UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended ~~June 30, 2023.~~March 31, 2024.


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-32504

TreeHouse Foods, Inc.

(Exact name of the registrant as specified in its charter)


Delaware			20-2311383
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2021 Spring Road, Suite 600
Oak Brook, IL 60523
(Address of principal executive offices) (Zip Code)

(Registrant's telephone number, including area code) (708) 483-1300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	THS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the registrant's common stock outstanding as of ~~July 31, 2023~~April 30, 2024 was ~~56,378,524.~~52.6 million.

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except per share data)


			June 30, 2023		December 31, 2022
		March 31, 2024						March 31, 2024	December 31, 2023
Assets	Assets						Assets
Current assets:	Current assets:						Current assets:
Cash and cash equivalents	Cash and cash equivalents		$	16.9	$	43.0
Receivables, net	Receivables, net		163.5		158.8
Inventories	Inventories		673.4		589.5
Prepaid expenses and other current assets	Prepaid expenses and other current assets		21.4		23.2

Total current assets
Total current assets
Total current assets	Total current assets		875.2		814.5
Property, plant, and equipment, net	Property, plant, and equipment, net		725.6		666.5
Operating lease right-of-use assets	Operating lease right-of-use assets		200.5		184.4
Goodwill	Goodwill		1,824.6		1,817.6
Intangible assets, net	Intangible assets, net		279.5		296.0
Note receivable, net			424.1		427.0

Other assets, net
Other assets, net
Other assets, net	Other assets, net		50.9		47.9
Total assets	Total assets		$	4,380.4	$	4,253.9
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity						Liabilities and Stockholders' Equity
Current liabilities:	Current liabilities:						Current liabilities:
Accounts payable	Accounts payable		$	526.5	$	618.7
Accrued expenses	Accrued expenses		164.9		208.5
Current portion of long-term debt	Current portion of long-term debt		0.5		0.6

Total current liabilities
Total current liabilities
Total current liabilities	Total current liabilities		691.9		827.8
Long-term debt	Long-term debt		1,594.5		1,394.0
Operating lease liabilities	Operating lease liabilities		172.4		159.1
Deferred income taxes	Deferred income taxes		110.5		108.7
Other long-term liabilities	Other long-term liabilities		76.2		77.3
Total liabilities	Total liabilities		2,645.5		2,566.9
Commitments and contingencies (Note 16)	Commitments and contingencies (Note 16)						Commitments and contingencies (Note 16)
Stockholders' equity:	Stockholders' equity:						Stockholders' equity:
Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued	Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued		—		—
Common stock, par value $0.01 per share, 90.0 shares authorized, 56.4 and 56.1 shares outstanding as of June 30, 2023 and December 31, 2022, respectively			0.6		0.6
Common stock, par value $0.01 per share, 90.0 shares authorized, 53.1 and 54.1 shares outstanding as of March 31, 2024 and December 31, 2023, respectively
Treasury stock	Treasury stock		(133.3)		(133.3)
Additional paid-in capital	Additional paid-in capital		2,212.5		2,205.4
Accumulated deficit	Accumulated deficit		(263.5)		(302.0)
Accumulated other comprehensive loss	Accumulated other comprehensive loss		(81.4)		(83.7)
Total stockholders' equity	Total stockholders' equity		1,734.9		1,687.0
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity		$	4,380.4	$	4,253.9

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
		2023		2022		2023		2022		2024	2023
Net sales	Net sales	$	843.6	$	810.2	$	1,738.4	$	1,582.8
Cost of sales	Cost of sales	710.8		699.2		1,453.3		1,373.1
Gross profit	Gross profit	132.8		111.0		285.1		209.7
Operating expenses:	Operating expenses:
Selling and distribution	Selling and distribution	39.9		54.8		84.9		115.9
Selling and distribution
Selling and distribution
General and administrative	General and administrative	54.1		56.1		107.5		109.0
Amortization expense	Amortization expense	12.1		11.9		24.1		23.8
Other operating (income) expense, net		(2.8)		13.9		(0.2)		43.0

Other operating expense, net
Other operating expense, net
Other operating expense, net
Total operating expenses	Total operating expenses	103.3		136.7		216.3		291.7
Operating income (loss)		29.5		(25.7)		68.8		(82.0)
Other (income) expense:
Operating (loss) income
Other expense:
Interest expense
Interest expense
Interest expense	Interest expense	19.2		17.0		37.0		33.7
Interest income	Interest income	(10.8)		(0.1)		(25.4)		(4.2)
(Gain) loss on foreign currency exchange		(3.3)		1.1		(3.0)		—
Loss on foreign currency exchange
Other (income) expense, net	Other (income) expense, net	(6.2)		(11.9)		3.5		(63.6)
Total other (income) expense		(1.1)		6.1		12.1		(34.1)
Income (loss) before income taxes		30.6		(31.8)		56.7		(47.9)
Income tax expense (benefit)		8.9		(4.5)		15.8		(6.8)
Net income (loss) from continuing operations		21.7		(27.3)		40.9		(41.1)
Net income (loss) from discontinued operations		1.6		(2.1)		(2.4)		8.7
Net income (loss)		$	23.3	$	(29.4)	$	38.5	$	(32.4)
Total other expense
(Loss) income before income taxes
Income tax (benefit) expense
Net (loss) income from continuing operations
Net loss from discontinued operations
Net (loss) income

Earnings (loss) per common share - basic:	Earnings (loss) per common share - basic:
Earnings (loss) per common share - basic:
Earnings (loss) per common share - basic:
Continuing operations
Continuing operations
Continuing operations	Continuing operations	$	0.38	$	(0.49)	$	0.73	$	(0.74)
Discontinued operations	Discontinued operations	0.03		(0.04)		(0.04)		0.16
Earnings (loss) per share basic (1)	Earnings (loss) per share basic (1)	$	0.41	$	(0.53)	$	0.68	$	(0.58)

Earnings (loss) per common share - diluted:	Earnings (loss) per common share - diluted:
Earnings (loss) per common share - diluted:
Earnings (loss) per common share - diluted:
Continuing operations
Continuing operations
Continuing operations	Continuing operations	$	0.38	$	(0.49)	$	0.72	$	(0.74)
Discontinued operations	Discontinued operations	0.03		(0.04)		(0.04)		0.16
Earnings (loss) per share diluted (1)	Earnings (loss) per share diluted (1)	$	0.41	$	(0.53)	$	0.68	$	(0.58)

Weighted average common shares:	Weighted average common shares:
Weighted average common shares:
Weighted average common shares:
Basic
Basic
Basic	Basic	56.4		56.0		56.3		55.9
Diluted	Diluted	56.8		56.0		56.8		55.9

(1) The sum of the individual per share amounts may not add due to rounding.

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME~~ (LOSS) INCOME

(Unaudited, in millions)

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
Net income (loss) $ 23.3 $ (29.4) $ 38.5 $ (32.4)
Other comprehensive income (loss):
Foreign currency translation adjustments 1.9 (10.6) 2.2 (6.3)
Pension and postretirement reclassification adjustment 0.1 — 0.1 0.1
Other comprehensive income (loss) 2.0 (10.6) 2.3 (6.2)
Comprehensive income (loss) $ 25.3 $ (40.0) $ 40.8 $ (38.6)


	Three Months Ended March 31,
		2024		2023
Net (loss) income		$	(11.7)	$	15.2

Other comprehensive (loss) income:
Foreign currency translation adjustments		(2.6)		0.3

Other comprehensive (loss) income		(2.6)		0.3
Comprehensive (loss) income		$	(14.3)	$	15.5

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in millions)


														Accumulated
									Additional					Other
			Common Stock			Treasury Stock			Paid-In		Accumulated			Comprehensive		Total
			Shares	Amount		Shares	Amount		Capital		Deficit			Loss		Equity
Balance, January 1, 2022			58.7	$	0.6	(2.9)	$	(133.3)	$	2,187.4	$	(155.7)		$	(53.6)	$	1,845.4
Net loss			—	—		—	—		—		(3.0)			—		(3.0)
													Accumulated
									Additional
									Additional
									Additional
			Common Stock
			Common Stock
			Common Stock																Treasury Stock			Paid-In		Accumulated		Comprehensive		Total
		Shares																Shares		Amount	Shares		Amount		Capital		Deficit		Loss	Equity
Balance, January 1, 2023
Net income
Other comprehensive income	Other comprehensive income		—	—		—	—		—		—			4.4		4.4
Issuance of stock awards	Issuance of stock awards		0.2	—		—	—		(3.3)		—			—		(3.3)
Stock-based compensation	Stock-based compensation		—	—		—	—		4.3		—			—		4.3

Balance, March 31, 2022			58.9	$	0.6	(2.9)	$	(133.3)	$	2,188.4	$	(158.7)		$	(49.2)	$	1,847.8
Net loss			—	—		—	—		—		(29.4)			—		(29.4)
Other comprehensive loss			—	—		—	—		—		—			(10.6)		(10.6)

Stock-based compensation			—	—		—	—		5.8		—			—		5.8

Balance, June 30, 2022			58.9	$	0.6	(2.9)	$	(133.3)	$	2,194.2	$	(188.1)		$	(59.8)	$	1,813.6
Balance, March 31, 2023
Balance, March 31, 2023
Balance, March 31, 2023

Balance, January 1, 2023			59.0	$	0.6	(2.9)	$	(133.3)	$	2,205.4	$	(302.0)		$	(83.7)	$	1,687.0
Net income			—	—		—	—		—		15.2			—		15.2
Other comprehensive income			—	—		—	—		—		—			0.3		0.3

Issuance of stock awards			0.2	—		—	—		(5.3)		—			—		(5.3)
Stock-based compensation			—	—		—	—		7.2		—			—		7.2

Balance, March 31, 2023			59.2	$	0.6	(2.9)	$	(133.3)	$	2,207.3	$	(286.8)		$	(83.4)	$	1,704.4
Net income			—	—		—	—		—		23.3			—		23.3
Other comprehensive income			—	—		—	—		—		—			2.0		2.0

Issuance of stock awards			0.1	—		—	—		(0.7)		—			—		(0.7)
Stock-based compensation			—	—		—	—		5.9		—			—		5.9

Balance, June 30, 2023			59.3	$	0.6	(2.9)	$	(133.3)	$	2,212.5	$	(263.5)		$	(81.4)	$	1,734.9

Balance, January 1, 2024

Balance, January 1, 2024

Balance, January 1, 2024
Net loss
Other comprehensive loss
Treasury stock repurchases
Issuance of stock awards
Stock-based compensation

Balance, March 31, 2024
Balance, March 31, 2024
Balance, March 31, 2024

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


			Six Months Ended June 30,
			2023		2022
		Three Months Ended March 31,						Three Months Ended March 31,
		2024					2024		2023
Cash flows from operating activities:	Cash flows from operating activities:
Net income (loss)			$	38.5	$	(32.4)
Net (loss) income from discontinued operations			(2.4)		8.7
Net income (loss) from continuing operations			40.9		(41.1)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net (loss) income
Net (loss) income
Net (loss) income
Net loss from discontinued operations
Net (loss) income from continuing operations
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization
Depreciation and amortization
Depreciation and amortization	Depreciation and amortization		71.5		71.8

Stock-based compensation	Stock-based compensation		13.1		9.1
Stock-based compensation
Stock-based compensation

Unrealized gain on derivative contracts			(3.5)		(62.3)
Unrealized (gain) loss on derivative contracts
Unrealized (gain) loss on derivative contracts
Unrealized (gain) loss on derivative contracts

Deferred TSA income
Deferred TSA income
Deferred TSA income	Deferred TSA income		(12.3)		—
Other	Other		(1.7)		(0.8)
Changes in operating assets and liabilities, net of acquisitions and divestitures:	Changes in operating assets and liabilities, net of acquisitions and divestitures:
Receivables
Receivables
Receivables	Receivables		(3.3)		(4.2)
Inventories	Inventories		(50.3)		(118.3)
Prepaid expenses and other assets	Prepaid expenses and other assets		8.0		(9.4)
Accounts payable	Accounts payable		(86.3)		94.0
Accrued expenses and other liabilities	Accrued expenses and other liabilities		(25.9)		(9.5)
Net cash used in operating activities - continuing operations	Net cash used in operating activities - continuing operations		(49.8)		(70.7)
Net cash provided by operating activities - discontinued operations			—		44.1
Net cash used in operating activities - discontinued operations
Net cash used in operating activities	Net cash used in operating activities		(49.8)		(26.6)
Cash flows from investing activities:	Cash flows from investing activities:
Additions to property, plant, and equipment			(52.6)		(39.0)
Additions to intangible assets			(2.1)		(4.4)
Capital expenditures
Capital expenditures
Capital expenditures

Proceeds from sale of fixed assets	Proceeds from sale of fixed assets		—		4.8
Acquisitions, net of cash acquired			(102.2)		—
Proceeds from sale of fixed assets
Proceeds from sale of fixed assets

Net cash used in investing activities - continuing operations

Net cash used in investing activities - continuing operations

Net cash used in investing activities - continuing operations	Net cash used in investing activities - continuing operations		(156.9)		(38.6)
Net cash used in investing activities - discontinued operations	Net cash used in investing activities - discontinued operations		(15.2)		(23.4)
Net cash used in investing activities	Net cash used in investing activities		(172.1)		(62.0)
Cash flows from financing activities:	Cash flows from financing activities:
Borrowings under Revolving Credit Facility	Borrowings under Revolving Credit Facility		1,544.3		48.0
Borrowings under Revolving Credit Facility
Borrowings under Revolving Credit Facility
Payments under Revolving Credit Facility	Payments under Revolving Credit Facility		(1,344.8)		(48.0)
Payments on financing lease obligations	Payments on financing lease obligations		(0.3)		(0.7)
Payment of deferred financing costs			—		(1.6)
Payments on Term Loans			—		(14.3)

Repurchases of common stock

Repurchases of common stock

Repurchases of common stock

Payments related to stock-based award activities	Payments related to stock-based award activities		(6.0)		(3.3)
Net cash provided by (used in) financing activities - continuing operations			193.2		(19.9)
Net cash used in financing activities - discontinued operations			—		(0.2)
Net cash provided by (used) in financing activities			193.2		(20.1)
Payments related to stock-based award activities
Payments related to stock-based award activities
Net cash (used in) provided by financing activities - continuing operations
Net cash (used in) provided by financing activities - discontinued operations
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents		2.6		(0.8)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents		(26.1)		(109.5)

Add: Cash and cash equivalents of discontinued operations, beginning of period			—		4.1
Less: Cash and cash equivalents of discontinued operations, end of period			—		(4.1)

Cash and cash equivalents, beginning of period

Cash and cash equivalents, beginning of period

Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period		43.0		304.5
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period		$	16.9	$	195.0


			Six Months Ended June 30,
			2023		2022
		Three Months Ended March 31,						Three Months Ended March 31,
		2024					2024		2023
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:
Interest paid
Interest paid
Interest paid	Interest paid		$	45.3	$	26.6
Net income taxes paid	Net income taxes paid		16.7		1.2

Non-cash investing activities:	Non-cash investing activities:
Accrued purchase of property and equipment			$	12.3	$	21.2
Accrued other intangible assets			0.2		1.4
Non-cash investing activities:
Non-cash investing activities:

Capital expenditures incurred but not yet paid

Capital expenditures incurred but not yet paid

Capital expenditures incurred but not yet paid
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations		32.2		43.0
Note receivable purchase price adjustment reduction			(5.1)		—

Note receivable increase from paid in kind interest	Note receivable increase from paid in kind interest		2.2		—
Deferred payment from acquisition of seasoned pretzel capability			4.0		—
Note receivable increase from paid in kind interest
Note receivable increase from paid in kind interest

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024

(Unaudited)

1. BASIS OF PRESENTATION

The unaudited Condensed Consolidated Financial Statements included herein have been prepared by TreeHouse Foods, Inc. and its consolidated subsidiaries (the "Company," "TreeHouse," "we," "us," or "our"), pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to quarterly reporting on Form 10-Q. In our opinion, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted as permitted by such rules and regulations. The Condensed Consolidated Financial Statements and related notes should be read in conjunction with the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022.~~2023. Results of operations for interim periods are not necessarily indicative of annual results.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, ~~Interest income has~~Additions to property, plant, and equipment and Additions to intangible assets have been ~~reclassified out~~condensed into Capital expenditures within the Cash flows from investing activities section of ~~Other (income) expense, net within~~ the Condensed Consolidated Statements of ~~Operations.~~Cash Flows. Additionally, Accrued purchase of property and equipment and Accrued other intangible assets have been condensed into Capital expenditures incurred but not yet paid within the Non-cash investing activities section of the Condensed Consolidated Statements of Cash Flows.

Use of Estimates

The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires management to use judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates.

Summary of Significant Accounting Policies

A detailed description of the Company's significant accounting policies can be found in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022.~~2023.

