TreeHouse Foods announces plans to close Visalia snack factory by March 2019
VISALIA – Nearly 300 employees at a Visalia food processing plant will lose their job by this time next year.
On Feb. 15, TreeHouse Foods, Inc. announced plans to close its facility at the corner of American and Goshen avenues by the end of the first quarter of 2019. The Visalia plant primarily produces pretzels and cereal snack mixes for the Baked Goods segment of the packaged food and beverage manufacturer. Current pretzel production will be moved to other TreeHouse manufacturing facilities prior to the plant closure. The closure was announced well in advance to provide approximately 294 employees with as much notice as possible and to ensure a seamless transition for customers.
The costs to close the Visalia facility are expected to be approximately $21 million, including approximately $13 million in non-cash asset write-offs, $3 million in employee-related costs and approximately $5 million in other closure costs. The Company expects charges of approximately $0.28 per fully diluted share to be incurred in 2018.
The announcement of the plant’s closure came on the same day the company reported that earnings continued to drop year over year from an already dismal 2016. TreeHouse’s fourth-quarter net sales were $1.70 billion, down from $1.78 billion in the fourth quarter of 2016. Adjusted earnings per share were down to $1.02, compared to $1.14 in 2016, which fell well below company expectations of finishing 2018 between $2.00 and $2.40 per share. TreeHouse Foods trades on the New York Stock Exchange under the ticker THS.
“Our cash flow delivery continues to be robust, and although our fourth quarter earnings were in line with our expectations, our operational results were disappointing,” stated TreeHouse President and Chairman Sam K. Reed. “We are well positioned within the private label marketplace; however, it is imperative that we build a more effective and efficient foundation for private label customer engagement.”
More specifically, the company’s Snacks segment did not achieve the forecasted results for the year and as a result, future revenue and profitability expectations were reduced. TreeHouse’s Snacks segment, including the Visalia plant, lost $276.4 million due to over valued assets acquired by the company and TreeHouse forecasted a $273.3 million loss in future cash flows of the snacks segment.
“The decision is consistent with the August 2017 announcement of TreeHouse 2020, the Company’s restructuring program,” the company said in a released statement. “TreeHouse 2020 is a multi-year plan to fully integrate the business and reduce its cost structure in order to invest in market-differentiated capabilities that will serve the rapidly evolving needs of its customers who are strategically focused and highly committed to their corporate brands.”
The Visalia plant closure is the latest in a cost-cutting trend for the cash stapped company. The news comes less than a month after TreeHouse Foods announced it will close operations at its cereal manufacturing facility in Battle Creek, Mich., which laid off another 84 workers. In August 2017, the company announced its TreeHouse 2020 restructuring plan which included the closure of facilities in Brooklyn Park, Minn. and Plymouth, Ind., by the end of December and in Dothan, Ala. over the next six months. Those closures eliminated more than 350 employees.
“The decisions to close these facilities are difficult ones given their impact on families and communities,” stated TreeHouse Chairman and CEO Sam K. Reed in released statement. “However, despite the toll they exact, these measures are required if we are to remain competitive in a rapidly changing marketplace for packaged foods. In order to win in today’s marketplace, we must not only produce the finest quality at the lowest costs, but also fully utilize the capacity of our plants and the capability of our people in doing so.”
About a year ago, Bay Valley Foods, a wholly-owned subsidiary of TreeHouse, closed another facility in the City of Industry in Southern California, laying off 62 employees. The closure is expected to save the company about $1 million per year. Other TreeHouse subsidiaries include E.D. Smith fruit spreads and Flagstone Foods, one of the largest manufacturers of trail mix and dried fruit categories.
TreeHouse Foods, Inc. is a manufacturer of packaged foods and beverages with over 40 manufacturing facilities across the United States, Canada and Italy that focuses primarily on private label products for both retail grocery and food away from home customers. TreeHouse manufactures shelf stable, refrigerated, frozen and fresh products, including beverages and beverage enhancers (single serve beverages, coffees, teas, creamers, powdered beverages and smoothies); meals (cereal, pasta, macaroni and cheese and side dishes); retail bakery (refrigerated and frozen dough, cookies and crackers); condiments (pourable and spoonable dressing, dips, pickles, and sauces) and healthy snacks (nuts, trail mix, bars, dried fruits and vegetables).