|
|
$
149.7
|
|
$
137.9
|
|
$
436.5
|
|
$
363.9
|
Adjusted gross profit
from continuing operations as a percentage of net sales
|
|
|
|
17.3 %
|
|
16.6 %
|
|
17.3 %
|
|
15.5 %
|
|
|
|
|
Location in
Condensed
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
|
|
Consolidated
Statements of Operations
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
(unaudited, in
millions)
|
(1)
|
|
(Gain) loss on sale of
business
|
|
Net loss from
discontinued operations
|
|
$ (1.9)
|
|
$
73.8
|
|
$ 1.6
|
|
$ 73.8
|
(2)
|
|
Growth, reinvestment,
and restructuring programs
|
|
Other operating
(income) expense, net
|
|
9.7
|
|
22.4
|
|
33.9
|
|
66.4
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
1.2
|
|
—
|
|
4.9
|
(3)
|
|
Product recall and
related costs
|
|
Cost of
sales
|
|
8.2
|
|
—
|
|
8.2
|
|
—
|
|
|
|
|
Net sales
|
|
3.0
|
|
—
|
|
3.0
|
|
—
|
(4)
|
|
Divestiture,
acquisition, integration, and related costs
|
|
General and
administrative
|
|
3.9
|
|
7.2
|
|
11.6
|
|
15.7
|
|
|
|
|
Other operating
(income) expense, net
|
|
—
|
|
1.0
|
|
0.9
|
|
1.1
|
|
|
|
|
Cost of
sales
|
|
1.0
|
|
—
|
|
1.0
|
|
1.6
|
|
|
|
|
Net loss from
discontinued operations
|
|
0.1
|
|
9.4
|
|
0.1
|
|
31.0
|
(5)
|
|
Foreign currency (gain)
loss on re-measurement of intercompany notes
|
|
Loss on foreign
currency exchange
|
|
2.5
|
|
1.8
|
|
(0.2)
|
|
1.4
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
3.2
|
|
—
|
|
2.7
|
(6)
|
|
Mark-to-market
adjustments
|
|
Other expense (income),
net
|
|
2.0
|
|
(17.1)
|
|
(1.5)
|
|
(79.4)
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
(0.1)
|
|
—
|
|
(0.1)
|
(7)
|
|
Tax
indemnification
|
|
Other expense (income),
net
|
|
—
|
|
—
|
|
0.3
|
|
—
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
—
|
|
(1.1)
|
|
0.1
|
(8)
|
|
Shareholder
activism
|
|
General and
administrative
|
|
—
|
|
0.4
|
|
0.3
|
|
2.1
|
(9)
|
|
Central services and
conveyed employee costs
|
|
Cost of
sales
|
|
—
|
|
5.0
|
|
—
|
|
14.9
|
|
|
|
|
General and
administrative
|
|
—
|
|
16.5
|
|
—
|
|
50.1
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
(21.5)
|
|
—
|
|
(65.0)
|
(10)
|
|
Litigation
matter
|
|
General and
administrative
|
|
—
|
|
—
|
|
—
|
|
0.4
|
(11)
|
|
Stock-based
compensation expense included as an adjusting item
|
|
Other operating
(income) expense, net
|
|
2.4
|
|
2.3
|
|
7.0
|
|
4.5
|
|
|
|
|
Net loss from
discontinued operations
|
|
—
|
|
—
|
|
0.1
|
|
(0.5)
|
TREEHOUSE FOODS,
INC.
RECONCILIATION OF
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES FROM
CONTINUING
OPERATIONS TO FREE CASH FLOW FROM CONTINUING
OPERATIONS
(Unaudited, in
millions)
|
|
|
|
Nine Months
Ended
September
30,
|
|
|
2023
|
|
2022
|
|
|
|
Cash flow provided by
(used in) operating activities from continuing
operations
|
|
$
11.0
|
|
$
(77.1)
|
Less: Capital
expenditures
|
|
(77.1)
|
|
(60.4)
|
Free cash flow from
continuing operations
|
|
$
(66.1)
|
|
$
(137.5)
|
TREEHOUSE FOODS, INC.
Supplemental
Financial Information
Overview
On September 29, 2023, the Company
completed the sale of the Company's Snack Bars business (the "Snack
Bars Business"). This transaction represents a component of the
single plan of disposal from the Company's strategic review
process, which also resulted in the divestiture of a significant
portion of the Meal Preparation business during the fourth quarter
of 2022. Beginning in the third quarter of 2023, the Snack Bars
Business is presented as a component of discontinued operations and
has been excluded from continuing operations for all periods
presented.
The Company provided additional recast historical unaudited
financial information prepared in accordance with GAAP reflecting
discontinued operations of the sale of the Business, as well as
certain Non-GAAP financial measures reflecting discontinued
operations (as defined by the Securities and Exchange Commission)
reconciled to GAAP presentation. The Company believes the
information provides investors with useful supplemental financial
information regarding the Company's underlying business trends and
the performance of the Company's continuing operations after the
separation of the Business, on both a GAAP and Non-GAAP adjusted
basis.