Segment Information

The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources as one segment. We manufacture and distribute private label food and beverages in North America. Our products are primarily shelf stable and share similar customers and distribution. The Chief Executive Officer, who has been identified as our Chief Operating Decision Maker ("CODM") allocates resources and assesses performance based upon discrete financial information at the consolidated level. We have one segment manager who reports directly to the CODM with incentive compensation based on aggregated consolidated results of the Company. The annual operating plan is prepared and approved by the CODM based on consolidated results of the Company. We operate our business with a centralized financial systems infrastructure, and we share centralized resources for sales, procurement, and general and administrative activities. The majority of our manufacturing plants each produce one food or beverage category. Refer to Note 18 for disaggregation of revenue for additional information of our principal products sold.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2. RECENT ACCOUNTING PRONOUNCEMENTS

Not yet adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. Upon adoption, the impact of ASU 2023-07 will be limited to certain notes to the Consolidated Financial Statements and therefore is not expected to have an impact on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. Upon adoption, the impact of ASU 2023-09 will be limited to certain notes to the Consolidated Financial Statements and therefore is not expected to have an impact on the Consolidated Financial Statements.

3. GROWTH, REINVESTMENT, AND RESTRUCTURING PROGRAMS

The Company’s ~~growth, reinvestment,~~Growth, Reinvestment, and ~~restructuring~~Restructuring activities are part of an enterprise-wide transformation to build long-term sustainable growth and improve profitability for the Company. These activities are aggregated into the following categories: (1) Strategic Growth Initiatives (expected completion in 2023) – a growth and reinvestment strategy and (2) other (collectively the "Growth, Reinvestment, and Restructuring Programs").

~~Below is a description~~As part of ~~each of the~~our Growth, Reinvestment, and Restructuring ~~Programs:~~

~~(1) Strategic Growth Initiatives~~

In the first quarter of 2021, the Company began executing on its growth and reinvestment initiatives designed to invest in our commercial organization, adapt the supply chain to better support long-term growth opportunities, and further enable the Company to build greater depth in growth categories. These initiatives are intended to better position the Company to accelerate future revenue and earnings growth, and improve the execution of our strategy to be our customers' preferred manufacturing and distribution partner. This reinvestment will occur through 2023, and the cumulative costs incurred to date are $110.8 million. The Company currently expects the total costs will be up to $130.0 million, comprised of consulting and professional fees, employee-related costs, and investment in information technology. Consulting and professional fees are expected to include TreeHouse Management Operating System ("TMOS") initiatives at our manufacturing plants, building digital capabilities, and advancing automation and value engineering in our supply chain network. Employee-related costs primarily consist of severance, retention, and dedicated employee costs.

~~(2) Other~~

Other costs include restructuring costs incurred for retention, severance, organization redesign, information technology system implementation, costs to exit facilities or production, and other administrative costs. Retention includes one-time cash recognition payments that were expensed during the first quarter of 2022 as well as additional cash bonuses and stock-based compensation to drive retention through 2023.

~~The costs by activity for the Growth, Reinvestment, and Restructuring~~ Programs, ~~are outlined below:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(In millions)
Strategic Growth Initiatives $ 3.4 $ 7.8 $ 10.4 $ 24.6
Other 5.5 6.1 13.8 19.4
Total $ 8.9 $ 13.9 $ 24.2 $ 44.0

~~As part of our growth, reinvestment, and restructuring programs,~~ we generally incur expenses that qualify as exit and disposal costs under U.S. GAAP. These include severance and employee separation costs and other exit costs. Severance and employee separation costs primarily relate to cash severance, non-cash severance, including accelerated equity award compensation expense, pension, and other termination benefits. Other exit costs typically relate to lease and contract terminations. We also incur expenses that are an integral component of, and directly attributable to, our ~~growth, reinvestment,~~Growth, Reinvestment, and ~~restructuring~~Restructuring activities, which do not qualify as exit and disposal costs under U.S. GAAP. These include asset-related costs and other costs. Asset-related costs primarily relate to accelerated depreciation and certain long-lived asset impairments. Other costs primarily relate to start-up costs of new facilities, consulting and professional fees, retention costs, organizational redesign, information technology system implementation, asset relocation costs, and costs to exit ~~facilities.~~facilities or production.

Strategic Growth Initiatives

The Company began executing on its Strategic Growth Initiatives in 2021 and completed the program in 2023. These initiatives were designed to invest in our commercial organization, adapt the supply chain to better support long-term growth opportunities, and further enable the Company to build greater depth in growth categories. The total costs within this program were $115.5 million, comprised of consulting and professional fees, employee-related costs, and investment in information technology. The costs incurred for the three months ended March 31, 2023 were $7.0 million.

Facility Closures

During the fourth quarter of 2023, the Company completed the closure of its Dallas, Texas Coffee facility in connection with the integration of the Coffee Roasting Capability and is transitioning production from Dallas to its Northlake, Texas facility in 2024. Additionally, during the first quarter of 2024, the Company announced the closure of its Sioux Falls, South Dakota facility in connection with the integration of the Seasoned Pretzel Capability and is transitioning production from Sioux Falls to its Hanover, Pennsylvania facility in 2024. The Company expects the total costs related to these facility closures to be approximately $15.0 million, and the cumulative costs incurred to date are $6.9 million. The costs incurred for the three months ended March 31, 2024 were $1.9 million.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a summary of costs by type associated with the Growth, Reinvestment, and Restructuring Programs:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)								(In millions)

Employee-related	Employee-related	$	3.4	$	3.5	$	7.7	$	19.3
Employee-related
Employee-related
Other costs
Other costs
Other costs	Other costs	5.5		10.4		16.5		24.7
Total	Total	$	8.9	$	13.9	$	24.2	$	44.0
Total
Total

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ employee-related costs primarily consisted of retention ~~severance,~~ and ~~dedicated project employee cost;~~severance; and other costs primarily consisted of consulting ~~services.~~services and third party costs related to facility plant closures. Employee-related and other costs are recognized in Other operating ~~(income)~~ expense, net of the Condensed Consolidated Statements of Operations.

The table below presents the exit cost liabilities related to severance ~~and retention~~ activity for the Growth, Reinvestment, and Restructuring Programs as of ~~June 30, 2023:~~March 31, 2024:

Severance Retention Total Exit Cost Liabilities
(In millions)
Balance as of December 31, 2022 $ 8.8 $ 4.2 $ 13.0
Expenses recognized 0.3 2.3 2.6
Cash payments (5.0) (6.2) (11.2)
Balance as of June 30, 2023 $ 4.1 $ 0.3 $ 4.4


	Severance
	(In millions)
Balance as of December 31, 2023	$	5.4
Expenses recognized	0.9
Cash payments	(3.0)


Balance as of March 31, 2024	$	3.3

The severance ~~and retention~~ liabilities are included in Accrued expenses in the Condensed Consolidated Balance Sheets.

3.4. RECEIVABLES SALES PROGRAM

The Company has entered into agreements to sell certain trade accounts receivable to unrelated, third-party financial institutions at a discount (collectively, ~~"the Receivables~~the "Receivables Sales Program"). The agreements can be terminated by either party with 60 days' notice. The Receivables Sales Program is used by the Company to manage liquidity in a cost-effective manner. The Company has noan insignificant retained interest in the receivables sold under the Receivables Sales Program; however, under the agreements, the Company does have collection and administrative responsibilities for the sold receivables. Under the Receivables Sales Program, the maximum amount of outstanding accounts receivables sold at any time is $500.0 million.

The following table includes the outstanding amount of accounts receivable sold under the Receivables Sales Program and the receivables collected from customers and not remitted to the financial ~~institutions.~~institutions:

June 30, 2023

December 31, 2022

March 31, 2024

December 31, 2023

(In millions)

Outstanding accounts receivable sold

305.4

347.1

Receivables collected and not remitted to financial institutions

176.9

204.5

Receivables sold under the Receivables Sales Program are derecognized from the Company's Condensed Consolidated Balance Sheet at the time of the sale and the proceeds from such sales are reflected as a component of the change in receivables in the operating activities section of the Condensed Consolidated Statements of Cash Flows. The receivables collected and not remitted to financial institutions are included in Accounts payable in the Condensed Consolidated Balance Sheets.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the cash flows of the Company's accounts ~~receivables~~receivable associated with the Receivables Sales ~~Program. All amounts in the table below include continuing and discontinued operations:~~Program:


			Six Months Ended June 30,
			2023		2022
		Three Months Ended March 31,							Three Months Ended March 31,
		2024						2024		2023
			(In millions)				(In millions)
Receivables sold	Receivables sold		$	923.0	$	1,105.5
Receivables collected and remitted to financial institutions	Receivables collected and remitted to financial institutions		(964.7)		(1,036.5)

The loss on sale of receivables represents the discount taken by third-party financial institutions and was $2.0 million and $3.3 million ~~and $0.9 million~~ for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and $6.6 million and $1.3 million for the six months ended June 30, 2023 and 2022,~~ respectively, and is included in Other (income) expense, net in the Condensed Consolidated Statements of Operations. The Company has not recognized any servicing assets or liabilities as of ~~June 30, 2023~~March 31, 2024 or December 31, ~~2022,~~2023, as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

4.5. INVENTORIES


			June 30, 2023		December 31, 2022
		March 31, 2024						March 31, 2024	December 31, 2023
			(In millions)				(In millions)
Raw materials and supplies	Raw materials and supplies		$	275.0	$	232.0
Finished goods	Finished goods		398.4		357.5

Total inventories	Total inventories		$	673.4	$	589.5
Total inventories
Total inventories

5.6. ACQUISITIONS AND ~~DIVESTITURE~~DIVESTITURES

Acquisitions

Acquisition of Pickle Branded Assets

On January 2, 2024, the Company completed the acquisition of pickle branded assets, including Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands (the "Pickle Branded Assets"), from The J.M. Smucker Co., a North American producer of coffee, consumer foods, dog snacks, and cat food. The acquisition is consistent with our strategy and builds depth in our Pickles category by expanding into Canada. The purchase consideration consisted of approximately $20.0 million in cash transferred at close, and subsequent to March 31, 2024, the Company transferred an additional $5.9 million as a purchase price adjustment resulting in a final total purchase price of $25.9 million. The purchase of the Pickle Branded Assets was accounted for as an Asset Acquisition.

The following table summarizes the purchase price allocation of the fair value of net tangible and intangible assets acquired:


	(In millions)
Cash transferred at close	$	20.0
Purchase price adjustment	5.9
Total consideration transferred	$	25.9

Allocation of consideration to assets acquired:
Inventories	$	25.2

Trademarks	0.7






Total purchase price	$	25.9

Intangible assets acquired included trademarks with an estimated life of 10 years.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisition of Coffee Roasting Capability

On June 30, 2023, the Company completed the acquisition of the Direct Ship coffee business and its Northlake, Texas coffee facility (the "Coffee Roasting Capability") from Farmer Brothers Company, a national coffee roaster, wholesaler, equipment servicer and distributor of coffee, tea, and culinary products. The acquisition brings roasting, grinding, flavoring and blending capabilities to the Company's portfolio to complement the Company's existing single-serve pod and ready-to-drink coffee businesses. The purchase consideration consisted of approximately ~~$92.2~~$90.6 million in ~~cash, subject to customary purchase price adjustments.~~cash. The acquisition was funded by borrowings from the Company’s $500.0 million Revolving Credit Facility.

The Coffee Roasting Capability was accounted for under the acquisition method of accounting. The Company incurred approximately $2.1 million in acquisition-related costs during the three and six months ended June 30, 2023. These costs are included in General and administrative expense in the Condensed Consolidated Statements of Operations.

The following table summarizes the preliminary purchase price allocation of the fair value of net tangible assets acquired:


	(In millions)
Cash transferred at close	$	92.2
Purchase price adjustment	(1.6)
Total consideration transferred	$	90.6

Allocation of consideration to assets acquired:
Inventories	$	~~31.5~~29.8
Property, plant, and equipment, net	~~60.7~~60.8







Total purchase price	$	~~92.2~~90.6

Real property and personal property fair values were determined using the cost and market approaches. The purchase price allocation in the table above is preliminary and subject to the finalization of the Company’s valuation analysis.

Acquisition of Seasoned Pretzel Capability

On April 1, 2023, the Company completed the acquisition of a seasoned pretzel capability for a total purchase price of $14.0 million, which included the recognition of $5.4 million within Goodwill in the Condensed Consolidated Balance Sheets based on the preliminary purchase price allocation. The purchase price consisted of approximately $10.0 million in cash and a deferred payment of $4.0 million due in the third quarter of 2024. The deferred payment is recognized within ~~Other long-term liabilities~~Accrued expenses in the Condensed Consolidated Balance Sheets as of ~~June 30, 2023.~~March 31, 2024. The acquisition is in line with our strategy to build category leadership, depth and capabilities to drive profitable growth.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Discontinued Operations

~~Discontinued Operations~~Sale of the Snack Bars Business

On September 29, 2023, the Company completed the sale of its Snack Bars business (the "Snack Bars Transaction" or the "Snack Bars Business") to John B. Sanfilippo & Son, Inc. for approximately $58.7 million in cash. The Snack Bars Business consists of manufacturing, packaging, and selling snack bars and operated in the Lakeville, Minnesota plant. The Snack Bars Transaction further advances the Company's enterprise-wide transformation to simplify its business and build depth around a focused group of high-growth categories.

The Company entered into a Transition Services Agreement ("TSA") with John B. Sanfilippo & Son, Inc., which is designed to ensure and facilitate an orderly transfer of business operations. The TSA ended in the first quarter of 2024. TSA income is recognized as services are performed, and the income received under the TSA was $0.1 million for the three months ended March 31, 2024. The TSA income is classified within Other operating expense, net in the Company's Condensed Consolidated Statements of Operations.

Sale of a Significant Portion of the Meal Preparation Business

On October 3, 2022, the Company completed the sale of a significant portion of the Company’s Meal Preparation business (the ~~"Business"~~"Meal Preparation Business") to two entities affiliated with Investindustrial: Rushmore Investment III LLC, a Delaware limited liability company ("US Buyer") and 1373978 B.C., ULC, a British Columbia unlimited liability company ("CA Buyer" and together with US Buyer, the "Buyer"). The closing purchase price was $963.8 million, and during the second quarter of 2023, a $20.3 million adjustment to the purchase price was finalized, resulting in a final purchase price of $943.5 million. The final purchase price consisted of approximately $522.6 million in cash and approximately $420.9 million in a five-year secured Seller Promissory Note. ~~Refer~~During the three months ended March 31, 2023, the Company recognized $10.7 million within Interest income in the Condensed Consolidated Statements of Operations related to ~~Note 6 for additional information on~~ the ~~secured~~ Seller Promissory Note. The Seller Promissory Note was repaid on October 19, 2023, and no interest income was recognized in 2024. Additionally, the Company recognized an expected loss on disposal adjustment of $4.5 million for the three months ended March 31, 2023.

The Business consists of consumer packaged food manufacturers operating 14 manufacturing facilities in the United States, Canada, and Italy servicing primarily retail grocery customers. The Business includes 11 categories and sells center of the store grocery and main course meal items, such as pasta, pourable dressings, sauces, red sauces (salsas and pasta sauces), spoonables (mayos and dips), syrups, preserves, dry dinners (macaroni and cheese), dry blends and baking goods, and pie filling as well as pita chips.

The Company entered into a Transition Services Agreement ("TSA") with the Buyer, which is designed to ensure and facilitate an orderly transfer of business operations. ~~The~~All TSA services ~~provided under the TSA include, but~~ are ~~not limited~~expected to IT systems implementation, IT and financial shared services, procurement and order processing, customer service, distribution network separation, and a supply agreement. These services terminate at various times up to twenty-four months from the date of sale and certain services can be renewed with a maximum of an additional twelve-month period. Additionally, a $35.0 million credit was provided to the Buyer by TreeHouse to cover initial TSA set-up costs that otherwise would have been incurredexited by the ~~Buyer ("TSA Credit"). The TSA Credit is included in~~end of the ~~fair value~~second quarter of ~~consideration transferred, and it represents deferred income for TreeHouse until the Company incurs the related TSA costs, at which point deferred income is reduced and TSA income recognized.~~2024. TSA income is recognized as services are performed, and the income received under the TSA was ~~$11.9~~$0.4 million and $13.4 million for the three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and $25.3 million for the six months ended June 30, 2023.~~respectively. The TSA income is classified within Other operating ~~(income)~~ expense, net in the Company's Condensed Consolidated Statements of Operations. ~~As of June 30, 2023, the deferred income balance on the TSA Credit was fully utilized with no balance remaining.~~

The Company has reflected ~~this transaction~~both of these transactions as a discontinued ~~operation.~~operations. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company's continuing operations.

