Delaware | 20-2311383 |
(State or Other Jurisdiction of Incorporation) | (IRS Employer Identification No.) |
2021 Spring Road Suite 600 Oak Brook, IL | 60523 |
(Address of Principal Executive Offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
Emerging growth company ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
(d) | Exhibits: |
Exhibit Number | Exhibit Description | ||
99.1 | |||
99.2 | |||
99.3 | |||
99.4 |
TreeHouse Foods, Inc. | ||||
Date: | May 2, 2019 | By: | /s/ Thomas E. O’Neill | |
Thomas E. O’Neill | ||||
General Counsel, Executive Vice President, Chief Administrative Officer and officer duly authorized to sign on behalf of the registrant |
NEWS RELEASE | ||
Contact: | Investor Relations | |
708.483.1300 Ext 1331 | ||
• | First quarter 2019 loss per fully diluted share was $(0.49) compared to a loss per fully diluted share of $(0.60) for the same period in 2018. |
• | First quarter 2019 adjusted earnings per fully diluted share was $0.13, above the midpoint of the Company's guidance range of $0.05 to $0.15. |
• | First quarter 2019 adjusted earnings per fully diluted share of $0.13 was $(0.05) below first quarter 2018. |
• | In a separate press release issued today, TreeHouse announced a definitive agreement to sell its Ready-to-eat cereal business to Post Holdings. |
• | TreeHouse confirmed that its strategic review of the Snacks business is ongoing and anticipates providing greater detail in conjunction with its second quarter earnings release in early August. The company plans to update its detailed full year 2019 guidance at that time. |
1 | Adjusted earnings per fully diluted share is a Non-GAAP financial measure. See “Comparison of Adjusted Information to GAAP Information” below for the definition of adjusted earnings per fully diluted share, information concerning certain items affecting comparability, and a reconciliation of adjusted earnings per fully diluted share to loss per fully diluted share, the most comparable GAAP financial measure. |
Three Months | |||
(unaudited) | |||
SKU rationalization | (1.7 | )% | |
Volume/mix excluding SKU rationalization | (10.2 | ) | |
Pricing | 0.2 | ||
Divestiture | (0.3 | ) | |
Foreign currency | (0.2 | ) | |
Total change in net sales | (12.2 | )% |
• | Volume/mix was unfavorable year-over-year across all segments with the largest decreases in the Snacks and Meal Solutions segments. |
• | Foreign currency exchange was unfavorable 0.2% in the first three months of 2019 compared to 2018. |
• | Pricing was favorable 0.2% in the first three months of 2019 compared to 2018 reflecting pricing actions to cover commodity inflation offset by lower pricing in the Single serve beverage category due to competitive pressure and commodity-based pass-through pricing declines in the Snacks segment. |
2 | Adjusted EBITDAS is a Non-GAAP financial measure. See “Comparison of Adjusted Information to GAAP Information” below for the definition of Adjusted EBITDAS, information concerning certain items affecting comparability, and a reconciliation of Adjusted EBITDAS to net loss, the most comparable GAAP measure. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
