TreeHouse Foods Inc. Reports Operating Results (10-Q)
Treehouse Foods Inc. has a market cap of $1.47 billion; its shares were traded at around $42.25 with a P/E ratio of 17.5 and P/S ratio of 1. Treehouse Foods Inc. had an annual average earning growth of 41.1% over the past 5 years.THS is in the portfolios of John Keeley of Keeley Fund Management, Ron Baron of Baron Funds, NWQ Managers of NWQ Investment Management Co, Bruce Kovner of Caxton Associates, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:During the second quarter of 2010, the Company recorded a charge of $4.6 million, to better align the cost structure of the infant feeding business with its volume. This charge includes $2.7 million primarily related to excess inventory included in the Gross profit line of the Condensed Consolidated Statements of Income and $1.9 million related to fixed assets write-down and severance costs included in the Other operating expense (income), net line of the Condensed Consolidated Statements of Income.
On March 2, 2010, we acquired all the issued and outstanding stock of Sturm Foods, Inc. at a purchase price of $659.4 million in cash. The transaction was financed with a high yield notes issuance of $400 million and common stock issuance of 2.7 million shares at $43.00 per share, with the balance being funded by borrowings on our revolving credit facility. We believe Sturm is the leading manufacturer of private label hot cereals and powdered drink mixes in the United States. The acquisition of Sturm adds two
Net Sales — Second quarter net sales increased 19.8% to $446.2 million in 2010 compared to $372.6 million in the second quarter of 2009. The increase is driven by the acquisition of Sturm in March 2010 and favorable foreign currency exchange rates between the U.S. and Canadian dollar, partially offset by volume and price decreases in legacy businesses. Net sales by segment are shown in the following table:
General and administrative expenses increased $5.2 million in the second quarter of 2010 compared to 2009. The increase is primarily related to incremental general and administrative costs of Sturm of $3.1 million, plus increases in stock based compensation and consulting fees, offset by a decrease in incentive compensation.
Interest Expense, net — Interest expense increased to $11.8 million in the second quarter of 2010, compared to $4.8 million in 2009 primarily due to an increase in debt resulting from the Sturm acquisition.
Foreign Currency — The Company s foreign currency gain was $2.2 million for the three months ended June 30, 2010 compared to a gain of $3.9 million in 2009, due to fluctuations in currency exchange rates between the U.S. and Canadian dollar.
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