TreeHouse Foods Predicts Strong PL Sales Growth This Year

February 15, 2011
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TreeHouse Foods Inc., Oak Brook, Ill., is reporting significantly higher fourth quarter earnings, driven by acquisition growth and margin improvements throughout its business segments. At the same time, the private label producer is forecasting a strong 2011 for its private label efforts and for the company as a whole.
Earnings for the quarter were $0.77 per fully-diluted share compared to $0.66 per fully-diluted share in the fourth quarter of the previous year.  On an adjusted basis, as described below, fully-diluted earnings per share improved 2.6% to $0.80 compared to $0.78 the previous year.
Adjusted operating earnings before interest, taxes, depreciation, amortization and other non-cash or unusual items (adjusted EBITDA, reconciled to net income, the most directly comparable GAAP measure, appears on the attached schedule) increased 41.3 percent to $82.8 million in the quarter compared to $58.6 million in the same period the prior year.  The increase is primarily due to higher sales driven by the acquisition of Sturm Foods in the first quarter of 2010.
Net sales for its fourth quarter totaled $509.5 million compared to $404.8 million the previous year, an increase of nearly 26 percent. Excluding acquisitions and retail infant feeding products, sales for the company’s private label products in the grocery segment would have increased by nearly 2 percent.  North American retail grocery sales rose just more than 35 percent (up one percent excluding acquisitions and infant feeding products), primarily due to higher sales of salad dressings and sauces.
In announcing the results, TreeHouse says that private label “has shown consistent growth potential, not only due to consumers' demand for quality at a value price point, but because customers also demand quality and differentiation from national brands.  As such, TreeHouse believes that private label products will continue to grow at a faster rate compared to the total food manufacturing sector.”
The company’s North American Retail Grocery segment sells private label and branded products that include pickles, peppers, relishes, condensed and ready to serve soups, broths, gravies, jams, spreads, salad dressings, sauces, nondairy powdered creamers, salsa, aseptic products, infant feeding products, powdered drinks, hot cereals, macaroni and cheese and skillet dinners.
Other highlights from its earnings report include:
  • Full year adjusted earnings per share grew 24.7 percent from the prior year
  • Fourth quarter net sales rose 25.9 percent
  • Fourth quarter gross margin increased 147 basis points
  • 2011 adjusted earnings per share growth of 12 percent to 14 percent  is forecast

TreeHouse bills itself as the largest manufacturer of pickles and non-dairy powdered creamer in the Untied States and the largest manufacturer of private label salad dressings, drink mixes and instant hot cereals in the States and Canada, based on sales.

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