Results of discontinued operations are as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(In millions) (In millions)
Net sales $ — $ 387.1 $ — $ 755.2
Cost of sales — 335.9 — 648.0
Selling, general, administrative and other operating expenses — 40.8 — 75.1
Amortization expense — 6.2 — 12.5
(Gain) loss on sale of business (1.0) — 3.5 —
Operating income (loss) from discontinued operations 1.0 4.2 (3.5) 19.6
Interest and other expense (income) — 5.8 (1.1) 6.9
Income tax (benefit) expense (0.6) 0.5 — 4.0
Net income (loss) from discontinued operations $ 1.6 $ (2.1) $ (2.4) $ 8.7

~~6. NOTE RECEIVABLE~~

On October 3, 2022, the Company entered into a five-year secured Seller Promissory Note ("Seller Note Credit Agreement") which matures on October 1, 2027. The Seller Note Credit Agreement sets forth the terms of the Seller Promissory Note and the loan evidenced thereby (the "Seller Loan"). The Seller Loan bears interest at a rate per annum equal to 10% for the first two years thereof, 11% for the third year thereof, 12% for the fourth year thereof, and 13% thereafter, payable quarterly in arrears. For the first year of the Seller Loan, a portion of the interest, of up to 1% per annum, may be paid in kind; all other interest for the first year, and all interest thereafter, will be paid in cash. Starting on March 31, 2025, the Loan Parties shall commence repayment of the principal amount of the Seller Loan on a quarterly basis at 0.25% of the principal adjusted for prepayments. During the second quarter of 2023, the Company entered into Amendment No. 1 to the Seller Note Credit Agreement and amended the collateral requirements under the Canadian Collateral Agreement.

The Seller Loan has a balance of $424.1 million and $427.0 million as of June 30, 2023 and December 31, 2022, respectively, included within Note receivable, net in the Condensed Consolidated Balance Sheets. During the three and six months ended June 30, 2023, the Company recognized $10.7 million and $21.4 million, respectively, within Interest income in the Condensed Consolidated Statements of Operations related to the Note Receivable. As of June 30, 2023, the Company has not recorded an allowance for credit losses on uncollectible amounts related to the Note Receivable.


	Three Months Ended March 31,
	2023
	(In millions)
Net sales	$	40.8
Cost of sales	42.1
Selling, general, administrative and other operating expenses	0.3



Loss on sale of business	4.5

Operating loss from discontinued operations	(6.1)
Interest and other income	(1.1)

Income tax expense	0.2
Net loss from discontinued operations	$	(5.2)

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. ~~PROPERTY, PLANT, AND EQUIPMENT~~

June 30, 2023 December 31, 2022
(In millions)
Land $ 37.4 $ 28.7
Buildings and improvements 383.1 321.2
Machinery and equipment 1,057.7 1,006.8
Construction in progress 52.3 66.6
Total 1,530.5 1,423.3
Less accumulated depreciation (804.9) (756.8)
Property, plant, and equipment, net $ 725.6 $ 666.5

~~Depreciation expense was $23.4 million for both the three months ended June 30, 2023 and 2022 and $47.4 million and $48.0 million for the six months ended June 30, 2023 and 2022, respectively.~~

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill, which include no accumulated impairment losses,for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 are as follows:


	Goodwill
	(In millions)


Balance at December 31, ~~2022, before accumulated impairment losses~~2023	$	~~1,850.6~~1,824.7
~~Accumulated impairment losses~~	~~(33.0)~~
~~Balance at December 31, 2022~~	~~1,817.6~~
~~Acquisition~~	~~5.4~~
Foreign currency exchange adjustments	~~1.6~~ (1.6)
Balance at ~~June 30, 2023~~March 31, 2024	$	~~1,824.6~~1,823.1

Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 are as follows:


			June 30, 2023						December 31, 2022
			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
			(In millions)													March 31, 2024				December 31, 2023
		Gross Carrying Amount																Gross Carrying Amount	Accumulated Amortization		Net Carrying Amount	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
																	(In millions)
Intangible assets with finite lives:	Intangible assets with finite lives:														Intangible assets with finite lives:
Customer-related	Customer-related		$	549.3	$	(347.1)	$	202.2	$	542.9	$	(329.5)	$	213.4

Trademarks
Trademarks
Trademarks	Trademarks		18.7		(15.3)		3.4		18.7		(14.6)		4.1
Formulas/recipes	Formulas/recipes		15.5		(14.8)		0.7		15.1		(14.7)		0.4
Computer software	Computer software		207.0		(139.8)		67.2		205.6		(133.5)		72.1
Total finite lived intangibles	Total finite lived intangibles		790.5		(517.0)		273.5		782.3		(492.3)		290.0

Intangible assets with indefinite lives:	Intangible assets with indefinite lives:
Intangible assets with indefinite lives:
Intangible assets with indefinite lives:
Trademarks
Trademarks
Trademarks	Trademarks		6.0		—		6.0		6.0		—		6.0
Total intangible assets	Total intangible assets		$	796.5	$	(517.0)	$	279.5	$	788.3	$	(492.3)	$	296.0

9.8. INCOME TAXES

Income taxes were recognized at effective rates of ~~29.1% and 27.9%~~23.5% for the three ~~and six~~ months ended ~~June 30, 2023, respectively,~~March 31, 2024, compared to ~~14.2%~~26.4% for ~~both~~ the three ~~and six~~ months ended ~~June 30, 2022.~~March 31, 2023. The change in the Company's effective tax rate for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 compared to ~~2022~~2023 is primarily driven by changes in the ~~estimated~~ amount of ~~annual pre-tax earnings.~~non-deductible executive compensation and the tax effect of cross-border tax laws. Our effective tax rate may change from period to period based on recurring and non-recurring factors, including the jurisdictional mix of earnings, enacted tax legislation, state income taxes, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits.

Management estimates that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by as much as ~~$0.3~~$1.0 million within the next 12 months, primarily as a result of the ~~resolution of audits currently in progress and the~~ lapsing of statutes of limitations. Approximately all of the ~~$0.3~~$1.0 million could affect net income when settled. The timing of cash settlement, if any, cannot be reasonably estimated for uncertain tax benefits.

TREEHOUSE FOODS, INC.

~~10.~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. LONG-TERM DEBT

June 30, 2023 December 31, 2022
(In millions)
Revolving Credit Facility $ 199.5 $ —
Term Loan A 316.4 316.4
Term Loan A-1 588.6 588.6
2028 Notes 500.0 500.0
Finance leases 0.9 1.2
Total outstanding debt 1,605.4 1,406.2
Deferred financing costs (10.4) (11.6)
Less current portion (0.5) (0.6)
Total long-term debt $ 1,594.5 $ 1,394.0

~~Credit Agreement~~

On February 17, 2023, the Company entered into Amendment No. 6 to the Credit Agreement. Amendment No. 6 implemented the replacement provisions for LIBOR with rates based on Term SOFR, plus a credit spread adjustment of 0.10%. The material terms and conditions under the Credit Agreement are otherwise substantially consistent with those contained in the Credit Agreement prior to Amendment No. 6.


	March 31, 2024		December 31, 2023
	(In millions)

Term Loan A	$	316.4	$	316.4
Term Loan A-1	588.6		588.6


2028 Notes	500.0		500.0
Finance leases	0.4		0.6
Total outstanding debt	1,405.4		1,405.6
Deferred financing costs	(8.6)		(9.2)
Less current portion	(0.3)		(0.4)
Total long-term debt	$	1,396.5	$	1,396.0

Revolving Credit Facility — As of ~~June 30, 2023,~~March 31, 2024, the ~~Company had $199.5 million drawn from its $500.0 million Revolving Credit Facility. The~~ Company had remaining availability of ~~$267.5~~$471.0 million under ~~the~~its $500 million Revolving Credit Facility, and there were ~~$33.0~~$29.0 million in letters of credit under the Revolving Credit Facility that were issued but undrawn, which have been included as a reduction to the calculation of available credit.

~~Interest is payable quarterly or, if earlier, at~~ Under the ~~end of the applicable interest period in arrears on any outstanding borrowings under the Revolving~~ Credit ~~Facility. The interest rates applicable to~~Agreement, the Revolving Credit Facility are based upon the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and are determined by either (i) Term SOFR, plus a margin ranging from 1.20% to 1.70%, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.20% to 0.70%. The unused feematures on the Revolving Credit Facility is also based on the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and accrues at a rate ranging from 0.20% to 0.35%.

~~Term Loan A~~ ~~— On December 1, 2017, the Company entered into a $500 million term loan and amended the loan to extend the maturity date to~~ March 26, 2028. The interest rates applicable to Term Loan A are based upon the Company’s consolidated net leverage ratio or the Company’s Corporate Credit Rating, whichever results in lower pricing, and are determined by either (i) Term SOFR, plus a margin ranging from 1.675% to 2.175%, or (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.675% to 1.175%. As a result of the principal prepayment of $174.8 million on Term Loan A in October 2022, principal amortization payments are no longer due on a quarterly basis, and the remaining principal balance is due at maturity. Interest is payable quarterly or, if earlier, at the end of the applicable interest period in arrears on any outstanding borrowings under Term Loan A.

~~Term Loan A-1~~ ~~— On December 1, 2017, the Company entered into a term loan and amended the loan amount to $930 million and extended the maturity date to March 26,~~ 2026. The interest rates applicable to Term Loan A-1 are the same as those applicable to the Revolving Credit Facility (other than, for the avoidance of doubt, the unused fee). As a result of the principal prepayment of $325.2 million on Term Loan A-1 in October 2022, principal amortization payments are no longer due on a quarterly basis, and the remaining principal balance is due at maturity. Interest is payable quarterly or, if earlier, at the end of the applicable interest period in arrears on any outstanding borrowing under Term Loan A-1.

~~2028 Notes~~ — On September 9, 2020, the Company completed its public offering of $500 million aggregate principal amount of the 2028 Notes. The 2028 Notes pay interest at the rate of 4.000% per annum and mature on September 1, 2028. Interest is payable on the 2028 Notes on March 1 and September 1 of each year. The payments began on March 1, 2021.

Fair Value — At ~~June 30,~~March 31, 2024, the aggregate fair value of the Company's total debt was $1,353.9 million and its carrying value was $1,405.0 million. At December 31, 2023, the aggregate fair value of the Company's total debt was ~~$1,539.3 million and its carrying value was $1,604.5 million. At December 31, 2022, the aggregate fair value of the Company's total debt was $1,335.8~~$1,350.5 million and its carrying value was $1,405.0 million. The fair values of ~~Revolving Credit Facility,~~ Term Loan A and Term Loan A-1 were estimated using present value techniques and market-based interest rates and credit spreads. The fair value of the Company's 2028 Notes was estimated based on quoted market prices for similar instruments due to their infrequent trading volume. Accordingly, the fair value of the Company's debt is classified as Level 2 within the valuation hierarchy.

10. STOCKHOLDERS' EQUITY

Share Repurchase Authorization — On November 2, 2017, the Company announced that the Board of Directors adopted a stock repurchase program. The stock repurchase program authorizes the Company to repurchase up to $400 million of the Company's common stock at any time, or from time to time. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The size and timing of any repurchases will depend on price, market and business conditions, and other factors. The Company has the ability to make discretionary repurchases up to an annual cap of $150 million under the $400 million total authorization of which $122.8 million remained available under the stock repurchase program as of March 31, 2024. The stock repurchase program does not have an expiration date. Any shares repurchased will be held as treasury stock.

During the three months ended March 31, 2024, the Company repurchased approximately 1.2 million shares of common stock at a weighted average share price of $36.61 for a total of $43.9 million. There were no shares repurchased during the three months ended March 31, 2023. Subsequent to March 31, 2024, the Company repurchased approximately 0.6 million shares of common stock at a weighted average share price of $36.95 for a total of $20.6 million.

The Company accrued approximately $0.4 million of excise tax in connection with the share repurchases it completed during the quarter ended March 31, 2024, which was recorded as an adjustment to the cost basis of repurchased shares in treasury stock and within Accrued expenses on the Company’s Condensed Consolidated Balance Sheets as of March 31, 2024.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. EARNINGS PER SHARE

The following table summarizes the effect of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings (loss) per share:


		Three Months Ended June 30,		Six Months Ended June 30,
		2023	2022	2023	2022
		(In millions)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		(In millions)
		(In millions)
		(In millions)

Weighted average common shares outstanding	Weighted average common shares outstanding	56.4	56.0	56.3	55.9

Weighted average common shares outstanding

Weighted average common shares outstanding
Assumed exercise/vesting of equity awards (1)	Assumed exercise/vesting of equity awards (1)	0.4	—	0.5	—
Assumed exercise/vesting of equity awards (1)
Assumed exercise/vesting of equity awards (1)
Weighted average diluted common shares outstanding
Weighted average diluted common shares outstanding
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	56.8	56.0	56.8	55.9

(1)For the three ~~and six~~ months ended ~~June 30, 2022,~~March 31, 2024, the weighted average common shares outstanding is the same for the computations of both basic and diluted shares outstanding because the Company had a net loss from continuing operations for the period. Equity awards, excluded from our computation of diluted earnings per share because they were anti-dilutive, were 0.6 million and 1.2 million for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 1.8 million and 1.4 million for three and six months ended June 30, 2022,~~ respectively.

12. STOCK-BASED COMPENSATION

The Board of Directors adopted, and the Company's stockholders approved, the "TreeHouse Foods, Inc. Equity and Incentive Plan" (the "Plan"). Under the Plan, the Compensation Committee may grant awards of various types of compensation, including stock options, restricted stock, restricted stock units, performance shares, performance units, other types of stock-based awards, and other cash-based compensation. ~~On April 27, 2023, the Plan was amended and restated to increase the number of shares available for issuance under the Plan by 5.0 million shares.~~ The maximum number of shares authorized to be awarded under the Plan is approximately 22.5 million as of ~~June 30, 2023.~~March 31, 2024.

Total compensation expense related to stock-based payments and the related income tax benefit recognized in Net (loss) income ~~(loss)~~ from continuing operations are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		(In millions)
		(In millions)
		(In millions)
Compensation expense related to stock-based payments
Compensation expense related to stock-based payments
Compensation expense related to stock-based payments	Compensation expense related to stock-based payments	$	5.9	$	5.3	$	13.1	$	9.1
Related income tax benefit	Related income tax benefit	0.8		1.2		1.7		2.1
Related income tax benefit
Related income tax benefit

All amounts below include continuing and discontinued operations.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options — Stock options granted under the Plan during 2022 have a three year vesting schedule, vest one-third on the second anniversary of the grant date and two-thirds on the third anniversary of the grant date, and expire ten years from the grant date. Stock options are generally only granted to employees and non-employee directors.

The following table summarizes stock option activity during ~~2023:~~2024:

Employee
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term (yrs.) Aggregate
Intrinsic
Value
(In thousands) (In millions)
Outstanding, at December 31, 2022 1,258 $ 72.09 3.5 $ 2.1
Expired (215) 71.92
Outstanding, at June 30, 2023 1,043 72.13 3.5 2.4
Vested/expected to vest, at June 30, 2023 1,001 73.35 3.3 2.1
Exercisable, at June 30, 2023 727 84.90 1.2 —


	Employee Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs.)	Aggregate Intrinsic Value
	(In thousands)				(In millions)
Outstanding, at December 31, 2023	578	$	64.20	5.1	$	—



Expired	(2)	80.42
Outstanding, at March 31, 2024	576	64.16		4.9	—
Vested/expected to vest, at March 31, 2024	557	64.89		4.7	—
Exercisable, at March 31, 2024	287	85.85		1.6	—

Unrecognized compensation costs related to nonvested options totaled ~~$3.1~~$1.7 million at ~~June 30, 2023~~March 31, 2024 and are expected to be recognized over a weighted average period of ~~1.9~~1.1 years.

Restricted Stock Units — Employee restricted stock unit awards generally vest based on the passage of time in approximately three equal installments on each of the first three anniversaries of the grant ~~date with the following exceptions:~~

•~~On June 9, 2022, restricted stock unit awards were granted that vest on the passage of time on the eighteen month anniversary of the grant~~ date. ~~The fair value of the awards was $37.90 on approximately 62,000 units granted.~~

•On December 29, 2021, restricted stock unit awards granted to certain executive members of management that vest on the passage of time in approximately three equal installments on each of the three six month anniversaries of the grant date. The fair value of the awards was $40.03 on approximately 51,200 units granted.

Non-employee director restricted stock units generally vest on the first anniversary of the grant date. Certain non-employee directors have elected to defer receipt of their awards until either their departure from the Board of Directors or a specified date beyond the first anniversary of the grant date.