TREEHOUSE FOODS,
INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Recast for
Discontinued Operations
(In millions, except
per share amounts)
|
|
|
Year Ended December
31,
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
Net sales
|
$
3,297.1
|
|
$
2,814.3
|
|
$
2,853.1
|
|
$
2,850.9
|
Cost of
sales
|
2,774.7
|
|
2,342.7
|
|
2,310.1
|
|
2,297.6
|
Gross profit
|
522.4
|
|
471.6
|
|
543.0
|
|
553.3
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling and
distribution
|
217.8
|
|
199.4
|
|
195.4
|
|
190.8
|
General and
administrative
|
206.5
|
|
185.2
|
|
225.8
|
|
238.4
|
Amortization
expense
|
47.9
|
|
47.3
|
|
50.4
|
|
51.8
|
Asset
impairment
|
—
|
|
—
|
|
—
|
|
83.2
|
Other operating
expense, net
|
62.8
|
|
83.9
|
|
67.8
|
|
93.5
|
Total operating
expenses
|
535.0
|
|
515.8
|
|
539.4
|
|
657.7
|
Operating (loss)
income
|
(12.6)
|
|
(44.2)
|
|
3.6
|
|
(104.4)
|
Other (income)
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
69.9
|
|
72.1
|
|
92.6
|
|
80.9
|
Interest
income
|
(15.5)
|
|
(4.7)
|
|
(4.8)
|
|
(4.8)
|
Loss on extinguishment
of debt
|
4.5
|
|
14.4
|
|
1.2
|
|
—
|
Loss (gain) on foreign
currency exchange
|
1.7
|
|
(0.4)
|
|
(0.6)
|
|
(1.2)
|
Other (income)
expense, net
|
(74.3)
|
|
(39.4)
|
|
30.2
|
|
44.6
|
Total other (income)
expense
|
(13.7)
|
|
42.0
|
|
118.6
|
|
119.5
|
Income (loss) before
income taxes
|
1.1
|
|
(86.2)
|
|
(115.0)
|
|
(223.9)
|
Income tax expense
(benefit)
|
10.3
|
|
(17.6)
|
|
(61.1)
|
|
(62.0)
|
Net loss from
continuing operations
|
(9.2)
|
|
(68.6)
|
|
(53.9)
|
|
(161.9)
|
Net (loss) income from
discontinued operations
|
(137.1)
|
|
56.1
|
|
67.7
|
|
(199.1)
|
Net (loss)
income
|
$
(146.3)
|
|
$
(12.5)
|
|
$
13.8
|
|
$
(361.0)
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
(0.16)
|
|
$
(1.23)
|
|
$
(0.95)
|
|
$
(2.88)
|
Discontinued
operations
|
(2.45)
|
|
1.00
|
|
1.20
|
|
(3.54)
|
Earnings (loss) per
share basic (1)
|
$
(2.61)
|
|
$
(0.22)
|
|
$
0.24
|
|
$
(6.42)
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
$
(0.16)
|
|
$
(1.23)
|
|
$
(0.95)
|
|
$
(2.88)
|
Discontinued
operations
|
(2.45)
|
|
1.00
|
|
1.20
|
|
(3.54)
|
Earnings (loss) per
share diluted (1)
|
$
(2.61)
|
|
$
(0.22)
|
|
$
0.24
|
|
$
(6.42)
|
|
|
|
|
|
|
|
|
Weighted average shares
— basic
|
56.0
|
|
55.9
|
|
56.5
|
|
56.2
|
Weighted average shares
— diluted
|
56.0
|
|
55.9
|
|
56.5
|
|
56.2
|
|
(1)
The sum of the individual per share amounts may not add due to
rounding.
|
TREEHOUSE FOODS, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Recast for
Discontinued Operations
(In millions, except
per share amounts)
|
|
|
Three Months
Ended
|
|
June 30,
2023
|
|
March 31,
2023
|
|
December 31,
2022
|
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
Net sales
|
$
803.5
|
|
$
854.0
|
|
$
956.7
|
|
$
832.9
|
|
$
765.3
|
|
$
742.2
|
Cost of
sales
|
670.3
|
|
700.4
|
|
781.7
|
|
700.0
|
|
654.1
|
|
638.9
|
Gross profit
|
133.2
|
|
153.6
|
|
175.0
|
|
132.9
|
|
111.2
|
|
103.3
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Selling and
distribution
|
39.7
|
|
44.7
|
|
50.9
|
|
51.7
|
|
54.4
|
|
60.8
|
General and
administrative
|
53.9
|
|
53.4
|
|
46.0
|
|
51.6
|
|
56.1
|
|
52.8
|
Amortization
expense
|
12.1
|
|
12.0
|
|
12.2
|
|
11.9
|
|
11.9
|
|
11.9
|
Other operating
(income) expense, net
|
(2.8)
|
|
2.6
|
|
(3.6)
|
|
23.4
|
|
13.9
|
|
29.1
|
Total operating
expenses
|
102.9
|
|
112.7
|
|
105.5
|
|
138.6
|
|
136.3
|
|
154.6
|
Operating income
(loss)
|
30.3
|
|
40.9
|
|
69.5
|
|
(5.7)
|
|
(25.1)
|
|
(51.3)
|
Other (income)
expense:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
19.2
|
|
17.8
|
|
18.7
|
|
17.5
|
|
17.0
|
|
16.7
|
Interest
income
|
(10.8)
