(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) | ||||
(Address of principal executive offices) (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||||||||||||||
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Exhibit Number | Exhibit Description | |||||||
99.1 | ||||||||
99.2 | ||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL) |
TreeHouse Foods, Inc. | ||||||||||||||
Date: | November 6, 2023 | By: | /s/ Kristy N. Waterman | |||||||||||
Kristy N. Waterman | ||||||||||||||
Executive Vice President, Chief Human Resources Officer, General Counsel, and Corporate Secretary |
Three Months | Nine Months | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||
Pricing | 3.2 | % | 10.3 | % | ||||||||||
Volume/mix excluding acquisitions | (3.4) | (3.9) | ||||||||||||
Product recall | (0.4) | (0.1) | ||||||||||||
Total change in organic net sales1 | (0.6) | % | 6.3 | % | ||||||||||
Volume/mix related to acquisitions | 4.3 | 1.6 | ||||||||||||
Foreign currency | (0.1) | (0.2) | ||||||||||||
Total change in net sales | 3.6 | % | 7.7 | % |
The net sales increase of 3.6% was primarily driven by the acquisition of the Coffee Roasting Capability, favorable pricing to recover commodity inflation, and an increase in retail volume. This was partially offset by declines in co-manufacturing and food-away-from-home volume, which is in line with broader macroeconomic consumption trends. Additionally, supply chain disruptions, including a voluntary product recall, impacted select categories. | ||
Gross Profit — Gross profit as a percentage of net sales was 15.9% in the third quarter of 2023, compared to 16.0% in the third quarter of 2022, a decrease of 0.1 percentage points. The decrease is primarily due to supply chain disruptions caused by a voluntary product recall, which resulted in a decrease to our gross profit. This was partially offset by the Company's pricing actions to recover commodity and freight inflation experienced in prior periods, and lower costs from operations resulting from our investment in our supply chain. | ||
Total Operating Expenses — Total operating expenses were $103.9 million in the third quarter of 2023 compared to $138.6 million in the third quarter of 2022, a decrease of $34.7 million. The decrease is primarily due to $9.9 million of TSA income, lower professional fees for strategic growth initiatives, lower retention bonus and severance expense, and lower freight costs. | ||
Total Other Expense (Income) — Total other expense was $20.1 million in the third quarter of 2023 compared to $3.5 million in the third quarter of 2022, an increase of $16.6 million. The increase was primarily due to a $19.1 million change in non-cash mark-to-market impacts from hedging activities, largely driven by interest rate swaps, as the favorable increase in the third quarter of 2023 was not as significant as the increase in the third quarter of 2022. Additionally, rising interest rates led to higher interest expense, higher costs in our pension plans, and higher costs with selling receivables in the Company's Receivables Sales Program. This was partially offset by $10.9 million of interest income received from the Company's Note Receivable. | ||
Income Taxes — Income taxes were recognized at an effective rate of 27.4% in the third quarter of 2023 compared to (30.4)% recognized in the third quarter of 2022. The change in the Company's effective tax rate is primarily driven by tax expense recognized in 2022 related to a valuation allowance recorded against certain deferred tax assets and the restructuring of Canadian subsidiaries associated with the divestiture of a significant portion of the Meal Preparation business. | ||
Net Income (Loss) from Continuing Operations and Adjusted EBITDA — Net income from continuing operations for the third quarter of 2023 was $9.8 million, compared to net loss from continuing operations of $12.0 million for the same period of the previous year. Adjusted EBITDA1 from continuing operations was $89.9 million in the third quarter of 2023, compared to $79.6 million in the third quarter of 2022, an increase of $10.3 million. The increase is primarily due to the Company's pricing actions to recover commodity inflation. This was partially offset by lower fixed cost absorption and category mix. | ||
Discontinued Operations — Net loss from discontinued operations was $2.7 million in the third quarter of 2023 compared to $78.5 million in the third quarter of 2022, a decrease of $75.8 million. The decrease is primarily due to a non-recurring loss on sale of business of $73.8 million recognized in the third quarter of 2022 as a result of the divestiture of a significant portion of the Meal Preparation business on October 3, 2022. |
Net Cash Provided by (Used in) Operating Activities from Continuing Operations — Net cash provided by operating activities from continuing operations was $11.0 million in the first nine months of 2023 compared to $77.1 million net cash used in the first nine months of 2022, an increase in cash provided of $88.1 million. The cash flow increase was primarily attributable to higher cash earnings reflecting the Company's pricing actions to recover commodity and freight inflation experienced in prior periods. This was partially offset by a decrease in cash flows from the Receivables Sales Program due to reduced factoring utilization. | ||
Share Repurchase — During the third quarter of 2023, the Company repurchased approximately 1.1 million shares of common stock for a total of $50.0 million, excluding excise tax. At the end of the third quarter, the Company had $216.7 million available under its share repurchase authorization. | ||
Repayment of Seller Note Credit Agreement — On October 19, 2023, the Company received the $427.5 million repayment of its Seller Note Credit Agreement, which included the outstanding principal balance and accrued interest. The repayment makes the Company's balance sheet strength an asset, and it is expected to reduce leverage by more than 1x and enable the Company to deploy capital for high returns. The Company will follow its disciplined capital allocation strategy in deploying the proceeds. |
September 30, 2023 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 19.7 | $ | 43.0 | ||||||||||
Receivables, net | 165.5 | 158.8 | ||||||||||||
Inventories | 618.7 | 554.0 | ||||||||||||
Prepaid expenses and other current assets | 32.1 | 23.2 | ||||||||||||
Assets of discontinued operations | — | 60.4 | ||||||||||||
Total current assets | 836.0 | 839.4 | ||||||||||||
Property, plant, and equipment, net | 719.1 | 641.6 | ||||||||||||
Operating lease right-of-use assets | 198.1 | 184.4 | ||||||||||||
Goodwill | 1,823.4 | 1,817.6 | ||||||||||||
Intangible assets, net | 268.1 | 296.0 | ||||||||||||
Note receivable, net | 425.2 | 427.0 | ||||||||||||
Other assets, net | 48.6 | 47.9 | ||||||||||||
Total assets | $ | 4,318.5 | $ | 4,253.9 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 543.1 | $ | 618.7 | ||||||||||
Accrued expenses | 178.7 | 208.5 | ||||||||||||
Current portion of long-term debt | 0.5 | 0.6 | ||||||||||||
Total current liabilities | 722.3 | 827.8 | ||||||||||||
Long-term debt | 1,550.7 | 1,394.0 | ||||||||||||
