TreeHouse Foods: Q1-2020 Results Above Guidance Range

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported first quarter GAAP loss per diluted share from continuing operations of USD (0.58) compared to USD (0.26) reported for the first quarter of 2019. The Company had adjusted earnings per diluted share from continuing operations of USD 0.37 in the first quarter of 2020 compared to USD 0.33 in the first quarter of 2019.

Highlights

• First quarter 2020 loss per diluted share from continuing operations was USD (0.58) compared to USD (0.26) for the same period in 2019.
• First quarter 2020 adjusted earnings per diluted share from continuing operations was USD 0.37, above the Company’s guidance range and USD 0.04, or 12 percent, above first quarter 2019, driven in large part by TreeHouse’s ability to service significant demand related to Covid-19.
• TreeHouse reaffirmed its full year 2020 guidance of USD 2.40 – USD 2.65 for adjusted earnings per diluted share from continuing operations, net sales between USD 4.10 and USD 4.40 billion and free cash flow of USD 250 to USD 300 million, however the Company noted that there continues to be uncertainty around the nature, timing and magnitude of changes in future sales and earnings attributable to the spread of Covid-19 in North America.

«We want to thank all of our employees for working tirelessly – in our manufacturing plants, as we have ramped up production; in our warehouses, as we have been working diligently to fulfill orders; and throughout our customer-facing organization, as we have partnered with our customers to service the heightened order flow. I’m very proud of the way the entire TreeHouse organization has come together in the midst of the Covid-19 crisis to deliver solid operational, commercial and financial results,» said Steve Oakland, Chief Executive Officer and President. «First quarter adjusted EPS of USD 0.37 and revenue of USD 1.08 billion came in above our expectations, as our hard work over the last three years to transform the business and our reorganization from three to two divisions have enabled us to quickly and successfully escalate production to meet the significantly higher demand for food and beverages during this pandemic.»

«I’m very pleased with our performance in the first quarter. Our retail business responded well to the unprecedented demand in March related to pantry stocking and higher at-home consumption, and more than offset the declines in our food-away-from-home business,» said Bill Kelley, EVP and Chief Financial Officer. «Organic net sales rose 2.6 percent versus last year, and exceeded our original expectations for a year-over-year decline, driven by the anticipated carryover of prior year lost distribution and pricing adjustments. Our first quarter adjusted Ebitda of USD 98.7 million was in line with our guidance range for the first quarter, despite incurring additional costs to add production shifts and ensure labor availability throughout our network of manufacturing and distribution facilities across the country.»

Adjusted earnings per diluted share from continuing operations, organic net sales, and adjusted Ebitda from continuing operations are Non-GAAP financial measures. See «Comparison of Adjusted Information to GAAP Information» for the definitions of the Non-GAAP measures, information concerning certain items affecting comparability, and reconciliations of the GAAP to Non-GAAP measures.

Outlook

TreeHouse reaffirmed its full year 2020 guidance for adjusted earnings from continuing operations of USD 2.40 to USD 2.65 per diluted share, net sales of USD 4.10 to USD 4.40 billion, and free cash flow of USD 250 to USD 300 million. The Company continues to focus on financial flexibility and anticipates current cash balances, cash flows from operations, and available sources of liquidity will be sufficient to meet cash needs.

In regard to the outlook for the balance of the year, Oakland said, «While we are very encouraged by the performance of our operations during this unprecedented period, we believe it is too early to fully appreciate how the balance of the year may unfold, given the uncertainty around the duration and potentially longer-lasting impact of the nation’s stay-at-home practices in response to Covid-19. We have taken into account a number of factors and contemplated a wide range of potential outcomes – including, but not limited to, varying levels of demand in retail grocery, increased expenses to meet that demand, and declines in the food-away-from-home market. As such, we believe it is prudent to maintain our original guidance for 2020.»

In regard to the outlook for the second quarter, TreeHouse anticipates the following:

• Adjusted earnings per diluted share from continuing operations of USD 0.40 to USD 0.50, up approximately 13 percent year-over-year at the midpoint
• Net sales between USD 1.05 to USD 1.09 billion, up approximately 4 percent year-over-year at the midpoint
• Adjusted Ebitda from continuing operations of USD 105 to USD 120 million, up approximately 7 percent year-over-year at the midpoint

The Company is not able to reconcile prospective adjusted earnings per diluted share from continuing operations and prospective adjusted Ebitda (Non-GAAP) to the most comparable GAAP financial measure 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.