TreeHouse (THS) Divests Lakeville Facility, Snack Bar Business
TreeHouse Foods, Inc. THS has closed the sale of its Lakeville, MN-based manufacturing facility and snack bar business to John B. Sanfilippo & Son, Inc. for nearly $61 million. The company is making this sale as part of its strategy to focus on being a leading provider of private-label products in high-growth and high-margin categories.
The Lakeville, MN-based manufacturing facility was responsible for producing various private-label snack bar products, including fruit and grain bars, chewy bars, crunchy bars, and protein bars. It had been part of TreeHouse Foods' network since the company's acquisition of the Private Brands business in 2016.
As part of the transaction, the private label snack bar business, the Lakeville, MN manufacturing facility, customer relationships, and approximately 400 Lakeville-based employees have all moved to John B. Sanfilippo & Son.
Notably, the snack bar business was not expected to contribute positively to adjusted EBITDA in fiscal 2023.
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What’s More?
TreeHouse Foods is steadfast in its dedication to allocating capital to long-term growth goals and contributing to the overall enhancement of shareholder value.
Notably, in October 2022, THS made a substantial move by selling off significant part of its Meal Preparation business. This strategic divestment allowed TreeHouse Foods to take advantage of strong demand trends and drive growth in its more profitable private-label snacking and beverage categories.
Before this, in June 2021, the company completed the sale of its Ready-to-eat Cereal business to Post Holdings. These strategic actions underscore the company's commitment to concentrating on areas with greater growth prospects and strengthening its financial position.
Wrapping Up
TreeHouse Foods has been struggling with rising costs for an extended period. In the second quarter of 2023, the company continued to face the challenges posed by extra expenses linked to its investments in supply-chain enhancements. These expenditures included high labor and manufacturing costs.
Shares of this Zacks Rank #5 (Strongly Sell) company have lost 15.1% in the past six months compared with the industry’s decline of 12.7%.
Nonetheless, TreeHouse Foods has been focused on strategies like fueling category leadership in high-appeal categories, extending strategic customer ties by offering private brand priorities, creating a robust supply chain, operating as a more focused organization and becoming a talent leader, and undertaking strict capital allocation.
Three Solid Picks
We have highlighted three better-ranked stocks, namely MGP Ingredients, Inc. MGPI, Celsius Holdings CELH and Flowers Foods FLO.
MGP Ingredients produces and markets ingredients and distillery products to the packaged goods industry. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS suggests growth of 5.8% and 10.4%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of around 18%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently flaunts a Zacks Rank #1. CELH delivered an earnings surprise of 100% in the second quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 88.9% and 170.7%, respectively, from the year-ago reported numbers.
Flowers Foods emphasizes providing high-quality baked items. The company currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Flowers Foods’s current financial-year sales suggests growth of 6.7% from the year-ago reported figure. FLO has a trailing four-quarter earnings surprise of 7.6%, on average.
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