Along with reporting its third-quarter financial results that showed net sales increased by 5.3%, year over year, the Oak Brook, Ill.-based company said the board of directors approved a plan to “explore strategic alternatives, including a possible sale of the company” or a transaction to allow the company to focus on its higher growth businesses, which are the snacking and beverages division and the meal preparation portion.
In the three months ending Sept. 30, snacking and beverages, for example, saw net sales increase $8 million or 2% compared with the same period a year ago, and net sales in the meal prep division increased $47.5 million, or 7.4%. The company’s total net sales exceeded $1.1 billion. TreeHouse Foods said in the report that its pasta acquisitions played a big part in the quarterly success, along with favorable pricing.
TreeHouse updated its full year 2021 guidance and Q4 guidance based on the positive swing, adjusting net sales to be in the range of $4.2 billion or $4.325 billion with $1.04 to $1.16 billion expected in the fourth quarter.
The positive growth is a huge step for the company that had been showing declines over the last few years, including a dip in second quarter and declines amid heavy pandemic pressure. But now, the momentum and growth of private brands at large, could be inching TreeHouse toward a potential sale, something the board of directors concluded following a strategic review it began earlier in the year.
"The board's decision to explore strategic alternatives follows careful consideration as well as engagement with many of our shareholders over the past year. The TreeHouse team has executed a major transformation since 2018, improving the ability to support its private label customers and navigate a challenging operating environment,” said Ann Sardini, board chair. “This progress and the strong long-term consumer demand trends for private label provide a favorable backdrop as the board thoroughly reviews and considers strategic options with a commitment to maximizing value for all shareholders."
TreeHouse said the company has exhibited commitment to shareholder value creation, evidenced by its track record of taking action to execute value-enhancing transactions, optimizing the business and maintaining a disciplined capital allocation approach. The company added that since 2016, it has reduced its total debt by more than $800 million and strategically invested its free cash flow to strengthen the company's foundation and support categories that generate growth and improve profitability, per TreeHouse. It also noted that there can be no assurance that the exploration of strategic alternatives will result in a company sale or other changes.
"We continue to be confident in our ability to capitalize on the strong long-term fundamentals of our business. We remain committed to serving our customers and supporting our employees as the Board conducts this review. We are proud of the progress we have made to improve our efficiency and the actions we are taking to drive growth, optimize our portfolio and support our customers,” said Steve Oakland, president and CEO of TreeHouse.