Operating lease liabilities | 170.4 | 159.1 | ||||||||||||
Deferred income taxes | 108.9 | 108.7 | ||||||||||||
Other long-term liabilities | 70.4 | 77.3 | ||||||||||||
Total liabilities | 2,622.7 | 2,566.9 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued | — | — | ||||||||||||
Common stock, par value $0.01 per share, 90.0 shares authorized, 55.3 and 56.1 shares outstanding as of September 30, 2023 and December 31, 2022, respectively | 0.6 | 0.6 | ||||||||||||
Treasury stock | (183.7) | (133.3) | ||||||||||||
Additional paid-in capital | 2,218.4 | 2,205.4 | ||||||||||||
Accumulated deficit | (256.4) | (302.0) | ||||||||||||
Accumulated other comprehensive loss | (83.1) | (83.7) | ||||||||||||
Total stockholders' equity | 1,695.8 | 1,687.0 | ||||||||||||
Total liabilities and stockholders' equity | $ | 4,318.5 | $ | 4,253.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net sales | $ | 863.3 | $ | 832.9 | $ | 2,520.8 | $ | 2,340.4 | ||||||||||||||||||
Cost of sales | 725.8 | 700.0 | 2,096.5 | 1,993.0 | ||||||||||||||||||||||
Gross profit | 137.5 | 132.9 | 424.3 | 347.4 | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling and distribution | 44.5 | 51.7 | 128.9 | 166.9 | ||||||||||||||||||||||
General and administrative | 47.5 | 51.6 | 154.8 | 160.5 | ||||||||||||||||||||||
Amortization expense | 12.0 | 11.9 | 36.1 | 35.7 | ||||||||||||||||||||||
Other operating (income) expense, net | (0.1) | 23.4 | (0.3) | 66.4 | ||||||||||||||||||||||
Total operating expenses | 103.9 | 138.6 | 319.5 | 429.5 | ||||||||||||||||||||||
Operating income (loss) | 33.6 | (5.7) | 104.8 | (82.1) | ||||||||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||||||
Interest expense | 20.9 | 17.5 | 57.9 | 51.2 | ||||||||||||||||||||||
Interest income | (10.8) | (0.1) | (36.2) | (4.4) | ||||||||||||||||||||||
Loss on foreign currency exchange | 3.7 | 2.9 | 0.7 | 3.0 | ||||||||||||||||||||||
Other expense (income), net | 6.3 | (16.8) | 9.8 | (80.4) | ||||||||||||||||||||||
Total other expense (income) | 20.1 | 3.5 | 32.2 | (30.6) | ||||||||||||||||||||||
Income (loss) before income taxes | 13.5 | (9.2) | 72.6 | (51.5) | ||||||||||||||||||||||
Income tax expense (benefit) | 3.7 | 2.8 | 20.0 | (2.6) | ||||||||||||||||||||||
Net income (loss) from continuing operations | 9.8 | (12.0) | 52.6 | (48.9) | ||||||||||||||||||||||
Net loss from discontinued operations | (2.7) | (78.5) | (7.0) | (74.0) | ||||||||||||||||||||||
Net income (loss) | $ | 7.1 | $ | (90.5) | $ | 45.6 | $ | (122.9) | ||||||||||||||||||
Earnings (loss) per common share - basic: | ||||||||||||||||||||||||||
Continuing operations | $ | 0.18 | $ | (0.21) | $ | 0.94 | $ | (0.87) | ||||||||||||||||||
Discontinued operations | (0.05) | (1.40) | (0.12) | (1.32) | ||||||||||||||||||||||
Earnings (loss) per share basic (1) | $ | 0.13 | $ | (1.61) | $ | 0.81 | $ | (2.19) | ||||||||||||||||||
Earnings (loss) per common share - diluted: | ||||||||||||||||||||||||||
Continuing operations | $ | 0.17 | $ | (0.21) | $ | 0.93 | $ | (0.87) | ||||||||||||||||||
Discontinued operations | (0.05) | (1.40) | (0.12) | (1.32) | ||||||||||||||||||||||
Earnings (loss) per share diluted (1) | $ | 0.13 | $ | (1.61) | $ | 0.80 | $ | (2.19) | ||||||||||||||||||
Weighted average common shares: | ||||||||||||||||||||||||||
Basic | 55.9 | 56.1 | 56.1 | 56.0 | ||||||||||||||||||||||
Diluted | 56.4 | 56.1 | 56.7 | 56.0 | ||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | 45.6 | $ | (122.9) | ||||||||||
Net loss from discontinued operations | (7.0) | (74.0) | ||||||||||||
Net income (loss) from continuing operations | 52.6 | (48.9) | ||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation and amortization | 105.7 | 103.6 | ||||||||||||
Stock-based compensation | 19.1 | 15.2 | ||||||||||||
Unrealized gain on derivative contracts | (1.5) | (79.3) | ||||||||||||
Deferred income taxes | 1.7 | 5.7 | ||||||||||||
Deferred TSA income | (12.3) | — | ||||||||||||
Other | 0.9 | 6.8 | ||||||||||||
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||
Receivables | (5.6) | (6.1) | ||||||||||||
Inventories | (32.4) | (190.0) | ||||||||||||
Prepaid expenses and other assets | (1.4) | 22.0 | ||||||||||||
Accounts payable | (90.5) | 110.5 | ||||||||||||
Accrued expenses and other liabilities | (25.3) | (16.6) | ||||||||||||
Net cash provided by (used in) operating activities - continuing operations | 11.0 | (77.1) | ||||||||||||
Net cash used in operating activities - discontinued operations | (0.7) | (37.0) | ||||||||||||
Net cash provided by (used in) operating activities | 10.3 | (114.1) | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Additions to property, plant, and equipment | (74.3) | (54.2) | ||||||||||||
Additions to intangible assets | (2.8) | (6.2) | ||||||||||||
Proceeds from sale of fixed assets | — | 4.8 | ||||||||||||
Acquisitions, net of cash acquired | (102.2) | — | ||||||||||||
Net cash used in investing activities - continuing operations | (179.3) | (55.6) | ||||||||||||
Net cash provided by (used in) investing activities - discontinued operations | 45.5 | (36.8) | ||||||||||||
Net cash used in investing activities | (133.8) | (92.4) | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Borrowings under Revolving Credit Facility | 2,692.3 | 326.9 | ||||||||||||
Payments under Revolving Credit Facility | (2,537.0) | (326.9) | ||||||||||||
Payments on financing lease obligations | (0.4) | (1.0) | ||||||||||||
Payment of deferred financing costs | — | (2.7) | ||||||||||||
Payments on Term Loans | — | (14.3) | ||||||||||||
Repurchases of common stock | (50.0) | — | ||||||||||||
Payments related to stock-based award activities | (6.2) | (3.8) | ||||||||||||
Net cash provided by (used in) financing activities - continuing operations | 98.7 | (21.8) | ||||||||||||
Net cash used in financing activities - discontinued operations | — | (0.3) | ||||||||||||
Net cash provided by (used in) financing activities | 98.7 | (22.1) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 1.5 | (2.5) | ||||||||||||
Net decrease in cash and cash equivalents | (23.3) | (231.1) | ||||||||||||
Add: Cash and cash equivalents of discontinued operations, beginning of period | — | 4.1 | ||||||||||||
Less: Cash and cash equivalents of discontinued operations, end of period | — | (2.8) | ||||||||||||
Cash and cash equivalents, beginning of period | 43.0 | 304.5 | ||||||||||||
Cash and cash equivalents, end of period | $ | 19.7 | $ | 74.7 | ||||||||||
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Supplemental cash flow disclosures: | ||||||||||||||
Interest paid | $ | 75.7 | $ | 51.0 | ||||||||||
Net income taxes paid (refunded) | 17.5 | (2.3) | ||||||||||||
Non-cash investing activities: | ||||||||||||||
Accrued purchase of property and equipment | $ | 32.6 | $ | 21.5 | ||||||||||
Accrued other intangible assets | 0.3 | 1.2 | ||||||||||||
Right-of-use assets obtained in exchange for lease obligations | 40.5 | 77.2 | ||||||||||||
Note receivable purchase price adjustment reduction | (5.1) | — | ||||||||||||
Note receivable increase from paid in kind interest | 3.2 | — | ||||||||||||
Deferred payment from acquisition of seasoned pretzel capability | 4.0 | — |
