TreeHouse First Quarter Net Sales
Exceed Guidance Range
Reaffirms 2024 Annual Guidance
- Net sales of $820.7 million
exceeded the Company's guidance range of $780 to $810
million.
- Net loss from continuing operations was $(11.7) million.
- Adjusted EBITDA1 of $46.0
million was within the Company's guidance range of
$45 to $55
million.
- Repurchased approximately $44
million of company shares during the quarter.
- Reaffirmed 2024 outlook for net sales of $3.43 to $3.50
billion, adjusted EBITDA2 of $360 to $390
million and free cash flow2 of at least
$130 million.
OAK
BROOK, Ill., May 6, 2024
/PRNewswire/ -- TreeHouse Foods, Inc. (NYSE: THS) today reported
financial results for the first quarter of 2024.
"We're encouraged by our solid start to fiscal 2024, delivering
net sales results above our expectations. We are building momentum
with our commercial pipeline, the largest in recent history, with
good progress closing opportunities. I believe this puts TreeHouse
in a strong position to deliver our annual net sales commitment,"
said Steve Oakland, Chairman, Chief
Executive Officer, and President.
Mr. Oakland continued, "While the downtime at our broth facility
impacted first quarter profitability, restart of that facility
coupled with our meaningful supply chain savings initiatives
position us well to expand margin through the rest of the year and
deliver our full year profitability guidance. I am pleased with the
focus throughout the Company and continue to see a long runway for
growth as we invest in opportunities to strengthen capabilities and
depth in our higher growth, higher margin snacking and beverage
categories. I look forward to updating you on our progress
throughout the remainder of 2024."
FIRST QUARTER 2024 FINANCIAL RESULTS
Net Sales — Net sales for the first quarter of 2024 totaled
$820.7 million compared to
$854.0 million for the same period
last year, a decrease of $33.3
million, or 3.9%. The change in net sales from 2023 to 2024
was due to the following:
|
|
Three
Months
|
|
|
|
(unaudited)
|
|
|
Volume/mix excluding
business acquisitions
|
|
(2.8)
|
%
|
|
Pricing
|
|
(2.6)
|
|
|
Volume/mix impact from
broth facility restart
|
|
(2.3)
|
|
|
Total change in organic
net sales1
|
|
(7.7)
|
%
|
|
Volume/mix related to
business acquisitions
|
|
3.8
|
|
|
Total change in net
sales
|
|
(3.9)
|
%
|
The net sales decrease of 3.9% was primarily driven by
unfavorable volume/mix due to planned distribution exits primarily
in our coffee and in-store bakery categories, as well as the
restart of one of our broth facilities, which contributed to
approximately half of the volume decline. Additionally, pricing was
modestly unfavorable as a result of targeted commodity-driven
pricing adjustments. These items were partially offset by
volume/mix from the acquisition of the Coffee Roasting
Capability.
Gross Profit — Gross profit as a percentage of net sales was
13.6% in the first quarter of 2024, compared to 18.0% in the first
quarter of 2023, a decrease of 4.4 percentage points. The decrease
is primarily due to the restart of one of our broth facilities,
unfavorable fixed cost absorption due to lower volume, increased
costs for labor investment, and unfavorable category mix.
Total Operating Expenses — Total operating expenses were
$117.2 million in the first quarter
of 2024 compared to $112.7 million in
the first quarter of 2023, an increase of $4.5 million. The increase in expense was
primarily due to a decrease of $12.9
million of TSA income following the exit of certain TSA
services. This was partially offset by lower professional fees for
strategic growth initiatives, TSA-related expense reductions, and
lower freight costs.
Total Other Expense — Total other expense was $10.1 million in the first quarter of 2024
compared to $13.2 million in the
first quarter of 2023, a decrease of $3.1
million. The decrease was primarily due to a $12.9 million favorable change in non-cash
mark-to-market impacts from hedging activities, largely driven by
an increase in interest rate swaps. This was partially offset by a
decrease in interest income of $10.7
million, as the Seller Promissory Note was repaid in the
fourth quarter of 2023.
Income Taxes — Income taxes were recognized at an effective rate
of 23.5% in the first quarter of 2024 compared to 26.4% recognized
in the first quarter of 2023. The change in the Company's effective
tax rate is primarily driven by changes in the amount of
non-deductible executive compensation and the tax effect of
cross-border tax laws.