Diluted loss per share (GAAP) | $ | (0.49 | ) | $ | (0.60 | ) | ||
Restructuring programs | 0.60 | 0.68 | ||||||
Mark-to-market adjustments | 0.28 | 0.10 | ||||||
Acquisition, integration, divestiture, and related costs | 0.02 | — | ||||||
Product recall | 0.01 | — | ||||||
Tax indemnification | (0.01 | ) | — | |||||
Foreign currency (gain) loss on re-measurement of intercompany notes | (0.03 | ) | 0.03 | |||||
CEO transition costs | — | 0.23 | ||||||
Taxes on adjusting items | (0.25 | ) | (0.26 | ) | ||||
Adjusted diluted EPS (Non-GAAP) | $ | 0.13 | $ | 0.18 |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||
Baked Goods | Beverages | Meal Solutions | Snacks | ||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
(unaudited, dollars in millions) | |||||||||||||||||||||||||||||||
Net sales | $ | 422.7 | $ | 455.4 | $ | 237.2 | $ | 249.1 | $ | 464.9 | $ | 523.3 | $ | 176.3 | $ | 253.4 | |||||||||||||||
Direct operating income | 44.7 | 28.0 | 43.9 | 39.4 | 46.9 | 56.2 | (13.8 | ) | 7.6 | ||||||||||||||||||||||
Direct operating income percent | 10.6 | % | 6.2 | % | 18.5 | % | 15.8 | % | 10.1 | % | 10.7 | % | (7.8 | )% | 3.0 | % |
SKU rationalization | (2.5 | )% | ||
Volume/mix excluding SKU rationalization | (7.0 | ) | ||
Pricing | 2.5 | |||
Foreign currency | (0.2 | ) | ||
Total change in net sales | (7.2 | )% |
SKU rationalization | (1.4 | )% | |
Volume/mix excluding SKU rationalization | (2.4 | ) | |
Pricing | (1.0 | ) | |
Total change in net sales | (4.8 | )% |
SKU rationalization | (2.0 | )% | |
Volume/mix excluding SKU rationalization | (9.3 | ) | |
Pricing | 1.0 | ||
Divestiture | (0.6 | ) | |
Foreign currency | (0.3 | ) | |
Total change in net sales | (11.2 | )% |
Volume/mix | (25.6 | )% | |
Pricing | (4.8 | ) | |
Total change in net sales | (30.4 | )% |
March 31, 2019 | December 31, 2018 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 79.0 | $ | 164.3 | ||||
Receivables, net | 367.3 | 351.3 | ||||||
Inventories | 854.2 | 839.7 | ||||||
Prepaid expenses and other current assets | 78.8 | 61.8 | ||||||
Total current assets | 1,379.3 | 1,417.1 | ||||||
Property, plant and equipment, net | 1,260.0 | 1,274.4 | ||||||
Operating lease right-of-use assets | 228.8 | — | ||||||
Goodwill | 2,163.9 | 2,161.4 | ||||||
Intangible assets, net | 690.5 | 700.2 | ||||||
Other assets, net | 42.5 | 46.2 | ||||||
Total assets | $ | 5,765.0 | $ | 5,599.3 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 591.1 | $ | 577.9 | ||||
Accrued expenses | 245.6 | 256.1 | ||||||
Current portion of long-term debt | 4.6 | 1.2 | ||||||
Total current liabilities | 841.3 | 835.2 | ||||||
Long-term debt | 2,285.2 | 2,297.4 | ||||||
Operating lease liabilities | 204.6 | — | ||||||
Deferred income taxes | 155.2 | 154.2 | ||||||
Other long-term liabilities | 155.5 | 170.6 | ||||||
Total liabilities | 3,641.8 | 3,457.4 | ||||||
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 | 2,137.5 | 2,135.8 | ||||||
Retained earnings | 158.6 | 185.9 | ||||||
Accumulated other comprehensive loss | (90.2 | ) | (97.1 | ) | ||||