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | ||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Diluted EPS (GAAP) | $ | 0.17 | $ | (0.05) | $ | 0.13 | $ | 0.93 | $ | (0.12) | $ | 0.80 | |||||||||||||||||||||||||||||
(Gain) loss on sale of business | (1) | — | (0.03) | (0.03) | — | 0.03 | 0.03 | ||||||||||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (2) | 0.17 | — | 0.17 | 0.60 | — | 0.60 | ||||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | 0.20 | — | 0.20 | 0.20 | — | 0.20 | ||||||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (4) | 0.09 | — | 0.09 | 0.24 | — | 0.24 | ||||||||||||||||||||||||||||||||||
Foreign currency loss (gain) on re-measurement of intercompany notes | (5) | 0.04 | — | 0.04 | — | — | — | ||||||||||||||||||||||||||||||||||
Mark-to-market adjustments | (6) | 0.04 | — | 0.04 | (0.03) | — | (0.03) | ||||||||||||||||||||||||||||||||||
Tax indemnification | (7) | — | — | — | — | (0.02) | (0.01) | ||||||||||||||||||||||||||||||||||
Shareholder activism | (8) | — | — | — | — | — | 0.01 | ||||||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (9) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Litigation matter | (10) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Taxes on adjusting items | (0.14) | — | (0.14) | (0.24) | 0.02 | (0.23) | |||||||||||||||||||||||||||||||||||
Adjusted diluted EPS (Non-GAAP) | $ | 0.57 | $ | (0.08) | $ | 0.50 | $ | 1.70 | $ | (0.09) | $ | 1.61 |
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||||
Diluted EPS (GAAP) | $ | (0.21) | $ | (1.40) | $ | (1.61) | $ | (0.87) | $ | (1.32) | $ | (2.19) | |||||||||||||||||||||||||||||
Loss on sale of business | (1) | — | 1.31 | 1.31 | — | 1.31 | 1.31 | ||||||||||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (2) | 0.40 | 0.02 | 0.42 | 1.18 | 0.09 | 1.26 | ||||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (4) | 0.15 | 0.17 | 0.31 | 0.33 | 0.55 | 0.88 | ||||||||||||||||||||||||||||||||||
Foreign currency loss on re-measurement of intercompany notes | (5) | 0.03 | 0.06 | 0.09 | 0.02 | 0.05 | 0.07 | ||||||||||||||||||||||||||||||||||
Mark-to-market adjustments | (6) | (0.30) | — | (0.30) | (1.41) | — | (1.41) | ||||||||||||||||||||||||||||||||||
Tax indemnification | (7) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
Shareholder activism | (8) | 0.01 | — | 0.01 | 0.04 | — | 0.04 | ||||||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (9) | 0.38 | (0.38) | — | 1.15 | (1.15) | — | ||||||||||||||||||||||||||||||||||
Litigation matter | (10) | — | — | — | 0.01 | — | 0.01 | ||||||||||||||||||||||||||||||||||
Taxes on adjusting items | (0.10) | 0.05 | (0.05) | (0.14) | 0.17 | 0.03 | |||||||||||||||||||||||||||||||||||
Adjusted diluted EPS (Non-GAAP) | $ | 0.36 | $ | (0.17) | $ | 0.18 | $ | 0.31 | $ | (0.30) | $ | — |
(1) | For the three and nine months ended September 30, 2023, the Company recognized an expected gain on disposal of the Snack Bars Business of $1.2 million. Additionally, loss on disposal adjustments related to the sale of a significant portion of the Meal Preparation business of $(0.7) million and $2.8 million were recognized for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2022, the Company recognized an expected loss on disposal of a significant portion of the Meal Preparation business of $73.8 million. | ||||
(2) | The Company's growth, reinvestment, and restructuring activities are part of an enterprise-wide transformation to improve long-term growth and profitability for the Company. | ||||
(3) | On September 22, 2023, the Company initiated a voluntary recall of broth products produced at its Cambridge, Maryland facility. These broth products may have the potential for non-pathogenic microbial contamination due to lack of sterility assurance. The Company recognized costs of $8.7 million which include, but are not limited to, a product recall liability recognized for logistics costs and product returns, plant shutdown costs, and inventory write-offs for the three and nine months ended September 30, 2023. Additionally, the Company recognized an inventory write-off of $2.5 million for a packaging quality matter for the three and nine months ended September 30, 2023. | ||||
(4) | Divestiture, acquisition, integration, and related costs represent costs associated with completed and potential divestitures, completed and potential acquisitions, and the related integration of the acquisitions. | ||||
(5) | The Company has foreign currency denominated intercompany loans and incurred foreign currency gains/losses to re-measure the loans at quarter end. These amounts are non-cash and the loans are eliminated in consolidation. | ||||
(6) | The Company's derivative contracts are marked-to-market each period. The non-cash unrealized changes in fair value recognized in Other expense (income), net within the Condensed Consolidated Statements of Operations are treated as Non-GAAP adjustments. As the contracts are settled, realized gains and losses are recognized, and only the mark-to-market impacts are treated as Non-GAAP adjustments. | ||||
(7) | Tax indemnification represents the non-cash write off of indemnification assets that were recorded in connection with acquisitions from prior years. These write-offs arose as a result of the related uncertain tax position being released due to the statute of limitation lapse or settlement with taxing authorities. | ||||
(8) | The Company incurred fees related to shareholder activism which include directly applicable third-party advisory and professional service fees. | ||||
(9) | As a result of the sale of a significant portion of the Meal Preparation business in the fourth quarter of 2022, the Company identified two items affecting comparability – 1) central service costs and 2) conveyed employee costs. 1) The Company has historically provided central services to the Meal Preparation business including, but not limited to, IT and financial shared services, procurement and order processing, customer service, warehousing, logistics, and customs. These costs were historically incurred by TreeHouse and include employee and non-employee expenses to support the services. There were no costs for the three and nine months ended September 30, 2023. For three and nine months ended September 30, 2022, central service costs were approximately $13.4 million and $40.2 million, respectively. 2) Conveyed employee costs represent compensation costs for employees that were not historically dedicated to the sold business and transferred to the buyer after the sale. There were no costs for the three and nine months ended September 30, 2023. For the three and nine months ended September 30, 2022, conveyed employee costs were approximately $8.1 million and $24.8 million, respectively. |
(10) | During the nine months ended September 30, 2022, the Company recognized $0.4 million incremental expense for the settlement payment of the $9.0 million accrual related to a litigation matter challenging wage and hour practices at three former manufacturing facilities in California. |
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) (GAAP) | $ | 9.8 | $ | (2.7) | $ | 7.1 | $ | 52.6 | $ | (7.0) | $ | 45.6 | ||||||||||||||||||||||||||||||||