Net (Loss) Income from Continuing Operations and Adjusted EBITDA
— Net loss from continuing operations for the first quarter of 2024
was $11.7 million, compared to net
income from continuing operations of $20.4
million for the same period of the previous year. Adjusted
EBITDA1 from continuing operations was $46.0 million in the first quarter of 2024,
compared to $91.3 million in the
first quarter of 2023, a decrease of $45.3
million. The decrease is primarily due to the restart of one
of our broth facilities, unfavorable fixed cost absorption due to
lower volume, increased costs for labor investment, and unfavorable
category mix. This was partially offset by lower freight costs.
Discontinued Operations — Net loss from discontinued operations
decreased by $5.2 million in the
first quarter of 2024 compared to the first quarter of 2023. The
decrease is primarily a result of the divestiture of a significant
portion of the Meal Preparation business on October 3, 2022 and an expected loss on disposal
adjustment of $4.5 million recognized
in the first quarter of 2023.
Net Cash Used in Operating Activities from Continuing Operations
— Net cash used in operating activities from continuing operations
was $52.4 million in the first three
months of 2024 compared to $30.5
million net cash used in the first three months of 2023, an
increase in cash used of $21.9
million. The increase in net cash used in operating
activities was primarily attributable to a decrease in cash flows
from the Receivables Sales Program due to reduced factoring
utilization. Additionally, the increase in net cash used was driven
by lower cash earnings.
Share Repurchase — During the first quarter of 2024, the Company
repurchased approximately 1.2 million shares of common stock for a
total of $43.9 million, excluding
excise tax. At the end of the first quarter, the Company had
$122.8 million available under its
share repurchase authorization.
OUTLOOK2
TreeHouse reaffirmed its previously-issued full year 2024
guidance:
- Net sales are expected in the range of $3.43 to $3.50
billion, which represents growth of approximately 0% to
2% year-over-year. Organic volume and mix are expected to be
slightly positive for the year, offset by modest,
targeted deflationary pricing. The Company expects a slight
volume and mix benefit from the acquisitions completed in the last
year.
- Adjusted EBITDA from continuing operations is expected in the
range of $360 to $390 million. The Company expects approximately
30% of its adjusted EBITDA to be earned in the first half of the
year, with approximately 70% earned in the second half driven by
the restart of the Company's broth facility and realization of
ongoing supply chain savings.
- Net interest expense is expected in the range of $56 to $62
million.
- The Company expects capital expenditures of approximately
$145 million.
- The Company expects free cash flow of at least $130 million.
With regard to the balance of the year, TreeHouse expects the
following:
- Second quarter net sales are expected in a range of
$770 to $800
million, down approximately 2% at the midpoint. Organic
volume and mix are expected to be down low-single digits. Pricing
is also expected to be down low-single digits. The Company expects
a low-single digit positive impact to volume and mix benefit from
the recently completed acquisitions.
- Second quarter adjusted EBITDA from continuing operations is
expected in a range of $55 to
$65 million.
- The Company expects a sequential improvement in adjusted EBITDA
of approximately $45 to $50 million from the second quarter mid-point
into the third quarter, and a sequential improvement of similar
magnitude from the third quarter into the fourth quarter. Drivers
of the sequential improvement include:
- Net sales improvement due to new distribution wins that largely
begin in the third quarter;
- Cost savings initiatives provide greatest impact beginning in
third and fourth quarters;
- Return to improved service levels in Broth business for the
peak season; and
- Incremental pricing actions to recover recent commodity
inflation related to cocoa.
________________________________________________
|
1
|
Adjusted EBITDA, 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 EBITDA from continuing operations
or free cash flow, 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 first 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 NON-GAAP INFORMATION TO GAAP
INFORMATION
The Company has included in this release measures of financial
performance that are not defined by GAAP ("Non-GAAP"). A Non-GAAP
financial measure is a numerical measure of financial performance
that excludes or includes amounts so as to be different than the
most directly comparable measure calculated and presented in
accordance with GAAP in the Company's Condensed Consolidated
Balance Sheets, Condensed Consolidated Statements of Operations,
Condensed Consolidated Statements of Comprehensive (Loss) Income,
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 business 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.
