Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices) (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | |||||
September 30, 2023 | December 31, 2022 | |||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Receivables, net | ||||||||||||||
Inventories | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Assets of discontinued operations | ||||||||||||||
Total current assets | ||||||||||||||
Property, plant, and equipment, net | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Goodwill | ||||||||||||||
Intangible assets, net | ||||||||||||||
Note receivable, net | ||||||||||||||
Other assets, net | ||||||||||||||
Total assets | $ | $ | ||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | $ | ||||||||||||
Accrued expenses | ||||||||||||||
Current portion of long-term debt | ||||||||||||||
Total current liabilities | ||||||||||||||
Long-term debt | ||||||||||||||
Operating lease liabilities | ||||||||||||||
Deferred income taxes | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 17) | ||||||||||||||
Stockholders' equity: | ||||||||||||||
Preferred stock, par value $ | ||||||||||||||
Common stock, par value $ | ||||||||||||||
Treasury stock | ( | ( | ||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated deficit | ( | ( | ||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Total stockholders' equity | ||||||||||||||
Total liabilities and stockholders' equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Gross profit | ||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Selling and distribution | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Amortization expense | ||||||||||||||||||||||||||
Other operating (income) expense, net | ( | ( | ||||||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||||||||
Operating income (loss) | ( | ( | ||||||||||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||
Interest income | ( | ( | ( | ( | ||||||||||||||||||||||
Loss on foreign currency exchange | ||||||||||||||||||||||||||
Other expense (income), net | ( | ( | ||||||||||||||||||||||||
Total other expense (income) | ( | |||||||||||||||||||||||||
Income (loss) before income taxes | ( | ( | ||||||||||||||||||||||||
Income tax expense (benefit) | ( | |||||||||||||||||||||||||
Net income (loss) from continuing operations | ( | ( | ||||||||||||||||||||||||
Net loss from discontinued operations | ( | ( | ( | ( | ||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Earnings (loss) per common share - basic: | ||||||||||||||||||||||||||
Continuing operations | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Discontinued operations | ( | ( | ( | ( | ||||||||||||||||||||||
Earnings (loss) per share basic (1) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Earnings (loss) per common share - diluted: | ||||||||||||||||||||||||||
Continuing operations | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Discontinued operations | ( | ( | ( | ( | ||||||||||||||||||||||
Earnings (loss) per share diluted (1) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Weighted average common shares: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net income (loss) | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Other comprehensive (loss) income: | ||||||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | |||||||||||||||||||||||
Pension and postretirement reclassification adjustment | ||||||||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ( | |||||||||||||||||||||||
Comprehensive income (loss) | $ | $ | ( | $ | $ | ( |
Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Paid-In | Accumulated | Comprehensive | Total | |||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit | Loss | Equity | |||||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2023 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, June 30, 2023 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Treasury stock repurchases | — | — | ( | ( | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Issuance of stock awards | — | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | ( | $ | ( | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | $ | ( | |||||||||||
Net loss from discontinued operations | ( | ( | ||||||||||||
Net income (loss) from continuing operations | ( | |||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Stock-based compensation | ||||||||||||||
Unrealized gain on derivative contracts | ( | ( | ||||||||||||
Deferred income taxes | ||||||||||||||
Deferred TSA income | ( | |||||||||||||
Other | ||||||||||||||
Changes in operating assets and liabilities, net of acquisitions and divestitures: | ||||||||||||||
Receivables | ( | ( | ||||||||||||
Inventories | ( | ( | ||||||||||||
Prepaid expenses and other assets | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Accrued expenses and other liabilities | ( | ( | ||||||||||||
Net cash provided by (used in) operating activities - continuing operations | ( | |||||||||||||
Net cash used in operating activities - discontinued operations | ( | ( | ||||||||||||
Net cash provided by (used in) operating activities | ( | |||||||||||||
Cash flows from investing activities: | ||||||||||||||
Additions to property, plant, and equipment | ( | ( | ||||||||||||
Additions to intangible assets | ( | ( | ||||||||||||
Proceeds from sale of fixed assets | ||||||||||||||
Acquisitions, net of cash acquired | ( | |||||||||||||
Net cash used in investing activities - continuing operations | ( | ( | ||||||||||||
Net cash provided by (used in) investing activities - discontinued operations | ( | |||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Borrowings under Revolving Credit Facility | ||||||||||||||
Payments under Revolving Credit Facility | ( | ( | ||||||||||||
Payments on financing lease obligations | ( | ( | ||||||||||||
Payment of deferred financing costs | ( | |||||||||||||
Payments on Term Loans | ( | |||||||||||||
Repurchases of common stock | ( | |||||||||||||
Payments related to stock-based award activities | ( | ( | ||||||||||||
Net cash provided by (used in) financing activities - continuing operations | ( | |||||||||||||
Net cash used in financing activities - discontinued operations | ( | |||||||||||||
Net cash provided by (used in) financing activities | ( | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | ( | |||||||||||||
Net decrease in cash and cash equivalents | ( | ( | ||||||||||||
Add: Cash and cash equivalents of discontinued operations, beginning of period | ||||||||||||||
Less: Cash and cash equivalents of discontinued operations, end of period | ( | |||||||||||||
Cash and cash equivalents, beginning of period | ||||||||||||||
Cash and cash equivalents, end of period | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Supplemental cash flow disclosures: | ||||||||||||||
Interest paid | $ | $ | ||||||||||||
Net income taxes paid (refunded) | ( | |||||||||||||
Non-cash investing activities: | ||||||||||||||
Accrued purchase of property and equipment | $ | $ | ||||||||||||
Accrued other intangible assets | ||||||||||||||
Right-of-use assets obtained in exchange for lease obligations | ||||||||||||||
Note receivable purchase price adjustment reduction | ( | |||||||||||||
Note receivable increase from paid in kind interest | ||||||||||||||
Deferred payment from acquisition of seasoned pretzel capability |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Strategic Growth Initiatives | $ | $ | $ | $ | ||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Employee-related | $ | $ | $ | $ | ||||||||||||||||||||||
Other costs | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Severance | Retention | Total Exit Cost Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Balance as of December 31, 2022 | $ | $ | $ | |||||||||||||||||
Expenses recognized | ||||||||||||||||||||
Cash payments | ( | ( | ( | |||||||||||||||||
Balance as of September 30, 2023 | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
(In millions) | ||||||||||||||
Outstanding accounts receivable sold | $ | $ | ||||||||||||
Receivables collected and not remitted to financial institutions |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
(In millions) | ||||||||||||||
Receivables sold | $ | $ | ||||||||||||
Receivables collected and remitted to financial institutions | ( | ( |
September 30, 2023 | December 31, 2022 | |||||||||||||
(In millions) | ||||||||||||||
Raw materials and supplies | $ | $ | ||||||||||||
Finished goods | ||||||||||||||
Total inventories | $ | $ |
(In millions) | |||||
Allocation of consideration to assets acquired: | |||||
Inventories | $ | ||||
Property, plant, and equipment, net | |||||
Total purchase price | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Net sales | $ | $ | $ | $ | ||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||
Selling, general, administrative and other operating expenses | ||||||||||||||||||||||||||
Amortization expense | ||||||||||||||||||||||||||
(Gain) loss on sale of business | ( | |||||||||||||||||||||||||
Operating loss from discontinued operations | ( | ( | ( | ( | ||||||||||||||||||||||
Interest and other expense (income) | ( | |||||||||||||||||||||||||
Income tax (benefit) expense | ( | ( | ( | |||||||||||||||||||||||
Net loss from discontinued operations | $ | ( | $ | ( | $ | ( | $ | ( |
December 31, 2022 | ||||||||
(In millions) | ||||||||
Inventories | $ | |||||||
Property, plant, and equipment, net | ||||||||
Total assets of discontinued operations | $ | |||||||
September 30, 2023 | December 31, 2022 | |||||||||||||
(In millions) | ||||||||||||||
Land | $ | $ | ||||||||||||
Buildings and improvements | ||||||||||||||
Machinery and equipment | ||||||||||||||
Construction in progress | ||||||||||||||
Total | ||||||||||||||
Less accumulated depreciation | ( | ( | ||||||||||||
Property, plant, and equipment, net | $ | $ |
Goodwill | ||||||||
(In millions) | ||||||||
Balance at December 31, 2022 | $ | |||||||
Acquisition | ||||||||
Foreign currency exchange adjustments | ||||||||
Balance at September 30, 2023 | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||||||||||||||||||||
Customer-related | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Trademarks | ( | ( | ||||||||||||||||||||||||||||||||||||
Formulas/recipes | ( | ( | ||||||||||||||||||||||||||||||||||||
Computer software | ( | ( | ||||||||||||||||||||||||||||||||||||
Total finite lived intangibles | ( | ( | ||||||||||||||||||||||||||||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||||||||||||||||||||||||
Trademarks | — | — | ||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
(In millions) | ||||||||||||||
Revolving Credit Facility | $ | $ | ||||||||||||
Term Loan A | ||||||||||||||
Term Loan A-1 | ||||||||||||||
2028 Notes | ||||||||||||||
Finance leases | ||||||||||||||
Total outstanding debt | ||||||||||||||
Deferred financing costs | ( | ( | ||||||||||||
Less current portion | ( | ( | ||||||||||||
Total long-term debt | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||||||
Assumed exercise/vesting of equity awards (1) | ||||||||||||||||||||||||||
Weighted average diluted common shares outstanding | ||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Compensation expense related to stock-based payments | $ | $ | $ | $ | ||||||||||||||||||||||
Related income tax benefit |
Employee Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (yrs.) | Aggregate Intrinsic Value | ||||||||||||||||||||
(In thousands) | (In millions) | ||||||||||||||||||||||
Outstanding, at December 31, 2022 | $ | $ | |||||||||||||||||||||
Expired | ( | ||||||||||||||||||||||
