TreeHouse Foods posted Q1 income of US$0.24 per diluted share compared to $0.37 per diluted share in the first quarter of 2005, due to payments through Financial Accounting Standards and relating to the closure of its La Junta, CO pickle factory.
Net sales for the quarter increased 3.8% to $172.7m. Pickle revenues increased slightly due to the acquisition of the Oxford Foods book of business, while both non-dairy powdered creamer and other product sales also grew.
Gross margin for the first quarter were 23.4%, compared to 22.7% last year, as the combination of targeted price increases and internal cost controls offset higher energy costs at the company.
Operating expenses increased from $19.7m during the first quarter of 2005 to $28.3m due in part to share based compensation expense of $4.8m and plant shutdown costs of $0.9m.
TreeHouse chairman and CEO Sam Reed said: “We are pleased with our first quarter performance, especially in light of the challenges our industry faces with higher energy costs. We have sharpened our focus on driving internal efficiencies, and we saw the benefits of these programs in our gross margins.
“We also made investments in our management team to ensure the integration of the soup and infant feeding businesses goes as smoothly as possible.
“We are pleased with the revenue increases in the first quarter of 2006, but we expect there will be pressure on input costs and pricing as we move into the key selling season for pickles,”
The company said it is optimistic, despite rising energy prices, of striking the right balance between price and volume, and that internal efficiencies will balance out the risk of higher input costs.
TreeHouse is maintaining its full year guidance of net income per share on base business of $0.81 to $0.86 per share and adding $0.05 per share for its soup and infant feeding businesses – recently acquired from Del Mont Foods – resulting in a new range of $0.86 to $0.91 for 2006.