TreeHouse Foods: Reports Q3-2021 Financial Results

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported third quarter GAAP earnings per diluted share from continuing operations of USD 0.12 compared to earnings of USD 0.20 for the third quarter of 2020. Adjusted earnings per diluted share from continuing operations was USD 0.46 in the third quarter of 2021 compared to USD 0.71 in the third quarter of 2020.

«Building on the improvements we have made over the past several years to enhance execution, we continue to make purposeful decisions to fulfil orders and partner with our customers to keep their shelves stocked during this period of unprecedented supply chain disruption,» said Steve Oakland, Chief Executive Officer and President. «In the quarter, our intense focus on high levels of service enabled us to outperform private label in seven of our ten largest categories. We are encouraged by strengthening demand for our products. As expected, the pricing actions we took earlier this year are being reflected in our results. While it will be more costly to fulfil our customers’ orders in the near term and impact our profitability, we believe it is the right choice, and one that will strengthen our customer relationships and drive performance over time.»

Oakland continued, «As the Board explores strategic alternatives to maximize value, we remain committed to serving our customers, enhancing the efficiency and resiliency of our supply chain and operations and driving growth, cash generation and value.»

«Our third quarter results were in line with our expectations,» said Bill Kelley, EVP and Chief Financial Officer. «Importantly, as anticipated, our pricing actions to recover our first half of the year inflation estimates are beginning to be reflected in our results, with pricing accounting for three percentage points of the 5.3 percent year-over-year net sales growth in the third quarter. Third quarter gross profit margin declined primarily due to the escalation in industry-wide inflation and supply chain disruption, and was partially offset by lower selling, general and administrative expenses and favourable interest expense. We continue to work diligently to mitigate supply chain disruption, and we are confident that we are implementing the necessary pricing actions to recover higher input costs over the inflationary cycle.»

Outlook

TreeHouse updated its full year 2021 guidance ranges and provided fourth quarter 2021 guidance. TreeHouse anticipates the following:

  • Net sales are expected to be in the USD 4.20 to USD 4.325 billion range, with USD 1.04 to USD 1.16 billion expected in the fourth quarter, as the current operating constraints are expected to limit the Company’s ability to service strengthening demand.
  • Adjusted earnings per diluted share from continuing operations of USD 1.08 to USD 1.28, with USD 0.00 to USD 0.20 expected in the fourth quarter, due to escalating inflation and the timing lag for pricing recovery to be reflected, as well as significantly higher costs related to labor and supply chain disruption.
  • Free cash flow1 of at least USD 100 million.

«As inflation continues, the compounding effect of labor shortages and supply chain disruption have created a progressively challenging operating environment,» Oakland continued. «In the face of these challenges, we continue to prioritize our customers and fulfill their orders by implementing new strategies to retain labor, source ingredients and deliver products differently and taking action to recover pricing to offset inflation. This will result in higher costs in the interim, but it is our belief that our investments to serve the customer will strengthen both our retail partnerships and our business for the long term.»

In a separate press release issued today, TreeHouse announced that the Board of Directors has approved a plan to explore strategic alternatives, including a possible sale of the Company or a transaction to allow the Company to focus on its higher growth Snacking & Beverages business by divesting a significant portion of its Meal Preparation business.

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