Outstanding, at September 30, 2023 | |||||||||||||||||||||||
Vested/expected to vest, at September 30, 2023 | |||||||||||||||||||||||
Exercisable, at September 30, 2023 |
Employee Restricted Stock Units | Weighted Average Grant Date Fair Value | Director Restricted Stock Units | Weighted Average Grant Date Fair Value | |||||||||||||||||||||||
(In thousands) | (In thousands) | |||||||||||||||||||||||||
Nonvested, at December 31, 2022 | $ | $ | ||||||||||||||||||||||||
Granted | ||||||||||||||||||||||||||
Vested | ( | ( | ||||||||||||||||||||||||
Forfeited | ( | |||||||||||||||||||||||||
Nonvested, at September 30, 2023 | ||||||||||||||||||||||||||
Vested and deferred, at September 30, 2023 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Fair value of vested restricted stock units | $ | $ | $ | $ | ||||||||||||||||||||||
Tax benefit recognized from vested restricted stock units |
Nine Months Ended September 30, | ||||||||
2023 | ||||||||
Dividend yield | % | |||||||
Risk-free rate | % | |||||||
Expected volatility (TreeHouse Foods, Inc.) | % | |||||||
Expected volatility (Peer Group) | % | |||||||
Expected volatility (Index) | N/A | |||||||
Expected term (in years) |
Performance Units | Weighted Average Grant Date Fair Value | |||||||||||||
(In thousands) | ||||||||||||||
Nonvested, at December 31, 2022 | $ | |||||||||||||
Granted | ||||||||||||||
Vested | ( | |||||||||||||
Forfeited | ( | |||||||||||||
Nonvested, at September 30, 2023 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Fair value of vested performance units | $ | $ | $ | $ | ||||||||||||||||||||||
Tax benefit recognized from performance units vested |
Foreign Currency Translation (1) | Unrecognized Pension and Postretirement Benefits (1) | Accumulated Other Comprehensive Loss | ||||||||||||||||||
(In millions) | ||||||||||||||||||||
Balance at December 31, 2021 | $ | ( | $ | $ | ( | |||||||||||||||
Other comprehensive loss before reclassifications | ( | ( | ||||||||||||||||||
Reclassifications from accumulated other comprehensive loss (2) | ||||||||||||||||||||
Other comprehensive (loss) income | ( | ( | ||||||||||||||||||
Balance at September 30, 2022 | $ | ( | $ | $ | ( | |||||||||||||||
Balance at December 31, 2022 | $ | ( | $ | $ | ( | |||||||||||||||
Other comprehensive income before reclassifications | ||||||||||||||||||||
Reclassifications from accumulated other comprehensive loss (2) | ||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Balance at September 30, 2023 | $ | ( | $ | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | ||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ||||||||||||||||||||||
Amortization of unrecognized prior service cost | ||||||||||||||||||||||||||
Amortization of unrecognized net loss | ||||||||||||||||||||||||||
Net periodic pension benefit | $ | $ | ( | $ | ( | $ | ( |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Interest cost | $ | $ | $ | $ | ||||||||||||||||||||||
Amortization of unrecognized net gain | ( | |||||||||||||||||||||||||
Net periodic postretirement cost | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Growth, reinvestment, and restructuring programs (1) | $ | $ | $ | $ | ||||||||||||||||||||||
TSA income (2) | ( | ( | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Other operating (income) expense, net | $ | ( | $ | $ | ( | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
(In millions) | ||||||||||||||
Asset derivatives | ||||||||||||||
Commodity contracts | $ | $ | ||||||||||||
Interest rate swap agreements | ||||||||||||||
$ | $ | |||||||||||||
Liability derivatives | ||||||||||||||
Commodity contracts | $ | $ | ||||||||||||
Location of Gain (Loss) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
Recognized in Net Income (Loss) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||||||
Mark-to-market unrealized gain (loss) | ||||||||||||||||||||||||||||||||
Commodity contracts | Other expense (income), net | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||
Interest rate swap agreements | Other expense (income), net | ( | ||||||||||||||||||||||||||||||
Total return swap contract | General and administrative | ( | ( | |||||||||||||||||||||||||||||
Total unrealized (loss) gain | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||
Realized gain (loss) | ||||||||||||||||||||||||||||||||
Commodity contracts | Manufacturing related to Cost of sales and transportation related to Selling and distribution | $ | $ | $ | $ | |||||||||||||||||||||||||||
Interest rate swap agreements | Interest expense | ( | ( | |||||||||||||||||||||||||||||
Total return swap contract | General and administrative | ( | ( | |||||||||||||||||||||||||||||
Total realized gain (loss) | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||
Total gain | $ | $ | $ | $ |
Product Category Group | Principal Products | |||||||
Snacking | Candy; cookies; crackers; in-store bakery items; pretzels; and frozen griddle items | |||||||
Beverages & drink mixes | Broths/stocks; non-dairy creamer; powdered beverages and other blends; ready-to-drink beverages; coffee; and tea | |||||||
Grocery | Cheese & pudding; hot cereal; pickles; and refrigerated dough |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Snacking | $ | $ | $ | $ | ||||||||||||||||||||||
Beverages & drink mixes | ||||||||||||||||||||||||||
Grocery | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||
Retail grocery | $ | $ | $ | $ | ||||||||||||||||||||||
Co-manufacturing | ||||||||||||||||||||||||||
Food-away-from-home and other | ||||||||||||||||||||||||||
Total net sales | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | |||||||||||||||||||||||||||||||||
GAAP Results | ||||||||||||||||||||||||||||||||||||||
Net sales | $ | 863.3 | $ | 832.9 | 3.6 | % | $ | 2,520.8 | $ | 2,340.4 | 7.7 | % | ||||||||||||||||||||||||||
Net income (loss) from continuing operations | 9.8 | (12.0) | 181.7 | % | 52.6 | (48.9) | 207.6 | % | ||||||||||||||||||||||||||||||
Net income (loss) | 7.1 | (90.5) | 107.8 | % | 45.6 | (122.9) | 137.1 | % | ||||||||||||||||||||||||||||||
Diluted earnings (loss) per share from continuing operations | 0.17 | (0.21) | 181.0 | % | 0.93 | (0.87) | 206.9 | % | ||||||||||||||||||||||||||||||
Non-GAAP Results (1) | ||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA from continuing operations | $ | 89.9 | $ | 79.6 | 12.9 | % | $ | 257.5 | $ | 173.2 | 48.7 | % | ||||||||||||||||||||||||||
Adjusted EBITDA | 85.9 | 89.4 | (3.9) | % | 253.1 | 213.3 | 18.7 | % | ||||||||||||||||||||||||||||||
Adjusted net income from continuing operations | 32.4 | 20.1 | 61.2 | % | 96.4 | 17.5 | 450.9 | % | ||||||||||||||||||||||||||||||
Adjusted diluted EPS from continuing operations | 0.57 | 0.36 | 58.3 | % | 1.70 | 0.31 | 448.4 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Dollars | Percent | Dollars | Percent | Dollars | Percent | Dollars | Percent | |||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions) | (Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||||
Net sales | $ | 863.3 | 100.0 | % | $ | 832.9 | 100.0 | % | $ | 2,520.8 | 100.0 | % | $ | 2,340.4 | 100.0 | % | ||||||||||||||||||||||||||||||||||
Cost of sales | 725.8 | 84.1 | 700.0 | 84.0 | 2,096.5 | 83.2 | 1,993.0 | 85.2 | ||||||||||||||||||||||||||||||||||||||||||
Gross profit | 137.5 | 15.9 | 132.9 | 16.0 | 424.3 | 16.8 | 347.4 | 14.8 | ||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Selling and distribution | 44.5 | 5.2 | 51.7 | 6.2 | 128.9 | 5.1 | 166.9 | 7.1 | ||||||||||||||||||||||||||||||||||||||||||
General and administrative | 47.5 | 5.5 | 51.6 | 6.2 | 154.8 | 6.1 | 160.5 | 6.9 | ||||||||||||||||||||||||||||||||||||||||||
Amortization expense | 12.0 | 1.4 | 11.9 | 1.4 | 36.1 | 1.4 | 35.7 | 1.5 | ||||||||||||||||||||||||||||||||||||||||||
Other operating (income) expense, net | (0.1) | — | 23.4 | 2.8 | (0.3) | — | 66.4 | 2.8 | ||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | 103.9 | 12.1 | 138.6 | 16.6 | 319.5 | 12.6 | 429.5 | 18.3 | ||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | 33.6 | 3.8 | (5.7) | (0.6) | 104.8 | 4.2 | (82.1) | (3.5) | ||||||||||||||||||||||||||||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense | 20.9 | 2.4 | 17.5 | 2.1 | 57.9 | 2.3 | 51.2 | 2.2 | ||||||||||||||||||||||||||||||||||||||||||
Interest income | (10.8) | (1.3) | (0.1) | — | (36.2) | (1.4) | (4.4) | (0.2) | ||||||||||||||||||||||||||||||||||||||||||
Loss on foreign currency exchange | 3.7 | 0.4 | 2.9 | 0.3 | 0.7 | — | 3.0 | 0.1 | ||||||||||||||||||||||||||||||||||||||||||
Other expense (income), net | 6.3 | 0.7 | (16.8) | (2.0) | 9.8 | 0.4 | (80.4) | (3.4) | ||||||||||||||||||||||||||||||||||||||||||
Total other expense (income) | 20.1 | 2.2 | 3.5 | 0.4 | 32.2 | 1.3 | (30.6) | (1.3) | ||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | 13.5 | 1.6 | (9.2) | (1.0) | 72.6 | 2.9 | (51.5) | (2.2) | ||||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 3.7 | 0.4 | 2.8 | 0.3 | 20.0 | 0.8 | (2.6) | (0.1) | ||||||||||||||||||||||||||||||||||||||||||
Net income (loss) from continuing operations | 9.8 | 1.2 | (12.0) | (1.3) | 52.6 | 2.1 | (48.9) | (2.1) | ||||||||||||||||||||||||||||||||||||||||||
Net loss from discontinued operations | (2.7) | (0.3) | (78.5) | (9.4) | (7.0) | (0.3) | (74.0) | (3.2) | ||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | 7.1 | 0.9 | % | $ | (90.5) | (10.7) | % | $ | 45.6 | 1.8 | % | $ | (122.9) | (5.3) | % |
Dollars | Percent | |||||||||||||
(In millions) | ||||||||||||||
2022 Net sales | $ | 832.9 | ||||||||||||
Volume/mix related to acquisitions | 36.2 | 4.3 | % | |||||||||||
Volume/mix excluding acquisitions | (28.4) | (3.4) | ||||||||||||
Pricing | 26.5 | 3.2 | ||||||||||||
Product recall | (3.0) | (0.4) | ||||||||||||
Foreign currency | (0.9) | (0.1) | ||||||||||||
2023 Net sales | $ | 863.3 | 3.6 | % | ||||||||||
Volume/mix related to acquisitions | (4.3) | |||||||||||||
Foreign currency | 0.1 | |||||||||||||
Percent change in organic net sales (1) | (0.6) | % |
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. |
Our effective tax rate may change from period to period based on recurring and non-recurring factors including the jurisdictional mix of earnings, enacted tax legislation, state income taxes, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. |
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. Refer to Note 5 of our Condensed Consolidated Financial Statements for additional details. |
Dollars | Percent | |||||||||||||
(In millions) | ||||||||||||||
2022 Net sales | $ | 2,340.4 | ||||||||||||
Pricing | 240.0 | 10.3 | % | |||||||||||
Volume/mix excluding acquisitions | (89.8) | (3.9) | ||||||||||||
Volume/mix related to acquisitions | 38.3 | 1.6 | ||||||||||||
Foreign currency | (5.1) | (0.2) | ||||||||||||
Product recall | (3.0) | (0.1) | ||||||||||||
2023 Net sales | $ | 2,520.8 | 7.7 | % | ||||||||||
Volume/mix related to acquisitions | (1.6) | |||||||||||||
Foreign currency | 0.2 | |||||||||||||
Percent change in organic net sales | 6.3 | % |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
(In millions) | ||||||||||||||
Net Cash Flows Provided By (Used In): | ||||||||||||||
Operating activities of continuing operations | $ | 11.0 | $ | (77.1) | ||||||||||
Investing activities of continuing operations | (179.3) | (55.6) | ||||||||||||
Financing activities of continuing operations | 98.7 | (21.8) | ||||||||||||
Cash flows from discontinued operations | 44.8 | (74.1) |
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. Refer to Note 3 to our Condensed Consolidated Financial Statements for additional information regarding the Receivables Sales Program. |
