TreeHouse Reports 10.6 Percent Net Sales Increase In 2012

TreeHouse Foods, Inc. reported fourth quarter earnings of $0.68 per fully diluted share compared to $0.81 per fully diluted share reported for the fourth quarter of last year. The company reported adjusted earnings per share for the fourth quarter of $0.86 compared to $0.85 in the prior year, excluding an unusual item described below.

The company's 2012 fourth quarter results included one unusual item that affected the year-over-year quarterly comparison, a $0.18 per share expense for restructuring charges. These charges are due to the previously announced restructuring of the company's soup operations and the Seaforth, Ontario, Canada salad dressing plant closure.

"We had a solid finish to the year and are encouraged by the fourth quarter revenue growth across nearly all of our categories. Despite continued sluggish performance in the U.S. grocery industry, we are very pleased with the 8.7 percent growth in volume/mix in our North American Retail Grocery segment," said Sam K. Reed, chairman, president and chief executive officer, in a prepared statement. "Last year's challenges in the retail grocery landscape and the input cost environment finally appear to be moderating, and we are carrying forward the momentum that we gained at the end of the year."

Adjusted operating earnings before interest, taxes, depreciation, amortization, non-cash stock based compensation, and unusual items, was $93.4 million in the fourth quarter, a 12.7 percent increase compared to the prior year.

Net sales for the fourth quarter totaled $592.8 million compared to $535.8 million last year, an increase of 10.6 percent primarily due to a 4.7 percent increase in volume/mix as well as additional sales from the acquisition of Naturally Fresh. Sales for the North American Retail Grocery segment increased 12.9 percent, sales for the Food Away From Home segment increased 13.9 percent, while the Industrial and Export segment sales decreased 3.6 percent compared to last year.

Selling, distribution, general and administrative expenses were $61.8 million for the quarter, an increase of 23.2 percent from $50.2 million in the fourth quarter of 2011. The increase was due primarily to significantly lower compensation costs in the fourth quarter of 2011 when bonus accruals were reversed, as well as the addition of Naturally Fresh in 2012.

Income tax expense decreased in the quarter to $10.8 million due to lower pretax income and a lower effective tax rate. The company's fourth quarter effective income tax rate of 30.0 percent was below the 2011 fourth quarter rate of 31.4 percent due to the impact of the repayment of certain intercompany debt, a decrease in the Canadian statutory tax rate and a decrease in state tax expense.

Net income for the quarter totaled $25.2 million compared to $29.9 million last year. Fully diluted earnings per share from continuing operations for the quarter were $0.68 per share compared to $0.81 per share last year. Excluding unusual items, adjusted earnings per share from continuing operations for the fourth quarter of 2012 was $0.86 compared to the 2011 fourth quarter adjusted earnings per share of $0.85.

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