TreeHouse (THS) Sees Q4 Numbers Below Views; Cuts FY11 Outlook
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TreeHouse Foods, Inc. (NYSE: THS) today announced that lower-than-anticipated December sales volumes will result in fourth quarter adjusted earnings to be between $0.84 to $0.87 per fully diluted share, representing a 7% increase compared to $0.80 per fully diluted shares for the 2010 fourth quarter.
The Street sees EPS of $1.07.
The Company's fourth quarter retail channel volumes decreased 4%, mainly due to an 8% decline in December volumes, well below historical levels. As a result, the Company's 2011 full year adjusted earnings are now expected to be between $2.70 and $2.73 per fully diluted share compared to the Company's previously-issued guidance of $2.90 to $3.00 per fully diluted share.
The Street is modeling EPS of $2.94.
The Company believes the volume decline was driven by three main factors: 1) Reduction in consumer food purchases, 2) Sales shift away from traditional grocery customers toward alternate channel retailers, 3) Negative effect of warm weather in the Midwest and Northeast on seasonal sales.
The Company's preliminary total fourth quarter revenue grew 5% to approximately $535 million compared to the 2010 fourth quarter revenue of $510 million, and the consensus of $567.1 million. The Company's pricing actions initiated earlier in the year contributed approximately 4% to fourth quarter sales, while acquisitions added approximately 2%, and volume/mix subtracted 1%. The Company anticipates fourth quarter gross margin will be approximately 22%, which compares to 24.8% in the year-ago fourth quarter. Although the Company's previously-initiated price increases offset higher year over year input costs, gross margins declined as a result of a mix shift towards lower margin products. The Company noted that although operating expenses will be down from the prior year, it will not be enough to offset the lower gross margins.
The Street sees EPS of $1.07.
The Company's fourth quarter retail channel volumes decreased 4%, mainly due to an 8% decline in December volumes, well below historical levels. As a result, the Company's 2011 full year adjusted earnings are now expected to be between $2.70 and $2.73 per fully diluted share compared to the Company's previously-issued guidance of $2.90 to $3.00 per fully diluted share.
The Street is modeling EPS of $2.94.
The Company believes the volume decline was driven by three main factors: 1) Reduction in consumer food purchases, 2) Sales shift away from traditional grocery customers toward alternate channel retailers, 3) Negative effect of warm weather in the Midwest and Northeast on seasonal sales.
The Company's preliminary total fourth quarter revenue grew 5% to approximately $535 million compared to the 2010 fourth quarter revenue of $510 million, and the consensus of $567.1 million. The Company's pricing actions initiated earlier in the year contributed approximately 4% to fourth quarter sales, while acquisitions added approximately 2%, and volume/mix subtracted 1%. The Company anticipates fourth quarter gross margin will be approximately 22%, which compares to 24.8% in the year-ago fourth quarter. Although the Company's previously-initiated price increases offset higher year over year input costs, gross margins declined as a result of a mix shift towards lower margin products. The Company noted that although operating expenses will be down from the prior year, it will not be enough to offset the lower gross margins.
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