Net cash used in investing activities from continuing operations was $179.3 million in the first nine months of 2023 compared to $55.6 million in the first nine months of 2022, an increase in cash used of $123.7 million. This was primarily driven by $102.2 million of cash used for the acquisitions of the seasoned pretzel and coffee roasting capabilities, which were completed on April 1, 2023 and June 30, 2023, respectively. Additionally, the exercise of a purchase option on the lease of our Cambridge, Maryland facility for $8.1 million, higher capital expenditures for growth and supply chain initiatives as well as infrastructure and maintenance at our manufacturing plants, and non-recurring proceeds received from the sale of fixed assets in the first quarter of 2022 contributed to the increase in cash used. Capital expenditures during the first nine months of 2023 included growth initiatives for building depth through capacity and capability expansion. |
Net cash provided by financing activities from continuing operations was $98.7 million in the first nine months of 2023 compared to $21.8 million net cash used in financing activities from continuing operations in the first nine months of 2022, an increase in cash provided of $120.5 million. The increase in cash provided is due to a $155.3 million increase in cash drawn on the Revolving Credit Facility in the first nine months of 2023 to fund business acquisitions and invest in inventory to improve service levels. This was partially offset by common stock repurchases during the first nine months of 2023, which resulted in a non-recurring cash outflow of $50.0 million. |
There was $44.8 million cash provided by discontinued operations in the first nine months of 2023 compared to $74.1 million of cash used in the first nine months of 2022, an increase in cash provided of $118.9 million. The increase in cash provided by discontinued operations is partially due to the completion of the sale of the Snack Bars Business on September 29, 2023, which resulted in a non-recurring cash inflow of $61.3 million from the buyer. Additionally, the increase was due to non-recurring cash used in operating and investing activities during the first nine months of 2022 from the divested Meal Preparation business sold on October 3, 2022. The increase in cash provided was partially offset by the finalization of the purchase price of the Meal Preparation business during the first nine months of 2023, which resulted in a cash payment of $15.2 million to the buyer. Refer to Note 5 to our Condensed Consolidated Financial Statements for additional information. |
TreeHouse Foods, Inc. and Guarantor Subsidiaries | ||||||||
Summarized Statement of Operations | Nine Months Ended September 30, 2023 | |||||||
(Unaudited, in millions) | ||||||||
Net sales | $ | 2,442.1 | ||||||
Gross profit (1) | 414.4 | |||||||
Net income from continuing operations | 65.1 | |||||||
Net income from discontinued operations | (7.0) | |||||||
Net income | 58.1 |
TreeHouse Foods, Inc. and Guarantor Subsidiaries | ||||||||||||||
Summarized Balance Sheet | September 30, 2023 | December 31, 2022 | ||||||||||||
(Unaudited, in millions) | ||||||||||||||
Current assets | $ | 741.3 | $ | 749.9 | ||||||||||
Noncurrent assets | 3,268.5 | 3,190.4 | ||||||||||||
Current liabilities | 639.4 | 742.3 | ||||||||||||
Noncurrent liabilities (2) | 1,816.7 | 1,665.2 |
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. | ||||
Refer to Note 5 to our Condensed Consolidated Financial Statements for additional information | |||||
(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. | ||||
Refer to Note 2 to our Condensed Consolidated Financial Statements for additional information. | |||||
(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. | ||||
Refer to Note 17 to our Condensed Consolidated Financial Statements for additional information. | |||||
(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. | ||||
Refer to Note 5 to our Condensed Consolidated Financial Statements for additional information. | |||||
(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. | ||||
Refer to Note 18 to our Condensed Consolidated Financial Statements for additional information. | |||||
(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, | 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 | |||||||||||||
(In millions) | ||||||||||||||
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) |
Period | Weighted Average Price Paid per Share | Total Number of Shares Purchased | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Maximum Number of Shares that may not yet be Purchased under the Program | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
July 1 through July 31, 2023 | $ | — | — | — | $ | 266.7 | ||||||||||||||||||||
August 1 through August 31, 2023 | 46.58 | 1.0 | 1.0 | 219.1 | ||||||||||||||||||||||
September 1 through September 30, 2023 | 46.74 | 0.1 | 0.1 | 216.7 | ||||||||||||||||||||||
For the Quarter Ended September 30, 2023 | $ | 46.59 | 1.1 | 1.1 | $ | 216.7 | ||||||||||||||||||||
3.1 | |||||
3.2 | |||||
22* | |||||
31.1* | |||||
31.2* | |||||
32.1* | |||||
32.2* | |||||
101.INS* | Inline XBRL Instance Document. | ||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | ||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | ||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
104* | The cover page from TreeHouse Foods, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, formatted in Inline XBRL (included as Exhibit 101). |
TREEHOUSE FOODS, INC. | |||||
Date: November 6, 2023 | /s/ Patrick M. O'Donnell | ||||
Patrick M. O'Donnell | |||||
Executive Vice President and Chief Financial Officer |
Name of Guarantor Subsidiary | Jurisdiction of Formation | ||||||||||
1 | Bay Valley Foods, LLC | Delaware | |||||||||
2 | Cottage Bakery, Inc. | California | |||||||||
3 | Linette Quality Chocolates, Inc. | Georgia | |||||||||
4 | Pickles Manufacturing LLC | Delaware | |||||||||
5 | Protenergy Holdings, Inc. | Delaware | |||||||||
6 | Protenergy Natural Foods, Inc. | Delaware | |||||||||
7 | Ralcorp Frozen Bakery Products, Inc. | Delaware | |||||||||
8 | Refrigerated Dough, Inc. | Delaware | |||||||||
9 | Sturm Foods, Inc. | Wisconsin | |||||||||
10 | TreeHouse Foods Services, LLC | Delaware | |||||||||
11 | TreeHouse Private Brands, Inc. | Missouri |
/s/ Steven Oakland | |||||
Steven Oakland | |||||
President and Chief Executive Officer |
/s/ Patrick M. O'Donnell | |||||
Patrick M. O'Donnell | |||||
Executive Vice President and Chief Financial Officer |
/s/ Steven Oakland | |||||
Steven Oakland | |||||
President and Chief Executive Officer |
/s/ Patrick M. O'Donnell | |||||
Patrick M. O'Donnell | |||||
Executive Vice President and Chief Financial Officer |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 10,000,000.0 | 10,000,000.0 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 90,000,000.0 | 90,000,000.0 |
Common stock, shares outstanding (in shares) | 55,300,000 | 56,100,000 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
Income Statement [Abstract] | ||||||
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 (in usd per share) | $ 0.18 | $ (0.21) | $ 0.94 | $ (0.87) | ||
Discontinued operations (in usd per share) | (0.05) | (1.40) | (0.12) | (1.32) | ||
Earnings (loss) per share basic (in usd per share) | [1] | 0.13 | (1.61) | 0.81 | (2.19) | |
Earnings (loss) per common share - diluted: | ||||||
Continuing operations (in usd per share) | 0.17 | (0.21) | 0.93 | (0.87) | ||
Discontinued operations (in usd per share) | (0.05) | (1.40) | (0.12) | (1.32) | ||
Earnings (loss) per share diluted (in usd per share) | [1] | $ 0.13 | $ (1.61) | $ 0.80 | $ (2.19) | |
Weighted average common shares: | ||||||
Basic (in shares) | 55.9 | 56.1 | 56.1 | 56.0 | ||
Diluted (in shares) | 56.4 | 56.1 | 56.7 | 56.0 | ||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 7.1 | $ (90.5) | $ 45.6 | $ (122.9) |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustments | (1.8) | (14.5) | 0.4 | (20.8) |
Pension and postretirement reclassification adjustment | 0.1 | 0.1 | 0.2 | 0.2 |
Other comprehensive (loss) income | (1.7) | (14.4) | 0.6 | (20.6) |
Comprehensive income (loss) | $ 5.4 | $ (104.9) | $ 46.2 | $ (143.5) |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 1. BASIS OF PRESENTATION The unaudited Condensed Consolidated Financial Statements included herein have been prepared by TreeHouse Foods, Inc. and its consolidated subsidiaries (the "Company," "TreeHouse," "we," "us," or "our"), pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to quarterly reporting on Form 10-Q. In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by such rules and regulations. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Results of operations for interim periods are not necessarily indicative of annual results. Reclassification Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, Interest income has been reclassified out of Other expense (income), net within the Condensed Consolidated Statements of Operations. Use of Estimates The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires management to use judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates. Summary of Significant Accounting Policies A detailed description of the Company's significant accounting policies can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Discontinued Operations On September 29, 2023, the Company completed the sale of its Snack Bars business for $61.3 million (the "Snack Bars Transaction" or the "Snack Bars Business"), subject to certain purchase price adjustments pursuant to the terms of the Asset Purchase Agreement, dated as of September 5, 2023. This transaction represents a component of the single plan of disposal from the Company’s strategic review process, which also resulted in the divestiture of a significant portion of the Meal Preparation business during the fourth quarter of 2022. The Snack Bars Transaction further advances the Company's enterprise-wide transformation to simplify its business and build depth around a focused group of higher-growth categories. Beginning in the third quarter of 2023, the Snack Bars Business is presented as a component of discontinued operations and has been excluded from continuing operations for all periods presented. Refer to Note 5 for additional information. Segment Information The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources as one segment. We manufacture and distribute private label food and beverages in North America. Our products are primarily shelf stable and share similar customers and distribution. The Chief Executive Officer, who has been identified as our Chief Operating Decision Maker ("CODM") allocates resources and assesses performance based upon discrete financial information at the consolidated level. We have one segment manager who reports directly to the CODM with incentive compensation based on aggregated consolidated results of the Company. The annual operating plan is prepared and approved by the CODM based on consolidated results of the Company. We operate our business with a centralized financial systems infrastructure, and we share centralized resources for sales, procurement, and general and administrative activities. The majority of our manufacturing plants each produce one food or beverage category. Refer to Note 19 for disaggregation of revenue for additional information of our principal products sold.