(Gain) loss on sale of business | (1) | — | (1.9) | (1.9) | — | 1.6 | 1.6 | |||||||||||||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (2) | 9.7 | — | 9.7 | 33.9 | — | 33.9 | |||||||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | 11.2 | — | 11.2 | 11.2 | — | 11.2 | |||||||||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (4) | 4.9 | 0.1 | 5.0 | 13.5 | 0.1 | 13.6 | |||||||||||||||||||||||||||||||||||||
Foreign currency loss (gain) on re-measurement of intercompany notes | (5) | 2.5 | — | 2.5 | (0.2) | — | (0.2) | |||||||||||||||||||||||||||||||||||||
Mark-to-market adjustments | (6) | 2.0 | — | 2.0 | (1.5) | — | (1.5) | |||||||||||||||||||||||||||||||||||||
Tax indemnification | (7) | — | — | — | 0.3 | (1.1) | (0.8) | |||||||||||||||||||||||||||||||||||||
Shareholder activism | (8) | — | — | — | 0.3 | — | 0.3 | |||||||||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (9) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Litigation matter | (10) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Less: Taxes on adjusting items | (7.7) | 0.2 | (7.5) | (13.7) | 1.2 | (12.5) | ||||||||||||||||||||||||||||||||||||||
Adjusted net income (loss) (Non-GAAP) | 32.4 | (4.3) | 28.1 | 96.4 | (5.2) | 91.2 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 20.9 | — | 20.9 | 57.9 | — | 57.9 | ||||||||||||||||||||||||||||||||||||||
Interest income | (10.8) | — | (10.8) | (36.2) | — | (36.2) | ||||||||||||||||||||||||||||||||||||||
Income taxes | 3.7 | (0.5) | 3.2 | 20.0 | (1.0) | 19.0 | ||||||||||||||||||||||||||||||||||||||
Add: Taxes on adjusting items | 7.7 | (0.2) | 7.5 | 13.7 | (1.2) | 12.5 | ||||||||||||||||||||||||||||||||||||||
Adjusted EBIT (Non-GAAP) | 53.9 | (5.0) | 48.9 | 151.8 | (7.4) | 144.4 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 36.0 | 1.0 | 37.0 | 105.7 | 3.0 | 108.7 | ||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (Non-GAAP) | 89.9 | (4.0) | 85.9 | 257.5 | (4.4) | 253.1 | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | (11) | 3.6 | — | 3.6 | 12.1 | — | 12.1 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDAS (Non-GAAP) | $ | 93.5 | $ | (4.0) | $ | 89.5 | $ | 269.6 | $ | (4.4) | $ | 265.2 | ||||||||||||||||||||||||||||||||
Net income (loss) margin | 1.1 | % | (6.7) | % | 0.8 | % | 2.1 | % | (5.8) | % | 1.7 | % | ||||||||||||||||||||||||||||||||
Adjusted net income (loss) margin | 3.8 | % | (10.7) | % | 3.1 | % | 3.8 | % | (4.3) | % | 3.5 | % | ||||||||||||||||||||||||||||||||
Adjusted EBIT margin | 6.2 | % | (12.4) | % | 5.4 | % | 6.0 | % | (6.1) | % | 5.5 | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDA margin | 10.4 | % | (9.9) | % | 9.5 | % | 10.2 | % | (3.6) | % | 9.6 | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDAS margin | 10.8 | % | (9.9) | % | 9.9 | % | 10.7 | % | (3.6) | % | 10.0 | % |
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income (GAAP) | $ | (12.0) | $ | (78.5) | $ | (90.5) | $ | (48.9) | $ | (74.0) | $ | (122.9) | ||||||||||||||||||||||||||||||||
Loss on sale of business | (1) | — | 73.8 | 73.8 | — | 73.8 | 73.8 | |||||||||||||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (2) | 22.4 | 1.2 | 23.6 | 66.4 | 4.9 | 71.3 | |||||||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (4) | 8.2 | 9.4 | 17.6 | 18.4 | 31.0 | 49.4 | |||||||||||||||||||||||||||||||||||||
Foreign currency loss on re-measurement of intercompany notes | (5) | 1.8 | 3.2 | 5.0 | 1.4 | 2.7 | 4.1 | |||||||||||||||||||||||||||||||||||||
Mark-to-market adjustments | (6) | (17.1) | (0.1) | (17.2) | (79.4) | (0.1) | (79.5) | |||||||||||||||||||||||||||||||||||||
Tax indemnification | (7) | — | — | — | — | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||||||
Shareholder activism | (8) | 0.4 | — | 0.4 | 2.1 | — | 2.1 | |||||||||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (9) | 21.5 | (21.5) | — | 65.0 | (65.0) | — | |||||||||||||||||||||||||||||||||||||
Litigation matter | (10) | — | — | — | 0.4 | — | 0.4 | |||||||||||||||||||||||||||||||||||||
Less: Taxes on adjusting items | (5.1) | 2.7 | (2.4) | (7.9) | 9.7 | 1.8 | ||||||||||||||||||||||||||||||||||||||
Adjusted net income (loss) (Non-GAAP) | 20.1 | (9.8) | 10.3 | 17.5 | (16.9) | 0.6 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 17.5 | 5.3 | 22.8 | 51.2 | 11.4 | 62.6 | ||||||||||||||||||||||||||||||||||||||
Interest income | (0.1) | — | (0.1) | (4.4) | — | (4.4) | ||||||||||||||||||||||||||||||||||||||
Income taxes | 2.8 | (0.2) | 2.6 | (2.6) | 2.4 | (0.2) | ||||||||||||||||||||||||||||||||||||||
Add: Taxes on adjusting items | 5.1 | (2.7) | 2.4 | 7.9 | (9.7) | (1.8) | ||||||||||||||||||||||||||||||||||||||
Adjusted EBIT (Non-GAAP) | 45.4 | (7.4) | 38.0 | 69.6 | (12.8) | 56.8 | ||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 34.2 | 17.2 | 51.4 | 103.6 | 52.9 | 156.5 | ||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA (Non-GAAP) | 79.6 | 9.8 | 89.4 | 173.2 | 40.1 | 213.3 | ||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | (11) | 3.8 | 0.7 | 4.5 | 10.7 | 2.2 | 12.9 | |||||||||||||||||||||||||||||||||||||
Adjusted EBITDAS (Non-GAAP) | $ | 83.4 | $ | 10.5 | $ | 93.9 | $ | 183.9 | $ | 42.3 | $ | 226.2 | ||||||||||||||||||||||||||||||||
Net (loss) income margin | (1.4) | % | (16.8) | % | (7.0) | % | (2.1) | % | (5.7) | % | (3.4) | % | ||||||||||||||||||||||||||||||||
Adjusted net income (loss) margin | 2.4 | % | (2.1) | % | 0.8 | % | 0.7 | % | (1.3) | % | — | % | ||||||||||||||||||||||||||||||||
Adjusted EBIT margin | 5.5 | % | (1.6) | % | 2.9 | % | 3.0 | % | (1.0) | % | 1.6 | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDA margin | 9.6 | % | 2.1 | % | 6.9 | % | 7.4 | % | 3.1 | % | 5.9 | % | ||||||||||||||||||||||||||||||||
Adjusted EBITDAS margin | 10.0 | % | 2.3 | % | 7.2 | % | 7.9 | % | 3.3 | % | 6.2 | % |
Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||||||||||||||||||||||
Net sales | $ | 863.3 | $ | 40.3 | $ | 903.6 | $ | 2,520.8 | $ | 121.1 | $ | 2,641.9 | ||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | 3.0 | — | 3.0 | 3.0 | — | 3.0 | |||||||||||||||||||||||||||||||||||||
Adjusted net sales | $ | 866.3 | $ | 40.3 | $ | 906.6 | $ | 2,523.8 | $ | 121.1 | $ | 2,644.9 |
Three Months Ended September 30, 2022 | Nine Months Ended September 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | |||||||||||||||||||||||||||||||||||||||
Net sales | $ | 832.9 | $ | 466.6 | $ | 1,299.5 | $ | 2,340.4 | $ | 1,297.1 | $ | 3,637.5 | ||||||||||||||||||||||||||||||||
Product recall and related costs | (3) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Adjusted net sales | $ | 832.9 | $ | 466.6 | $ | 1,299.5 | $ | 2,340.4 | $ | 1,297.1 | $ | 3,637.5 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||
Net sales | $ | 863.3 | $ | 832.9 | $ | 2,520.8 | $ | 2,340.4 | ||||||||||||||||||||||||
Cost of sales | 725.8 | 700.0 | 2,096.5 | 1,993.0 | ||||||||||||||||||||||||||||
Gross profit | 137.5 | 132.9 | 424.3 | 347.4 | ||||||||||||||||||||||||||||
Gross profit as a percentage of net sales | 15.9 | % | 16.0 | % | 16.8 | % | 14.8 | % | ||||||||||||||||||||||||
Product recall and related costs | (3) | 11.2 | — | 11.2 | — | |||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (4) | 1.0 | — | 1.0 | 1.6 | |||||||||||||||||||||||||||
