TreeHouse Foods sees earnings up in Q4
TreeHouse Foods reported an overall sales loss, but turned its earnings around in its fourth quarter.
The Oak Brook, Ill.-based company posted revenue of $1.1 billion for the three months ended Dec. 31, 2019 — a decrease of 4.5% from the prior-year period. Earnings per diluted share from continuing operations were $0.27 — compared with an $0.08 loss that was posted in Q4 of 2018. For the full-year period, the company posted a diluted loss per share of $1.96 — more than double the loss it saw in 2018.
Outlook, however, was positive.
"Our 2019 results demonstrated great progress. It's important to recognize how much we accomplished in the past year - we provided consistently excellent service for our customers; we designed and stood up our commercial organization; we completed the majority of non-core asset sales; and we made great strides toward building our TreeHouse culture," said Steve Oakland, CEO and president.
The earnings came at the tail end of a busy year in which TreeHouse sold two manufacturing facilities for its private label bakery goods and lost the sale of its ready-to-eat cereal business to Post Holdings.
TreeHouse said efforts to simplify and rationalize low-margin SKUs from its product portfolio contributed 0.7% to the overall year-over-year decline in net sales, primarily within the baked goods segment. Total operating expenses as a percentage of net sales did increase during the quarter by 0.4% due to the sale of the two baker facilities.
Looking ahead at 2020, the company estimates net sales to reach as high as $4.4 billion, foreseeing a sales decline of 3%-5% in the first half of 2020, around $175-$200 million in revenue loss, but estimates the second half of 2020 to generate 2%-3% sales growth driven by its meal solutions and remaining bakery business.
"We continue to focus on our strategic goals in 2020," Oakland said. "This year, we will continue to drive the organization toward growth and improved profitability. While our pivot to growth is taking longer than originally anticipated due to the carryover impact of business that was lost last year, we believe we have the right plans in place to demonstrate consistent delivery of top-line growth in the back half of 2020."
TreeHouse is continuing to look for a buyer of its ready-to-eat, private brand cereal business, after the Federal Trade Commission filed against the sale to Post Holdings, claiming the $110 million acquisition would give Post more than a 60% share of the market and eliminate competition between the companies. After the filing, both Post and TreeHouse pulled out of the deal.
In other news, TreeHouse announced that the Board of Directors elected Kelley to serve as executive vice president and CFO. He has been serving as the CFO since November 2019 on an interim basis. He’s been with TreeHouse since 2016 as a corporate controller, and as senior vice president of corporate and operations finance. Prior to the private label company, Kelley spent time with Heinz, Hillshire Brands and Sara Lee.