Mother Nature did not help TreeHouse Foods, Inc. during the third quarter of fiscal 2018. The two hurricanes that struck the southeast in September and October disrupted operations and damaged the cucumber crop, which plays an integral role in the company’s Condiments business unit.

Steven T. Oakland, president and chief executive officer, said in a Nov. 1 conference call that none of the company’s manufacturing plants were damaged due to Hurricanes Florence and Michael.


“…our Robersonville snacks plant and Faison pickles plant were both hit by the storm, and both were shut down for eight days due to Florence, its aftermath and the resulting flooding,” he said. “Lost production time at these plants along with several days of downtime at our three affected warehouses resulted in a drag of a few cents per share in the third quarter.”

Hurricane Michael affected operations at TreeHouse’s Dothan, Ala., plant and the company expects a negative impact from that storm to show up in the fourth quarter. Of greater importance is the effect Hurricane Michael may have had on the U.S. cucumber crop.

“About one-third of our country's cucumbers are grown and processed in the Carolinas, Florida and Alabama,” Mr. Oakland said. “We are now facing supply shortages as well as increased shipping distances, which will likely drive costs higher in the months to come.

Bay Valley pickles, TreeHouse Foods“…our pickle business represents just under one-third of our Condiments segment. Given the prospective nature of these issues, we’ve done our best to factor that into our fourth-quarter guidance. There are further constraints in the supply chain that are still being evaluated. For example, one of our large packaging suppliers with operations in the Florida Panhandle has been down and does not expect to be back at full production at that site for another six months. So, while less direct, these are issues that are still being assessed and at a minimum, will likely affect us down the road.”

TreeHouse Foods net income for the third quarter ended Sept. 30 was $5.4 million, equal to 10c per share on the common stock, and a decline compared with the same period of the previous year when the company earned $28.8 million, equal to 50c per share.

Sales for the quarter fell to $1,394 million from $1,548.8 million the year prior.

Despite the weak results, management emphasized the company’s turnaround is on track.

“Our Q3 results represent the third quarter in a row of delivering upon our financial commitments,” Mr. Oakland said. “I continue to be impressed by the effort our organization is putting forth to deliver sequential operational progress and improve our business for the long term.

“Our TreeHouse 2020 and Structure to Win initiatives and goals, which aim to properly align our cost structure across the business, remain on track as we continue the process of defining how we can best position ourselves to capitalize on private label growth across the food and beverage landscape.”

Matthew J. Foulston, chief financial officer, said stock-keeping rationalization, divestment of the McCann’s Irish oatmeal business this past July, and volume weakness impacted sales.

“The top line was a little softer than anticipated, driven by unfavorable volume and mix of 8.9%,” he said. “The primary drivers were less volume in our Snacks division where we lost the majority of a large low-margin piece of business and Meals where … being first in the market with pricing late last year cost us to some degree.”

The company issued guidance of earnings per share for the year to be in the range of $2.05 to $2.25. Management expects fourth-quarter earnings to be between 88c per share and $1.08 per share. The company said pricing related to Canadian tariffs are in place and will be reflected in the fourth quarter.