|
|
(14.6)
|
|
(11.1)
|
|
(0.1)
|
|
(0.1)
|
|
(4.2)
|
Loss on extinguishment
of debt
|
—
|
|
—
|
|
4.5
|
|
—
|
|
—
|
|
—
|
(Gain) loss on foreign
currency exchange
|
(3.3)
|
|
0.3
|
|
(1.3)
|
|
2.9
|
|
1.1
|
|
(1.0)
|
Other (income)
expense, net
|
(6.2)
|
|
9.7
|
|
6.1
|
|
(16.8)
|
|
(11.9)
|
|
(51.7)
|
Total other (income)
expense
|
(1.1)
|
|
13.2
|
|
16.9
|
|
3.5
|
|
6.1
|
|
(40.2)
|
Income (loss) before
income taxes
|
31.4
|
|
27.7
|
|
52.6
|
|
(9.2)
|
|
(31.2)
|
|
(11.1)
|
Income tax expense
(benefit)
|
9.0
|
|
7.3
|
|
12.9
|
|
2.8
|
|
(4.3)
|
|
(1.1)
|
Net income (loss) from
continuing operations
|
22.4
|
|
20.4
|
|
39.7
|
|
(12.0)
|
|
(26.9)
|
|
(10.0)
|
Net income (loss) from
discontinued operations
|
0.9
|
|
(5.2)
|
|
(63.1)
|
|
(78.5)
|
|
(2.5)
|
|
7.0
|
Net income
(loss)
|
$
23.3
|
|
$
15.2
|
|
$
(23.4)
|
|
$
(90.5)
|
|
$
(29.4)
|
|
$
(3.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.40
|
|
$
0.36
|
|
$
0.71
|
|
$
(0.21)
|
|
$
(0.48)
|
|
$
(0.18)
|
Discontinued
operations
|
0.02
|
|
(0.09)
|
|
(1.12)
|
|
(1.40)
|
|
(0.04)
|
|
0.13
|
Earnings (loss) per
share basic (1)
|
$
0.41
|
|
$
0.27
|
|
$
(0.42)
|
|
$
(1.61)
|
|
$
(0.53)
|
|
$
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
$
0.39
|
|
$
0.36
|
|
$
0.70
|
|
$
(0.21)
|
|
$
(0.48)
|
|
$
(0.18)
|
Discontinued
operations
|
0.02
|
|
(0.09)
|
|
(1.11)
|
|
(1.40)
|
|
(0.04)
|
|
0.13
|
Earnings (loss) per
share diluted (1)
|
$
0.41
|
|
$
0.27
|
|
$
(0.41)
|
|
$
(1.61)
|
|
$
(0.53)
|
|
$
(0.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
— basic
|
56.4
|
|
56.1
|
|
56.1
|
|
56.1
|
|
56.0
|
|
55.8
|
Weighted average shares
— diluted
|
56.8
|
|
56.7
|
|
56.7
|
|
56.1
|
|
56.0
|
|
55.8
|
|
(1)
The sum of the individual per share amounts may not add due to
rounding.
|
Non-GAAP Measures
We have included 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 Unaudited Condensed Consolidated Financial
Statements recast for discontinued operations. We believe 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, we provide a
reconciliation between the Non-GAAP measure and the most directly
comparable 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.
Adjusted Earnings Per Diluted Share From Continuing
Operations, Adjusting for Certain Items Affecting
Comparability
Adjusted earnings (loss) per diluted share from continuing
operations ("adjusted diluted EPS") reflects adjustments to GAAP
net earnings (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 divestiture, acquisition, integration, and
related costs, mark-to-market adjustments on derivative contracts,
foreign currency exchange impact on the re-measurement of
intercompany notes, growth, reinvestment, and restructuring
programs, impairment of assets, the impact of the COVID-19
pandemic, 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.
Adjusted Net Income (Loss) from Continuing Operations,
Adjusted EBIT from Continuing Operations, Adjusted EBITDA from
Continuing Operations, Adjusted EBITDAS from Continuing Operations,
Adjusted Net Income (Loss) 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 (loss) from continuing operations represents
GAAP net income (loss) from continuing operations as reported in
the Unaudited Condensed Consolidated Statements of Operations
recast for discontinued 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. 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 and as a component of our debt covenant calculations.
Adjusted net income (loss) 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
Unaudited Condensed Consolidated Statements of Operations recast
for discontinued 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.
