TreeHouse Foods: Reports Q4-2021 Financial Results

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported fourth quarter GAAP loss per diluted share from continuing operations of USD (0.52) compared to GAAP earnings per diluted share from continuing operations of USD 1.29 reported for the fourth quarter of 2020. The Company generated adjusted earnings per diluted share from continuing operations1 of USD 0.11 in the fourth quarter of 2021 compared to USD 1.07 in the fourth quarter of 2020.

«We are encouraged by our solid top-line results and the demand signal which continued to strengthen in the fourth quarter,» said Steve Oakland, Chief Executive Officer and President. «I’m incredibly proud of the resilience and agility of our TreeHouse team. Our collaboration with our customers to implement pricing to recover inflation and disciplined approach to addressing labor shortages and supply chain disruption across the network position us for improved performance throughout the coming year. We continue to work diligently to serve the customer, and we believe our intense and ongoing focus on service will reinforce our customer relationships and enhance our performance over time, despite the near-term impact on our profitability.»

Oakland continued, «As our Board’s strategic review continues to progress, we continue to believe there is significant opportunity to drive long-term sustainable growth across private label.»

«We delivered fourth quarter net sales of USD 1.17 billion, slightly ahead of our guidance, and our earnings were very much in line with our expectations,» said Bill Kelley, EVP and Chief Financial Officer. «While fourth quarter revenue declined one percent versus 2020, the impact of our pricing actions to recover inflation continued to build, contributing 5.6 percentage points of growth and reflecting the strong communication and collaboration with our customers. Pricing was offset by lower service levels driven by industry-wide labor and supply chain disruption. Importantly, we are investing in the resiliency of our network to improve staffing, supply chain and operations and we are prepared to recover further inflation, as necessary, through pricing actions and continuous improvement initiatives in 2022.»

Outlook

In fiscal year 2022, TreeHouse anticipates the following:

• Net sales growth of at least 11 percent year-over-year. Pricing actions are expected to drive the majority of the sales growth, and are anticipated to be tempered by volume constraints related to labor shortages and supply chain disruption.
• Adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of USD 385 to USD 415 million, up approximately 5 percent year-over-year at the midpoint. The cadence of earnings is expected to be weighted toward the second half of the year, as we expect labor shortages and supply chain disruption will continue to challenge profitability and volume in the first half.

The Company anticipates further erosion in its first quarter adjusted Ebitda margin (on both a sequential and year-over-year basis). Adjusted Ebitda improvement is expected as the year progresses due to additional pricing to offset inflation that will be effected at the end of the first quarter, and as the Company better mitigates the impact of labor and supply chain disruption, improving both volume and profitability.

TreeHouse has a strong working relationship with its bank group, and in light of the outlook for adjusted Ebitda, the Company has negotiated an amendment to temporarily increase its debt covenant leverage ratio, providing additional flexibility in 2022. The amendment is expected to be completed by the close of business today.

Strategic Review

As previously announced, the Board of Directors continues 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.