The following table summarizes the restricted stock unit activity during the ~~six~~three months ended ~~June 30, 2023:~~March 31, 2024:


		Employee Restricted Stock Units								Employee Restricted Stock Units	Weighted Average Grant Date Fair Value		Director Restricted Stock Units	Weighted Average Grant Date Fair Value
			Employee Restricted Stock Units	Weighted Average Grant Date Fair Value		Director Restricted Stock Units	Weighted Average Grant Date Fair Value		(In thousands)			(In thousands)
			(In thousands)			(In thousands)
Nonvested, at December 31, 2022			632	$	37.08	71	$	35.88
Nonvested, at December 31, 2023
Granted	Granted		323	47.44		22	52.81
Vested	Vested		(240)	39.11		(45)	31.25
Forfeited	Forfeited		(40)	38.25		—	—
Nonvested, at June 30, 2023			675	41.24		48	48.15
Vested and deferred, at June 30, 2023						26	44.01
Nonvested, at March 31, 2024
Earned and deferred, at March 31, 2024








		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)

Fair value of vested restricted stock units	Fair value of vested restricted stock units	$	3.2	$	1.7	$	14.3	$	9.3

Fair value of vested restricted stock units

Fair value of vested restricted stock units
Tax benefit recognized from vested restricted stock units	Tax benefit recognized from vested restricted stock units	0.7		0.3		2.3		1.5
Tax benefit recognized from vested restricted stock units
Tax benefit recognized from vested restricted stock units

Unrecognized compensation costs related to nonvested restricted stock units are approximately ~~$23.9~~$29.2 million as of ~~June 30, 2023~~March 31, 2024 and will be recognized over a weighted average period of ~~2.0~~2.3 years. The grant date fair value of the awards is equal to the Company's closing stock price on the grant date.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Performance Units — Performance unit awards are granted to certain members of management. These awards contain both service and performance conditions, and for certain executive members of management, a market condition, in each case as described below.

•~~Performance~~For performance unit awards granted in 2021 through 2023, performance goals are set and measured annually with one-quarter of the units eligible to accrue for each year in the three-year performance period. Accrued shares are earned at the end of each performance period but remain subject to forfeiture until the third anniversary of the grant date. Additionally, for the cumulative three-year performance period, one-quarter of the units will accrue. For both the annual and cumulative shares, the earned shares are equal to the number of units granted multiplied by a predefined percentage generally between 0% and 200%, depending on the achievement of certain operating performance measures.

•For performance unit awards granted in 2024, performance goals were established upfront and will be measured over a cumulative three-year performance period. The units will accrue each month, multiplied by a predefined percentage between 0% and 200%, depending on the achievement of certain operating performance measures. Accrued shares are not earned until the end of the full three-year performance period and remain subject to forfeiture until the third anniversary of the grant date.

•For performance unit awards granted in 2021 through ~~2023,~~2024, certain executive members of management received awards that were measured using a relative total shareholder return ("TSR") market condition over a three-year performance goal. The units will accrue, multiplied by a predefined percentage between 0% and 150% for years 2021 through 2023 and between 0% and 200% for 2024, for the relative TSR measure, depending on the achievement attainment over the three-year performance period based on the Company's absolute annualized TSR relative to the annualized TSR of a Peer Group. The fair value of the portion of the awards based on relative TSR was valued using a Monte Carlo simulation model with a grant-date fair value of ~~$50.43~~$37.56 on approximately ~~22,000~~35,800 units granted in ~~2023 and a grant-date fair value of $26.84 on approximately 52,600 units granted in 2022.~~2024.

•During the second quarter of 2022, the Company made grants to certain of the Company’s named executive officers and certain other executive officers of performance-based restricted stock units (the "PBRSU Awards"). The PBRSU Awards include a relative TSR market condition over a two-year performance period beginning on the date of grant. The units will accrue, multiplied by a predefined percentage between 0% to 450% for the relative TSR measure, depending on the achievement attainment over the two-year performance period based on Company’s absolute annualized TSR relative to the annualized TSR of the S&P Food & Beverage Select Industry Index (the "Index"). The fair value of the awards was valued using a Monte Carlo simulation model with a weighted average grant-date fair value of $58.36 on approximately 239,300 units granted in 2022.

These awards will be converted to stock or cash, at the discretion of the Compensation Committee, generally, on the third anniversary of the grant date with the exception of the PBRSU Awards on the second anniversary. The Company intends to settle these awards in stock and has the shares available to do so.

Performance unit awards with market conditions are valued using a Monte Carlo simulation model. Expected volatility is based on the historical volatility of the Company’s stock price, average Peer Group stock price, or the total return value of the Index. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant with a term equivalent to the expected term of the award. The expected term is the time period from the grant date to the end of the performance period. The weighted average assumptions used in the Monte Carlo simulations were as follows:

~~Six~~Three Months Ended
~~June 30,~~March 31,

~~2023~~2024

Dividend yield

Risk-free rate

~~3.87~~4.50

Expected volatility (TreeHouse Foods, Inc.)

~~35.17~~34.34

Expected volatility (Peer Group)

~~35.04~~33.56

~~Expected volatility (Index)~~

~~N/A~~

Expected term (in years)

~~2.80~~2.79

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the performance unit activity during the ~~six~~three months ended ~~June 30, 2023:~~ March 31, 2024:

Performance
Units

Weighted
Average
Grant Date
Fair Value

Performance
Units

Weighted
Average
Grant Date
Fair Value

(In thousands)

Nonvested, at December 31, 2022

620

45.23

Nonvested, at December 31, 2023

Granted

47.73

Vested

(98)

42.73

Forfeited

(72)

42.10

Nonvested, at June 30, 2023

549

47.42

Nonvested, at March 31, 2024








		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)

Fair value of vested performance units	Fair value of vested performance units	$	1.3	$	—	$	5.0	$	2.0

Fair value of vested performance units

Fair value of vested performance units
Tax benefit recognized from performance units vested	Tax benefit recognized from performance units vested	—		—		0.4		0.2
Tax benefit recognized from performance units vested
Tax benefit recognized from performance units vested

Unrecognized compensation costs related to nonvested performance units are estimated to be approximately ~~$11.6~~$10.0 million as of ~~June 30, 2023~~March 31, 2024 and are expected to be recognized over a weighted average period of ~~1.4~~1.3 years. The fair value of the portion of the awards ~~earned~~granted based on market conditions were valued using a Monte Carlo simulation model. For other awards, the grant date fair value is equal to the Company's closing stock price on the date of grant.

13. ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss consists of the following components, all of which are net of tax:

Foreign
Currency
Translation (1) Unrecognized
Pension and
Postretirement
Benefits (1) Accumulated
Other
Comprehensive
Loss
(In millions)
Balance at December 31, 2021 $ (70.9) $ 17.3 $ (53.6)
Other comprehensive loss before reclassifications (6.3) — (6.3)
Reclassifications from accumulated other comprehensive loss (2) — 0.1 0.1
Other comprehensive (loss) income (6.3) 0.1 (6.2)
Balance at June 30, 2022 $ (77.2) $ 17.4 $ (59.8)
Balance at December 31, 2022 $ (87.0) $ 3.3 $ (83.7)
Other comprehensive income before reclassifications 2.2 — 2.2
Reclassifications from accumulated other comprehensive loss (2) — 0.1 0.1
Other comprehensive income 2.2 0.1 2.3
Balance at June 30, 2023 $ (84.8) $ 3.4 $ (81.4)


	Foreign Currency Translation (1)		Unrecognized Pension and Postretirement Benefits (1)		Accumulated Other Comprehensive Loss
	(In millions)
Balance at December 31, 2022	$	(87.0)	$	3.3	$	(83.7)


Other comprehensive income	0.3		—		0.3
Balance at March 31, 2023	$	(86.7)	$	3.3	$	(83.4)

Balance at December 31, 2023	$	(84.2)	$	8.1	$	(76.1)


Other comprehensive loss	(2.6)		—		(2.6)
Balance at March 31, 2024	$	(86.8)	$	8.1	$	(78.7)

(1)The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three ~~and six~~ months ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~

~~(2)Refer to Note 14 for additional information regarding these reclassifications.~~2023.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14. EMPLOYEE RETIREMENT AND POSTRETIREMENT BENEFITS

Pension, Profit Sharing, and Postretirement Benefits — Certain employees and retirees participate in pension and other postretirement benefit plans. Employee benefit plan obligations and expenses included in the Condensed Consolidated Financial Statements are determined based on plan assumptions, employee demographic data, including years of service and compensation, benefits and claims paid, and employer contributions. The information below includes the activities of the Company's continuing and discontinued operations.

Components of net periodic pension ~~benefit~~cost are as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,



		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
Service cost	Service cost	$	0.1	$	0.2	$	0.2	$	0.3
Service cost
Service cost
Interest cost
Interest cost
Interest cost	Interest cost	3.1		2.3		6.3		4.6
Expected return on plan assets	Expected return on plan assets	(3.5)		(3.8)		(6.9)		(7.6)
Expected return on plan assets
Expected return on plan assets

Amortization of unrecognized prior service cost		0.1		—		0.1		—

Amortization of unrecognized net loss	Amortization of unrecognized net loss	0.1		—		0.2		0.1
Net periodic pension benefit		$	(0.1)	$	(1.3)	$	(0.1)	$	(2.6)

Amortization of unrecognized net loss

Amortization of unrecognized net loss
Net periodic pension cost
Net periodic pension cost
Net periodic pension cost

Components of net periodic postretirement cost are as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,



		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
Interest cost	Interest cost	$	0.2	$	0.1	$	0.4	$	0.3
Interest cost
Interest cost
Amortization of unrecognized net gain
Amortization of unrecognized net gain
Amortization of unrecognized net gain	Amortization of unrecognized net gain	(0.1)		—		(0.2)		—
Net periodic postretirement cost	Net periodic postretirement cost	$	0.1	$	0.1	$	0.2	$	0.3
Net periodic postretirement cost
Net periodic postretirement cost

The service cost components of net periodic pension and postretirement costs were recognized in Cost of sales and the other components were recognized in Other (income) expense, net of the Condensed Consolidated Statements of Operations.

15. OTHER OPERATING ~~(INCOME)~~ EXPENSE, NET

The Company incurred other operating expense, net, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022,~~ which consisted of the following:


		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
		2024
		2024
		2024
		(In millions)
		(In millions)
		(In millions)
Growth, reinvestment, and restructuring programs (1)	Growth, reinvestment, and restructuring programs (1)	$	8.9	$	13.9	$	24.2	$	44.0
Growth, reinvestment, and restructuring programs (1)
Growth, reinvestment, and restructuring programs (1)
TSA income (2)
TSA income (2)
TSA income (2)	TSA income (2)	(11.9)		—		(25.3)		—

Other	Other	0.2		—		0.9		(1.0)
Other operating (income) expense, net		$	(2.8)	$	13.9	$	(0.2)	$	43.0

Other

Other
Other operating expense, net
Other operating expense, net
Other operating expense, net

(1) Refer to Note 23 for more information.

(2) Refer to Note 56 for more information.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16. COMMITMENTS AND CONTINGENCIES

Shareholder Class Action and Related Derivative Actions

The Company, as nominal defendant, and certain of its directors, officers and former directors and officers are parties to the following ~~four~~ shareholder derivative ~~suits, each of which involves substantially similar claims and allegations:~~suits:

(i)Wells v. Reed, et al., Case No. 2016-CH-16359 (filed Dec. 22, 2016 in the Circuit Court of Cook County, Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment and corporate waste; and

(ii)~~Lavin v. Reed, et al.~~, Case No. 17-cv-01014 (filed Feb. 7, 2017 in the United States District Court for the Northern District of Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste;

~~(iii)Bartelt v. Reed, et al.~~, Case No. 1:19-cv-00835 (filed Feb. 8, 2019 in the United States District Court for the Northern District of Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste, as well as violations of Section 14 of the Securities Exchange Act of 1934; and

~~(iv)~~City of Ann Arbor Employees' Retirement System v. Reed, et al., Case No. 2019-CH-06753 (filed June 3, 2019 in the Circuit Court of Cook County, Illinois), asserting claims breach of fiduciary duty, aiding and abetting breaches of fiduciary duty and contribution and indemnification from the individual defendants for losses incurred by the Company.

Essentially, ~~all four~~each of the complaints allege that TreeHouse, under the authority and control of the individual defendants: (i) made certain false and misleading statements regarding the Company's business, operations, and future prospects; and (ii) failed to disclose that (a) the Company's private label business was underperforming; (b) the Company's Flagstone Foods business was underperforming; (c) the Company's acquisition strategy was underperforming; (d) the Company had overstated its full-year 2016 guidance; and (e) TreeHouse's statements lacked reasonable basis. The complaints allege, among other things, that these actions artificially inflated the market price of TreeHouse common stock and resulted in harm to the Company, including the filing of the MPERS class action (see below). ~~The~~ ~~Bartelt~~ ~~action also includes substantially similar allegations concerning events in 2017.~~

Each of these cases involves allegations similar to those in an earlier-filed, resolved federal securities class action, Public Employees' Retirement Systems of Mississippi v. TreeHouse Foods, Inc., et al., Case No. 1:16-cv-10632 ("MPERS") (filed Nov. 16, 2016), in the United States District Court for the Northern District of Illinois brought on behalf of a class of all purchasers of TreeHouse common stock from January 20, 2016 through and including November 2, 2016. The MPERS complaint asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and was based on essentially the same facts described above. The parties filed a stipulation of settlement to resolve the MPERS class action for a cash payment of $27.0 million (funded by D&O insurance) in exchange for dismissal with prejudice of the class claims and full releases. After briefing, preliminary approval, notice and a hearing, on November 17, 2021, the Court granted final approval of the settlement and entered a final judgment dismissing the case with prejudice on a classwide basis.

Due to the similarity of the derivative complaints, ~~Bartelt~~ ~~was consolidated with~~ ~~Lavin, and~~ Ann Arbor was consolidated with Wells. On August 26, 2022, plaintiffs in the consolidated Wells case filed a second amended complaint, which was dismissed in its entirety with prejudice on March 15, 2023. The plaintiffs filed a notice of appeal on March 16, 2023, and ~~they filed~~ the ~~record on~~ appeal ~~on May 25, 2023, which is being responded to pursuant to a briefing schedule set by the appellate court. On October 24, 2022, the plaintiffs’ designated an operative complaint in the~~ ~~Lavin~~ ~~case, which defendants have moved to dismiss, and~~ was fully briefed as of ~~May 25,~~August 17, 2023. On March 22, 2024, the Appellate Court reversed the state trial court’s dismissal of the consolidated amended complaint, the complaint was reinstated, and the case was remanded to the state trial court for further proceedings.

Other Claims

In addition, the Company is party in the ordinary course of business to certain claims, litigation, audits, and investigations. The Company will record an accrual for a loss contingency when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. The Company believes it has established adequate accruals for liabilities that are probable and reasonably estimable that may be incurred in connection with any such currently pending or threatened matter. In the Company's opinion, the eventual resolution of such matters, either individually or in the aggregate, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. However, litigation is inherently unpredictable and resolutions or dispositions of claims or lawsuits by settlement or otherwise could have an adverse impact on our financial position, results of operations or cash flows for the reporting period in which any such resolution or disposition occurs.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In February 2014, TreeHouse, along with its 100% owned subsidiaries, Bay Valley Foods, LLC and Sturm Foods, Inc., filed suit against Keurig Dr. Pepper Inc.'s wholly-owned subsidiary, Keurig Green Mountain ("KGM"), in the U.S. District Court for the Southern District of New York captioned TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al. asserting claims under the federal antitrust laws, various state antitrust laws and unfair competition statutes, contending that KGM had monopolized alleged markets for single serve coffee brewers and single serve coffee pods. The Company is seeking monetary damages, declaratory relief, injunctive relief, and attorneys' fees. The matter remains pending, with summary judgment, motions to exclude certain expert opinions, and discovery sanctions motions fully briefed. On March 28, 2022, the Magistrate Judge issued a non-public Opinion and Order granting in part and denying in part the TreeHouse sanctions motion against KGM and denying the KGM sanctions motion against TreeHouse. KGM has appealed a portion of the Opinion and Order awarding sanctions to the Company. Most recently, the Judge appointed a special master to resolve disputes about whether certain portions of the case record could be made public. The special master made the last of his decisions on these disputes on January 5, 2024, and the Judge adopted all of the special master’s decisions on March 24, 2024. Following these decisions, the parties expect that public versions of summary judgment and other briefing will be filed in the near term. KGM is denying the allegations made by the Company in the litigation. The Company has not recorded any amount in its Condensed Consolidated Financial Statements as of ~~June 30, 2023.~~March 31, 2024.

17. DERIVATIVE INSTRUMENTS

Interest Rate Swap Agreements - The Company manages its exposure to changes in interest rates by optimizing the use of variable-rate and fixed-rate debt and by utilizing interest rate swaps to hedge our exposure to changes in interest rates, to reduce the volatility of our financing costs, and to achieve a desired proportion of fixed versus floating-rate debt, based on current and projected market conditions.

The Company has entered into long-term interest rate swap agreements ~~with~~to lock into a fixed interest rate base that have a notional value of ~~$875.0~~$1,475.0 million as of ~~both June 30, 2023~~March 31, 2024 and $1,175.0 million as of December 31, 2022, to fix the interest rate base. Subsequent to June 30, 2023, SOFR will become the reference rate for the Company's interest rate swap agreements as a result of LIBOR ceasing to be a representative rate.2023. Under the terms of the agreements, ~~$875.0 million in variable-rate debt is swapped for a~~the weighted average fixed interest rate base for the $875.0 million of interest rate swaps maturing on February 28, 2025 is approximately 2.91%, and for the $600.0 million of interest rate swaps effective February 28, 2025 through February ~~28, 2025.~~29, 2028, is approximately 3.68%.