The following tables reconcile the Company's diluted earnings
(loss) per share from continuing operations as presented in the
Unaudited Condensed Consolidated Statements of Operations recast
for discontinued operations, the relevant GAAP measure, to adjusted
diluted earnings per share from continuing operations for each of
the periods presented:
RECONCILIATION OF
DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS TO
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS
|
|
|
|
Year Ended December
31,
|
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
|
|
(unaudited)
|
Diluted EPS from
continuing operations (GAAP)
|
|
$
(0.16)
|
|
$
(1.23)
|
|
$
(0.95)
|
|
$
(2.88)
|
Growth, reinvestment,
restructuring programs & other
|
(1)
|
1.51
|
|
1.49
|
|
1.21
|
|
1.74
|
Central services and
conveyed employee costs
|
(2)
|
1.15
|
|
1.45
|
|
1.52
|
|
1.44
|
Divestiture,
acquisition, integration, and related costs
|
(3)
|
0.24
|
|
0.07
|
|
0.04
|
|
0.01
|
Loss on extinguishment
of debt
|
(4)
|
0.08
|
|
0.26
|
|
0.02
|
|
—
|
Shareholder
activism
|
(5)
|
0.05
|
|
0.08
|
|
—
|
|
—
|
Foreign currency loss
(gain) on re-measurement of intercompany notes
|
(6)
|
0.01
|
|
(0.01)
|
|
—
|
|
(0.03)
|
Litigation
matter
|
(7)
|
0.01
|
|
—
|
|
0.16
|
|
0.44
|
Mark-to-market
adjustments
|
(8)
|
(1.33)
|
|
(0.66)
|
|
0.53
|
|
0.83
|
Tax
indemnification
|
(9)
|
—
|
|
0.03
|
|
0.07
|
|
0.03
|
COVID-19
|
(10)
|
—
|
|
0.25
|
|
0.25
|
|
—
|
Impairment
|
(11)
|
—
|
|
—
|
|
—
|
|
1.48
|
Change in regulatory
requirements
|
(12)
|
—
|
|
—
|
|
0.02
|
|
0.19
|
Executive management
transition
|
(13)
|
—
|
|
—
|
|
0.01
|
|
0.05
|
Multiemployer pension
plan withdrawal
|
(14)
|
—
|
|
—
|
|
—
|
|
0.08
|
Taxes on adjusting
items
|
|
(0.28)
|
|
(0.70)
|
|
(1.09)
|
|
(1.56)
|
Adjusted diluted EPS
from continuing operations (Non-GAAP)
|
|
$
1.28
|
|
$
1.03
|
|
$
1.79
|
|
$
1.82
|
RECONCILIATION OF
DILUTED EARNINGS (LOSS) PER SHARE FROM CONTINUING OPERATIONS TO
ADJUSTED DILUTED EPS FROM CONTINUING OPERATIONS
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
December 31,
2022
|
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
|
|
(unaudited)
|
Diluted EPS from
continuing operations (GAAP)
|
|
$
0.39
|
|
$
0.36
|
|
$
0.70
|
|
$
(0.21)
|
|
$
(0.48)
|
|
$
(0.18)
|
Growth, reinvestment,
restructuring programs & other
|
(1)
|
0.16
|
|
0.27
|
|
0.33
|
|
0.40
|
|
0.25
|
|
0.54
|
Central services and
conveyed employee costs
|
(2)
|
—
|
|
—
|
|
—
|
|
0.38
|
|
0.39
|
|
0.39
|
Divestiture,
acquisition, integration, and related costs
|
(3)
|
0.08
|
|
0.07
|
|
(0.08)
|
|
0.15
|
|
0.13
|
|
0.05
|
Loss on extinguishment
of debt
|
(4)
|
—
|
|
—
|
|
0.08
|
|
—
|
|
—
|
|
—
|
Shareholder
activism
|
(5)
|
—
|
|
0.01
|
|
0.01
|
|
0.01
|
|
0.02
|
|
0.01
|
Foreign currency (gain)
loss on re-measurement of intercompany notes
|
(6)
|
(0.04)
|
|
—
|
|
(0.01)
|
|
0.03
|
|
0.01
|
|
(0.01)
|
Litigation
matter
|
(7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.01
|
Mark-to-market
adjustments
|
(8)
|
(0.17)
|
|
0.10
|
|
0.08
|
|
(0.30)
|
|
(0.20)
|
|
(0.91)
|
Tax
indemnification
|
(9)
|
0.01
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Taxes on adjusting
items
|
|
—
|
|
(0.11)
|
|
(0.14)
|
|
(0.10)
|
|
(0.07)
|
|
—
|
Adjusted diluted EPS
from continuing operations (Non-GAAP)
|
|
$
0.43
|
|
$
0.70
|
|
$
0.97
|
|
$
0.36
|
|
$
0.05
|
|
$
(0.10)
|
The following tables reconcile the Company's net loss from
continuing operations as presented in the Unaudited Condensed
Consolidated Statements of Operations recast for discontinued
operations, the relevant GAAP measure, to adjusted net income
(loss), adjusted EBIT, adjusted EBITDA, and adjusted EBITDAS from
