Milling & Baking News Corporate Profiles - 2019 - 108

COMPANY OVERVIEW

TreeHouse Foods, Inc.
Divestments, structure simplification key for private label manufacturer
reeHouse Foods, Inc.'s management is adopting an integrated business planning model
to improve operations and generate better
financial results. The company has reported net
losses for three straight fiscal years.
"The next step in the sophistication ofTreeHouse is to
bring the visibility to our business that many of the big
national branded players have had for years,"said Steven
T. Oakland, president and chief executive officer, during
a presentation Sept. 4 at the Barclays Global Consumer
Staples Conference in Boston."It gives us an opportunity
to use data to bring together the opportunity, both for
better forecasting (and) better inventory control."
Since taking the helm of Oak Brook, Ill.-based
TreeHouse Foods two years ago, Mr. Oakland has focused on taking what was a fragmented business and
streamlining it into a more integrated organization.
Divestments are part of the strategy. TreeHouse
sold its Snacks business - comprising private label nuts and trail mixes - to Atlas Holdings L.L.C.
for $90 million in August. The Snacks unit employs
800 and has three manufacturing plants in Robersonville, N.C.; El Paso, Texas; and Dothan, Ala.
"The sale of the Snacks division is a key step
in optimizing TreeHouse's overall product portfolio,"
Mr. Oakland said when the sale was announced in
July. "It is the culmination of TreeHouse's strategic
review of its Snacks business."

TreeHouse also agreed to sell its private label
ready-to-eat cereal business - including plants in
Lancaster, Ohio, and Sparks, Nev. - to Post Holdings, Inc. in May. The transaction was delayed by the
Federal Trade Commission in July, but both companies said they remain committed to the transaction.
"Selling the ready-to-eat cereal business allows
us to bring greater focus to the TreeHouse organization and represents another step on our portfolio
optimization journey," Mr. Oakland said at the announcement of the acquisition.
Divestment of its Snacks business unit and the
future divestment of the R.-T.-E. cereal business will
both aid in simplifying the company's structure.
"We go from around $6 billion (in sales) to about
$4.4 billion," he said. "We have significantly improved the operating structure of the business. We've
significantly improved our margins, and we've organized the way our customers are organized.
"We went from five divisions to three; we went
from five sales forces to one; and we see businesses

that are segmented the way the customer would
segment them - the Beverage business, the Baked
Goods business and the Meal Solutions business."
Mr. Oakland said continued reorganization of
the company's structure will help make its size an
advantage in the future.
"We have identified $1 billion of profitable revenue
opportunities in our current categories by helping our
customers both grow their categories - so bringing
them products and tactics that we have proven across
our network in other places - and by growing share,
places where we know we have the right to win," he
said Feb. 21 during a presentation at the Consumer
Analyst Group of New York conference. "Then there's
the opportunity for innovation in adjacencies. Some
of those adjacencies will come through our innovation
organization. And over time, they'll come with smaller
bolt-on and synergistic acquisitions."
Synergy will be a key focus of future acquisitions
for the company.
"(When) we have talked to about future M.&A.
it's about adjacencies, it's about bolt-ons, it's about
things that fit in the current structure," Mr. Oakland
said. "So, the way we leverage scale isn't by buying
new, totally different businesses; it's about buying
something that's closer in. I think we can organize
to leverage scale, and I think we can have a different filter for M.&A. going forward." CP

Chief executive officer -
Steven T. Oakland

TreeHouse Foods net
income (loss)
-$229

-$286

TreeHouse Foods net sales

TreeHouse Foods share price

per share
$66

-$61

in millions

$60

2016

108 \ November 2019

2017

2018

$54

$6,175

2016

$6,307

2017

$5,812

2018

$48
$42
Oct.
2018

Dec.

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Milling & Baking News Corporate Profiles - 2019

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