Commodity Contracts - Certain commodities the Company uses in the production and distribution of its products are exposed to market price risk. The Company utilizes derivative contracts to manage this risk. The majority of commodity forward contracts are not derivatives, and those that are generally qualify for the normal purchases and normal sales scope exception under the guidance for derivative instruments and hedging activities and, therefore, are not subject to its provisions. For derivative commodity contracts that do not qualify for the normal purchases and normal sales scope exception, the Company accounts for the contracts as derivatives.

The Company's derivative commodity contracts may include contracts for diesel, oil, plastics, resin, and other commodity contracts that do not meet the requirements for the normal purchases and normal sales scope exception. Diesel contracts are used to manage the Company's risk associated with the underlying cost of diesel fuel used to deliver products. Contracts for oil, plastics, and resin are used to manage the Company's risk associated with the underlying commodity cost of a significant component used in packaging materials. Other commodity contracts that are derivatives that do not meet the normal purchases and normal sales scope exception are used to manage the price risk associated with raw material costs. As of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the notional value of the ~~derivative~~ commodity contracts outstanding was ~~$12.5~~$64.2 million and ~~$8.9~~$24.4 million, respectively. These commodity contracts have maturities expiring throughout 2023 and 2024 as of ~~June 30, 2023.~~March 31, 2024.

~~Total Return Swap Contract -~~ The Company had an economic hedge program that used a total return swap contract to hedge the market risk associated with the unfunded portion of the Company's deferred compensation liability. The total return swap contract trades generally had a duration of one month and were rebalanced and re-hedged at the end of each monthly term. While the total return swap contract was treated as an economic hedge, the Company did not designate it as a hedge for accounting purposes. The total return swap contract was measured at fair value and recognized in the Condensed Consolidated Balance Sheets, with changes in value being recognized in the Condensed Consolidated Statements of Operations. At June 30, 2023, the Company had no outstanding and unsettled total return swap contracts, and at December 31, 2022, the notional value of the total return swap contract was $3.9 million.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table identifies the fair value of each derivative instrument:

June 30, 2023 December 31, 2022
(In millions)
Asset derivatives
Commodity contracts $ 0.4 $ —
Interest rate swap agreements 30.0 27.2
$ 30.4 $ 27.2
Liability derivatives
Commodity contracts $ — $ 0.3

Asset derivatives for commodity contracts are included within Prepaid expenses and other current assets and interest rate swap agreements are included within Other assets, net. Liability derivatives are included within Accrued expenses in the Condensed Consolidated Balance Sheets.


	Balance Sheet Location	March 31, 2024		December 31, 2023
		(In millions)
Asset derivatives
Commodity contracts	Prepaid expenses and other current assets	$	1.0	$	1.9
Interest rate swap agreements	Prepaid expenses and other current assets	17.5		—
Interest rate swap agreements	Other assets, net	2.9		17.9

		$	21.4	$	19.8
Liability derivatives
Commodity contracts	Accrued expenses	$	0.3	$	0.8

Interest rate swap agreements	Accrued expenses	2.3		7.2

		$	2.6	$	8.0

The fair values of the commodity contracts and interest rate swap agreements ~~and the total return swap contract~~ are determined using Level 2 inputs. Level 2 inputs are inputs other than quoted market prices that are observable for an asset or liability, either directly or indirectly. The fair values of the commodity contracts and interest rate swap agreements ~~and total return swap contract~~ are based on an analysis comparing the contract rates to the market rates at the balance sheet date.

We recognized the following gains and losses on our derivative contracts in the Condensed Consolidated Statements of Operations:


		Location of Gain (Loss)
		Location of Gain (Loss)
		Location of Gain (Loss)



		Location of Gain (Loss)	Three Months Ended June 30,				Six Months Ended June 30,
		Recognized in Net Income (Loss)	2023		2022		2023		2022
			(In millions)				(In millions)
Mark-to-market unrealized gain (loss)	Mark-to-market unrealized gain (loss)
Mark-to-market unrealized gain (loss)
Mark-to-market unrealized gain (loss)
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	Other (income) expense, net	$	0.4	$	(1.7)	$	0.7	$	10.0

Interest rate swap agreements	Interest rate swap agreements	Other (income) expense, net	9.0		13.2		2.8		52.3

Total unrealized gain			$	9.4	$	11.5	$	3.5	$	62.3
Interest rate swap agreements

Interest rate swap agreements

Total unrealized gain (loss)

Total unrealized gain (loss)

Total unrealized gain (loss)
Realized gain (loss)	Realized gain (loss)
Realized gain (loss)
Realized gain (loss)
Commodity contracts
Commodity contracts
Commodity contracts	Commodity contracts	Manufacturing related to Cost of sales and transportation related to Selling and distribution	$	—	$	6.7	$	—	$	9.8

Interest rate swap agreements	Interest rate swap agreements	Interest expense	4.6		(4.8)		8.2		(10.8)
Total return swap contract		General and administrative	—		(0.7)		—		(1.1)
Total realized gain (loss)			$	4.6	$	1.2	$	8.2	$	(2.1)
Total gain			$	14.0	$	12.7	$	11.7	$	60.2

Interest rate swap agreements

Interest rate swap agreements

Total realized gain

Total realized gain

Total realized gain
Total gain (loss)
Total gain (loss)
Total gain (loss)

18. DISAGGREGATION OF REVENUE

The principal products that comprise our different product category groups are as follows:


Product Category Group						Principal Products
Snacking						Candy; cookies; crackers; in-store bakery items; pretzels; and frozen griddle ~~items; and snack bars~~items
Beverages & drink mixes						Broths/stocks; non-dairy creamer; powdered beverages and other blends; ready-to-drink beverages; coffee; and tea
Grocery						Cheese & pudding; hot cereal; pickles; and refrigerated dough

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue disaggregated by product category groups is as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,



		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
Snacking	Snacking	$	361.5	$	333.5	$	720.1	$	632.6
Snacking
Snacking
Beverages & drink mixes
Beverages & drink mixes
Beverages & drink mixes	Beverages & drink mixes	243.9		246.8		535.2		506.6
Grocery	Grocery	238.2		229.9		483.1		443.6
Grocery
Grocery
Total net sales	Total net sales	$	843.6	$	810.2	$	1,738.4	$	1,582.8
Total net sales
Total net sales

Revenue disaggregated by sales channel is as follows:


		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,



		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
		(In millions)				(In millions)
Retail grocery	Retail grocery	$	663.4	$	608.6	$	1,378.1	$	1,201.7
Retail grocery
Retail grocery
Co-manufacturing
Co-manufacturing
Co-manufacturing	Co-manufacturing	111.7		131.5		226.1		254.5
Food-away-from-home and other	Food-away-from-home and other	68.5		70.1		134.2		126.6
Food-away-from-home and other
Food-away-from-home and other
Total net sales	Total net sales	$	843.6	$	810.2	$	1,738.4	$	1,582.8
Total net sales
Total net sales

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

TreeHouse ~~Foods, Inc.~~ is a leading private ~~label food~~brands snacking and beverage manufacturer in North America. Our purpose is to engage and delight - one customer at a time. Through our customer focus and category experience, we strive to deliver excellent service, ~~and~~ build capabilities and provide insights to drive mutually profitable growth for both TreeHouse and ~~for~~ our customers. Our purpose is supported by ~~investment~~investments in depth, capabilities and operational efficiencies which are aimed to capitalize on the long-term growth prospects inwithin the categories ~~in which~~where we operate.

TreeHouse believes it is well positioned across attractive snacking and beverage growth categories fueled by strong underlying consumer demand trends. ~~The~~Our portfolio includes snacking offerings (crackers, pretzels, in-store bakery items, frozen griddle items, cookies, ~~snack bars,~~ and unique candy offerings), ~~beverage~~beverages & drink mix offerings (non-dairy creamer, coffee, broths/stocks, powdered beverages and other blends, tea, and ready-to-drink-beverages), ~~and~~as well as other grocery offerings (pickles, refrigerated dough, hot cereal, and cheese & pudding). The Company sells its products toacross various channels including retail grocery, co-manufacturing, and food-away-from-home customers in shelf stable, refrigerated, and frozen formats. TreeHouse also offers its customer partners a range of value and nutritional solutions, including natural, organic and gluten free ~~so they can~~offerings, providing each the capability to meet the unique needs of their consumers.

The following discussion and analysis presents the factors that had a material effect on our financial condition, changes in financial condition, and results of operations for the three ~~and six~~ month periods ended ~~June 30, 2023~~March 31, 2024 and ~~2022.~~2023. This discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the Notes to those Condensed Consolidated Financial Statements included elsewhere in this report. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. See Cautionary Statement Regarding Forward-Looking Statements for a discussion of the uncertainties, risks, and assumptions associated with these statements.

Recent Developments

~~Acquisition~~Restart of ~~Coffee Roasting Capability~~One of our Broth Facilities

Since the third quarter of 2023, our results of operations have been impacted by supply chain disruptions related to a voluntary recall of certain broth products produced at our Cambridge, Maryland broth facility. The impact will continue to impact our results of operations throughout the first half of 2024, as we continue to incur costs to restore and upgrade our broth facility to full production capacity. The Company is seeking to recover the recall-related costs through its insurance coverage, and such recoveries are recorded in the period in which the recoveries are determined to be probable of realization.

Acquisition of Pickle Branded Assets

On ~~June 30, 2023,~~January 2, 2024, the Company completed the acquisition of ~~the Direct Ship coffee business~~pickle branded assets, including Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and ~~its Northlake, Texas coffee facility (the "Coffee Roasting Capability")~~McLarens pickled onions brands, from ~~Farmer Brothers Company,~~The J.M. Smucker Co., a ~~national coffee roaster, wholesaler, equipment servicer and distributor~~North American producer of coffee, ~~tea,~~consumer foods, dog snacks, and culinary products. The acquisition brings roasting, grinding, flavoring and blending capabilities to the Company's portfolio to complement the Company's existing single-serve pod and ready-to-drink coffee businesses. The Coffee Roasting Capability enables us to deliver greater category depth in a world-class, end-to-end private label coffee offering for our customers. The purchase consideration consisted of approximately $92.2 million in cash, subject to customary purchase price adjustments. The acquisition was funded by borrowings from the Company’s $500.0 million Revolving Credit Facility. Refer to Note 5 to our Condensed Consolidated Financial Statements for additional information.

~~Acquisition of Seasoned Pretzel Capability~~

~~On April 1, 2023, the Company completed the acquisition of a seasoned pretzel capability~~cat food, for a total purchase price of ~~$14.0 million.~~$25.9 million in cash. The total purchase price includes an adjustment of $5.9 million paid subsequent to March 31, 2024, and the allocation of the purchase price consists primarily of inventory. The acquisition is ~~in line~~consistent with our strategy ~~to build~~and builds depth in our Pickles category ~~leadership, depth and capabilities to drive profitable growth. The seasoned pretzel acquisition expands our current portfolio of traditional, filled and enrobed pretzels and extends our capabilities~~by expanding into ~~this growing sub-sector of the Pretzels category.~~Canada. Refer to Note 56 to our Condensed Consolidated Financial Statements for additional information.

~~Executive Summary~~

~~The following table summarizes our consolidated financial results (in millions, except per share data and percentages):~~

Three Months Ended June 30, Six Months Ended June 30,
2023 2022 % Change 2023 2022 % Change
GAAP Results
Net sales $ 843.6 $ 810.2 4.1 % $ 1,738.4 $ 1,582.8 9.8 %
Net income (loss) from continuing operations 21.7 (27.3) 179.5 % 40.9 (41.1) 199.5 %
Diluted earnings (loss) per share from continuing operations 0.38 (0.49) 177.6 % 0.72 (0.74) 197.3 %
Non-GAAP Results (1)
Adjusted EBITDA from continuing operations $ 76.4 $ 53.1 43.9 % $ 167.0 $ 90.4 84.7 %
Adjusted net income (loss) from continuing operations 23.8 2.7 781.5 % 62.2 (6.5) 1,056.9 %
Adjusted diluted EPS from continuing operations 0.42 0.05 740.0 % 1.10 (0.12) 1,016.7 %

~~(1)~~Adjusted EBITDA from continuing operations, adjusted net income (loss) from continuing operations, and adjusted diluted EPS from continuing operations are Non-GAAP financial measures. Refer to the "Non-GAAP Measures" section for additional information.

~~Second Quarter 2023 Financial Highlights~~

The following are highlights in our net sales and earnings for the three months ended June 30, 2023 compared to the three months ended June 30, 2022. Refer to the "Results of Operations" section for further discussion and analysis.

•Net sales increased 4.1% primarily due to favorable pricing to recover commodity inflation. This was partially offset by decreased volume as a result of the Company's ability to fulfill certain customer orders earlier than planned in the first quarter of 2023 due to service improvements.

•Earnings increased primarily due to the Company's pricing actions to recover commodity and freight inflation experienced in prior periods, which was partially offset by increased costs to invest in the supply chain to improve service levels.

Known Trends or Uncertainties

~~Macroeconomic Conditions~~

~~Consumers have faced significant~~Significant inflationary pressure and rising interest rates ~~which has resulted in~~have contributed to an overall decline in food and beverage consumption trends. ~~Private~~In the categories where TreeHouse operates, private brands ~~while also down on a~~have consistently gained unit ~~basis, are performing modestly better than~~market share compared to national brands, ~~and have gained unit share. Supply chain disruption had previously been constraining our ability to service all~~which demonstrates the continued strength of the customer orders received, but we have invested in the supply chain and inventory, which has resulted in improvements in service compared to the prior year. We continue to make steady progress in enhancing our service levels to target to capture private ~~label demand.~~brands market.

~~Commodity Inflation~~

~~The inflationary environment continues~~While we have seen some commodity prices move lower relative to ~~be volatile~~recent all-time highs, many of our ingredients and ~~has led~~packaging input costs still remain elevated compared to ~~higher costs for raw materials and agricultural commodities, packaging materials, fuel, energy, and other supply chain components. As a result~~historical levels, such as the price of ~~the inflationary environment, we implemented waves of pricing actions during 2022 that remain~~cocoa in ~~effect in 2023. The Federal Reserve has raised the federal funds interest rate throughout 2022 and has continued to raise rates in 2023 in its effort to take action against domestic inflation.~~particular. We will continue to monitor the inflationary environment and its economic impact on pricing and consumer ~~trends.~~trends to determine if future pricing actions will be necessary.

Additionally, as a result of the invasion of Ukraine by Russia, the United States and other countries imposed economic sanctions on Russian financial institutions, oil and gas imports, and other businesses. TreeHouse Foods is a North American focused company with no direct exposure to Russia or Ukraine. As such, the impact to the Company has not been material to date. However, sanctions imposed by the United States on Russia oil and gas imports, as well as disruption caused to Ukraine's wheat and other agricultural supply due to the ongoing military conflict, has caused further inflation to our commodity costs. We will continue to monitor any broader economic impact from the current conflict.