Central services and conveyed employee costs | (9) | — | 5.0 | — | 14.9 | |||||||||||||||||||||||||||
Adjusted gross profit from continuing operations | $ | 149.7 | $ | 137.9 | $ | 436.5 | $ | 363.9 | ||||||||||||||||||||||||
Adjusted gross profit from continuing operations as a percentage of net sales | 17.3 | % | 16.6 | % | 17.3 | % | 15.5 | % |
Location in Condensed | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
Consolidated Statements of Operations | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||||||||
(1) | (Gain) loss on sale of business | Net loss from discontinued operations | $ | (1.9) | $ | 73.8 | $ | 1.6 | $ | 73.8 | ||||||||||||||||||||||||||||
(2) | Growth, reinvestment, and restructuring programs | Other operating (income) expense, net | 9.7 | 22.4 | 33.9 | 66.4 | ||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | 1.2 | — | 4.9 | ||||||||||||||||||||||||||||||||||
(3) | Product recall and related costs | Cost of sales | 8.2 | — | 8.2 | — | ||||||||||||||||||||||||||||||||
Net sales | 3.0 | — | 3.0 | — | ||||||||||||||||||||||||||||||||||
(4) | Divestiture, acquisition, integration, and related costs | General and administrative | 3.9 | 7.2 | 11.6 | 15.7 | ||||||||||||||||||||||||||||||||
Other operating (income) expense, net | — | 1.0 | 0.9 | 1.1 | ||||||||||||||||||||||||||||||||||
Cost of sales | 1.0 | — | 1.0 | 1.6 | ||||||||||||||||||||||||||||||||||
Net loss from discontinued operations | 0.1 | 9.4 | 0.1 | 31.0 | ||||||||||||||||||||||||||||||||||
(5) | Foreign currency (gain) loss on re-measurement of intercompany notes | Loss on foreign currency exchange | 2.5 | 1.8 | (0.2) | 1.4 | ||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | 3.2 | — | 2.7 | ||||||||||||||||||||||||||||||||||
(6) | Mark-to-market adjustments | Other expense (income), net | 2.0 | (17.1) | (1.5) | (79.4) | ||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | (0.1) | — | (0.1) | ||||||||||||||||||||||||||||||||||
(7) | Tax indemnification | Other expense (income), net | — | — | 0.3 | — | ||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | — | (1.1) | 0.1 | ||||||||||||||||||||||||||||||||||
(8) | Shareholder activism | General and administrative | — | 0.4 | 0.3 | 2.1 | ||||||||||||||||||||||||||||||||
(9) | Central services and conveyed employee costs | Cost of sales | — | 5.0 | — | 14.9 | ||||||||||||||||||||||||||||||||
General and administrative | — | 16.5 | — | 50.1 | ||||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | (21.5) | — | (65.0) | ||||||||||||||||||||||||||||||||||
(10) | Litigation matter | General and administrative | — | — | — | 0.4 | ||||||||||||||||||||||||||||||||
(11) | Stock-based compensation expense included as an adjusting item | Other operating (income) expense, net | 2.4 | 2.3 | 7.0 | 4.5 | ||||||||||||||||||||||||||||||||
Net loss from discontinued operations | — | — | 0.1 | (0.5) |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flow provided by (used in) operating activities from continuing operations | $ | 11.0 | $ | (77.1) | ||||||||||
Less: Capital expenditures | (77.1) | (60.4) | ||||||||||||
Free cash flow from continuing operations | $ | (66.1) | $ | (137.5) |
Year Ended December 31, | |||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | ||||||||||||||||||||
Net sales | $ | 3,297.1 | $ | 2,814.3 | $ | 2,853.1 | $ | 2,850.9 | |||||||||||||||
Cost of sales | 2,774.7 | 2,342.7 | 2,310.1 | 2,297.6 | |||||||||||||||||||
Gross profit | 522.4 | 471.6 | 543.0 | 553.3 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Selling and distribution | 217.8 | 199.4 | 195.4 | 190.8 | |||||||||||||||||||
General and administrative | 206.5 | 185.2 | 225.8 | 238.4 | |||||||||||||||||||
Amortization expense | 47.9 | 47.3 | 50.4 | 51.8 | |||||||||||||||||||
Asset impairment | — | — | — | 83.2 | |||||||||||||||||||
Other operating expense, net | 62.8 | 83.9 | 67.8 | 93.5 | |||||||||||||||||||
Total operating expenses | 535.0 | 515.8 | 539.4 | 657.7 | |||||||||||||||||||
Operating (loss) income | (12.6) | (44.2) | 3.6 | (104.4) | |||||||||||||||||||
Other (income) expense: | |||||||||||||||||||||||
Interest expense | 69.9 | 72.1 | 92.6 | 80.9 | |||||||||||||||||||
Interest income | (15.5) | (4.7) | (4.8) | (4.8) | |||||||||||||||||||
Loss on extinguishment of debt | 4.5 | 14.4 | 1.2 | — | |||||||||||||||||||
Loss (gain) on foreign currency exchange | 1.7 | (0.4) | (0.6) | (1.2) | |||||||||||||||||||
Other (income) expense, net | (74.3) | (39.4) | 30.2 | 44.6 | |||||||||||||||||||
Total other (income) expense | (13.7) | 42.0 | 118.6 | 119.5 | |||||||||||||||||||
Income (loss) before income taxes | 1.1 | (86.2) | (115.0) | (223.9) | |||||||||||||||||||
Income tax expense (benefit) | 10.3 | (17.6) | (61.1) | (62.0) | |||||||||||||||||||
Net loss from continuing operations | (9.2) | (68.6) | (53.9) | (161.9) | |||||||||||||||||||
Net (loss) income from discontinued operations | (137.1) | 56.1 | 67.7 | (199.1) | |||||||||||||||||||
Net (loss) income | $ | (146.3) | $ | (12.5) | $ | 13.8 | $ | (361.0) | |||||||||||||||
Earnings (loss) per common share - basic: | |||||||||||||||||||||||
Continuing operations | $ | (0.16) | $ | (1.23) | $ | (0.95) | $ | (2.88) | |||||||||||||||
Discontinued operations | (2.45) | 1.00 | 1.20 | (3.54) | |||||||||||||||||||
Earnings (loss) per share basic (1) | $ | (2.61) | $ | (0.22) | $ | 0.24 | $ | (6.42) | |||||||||||||||
Earnings (loss) per common share - diluted: | |||||||||||||||||||||||
Continuing operations | $ | (0.16) | $ | (1.23) | $ | (0.95) | $ | (2.88) | |||||||||||||||
Discontinued operations | (2.45) | 1.00 | 1.20 | (3.54) | |||||||||||||||||||
Earnings (loss) per share diluted (1) | $ | (2.61) | $ | (0.22) | $ | 0.24 | $ | (6.42) | |||||||||||||||
Weighted average shares — basic | 56.0 | 55.9 | 56.5 | 56.2 | |||||||||||||||||||
Weighted average shares — diluted | 56.0 | 55.9 | 56.5 | 56.2 |
Three Months Ended | |||||||||||||||||||||||||||||||||||
June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||
Net sales | $ | 803.5 | $ | 854.0 | $ | 956.7 | $ | 832.9 | $ | 765.3 | $ | 742.2 | |||||||||||||||||||||||
Cost of sales | 670.3 | 700.4 | 781.7 | 700.0 | 654.1 | 638.9 | |||||||||||||||||||||||||||||
Gross profit | 133.2 | 153.6 | 175.0 | 132.9 | 111.2 | 103.3 | |||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||
Selling and distribution | 39.7 | 44.7 | 50.9 | 51.7 | 54.4 | 60.8 | |||||||||||||||||||||||||||||
General and administrative | 53.9 | 53.4 | 46.0 | 51.6 | 56.1 | 52.8 | |||||||||||||||||||||||||||||
Amortization expense | 12.1 | 12.0 | 12.2 | 11.9 | 11.9 | 11.9 | |||||||||||||||||||||||||||||
Other operating (income) expense, net | (2.8) | 2.6 | (3.6) | 23.4 | 13.9 | 29.1 | |||||||||||||||||||||||||||||
Total operating expenses | 102.9 | 112.7 | 105.5 | 138.6 | 136.3 | 154.6 | |||||||||||||||||||||||||||||
Operating income (loss) | 30.3 | 40.9 | 69.5 | (5.7) | (25.1) | (51.3) | |||||||||||||||||||||||||||||
Other (income) expense: | |||||||||||||||||||||||||||||||||||
Interest expense | 19.2 | 17.8 | 18.7 | 17.5 | 17.0 | 16.7 | |||||||||||||||||||||||||||||
Interest income | (10.8) | (14.6) | (11.1) | (0.1) | (0.1) | (4.2) | |||||||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 4.5 | — | — | — | |||||||||||||||||||||||||||||