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Growth, Reinvestment, and Restructuring Programs |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Growth, Reinvestment, and Restructuring Programs | 2. GROWTH, REINVESTMENT, AND RESTRUCTURING PROGRAMS The Company’s growth, reinvestment, and restructuring activities are part of an enterprise-wide transformation to build long-term sustainable growth and improve profitability for the Company. These activities are aggregated into the following categories: (1) Strategic Growth Initiatives (expected completion in 2023) – a growth and reinvestment strategy and (2) other (collectively the "Growth, Reinvestment, and Restructuring Programs"). Below is a description of each of the Growth, Reinvestment, and Restructuring Programs: (1) Strategic Growth Initiatives In the first quarter of 2021, the Company began executing on its growth and reinvestment initiatives designed to invest in our commercial organization, adapt the supply chain to better support long-term growth opportunities, and further enable the Company to build greater depth in growth categories. These initiatives are intended to better position the Company to accelerate future revenue and earnings growth, and improve the execution of our strategy to be our customers' preferred manufacturing and distribution partner. This reinvestment will occur through 2023, and the cumulative costs incurred to date are $113.9 million. The Company currently expects the total costs will be up to $130.0 million, comprised of consulting and professional fees, employee-related costs, and investment in information technology. Consulting and professional fees are expected to include TreeHouse Management Operating System ("TMOS") initiatives at our manufacturing plants, building digital capabilities, and advancing automation and value engineering in our supply chain network. Employee-related costs primarily consist of severance, retention, and dedicated employee costs. (2) Other Other costs include restructuring costs incurred for retention, severance, organization redesign, information technology system implementation, costs to exit facilities or production, contract termination costs, and other administrative costs. Retention includes one-time cash recognition payments that were expensed during the first quarter of 2022 as well as additional cash bonuses and stock-based compensation to drive retention through 2023. The costs by activity for the Growth, Reinvestment, and Restructuring Programs are outlined below:
As part of our growth, reinvestment, and restructuring programs, we generally incur expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee separation costs and other exit costs. Severance and employee separation costs primarily relate to cash severance, non-cash severance, including accelerated equity award compensation expense, pension, and other termination benefits. Other exit costs typically relate to lease and contract terminations. We also incur expenses that are an integral component of, and directly attributable to, our growth, reinvestment, and restructuring activities, which do not qualify as exit and disposal costs under U.S. GAAP. These include asset-related costs and other costs. Asset-related costs primarily relate to accelerated depreciation and certain long-lived asset impairments. Other costs primarily relate to start-up costs of new facilities, consulting and professional fees, information technology implementation, asset relocation costs, and costs to exit facilities. Below is a summary of costs by type associated with the Growth, Reinvestment, and Restructuring Programs:
For the three and nine months ended September 30, 2023 and 2022, employee-related costs primarily consisted of retention, severance, and dedicated project employee cost; and other costs primarily consisted of consulting services. Employee-related and other costs are recognized in Other operating (income) expense, net of the Condensed Consolidated Statements of Operations. The table below presents the exit cost liabilities related to severance and retention activity for the Growth, Reinvestment, and Restructuring Programs as of September 30, 2023:
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Receivables Sales Program |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables Sales Program | 3. RECEIVABLES SALES PROGRAM The Company has entered into agreements to sell certain trade accounts receivable to unrelated, third-party financial institutions at a discount (collectively, the "Receivables Sales Program"). The agreements can be terminated by either party with 60 days' notice. The Receivables Sales Program is used by the Company to manage liquidity in a cost-effective manner. The Company has no retained interest in the receivables sold under the Receivables Sales Program; however, under the agreements, the Company does have collection and administrative responsibilities for the sold receivables. Under the Receivables Sales Program, the maximum amount of outstanding accounts receivables sold at any time is $500.0 million. The following table includes the outstanding amount of accounts receivable sold under the Receivables Sales Program and the receivables collected from customers and not remitted to the financial institutions.
Receivables sold under the Receivables Sales Program are derecognized from the Company's Condensed Consolidated Balance Sheet at the time of the sale and the proceeds from such sales are reflected as a component of the change in receivables in the operating activities section of the Condensed Consolidated Statements of Cash Flows. The receivables collected and not remitted to financial institutions are included in Accounts payable in the Condensed Consolidated Balance Sheets. The following table summarizes the cash flows of the Company's accounts receivables associated with the Receivables Sales Program. All amounts in the table below include continuing and discontinued operations:
The loss on sale of receivables represents the discount taken by third-party financial institutions and was $4.4 million and $2.0 million for three months ended September 30, 2023 and 2022, respectively, and $11.0 million and $3.3 million for the nine months ended September 30, 2023 and 2022, respectively, and is included in Other expense (income), net in the Condensed Consolidated Statements of Operations. The Company has not recognized any servicing assets or liabilities as of September 30, 2023 or December 31, 2022, as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements. 6. NOTE RECEIVABLE On October 3, 2022, the Company entered into a five-year secured Seller Promissory Note ("Seller Note Credit Agreement") which matures on October 1, 2027. The Seller Note Credit Agreement sets forth the terms of the Seller Promissory Note and the loan evidenced thereby (the "Seller Loan"). The Seller Loan bears interest at a rate per annum equal to 10% for the first two years thereof, 11% for the third year thereof, 12% for the fourth year thereof, and 13% thereafter, payable quarterly in arrears. For the first year of the Seller Loan, a portion of the interest, of up to 1% per annum, may be paid in kind; all other interest for the first year, and all interest thereafter, will be paid in cash. The Seller Loan had a balance of $425.2 million and $427.0 million as of September 30, 2023 and December 31, 2022, respectively, included within Note receivable, net in the Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2023, the Company recognized $10.9 million and $32.3 million, respectively, within Interest income in the Condensed Consolidated Statements of Operations related to the Seller Loan. 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 Company will follow its disciplined capital allocation strategy in deploying the proceeds.
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | 4. INVENTORIES
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Acquisitions and Divestitures |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures | 5. ACQUISITIONS AND DIVESTITURES Acquisitions Acquisition of Coffee Roasting Capability On June 30, 2023, the Company completed the acquisition of the Direct Ship coffee business and its Northlake, Texas coffee facility (the "Coffee Roasting Capability") from Farmer Brothers Company, a national coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea, and culinary products. The acquisition brings roasting, grinding, flavoring and blending capabilities to the Company's portfolio to complement the Company's existing single-serve pod and ready-to-drink coffee businesses. The purchase consideration consisted of approximately $92.2 million in cash, subject to customary purchase price adjustments. The acquisition was funded by borrowings from the Company’s $500.0 million Revolving Credit Facility. The Coffee Roasting Capability was accounted for under the acquisition method of accounting. The Company incurred acquisition-related costs of $0.3 million and $2.4 million costs during the three and nine months ended September 30, 2023, respectively. These costs are included in General and administrative expense in the Condensed Consolidated Statements of Operations. The following table summarizes the preliminary purchase price allocation of the fair value of net tangible assets acquired:
Real property and personal property fair values were determined using the cost and market approaches. The purchase price allocation in the table above is preliminary and subject to the finalization of the Company’s valuation analysis. The results of operations of the Coffee Roasting Capability were included in our Condensed Consolidated Financial Statements from the date of acquisition. Included in the Company’s Condensed Consolidated Statements of Operations are the Coffee Roasting Capability’s net sales of approximately $34.8 million and loss before income taxes of $0.2 million from the date of acquisition through September 30, 2023. Acquisition of Seasoned Pretzel Capability On April 1, 2023, the Company completed the acquisition of a seasoned pretzel capability for a total purchase price of $14.0 million, which included the recognition of $5.4 million within Goodwill in the Condensed Consolidated Balance Sheets based on the preliminary purchase price allocation. The purchase price consisted of approximately $10.0 million in cash and a deferred payment of $4.0 million due in the third quarter of 2024. The deferred payment is recognized within Accrued expenses in the Condensed Consolidated Balance Sheets as of September 30, 2023. The acquisition is in line with our strategy to build category leadership, depth and capabilities to drive profitable growth. Discontinued Operations Sale of the Snack Bars Business On September 29, 2023, the Company completed the sale of its Snack Bars business (the "Snack Bars Business") to John B. Sanfilippo & Son, Inc. for approximately $61.3 million in cash, subject to customary purchase price adjustments. The Snack Bars Business consists of manufacturing, packaging, and selling snack bars and operated in the Lakeville, Minnesota plant. The Company classified the proceeds within Net cash provided by (used in) investing activities - discontinued operations. The Company recognized an expected gain on disposal of $1.2 million during the three and nine months ended September 30, 2023. The expected gain on disposal is recognized within Net loss from discontinued operations in the Company's Condensed Consolidated Statements of Operations. This transaction represents a component of the single plan of disposal from the Company’s strategic review process, which also resulted in the divestiture of a significant portion of the Meal Preparation business during the fourth quarter of 2022. The Snack Bars Transaction further advances the Company's enterprise-wide transformation to simplify its business and build depth around a focused group of high-growth categories. The Company entered into a Transition Services Agreement ("TSA") with John B. Sanfilippo & Son, Inc., which is designed to ensure and facilitate an orderly transfer of business operations. The terms of the TSA are four months with the option to extend up to additional months. The Buyer may terminate any individual services upon 14 days notice. TSA income is recognized as services are performed. Sale of a Significant Portion of the Meal Preparation Business On October 3, 2022, the Company completed the sale of a significant portion of the Company’s Meal Preparation business (the "Meal Preparation Business") to two entities affiliated with Investindustrial: Rushmore Investment III LLC, a Delaware limited liability company ("US Buyer") and 1373978 B.C., ULC, a British Columbia unlimited liability company ("CA Buyer" and together with US Buyer, the "Buyer"). The closing purchase price was $963.8 million, and during the second quarter of 2023, a $20.3 million adjustment to the purchase price was finalized, resulting in a final purchase price of $943.5 million. The final purchase price consisted of approximately $522.6 million in cash and approximately $420.9 million in a five-year secured Seller Promissory Note. Refer to Note 6 for additional information on the secured Seller Promissory Note. Additionally, the Company recognized expected loss on disposal adjustments of $(0.7) million and $2.8 million for the three and nine months ended September 30, 2023, respectively, and $73.8 million for the three and nine months ended September 30, 2022. The Meal Preparation Business consists of consumer packaged food manufacturers operating 14 manufacturing facilities in the United States, Canada, and Italy servicing primarily retail grocery customers. The Meal Preparation Business includes 11 categories and sells center of the store grocery and main course meal items, such as pasta, pourable dressings, sauces, red sauces (salsas and pasta sauces), spoonables (mayos and dips), syrups, preserves, dry dinners (macaroni and cheese), dry blends and baking goods, and pie filling as well as pita chips. The Company entered into a Transition Services Agreement ("TSA") with the Buyer, which is designed to ensure and facilitate an orderly transfer of business operations. The services provided under the TSA include, but are not limited to, IT systems implementation, IT and financial shared services, procurement and order processing, customer service, distribution network separation, and a supply agreement. These services terminate at various times up to twenty-four months from the date of sale and certain services can be renewed with a maximum of an additional twelve-month period. Additionally, a $35.0 million credit was provided to the Buyer by TreeHouse to cover initial TSA set-up costs that otherwise would have been incurred by the Buyer ("TSA Credit"). The TSA Credit is included in the fair value of consideration transferred, and it represents deferred income for TreeHouse until the Company incurs the related TSA costs, at which point deferred income is reduced and TSA income recognized. TSA income is recognized as services are performed, and the income received under the TSA was $9.9 million for the three months ended September 30, 2023 and $35.2 million for the nine months ended September 30, 2023. The TSA income is classified within Other operating (income) expense, net in the Company's Condensed Consolidated Statements of Operations. As of September 30, 2023, the deferred income balance on the TSA Credit was fully utilized with no balance remaining. The Company has reflected both of these transactions as discontinued operations. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company's continuing operations. Results of discontinued operations are as follows:
Assets of discontinued operations presented in the Condensed Consolidated Balance Sheet as of December 31, 2022 include the following:
Subsequent Event On October 17, 2023, the Company executed a definitive agreement with The J.M. Smucker Co. to acquire Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands for a base purchase price of $20.0 million, subject to a working capital adjustment. The allocation of the purchase price is expected to consist primarily of inventory. The transaction is expected to close in the fourth quarter of 2023, subject to customary closing conditions.
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Note Receivable |
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Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note Receivable | 3. RECEIVABLES SALES PROGRAM The Company has entered into agreements to sell certain trade accounts receivable to unrelated, third-party financial institutions at a discount (collectively, the "Receivables Sales Program"). The agreements can be terminated by either party with 60 days' notice. The Receivables Sales Program is used by the Company to manage liquidity in a cost-effective manner. The Company has no retained interest in the receivables sold under the Receivables Sales Program; however, under the agreements, the Company does have collection and administrative responsibilities for the sold receivables. Under the Receivables Sales Program, the maximum amount of outstanding accounts receivables sold at any time is $500.0 million. The following table includes the outstanding amount of accounts receivable sold under the Receivables Sales Program and the receivables collected from customers and not remitted to the financial institutions.
