Treehouse Foods (THS) Misses Q3 EPS by 8c; Announces CFO Transition, Plant Rightsizing

November 3, 2016 6:58 AM EDT

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Treehouse Foods (NYSE: THS) reported Q3 EPS of $0.70, $0.08 worse than the analyst estimate of $0.78. Revenue for the quarter came in at $1.59 billion versus the consensus estimate of $1.64 billion.

CFO Transition:

TreeHouse Foods announced that its Board of Directors has appointed Matthew J. Foulston, age 52, Executive Vice President and Chief Financial Officer. Mr. Foulston was most recently Chief Financial Officer of Compass Minerals International, Inc. where he was responsible for accounting, financial planning and reporting, tax, internal audit, capital investment management and investor relations. To ensure a smooth transition, Mr. Foulston has agreed to remain with Compass Minerals through December 1, 2016. Consequently, he will join TreeHouse no later than December 2, 2016.

"We are delighted to welcome Matthew to our TreeHouse family," said Sam K. Reed, Chairman and Chief Executive Officer of TreeHouse Foods. "As we continue the integration of Private Brands, Matthew will be a key partner in our organization and will be instrumental to our growth and simplification initiatives. Matthew's large public company background in the automotive industry will serve us well as we enter the next phase of our Company's growth."

"The track record of this management team over the last 10 years is what initially interested me in TreeHouse," said Mr. Foulston. "As I've gotten to know more of the senior team, it is clear to me that this is a special organization. We have a unique and tremendous opportunity within the private label food and beverage landscape, and I am eager to make a meaningful contribution at TreeHouse."

Prior to joining Compass Minerals in December 2014, Mr. Foulston was Senior Vice President of Operations and Corporate Finance at Navistar International and Vice President and Chief Financial Officer at Navistar Truck. He previously held senior leadership positions at Mazda North America and Ford Motor Company in Germany, the United Kingdom and the United States. Mr. Foulston earned his Bachelors of Science with honors in Economics from Loughborough University in Leicestershire, United Kingdom.

Rightsizing:

TreeHouse Foods also announced its intention to close a facility in Delta, British Columbia and reduce its manufacturing footprint in Battle Creek, Michigan. The decision follows an analysis of the Company's plant network to align operations with the current and future needs of its customers and eliminate excess manufacturing capacity.

The Delta facility employs approximately 90 employees and produces frozen griddle products, primarily for the North American Retail Grocery segment. Production is expected to cease in early 2018. The Company operates two facilities in Delta, and this announcement only affects the frozen griddle facility.

The Battle Creek facility produces ready-to-eat cereal, primarily for the North American Retail Grocery segment. The partial closure will affect approximately 100 of the current 160 employees over a 15 month period beginning in January 2017. The decision is being announced in advance of the downsizing in order to provide employees with as much notice as possible and to ensure a seamless transition for customers.

Both the Battle Creek and Delta griddle facilities were part of the Company's acquisition of the ConAgra Foods private brands business in February 2016. The Company will provide support to employees whose positions are being eliminated.

Total costs to close the Delta facility and downsize Battle Creek are expected to be approximately $14.7 million, or $0.16 per fully diluted share, of which approximately $6.8 million, or $0.08 per fully diluted share, is expected to be in cash. Components of the charges include non-cash asset write-offs of approximately $7.9 million, employee-related costs of approximately $4.6 million and other closure costs of approximately $2.2 million. The Company expects approximately $4.0 million and $3.1 million of the charges to be incurred in the fourth quarter of this year and the first quarter of 2017, respectively, with the balance of the charges being incurred through the end of 2018.

GUIDANCE:

Treehouse Foods sees FY2016 EPS of $2.80-$2.85, versus the consensus of $3.07.

For earnings history and earnings-related data on Treehouse Foods (THS) click here.



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