EBITDA from Continuing Operations, EBITDA from Continuing
Operations Margin, Adjusted EBITDA from Continuing Operations, and
Adjusted EBITDA from Continuing Operations Margin, Adjusting for
Certain Items Affecting Comparability
EBITDA from continuing operations margin and adjusted EBITDA
from continuing operations margin are defined as EBITDA from
continuing operations and adjusted EBITDA from continuing
operations as a percentage of net sales. EBITDA from continuing
operations represents net (loss) income from continuing operations
before interest expense, interest income, income tax (benefit)
expense, and depreciation and amortization expense. Adjusted EBITDA
from continuing operations reflects adjustments to EBITDA 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 facility restoration and product recall
costs, growth, reinvestment, and restructuring programs,
acquisition, integration, divestiture, and related costs, foreign
currency exchange impact on the re-measurement of intercompany
notes, mark-to-market adjustments on derivative contracts, 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. EBITDA from
continuing operations, and adjusted EBITDA from continuing
operations 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 Gross Profit, Adjusted Total Operating Expenses,
Adjusted Operating (Loss) Income, Adjusted Total Other Expense
(Income), Adjusted Income Tax Expense (Benefit), Adjusted Net
(Loss) Income from Continuing Operations, and Adjusted Diluted
Earnings (Loss) Per Share from Continuing Operations, Adjusting for
Certain Items Affecting Comparability
Adjusted gross profit, adjusted total operating expenses,
adjusted operating (loss) income, adjusted total other expense
(income), adjusted income tax expense (benefit), and adjusted net
(loss) income from continuing operations represent their respective
GAAP presentation line item adjusted for items such as facility
restoration and product recall costs, growth, reinvestment, and
restructuring programs, acquisition, integration, divestiture, and
related costs, foreign currency exchange impact on the
re-measurement of intercompany notes, mark-to-market adjustments on
derivative contracts, 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. 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. The Company has presented each
of these adjusted Non-GAAP measures as a percentage of net sales
compared to its respective reported GAAP presentation line item as
a percentage of net sales. Adjusted diluted earnings (loss) per
share from continuing operations ("Adjusted diluted EPS") is
determined by dividing adjusted net (loss) income from continuing
operations by the weighted average diluted common shares
outstanding. 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.
A full reconciliation between the relevant GAAP measure of
reported net income (loss) from continuing operations for the three
months ended March 31, 2024 and 2023
calculated according to GAAP, adjusted net income from continuing
operations, and adjusted EBITDA from continuing operations is
presented in the attached tables. Given the inherent uncertainty
regarding adjusted items in any future period, a reconciliation of
forward-looking financial measures to the most directly comparable
GAAP measure is not feasible.
Free Cash Flow from Continuing Operations
In addition to measuring the Company's cash flow generation and
usage based upon the operating, investing, and financing
classifications included in the 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 liquidity