Receivables sold under the Receivables Sales Program are derecognized from the Company's Condensed Consolidated Balance Sheet at the time of the sale and the proceeds from such sales are reflected as a component of the change in receivables in the operating activities section of the Condensed Consolidated Statements of Cash Flows. The receivables collected and not remitted to financial institutions are included in Accounts payable in the Condensed Consolidated Balance Sheets. The following table summarizes the cash flows of the Company's accounts receivables associated with the Receivables Sales Program. All amounts in the table below include continuing and discontinued operations:
The loss on sale of receivables represents the discount taken by third-party financial institutions and was $4.4 million and $2.0 million for three months ended September 30, 2023 and 2022, respectively, and $11.0 million and $3.3 million for the nine months ended September 30, 2023 and 2022, respectively, and is included in Other expense (income), net in the Condensed Consolidated Statements of Operations. The Company has not recognized any servicing assets or liabilities as of September 30, 2023 or December 31, 2022, as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements. 6. NOTE RECEIVABLE On October 3, 2022, the Company entered into a five-year secured Seller Promissory Note ("Seller Note Credit Agreement") which matures on October 1, 2027. The Seller Note Credit Agreement sets forth the terms of the Seller Promissory Note and the loan evidenced thereby (the "Seller Loan"). The Seller Loan bears interest at a rate per annum equal to 10% for the first two years thereof, 11% for the third year thereof, 12% for the fourth year thereof, and 13% thereafter, payable quarterly in arrears. For the first year of the Seller Loan, a portion of the interest, of up to 1% per annum, may be paid in kind; all other interest for the first year, and all interest thereafter, will be paid in cash. The Seller Loan had a balance of $425.2 million and $427.0 million as of September 30, 2023 and December 31, 2022, respectively, included within Note receivable, net in the Condensed Consolidated Balance Sheets. During the three and nine months ended September 30, 2023, the Company recognized $10.9 million and $32.3 million, respectively, within Interest income in the Condensed Consolidated Statements of Operations related to the Seller Loan. 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 Company will follow its disciplined capital allocation strategy in deploying the proceeds.
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Property, Plant, and Equipment |
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Property, Plant, and Equipment | 7. PROPERTY, PLANT, AND EQUIPMENT
Depreciation expense was $24.0 million and $22.3 million for the three months ended September 30, 2023 and 2022, respectively and $69.6 million and $67.9 million for the nine months ended September 30, 2023 and 2022, respectively.
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Goodwill and Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets | 8. GOODWILL AND INTANGIBLE ASSETS Goodwill Changes in the carrying amount of goodwill, which include no accumulated impairment losses, for the nine months ended September 30, 2023 are as follows:
Intangible Assets The gross carrying amounts and accumulated amortization of intangible assets as of September 30, 2023 and December 31, 2022 are as follows:
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. INCOME TAXES Income taxes were recognized at effective rates of 27.4% and 27.5% for the three and nine months ended September 30, 2023, respectively, compared to (30.4)% and 5.0% for the three and nine months ended September 30, 2022, respectively. The change in the Company's effective tax rate for the three and nine months ended September 30, 2023 compared to 2022 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. In addition, the Company's effective tax rate for the nine months ended September 30, 2023 compared to 2022 was impacted by the change in the estimated amount of annual pre-tax earnings. Our effective tax rate may change from period to period based on recurring and non-recurring factors, including the jurisdictional mix of earnings, enacted tax legislation, state income taxes, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. Management estimates that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by as much as $1.0 million within the next 12 months, primarily as a result of the lapsing of statutes of limitations. Approximately all of the $1.0 million could affect net income when settled. The timing of cash settlement, if any, cannot be reasonably estimated for uncertain tax benefits.
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Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | 10. LONG-TERM DEBT
Credit Agreement On February 17, 2023, the Company entered into Amendment No. 6 to the Credit Agreement. Amendment No. 6 implemented the replacement provisions for LIBOR with rates based on Term SOFR, plus a credit spread adjustment of 0.10%. The material terms and conditions under the Credit Agreement are otherwise substantially consistent with those contained in the Credit Agreement prior to Amendment No. 6. Revolving Credit Facility — As of September 30, 2023, the Company had $155.3 million drawn from its $500.0 million Revolving Credit Facility. The Company had remaining availability of $315.7 million under the Revolving Credit Facility, and there were $29.0 million in letters of credit under the Revolving Credit Facility that were issued but undrawn, which have been included as a reduction to the calculation of available credit. Interest is payable quarterly or, if earlier, at the end of the applicable interest period in arrears on any outstanding borrowings under the Revolving Credit Facility. The interest rates applicable to the Revolving Credit Facility are based upon the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and are determined by either (i) Term SOFR, plus a margin ranging from 1.20% to 1.70%, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.20% to 0.70%. The unused fee on the Revolving Credit Facility is also based on the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and accrues at a rate ranging from 0.20% to 0.35%. Term Loan A — On December 1, 2017, the Company entered into a $500 million term loan and amended the loan to extend the maturity date to March 26, 2028. The interest rates applicable to Term Loan A are based upon the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and are determined by either (i) Term SOFR, plus a margin ranging from 1.675% to 2.175%, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.675% to 1.175%. As a result of the principal prepayment of $174.8 million on Term Loan A in October 2022, principal amortization payments are no longer due on a quarterly basis, and the remaining principal balance is due at maturity. Interest is payable quarterly or, if earlier, at the end of the applicable interest period in arrears on any outstanding borrowings under Term Loan A. Term Loan A-1 — On December 1, 2017, the Company entered into a term loan and amended the loan amount to $930 million and extended the maturity date to March 26, 2026. The interest rates applicable to Term Loan A-1 are the same as those applicable to the Revolving Credit Facility (other than, for the avoidance of doubt, the unused fee). As a result of the principal prepayment of $325.2 million on Term Loan A-1 in October 2022, principal amortization payments are no longer due on a quarterly basis, and the remaining principal balance is due at maturity. Interest is payable quarterly or, if earlier, at the end of the applicable interest period in arrears on any outstanding borrowing under Term Loan A-1. 2028 Notes — On September 9, 2020, the Company completed its public offering of $500 million aggregate principal amount of the 2028 Notes. The 2028 Notes pay interest at the rate of 4.000% per annum and mature on September 1, 2028. Interest is payable on the 2028 Notes on March 1 and September 1 of each year. The payments began on March 1, 2021. Fair Value — At September 30, 2023, the aggregate fair value of the Company's total debt was $1,475.9 million and its carrying value was $1,560.3 million. At December 31, 2022, the aggregate fair value of the Company's total debt was $1,335.8 million and its carrying value was $1,405.0 million. The fair values of Revolving Credit Facility, Term Loan A, and Term Loan A-1 were estimated using present value techniques and market-based interest rates and credit spreads. The fair value of the Company's 2028 Notes was estimated based on quoted market prices for similar instruments due to their infrequent trading volume. Accordingly, the fair value of the Company's debt is classified as Level 2 within the valuation hierarchy.
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Stockholders' Equity |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | 11. STOCKHOLDERS' EQUITY Share Repurchase Authorization — On November 2, 2017, the Company announced that the Board of Directors adopted a stock repurchase program. The stock repurchase program authorizes the Company to repurchase up to $400 million of the Company's common stock at any time, or from time to time. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The size and timing of any repurchases will depend on price, market and business conditions, and other factors. The Company has the ability to make discretionary repurchases up to an annual cap of $150 million under the $400 million total authorization of which $216.7 million remained available under the stock repurchase program. The stock repurchase program does not have an expiration date. Any shares repurchased will be held as treasury stock. During the three and nine months ended September 30, 2023, the Company repurchased approximately 1.1 million shares of common stock at a weighted average share price of $46.59 for a total of $50.0 million. There were no shares repurchased during the three or nine months ended September 30, 2022. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which imposed a 1.0% excise tax on share repurchases (net of share issuances) made after December 31, 2022. As a result, the Company accrued approximately $0.4 million of excise tax in connection with the share repurchases it completed during the quarter ended September 30, 2023, which was recorded as an adjustment to the cost basis of repurchased shares in treasury stock and within Accrued expenses on the Company’s Condensed Consolidated Balance Sheets as of September 30, 2023.
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Earnings Per Share |
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Earnings Per Share | 12. EARNINGS PER SHARE The following table summarizes the effect of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings (loss) per share:
(1)For the three and nine months ended September 30, 2022, the weighted average common shares outstanding is the same for the computations of both basic and diluted shares outstanding because the Company had a net loss from continuing operations for the period. Equity awards, excluded from our computation of diluted earnings per share because they were anti-dilutive, were 1.0 million and 1.1 million for the three and nine months ended September 30, 2023, and 1.6 million and 1.4 million for three and nine months ended September 30, 2022, respectively.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 13. STOCK-BASED COMPENSATION The Board of Directors adopted, and the Company's stockholders approved, the "TreeHouse Foods, Inc. Equity and Incentive Plan" (the "Plan"). Under the Plan, the Compensation Committee may grant awards of various types of compensation, including stock options, restricted stock, restricted stock units, performance shares, performance units, other types of stock-based awards, and other cash-based compensation. On April 27, 2023, the Plan was amended and restated to increase the number of shares available for issuance under the Plan by 5.0 million shares. The maximum number of shares authorized to be awarded under the Plan is approximately 22.5 million as of September 30, 2023. Total compensation expense related to stock-based payments and the related income tax benefit recognized in Net income (loss) from continuing operations are as follows:
All amounts below include continuing and discontinued operations. Stock Options — Stock options granted under the Plan during 2022 have a three year vesting schedule, vest one-third on the second anniversary of the grant date and two-thirds on the third anniversary of the grant date, and expire ten years from the grant date. Stock options are generally only granted to employees and non-employee directors. The following table summarizes stock option activity during 2023:
Unrecognized compensation costs related to nonvested options totaled $2.7 million at September 30, 2023 and are expected to be recognized over a weighted average period of 1.6 years. Restricted Stock Units — Employee restricted stock unit awards generally vest based on the passage of time in approximately three equal installments on each of the first anniversaries of the grant date with the following exceptions: •On June 9, 2022, restricted stock unit awards were granted that vest on the passage of time on the eighteen month anniversary of the grant date. The fair value of the awards was $37.90 on approximately 62,000 units granted. •On December 29, 2021, restricted stock unit awards granted to certain executive members of management that vest on the passage of time in approximately three equal installments on each of the three six month anniversaries of the grant date. The fair value of the awards was $40.03 on approximately 51,200 units granted. Non-employee director restricted stock units generally vest on the first anniversary of the grant date. Certain non-employee directors have elected to defer receipt of their awards until either their departure from the Board of Directors or a specified date beyond the first anniversary of the grant date. The following table summarizes the restricted stock unit activity during the nine months ended September 30, 2023:
Unrecognized compensation costs related to nonvested restricted stock units are approximately $20.2 million as of September 30, 2023 and will be recognized over a weighted average period of 1.7 years. The grant date fair value of the awards is equal to the Company's closing stock price on the grant date. Performance Units — Performance unit awards are granted to certain members of management. These awards contain both service and performance conditions, and for certain executive members of management, a market condition, in each case as described below. •Performance goals are set and measured annually with one-quarter of the units eligible to accrue for each year in the three-year performance period. Accrued shares are earned at the end of each performance period but remain subject to forfeiture until the third anniversary of the grant date. Additionally, for the cumulative three-year performance period, one-quarter of the units will accrue. For both the annual and cumulative shares, the earned shares are equal to the number of units granted multiplied by a predefined percentage generally between 0% and 200%, depending on the achievement of certain operating performance measures. •For performance unit awards granted in 2021 through 2023, certain executive members of management received awards that were measured using a relative total shareholder return ("TSR") market condition over a three-year performance goal. The units will accrue, multiplied by a predefined percentage between 0% and 150% for the relative TSR measure, depending on the achievement attainment over the three-year performance period based on the Company's absolute annualized TSR relative to the annualized TSR of a Peer Group. The fair value of the portion of the awards based on relative TSR was valued using a Monte Carlo simulation model with a grant-date fair value of $50.43 on approximately 22,000 units granted in 2023 and a grant-date fair value of $26.84 on approximately 52,600 units granted in 2022. •During the second quarter of 2022, the Company made grants to certain of the Company’s named executive officers and certain other executive officers of performance-based restricted stock units (the "PBRSU Awards"). The PBRSU Awards include a relative TSR market condition over a two-year performance period beginning on the date of grant. The units will accrue, multiplied by a predefined percentage between 0% to 450% for the relative TSR measure, depending on the achievement attainment over the two-year performance period based on Company’s absolute annualized TSR relative to the annualized TSR of the S&P Food & Beverage Select Industry Index (the "Index"). The fair value of the awards was valued using a Monte Carlo simulation model with a weighted average grant-date fair value of $58.36 on approximately 239,300 units granted in 2022. These awards will be converted to stock or cash, at the discretion of the Compensation Committee, generally, on the third anniversary of the grant date with the exception of the PBRSU Awards on the second anniversary. The Company intends to settle these awards in stock and has the shares available to do so. Performance unit awards with market conditions are valued using a Monte Carlo simulation model. Expected volatility is based on the historical volatility of the Company’s stock price, average Peer Group stock price, or the total return value of the Index. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant with a term equivalent to the expected term of the award. The expected term is the time period from the grant date to the end of the performance period. The weighted average assumptions used in the Monte Carlo simulations were as follows:
The following table summarizes the performance unit activity during the nine months ended September 30, 2023:
Unrecognized compensation costs related to nonvested performance units are estimated to be approximately $9.5 million as of September 30, 2023 and are expected to be recognized over a weighted average period of 1.2 years. The fair value of the portion of the awards earned based on market conditions were valued using a Monte Carlo simulation model. For other awards, the grant date fair value is equal to the Company's closing stock price on the date of grant.