continuing operations for each of the periods presented:
RECONCILIATION OF
NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME,
ADJUSTED EBIT,
ADJUSTED EBITDA, AND ADJUSTED EBITDAS FROM CONTINUING
OPERATIONS
|
|
|
|
Year Ended December
31,
|
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
|
|
(unaudited, in
millions)
|
Net loss from
continuing operations (GAAP)
|
|
$
(9.2)
|
|
$
(68.6)
|
|
$
(53.9)
|
|
$
(161.9)
|
Growth, reinvestment,
restructuring programs & other
|
(1)
|
85.1
|
|
83.4
|
|
69.2
|
|
98.1
|
Central services and
conveyed employee costs
|
(2)
|
65.0
|
|
81.6
|
|
86.0
|
|
81.1
|
Divestiture,
acquisition, integration, and related costs
|
(3)
|
13.8
|
|
4.0
|
|
2.0
|
|
0.4
|
Loss on extinguishment
of debt
|
(4)
|
4.5
|
|
14.4
|
|
1.2
|
|
—
|
Shareholder
activism
|
(5)
|
2.7
|
|
4.6
|
|
—
|
|
—
|
Foreign currency loss
(gain) on re-measurement of intercompany notes
|
(6)
|
0.8
|
|
(0.5)
|
|
(0.2)
|
|
(1.7)
|
Litigation
matter
|
(7)
|
0.4
|
|
—
|
|
9.0
|
|
25.0
|
Mark-to-market
adjustments
|
(8)
|
(75.1)
|
|
(37.3)
|
|
30.0
|
|
47.0
|
Tax
indemnification
|
(9)
|
—
|
|
1.6
|
|
3.7
|
|
1.9
|
COVID-19
|
(10)
|
—
|
|
14.3
|
|
14.8
|
|
—
|
Impairment
|
(11)
|
—
|
|
—
|
|
—
|
|
83.4
|
Change in regulatory
requirements
|
(12)
|
—
|
|
(0.1)
|
|
1.0
|
|
10.7
|
Executive management
transition
|
(13)
|
—
|
|
—
|
|
0.4
|
|
2.9
|
Multiemployer pension
plan withdrawal
|
(14)
|
—
|
|
—
|
|
—
|
|
4.3
|
Less: Taxes on
adjusting items
|
|
(15.4)
|
|
(39.7)
|
|
(61.5)
|
|
(88.5)
|
Adjusted net income
from continuing operations (Non-GAAP)
|
|
72.6
|
|
57.7
|
|
101.7
|
|
102.7
|
Interest
expense
|
|
69.9
|
|
72.1
|
|
92.6
|
|
80.9
|
Interest income
(excluding COVID-19 interest income adjustments)
|
|
(15.5)
|
|
(4.7)
|
|
(4.1)
|
|
(4.8)
|
Income taxes (excluding
COVID-19 income tax adjustments)
|
|
10.3
|
|
(19.5)
|
|
(31.3)
|
|
(62.0)
|
Add: Taxes on adjusting
items
|
|
15.4
|
|
39.7
|
|
61.5
|
|
88.5
|
Adjusted EBIT from
continuing operations (Non-GAAP)
|
|
152.7
|
|
145.3
|
|
220.4
|
|
205.3
|
Depreciation and
amortization
|
(15)
|
139.0
|
|
143.4
|
|
142.5
|
|
145.8
|
Adjusted EBITDA from
continuing operations (Non-GAAP)
|
|
291.7
|
|
288.7
|
|
362.9
|
|
351.1
|
Stock-based
compensation expense
|
(16)
|
13.2
|
|
11.7
|
|
22.4
|
|
18.9
|
Adjusted EBITDAS from
continuing operations (Non-GAAP)
|
|
$
304.9
|
|
$
300.4
|
|
$
385.3
|
|
$
370.0
|
|
|
|
|
|
|
|
|
|
Net loss margin from
continuing operations
|
|
(0.3) %
|
|
(2.4) %
|
|
(1.9) %
|
|
(5.7) %
|
Adjusted net income
margin from continuing operations
|
|
2.2 %
|
|
2.1 %
|
|
3.6 %
|
|
3.6 %
|
Adjusted EBIT margin
from continuing operations
|
|
4.6 %
|
|
5.2 %
|
|
7.7 %
|
|
7.2 %
|
Adjusted EBITDA margin
from continuing operations
|
|
8.8 %
|
|
10.3 %
|
|
12.7 %
|
|
12.3 %
|
Adjusted EBITDAS margin
from continuing operations
|
|
9.2 %
|
|
10.7 %
|
|
13.5 %
|
|
13.0 %
|
RECONCILIATION OF
NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED NET INCOME
(LOSS), ADJUSTED EBIT,
ADJUSTED EBITDA, AND ADJUSTED EBITDAS FROM CONTINUING
OPERATIONS
|
|
|
|
Three Months
Ended
|
|
|
June 30,
2023
|
|
March 31,
2023
|
|
December 31,
2022
|
|
September 30,
2022
|
|
June 30,
2022
|
|
March 31,
2022
|
|
|
(unaudited, in
millions)
|
Net loss from
continuing operations (GAAP)
|
|
$
22.4
|
|
$
20.4
|
|
$
39.7
|
|
$
(12.0)
|
|
$
(26.9)
|
|
$
(10.0)
|
Growth, reinvestment,
restructuring programs & other
|
(1)
|
8.9
|
|
15.3
|
|
18.7
|
|
22.4
|
|
13.9
|
|
30.1
|
Central services and
conveyed employee costs
|
(2)
|
—
|
|
—
|
|
—
|
|
21.5
|
|
21.7
|
|
21.8
|
Divestiture,
acquisition, integration, and related costs
|
(3)
|
4.8
|
|
3.8
|
|
