OAK BROOK, ILL. — Private label manufacturer TreeHouse Foods, Inc., is in transition. The bulk of fiscal 2018 was spent laying the groundwork to accomplish the goals management expressed in the company’s TreeHouse 2020 strategic plan, which will create a smaller, leaner organization focused on higher margin initiatives.
“We are standing on a stronger base today than we did a year ago,” Steven T. Oakland, president and chief executive officer, said during a Feb. 14 conference call with financial analysts. “We worked hard as an organization to resolve the majority of our service issues and to restore customer trust in TreeHouse’s ability to deliver. I don’t want to imply that we are anywhere near the finish line, but I’m pleased with the progress.”
During the year the company consolidated 3 manufacturing plants and 12 warehouses, and permanently decommissioned 20 production lines. Management closed an administrative office in St. Louis and is in the process of closing another in Omaha.
The results of the efforts weren’t great, but an improvement when compared to the previous fiscal year. For the year ended Dec. 31, 2018, TreeHouse Foods recorded a loss of $61.4 million, which compared with a loss of $286.2 million the year before.
Sales in 2018 fell to $5,812.1 million from $6,307.1 million in fiscal 2017.
Three items that affected results during the year included significant volume reduction in the Snacks business unit, which is currently under strategic review and may be divested, manufacturing capacity constraints in beverages, and the lingering effects of a strike at TreeHouse’s Pecatonica, Ill., non-dairy creamer processing plant.
During the fourth quarter, TreeHouse Foods recorded a loss of $12.6 million.
“Revenue of $1.48 billion was at the midpoint of our guidance range for the quarter, a decline of 13% versus the prior year,” said Matthew J. Foulston, chief financial officer. “Excluding s.k.u. (stock-keeping unit) rationalization and the McCann sale, revenue declined 10.5%, driven largely by the loss of some low-margin Snacks business.”
In fiscal 2019, TreeHouse Foods management expects sales to fall in a range of $5.35 billion to $5.75 billion and adjusted earnings per share to come in between $2.35 per share and $2.75 per share.
“What I want to make sure comes across here is that, despite our expectation for 2019 revenue decline of about 5% at the midpoint, we anticipate that we will deliver adjusted earnings per share growth of approximately 16% of the $2.55 guidance midpoint,” Mr. Foulston said. “That will be driven by solid execution on operational improvement across the entire organization.”
Mr. Foulston added that the company will face headwinds during the first half of fiscal 2019 as it laps some low-margin business.
“As we get into the back half of the year, however, we do have some visibility to new business wins and anticipate pivoting to revenue growth,” he said.