We manage the impact of cost increases, wherever possible, on commercially reasonable terms, by locking in prices on the quantities we expect are required to meet our production requirements. In addition, as input costs rise, we seek to recover inflation by implementing higher pricing. However, our pricing actions often lag commodity cost changes temporarily, or we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

2826

Results of Operations

The following table presents certain information concerning our financial results, including information presented as a percentage of consolidated net sales:


		Three Months Ended March 31,

			Three Months Ended June 30,								Six Months Ended June 30,
			2023				2022				2023				2022					2024									2023							Increase / (Decrease)
(Dollars in millions, except per share amounts)																			(Dollars in millions, except per share amounts)			Dollars				Percent					Dollars				Percent			$ Change					% Change
			Dollars		Percent		Dollars		Percent		Dollars		Percent		Dollars		Percent
			(Dollars in millions)								(Dollars in millions)
Net sales
Net sales
Net sales	Net sales		$	843.6	100.0	%	$	810.2	100.0	%	$	1,738.4	100.0	%	$	1,582.8	100.0	%		$	820.7			100.0	100.0		%			$	854.0		100.0		100.0		%	$	(33.3)	(3.9)				(3.9)		%
Cost of sales	Cost of sales		710.8		84.3		699.2		86.3		1,453.3		83.6		1,373.1		86.8
Gross profit	Gross profit		132.8		15.7		111.0		13.7		285.1		16.4		209.7		13.2
Operating expenses:	Operating expenses:																		Operating expenses:
Selling and distribution	Selling and distribution		39.9		4.7		54.8		6.8		84.9		4.9		115.9		7.3
General and administrative	General and administrative		54.1		6.4		56.1		6.9		107.5		6.2		109.0		6.9
Amortization expense	Amortization expense		12.1		1.4		11.9		1.5		24.1		1.4		23.8		1.5

Other operating (income) expense, net			(2.8)		(0.3)		13.9		1.7		(0.2)		—		43.0		2.7
Other operating expense, net
Other operating expense, net
Other operating expense, net
Total operating expenses	Total operating expenses		103.3		12.2		136.7		16.9		216.3		12.5		291.7		18.4
Operating income (loss)			29.5		3.5		(25.7)		(3.2)		68.8		3.9		(82.0)		(5.2)
Other (income) expense:
Operating (loss) income
Other expense:																			Other expense:
Interest expense	Interest expense		19.2		2.3		17.0		2.1		37.0		2.1		33.7		2.1
Interest income	Interest income		(10.8)		(1.3)		(0.1)		—		(25.4)		(1.5)		(4.2)		(0.3)

(Gain) loss on foreign currency exchange			(3.3)		(0.4)		1.1		0.1		(3.0)		(0.2)		—		—
Loss on foreign currency exchange
Loss on foreign currency exchange
Loss on foreign currency exchange
Other (income) expense, net	Other (income) expense, net		(6.2)		(0.7)		(11.9)		(1.5)		3.5		0.2		(63.6)		(4.0)
Total other (income) expense			(1.1)		(0.1)		6.1		0.7		12.1		0.6		(34.1)		(2.2)
Income (loss) before income taxes			30.6		3.6		(31.8)		(3.9)		56.7		3.3		(47.9)		(3.0)
Income tax expense (benefit)			8.9		1.1		(4.5)		(0.6)		15.8		0.9		(6.8)		(0.4)
Net income (loss) from continuing operations			21.7		2.5		(27.3)		(3.3)		40.9		2.4		(41.1)		(2.6)
Net income (loss) from discontinued operations			1.6		0.2		(2.1)		(0.3)		(2.4)		(0.1)		8.7		0.5
Net income (loss)			$	23.3	2.7	%	$	(29.4)	(3.6)	%	$	38.5	2.3	%	$	(32.4)	(2.1)	%
Total other expense
(Loss) income before income taxes
Income tax (benefit) expense
Net (loss) income from continuing operations
Net loss from discontinued operations
Net (loss) income																			Net (loss) income			$	(11.7)			(1.5)		%			$	15.2			1.8		%	$	(26.9)				(177.0)		%

Earnings (loss) per common share - diluted:
Earnings (loss) per common share - diluted:
Earnings (loss) per common share - diluted:
Continuing operations
Continuing operations
Continuing operations																						$	(0.22)										$	0.36							$	(0.58)					(161.1)	%
Discontinued operations
Earnings (loss) per share diluted(1)																			Earnings (loss) per share diluted(1)			$	(0.22)										$	0.27							$	(0.49)					(181.5)	%

(1) The sum of the individual per share amounts may not add due to rounding

2927


	Three Months Ended March 31,
	2024		2023		Increase / (Decrease)
(Dollars in millions, except per share amounts)	Dollars		Dollars		$ Change		% Change

Other financial data:(1)
EBITDA from continuing operations	$	32.9	$	66.0	$	(33.1)	(50.2)	%
Adjusted EBITDA from continuing operations	46.0		91.3		(45.3)		(49.6)
Adjusted gross profit	120.8		153.6		(32.8)		(21.4)
Adjusted total operating expenses	108.3		93.3		15.0		16.1
Adjusted operating income	12.5		60.3		(47.8)		(79.3)
Adjusted total other expense	14.7		7.3		7.4		101.4
Adjusted income tax (benefit) expense	(0.4)		13.3		(13.7)		(103.0)
Adjusted net (loss) income from continuing operations	(1.8)		39.7		(41.5)		(104.5)
Adjusted diluted earnings (loss) per share from continuing operations	$	(0.03)	$	0.70	$	(0.73)	(104.3)	%

(1) Other financial data included Non-GAAP financial metrics. See "Non-GAAP Measures" for definitions and reconciliations of our Net (loss) income from continuing operations to EBITDA from continuing operations and Adjusted EBITDA from continuing operations, Gross profit to Adjusted gross profit, Total operating expenses to Adjusted total operating expenses, Operating (loss) income to Adjusted operating income, Total other expense to Adjusted total other expense, Income tax (benefit) expense to Adjusted income tax (benefit) expense, Net (loss) income from continuing operations to Adjusted net (loss) income from continuing operations, and Diluted earnings (loss) per share from continuing operations to Adjusted diluted earnings (loss) per share from continuing operations.

Three Months Ended ~~June 30, 2023~~March 31, 2024 Compared to Three Months Ended ~~June 30, 2022~~March 31, 2023

Continuing Operations

Net Sales — Net sales for the ~~second~~first quarter of ~~2023~~2024 totaled ~~$843.6~~$820.7 million compared to ~~$810.2~~$854.0 million for the same period last year, ~~an increase~~a decrease of ~~$33.4~~$33.3 million, or ~~4.1%~~3.9%. The change in net sales from ~~2022~~2023 to ~~2023~~2024 was due to the following:

Dollars Percent
(In millions)
2022 Net sales $ 810.2
Pricing 90.9 11.2 %
Volume/mix (58.0) (7.2)
Acquisition 2.1 0.3
Foreign currency (1.6) (0.2)
2023 Net sales $ 843.6 4.1 %
Acquisition (0.3)
Foreign currency 0.2
Percent change in organic net sales (1) 4.0 %


	Dollars		Percent
	(In millions)
2023 Net sales	$	854.0
Volume/mix related to business acquisitions	32.4		3.8	%
Volume/mix excluding business acquisitions	(23.6)		(2.8)
Pricing	(22.1)		(2.6)
Volume/mix impact from broth facility restart	(20.0)		(2.3)




2024 Net sales	$	820.7	(3.9)	%


Volume/mix related to business acquisitions			(3.8)


Percent change in organic net sales (1)			(7.7)	%

(1)Organic net sales is a Non-GAAP financial measure. Refer to the "Non-GAAP Measures" section for additional information.


The net sales ~~increase~~decrease of ~~4.1%~~3.9% was primarily driven by ~~favorable~~unfavorable volume/mix due to planned distribution exits primarily in our coffee and in-store bakery categories, as well as the restart of one of our broth facilities, which contributed to approximately half of the volume decline. Additionally, pricing ~~to recover commodity inflation. This~~ was ~~partially offset by decreased volume~~modestly unfavorable as a result of targeted commodity-driven pricing adjustments. These items were partially offset by volume/mix from the ~~Company's ability to fulfill certain customer orders earlier than planned in~~acquisition of the first quarter of 2023 due to service improvements. Additionally, declines in food and beverage consumption trends, the exit of lower margin business, and distribution losses contributed to the decrease.Coffee Roasting Capability.

Gross Profit — Gross profit as a percentage of net sales was ~~15.7%~~13.6% in the ~~second~~first quarter of 2024, compared to 18.0% in the first quarter of 2023, ~~compared to 13.7% in the second quarter~~a decrease of ~~2022, an increase of 2.0~~4.4 percentage points. The ~~increase~~decrease is primarily due to the ~~Company's pricing actions~~restart of one of our broth facilities, unfavorable fixed cost absorption due to ~~recover commodity and freight inflation experienced in prior periods. This was partially offset by increased costs to invest in the supply chain to improve service levels, which included~~lower volume, increased costs for labor investment, and ~~manufacturing plant maintenance.~~unfavorable category mix.

Total Operating Expenses — Total operating expenses were ~~$103.3~~$117.2 million in the ~~second~~first quarter of 2024 compared to $112.7 million in the first quarter of 2023, ~~compared~~an increase of $4.5 million. The increase in expense was primarily due to ~~$136.7 million in the second quarter of 2022,~~ a decrease of ~~$33.4 million. The decreaseis primarily due to $11.9~~$12.9 million of TSA income following the exit of certain TSA services. This was partially offset by lower professional fees for strategic growth initiatives, ~~lower retention bonus~~TSA-related expense reductions, and lower freight costs.

Total Other ~~(Income)~~ Expense — Total other expense ~~of $6.1~~was $10.1 million in the ~~second~~first quarter of ~~2022 decreased by $7.2 million~~2024 compared to ~~be total other income of $1.1~~$13.2 million in the ~~second~~first quarter of ~~2023.~~2023, a decrease of $3.1 million. The decrease was primarily due to ~~$10.7~~a $12.9 million of interest income received from the Company's Note Receivable and favorable currency exchange rate impacts between the U.S. and Canada. This was partially offset by rising interest rates, which led to interest expense, higher costs with selling receivables in the Company's Receivables Sales Program, and higher costs in our pension plans. Additionally, offsetting was a less favorable change in non-cash mark-to-market impacts from hedging activities, largely driven by an increase in interest rate swaps. This was partially offset by a decrease in interest income of $10.7 million, as the Seller Promissory Note was repaid in the fourth quarter of 2023.

Income Taxes — Income taxes were recognized at an effective rate of ~~29.1%~~23.5% in the ~~second~~first quarter of ~~2023~~2024 compared to ~~14.2%~~26.4% recognized in the ~~second~~first quarter of ~~2022.~~2023. The change in the ~~Company's~~Company’s effective tax rate is primarily driven by changes in the ~~estimated~~ amount of ~~annual pre-tax earnings.~~non-deductible executive compensation and the tax effect of cross-border tax laws.

Our effective tax rate may change from period to period based on recurring and non-recurring factors including the jurisdictional mix of earnings, enacted tax legislation, state income taxes, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits.

Discontinued Operations


Discontinued Operations — Net ~~income (loss)~~loss from discontinued operations ~~was $1.6~~decreased by $5.2 million ~~of income~~ in the ~~second~~first quarter of ~~2023~~2024 compared to ~~a $2.1 million loss in~~ the ~~second~~first quarter of ~~2022, an increase of $3.7 million.~~2023. The ~~increase~~decrease is primarily a result of the divestiture of a significant portion of the Meal Preparation business on October 3, 2022 and ~~a favorable~~an expected loss on disposal adjustment of ~~$1.0~~$4.5 million during the ~~second~~first quarter of ~~2023 as the purchase price was finalized.~~2023. Refer to Note 56 of our Condensed Consolidated Financial Statements for additional details.

~~Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022~~

~~Continuing Operations~~

~~Net Sales~~ — Net sales for the first six months of 2023 totaled $1,738.4 million compared to $1,582.8 million for the same period last year, a increase of $155.6 million, or 9.8%. The change in net sales from 2022 to 2023 was due to the following:

Dollars Percent
(In millions)
2022 Net sales $ 1,582.8
Pricing 219.7 13.9 %
Volume/mix (62.2) (3.9)
Acquisition 2.1 0.1
Foreign currency (4.0) (0.3)
2023 Net sales $ 1,738.4 9.8 %
Acquisition (0.1)
Foreign currency 0.3
Percent change in organic net sales 10.0 %

The net sales increase of 9.8% was primarily driven by favorable pricing to recover commodity inflation. This was partially offset by declines in food and beverage consumption trends, the exit of lower margin business, and distribution losses.

~~Gross Profit~~ — Gross profit as a percentage of net sales was 16.4% in the first six months of 2023, compared to 13.2% in the first six months of 2022, an increase of 3.2 percentage points. The increase is primarily due to the Company's pricing actions to recover commodity and freight inflation experienced in prior periods and favorable category mix. This was partially offset by increased costs to invest in the supply chain to improve service levels, which included increased costs for labor and manufacturing plant maintenance.

~~Total Operating Expenses~~ ~~— Total operating expenses were $216.3 million in the first six months of 2023 compared to $291.7 million in the first six months of 2022, a decrease of $75.4 million. The decreaseis primarily due to $25.3 million of TSA income, lower freight costs, lower professional fees from strategic growth initiatives, lower retention bonus expense, and lower severance expense.~~

~~Total Other (Income) Expense~~ —Total other income of $34.1 million in the first six months of 2022 decreased by $46.2 million to be total other expense of $12.1 million in the first six months of 2023. The decrease was primarily due to a $58.8 million unfavorable change in non-cash mark-to-market impacts from hedging activities, largely driven by an unfavorable change to interest rate swaps and less favorable impacts from commodity contracts. Additionally, rising interest rates led to higher costs with selling receivables in the Company's Receivables Sales Program, higher costs in our pension plans, and higher interest expense. This was partially offset by $21.4 million of interest income received from the Company's Note Receivable.

~~Income Taxes~~ — Income taxes were recognized at an effective rate of 27.9% in the first six months of 2023 compared to 14.2% recognized in the first six months of 2022. The change in the Company's effective tax rate is primarily driven by the estimated amount of annual pre-tax earnings.

Our effective tax rate may change from period to period based on recurring and non-recurring factors including the jurisdictional mix of earnings, enacted tax legislation, state income taxes, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits.

~~Discontinued Operations~~

~~Discontinued Operations~~ — Net income (loss) from discontinued operations was a $2.4 million loss in the first six months of 2023 compared to $8.7 million of income in the first six months of 2022, a decrease of $11.1 million. The decrease is primarily a result of the divestiture of a significant portion of the Meal Preparation business on October 3, 2022 and an expected loss on disposal adjustment of $3.5 million during the first six months of 2023. Refer to Note 5 of our Condensed Consolidated Financial Statements for additional details.

3230

Liquidity and Capital Resources

Management assesses the Company's liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, with resources available for reinvesting in existing businesses, ~~including our strategic growth initiatives,~~ conducting acquisitions, and managing its capital structure on a short and long-term basis.

~~Seller Note Credit Agreement~~

On October 3, 2022, the Company entered into a five-year secured Seller Promissory Note ("Seller Note Credit Agreement") which matures on October 1, 2027. The Seller Note Credit Agreement sets forth the terms of the Seller Promissory Note and the loan evidenced thereby (the "Seller Loan"). The Seller Loan bears interest at a rate per annum equal to 10% for the first two years thereof, 11% for the third year thereof, 12% for the fourth year thereof, and 13% thereafter, payable quarterly in arrears. For the first year of the Seller Loan, a portion of the interest, of up to 1% per annum, may be paid in kind; all other interest for the first year, and all interest thereafter, will be paid in cash. Starting on March 31, 2025, the Loan Parties shall commence repayment of the principal amount of the Seller Loan on a quarterly basis at 0.25% of the principal adjusted for prepayments. The Seller Loan has a balance of $424.1 million as of June 30, 2023. See Note 6 to our Condensed Consolidated Financial Statements for additional information regarding our Seller Note Credit Agreement.

Receivables Sales Program

The Company has the ability to strategically manage customer payment terms and counterparty risk by selling receivables in a cost-effective manner through its Receivables Sales Program. Approximately ~~$194.6~~$256.8 million was available under the Receivables Sales Program limit as of ~~June 30, 2023.~~March 31, 2024. During the first quarter of 2024, usage of the Receivables Sales Program decreased due to the Company's strong cash balance position. See Note 34 to our Condensed Consolidated Financial Statements for additional information regarding our Receivables Sales Program. Our Receivables Sales Program provides us lower cost access to liquidity when compared to the Revolving Credit Facility.

Revolving Credit Facility

If additional borrowings are needed, approximately ~~$267.5~~$471.0 million was available under the Revolving Credit Facility as of June 30, 2023. On June 30, 2023, we completed the Coffee Roasting Capability acquisition for $92.2 million in cash and funded the purchase through borrowings from the Company’s Revolving Credit Facility.March 31, 2024. See Note 109 to our Condensed Consolidated Financial Statements for additional information regarding our Revolving Credit Facility. We are in compliance with the terms of the Revolving Credit Facility and expect to meet foreseeable financial requirements.

~~CARES Act~~Share Repurchases

~~Under~~During the ~~CARES Act, we deferred~~three months ended March 31, 2024, the ~~payment~~Company repurchased approximately 1.2 million shares of ~~$21.7~~common stock at a weighted average share price of $36.61 for a total of $43.9 million. Subsequent to March 31, 2024, the Company repurchased approximately 0.6 million ~~in payroll taxes in 2020, with $12.3 million paid in 2021 and 2022, and~~shares of common stock at a weighted average share price of $36.95 for a total of $20.6 million. The Company has the ~~remaining $9.4 million was paid in the first quarter~~ability to make discretionary repurchases up to an annual cap of ~~2023.~~$150 million. See Note 10 to our Condensed Consolidated Financial Statements for additional information regarding our stock repurchase program.

Cash Flow

The following table is derived from our Condensed Consolidated Statement of Cash Flows:


		Six Months Ended June 30,					Three Months Ended March 31,
		2023		2022			2024	2023
		(In millions)					(In millions)
Net Cash Flows Provided By (Used In):
Net Cash Flows (Used In) Provided By:						Net Cash Flows (Used In) Provided By:
Operating activities of continuing operations	Operating activities of continuing operations	$	(49.8)	$	(70.7)
Investing activities of continuing operations	Investing activities of continuing operations	(156.9)		(38.6)
Financing activities of continuing operations	Financing activities of continuing operations	193.2		(19.9)
Cash flows from discontinued operations	Cash flows from discontinued operations	(15.2)		20.5

3331

Operating Activities From Continuing Operations


Net cash used in operating activities from continuing operations was ~~$49.8~~$52.4 million in the first ~~six~~three months of 2024 compared to $30.5 million net cash used in the first three months of 2023, ~~compared to $70.7 million in the first six months of 2022, a decrease~~an increase in cash used of ~~$20.9~~$21.9 million. The increase in net cash ~~flow improvement~~used in operating activities was primarily attributable to ~~higher cash earnings reflecting the Company's pricing actions to recover commodity and freight inflation experienced in prior periods. This was partially offset by~~ a decrease in cash flows from the Receivables Sales Program ~~and payment timing in accounts payable.~~due to reduced factoring utilization. Refer to Note 34 to our Condensed Consolidated Financial Statements for additional information regarding the Receivables Sales Program. Additionally, the increase in net cash used was driven by lower cash earnings.