(4.6)
|
|
8.2
|
|
7.2
|
|
3.0
|
Loss on extinguishment
of debt
|
(4)
|
—
|
|
—
|
|
4.5
|
|
—
|
|
—
|
|
—
|
Shareholder
activism
|
(5)
|
—
|
|
0.3
|
|
0.6
|
|
0.4
|
|
1.1
|
|
0.6
|
Foreign currency (gain)
loss on re-measurement of intercompany notes
|
(6)
|
(2.5)
|
|
(0.2)
|
|
(0.6)
|
|
1.8
|
|
0.4
|
|
(0.8)
|
Litigation
matter
|
(7)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
0.4
|
Mark-to-market
adjustments
|
(8)
|
(9.4)
|
|
5.9
|
|
4.3
|
|
(17.1)
|
|
(11.5)
|
|
(50.8)
|
Tax
indemnification
|
(9)
|
0.1
|
|
0.2
|
|
—
|
|
—
|
|
—
|
|
—
|
Less: Taxes on
adjusting items
|
|
—
|
|
(6.0)
|
|
(7.5)
|
|
(5.1)
|
|
(3.1)
|
|
0.3
|
Adjusted net income
(loss) from continuing operations (Non-GAAP)
|
|
24.3
|
|
39.7
|
|
55.1
|
|
20.1
|
|
2.8
|
|
(5.4)
|
Interest
expense
|
|
19.2
|
|
17.8
|
|
18.7
|
|
17.5
|
|
17.0
|
|
16.7
|
Interest
income
|
|
(10.8)
|
|
(14.6)
|
|
(11.1)
|
|
(0.1)
|
|
(0.1)
|
|
(4.2)
|
Income taxes (excluding
COVID-19 income tax adjustments)
|
|
9.0
|
|
7.3
|
|
12.9
|
|
2.8
|
|
(4.3)
|
|
(1.1)
|
Add: Taxes on adjusting
items
|
|
—
|
|
6.0
|
|
7.5
|
|
5.1
|
|
3.1
|
|
(0.3)
|
Adjusted EBIT from
continuing operations (Non-GAAP)
|
|
41.7
|
|
56.2
|
|
83.1
|
|
45.4
|
|
18.5
|
|
5.7
|
Depreciation and
amortization
|
(15)
|
34.6
|
|
35.1
|
|
35.4
|
|
34.2
|
|
34.4
|
|
35.0
|
Adjusted EBITDA from
continuing operations (Non-GAAP)
|
|
76.3
|
|
91.3
|
|
118.5
|
|
79.6
|
|
52.9
|
|
40.7
|
Stock-based
compensation expense
|
(16)
|
3.5
|
|
5.0
|
|
2.5
|
|
3.8
|
|
3.6
|
|
3.3
|
Adjusted EBITDAS from
continuing operations (Non-GAAP)
|
|
$
79.8
|
|
$
96.3
|
|
$
121.0
|
|
$
83.4
|
|
$
56.5
|
|
$
44.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
margin from continuing operations
|
|
2.8 %
|
|
2.4 %
|
|
4.1 %
|
|
(1.4) %
|
|
(3.5) %
|
|
(1.3) %
|
Adjusted net income
(loss) margin from continuing operations
|
|
3.0 %
|
|
4.6 %
|
|
5.8 %
|
|
2.4 %
|
|
0.4 %
|
|
(0.7) %
|
Adjusted EBIT margin
from continuing operations
|
|
5.2 %
|
|
6.6 %
|
|
8.7 %
|
|
5.5 %
|
|
2.4 %
|
|
0.8 %
|
Adjusted EBITDA margin
from continuing operations
|
|
9.5 %
|
|
10.7 %
|
|
12.4 %
|
|
9.6 %
|
|
6.9 %
|
|
5.5 %
|
Adjusted EBITDAS margin
from continuing operations
|
|
9.9 %
|
|
11.3 %
|
|
12.6 %
|
|
10.0 %
|
|
7.4 %
|
|
5.9 %
|
FOOTNOTES FOR
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED
NET INCOME, ADJUSTED EBIT,
ADJUSTED EBITDA, AND ADJUSTED EBITDAS FROM CONTINUING
OPERATIONS
|
|
|
|
Location in
Unaudited Condensed
Consolidated Statements of Operations
|
|
Year Ended December
31,
|
|
|
|
2022
|
|
2021
|
|
2020
|
|
2019
|
|
|
|
|
|
|
(unaudited, in
millions)
|
(1)
|
Growth, reinvestment,
restructuring programs & other
|
Other operating
expense, net
|
|
$
84.6
|
|
$
83.4
|
|
$
67.5
|
|
$
93.2
|
|
|
Cost of
sales
|
|
0.5
|
|
—
|
|
0.9
|
|
3.1
|
|
|
General and
administrative
|
|
—
|
|
—
|
|
0.8
|
|
1.8
|
(2)
|
Central services and
conveyed employee costs
|
General and
administrative
|
|
50.1
|
|
63.5
|
|
66.5
|
|
63.2
|
|
|
Cost of
sales
|
|
14.9
|
|
18.1
|
|
19.5
|
|
17.9
|
(3)
|
Divestiture,
acquisition, integration, and related costs
|
General and
administrative
|
|
19.1
|
|
3.4
|
|
1.5
|
|
0.4
|
|
|
Cost of
sales
|
|
1.6
|
|
0.5
|
|
0.1
|
|
—
|
|
|
Other operating
expense, net
|
|
(6.9)
|
|
0.1
|
|
0.4
|
|
—
|
(4)
|
Loss on extinguishment
of debt
|
Loss on extinguishment
of debt
|
|
4.5
|
|
14.4
|
|
1.2
|
|
—
|
(5)
|
Shareholder
activism
|
General and
administrative
|
|
2.7
|
|
4.6
|
|
—
|
|
—
|
(6)
|
Foreign currency loss
(gain) on re-measurement of intercompany notes
|
Loss (gain) on foreign
currency exchange
|
|
0.8
|
|
(0.5)
|
|
(0.2)
|
|
(1.7)
|
(7)
|
Litigation
matter
|
General and
administrative