(Gain) loss on foreign currency exchange | (3.3) | 0.3 | (1.3) | 2.9 | 1.1 | (1.0) | |||||||||||||||||||||||||||||
Other (income) expense, net | (6.2) | 9.7 | 6.1 | (16.8) | (11.9) | (51.7) | |||||||||||||||||||||||||||||
Total other (income) expense | (1.1) | 13.2 | 16.9 | 3.5 | 6.1 | (40.2) | |||||||||||||||||||||||||||||
Income (loss) before income taxes | 31.4 | 27.7 | 52.6 | (9.2) | (31.2) | (11.1) | |||||||||||||||||||||||||||||
Income tax expense (benefit) | 9.0 | 7.3 | 12.9 | 2.8 | (4.3) | (1.1) | |||||||||||||||||||||||||||||
Net income (loss) from continuing operations | 22.4 | 20.4 | 39.7 | (12.0) | (26.9) | (10.0) | |||||||||||||||||||||||||||||
Net income (loss) from discontinued operations | 0.9 | (5.2) | (63.1) | (78.5) | (2.5) | 7.0 | |||||||||||||||||||||||||||||
Net income (loss) | $ | 23.3 | $ | 15.2 | $ | (23.4) | $ | (90.5) | $ | (29.4) | $ | (3.0) | |||||||||||||||||||||||
Earnings (loss) per common share - basic: | |||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.40 | $ | 0.36 | $ | 0.71 | $ | (0.21) | $ | (0.48) | $ | (0.18) | |||||||||||||||||||||||
Discontinued operations | 0.02 | (0.09) | (1.12) | (1.40) | (0.04) | 0.13 | |||||||||||||||||||||||||||||
Earnings (loss) per share basic (1) | $ | 0.41 | $ | 0.27 | $ | (0.42) | $ | (1.61) | $ | (0.53) | $ | (0.05) | |||||||||||||||||||||||
Earnings (loss) per common share - diluted: | |||||||||||||||||||||||||||||||||||
Continuing operations | $ | 0.39 | $ | 0.36 | $ | 0.70 | $ | (0.21) | $ | (0.48) | $ | (0.18) | |||||||||||||||||||||||
Discontinued operations | 0.02 | (0.09) | (1.11) | (1.40) | (0.04) | 0.13 | |||||||||||||||||||||||||||||
Earnings (loss) per share diluted (1) | $ | 0.41 | $ | 0.27 | $ | (0.41) | $ | (1.61) | $ | (0.53) | $ | (0.05) | |||||||||||||||||||||||
Weighted average shares — basic | 56.4 | 56.1 | 56.1 | 56.1 | 56.0 | 55.8 | |||||||||||||||||||||||||||||
Weighted average shares — diluted | 56.8 | 56.7 | 56.7 | 56.1 | 56.0 | 55.8 |
Year Ended December 31, | ||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | |||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Diluted EPS from continuing operations (GAAP) | $ | (0.16) | $ | (1.23) | $ | (0.95) | $ | (2.88) | ||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (1) | 1.51 | 1.49 | 1.21 | 1.74 | |||||||||||||||||||||
Central services and conveyed employee costs | (2) | 1.15 | 1.45 | 1.52 | 1.44 | |||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (3) | 0.24 | 0.07 | 0.04 | 0.01 | |||||||||||||||||||||
Loss on extinguishment of debt | (4) | 0.08 | 0.26 | 0.02 | — | |||||||||||||||||||||
Shareholder activism | (5) | 0.05 | 0.08 | — | — | |||||||||||||||||||||
Foreign currency loss (gain) on re-measurement of intercompany notes | (6) | 0.01 | (0.01) | — | (0.03) | |||||||||||||||||||||
Litigation matter | (7) | 0.01 | — | 0.16 | 0.44 | |||||||||||||||||||||
Mark-to-market adjustments | (8) | (1.33) | (0.66) | 0.53 | 0.83 | |||||||||||||||||||||
Tax indemnification | (9) | — | 0.03 | 0.07 | 0.03 | |||||||||||||||||||||
COVID-19 | (10) | — | 0.25 | 0.25 | — | |||||||||||||||||||||
Impairment | (11) | — | — | — | 1.48 | |||||||||||||||||||||
Change in regulatory requirements | (12) | — | — | 0.02 | 0.19 | |||||||||||||||||||||
Executive management transition | (13) | — | — | 0.01 | 0.05 | |||||||||||||||||||||
Multiemployer pension plan withdrawal | (14) | — | — | — | 0.08 | |||||||||||||||||||||
Taxes on adjusting items | (0.28) | (0.70) | (1.09) | (1.56) | ||||||||||||||||||||||
Adjusted diluted EPS from continuing operations (Non-GAAP) | $ | 1.28 | $ | 1.03 | $ | 1.79 | $ | 1.82 |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||
June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||
Diluted EPS from continuing operations (GAAP) | $ | 0.39 | $ | 0.36 | $ | 0.70 | $ | (0.21) | $ | (0.48) | $ | (0.18) | ||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (1) | 0.16 | 0.27 | 0.33 | 0.40 | 0.25 | 0.54 | |||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (2) | — | — | — | 0.38 | 0.39 | 0.39 | |||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (3) | 0.08 | 0.07 | (0.08) | 0.15 | 0.13 | 0.05 | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (4) | — | — | 0.08 | — | — | — | |||||||||||||||||||||||||||||||
Shareholder activism | (5) | — | 0.01 | 0.01 | 0.01 | 0.02 | 0.01 | |||||||||||||||||||||||||||||||
Foreign currency (gain) loss on re-measurement of intercompany notes | (6) | (0.04) | — | (0.01) | 0.03 | 0.01 | (0.01) | |||||||||||||||||||||||||||||||
Litigation matter | (7) | — | — | — | — | — | 0.01 | |||||||||||||||||||||||||||||||
Mark-to-market adjustments | (8) | (0.17) | 0.10 | 0.08 | (0.30) | (0.20) | (0.91) | |||||||||||||||||||||||||||||||
Tax indemnification | (9) | 0.01 | — | — | — | — | — | |||||||||||||||||||||||||||||||
Taxes on adjusting items | — | (0.11) | (0.14) | (0.10) | (0.07) | — | ||||||||||||||||||||||||||||||||
Adjusted diluted EPS from continuing operations (Non-GAAP) | $ | 0.43 | $ | 0.70 | $ | 0.97 | $ | 0.36 | $ | 0.05 | $ | (0.10) |
Year Ended December 31, | ||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | |||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||
Net loss from continuing operations (GAAP) | $ | (9.2) | $ | (68.6) | $ | (53.9) | $ | (161.9) | ||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (1) | 85.1 | 83.4 | 69.2 | 98.1 | |||||||||||||||||||||
Central services and conveyed employee costs | (2) | 65.0 | 81.6 | 86.0 | 81.1 | |||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (3) | 13.8 | 4.0 | 2.0 | 0.4 | |||||||||||||||||||||
Loss on extinguishment of debt | (4) | 4.5 | 14.4 | 1.2 | — | |||||||||||||||||||||
Shareholder activism | (5) | 2.7 | 4.6 | — | — | |||||||||||||||||||||
Foreign currency loss (gain) on re-measurement of intercompany notes | (6) | 0.8 | (0.5) | (0.2) | (1.7) | |||||||||||||||||||||
Litigation matter | (7) | 0.4 | — | 9.0 | 25.0 | |||||||||||||||||||||
Mark-to-market adjustments | (8) | (75.1) | (37.3) | 30.0 | 47.0 | |||||||||||||||||||||
Tax indemnification | (9) | — | 1.6 | 3.7 | 1.9 | |||||||||||||||||||||
COVID-19 | (10) | — | 14.3 | 14.8 | — | |||||||||||||||||||||
Impairment | (11) | — | — | — | 83.4 | |||||||||||||||||||||
Change in regulatory requirements | (12) | — | (0.1) | 1.0 | 10.7 | |||||||||||||||||||||
Executive management transition | (13) | — | — | 0.4 | 2.9 | |||||||||||||||||||||
Multiemployer pension plan withdrawal | (14) | — | — | — | 4.3 | |||||||||||||||||||||
Less: Taxes on adjusting items | (15.4) | (39.7) | (61.5) | (88.5) | ||||||||||||||||||||||
Adjusted net income from continuing operations (Non-GAAP) | 72.6 | 57.7 | 101.7 | 102.7 | ||||||||||||||||||||||
Interest expense | 69.9 | 72.1 | 92.6 | 80.9 | ||||||||||||||||||||||
Interest income (excluding COVID-19 interest income adjustments) | (15.5) | (4.7) | (4.1) | (4.8) | ||||||||||||||||||||||
Income taxes (excluding COVID-19 income tax adjustments) | 10.3 | (19.5) | (31.3) | (62.0) | ||||||||||||||||||||||
Add: Taxes on adjusting items | 15.4 | 39.7 | 61.5 | 88.5 | ||||||||||||||||||||||
Adjusted EBIT from continuing operations (Non-GAAP) | 152.7 | 145.3 | 220.4 | 205.3 | ||||||||||||||||||||||