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Accumulated Other Comprehensive Loss |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Loss | 14. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss consists of the following components, all of which are net of tax:
(1)The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three and nine months ended September 30, 2023 and 2022. (2)Refer to Note 15 for additional information regarding these reclassifications.
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Employee Retirement and Postretirement Benefits |
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Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Retirement and Postretirement Benefits | 15. EMPLOYEE RETIREMENT AND POSTRETIREMENT BENEFITS Pension, Profit Sharing, and Postretirement Benefits — Certain employees and retirees participate in pension and other postretirement benefit plans. Employee benefit plan obligations and expenses included in the Condensed Consolidated Financial Statements are determined based on plan assumptions, employee demographic data, including years of service and compensation, benefits and claims paid, and employer contributions. The information below includes the activities of the Company's continuing and discontinued operations. Components of net periodic pension benefit are as follows:
Components of net periodic postretirement cost are as follows:
The service cost components of net periodic pension and postretirement costs were recognized in Cost of sales and the other components were recognized in Other expense (income), net of the Condensed Consolidated Statements of Operations.
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Other Operating (Income) Expense, Net |
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Other Operating (Income) Expense, Net | 16. OTHER OPERATING (INCOME) EXPENSE, NET The Company incurred other operating (income) expense, net, for the three and nine months ended September 30, 2023 and 2022, which consisted of the following:
(1) Refer to Note 2 for more information. (2) Refer to Note 5 for more information.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 17. COMMITMENTS AND CONTINGENCIES Product Recall and Related Costs 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. For the three and nine months ended September 30, 2023, the Company recognized incremental charges of $8.7 million related to the product recall, comprised of a $3.0 million reduction in Net sales for estimated product returns and $5.7 million in Cost of sales related to plant shutdown costs, inventory write-offs, and estimated logistics costs in the Condensed Consolidated Statements of Operations. As of September 30, 2023, a $4.1 million product recall liability is included within Accrued expenses in the Condensed Consolidated Balance Sheets. The Company is seeking to recover the recall-related costs through its insurance coverage, and such recoveries are recorded in the period in which the recoveries are determined to be probable of realization. The Company may incur additional costs related to the recall, including, but not limited to, additional plant shutdown costs, sales returns, and logistics cost. Shareholder Class Action and Related Derivative Actions The Company, as nominal defendant, and certain of its directors, officers and former directors and officers are parties to the following four shareholder derivative suits, each of which involves substantially similar claims and allegations: (i)Wells v. Reed, et al., Case No. 2016-CH-16359 (filed Dec. 22, 2016 in the Circuit Court of Cook County, Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment and corporate waste; (ii)Lavin v. Reed, et al., Case No. 17-cv-01014 (filed Feb. 7, 2017 in the United States District Court for the Northern District of Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste; (iii)Bartelt v. Reed, et al., Case No. 1:19-cv-00835 (filed Feb. 8, 2019 in the United States District Court for the Northern District of Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste, as well as violations of Section 14 of the Securities Exchange Act of 1934; and (iv)City of Ann Arbor Employees' Retirement System v. Reed, et al., Case No. 2019-CH-06753 (filed June 3, 2019 in the Circuit Court of Cook County, Illinois), asserting claims breach of fiduciary duty, aiding and abetting breaches of fiduciary duty and contribution and indemnification from the individual defendants for losses incurred by the Company. Essentially, all four complaints allege that TreeHouse, under the authority and control of the individual defendants: (i) made certain false and misleading statements regarding the Company's business, operations, and future prospects; and (ii) failed to disclose that (a) the Company's private label business was underperforming; (b) the Company's Flagstone Foods business was underperforming; (c) the Company's acquisition strategy was underperforming; (d) the Company had overstated its full-year 2016 guidance; and (e) TreeHouse's statements lacked reasonable basis. The complaints allege, among other things, that these actions artificially inflated the market price of TreeHouse common stock and resulted in harm to the Company, including the filing of the MPERS class action (see below). The Bartelt action also includes substantially similar allegations concerning events in 2017. Each of these cases involves allegations similar to those in an earlier-filed, resolved federal securities class action, Public Employees' Retirement Systems of Mississippi v. TreeHouse Foods, Inc., et al., Case No. 1:16-cv-10632 ("MPERS") (filed Nov. 16, 2016), in the United States District Court for the Northern District of Illinois brought on behalf of a class of all purchasers of TreeHouse common stock from January 20, 2016 through and including November 2, 2016. The MPERS complaint asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and was based on essentially the same facts described above. The parties filed a stipulation of settlement to resolve the MPERS class action for a cash payment of $27.0 million (funded by D&O insurance) in exchange for dismissal with prejudice of the class claims and full releases. After briefing, preliminary approval, notice and a hearing, on November 17, 2021, the Court granted final approval of the settlement and entered a final judgment dismissing the case with prejudice on a classwide basis. Due to the similarity of the derivative complaints, Bartelt was consolidated with Lavin, and Ann Arbor was consolidated with Wells. On August 26, 2022, plaintiffs in the consolidated Wells case filed a second amended complaint, which was dismissed in its entirety with prejudice on March 15, 2023. The plaintiffs filed a notice of appeal on March 16, 2023, and the appeal was fully briefed as of August 17, 2023. On October 24, 2022, the plaintiffs’ designated an operative complaint in the Lavin case, which defendants have moved to dismiss, and was fully briefed as of May 15, 2023. Other Claims In addition, the Company is party in the ordinary course of business to certain claims, litigation, audits, and investigations. The Company will record an accrual for a loss contingency when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable that may be incurred in connection with any such currently pending or threatened matter. In the Company's opinion, the eventual resolution of such matters, either individually or in the aggregate, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. However, litigation is inherently unpredictable and resolutions or dispositions of claims or lawsuits by settlement or otherwise could have an adverse impact on our financial position, results of operations or cash flows for the reporting period in which any such resolution or disposition occurs. In February 2014, TreeHouse, along with its 100% owned subsidiaries, Bay Valley Foods, LLC and Sturm Foods, Inc., filed suit against Keurig Dr. Pepper Inc.'s wholly-owned subsidiary, Keurig Green Mountain ("KGM"), in the U.S. District Court for the Southern District of New York captioned TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al. asserting claims under the federal antitrust laws, various state antitrust laws and unfair competition statutes, contending that KGM had monopolized alleged markets for single serve coffee brewers and single serve coffee pods. The Company is seeking monetary damages, declaratory relief, injunctive relief, and attorneys' fees. The matter remains pending, with summary judgment, motions to exclude certain expert opinions, and discovery sanctions motions fully briefed. On March 28, 2022, the Magistrate Judge issued a non-public Opinion and Order granting in part and denying in part the TreeHouse sanctions motion against KGM and denying the KGM sanctions motion against TreeHouse. KGM has appealed a portion of the Opinion and Order awarding sanctions to the Company. KGM is denying the allegations made by the Company in the litigation. The Company has not recorded any amount in its Condensed Consolidated Financial Statements as of September 30, 2023.
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Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | 18. DERIVATIVE INSTRUMENTS Interest Rate Swap Agreements - The Company manages its exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps to hedge our exposure to changes in interest rates, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions. The Company has entered into long-term interest rate swap agreements with a notional value of $875.0 million as of both September 30, 2023 and December 31, 2022, to fix the interest rate base. Beginning July 1, 2023, SOFR became the reference rate for the Company's interest rate swap agreements as a result of LIBOR ceasing to be a representative rate. Under the terms of the agreements, $875.0 million in variable-rate debt is swapped for a weighted average fixed interest rate base of approximately 2.91% through February 28, 2025. Commodity Contracts - Certain commodities the Company uses in the production and distribution of its products are exposed to market price risk. The Company utilizes derivative contracts to manage this risk. The majority of commodity forward contracts are not derivatives, and those that are generally qualify for the normal purchases and normal sales scope exception under the guidance for derivative instruments and hedging activities and, therefore, are not subject to its provisions. For derivative commodity contracts that do not qualify for the normal purchases and normal sales scope exception, the Company accounts for the contracts as derivatives. The Company's derivative commodity contracts may include contracts for diesel, oil, plastics, resin, and other commodity contracts that do not meet the requirements for the normal purchases and normal sales scope exception. Diesel contracts are used to manage the Company's risk associated with the underlying cost of diesel fuel used to deliver products. Contracts for oil, plastics, and resin are used to manage the Company's risk associated with the underlying commodity cost of a significant component used in packaging materials. Other commodity contracts that are derivatives that do not meet the normal purchases and normal sales scope exception are used to manage the price risk associated with raw material costs. As of September 30, 2023 and December 31, 2022, the notional value of the derivative commodity contracts outstanding was $9.8 million and $8.9 million, respectively. These commodity contracts have maturities expiring throughout 2023 and 2024 as of September 30, 2023. Total Return Swap Contract - The Company had an economic hedge program that used a total return swap contract to hedge the market risk associated with the unfunded portion of the Company's deferred compensation liability. The total return swap contract trades generally had a duration of one month and were rebalanced and re-hedged at the end of each monthly term. While the total return swap contract was treated as an economic hedge, the Company did not designate it as a hedge for accounting purposes. The total return swap contract was measured at fair value and recognized in the Condensed Consolidated Balance Sheets, with changes in value being recognized in the Condensed Consolidated Statements of Operations. At September 30, 2023, the Company had no outstanding and unsettled total return swap contracts, and at December 31, 2022, the notional value of the total return swap contract was $3.9 million. The following table identifies the fair value of each derivative instrument:
Asset derivatives for commodity contracts are included within Prepaid expenses and other current assets and interest rate swap agreements are included within Other assets, net. Liability derivatives are included within Accrued expenses in the Condensed Consolidated Balance Sheets. The fair values of the commodity contracts, interest rate swap agreements, and the total return swap contract are determined using Level 2 inputs. Level 2 inputs are inputs other than quoted market prices that are observable for an asset or liability, either directly or indirectly. The fair values of the commodity contracts, interest rate swap agreements, and total return swap contract are based on an analysis comparing the contract rates to the market rates at the balance sheet date. We recognized the following gains and losses on our derivative contracts in the Condensed Consolidated Statements of Operations:
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Disaggregation Of Revenue |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation Of Revenue | 19. DISAGGREGATION OF REVENUE The principal products that comprise our different product category groups are as follows:
Revenue disaggregated by product category groups is as follows:
Revenue disaggregated by sales channel is as follows:
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Pay vs Performance Disclosure - USD ($) $ in Millions |
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Jun. 30, 2022 |
Mar. 31, 2022 |
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Pay vs Performance Disclosure | ||||||||
Net income (loss) | $ 7.1 | $ 23.3 | $ 15.2 | $ (90.5) | $ (29.4) | $ (3.0) | $ 45.6 | $ (122.9) |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Reclassification | Reclassification Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, Interest income has been reclassified out of Other expense (income), net within the Condensed Consolidated Statements of Operations.