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 three months ended March
31, 2024 and 2023 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 brands snacking 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.
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 quality issues, disruptions, or inefficiencies in
our supply chain and/or operations; loss or consolidation 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 and the prevalence of
weight loss drugs; the outcome of litigation and regulatory
proceedings to which we and/or our customers 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; geopolitical events; 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 our Annual Report on Form 10-K for the year ended
December 31, 2023, 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)
|
|
|
|
March 31,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
191.8
|
|
$
320.3
|
|
Receivables,
net
|
|
173.2
|
|
175.6
|
|
Inventories
|
|
542.3
|
|
534.0
|
|
Prepaid expenses and
other current assets
|
|
48.0
|
|
24.9
|
|
Total current
assets
|
|
955.3
|
|
1,054.8
|
|
Property, plant, and
equipment, net
|
|
731.0
|
|
737.6
|
|
Operating lease
right-of-use assets
|
|
180.5
|
|
193.0
|
|
Goodwill
|
|
1,823.1
|
|
1,824.7
|
|
Intangible assets,
net
|
|
246.4
|
|
257.4
|
|
Other assets,
net
|
|
25.3
|
|
39.1
|
|
Total
assets
|
|
$
3,961.6
|
|
$
4,106.6
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
|
$
482.1
|
|
$
534.9
|
|
Accrued
expenses
|
|
146.9
|
|
169.0
|
|
Current portion of
long-term debt
|
|
0.3
|
|
0.4
|
|
Total current
liabilities
|
|
629.3
|
|
704.3
|
|
Long-term
debt
|
|
1,396.5
|
|
1,396.0
|
|
Operating lease
liabilities
|
|
153.2
|
|
165.0
|
|
Deferred income
taxes
|
|
111.3
|
|
111.4
|
|
Other long-term
liabilities
|
|
63.2
|
|
65.1
|
|
Total
liabilities
|
|
2,353.5
|
|
2,441.8
|
|
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, 53.1 and
54.1
shares outstanding as of March 31, 2024 and December 31, 2023,
respectively
|
|
0.6
|
|
0.6
|
|
Treasury
stock
|
|
(278.5)
|
|
(234.2)
|
|
Additional paid-in
capital
|
|
2,225.3
|
|
2,223.4
|
|
Accumulated
deficit
|
|
(260.6)
|
|
(248.9)
|
|
Accumulated other
comprehensive loss
|
|
(78.7)
|
|
(76.1)
|
|
Total stockholders'
equity
|
|
1,608.1
|
|
1,664.8
|
|
Total liabilities and
stockholders' equity
|
|
$
3,961.6
|
|
$
4,106.6
|
|
TREEHOUSE FOODS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited, in
millions, except per share data)
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2024
|
|
2023
|
|
Net sales
|
|
$
820.7
|
|
$
854.0
|
|
Cost of
sales
|
|
708.7
|
|
700.4
|
|
Gross profit
|
|
112.0
|
|
153.6
|
|
Operating
expenses:
|
|
|
|
|
|
Selling and
distribution
|
|
42.9
|
|
44.7
|
|
General and
administrative
|
|
55.8
|
|
53.4
|
|
Amortization
expense
|
|
12.1
|
|
12.0
|
|
Other operating
expense, net
|
|
6.4
|
|
2.6
|
|
Total operating
expenses
|
|
117.2
|
|
112.7
|
|
Operating (loss)
income
|
|
(5.2)
|
|
40.9
|
|
Other
expense:
|
|
|
|
|
|
Interest
expense
|
|
15.6
|
|
17.8
|
|
Interest
income
|
|
(4.0)
|
|
(14.6)
|
|
Loss on foreign
currency exchange
|
|
3.4
|
|
0.3
|
|
Other (income)
expense, net
|
|
(4.9)
|
|
9.7
|
|
Total other
expense
|
|
10.1
|
|
13.2
|
|
(Loss) income before
income taxes
|
|
(15.3)
|
|
27.7
|
|
Income tax (benefit)
expense
|
|
(3.6)
|
|
7.3
|
|
Net (loss) income from
continuing operations
|
|
(11.7)
|
|
20.4
|
|
Net loss from
discontinued operations
|
|
—
|
|
(5.2)
|
|
Net (loss)
income
|
|
$
(11.7)
|
|
$
15.2
|
|
|
|
|
|
|
Earnings (loss) per
common share - basic:
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.22)
|
|
$
0.36