Total stockholders’ equity | 2,123.2 | 2,141.9 | ||||||
Total liabilities and stockholders’ equity | $ | 5,765.0 | $ | 5,599.3 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited) | ||||||||
Net sales | $ | 1,301.1 | $ | 1,481.2 | ||||
Cost of sales | 1,106.5 | 1,249.3 | ||||||
Gross profit | 194.6 | 231.9 | ||||||
Operating expenses: | ||||||||
Selling and distribution | 79.2 | 108.4 | ||||||
General and administrative | 65.9 | 81.1 | ||||||
Amortization expense | 21.6 | 22.2 | ||||||
Other operating expense, net | 28.8 | 28.9 | ||||||
Total operating expenses | 195.5 | 240.6 | ||||||
Operating loss | (0.9 | ) | (8.7 | ) | ||||
Other expense: | ||||||||
Interest expense | 26.9 | 28.5 | ||||||
(Gain) loss on foreign currency exchange | (0.4 | ) | 2.5 | |||||
Other expense, net | 12.2 | 4.2 | ||||||
Total other expense | 38.7 | 35.2 | ||||||
Loss before income taxes | (39.6 | ) | (43.9 | ) | ||||
Income tax benefit | (12.3 | ) | (9.8 | ) | ||||
Net loss | $ | (27.3 | ) | $ | (34.1 | ) | ||
Net loss per common share: | ||||||||
Basic | $ | (0.49 | ) | $ | (0.60 | ) | ||
Diluted | $ | (0.49 | ) | $ | (0.60 | ) | ||
Weighted average common shares: | ||||||||
Basic | 56.1 | 56.5 | ||||||
Diluted | 56.1 | 56.5 | ||||||
Supplemental Information: | ||||||||
Depreciation and amortization | $ | 61.9 | $ | 67.0 | ||||
Stock-based compensation expense | 6.1 | 16.3 |
Three Months Ended March 31, | ||||||||||
2019 | 2018 | |||||||||
(unaudited, in millions) | ||||||||||
Net loss per GAAP | $ | (27.3 | ) | $ | (34.1 | ) | ||||
Restructuring programs | (1) | 33.7 | 38.6 | |||||||
Mark-to-market adjustments | (2) | 15.9 | 5.6 | |||||||
Acquisition, integration, divestiture, and related costs | (3) | 1.0 | (0.1 | ) | ||||||
Product recall | (4) | 0.4 | — | |||||||
Tax indemnification | (5) | (0.3 | ) | — | ||||||
Foreign currency (gain) loss on re-measurement of intercompany notes | (6) | (1.6 | ) | 1.9 | ||||||
CEO transition costs | (7) | — | 13.0 | |||||||
Less: Taxes on adjusting items | (14.3 | ) | (14.8 | ) | ||||||
Adjusted net income | 7.5 | 10.1 | ||||||||
Interest expense | 26.9 | 28.5 | ||||||||
Interest income | (2.6 | ) | (2.0 | ) | ||||||
Income tax benefit | (12.3 | ) | (9.8 | ) | ||||||
Add: Taxes on adjusting items | 14.3 | 14.8 | ||||||||
Adjusted EBIT | 33.8 | 41.6 | ||||||||
Depreciation and amortization | (8) | 59.2 | 58.8 | |||||||
Stock-based compensation expense | (9) | 5.9 | 6.4 | |||||||
Adjusted EBITDAS | $ | 98.9 | $ | 106.8 |
Location in Condensed | Three Months Ended March 31, | ||||||||||||
Consolidated Statements of Operations | 2019 | 2018 | |||||||||||
(unaudited, in millions) | |||||||||||||
(1 | ) | Restructuring programs | Other operating expense, net | $ | 28.8 | $ | 28.9 | ||||||
Cost of sales | 4.1 | 9.7 | |||||||||||
General and administrative | 0.8 | — | |||||||||||
(2 | ) | Mark-to-market adjustments | Other expense, net | 15.9 | 5.6 | ||||||||
(3 | ) | Acquisition, integration, divestiture, and related costs | General and administrative | 1.0 | (0.1 | ) | |||||||