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Use of Estimates | Use of Estimates The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires management to use judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates.
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Discontinued Operations | Discontinued OperationsOn September 29, 2023, the Company completed the sale of its Snack Bars business for $61.3 million (the "Snack Bars Transaction" or the "Snack Bars Business"), subject to certain purchase price adjustments pursuant to the terms of the Asset Purchase Agreement, dated as of September 5, 2023. This transaction represents a component of the single plan of disposal from the Company’s strategic review process, which also resulted in the divestiture of a significant portion of the Meal Preparation business during the fourth quarter of 2022. The Snack Bars Transaction further advances the Company's enterprise-wide transformation to simplify its business and build depth around a focused group of higher-growth categories. Beginning in the third quarter of 2023, the Snack Bars Business is presented as a component of discontinued operations and has been excluded from continuing operations for all periods presented. |
Segment Information | Segment InformationThe Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources as one segment. We manufacture and distribute private label food and beverages in North America. Our products are primarily shelf stable and share similar customers and distribution. The Chief Executive Officer, who has been identified as our Chief Operating Decision Maker ("CODM") allocates resources and assesses performance based upon discrete financial information at the consolidated level. We have one segment manager who reports directly to the CODM with incentive compensation based on aggregated consolidated results of the Company. The annual operating plan is prepared and approved by the CODM based on consolidated results of the Company. We operate our business with a centralized financial systems infrastructure, and we share centralized resources for sales, procurement, and general and administrative activities. The majority of our manufacturing plants each produce one food or beverage category. |
Growth, Reinvestment, and Restructuring Programs (Tables) |
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Schedule of Aggregate Expenses Incurred Associated with Facility Closure | Below is a summary of costs by type associated with the Growth, Reinvestment, and Restructuring Programs:
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Schedule of Activity of Restructuring Program Liabilities | The table below presents the exit cost liabilities related to severance and retention activity for the Growth, Reinvestment, and Restructuring Programs as of September 30, 2023:
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Schedule of Aggregate Expenses Incurred Associated with Facility Closure | The costs by activity for the Growth, Reinvestment, and Restructuring Programs are outlined below:
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Receivables Sales Program (Tables) |
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Schedule of Receivable Sales Program | The following table includes the outstanding amount of accounts receivable sold under the Receivables Sales Program and the receivables collected from customers and not remitted to the financial institutions.
The following table summarizes the cash flows of the Company's accounts receivables associated with the Receivables Sales Program. All amounts in the table below include continuing and discontinued operations:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories |
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Acquisitions and Divestitures (Tables) |
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Business Combination and Asset Acquisition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Preliminary Purchase Price Allocation of Fair value of Net Tangible Assets Acquired | The following table summarizes the preliminary purchase price allocation of the fair value of net tangible assets acquired:
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Schedule of Disposal Groups, Including Discontinued Operations | Results of discontinued operations are as follows:
Assets of discontinued operations presented in the Condensed Consolidated Balance Sheet as of December 31, 2022 include the following:
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Property, Plant, and Equipment (Tables) |
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Schedule of Property, Plant, and Equipment |
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Goodwill and Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill, which include no accumulated impairment losses, for the nine months ended September 30, 2023 are as follows:
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Schedule of Gross Carrying Amounts and Accumulated Amortization of Intangible Assets, with Finite Lives | The gross carrying amounts and accumulated amortization of intangible assets as of September 30, 2023 and December 31, 2022 are as follows:
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Schedule of Gross Carrying Amounts of Intangible Assets, with Indefinite Lives | The gross carrying amounts and accumulated amortization of intangible assets as of September 30, 2023 and December 31, 2022 are as follows:
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Long-Term Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt |
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Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effect of Share-Based Compensation Awards on Weighted Average Number of Shares Outstanding Used in Calculating Diluted Earnings (Loss) Per Share | The following table summarizes the effect of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings (loss) per share:
(1)For the three and nine months ended September 30, 2022, the weighted average common shares outstanding is the same for the computations of both basic and diluted shares outstanding because the Company had a net loss from continuing operations for the period. Equity awards, excluded from our computation of diluted earnings per share because they were anti-dilutive, were 1.0 million and 1.1 million for the three and nine months ended September 30, 2023, and 1.6 million and 1.4 million for three and nine months ended September 30, 2022, respectively.
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Stock-Based Compensation (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Total Compensation Expense | Total compensation expense related to stock-based payments and the related income tax benefit recognized in Net income (loss) from continuing operations are as follows:
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Schedule of Stock Option Activity | The following table summarizes stock option activity during 2023:
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Schedule of Restricted Stock Unit Activity | The following table summarizes the restricted stock unit activity during the nine months ended September 30, 2023:
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Schedule of Highlight of Restricted Stock Unit Activity |
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Schedule of Assumptions Used in the Monte Carlo Simulation | The weighted average assumptions used in the Monte Carlo simulations were as follows:
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Schedule of Performance Unit Activity | The following table summarizes the performance unit activity during the nine months ended September 30, 2023:
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Schedule of Highlight of Performance Unit Activity |
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Accumulated Other Comprehensive Loss (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Accumulated Other Comprehensive Loss Net of Tax | Accumulated other comprehensive loss consists of the following components, all of which are net of tax:
(1)The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three and nine months ended September 30, 2023 and 2022. (2)Refer to Note 15 for additional information regarding these reclassifications.
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Employee Retirement and Postretirement Benefits (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Periodic Pension Benefit and Postretirement Cost | Components of net periodic pension benefit are as follows:
Components of net periodic postretirement cost are as follows:
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Other Operating (Income) Expense, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Operating (Income) Expense, Net | The Company incurred other operating (income) expense, net, for the three and nine months ended September 30, 2023 and 2022, which consisted of the following:
(1) Refer to Note 2 for more information. (2) Refer to Note 5 for more information.
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Derivative Instruments (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Derivative Instrument | The following table identifies the fair value of each derivative instrument:
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Schedule of Gains and Losses on Derivative Contracts | We recognized the following gains and losses on our derivative contracts in the Condensed Consolidated Statements of Operations:
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Disaggregation Of Revenue (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Revenue Disaggregated by Product Category and Sales Channel | Revenue disaggregated by product category groups is as follows:
Revenue disaggregated by sales channel is as follows:
|
Basis of Presentation - Additional Information (Details) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2023
segment_manager
segment
|
Sep. 29, 2023
USD ($)
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of operating segments | segment | 1 | |
Number of segment managers | segment_manager | 1 | |
Disposed of by sale | Snack Bars Business | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash consideration | $ | $ 61.3 |
Growth, Reinvestment, and Restructuring Programs - Additional Information (Details) - Strategic Growth Initiatives $ in Millions |
Sep. 30, 2023
USD ($)
|
---|---|
Restructuring Cost and Reserve [Line Items] | |
Restructuring costs incurred | $ 113.9 |
Expected restructuring costs | $ 130.0 |
Growth, Reinvestment, and Restructuring Programs - Activity of Restructuring Program Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | $ 13.0 | |||
Expenses recognized | $ 9.7 | $ 22.4 | 33.9 | $ 66.4 |
Cash payments | (12.3) | |||
Ending Balance | 4.4 | 4.4 | ||
Expenses recognized | ||||
Restructuring Reserve [Roll Forward] | ||||
Expenses recognized | 3.7 | |||
Severance | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 8.8 | |||
Cash payments | (6.0) | |||
Ending Balance | 4.2 | 4.2 | ||
Severance | Expenses recognized | ||||
Restructuring Reserve [Roll Forward] | ||||
Expenses recognized | 1.4 | |||
Retention | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 4.2 | |||
Cash payments | (6.3) | |||
Ending Balance | $ 0.2 | 0.2 | ||
Retention | Expenses recognized | ||||
Restructuring Reserve [Roll Forward] | ||||
Expenses recognized | $ 2.3 |
Receivables Sales Program - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Receivables Sales Agreement [Line Items] | ||||
Termination period | 60 days | |||
Retained interest | $ 0 | |||
Loss on sale of receivables | $ 4,400,000 | $ 2,000,000 | 11,000,000 | $ 3,300,000 |
Maximum | ||||
Receivables Sales Agreement [Line Items] | ||||
Receivables held for sale | $ 500,000,000 | $ 500,000,000 |
Receivables Sales Program - Accounts Receivable Sold the Receivable Sales Program (Details) - USD ($) $ in Millions |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Receivables [Abstract] | |||
Outstanding accounts receivable sold | $ 318.4 | $ 347.1 | |
Receivables collected and not remitted to financial institutions | 161.9 | $ 204.5 | |
Receivables sold | 1,455.0 | $ 1,782.3 | |