|
|
Discontinued
operations
|
|
—
|
|
(0.09)
|
|
Earnings (loss) per
share basic (1)
|
|
$
(0.22)
|
|
$
0.27
|
|
|
|
|
|
|
Earnings (loss) per
common share - diluted:
|
|
|
|
|
|
Continuing
operations
|
|
$
(0.22)
|
|
$
0.36
|
|
Discontinued
operations
|
|
—
|
|
(0.09)
|
|
Earnings (loss) per
share diluted (1)
|
|
$
(0.22)
|
|
$
0.27
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
Basic
|
|
53.8
|
|
56.1
|
|
Diluted
|
|
53.8
|
|
56.7
|
|
(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)
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net (loss)
income
|
|
$
(11.7)
|
|
$
15.2
|
|
Net loss from
discontinued operations
|
|
—
|
|
(5.2)
|
|
Net (loss) income from
continuing operations
|
|
(11.7)
|
|
20.4
|
|
Adjustments to
reconcile net (loss) income to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
|
36.6
|
|
35.1
|
|
Stock-based
compensation
|
|
5.7
|
|
7.2
|
|
Unrealized (gain) loss
on derivative contracts
|
|
(7.0)
|
|
5.9
|
|
Deferred TSA
income
|
|
—
|
|
(12.3)
|
|
Other
|
|
5.0
|
|
0.7
|
|
Changes in operating
assets and liabilities, net of acquisitions and
divestitures:
|
|
|
|
|
|
Receivables
|
|
2.9
|
|
0.5
|
|
Inventories
|
|
(9.6)
|
|
(38.1)
|
|
Prepaid expenses and
other assets
|
|
(8.4)
|
|
(7.1)
|
|
Accounts
payable
|
|
(48.2)
|
|
(20.3)
|
|
Accrued expenses and
other liabilities
|
|
(17.7)
|
|
(22.5)
|
|
Net cash used in
operating activities - continuing operations
|
|
(52.4)
|
|
(30.5)
|
|
Net cash used in
operating activities - discontinued operations
|
|
—
|
|
(0.4)
|
|
Net cash used in
operating activities
|
|
(52.4)
|
|
(30.9)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Capital
expenditures
|
|
(28.3)
|
|
(31.7)
|
|
Proceeds from sale of
fixed assets
|
|
0.2
|
|
—
|
|
Net cash used in
investing activities - continuing operations
|
|
(28.1)
|
|
(31.7)
|
|
Net cash used in
investing activities - discontinued operations
|
|
—
|
|
(0.3)
|
|
Net cash used in
investing activities
|
|
(28.1)
|
|
(32.0)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Borrowings under
Revolving Credit Facility
|
|
—
|
|
770.8
|
|
Payments under
Revolving Credit Facility
|
|
—
|
|
(732.8)
|
|
Payments on financing
lease obligations
|
|
(0.1)
|
|
(0.2)
|
|
Repurchases of common
stock
|
|
(43.9)
|
|
—
|
|
Payments related to
stock-based award activities
|
|
(3.8)
|
|
(5.3)
|
|
Net cash (used in)
provided by financing activities - continuing operations
|
|
(47.8)
|
|
32.5
|
|
Net cash (used in)
provided by financing activities - discontinued
operations
|
|
—
|
|
—
|
|
Net cash (used in)
provided by financing activities
|
|
(47.8)
|
|
32.5
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
|
(0.2)
|
|
2.0
|
|
Net decrease in cash
and cash equivalents
|
|
(128.5)
|
|
(28.4)
|
|
Cash and cash
equivalents, beginning of period
|
|
320.3
|
|
43.0
|
|
Cash and cash
equivalents, end of period
|
|
$
191.8
|
|
$
14.6
|
|
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
|
|
2024
|
|
2023
|
|
Supplemental cash
flow disclosures:
|
|
|
|
|
|
Interest
paid
|
|
$
26.3
|
|
$
27.4
|
|
Net income taxes
paid
|
|
0.6
|
|
5.5
|
|
|
|
|
|
|
Non-cash investing
activities:
|
|
|
|
|
|
Capital expenditures
incurred but not yet paid
|
|
11.7
|
|
14.8
|
|
Right-of-use assets
obtained in exchange for lease obligations
|
|
(1.7)
|
|
8.5
|
|
Note receivable
increase from paid in kind interest
|
|
—
|
|
1.1
|
The following table reconciles the Company's net (loss) income
from continuing operations to EBITDA and adjusted EBITDA from
continuing operations, for the three months ended March 31, 2024 and 2023:
|
TREEHOUSE FOODS,
INC.
