TreeHouse Foods, Inc., which owns Sturm Foods (which markets Grove Square® single-cup coffee), reported second quarter earnings of $0.53 per fully diluted share compared to $0.39 per fully diluted share reported for the second quarter of last year. The company reported adjusted earnings per share, excluding unusual items as described below, of $0.60 compared to $0.43 in the prior year.
The company's 2012 second quarter results included several unusual items that affected the year-over-year quarterly comparison. These items are comprised of a $0.04 per share expense associated with the acquisition of substantially all of the assets of Naturally Fresh, Inc., a $0.04 per share loss on the mark-to-market adjustment of the company's commodity agreements, and a $0.01 per share gain on the foreign currency translation of cash held at E.D. Smith.
"We are very pleased with our overall performance for the second quarter," said Sam K. Reed, chairman, president and chief executive officer in a prepared statement. "Excluding the soup business, our retail grocery volume grew 1.9 percent, with dry dinners, pasta sauces and salsa all posting growth in the double-digits. Clearly our customers see the value of a strong private label portfolio of products during these difficult times."
Adjusted operating earnings before interest, taxes, depreciation, amortization, non-cash stock based compensation, and unusual items, or Adjusted EBITDA, was $69.1 million in the quarter, a 10.9 percent increase compared to the prior year. Adjusted EBITDA was higher primarily due to the improvement in net income.
Net sales for the second quarter totaled $527.4 million compared to $492.6 million last year, an increase of 7.1 percent as the company realized the benefits of increased pricing and additional sales from the acquisition of Naturally Fresh. Sales for the North American retail grocery segment increased 5.9 percent, sales for the food away from home segment increased 11.0 percent compared to last year, while the industrial and export segment showed growth of 8.7 percent.
Selling, distribution, general and administrative expenses were $56.6 million for the quarter, a decrease of 14.5 percent from $66.2 million in the second quarter of 2011. The decrease was due primarily to lower distribution and delivery costs resulting from the efficiencies of last year's warehouse consolidation program and lower incentive based compensation costs.
Other operating (income) expense in the quarter was insignificant compared to $1.3 million in the prior year. Last year's expense was primarily related to the closure of the Springfield, Mo. pickle plant.
Interest expense in the quarter was $12.4 million compared to $13.5 million last year. The decrease was due to lower interest rates.
Income tax expense increased in the quarter to $8.0 million due to higher pretax income. The company's second quarter effective income tax rate of 29.0 percent was lower than last year's second quarter rate of 32.5 percent due to the impact of the repayment of certain intercompany debt and a decrease in the Canadian statutory tax rate.
Net income for the quarter totaled $19.5 million compared to $14.3 million last year. Fully diluted earnings per share from continuing operations for the quarter were $0.53 per share compared to $0.39 per share last year. Excluding unusual items, adjusted earnings per share from continuing operations for the second quarter of 2012 was $0.60 compared to last year's second quarter adjusted earnings per share of $0.43.
The company has three reportable segments:
North American retail grocery – This segment sells private label and branded products to customers within the U.S. and Canada. These products include pickles, peppers, relishes, condensed and ready to serve soups, broths, gravies, jams, spreads, salad dressings, sauces, non-dairy powdered creamers, salsa, powdered drinks, hot cereals, macaroni and cheese, skillet dinners and aseptic products.