(4 | ) | Product recall | General and administrative | 0.4 | — | ||||||||
(5 | ) | Tax indemnification | Other expense, net | (0.3 | ) | — | |||||||
(6 | ) | Foreign currency (gain) loss on re-measurement of intercompany notes | (Gain) loss on foreign currency exchange | (1.6 | ) | 1.9 | |||||||
(7 | ) | CEO transition costs | General and administrative | — | 13.0 | ||||||||
(8 | ) | Depreciation included as an adjusting item | Cost of sales | 2.7 | 8.2 | ||||||||
(9 | ) | Stock-based compensation expense included as an adjusting item | General and administrative | 0.2 | 9.9 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited, in millions) | ||||||||
Net Cash Flows (Used In) Provided By : | ||||||||
Operating activities | $ | (37.9 | ) | $ | 57.8 | |||
Investing activities | (36.5 | ) | (41.7 | ) | ||||
Financing activities | (14.8 | ) | (20.1 | ) |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(unaudited, in millions) | ||||||||
Cash flow (used in) provided by operating activities | $ | (37.9 | ) | $ | 57.8 | |||
Less: Capital expenditures | (36.4 | ) | (41.4 | ) | ||||
Free cash flow | $ | (74.3 | ) | $ | 16.4 |
Q1 | Q2 | Q3 | Q4 | 2018 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Net sales to external customers - as previously reported | ||||||||||||||||||||
Baked Goods | $ | 346.0 | $ | 319.1 | $ | 332.8 | $ | 387.4 | $ | 1,385.3 | ||||||||||
Beverages | 249.1 | 236.4 | 236.3 | 286.6 | 1,008.4 | |||||||||||||||
Condiments | 315.2 | 336.1 | 317.1 | 284.1 | 1,252.5 | |||||||||||||||
Meals | 277.0 | 246.5 | 253.7 | 262.8 | 1,040.0 | |||||||||||||||
Snacks | 293.9 | 317.7 | 254.1 | 260.2 | 1,125.9 | |||||||||||||||
Total net sales | $ | 1,481.2 | $ | 1,455.8 | $ | 1,394.0 | $ | 1,481.1 | $ | 5,812.1 | ||||||||||
Net sales to external customers - as recast | ||||||||||||||||||||
Baked Goods | $ | 455.4 | $ | 426.6 | $ | 443.5 | $ | 490.2 | $ | 1,815.7 | ||||||||||
Beverages | 249.1 | 236.4 | 236.3 | 286.6 | 1,008.4 | |||||||||||||||
Meal Solutions | 523.3 | 518.5 | 504.5 | 481.7 | 2,028.0 | |||||||||||||||
Snacks | 253.4 | 274.3 | 209.7 | 222.6 | 960.0 | |||||||||||||||
Total net sales | $ | 1,481.2 | $ | 1,455.8 | $ | 1,394.0 | $ | 1,481.1 | $ | 5,812.1 |
Q1 | Q2 | Q3 | Q4 | 2018 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Operating income (loss) - as previously reported | ||||||||||||||||||||
Baked Goods | $ | 28.0 | $ | 30.7 | $ | 35.2 | $ | 55.9 | $ | 149.8 | ||||||||||
Beverages | 39.4 | 45.8 | 44.1 | 51.0 | 180.3 | |||||||||||||||
Condiments | 27.2 | 36.2 | 49.4 | 35.7 | 148.5 | |||||||||||||||
Meals | 29.9 | 28.4 | 29.8 | 37.8 | 125.9 | |||||||||||||||
Snacks | 6.7 | 4.4 | (3.8 | ) | (5.0 | ) | 2.3 | |||||||||||||
Total segment direct operating income | 131.2 | 145.5 | 154.7 | 175.4 | 606.8 | |||||||||||||||
Unallocated operating expenses | 139.9 | 142.3 | 123.8 | 132.9 | 538.9 | |||||||||||||||
Operating income (loss) | $ | (8.7 | ) | $ | 3.2 | $ | 30.9 | $ | 42.5 | $ | 67.9 | |||||||||
Operating income (loss) - as recast | ||||||||||||||||||||
Baked Goods | $ | 28.0 | $ | 37.3 | $ | 37.3 | $ | 57.2 | $ | 159.8 | ||||||||||
