TreeHouse Details 2018 Restructuring Program; To Reduce Headcount By Mid-2018

(RTTNews) - TreeHouse Foods, Inc. (THS) outlined its TreeHouse 2020, the company's restructuring program, for the calendar year 2018: the partial closure of Dothan, Alabama expected in the second quarter of 2018; the final phase of closure of the Battle Creek, Michigan facility announced on January 31, 2018; the closure of the Visalia, California facility which is targeted for closure by the end of first quarter 2019; at least 15 production lines permanently shuttered; and the full roll-out of the TreeHouse Management Operating System to 12 plants in 2018.

The costs to close the Visalia facility are expected to be approximately $21 million, of which approximately $8 million is expected to be in cash. The company expects charges of approximately $0.28 per share to be incurred in 2018. The closure will affect approximately 294 employees.

In addition to TreeHouse 2020, TreeHouse has completed a comprehensive review of SG&A and related expenses in partnership with a major global consulting firm to provide an independent perspective of improvement potential across all of its functions, business units, and geographies based on industry benchmarks. The company plans to reduce salaried headcount across the organization by mid-year 2018. TreeHouse expects savings in calendar 2018 to total approximately $30 million, with a run rate impact of $55 million exiting 2018.

For the fourth quarter, the company reported adjusted earnings per share of $1.02 compared to $1.14 for the fourth quarter of 2016. Net sales for the fourth quarter of 2017 totaled $1.7 billion compared to $1.8 billion for the same period last year, a decrease of 4.3%. On a comparable basis, excluding the SIF business and an extra week of Private Brands in 2016, the company reported sales growth of 2.4%.

For 2018, the company's earnings per share guidance is between $2.00 and $2.40. TreeHouse net sales are expected to decrease in 2018 to approximately $5.9 to $6.1 billion, driven by the sale of the Soup and Infant Feeding business in May 2017 and the company's planned SKU reduction initiatives.

For the first quarter of 2018, the company expects earnings in the range of $0.10 to $0.20 per share. The company said the expected decrease compared to the first quarter of 2017 is due to lower volumes, the timing of higher commodity and freight costs versus pricing actions that will take effect in later quarters and operational inefficiencies.