|
|
0.4
|
|
—
|
|
9.0
|
|
25.0
|
(8)
|
Mark-to-market
adjustments
|
Other (expense) income,
net
|
|
(75.1)
|
|
(37.3)
|
|
30.0
|
|
47.0
|
(9)
|
Tax
indemnification
|
Other (income) expense,
net
|
|
—
|
|
1.6
|
|
3.7
|
|
1.9
|
(10)
|
COVID-19
|
Net sales
|
|
—
|
|
—
|
|
1.0
|
|
—
|
|
|
Cost of
sales
|
|
—
|
|
12.4
|
|
40.9
|
|
—
|
|
|
Selling and
distribution
|
|
—
|
|
—
|
|
1.6
|
|
—
|
|
|
General and
administrative
|
|
—
|
|
—
|
|
1.8
|
|
—
|
|
|
Interest
income
|
|
—
|
|
—
|
|
(0.7)
|
|
—
|
|
|
Income tax expense
(benefit)
|
|
—
|
|
1.9
|
|
(29.8)
|
|
—
|
(11)
|
Impairment
|
Asset
impairment
|
|
—
|
|
—
|
|
—
|
|
83.4
|
(12)
|
Change in regulatory
requirements
|
Cost of
sales
|
|
—
|
|
(0.1)
|
|
(0.1)
|
|
8.5
|
|
|
Selling and
distribution
|
|
—
|
|
—
|
|
1.0
|
|
1.8
|
|
|
General and
administrative
|
|
—
|
|
—
|
|
0.1
|
|
0.4
|
(13)
|
Executive management
transition
|
General and
administrative
|
|
—
|
|
—
|
|
0.4
|
|
2.9
|
(14)
|
Multiemployer pension
plan withdrawal
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
4.3
|
(15)
|
Depreciation included
as an adjusting item
|
Cost of
sales
|
|
0.6
|
|
—
|
|
0.2
|
|
1.7
|
|
|
General and
administrative
|
|
—
|
|
—
|
|
—
|
|
1.6
|
|
|
Other operating
expense, net
|
|
—
|
|
—
|
|
—
|
|
0.2
|
(16)
|
Stock-based
compensation expense included as an adjusting item
|
Other operating
expense, net
|
|
6.6
|
|
2.5
|
|
2.0
|
|
2.0
|
FOOTNOTES FOR
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO ADJUSTED
NET INCOME (LOSS), ADJUSTED EBIT,
ADJUSTED EBITDA, AND ADJUSTED EBITDAS FROM CONTINUING
OPERATIONS
|
|
|
|
Location in
Unaudited Condensed
Consolidated Statements of Operations
|
Three Months
Ended
|
|
|
June 30,
2023
|
March 31,
2023
|
December 31,
2022
|
September 30,
2022
|
June 30,
2022
|
March 31,
2022
|
|
|
|
(unaudited, in
millions)
|
(1)
|
Growth, reinvestment,
restructuring programs & other
|
Other operating
expense, net
|
$
8.9
|
$ 15.3
|
$
18.2
|
$
22.4
|
$ 13.9
|
$
30.1
|
|
|
Cost of
sales
|
—
|
—
|
0.5
|
—
|
—
|
—
|
(2)
|
Central services and
conveyed employee costs
|
General and
administrative
|
—
|
—
|
—
|
16.5
|
16.8
|
16.8
|
|
|
Cost of
sales
|
—
|
—
|
—
|
5.0
|
4.9
|
5.0
|
(3)
|
Divestiture,
acquisition, integration, and related costs
|
General and
administrative
|
4.6
|
3.1
|
3.4
|
7.2
|
6.6
|
1.9
|
|
|
Other operating
expense, net
|
0.2
|
0.7
|
(8.0)
|
1.0
|
0.1
|
—
|
|
|
Cost of
sales
|
—
|
—
|
—
|
—
|
0.5
|
1.1
|
(4)
|
Loss on extinguishment
of debt
|
Loss on extinguishment
of debt
|
—
|
—
|
4.5
|
—
|
—
|
—
|
(5)
|
Shareholder
activism
|
General and
administrative
|
—
|
0.3
|
0.6
|
0.4
|
1.1
|
0.6
|
(6)
|
Foreign currency (gain)
loss on re-measurement
of intercompany notes
|
(Gain) loss on foreign
currency exchange
|
(2.5)
|
(0.2)
|
(0.6)
|
1.8
|
0.4
|
(0.8)
|
(7)
|
Litigation
matter
|
General and
administrative
|
—
|
—
|
—
|
—
|
—
|
0.4
|
(8)
|
Mark-to-market
adjustments
|
Other (income) expense,
net
|
(9.4)
|
5.9
|
4.3
|
(17.1)
|
(11.5)
|
(50.8)
|
(9)
|
Tax
indemnification
|
Other (income) expense,
net
|
0.1
|
0.2
|
—
|
—
|
—
|
—
|
(15)
|
Depreciation included
as an adjusting item
|
Cost of
sales
|
—
|
—
|
0.6
|
—
|
—
|
—
|
(16)
|
Stock-based
compensation expense included
as an adjusting item
|
Other operating
expense, net
|
2.4
|
2.2
|
2.1
|
2.3
|
1.7
|
0.5
|
During the periods presented, the Company entered into
transactions that affected the year-over-year comparison of its
financial results from continuing operations as follows:
(1)
|
The Company's growth,
reinvestment, and restructuring activities are part of an
enterprise-wide transformation to improve long-term growth and
profitability for the Company.
