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TreeHouse Foods: Q2-2018 Results Above Expectations

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported second quarter GAAP loss per fully diluted share of USD (0.36) compared to a GAAP loss of USD (0.60) reported for the second quarter of 2017. The Company reported adjusted earnings per fully diluted share1 of USD 0.37 in the second quarter of 2018 compared to adjusted earnings of USD 0.51 for the second quarter of 2017.

«I’m pleased with our results this period as we continued to deliver upon our financial commitments,» said Steve Oakland, Chief Executive Officer and President. «Having spent the last few months listening to our customers, getting to know our employees and visiting our plant and warehouse locations, I am very encouraged by the effort and dedication our organization is putting forth to support TreeHouse 2020. I continue to be excited about the private label opportunity and confident that these programs are the right initiatives to improve the long-term health of the Company.»

«We delivered second quarter earnings above our expectations. Sales grew 0.9 percent year over year, excluding the impact of the sale of Soup and Infant Feeding and the SKU rationalization. We were particularly pleased with pricing realization of 1.3 percent in the quarter, as our teams worked hard to recover freight and commodity inflation,» said Matthew Foulston, EVP and Chief Financial Officer. «Operating income was above our expectations, primarily reflecting lower SG+A expense related to our Structure to Win initiative. We also benefited from a lower than anticipated tax rate in the quarter, driven primarily by legislation enacted in certain jurisdictions that reduced our state income tax expense.»

Outlook

«Private label continues to be a strategic imperative for our retail partners,» continued Mr. Oakland. «Every day, we strive to provide retailers with high quality food and beverages, coupled with exceptional service. However, we have yet to really leverage our leadership position in private label and unleash the power of scale. Our teams are energized, they’re on board, and we will continue our focus on operational excellence.»

«While our work around process improvement and better discipline in order to drive costs out of the system is ongoing, one of my priorities has been thinking through how we can position our portfolio to best serve the changing retail environment. We have reinvigorated a strategy process across the company, and we are in the process of refining our priorities. I look forward to communicating more detail on our strategy before the end of the year,» concluded Mr. Oakland.

The Company fine-tuned its 2018 guidance for adjusted earnings per fully diluted share to USD 2.05 to USD 2.35 and updated its revenue expectation to a range of USD 5.8 to USD 6.0 billion, as volumes in the second half of the year are expected to be modestly lower than originally anticipated. Regarding the third quarter of 2018, the Company expects adjusted earnings in the range of USD 0.50 to USD 0.60 per fully diluted share. The Company noted that although production has resumed at its Pecatonica non-dairy creamer plant the ramp up period is expected to extend into the fourth quarter. In addition, while TreeHouse has initiated pricing discussions with customers related to the Canadian import tariffs, the Company does not expect pricing recovery to occur until the fourth quarter of 2018.

The Company is not able to reconcile adjusted earnings per fully diluted share (non-GAAP) to projected reported diluted earnings per share 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.

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