|
|
RECONCILIATION OF
NET (LOSS) INCOME FROM CONTINUING OPERATIONS TO EBITDA AND
ADJUSTED
EBITDA FROM CONTINUING OPERATIONS
|
|
(Unaudited, in
millions)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2024
|
|
2023
|
|
Net (loss) income
from continuing operations (GAAP)
|
|
$
(11.7)
|
|
$
20.4
|
|
Interest
expense
|
|
15.6
|
|
17.8
|
|
Interest
income
|
|
(4.0)
|
|
(14.6)
|
|
Income tax (benefit)
expense
|
|
(3.6)
|
|
7.3
|
|
Depreciation and
amortization
|
|
36.6
|
|
35.1
|
|
EBITDA from
continuing operations (Non-GAAP)
|
|
32.9
|
|
66.0
|
|
Broth facility
restoration and product recall costs(1)
|
|
6.9
|
|
—
|
|
Growth, reinvestment,
restructuring programs & other(2)
|
|
6.7
|
|
15.3
|
|
Acquisition,
integration, divestiture, and related
costs(3)
|
|
4.1
|
|
3.8
|
|
Foreign currency loss
(gain) on re-measurement of intercompany
notes(4)
|
|
2.4
|
|
(0.2)
|
|
Mark-to-market
adjustments(5)
|
|
(7.0)
|
|
5.9
|
|
Shareholder
activism(6)
|
|
—
|
|
0.3
|
|
Tax
indemnification(7)
|
|
—
|
|
0.2
|
|
Adjusted EBITDA from
continuing operations (Non-GAAP)
|
|
$
46.0
|
|
$
91.3
|
|
|
|
|
|
|
% of net
sales
|
|
|
|
|
|
Net (loss) income from
continuing operations margin
|
|
(1.4) %
|
|
2.4 %
|
|
EBITDA from continuing
operations margin
|
|
4.0 %
|
|
7.7 %
|
|
Adjusted EBITDA from
continuing operations margin
|
|
5.6 %
|
|
10.7 %
|
During the three months ended March 31,
2024 and 2023, the Company entered into transactions that
affected the year-over-year comparison of its financial results
from continuing operations as follows:
|
(1)
|
On September 22, 2023,
the Company initiated a voluntary recall of certain broth products
produced at its Cambridge, Maryland facility and has subsequently
been executing a turnaround plan to restore the facility to full
production capacity. As a result of these restoration activities,
in the first quarter of 2024, the Company incurred incremental
costs of $6.9 million which include non-cash plant shutdown charges
of $4.4 million, non-cash inventory write-offs of $2.3 million, and
other costs, including product returns and logistics, of $0.2
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)
|
Acquisition,
integration, divestiture, and related costs represents costs
associated with completed and potential acquisitions, the related
integration of the acquisitions, completed and potential
divestitures, and gains or losses on the divestiture of a business.
During the three months ended March 31, 2024, $2.0 million was
classified in General and administrative, $1.9 million was
classified in Cost of sales, and $0.2 million was classified in
Other operating expense, net. During the three months ended March
31, 2023, $3.1 million was classified in General and administrative
and $0.7 million was classified in Other operating expense,
net.
|
|
|
|
(4)
|
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.
|
|
|
|
(5)
|
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 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.
|
|
|
|
(6)
|
The Company incurred
fees related to shareholder activism which include directly
applicable third-party advisory and professional service
fees.
|
|
|
|
(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.
|
The following tables reconcile the Company's adjusted gross
profit, adjusted total operating expenses, adjusted operating
(loss) income, adjusted total other expense (income), adjusted
income tax expense (benefit), and adjusted net (loss) income to
their most directly comparable GAAP measure, for three months ended
March 31, 2024 and 2023:
|
TREEHOUSE FOODS,
INC.
|
|
RECONCILIATION OF
NON-GAAP MEASURES
|
|
(Unaudited, in
millions, except per share amounts)
|
|
|
|
Three Months Ended
March 31, 2024
|
|
|
Gross
profit
|
|
Total
operating
expenses
|
|
Operating
(loss)
income
|
|
Total