|
|
|
(2)
|
As a result of the sale
of a significant portion of the Meal Preparation business, the
Company identified two items affecting comparability – 1) central
service costs and 2) conveyed employee costs.
1) The Company has
historically provided central services to the Meal Preparation
business including, but not limited to, IT and financial shared
services, procurement and order processing, customer service,
warehousing, logistics, and customs. These costs were historically
incurred by TreeHouse and include employee and non-employee
expenses to support the services.
2) Conveyed employee
costs represent compensation costs for employees that were not
historically dedicated to the sold business and transferred to the
buyer after the sale.
|
|
|
(3)
|
Divestiture,
acquisition, integration, and related costs represent costs
associated with completed and potential divestitures, completed and
potential acquisitions, and the related integration of the
acquisitions.
|
|
|
(4)
|
During the fourth
quarter of 2022, the Company incurred a loss on extinguishment of
debt representing the write-off of deferred financing costs in
connection with the debt prepayment and revolving credit commitment
reduction in October 2022. During 2021, the Company incurred a loss
on extinguishment of debt in connection with the 2024 Notes
Redemption and Credit Agreement refinancing. During 2020, the
Company incurred a loss on extinguishment of debt representing the
write-off of deferred financing costs in connection with the
redemption of its 2022 Notes.
|
|
|
(5)
|
The Company incurred
fees related to shareholder activism which include directly
applicable third-party advisory and professional service
fees.
|
|
|
(6)
|
The Company has foreign
currency denominated intercompany loans and incurred foreign
currency gains or losses to re-measure the loans at each period
end. These charges are non-cash and the loans are eliminated in
consolidation.
|
|
|
(7)
|
The Company recognized
expense for the settlement related to a litigation matter
challenging wage and hour practices at three former manufacturing
facilities in California.
|
|
|
(8)
|
The Company's
derivative contracts are marked-to-market each period. The non-cash
unrealized changes in fair value recognized in Other (income)
expense, net within the Unaudited Condensed Consolidated Statements
of Operations are treated as Non-GAAP adjustments. As the contracts
are settled, realized gains and losses are recognized, and only the
mark-to-market impacts are treated as Non-GAAP
adjustments.
|
|
|
(9)
|
Tax indemnification
represents the non-cash write off of indemnification assets that
were recorded in connection with acquisitions from prior
years. These write-offs arose as a result of the related
uncertain tax position being released due to the statute of
limitation lapse or settlement with taxing authorities.
|
|
|
(10)
|
The Company incurred
incremental expenses directly attributable to our response to the
COVID-19 pandemic, which included additional protective equipment
for employees and additional sanitation measures. Additionally, the
Company incurred income tax (benefit) expense due to the enactment
of the CARES Act.
|
|
|
(11)
|
During 2019, the
Company incurred non-cash impairment charges related to the Cookies
asset group and to the expected disposal loss related to two
In-Store Bakery facilities.
|
|
|
(12)
|
The Company incurred
regulatory compliance costs related to changes in nutrition
labeling requirements. These costs included both consulting
services and inventory write-downs.
|
|
|
(13)
|
Executive management
transition includes costs associated with the 2019 CFO transition.
The CFO transition costs primarily relate to severance and
consulting fees.
|
|
|
(14)
|
During 2019, the
Company executed a complete withdrawal from the Retail, Wholesale,
and Department Store International Union and Industry Pension Fund.
The Company settled the withdrawal in the fourth quarter of
2019.
|
The tax impact on adjusting items is calculated based upon the
tax laws and statutory tax rates applicable in the tax jurisdiction
of the underlying Non-GAAP adjustments.
View original
content:https://www.prnewswire.com/news-releases/treehouse-foods-inc-reports-third-quarter-2023-results-301977927.html
SOURCE TreeHouse Foods, Inc.