TreeHouse Foods, Inc.
“We remain resolute in our commitment to private label and believe that we will generate superior shareholder returns through our dual agenda of internal improvements and external expansion,” said Sam K. Reed, chairman and chief executive officer of TreeHouse Foods, Inc., Oak Brook, Ill., in commentary accompanying the company’s review of its second-quarter results. “Our growth will be driven by innovation and acquisition coupled with our passion for consumer value, consumer brands and financial performance.”
TreeHouse Foods was established in 2005 as a result of the spin-off by Dean Foods Co. of its specialty foods group. Mr. Reed, a former chief executive officer of Keebler Foods Co., joined the Dean Foods’ specialty foods group to lead the launch of the new packaged food company. He has been at the TreeHouse helm ever since. The company was created as a manufacturer of private label and regionally branded consumer packaged goods, and it has remained committed to the private label course.
In April, TreeHouse acquired Naturally Fresh, Inc., Atlanta, a manufacturer of refrigerated dressings, sauces, marinades, dips and specialty items.
Mr. Reed said of the latest acquisition, “Naturally Fresh provides retailers with a premium offering in the refrigerated produce section, and the acquisition is a perfect complement to our existing broad array of private label shelf-stable dressings, sauces and salsa.”
TreeHouse said it plans to close two manufacturing facilities, citing excess capacity and opportunities to lower production costs. Production at the Mendota, Ill., soup facility is expected to cease in the first quarter of fiscal 2013, with the full plant closing expected by the second quarter of fiscal 2013. Production will shift to TreeHouse’s Pittsburgh soup facility. Total costs associated with the closing will be approximately $17.7 million, the company said.
The company also plans to cease production at its salad dressing facility in Seaforth, Ont., in the second quarter of fiscal 2013, with full plant closing set for the third quarter of fiscal 2013. Production will move to other manufacturing facilities within the company’s existing network. Total costs associated with the closing will be about $17.3 million, the company said.
TreeHouse in September announced that beginning in the fourth quarter of 2012, it will begin manufacturing private label packets of roasted coffee for use in single-service coffee machines.
“We have been quite careful to do this — take this investment and bootstrap it, build it up as we, in fact, have solid commitments from existing customers that are prepared to enter into the private label business,” Mr. Reed said. “It’s important to remember that we’ve got a broad product portfolio. What we want is a very fine coffee business that for years turns out to be an above-average contributor in both growth and in margins and cash flow.”
For the six months ended June 30 net income was $41,585,000, or $1.15 per share, up 22% from $34,153,000, or 96c per share, in the same period of fiscal 2011. Net sales were $1,051,232,000, up 7% from $986,133,000.
Looking ahead to the remainder of the fiscal year, Mr. Reed said TreeHouse expects full-year sales to be about $2.2 billion, which would be up 8% from 2011. Lower soup expectations led the company to revise downward its estimated full-year earnings per share to a range of $2.75 to 2.90 from $3 to 3.15.