other
expense
|
|
Income
tax
benefit
|
|
Net loss
from
continuing
operations
|
|
As reported
(GAAP)
|
|
$
112.0
|
|
$
117.2
|
|
$ (5.2)
|
|
$ 10.1
|
|
$ (3.6)
|
|
$
(11.7)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broth facility
restoration and product recall costs(1)
|
|
6.9
|
|
—
|
|
6.9
|
|
—
|
|
—
|
|
6.9
|
|
Growth, reinvestment,
restructuring programs & other(2)
|
|
—
|
|
(6.7)
|
|
6.7
|
|
—
|
|
—
|
|
6.7
|
|
Acquisition,
integration, divestiture, and related
costs(3)
|
|
1.9
|
|
(2.2)
|
|
4.1
|
|
—
|
|
—
|
|
4.1
|
|
Foreign currency loss
on re-measurement of intercompany notes(4)
|
|
—
|
|
—
|
|
—
|
|
(2.4)
|
|
—
|
|
2.4
|
|
Mark-to-market
adjustments(5)
|
|
—
|
|
—
|
|
—
|
|
7.0
|
|
—
|
|
(7.0)
|
|
Taxes on adjusting
items
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3.2
|
|
(3.2)
|
|
As adjusted
(Non-GAAP)
|
|
$
120.8
|
|
$
108.3
|
|
$ 12.5
|
|
$ 14.7
|
|
$ (0.4)
|
|
$ (1.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported (% of net
sales)
|
|
13.6 %
|
|
14.3 %
|
|
(0.6) %
|
|
1.2 %
|
|
(0.4) %
|
|
(1.4) %
|
|
As adjusted (% of net
sales)
|
|
14.7 %
|
|
13.2 %
|
|
1.5 %
|
|
1.8 %
|
|
— %
|
|
(0.2) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
$
(0.22)
|
|
Adjusted
diluted
|
|
|
|
|
|
|
|
|
|
|
|
$
(0.03)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net loss
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
53.8
|
|
Diluted for adjusted
net loss from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
53.8
|
|
|
Three Months Ended
March 31, 2023
|
|
|
Gross
profit
|
|
Total
operating
expenses
|
|
Operating
income
|
|
Total
other
expense
|
|
Income
tax
expense
|
|
Net
income
from
continuing
operations
|
|
As reported
(GAAP)
|
|
$
153.6
|
|
$
112.7
|
|
$ 40.9
|
|
$ 13.2
|
|
$
7.3
|
|
$ 20.4
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth, reinvestment,
restructuring programs & other(2)
|
|
—
|
|
(15.3)
|
|
15.3
|
|
—
|
|
—
|
|
15.3
|
|
Acquisition,
integration, divestiture, and related
costs(3)
|
|
—
|
|
(3.8)
|
|
3.8
|
|
—
|
|
—
|
|
3.8
|
|
Foreign currency gain
on re-measurement of intercompany notes(4)
|
|
—
|
|
—
|
|
—
|
|
0.2
|
|
—
|
|
(0.2)
|
|
Mark-to-market
adjustments(5)
|
|
—
|
|
—
|
|
—
|
|
(5.9)
|
|
—
|
|
5.9
|
|
Shareholder
activism(6)
|
|
—
|
|
(0.3)
|
|
0.3
|
|
—
|
|
—
|
|
0.3
|
|
Tax
indemnification(7)
|
|
—
|
|
—
|
|
—
|
|
(0.2)
|
|
—
|
|
0.2
|
|
Taxes on adjusting
items
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6.0
|
|
(6.0)
|
|
As adjusted
(Non-GAAP)
|
|
$
153.6
|
|
$ 93.3
|
|
$ 60.3
|
|
$
7.3
|
|
$ 13.3
|
|
$ 39.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported (% of net
sales)
|
|
18.0 %
|
|
13.2 %
|
|
4.8 %
|
|
1.5 %
|
|
0.9 %
|
|
2.4 %
|
|
As adjusted (% of net
sales)
|
|
18.0 %
|
|
10.9 %
|
|
7.1 %
|
|
0.9 %
|
|
1.6 %
|
|
4.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from
continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
|
$ 0.36
|
|
Adjusted
diluted
|
|
|
|
|
|
|
|
|
|
|
|
$ 0.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted for net income
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
56.7
|
|
Diluted for adjusted
net income from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
56.7
|
|
TREEHOUSE FOODS,
INC.
|
|
RECONCILIATION OF
NET CASH USED IN OPERATING ACTIVITIES FROM CONTINUING OPERATIONS TO
FREE CASH FLOW FROM CONTINUING OPERATIONS
|
|
(Unaudited, in
millions)
|
|
|
|
Three Months
Ended
March
31,
|
|
|
2024
|
|
2023
|
|
|
|
|
Cash flow used in
operating activities from continuing operations
|
|
$
(52.4)
|
|
$
(30.5)
|
|
Less: Capital
expenditures
|
|
(28.3)
|
|
(31.7)
|
|
Free cash flow from
continuing operations
|
|
$
(80.7)
|
|
$
(62.2)
|
View original
content:https://www.prnewswire.com/news-releases/treehouse-foods-inc-reports-first-quarter-2024-results-302135995.html
SOURCE TreeHouse Foods, Inc.