Beverages | 39.4 | 45.8 | 44.1 | 51.0 | 180.3 | |||||||||||||||
Meal Solutions | 56.2 | 58.0 | 74.0 | 69.3 | 257.5 | |||||||||||||||
Snacks | 7.6 | 4.4 | (0.7 | ) | (2.1 | ) | 9.2 | |||||||||||||
Total segment direct operating income | 131.2 | 145.5 | 154.7 | 175.4 | 606.8 | |||||||||||||||
Unallocated operating expenses | 139.9 | 142.3 | 123.8 | 132.9 | 538.9 | |||||||||||||||
Operating income (loss) | $ | (8.7 | ) | $ | 3.2 | $ | 30.9 | $ | 42.5 | $ | 67.9 |
Q1 | Q2 | Q3 | Q4 | 2017 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Net sales to external customers - as previously reported | ||||||||||||||||||||
Baked Goods | $ | 341.1 | $ | 324.3 | $ | 351.2 | $ | 387.3 | $ | 1,403.9 | ||||||||||
Beverages | 268.0 | 246.2 | 244.9 | 314.3 | 1,073.4 | |||||||||||||||
Condiments | 310.1 | 344.9 | 333.8 | 311.8 | 1,300.6 | |||||||||||||||
Meals | 324.0 | 288.4 | 284.6 | 292.2 | 1,189.2 | |||||||||||||||
Snacks | 290.6 | 317.0 | 332.6 | 394.3 | 1,334.5 | |||||||||||||||
Unallocated | 2.4 | 1.4 | 1.7 | — | 5.5 | |||||||||||||||
Total net sales | $ | 1,536.2 | $ | 1,522.2 | $ | 1,548.8 | $ | 1,699.9 | $ | 6,307.1 | ||||||||||
Net sales to external customers - as recast | ||||||||||||||||||||
Baked Goods | $ | 462.4 | $ | 444.3 | $ | 471.4 | $ | 498.2 | $ | 1,876.3 | ||||||||||
Beverages | 268.0 | 246.2 | 244.9 | 314.3 | 1,073.4 | |||||||||||||||
Meal Solutions | 557.1 | 559.2 | 543.1 | 534.6 | 2,194.0 | |||||||||||||||
Snacks | 246.3 | 271.1 | 287.7 | 352.8 | 1,157.9 | |||||||||||||||
Unallocated | 2.4 | 1.4 | 1.7 | — | 5.5 | |||||||||||||||
Total net sales | $ | 1,536.2 | $ | 1,522.2 | $ | 1,548.8 | $ | 1,699.9 | $ | 6,307.1 |
Q1 | Q2 | Q3 | Q4 | 2017 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Operating income (loss) - as previously reported | ||||||||||||||||||||
Baked Goods | $ | 41.9 | $ | 32.5 | $ | 46.9 | $ | 54.2 | $ | 175.5 | ||||||||||
Beverages | 58.7 | 60.3 | 51.7 | 56.2 | 226.9 | |||||||||||||||
Condiments | 31.7 | 36.0 | 34.4 | 34.4 | 136.5 | |||||||||||||||
Meals | 34.0 | 33.8 | 32.1 | 37.4 | 137.3 | |||||||||||||||
Snacks | 12.5 | 10.1 | 1.8 | 1.1 | 25.5 | |||||||||||||||
Total segment direct operating income | 178.8 | 172.7 | 166.9 | 183.3 | 701.7 | |||||||||||||||
Unallocated operating expenses | 111.5 | 196.5 | 109.3 | 697.2 | 1,114.5 | |||||||||||||||
Operating income (loss) | $ | 67.3 | $ | (23.8 | ) | $ | 57.6 | $ | (513.9 | ) | $ | (412.8 | ) | |||||||
Operating income (loss) - as recast | ||||||||||||||||||||
Baked Goods | $ | 48.4 | $ | 40.9 | $ | 52.5 | $ | 60.0 | $ | 201.8 | ||||||||||
Beverages | 58.7 | 60.3 | 51.7 | 56.2 | 226.9 | |||||||||||||||
Meal Solutions | 59.3 | 62.7 | 61.4 | 66.6 | 250.0 | |||||||||||||||
Snacks | 12.4 | 8.8 | 1.3 | 0.5 | 23.0 | |||||||||||||||
Total segment direct operating income | 178.8 | 172.7 | 166.9 | 183.3 | 701.7 | |||||||||||||||
Unallocated operating expenses | 111.5 | 196.5 | 109.3 | 697.2 | 1,114.5 | |||||||||||||||
Operating income (loss) | $ | 67.3 | $ | (23.8 | ) | $ | 57.6 | $ | (513.9 | ) | $ | (412.8 | ) |
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