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TreeHouse Foods: Reports First Quarter 2018 Results

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported first quarter GAAP loss per fully diluted share of USD (0.60) compared to GAAP income of USD 0.49 reported for the first quarter of 2017. The Company reported adjusted earnings per fully diluted share1 of USD 0.18 in the first quarter of 2018 compared to adjusted earnings of USD 0.61 for the first quarter of 2017.

«In the first quarter, we delivered both revenue and adjusted earnings per share above the midpoint of our guidance range», said Steve Oakland, Chief Executive Officer and President. «Our progress to date has been solid, and I continue to be impressed with the tremendous effort our team is putting towards the key elements of TreeHouse 2020».

«Our work to address near term challenges such as margin recovery is ongoing. More broadly, we are working to better position ourselves to address the evolving retail landscape», continued Oakland. «As a private label industry leader, we are in the ideal position within food and beverage as private label continues to grow at the expense of brands. This year continues to be one of transition, but I’m encouraged by the progress we are making around TreeHouse 2020, our Structure to Win SG+A initiative, supply chain optimization, and rolling out our TreeHouse Management Operating Structure», Oakland said.

Matthew Foulston, Chief Financial Officer of TreeHouse, continued, «I’m pleased with our start to the year. First quarter sales increased 1.9 percent, excluding the (2.8) percent impact of the SIF divestiture last year and an approximate (2.7) percent drag due to our SKU rationalization efforts. The year-over-year segment direct operating income decline was largely expected and was driven by pricing that has yet to fully cover higher commodity and escalating freight costs; offset, in part, by tighter SG+A expense control».

Outlook

«In today’s market, private label is highly relevant and is one of the keys to helping our customers differentiate themselves and build consumer loyalty», said Oakland. «As we improve our processes and put greater discipline in place, not only will we drive costs out, but we will better align our capabilities with our customers’ needs. In turn, I believe we can take advantage of the underlying growth in private label».

The Company reaffirmed its 2018 adjusted guidance of USD 2.00 to USD 2.40 in earnings per fully diluted share. Regarding the second quarter of 2018, the Company expects adjusted earnings in the range of USD 0.20 to USD 0.30 per fully diluted share. The sequential increase compared to the first quarter of 2018 is driven by pricing realization, continued SG+A expense control, and operational improvement.

Because the Company cannot predict some of the key items impacting reported GAAP results, the second quarter forecast for both GAAP and adjusted earnings is the same. Regarding the full year, TreeHouse provided a GAAP earnings per fully diluted share guidance range of USD 1.22 to USD 1.62. The difference between the full year GAAP and adjusted (Non-GAAP) guidance ranges is related to the impact of adjusting for the items noted in the earnings per share reconciliation table for the three months ended March 31, 2018, equating to USD 0.78 per fully diluted share.