Recall Negatively Impacts TreeHouse Foods Q4 Results
Following a challenging fourth quarter when year-over-year sales fell slightly, TreeHouse Foods is implementing a plan company officials said will focus on margin management and additional efficiency opportunities.
For the quarter ended December 31, net sales were $905.7 million, down 0.6% from the comparable quarter the previous year. TreeHouse officials said the decline was the result of lost volume from the griddle product facility restoration following a related recall. The drop in volume was nearly offset by strong performances in multiple categories, including pretzels, in-store bakery, and cookies.
In October, TreeHouse recalled frozen waffle and pancake products over possible contamination with Listeria monocytogenes. The items were sold through several retail stores, including but not limited to Albertsons, Aldi, Dollar General, Foodhold, HEB, Kroger, Publix, Target, and Walmart.
Net income in the quarter was $58.7 million, or $1.15 per diluted share, up from net income of $7.5 million, or $0.14 per diluted share, in the comparable quarter the prior year.
"Despite a slower macro environment and two significant supply chain issues, our teams made steady progress executing our supply chain initiatives amidst a difficult consumer backdrop across food and beverage categories,” said Steve Oakland, chairman, CEO, and president of TreeHouse Foods.
He continued, "As a result, the board and management are executing a plan to drive more profitable business through the organization, including making strategic decisions on margin management on new and existing business with a goal of prioritizing gross profit dollars. We are also focused on additional efficiency opportunities across the organization that, along with declining levels of capex as we complete growth-related investments, can drive improved profitability and cash flow. We believe these actions will position the business well in the near term and provide the opportunity for significant operating leverage when our categories return to growth."
For the full year, net sales were $3.35 billion, down from net sales of $3.43 billion in the prior year. Full-year net income was $26.9 million, or $0.51 per diluted share, down from net income of $53.1 million, or $0.94 per diluted share, in the prior year.
Looking ahead, TreeHouse is forecasting adjusted net sales in the range of $3.34 billion to $3.40 billion, which represents a decline of approximately 1% to growth of approximately 1% year-over-year.