Investing Activities From Continuing Operations


Net cash used in investing activities from continuing operations was ~~$156.9~~$28.1 million in the first ~~six~~three months of ~~2023~~2024 compared to ~~$38.6~~$31.7 million in the first ~~six~~three months of ~~2022, an increase~~2023, a decrease in cash used of ~~$118.3~~$3.6 million. ~~This~~The decrease in cash used for investing activities in the first three months of 2024 was primarily driven by ~~$102.2 million of cash used for~~ the ~~acquisitions of the seasoned pretzel and coffee roasting capabilities, which were completed on April 1, 2023 and June 30, 2023, respectively. Additionally, the~~non-recurring exercise of a purchase option on the lease of our Cambridge, Maryland facility for $8.1 million higher capital expenditures for growth and supply chain initiatives as well as infrastructure and maintenance at our manufacturing plants, and non-recurring proceeds received from the sale of fixed assets induring the first quarter of ~~2022 contributed to the~~2023. This was partially offset by an increase in ~~cash used.~~capital expenditures related to growth initiatives and integration activities from recent acquisitions during the first quarter of 2024.

Financing Activities From Continuing Operations


Net cash used in financing activities from continuing operations was $47.8 million in the first three months of 2024 compared to $32.5 million net cash provided by financing activities from continuing operations ~~was $193.2 million~~ in the first ~~six~~three months of 2023, ~~compared to $19.9 million net cash used in financing activities from continuing operations in the first six months of 2022,~~ an increase in cash ~~provided~~used of ~~$213.1~~$80.3 million. The increase in cash ~~provided~~used is due to common stock repurchases of $43.9 million during the first quarter of 2024 and a ~~$199.5 million increase in~~non-recurring cash ~~drawn on~~inflow from the Revolving Credit Facility ~~in the first half~~ of ~~2023 to fund business acquisitions and invest in inventory to improve service levels. Additionally, as a result of the prepayment of $500.0~~$38.0 million on the Term Loans in the fourth quarter of 2022, principal amortization payments are no longer due on a quarterly basis, and the remaining principal balance is due at maturity. As such, cash provided increased due to a non-recurring payment of $14.3 million on the Term Loans in the first quarter of ~~2022.~~2023.

Cash Flows From Discontinued Operations


There was ~~$15.2 million~~no cash ~~used~~provided by discontinued operations in the first ~~six~~three months of 2024 compared to $0.7 million of cash used in the first three months of 2023, ~~compared to $20.5 million~~a decrease of cash ~~provided in the first six months~~used of ~~2022, a decrease in cash provided of $35.7~~$0.7 million. The decrease in cash ~~provided by~~used in discontinued operations is due to the completion of the sale of ~~a significant portion of~~ the ~~Meal Preparation business~~Snack Bars Business on ~~October 3, 2022 and the finalization of the purchase price of the business, which resulted in a cash payment of $15.2 million to the buyer.~~September 29, 2023. Refer to Note 56 to our Condensed Consolidated Financial Statements for additional information.

Debt Obligations

At ~~June 30, 2023,~~March 31, 2024, we had ~~$199.5 million outstanding under the Revolving Credit Facility,~~ $316.4 million outstanding under Term Loan A, $588.6 million outstanding under Term Loan A-1, $500.0 million of the 2028 Notes outstanding, and ~~$0.9~~$0.4 million of finance lease obligations.

As of ~~June 30, 2023,~~March 31, 2024, the ~~Company had $199.5 million drawn from its $500.0 million Revolving Credit Facility. The~~ Company had remaining availability of ~~$267.5~~$471.0 million under ~~the~~its $500.0 million Revolving Credit Facility, and there were ~~$33.0~~$29.0 million in letters of credit under the Revolving Credit Facility that were issued but undrawn, which have been included as a reduction to the calculation of available credit.

The Company has long-term interest rate swap agreements to fix the interest rate base in order to mitigate the Company's exposure to interest rate risk. As of ~~June 30, 2023,~~March 31, 2024, we have an outstanding variable-rate debt balance of ~~$1,104.5~~$905.0 million, and our interest rate swap agreements have a notional value of $1,475.0 million. Under the terms of the agreements, $875.0 million ~~and~~of interest rate swaps mature on February 28, ~~2025.~~2025, and the remaining $600.0 million of interest rate swaps, which are effective February 28, 2025, mature on February 29, 2028. As a result, our variable-rate ~~term loan~~ debt is nearly fully hedged with our fixed rate interest rate swaps. ~~Subsequent to June 30, 2023, SOFR will become the reference rate for the Company's interest rate swap agreements as a result of LIBOR ceasing to be a representative rate.~~

The Credit Agreement contains various financial and restrictive covenants and requires that the Company maintain a consolidated net leverage ratio of no greater than 4.50 to 1.0, and our debt obligations contain customary representations and events of default. We are in compliance with all applicable debt covenants as of ~~June 30, 2023.~~March 31, 2024.

See Note 109 to our Condensed Consolidated Financial Statements for information on our debt obligations.

Guarantor Summarized Financial Information

The 2028 Notes issued by TreeHouse Foods, Inc. are fully and unconditionally, as well as jointly and severally, guaranteed by our directly and indirectly owned domestic subsidiaries, which are collectively known as the "Guarantor Subsidiaries." The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances, only upon the occurrence of certain customary conditions. There are no significant restrictions on the ability of the parent company or any guarantor to obtain funds from its subsidiaries by dividend or loan.

The following tables present summarized financial information of TreeHouse Foods, Inc. and the Guarantor Subsidiaries on a combined basis. The combined summarized financial information eliminates intercompany balances and transactions among TreeHouse Foods, Inc. and the Guarantor Subsidiaries and equity in earnings and investments in any Guarantor Subsidiaries or Non-Guarantor Subsidiaries. The summarized financial information is provided in accordance with the reporting requirements of Rule 13-01 under SEC Regulation S-X for the issuer and Guarantor Subsidiaries.


	TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Statement of Operations	~~Six~~Three Months Ended ~~June 30, 2023~~March 31, 2024
	(Unaudited, in millions)
Net sales	$	~~1,683.1~~785.8
Gross profit (1)	~~278.6~~103.2


Net ~~income from continuing operations~~loss	(8.6)		~~46.1~~
~~Net income from discontinued operations~~	~~(2.4)~~
~~Net income~~	~~43.7~~

TreeHouse Foods, Inc. and Guarantor Subsidiaries

Summarized Balance Sheet

June 30, 2023

December 31, 2022

Summarized Balance Sheet

March 31, 2024

December 31, 2023

(Unaudited, in millions)

Current assets

778.8

725.0

Noncurrent assets

3,284.5

3,215.3

Current liabilities

630.1

742.3

Noncurrent liabilities (2)

1,849.5

1,665.2

(1)For the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, TreeHouse Foods, Inc. and Guarantor Subsidiaries recorded ~~$14.9~~$10.0 million of net sales to the Non-Guarantor Subsidiaries and ~~$128.3~~$74.4 million of purchases from the Non-Guarantor Subsidiaries.

(2)Includes an amount due from Non-Guarantor Subsidiaries of ~~$46.4~~$28.5 million and ~~$13.2~~$42.3 million as of ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

3533

Non-GAAP Measures

We have included in this report measures of financial performance that are not defined by GAAP ("Non-GAAP"). A Non-GAAP financial measure is a numerical measure of financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the Company's Condensed Consolidated Financial Statements. As described further below, we believe these measures provide useful information to the users of the financial statements.

For each of these Non-GAAP financial measures, we provide a reconciliation between the Non-GAAP measure and the most directly comparable GAAP measure, an explanation of why management believes the Non-GAAP measure provides useful information to financial statement users, and any additional purposes for which management uses the Non-GAAP measure. This Non-GAAP financial information is provided as additional information for the financial statement users and is not in accordance with, or an alternative to, GAAP. These Non-GAAP measures may be different from similar measures used by other companies.

Organic Net Sales

Organic net sales is defined as net sales excluding the impacts of business acquisitions, divestitures, and foreign currency. This information is provided in order to allow investors to make meaningful comparisons of the Company's sales between periods and to view the Company's business from the same perspective as Company management.

~~Adjusted Earnings Per Diluted Share From~~EBITDA from Continuing Operations, EBITDA from Continuing Operations Margin, Adjusted EBITDA from Continuing Operations, and Adjusted EBITDA from Continuing Operations Margin, Adjusting for Certain Items Affecting Comparability

~~Adjusted earnings (loss) per diluted share~~EBITDA from continuing operations ("margin and adjusted ~~diluted EPS")~~EBITDA from continuing operations margin are defined as EBITDA from continuing operations and adjusted EBITDA from continuing operations as a percentage of net sales. EBITDA from continuing operations represents net (loss) income from continuing operations before interest expense, interest income, income tax (benefit) expense, and depreciation and amortization expense. Adjusted EBITDA from continuing operations reflects adjustments to ~~GAAP earnings (loss) per diluted share~~EBITDA from continuing operations to identify items that, in ~~management's~~management’s judgment, significantly affect the assessment of earnings results between periods. This information is provided in order to allow investors to make meaningful comparisons of the ~~Company's~~Company’s earnings performance between periods and to view the ~~Company's~~Company’s business from the same perspective as Company management. As the Company cannot predict the timing and amount of charges that include, but are not limited to, items such as ~~divestiture,~~facility restoration and product recall costs, growth, reinvestment, and restructuring programs, acquisition, integration, divestiture, and related costs, ~~mark-to-market adjustments on derivative contracts,~~ foreign currency exchange impact on the re-measurement of intercompany notes, ~~growth, reinvestment, and restructuring programs,~~mark-to-market adjustments on derivative contracts, and other items that may arise from time to time that would impact comparability, management does not consider these costs when evaluating the ~~Company's~~Company’s performance, when making decisions regarding the allocation of resources, in determining incentive compensation, or in determining earnings estimates. EBITDA from continuing operations and adjusted EBITDA from continuing operations are performance measures commonly used by management to assess operating performance and incentive compensation, and the Company believes they are commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance between periods and as a component of our debt covenant calculations.

Adjusted Gross Profit, Adjusted Total Operating Expenses, Adjusted Operating (Loss) Income, Adjusted Total Other Expense (Income), Adjusted Income Tax Expense (Benefit), Adjusted Net (Loss) Income from Continuing Operations, and Adjusted Diluted Earnings (Loss) Per Share from Continuing Operations, Adjusting for Certain Items Affecting Comparability

Adjusted gross profit, adjusted total operating expenses, adjusted operating (loss) income, adjusted total other expense (income), adjusted income tax expense (benefit), and adjusted net (loss) income from continuing operations represent their respective GAAP presentation line item adjusted for items such as facility restoration and product recall costs, growth, reinvestment, and restructuring programs, acquisition, integration, divestiture, and related costs, foreign currency exchange impact on the re-measurement of intercompany notes, mark-to-market adjustments on derivative contracts, and other items that may arise from time to time that would impact comparability. Management does not consider these costs when evaluating the Company’s performance, when making decisions regarding the allocation of resources, in determining incentive compensation, or in determining earnings estimates. This information is provided in order to allow investors to make meaningful comparisons of the Company’s earnings performance between periods and to view the Company’s business from the same perspective as Company management. The Company has presented each of these adjusted Non-GAAP measures as a percentage of net sales compared to its respective reported GAAP presentation line item as a percentage of net sales. Adjusted diluted earnings (loss) per share from continuing operations ("Adjusted diluted EPS") is determined by dividing adjusted net (loss) income from continuing operations by the weighted average diluted common shares outstanding. Adjusted diluted EPS reflects adjustments to GAAP earnings (loss) per diluted share to identify items that, in management's judgment, significantly affect the assessment of earnings results between periods.

The ~~reconciliation of adjusted diluted EPS from continuing operations, excluding certain items affecting comparability, to~~following table reconciles the ~~relevant GAAP measure of diluted EPS~~Company's net (loss) income from continuing operations as presented in the Condensed Consolidated Statements of Operations, ~~is as follows:~~the relevant GAAP measure, to EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the three months ended March 31, 2024 and 2023:

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(Unaudited) (Unaudited)
Diluted EPS from continuing operations (GAAP) $ 0.38 $ (0.49) $ 0.72 $ (0.74)
Growth, reinvestment, and restructuring programs (1) 0.16 0.25 0.42 0.79
Divestiture, acquisition, integration, and related costs (2) 0.08 0.13 0.15 0.18
Shareholder activism (3) — 0.02 0.01 0.03
Tax indemnification (4) — — 0.01 —
Foreign currency (gain) loss on re-measurement of intercompany notes (5) (0.04) 0.01 (0.05) (0.01)
Mark-to-market adjustments (6) (0.17) (0.20) (0.06) (1.11)
Central services and conveyed employee costs (7) — 0.39 — 0.78
Litigation matter (8) — — — 0.01
Taxes on adjusting items 0.01 (0.06) (0.10) (0.05)
Adjusted diluted EPS from continuing operations (Non-GAAP) $ 0.42 $ 0.05 $ 1.10 $ (0.12)


	Three Months Ended March 31,
	2024			2023
	(unaudited, in millions)
Net (loss) income from continuing operations (GAAP)	$	(11.7)		$	20.4
Interest expense	15.6			17.8
Interest income	(4.0)			(14.6)
Income tax (benefit) expense	(3.6)			7.3
Depreciation and amortization	36.6			35.1
EBITDA from continuing operations (Non-GAAP)	32.9			66.0
Broth facility restoration and product recall costs(1)	6.9			—
Growth, reinvestment, restructuring programs & other(2)	6.7			15.3
Acquisition, integration, divestiture, and related costs(3)	4.1			3.8
Foreign currency loss (gain) on re-measurement of intercompany notes(4)	2.4			(0.2)
Mark-to-market adjustments(5)	(7.0)			5.9
Shareholder activism(6)	—			0.3
Tax indemnification(7)	—			0.2
Adjusted EBITDA from continuing operations (Non-GAAP)	$	46.0		$	91.3

% of net sales
Net (loss) income from continuing operations margin	(1.4)		%	2.4		%
EBITDA from continuing operations margin	4.0		%	7.7		%
Adjusted EBITDA from continuing operations margin	5.6		%	10.7		%

3635

During the three and six months ended June 30, 2023 and 2022, the Company entered into transactions that affected the year-over-year comparison of its financial results from continuing operations as follows:


(1)			On September 22, 2023, the Company initiated a voluntary recall of certain broth products produced at its Cambridge, Maryland facility and has subsequently been executing a turnaround plan to restore the facility to full production capacity. As a result of these restoration activities, in the first quarter of 2024, the Company incurred incremental costs of $6.9 million which include non-cash plant shutdown charges of $4.4 million, non-cash inventory write-offs of $2.3 million, and other costs, including product returns and logistics, of $0.2 million.

(2)			The Company's growth, reinvestment, and restructuring activities are part of an enterprise-wide transformation to improve long-term growth and profitability for the Company.

			Refer to Note 23 to our Condensed Consolidated Financial Statements for additional information.

~~(2)~~(3)			~~Divestiture, acquisition,~~Acquisition, integration, divestiture, and related costs ~~represent~~represents costs associated with completed and potential ~~divestitures, completed and potential~~ acquisitions, ~~and~~ the related integration of the ~~acquisitions.~~acquisitions, completed and potential divestitures, and gains or losses on the divestiture of a business. During the three months ended March 31, 2024, $2.0 million was classified in General and administrative, $1.9 million was classified in Cost of sales, and $0.2 million was classified in Other operating expense, net. During the three months ended March 31, 2023, $3.1 million was classified in General and administrative and $0.7 million was classified in Other operating expense, net.

			Refer to Note 56 to our Condensed Consolidated Financial Statements for additional information.

~~(3)~~			~~The Company incurred fees related to shareholder activism which include directly applicable third-party advisory and professional service fees.~~

(4)			Tax indemnification represents the non-cash write off of indemnification assets that were recorded in connection with acquisitions from prior years. These write-offs arose as a result of the related uncertain tax position being released due to the statute of limitation lapse or settlement with taxing authorities.

~~(5)~~			The Company has foreign currency denominated intercompany loans and incurred foreign currency gains/losses to re-measure the loans at quarter end. These amounts are non-cash and the loans are eliminated in consolidation.

~~(6)~~(5)			The Company's derivative contracts are marked-to-market each period. The non-cash unrealized changes in fair value recognized in Other (income) expense, net within the Condensed Consolidated Statements of Operations are treated as Non-GAAP adjustments. As the contracts are settled, realized gains and losses are recognized, and only the mark-to-market impacts are treated as Non-GAAP adjustments.

			Refer to Note 17 to our Condensed Consolidated Financial Statements for additional information.

