US – TreeHouse Foods, a manufacturer of packaged foods and beverages, has reported its fourth quarter 2017 results, with a GAAP loss per fully diluted share of US$5.40, compared to GAAP loss of US$4.96 in 2016.
According to the company, it reported adjusted earnings per fully diluted share for the fourth quarter of US$1.02 compared to adjusted earnings of US$1.14 for the fourth quarter of 2016.
“Our cash flow delivery continues to be robust, and although our fourth quarter earnings were in line with our expectations, our operational results were disappointing,” said Sam K. Reed, Chairman, Chief Executive Officer, and President.
“We are well positioned within the private label marketplace; however, it is imperative that we build a more effective and efficient foundation for private label customer engagement.
Our infrastructure is unrivaled in our sector, and we continue to see opportunity to, over time, achieve consistent organic growth and margin expansion in parallel.”
The company also recorded a US$549.7 million impairment of goodwill and intangible assets in the fourth quarter of 2017 related entirely to the Snacks segment.
This segment did not achieve the forecasted results for the year and as a result, future revenue and profitability expectations were reduced.
It also recorded impairment losses of US$276.4 million related to the Snacks segment’s goodwill, which brings the allocated goodwill balance of this segment to zero.
Additionally, in the fourth quarter, the Company determined the carrying value of certain long-lived assets may not be recoverable due to the decline in forecasted future cash flows in the Snacks segment resulting in a US$273.3 million impairment of the Snacks customer lists.
No other segments had impairment charges.
The company’s previously announced share repurchase program launched in the fourth quarter with repurchases totalling US$28.7 million, or 0.6 million shares.
It may continue to repurchase shares throughout 2018 in accordance with the approved plan with a total annual cap of US$150 million.
The extent to which the Company repurchases shares and the timing of such repurchases will depend on market conditions and other factors.
“We are on track and committed to our TreeHouse 2020 restructuring program, whereby simplification continues to be the fundamental tenet in our recovery process.
As we realign the Company to meet the demands of today’s evolving food and beverage landscape, we must narrow our strategic focus to those categories and customers that value organic growth, market segmentation, product differentiation, service capability, and economies of scale,” Mr. Reed concluded.
Matthew Foulston, Chief Financial Officer of TreeHouse, continued, “Sales growth in the quarter was solid, up 2.4% excluding the impact of the divestiture of the Soup and Infant Feeding business, and driven by favorable volume/mix and pricing.
Segment direct operating income, however, was once again disappointing, and we relied on SG&A expense control and tax favorability to offset these shortfalls.
That said, we are pleased to have generated strong free cash flow of US$320 million in 2017.”
In addition to TreeHouse 2020, TreeHouse has completed a comprehensive review of SG&A and related expenses in partnership with a major global consulting firm to provide an independent perspective of improvement potential across all of its functions, business units, and geographies based on industry benchmarks.
As such, the company plans to reduce salaried headcount across the organization by mid-year 2018.
TreeHouse expects savings in calendar 2018 to total approximately US$30 million, with a run rate impact of US$55 million exiting 2018.