Depreciation and amortization | (15) | 139.0 | 143.4 | 142.5 | 145.8 | |||||||||||||||||||||
Adjusted EBITDA from continuing operations (Non-GAAP) | 291.7 | 288.7 | 362.9 | 351.1 | ||||||||||||||||||||||
Stock-based compensation expense | (16) | 13.2 | 11.7 | 22.4 | 18.9 | |||||||||||||||||||||
Adjusted EBITDAS from continuing operations (Non-GAAP) | $ | 304.9 | $ | 300.4 | $ | 385.3 | $ | 370.0 | ||||||||||||||||||
Net loss margin from continuing operations | (0.3) | % | (2.4) | % | (1.9) | % | (5.7) | % | ||||||||||||||||||
Adjusted net income margin from continuing operations | 2.2 | % | 2.1 | % | 3.6 | % | 3.6 | % | ||||||||||||||||||
Adjusted EBIT margin from continuing operations | 4.6 | % | 5.2 | % | 7.7 | % | 7.2 | % | ||||||||||||||||||
Adjusted EBITDA margin from continuing operations | 8.8 | % | 10.3 | % | 12.7 | % | 12.3 | % | ||||||||||||||||||
Adjusted EBITDAS margin from continuing operations | 9.2 | % | 10.7 | % | 13.5 | % | 13.0 | % |
Three Months Ended | ||||||||||||||||||||||||||||||||||||||
June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||||||||
Net loss from continuing operations (GAAP) | $ | 22.4 | $ | 20.4 | $ | 39.7 | $ | (12.0) | $ | (26.9) | $ | (10.0) | ||||||||||||||||||||||||||
Growth, reinvestment, restructuring programs & other | (1) | 8.9 | 15.3 | 18.7 | 22.4 | 13.9 | 30.1 | |||||||||||||||||||||||||||||||
Central services and conveyed employee costs | (2) | — | — | — | 21.5 | 21.7 | 21.8 | |||||||||||||||||||||||||||||||
Divestiture, acquisition, integration, and related costs | (3) | 4.8 | 3.8 | (4.6) | 8.2 | 7.2 | 3.0 | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (4) | — | — | 4.5 | — | — | — | |||||||||||||||||||||||||||||||
Shareholder activism | (5) | — | 0.3 | 0.6 | 0.4 | 1.1 | 0.6 | |||||||||||||||||||||||||||||||
Foreign currency (gain) loss on re-measurement of intercompany notes | (6) | (2.5) | (0.2) | (0.6) | 1.8 | 0.4 | (0.8) | |||||||||||||||||||||||||||||||
Litigation matter | (7) | — | — | — | — | — | 0.4 | |||||||||||||||||||||||||||||||
Mark-to-market adjustments | (8) | (9.4) | 5.9 | 4.3 | (17.1) | (11.5) | (50.8) | |||||||||||||||||||||||||||||||
Tax indemnification | (9) | 0.1 | 0.2 | — | — | — | — | |||||||||||||||||||||||||||||||
Less: Taxes on adjusting items | — | (6.0) | (7.5) | (5.1) | (3.1) | 0.3 | ||||||||||||||||||||||||||||||||
Adjusted net income (loss) from continuing operations (Non-GAAP) | 24.3 | 39.7 | 55.1 | 20.1 | 2.8 | (5.4) | ||||||||||||||||||||||||||||||||
Interest expense | 19.2 | 17.8 | 18.7 | 17.5 | 17.0 | 16.7 | ||||||||||||||||||||||||||||||||
Interest income | (10.8) | (14.6) | (11.1) | (0.1) | (0.1) | (4.2) | ||||||||||||||||||||||||||||||||
Income taxes (excluding COVID-19 income tax adjustments) | 9.0 | 7.3 | 12.9 | 2.8 | (4.3) | (1.1) | ||||||||||||||||||||||||||||||||
Add: Taxes on adjusting items | — | 6.0 | 7.5 | 5.1 | 3.1 | (0.3) | ||||||||||||||||||||||||||||||||
Adjusted EBIT from continuing operations (Non-GAAP) | 41.7 | 56.2 | 83.1 | 45.4 | 18.5 | 5.7 | ||||||||||||||||||||||||||||||||
Depreciation and amortization | (15) | 34.6 | 35.1 | 35.4 | 34.2 | 34.4 | 35.0 | |||||||||||||||||||||||||||||||
Adjusted EBITDA from continuing operations (Non-GAAP) | 76.3 | 91.3 | 118.5 | 79.6 | 52.9 | 40.7 | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | (16) | 3.5 | 5.0 | 2.5 | 3.8 | 3.6 | 3.3 | |||||||||||||||||||||||||||||||
Adjusted EBITDAS from continuing operations (Non-GAAP) | $ | 79.8 | $ | 96.3 | $ | 121.0 | $ | 83.4 | $ | 56.5 | $ | 44.0 | ||||||||||||||||||||||||||
Net income (loss) margin from continuing operations | 2.8 | % | 2.4 | % | 4.1 | % | (1.4) | % | (3.5) | % | (1.3) | % | ||||||||||||||||||||||||||
Adjusted net income (loss) margin from continuing operations | 3.0 | % | 4.6 | % | 5.8 | % | 2.4 | % | 0.4 | % | (0.7) | % | ||||||||||||||||||||||||||
Adjusted EBIT margin from continuing operations | 5.2 | % | 6.6 | % | 8.7 | % | 5.5 | % | 2.4 | % | 0.8 | % | ||||||||||||||||||||||||||
Adjusted EBITDA margin from continuing operations | 9.5 | % | 10.7 | % | 12.4 | % | 9.6 | % | 6.9 | % | 5.5 | % | ||||||||||||||||||||||||||
Adjusted EBITDAS margin from continuing operations | 9.9 | % | 11.3 | % | 12.6 | % | 10.0 | % | 7.4 | % | 5.9 | % |
Location in Unaudited Condensed Consolidated Statements of Operations | Year Ended December 31, | |||||||||||||||||||||||||||||||
2022 | 2021 | 2020 | 2019 | |||||||||||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||||||||
(1) | Growth, reinvestment, restructuring programs & other | Other operating expense, net | $ | 84.6 | $ | 83.4 | $ | 67.5 | $ | 93.2 | ||||||||||||||||||||||
Cost of sales | 0.5 | — | 0.9 | 3.1 | ||||||||||||||||||||||||||||
General and administrative | — | — | 0.8 | 1.8 | ||||||||||||||||||||||||||||
(2) | Central services and conveyed employee costs | General and administrative | 50.1 | 63.5 | 66.5 | 63.2 | ||||||||||||||||||||||||||
Cost of sales | 14.9 | 18.1 | 19.5 | 17.9 | ||||||||||||||||||||||||||||
(3) | Divestiture, acquisition, integration, and related costs | General and administrative | 19.1 | 3.4 | 1.5 | 0.4 | ||||||||||||||||||||||||||
Cost of sales | 1.6 | 0.5 | 0.1 | — | ||||||||||||||||||||||||||||
Other operating expense, net | (6.9) | 0.1 | 0.4 | — | ||||||||||||||||||||||||||||
(4) | Loss on extinguishment of debt | Loss on extinguishment of debt | 4.5 | 14.4 | 1.2 | — | ||||||||||||||||||||||||||
(5) | Shareholder activism | General and administrative | 2.7 | 4.6 | — | — | ||||||||||||||||||||||||||
(6) | Foreign currency loss (gain) on re-measurement of intercompany notes | Loss (gain) on foreign currency exchange | 0.8 | (0.5) | (0.2) | (1.7) | ||||||||||||||||||||||||||
(7) | Litigation matter | General and administrative | 0.4 | — | 9.0 | 25.0 | ||||||||||||||||||||||||||
(8) | Mark-to-market adjustments | Other (expense) income, net | (75.1) | (37.3) | 30.0 | 47.0 | ||||||||||||||||||||||||||
(9) | Tax indemnification | Other (income) expense, net | — | 1.6 | 3.7 | 1.9 | ||||||||||||||||||||||||||
(10) | COVID-19 | Net sales | — | — | 1.0 | — | ||||||||||||||||||||||||||
Cost of sales | — | 12.4 | 40.9 | — | ||||||||||||||||||||||||||||
Selling and distribution | — | — | 1.6 | — | ||||||||||||||||||||||||||||
General and administrative | — | — | 1.8 | — | ||||||||||||||||||||||||||||
Interest income | — | — | (0.7) | — | ||||||||||||||||||||||||||||
Income tax expense (benefit) | — | 1.9 | (29.8) | — | ||||||||||||||||||||||||||||
(11) | Impairment | Asset impairment | — | — | — | 83.4 | ||||||||||||||||||||||||||
(12) | Change in regulatory requirements | Cost of sales | — | (0.1) | (0.1) | 8.5 | ||||||||||||||||||||||||||
Selling and distribution | — | — | 1.0 | 1.8 | ||||||||||||||||||||||||||||
General and administrative | — | — | 0.1 | 0.4 | ||||||||||||||||||||||||||||
(13) | Executive management transition | General and administrative | — | — | 0.4 | 2.9 | ||||||||||||||||||||||||||
(14) | Multiemployer pension plan withdrawal | Cost of sales | — | — | — | 4.3 | ||||||||||||||||||||||||||
(15) | Depreciation included as an adjusting item | Cost of sales | 0.6 | — | 0.2 | 1.7 | ||||||||||||||||||||||||||
General and administrative | — | — | — | 1.6 | ||||||||||||||||||||||||||||