Receivables collected and remitted to financial institutions | $ (1,483.7) | $ (1,761.6) |
Inventories (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials and supplies | $ 256.5 | $ 215.6 |
Finished goods | 362.2 | 338.4 |
Total inventories | $ 618.7 | $ 554.0 |
Acquisitions and Divestitures - Preliminary Purchase Price Allocation of Fair value of Net Tangible Assets Acquired (Details) - Coffee Roasting Capability $ in Millions |
Sep. 30, 2023
USD ($)
|
---|---|
Allocation of consideration to assets acquired: | |
Inventories | $ 31.5 |
Property, plant, and equipment, net | 60.7 |
Total purchase price | $ 92.2 |
Acquisitions and Divestitures - Results of Discontinued Operations on Income Statement (Details) - Disposed of by sale - Snack Bars Business and Meal Preparation - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net sales | $ 40.3 | $ 466.6 | $ 121.1 | $ 1,297.1 |
Cost of sales | 45.0 | 415.8 | 127.6 | 1,143.9 |
Selling, general, administrative and other operating expenses | 0.4 | 42.3 | 1.0 | 118.2 |
Amortization expense | 0.0 | 2.0 | 0.0 | 14.5 |
(Gain) loss on sale of business | (1.9) | 73.8 | 1.6 | 73.8 |
Operating loss from discontinued operations | (3.2) | (67.3) | (9.1) | (53.3) |
Interest and other expense | 0.0 | 11.4 | 18.3 | |
Interest and other (income) | (1.1) | |||
Income tax (benefit) expense | (0.5) | (0.2) | (1.0) | 2.4 |
Net loss from discontinued operations | $ (2.7) | $ (78.5) | $ (7.0) | $ (74.0) |
Acquisitions and Divestiture - Results of Discontinued Operations in the Balance Sheet (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total assets of discontinued operations | $ 0.0 | $ 60.4 |
Disposed of by sale | Snack Bars Business and Meal Preparation | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Inventories | 35.5 | |
Property, plant, and equipment, net | 24.9 | |
Total assets of discontinued operations | $ 60.4 |
Note Receivable (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Oct. 19, 2023 |
Oct. 03, 2022 |
Sep. 30, 2023 |
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Note receivable, term | 5 years | ||||
Interest rate, year one and two | 10.00% | ||||
Interest rate, year three | 11.00% | ||||
Interest rate, year four | 12.00% | ||||
Interest rate thereafter | 13.00% | ||||
Financing receivables, interest | 1.00% | ||||
Note receivable, net | $ 425.2 | $ 425.2 | $ 427.0 | ||
Interest income | $ 10.9 | $ 32.3 | |||
Subsequent Event | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Proceeds from repayment of Seller Note Credit Agreement | $ 427.5 |
Property, Plant, and Equipment - Components (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,501.4 | $ 1,369.0 |
Less accumulated depreciation | (782.3) | (727.4) |
Property, plant, and equipment, net | 719.1 | 641.6 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 35.1 | 26.4 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 366.5 | 308.0 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,025.5 | 968.9 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 74.3 | $ 65.7 |
Property, Plant, and Equipment - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 24.0 | $ 22.3 | $ 69.6 | $ 67.9 |
Goodwill and Intangible Assets - Changes in Carrying Amount of Goodwill (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Accumulated impairment losses | $ 0 |
Goodwill [Roll Forward] | |
Beginning Balance | 1,817,600,000 |
Acquisition | 5,400,000 |
Foreign currency exchange adjustments | 400,000 |
Ending Balance | $ 1,823,400,000 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 27.40% | (30.40%) | 27.50% | 5.00% |
Decrease in unrecognized tax benefits is reasonably possible | $ 1.0 | $ 1.0 |
Long-Term Debt - Components (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Finance leases | $ 0.7 | $ 1.2 |
Total outstanding debt | 1,561.0 | 1,406.2 |
Deferred financing costs | (9.8) | (11.6) |
Less current portion | (0.5) | (0.6) |
Total long-term debt | 1,550.7 | 1,394.0 |
2028 Notes | ||
Debt Instrument [Line Items] | ||
2028 Notes | 500.0 | 500.0 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolving Credit Facility | 155.3 | 0.0 |
Term Loan A | ||
Debt Instrument [Line Items] | ||
Term loan | 316.4 | 316.4 |
Term Loan A-1 | ||
Debt Instrument [Line Items] | ||
Term loan | $ 588.6 | $ 588.6 |
Stockholders' Equity - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Nov. 02, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | |||||
Shares repurchased (in shares) | 1,100,000 | 0 | 1,100,000 | 0 | |
Weighted average price per share (in usd per share) | $ 46.59 | $ 46.59 | |||
Value of shares repurchased | $ 50,000,000 | $ 50,000,000 | |||
Excise tax in connection with share repurchases | 400,000 | ||||
Common Stock | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, expected annual cap | $ 150,000,000 | ||||
Remaining authorized repurchase amount | $ 216,700,000 | $ 216,700,000 | |||
Common Stock | Maximum | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 400,000,000 |
Earnings Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Earnings Per Share [Abstract] | ||||
Weighted average common shares outstanding (in shares) | 55.9 | 56.1 | 56.1 | 56.0 |
Assumed exercise/vesting of equity awards (in shares) | 0.5 | 0.0 | 0.6 | 0.0 |
Weighted average diluted common shares outstanding (in shares) | 56.4 | 56.1 | 56.7 | 56.0 |
Equity awards, excluded from computation of diluted earnings (in shares) | 1.0 | 1.6 | 1.1 | 1.4 |
Stock-Based Compensation - Schedule of Total Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-Based Payment Arrangement [Abstract] | ||||
Compensation expense related to stock-based payments | $ 6.0 | $ 6.1 | $ 19.1 | $ 15.2 |
Related income tax benefit | $ 0.9 | $ 1.5 | $ 2.6 | $ 3.6 |
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - Stock Option - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Employee Options | ||
Beginning balance (in shares) | 1,258 | |
Expired (in shares) | (310) | |
Ending balance (in shares) | 948 | 1,258 |
Vested/expected to vest (in shares) | 913 | |
Exercisable (in shares) | 633 | |
Weighted Average Exercise Price | ||
Beginning balance (in usd per share) | $ 72.09 | |
Expired (in usd per share) | 75.18 | |
Ending balance (in usd per share) | 71.08 | $ 72.09 |
Vested/expected to vest (in usd per share) | 72.19 | |
Exercisable (in usd per share) | $ 85.24 | |
Weighted Average Remaining Contractual Term (yrs.) | ||
Outstanding | 3 years 7 months 6 days | 3 years 6 months |
Vested/expected to vest | 3 years 4 months 24 days | |
Exercisable | 1 year 1 month 6 days | |
Aggregate Intrinsic Value | ||
Beginning balance | $ 2.1 | |
Ending balance | 0.3 | $ 2.1 |
Vested/expected to vest | 0.2 | |
Exercisable | $ 0.0 |
Stock-Based Compensation - Schedule of Employee and Director Restricted Stock and Restricted Stock Highlights (Details) - Employee Restricted Stock Units - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of vested restricted stock units | $ 0.6 | $ 1.0 | $ 14.9 | $ 10.3 |
Tax benefit recognized from vested restricted stock units | $ 0.1 | $ 0.1 | $ 2.4 | $ 1.6 |
Stock-Based Compensation - Shareholder Return Market Condition and Assumptions (Details) - Performance Units |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 0.00% |
Risk-free rate | 3.87% |
Expected term (in years) | 2 years 9 months 18 days |
Expected volatility (TreeHouse Foods, Inc.) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 35.17% |
Expected volatility (Peer Group) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 35.04% |
Stock-Based Compensation - Schedule of Performance Unit Activity (Details) - Performance Units shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
$ / shares
shares
| |
Performance Units | |
Beginning balance (in shares) | shares | 620 |
Granted (in shares) | shares | 99 |
Vested (in shares) | shares | (98) |
Forfeited (in shares) | shares | (74) |
Ending balance (in shares) | shares | 547 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 45.23 |
Granted (in usd per share) | $ / shares | 47.73 |
Vested (in usd per share) | $ / shares | 42.73 |
Forfeited (in usd per share) | $ / shares | 42.15 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 47.43 |
Stock-Based Compensation - Schedule of Performance Unit Highlights (Details) - Performance Units - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Fair value of vested performance units | $ 0.0 | $ 0.0 | $ 5.0 | $ 2.0 |
Tax benefit recognized from performance units vested | $ 0.0 | $ 0.0 | $ 0.4 | $ 0.2 |
Employee Retirement and Postretirement Benefits (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Pension Benefits | ||||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||||
Service cost | $ 0.1 | $ 0.1 | $ 0.3 | $ 0.4 |
Interest cost | 3.2 | 2.3 | 9.5 | 6.9 |
Expected return on plan assets | (3.4) | (3.8) | (10.3) | (11.4) |
Amortization of unrecognized prior service cost | 0.0 | 0.0 | 0.1 | 0.0 |
Amortization of unrecognized net loss | 0.1 | 0.1 | 0.3 | 0.2 |
Net periodic pension benefit | 0.0 | (1.3) | (0.1) | (3.9) |
Postretirement Benefits | ||||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit) [Abstract] | ||||
Interest cost | 0.2 | 0.2 | 0.6 | 0.5 |
Amortization of unrecognized net loss | 0.0 | 0.0 | (0.2) | 0.0 |
Net periodic pension benefit | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.5 |
Other Operating (Income) Expense, Net (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Other Income and Expenses [Abstract] | ||||
Growth, reinvestment, and restructuring programs | $ 9.7 | $ 22.4 | $ 33.9 | $ 66.4 |
TSA, income | (9.9) | 0.0 | (35.2) | 0.0 |
Other | 0.1 | 1.0 | 1.0 | 0.0 |
Other operating (income) expense, net | $ (0.1) | $ 23.4 | $ (0.3) | $ 66.4 |
Commitments and Contingencies (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
complaint
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
complaint
|
Sep. 30, 2022
USD ($)
|
|
Loss Contingencies [Line Items] | ||||
Cost of sales | $ 725.8 | $ 700.0 | $ 2,096.5 | $ 1,993.0 |
Loss contingency, cash payment | 27.0 | |||
Damages from Product Defects | ||||
Loss Contingencies [Line Items] | ||||
Incremental charges | 8.7 | 8.7 | ||
Reduction in net sales for estimated product returns | 3.0 | 3.0 | ||
Cost of sales | 5.7 | 5.7 | ||
Loss contingency, liability | $ 4.1 | $ 4.1 | ||
Class Actions Filed by Shareholders | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, number of claims | complaint | 4 | 4 |
Derivative Instruments - Additional Information (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2022 |
Sep. 30, 2023 |
|
Interest Rate Swap Agreements | ||
Derivative [Line Items] | ||
Derivative notional amount | $ 875,000,000 | $ 875,000,000 |
Weighted average fixed interest rate | 2.91% | |
Diesel Contract | ||
Derivative [Line Items] | ||
Derivative, nonmonetary notional amount | 8,900,000 | 9,800,000 |
Total return swap contract | ||
Derivative [Line Items] | ||
Derivative notional amount | $ 3,900,000 | $ 0 |
Term of contract | 1 month |
Derivative Instruments - Fair Value of Derivative Instrument (Details) - USD ($) $ in Millions |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 28.7 | $ 27.2 |
Commodity contracts | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | 0.1 | 0.0 |
Liability derivatives | 0.3 | 0.3 |
Interest rate swap agreements | ||
Derivatives, Fair Value [Line Items] | ||
Asset derivatives | $ 28.6 | $ 27.2 |
Disaggregation Of Revenue (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Segment Reporting Information [Line Items] | ||||
Net sales | $ 863.3 | $ 832.9 | $ 2,520.8 | $ 2,340.4 |
Retail grocery | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 682.3 | 650.9 | 1,988.7 | 1,793.1 |
Co-manufacturing | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 108.4 | 118.5 | 325.6 | 361.2 |
Food-away-from-home and other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 72.6 | 63.5 | 206.5 | 186.1 |
Snacking | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 316.9 | 305.2 | 956.3 | 862.4 |
Beverages & drink mixes | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 309.1 | 291.0 | 844.3 | 798.3 |
Grocery | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 237.3 | $ 236.7 | $ 720.2 | $ 679.7 |
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