Other operating expense, net | — | — | — | 0.2 | ||||||||||||||||||||||||||||
(16) | Stock-based compensation expense included as an adjusting item | Other operating expense, net | 6.6 | 2.5 | 2.0 | 2.0 |
Location in Unaudited Condensed Consolidated Statements of Operations | Three Months Ended | |||||||||||||||||||||||||
June 30, 2023 | March 31, 2023 | December 31, 2022 | September 30, 2022 | June 30, 2022 | March 31, 2022 | |||||||||||||||||||||
(unaudited, in millions) | ||||||||||||||||||||||||||
(1) | Growth, reinvestment, restructuring programs & other | Other operating expense, net | $ | 8.9 | $ | 15.3 | $ | 18.2 | $ | 22.4 | $ | 13.9 | $ | 30.1 | ||||||||||||
Cost of sales | — | — | 0.5 | — | — | — | ||||||||||||||||||||
(2) | Central services and conveyed employee costs | General and administrative | — | — | — | 16.5 | 16.8 | 16.8 | ||||||||||||||||||
Cost of sales | — | — | — | 5.0 | 4.9 | 5.0 | ||||||||||||||||||||
(3) | Divestiture, acquisition, integration, and related costs | General and administrative | 4.6 | 3.1 | 3.4 | 7.2 | 6.6 | 1.9 | ||||||||||||||||||
Other operating expense, net | 0.2 | 0.7 | (8.0) | 1.0 | 0.1 | — | ||||||||||||||||||||
Cost of sales | — | — | — | — | 0.5 | 1.1 | ||||||||||||||||||||
(4) | Loss on extinguishment of debt | Loss on extinguishment of debt | — | — | 4.5 | — | — | — | ||||||||||||||||||
(5) | Shareholder activism | General and administrative | — | 0.3 | 0.6 | 0.4 | 1.1 | 0.6 | ||||||||||||||||||
(6) | Foreign currency (gain) loss on re-measurement of intercompany notes | (Gain) loss on foreign currency exchange | (2.5) | (0.2) | (0.6) | 1.8 | 0.4 | (0.8) | ||||||||||||||||||
(7) | Litigation matter | General and administrative | — | — | — | — | — | 0.4 | ||||||||||||||||||
(8) | Mark-to-market adjustments | Other (income) expense, net | (9.4) | 5.9 | 4.3 | (17.1) | (11.5) | (50.8) | ||||||||||||||||||
(9) | Tax indemnification | Other (income) expense, net | 0.1 | 0.2 | — | — | — | — | ||||||||||||||||||
(15) | Depreciation included as an adjusting item | Cost of sales | — | — | 0.6 | — | — | — | ||||||||||||||||||
(16) | Stock-based compensation expense included as an adjusting item | Other operating expense, net | 2.4 | 2.2 | 2.1 | 2.3 | 1.7 | 0.5 |
(1) | The Company's growth, reinvestment, and restructuring activities are part of an enterprise-wide transformation to improve long-term growth and profitability for the Company. | ||||
(2) | As a result of the sale of a significant portion of the Meal Preparation business, the Company identified two items affecting comparability – 1) central service costs and 2) conveyed employee costs. 1) The Company has historically provided central services to the Meal Preparation business including, but not limited to, IT and financial shared services, procurement and order processing, customer service, warehousing, logistics, and customs. These costs were historically incurred by TreeHouse and include employee and non-employee expenses to support the services. 2) Conveyed employee costs represent compensation costs for employees that were not historically dedicated to the sold business and transferred to the buyer after the sale. | ||||
(3) | Divestiture, acquisition, integration, and related costs represent costs associated with completed and potential divestitures, completed and potential acquisitions, and the related integration of the acquisitions. | ||||
(4) | During the fourth quarter of 2022, the Company incurred a loss on extinguishment of debt representing the write-off of deferred financing costs in connection with the debt prepayment and revolving credit commitment reduction in October 2022. During 2021, the Company incurred a loss on extinguishment of debt in connection with the 2024 Notes Redemption and Credit Agreement refinancing. During 2020, the Company incurred a loss on extinguishment of debt representing the write-off of deferred financing costs in connection with the redemption of its 2022 Notes. | ||||
(5) | The Company incurred fees related to shareholder activism which include directly applicable third-party advisory and professional service fees. | ||||
(6) | The Company has foreign currency denominated intercompany loans and incurred foreign currency gains or losses to re-measure the loans at each period end. These charges are non-cash and the loans are eliminated in consolidation. | ||||
(7) | The Company recognized expense for the settlement related to a litigation matter challenging wage and hour practices at three former manufacturing facilities in California. | ||||
(8) | The Company's derivative contracts are marked-to-market each period. The non-cash unrealized changes in fair value recognized in Other (income) expense, net within the Unaudited Condensed Consolidated Statements of Operations are treated as Non-GAAP adjustments. As the contracts are settled, realized gains and losses are recognized, and only the mark-to-market impacts are treated as Non-GAAP adjustments. | ||||
(9) | Tax indemnification represents the non-cash write off of indemnification assets that were recorded in connection with acquisitions from prior years. These write-offs arose as a result of the related uncertain tax position being released due to the statute of limitation lapse or settlement with taxing authorities. | ||||
(10) | The Company incurred incremental expenses directly attributable to our response to the COVID-19 pandemic, which included additional protective equipment for employees and additional sanitation measures. Additionally, the Company incurred income tax (benefit) expense due to the enactment of the CARES Act. | ||||
(11) | During 2019, the Company incurred non-cash impairment charges related to the Cookies asset group and to the expected disposal loss related to two In-Store Bakery facilities. | ||||
(12) | The Company incurred regulatory compliance costs related to changes in nutrition labeling requirements. These costs included both consulting services and inventory write-downs. | ||||
(13) | Executive management transition includes costs associated with the 2019 CFO transition. The CFO transition costs primarily relate to severance and consulting fees. | ||||
(14) | During 2019, the Company executed a complete withdrawal from the Retail, Wholesale, and Department Store International Union and Industry Pension Fund. The Company settled the withdrawal in the fourth quarter of 2019. |
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Document and Entity Information Document |
Nov. 06, 2023 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Nov. 06, 2023 |
Entity Registrant Name | TREEHOUSE FOODS, INC. |
Entity File Number | 001-32504 |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 20-2311383 |
Entity Address, Address Line One | 2021 Spring Road, |
Entity Address, Address Line Two | Suite 600 |
Entity Address, City or Town | Oak Brook |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60523 |
City Area Code | 708 |
Local Phone Number | 483-1300 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, $0.01 par value |
Trading Symbol | THS |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Entity Central Index Key | 0001320695 |
Amendment Flag | false |
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