(6)			The Company incurred fees related to shareholder activism which include directly applicable third-party advisory and professional service fees.

(7)			AsTax indemnification represents the non-cash write off of indemnification assets that were recorded in connection with acquisitions from prior years. These write-offs arose as a result of the ~~sale of a significant portion of the Meal Preparation business, the Company identified two items affecting comparability – 1) central service costs and 2) conveyed employee costs.~~ ~~1) The Company has historically provided central services~~related uncertain tax position being released due to the Meal Preparation business including, but not limited to, IT and financial shared services, procurement and order processing, customer service, warehousing, logistics, and customs. These costs were historically incurred by TreeHouse and include employee and non-employee expenses to support the services. There were no costs for the three and six months ended June 30, 2023. For three and six months ended June 30, 2022, central service costs were approximately $13.4 million and $26.8 million, respectively. 2) Conveyed employee costs represent compensation costs for employees that were not historically dedicated to the sold business and transferred to the buyer after the sale. There were no costs for the three and six months ended June 30, 2023. For the three and six months ended June 30, 2022, conveyed employee costs were approximately $8.3 million and $16.7 million, respectively.

~~(8)~~			~~During the six months ended June 30, 2022, the Company recognized $0.4 million incremental expense for the~~statute of limitation lapse or settlement ~~payment of the $9.0 million accrual related to a litigation matter challenging wage and hour practices at three former manufacturing facilities in California.~~with taxing authorities.

The following tables provide a reconciliation of Adjusted gross profit, Adjusted total operating expenses, Adjusted operating income (loss), Adjusted total other expense (income), Adjusted income tax ~~impact on adjusting items is calculated based upon the tax laws~~expense (benefit), and ~~statutory tax rates applicable in the tax jurisdiction~~Adjusted net (loss) income from continuing operations to their most directly comparable GAAP measure, for each of the ~~underlying Non-GAAP adjustments.~~periods presented:


	Three Months Ended March 31, 2024
(Unaudited, in millions, except per share amounts)	Gross profit			Total operating expenses			Operating (loss) income			Total other expense			Income tax benefit			Net loss from continuing operations
As reported (GAAP)	$	112.0		$	117.2		$	(5.2)		$	10.1		$	(3.6)		$	(11.7)
Adjustments:
Broth facility restoration and product recall costs(1)	6.9			—			6.9			—			—			6.9
Growth, reinvestment, restructuring programs & other(2)	—			(6.7)			6.7			—			—			6.7
Acquisition, integration, divestiture, and related costs(3)	1.9			(2.2)			4.1			—			—			4.1
Foreign currency loss on re-measurement of intercompany notes(4)	—			—			—			(2.4)			—			2.4
Mark-to-market adjustments(5)	—			—			—			7.0			—			(7.0)


Taxes on adjusting items	—			—			—			—			3.2			(3.2)
As adjusted (Non-GAAP)	$	120.8		$	108.3		$	12.5		$	14.7		$	(0.4)		$	(1.8)

As reported (% of net sales)	13.6		%	14.3		%	(0.6)		%	1.2		%	(0.4)		%	(1.4)		%
As adjusted (% of net sales)	14.7		%	13.2		%	1.5		%	1.8		%	—		%	(0.2)		%

Earnings (loss) per share from continuing operations:
Diluted																$	(0.22)
Adjusted diluted																$	(0.03)

Weighted average common shares:
Diluted for net loss from continuing operations																53.8
Diluted for adjusted net loss from continuing operations																53.8

Adjusted Net Income (Loss) from Continuing Operations, Adjusted EBIT from Continuing Operations, Adjusted EBITDA from Continuing Operations, Adjusted EBITDAS from Continuing Operations, Adjusted Net Income (Loss) Margin from Continuing Operations, Adjusted EBIT Margin from Continuing Operations, Adjusted EBITDA Margin from Continuing Operations, and Adjusted EBITDAS Margin from Continuing Operations, Adjusting for Certain Items Affecting Comparability

Adjusted net income (loss) from continuing operations represents GAAP net income (loss) from continuing operations as reported in the Condensed Consolidated Statements of Operations adjusted for items that, in management's judgment, significantly affect the assessment of earnings results between periods as outlined in the adjusted diluted EPS from continuing operations section above. This information is provided in order to allow investors to make meaningful comparisons of the Company's earnings performance between periods and to view the Company's business from the same perspective as Company management. This measure is also used as a component of the Board of Directors' measurement of the Company's performance for incentive compensation purposes and is the basis of calculating the adjusted diluted EPS from continuing operations metric outlined above.

Adjusted EBIT from continuing operations represents adjusted net income (loss) from continuing operations before interest expense, interest income, and income tax expense. Adjusted EBITDA from continuing operations represents adjusted net income (loss) from continuing operations before interest expense, interest income, income tax expense, and depreciation and amortization expense. Adjusted EBITDAS from continuing operations represents adjusted EBITDA from continuing operations before non-cash stock-based compensation expense. Adjusted EBIT from continuing operations, adjusted EBITDA from continuing operations, and adjusted EBITDAS from continuing operations are performance measures commonly used by management to assess operating performance and incentive compensation, and the Company believes they are commonly reported and widely used by investors and other interested parties as a measure of a company's operating performance between periods and as a component of our debt covenant calculations.

Adjusted net income (loss) margin from continuing operations, adjusted EBIT margin from continuing operations, adjusted EBITDA margin from continuing operations, and adjusted EBITDAS margin from continuing operations are calculated as the respective metric defined above as a percentage of net sales as reported in the Condensed Consolidated Statements of Operations.

The following table reconciles the Company's net income (loss) from continuing operations as presented in the Condensed Consolidated Statements of Operations, the relevant GAAP measure, to Adjusted net income (loss) from continuing operations, Adjusted EBIT from continuing operations, Adjusted EBITDA from continuing operations, and Adjusted EBITDAS from continuing operations for the three and six months ended June 30, 2023 and 2022:

Three Months Ended
June 30, Six Months Ended
June 30,
2023 2022 2023 2022
(Unaudited, in millions)
Net income (loss) from continuing operations (GAAP) $ 21.7 $ (27.3) $ 40.9 $ (41.1)
Growth, reinvestment, and restructuring programs (1) 8.9 13.9 24.2 44.0
Divestiture, acquisition, integration, and related costs (2) 4.8 7.2 8.6 10.2
Shareholder activism (3) — 1.1 0.3 1.7
Tax indemnification (4) 0.1 — 0.3 —
Foreign currency (gain) loss on re-measurement of intercompany notes (5) (2.5) 0.4 (2.7) (0.4)
Mark-to-market adjustments (6) (9.4) (11.5) (3.5) (62.3)
Central services and conveyed employee costs (7) — 21.7 — 43.5
Litigation matter (8) — — — 0.4
Less: Taxes on adjusting items 0.2 (2.8) (5.9) (2.5)
Adjusted net income (loss) from continuing operations (Non-GAAP) 23.8 2.7 62.2 (6.5)
Interest expense 19.2 17.0 37.0 33.7
Interest income (10.8) (0.2) (25.4) (4.3)
Income taxes 8.9 (4.5) 15.8 (6.8)
Add: Taxes on adjusting items (0.2) 2.8 5.9 2.5
Adjusted EBIT from continuing operations (Non-GAAP) 40.9 17.8 95.5 18.6
Depreciation and amortization 35.5 35.3 71.5 71.8
Adjusted EBITDA from continuing operations (Non-GAAP) 76.4 53.1 167.0 90.4
Stock-based compensation expense (9) 3.5 3.6 8.5 6.9
Adjusted EBITDAS from continuing operations (Non-GAAP) $ 79.9 $ 56.7 $ 175.5 $ 97.3
Net income (loss) margin from continuing operations 2.6 % (3.4) % 2.4 % (2.6) %
Adjusted net income (loss) margin from continuing operations 2.8 % 0.3 % 3.6 % (0.4) %
Adjusted EBIT margin from continuing operations 4.8 % 2.2 % 5.5 % 1.2 %
Adjusted EBITDA margin from continuing operations 9.1 % 6.6 % 9.6 % 5.7 %
Adjusted EBITDAS margin from continuing operations 9.5 % 7.0 % 10.1 % 6.1 %

Location in Condensed Three Months Ended
June 30, Six Months Ended
June 30,
Consolidated Statements of Operations 2023 2022 2023 2022
(Unaudited, in millions)
(1) Growth, reinvestment, and restructuring programs Other operating (income) expense, net $ 8.9 $ 13.9 $ 24.2 $ 44.0
(2) Divestiture, acquisition, integration, and related costs General and administrative 4.6 6.6 7.7 8.5
Other operating (income) expense, net 0.2 0.1 0.9 0.1
Cost of sales — 0.5 — 1.6
(3) Shareholder activism General and administrative — 1.1 0.3 1.7
(4) Tax indemnification Other (income) expense, net 0.1 — 0.3 —
(5) Foreign currency (gain) loss on re-measurement of intercompany notes (Gain) loss on foreign currency exchange (2.5) 0.4 (2.7) (0.4)
(6) Mark-to-market adjustments Other (income) expense, net (9.4) (11.5) (3.5) (62.3)
(7) Central services and conveyed employee costs Cost of sales — 4.9 — 9.9
General and administrative — 16.8 — 33.6
(8) Litigation matter General and administrative — — — 0.4
(9) Stock-based compensation expense included as an adjusting item Other operating (income) expense, net 2.4 1.7 4.6 2.2


	Three Months Ended March 31, 2023
(Unaudited, in millions, except per share amounts)	Gross profit			Total operating expenses			Operating income			Total other expense			Income tax expense			Net income from continuing operations
As reported (GAAP)	$	153.6		$	112.7		$	40.9		$	13.2		$	7.3		$	20.4
Adjustments:
Growth, reinvestment, restructuring programs & other(2)	—			(15.3)			15.3			—			—			15.3
Acquisition, integration, divestiture, and related costs(3)	—			(3.8)			3.8			—			—			3.8
Foreign currency gain on re-measurement of intercompany notes(4)	—			—			—			0.2			—			(0.2)
Mark-to-market adjustments(5)	—			—			—			(5.9)			—			5.9
Shareholder activism(6)	—			(0.3)			0.3			—			—			0.3
Tax indemnification(7)	—			—			—			(0.2)			—			0.2

Taxes on adjusting items	—			—			—			—			6.0			(6.0)
As adjusted (Non-GAAP)	$	153.6		$	93.3		$	60.3		$	7.3		$	13.3		$	39.7

As reported (% of net sales)	18.0		%	13.2		%	4.8		%	1.5		%	0.9		%	2.4		%
As adjusted (% of net sales)	18.0		%	10.9		%	7.1		%	0.9		%	1.6		%	4.6		%

Earnings per share from continuing operations:
Diluted																$	0.36
Adjusted diluted																$	0.70

Weighted average common shares:
Diluted for net income from continuing operations																56.7
Diluted for adjusted net income from continuing operations																56.7

Free Cash Flow From Continuing Operations

In addition to measuring our cash flow generation and usage based upon the operating, investing, and financing classifications included in the Condensed Consolidated Statements of Cash Flows, we also measure free cash flow from continuing operations (a Non-GAAP measure) which represents net cash used in operating activities from continuing operations less capital expenditures. We believe free cash flow is an important measure of ~~operating performance~~liquidity because it provides management and investors a measure of cash generated from operations that is available for mandatory payment obligations and investment opportunities such as funding acquisitions, repaying debt, repurchasing public debt, and repurchasing our common stock.

The following table reconciles cash flow used in operating activities from continuing operations (a GAAP measure) to our free cash flow from continuing operations (a Non-GAAP measure).


		Six Months Ended June 30,				Three Months Ended March 31,
		2023		2022		2024	2023
		(In millions)				(In millions)
Cash flow used in operating activities from continuing operations	Cash flow used in operating activities from continuing operations	$	(49.8)	$	(70.7)
Less: Capital expenditures	Less: Capital expenditures	(54.7)		(43.4)
Free cash flow from continuing operations	Free cash flow from continuing operations	$	(104.5)	$	(114.1)

4038

Other Commitments and Contingencies

The Company also has selected levels of property and casualty risks, primarily related to employee health care, workers' compensation claims, and other casualty losses, in addition to contingent liabilities related to the ordinary course of litigation, investigations, and tax audits.

See Note 16 to our Condensed Consolidated Financial Statements included herein and Note 20 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2022~~2023 for additional information about our commitments and contingent obligations.

Recent Accounting Pronouncements

~~The Company has considered all~~Information regarding recent accounting pronouncements ~~and has concluded there are no new pronouncements that had or will have a material impact on~~is provided in Note 2 to the ~~Company’s results of operations, comprehensive income, financial condition, cash flows, shareholders’ equity or related disclosures based on current information.~~Company's Condensed Consolidated Financial Statements.

Critical Accounting Estimates

A description of the Company's critical accounting estimates is contained in our Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. There were no material changes to the Company's critical accounting estimates in the three ~~and six~~ months ended ~~June 30, 2023.~~March 31, 2024.

Cautionary Statement Regarding Forward Looking Statements

From time to time, we and our representatives may provide information, whether orally or in writing, including certain statements in this Quarterly Report on Form 10-Q, which are deemed to be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act"). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words "believe," "estimate," "project," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could," and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. We do not intend to update these forward-looking statements following the date of this report. In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q and other public statements we make. Such factors include, but are not limited to: risks related to ~~the impact that the divestiture of a significant portion of our Meal Preparation Business or any such divestiture might have on the Company’s operations;~~quality issues, disruptions, or inefficiencies in our supply chain and/or operations; loss or consolidation of key suppliers; raw material and commodity costs due to inflation; labor strikes or work stoppages; multiemployer pension plans; labor shortages and increased competition for labor; success of our growth, reinvestment, and restructuring programs; our level of indebtedness and related obligations; disruptions in the financial markets; interest rates; changes in foreign currency exchange rates; ~~collectibility of our note receivable,~~ customer concentration and consolidation; competition; our ability to execute on our business strategy; our ability to continue to make acquisitions and execute on divestitures or effectively manage the growth from acquisitions; impairment of goodwill or long lived assets; changes and developments affecting our industry, including customer ~~preferences;~~preferences and the prevalence of weight loss drugs; the outcome of litigation and regulatory proceedings to which we and/or our customers may be a party; product recalls; changes in laws and regulations applicable to us; shareholder activism; disruptions in or failures of our information technology systems; geopolitical events; changes in weather conditions, climate changes, and natural disasters; and other risks that are set forth in the Risk Factors section, the Legal Proceedings section, the Management's Discussion and Analysis of Financial Condition and Results of Operations section, and other sections of this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, and from time to time in our filings with the Securities and Exchange Commission ("SEC").

4139

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to certain market risks, which exist as part of its ongoing business operations. The Company uses derivative instruments, where appropriate, to manage these risks. Refer to Note 17 to our Condensed Consolidated Financial Statements for additional information regarding these derivative instruments.

For additional information regarding the Company's exposure to certain market risk, refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, within the Company's ~~2022~~2023 Annual Report on Form 10-K. There have been no significant changes in the Company's portfolio of financial instruments or market risk exposures from the ~~2022~~2023 year-end.

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in the Company's reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), to allow timely decisions regarding required disclosures.

As of ~~June 30, 2023,~~March 31, 2024, management, with the participation of our CEO and CFO, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. The scope of management’s assessment of the effectiveness of our disclosure controls and procedures includes all of the Company’s subsidiaries with the exception of the internal control over financial reporting of the operations of the acquisitions of the seasoned pretzel and the coffee roasting capabilities, which were completed on April 1, 2023 and June 30, 2023, respectively. This exclusion is in accordance with the general guidance from the Staff of the SEC that an assessment of a recently acquired business's internal control over financial reporting may be omitted from the scope of management’s assessment for a period of up to one year following the acquisition. We are in the process of implementing the Company’s internal control over financial reporting of the acquisitions. The net sales and total assets of the acquisitions represented approximately ~~0.1%~~3.9% and ~~2.4%~~3.7%, respectively, of the Condensed Consolidated Financial Statement amounts as of and for the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024.

There have been no changes in the Company's internal control over financial reporting that occurred during the quarter ended ~~June 30, 2023~~March 31, 2024 that has materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting.

4240

Part II — Other Information

Item 1. Legal Proceedings

Information regarding legal proceedings is available in Note 16 to the Condensed Consolidated Financial Statements in this report.

Item 1A. Risk Factors

Information regarding risk factors appears in Management's Discussion and Analysis of Financial Condition and Results of Operations — Information Related to Forward-Looking Statements, in Part I — Item 2 of this Form 10-Q, and in Part I — Item 1A of the TreeHouse Foods, Inc. Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023. There have been no material changes from the risk factors previously disclosed in the TreeHouse Foods, Inc. Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

~~Not applicable.~~On November 2, 2017, the Company announced that the Board of Directors adopted a stock repurchase program. The stock repurchase program authorizes the Company to repurchase up to $400 million of the Company's common stock at any time, or from time to time. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The size and timing of any repurchases will depend on price, market and business conditions, and other factors. The Company has the ability to make discretionary repurchases up to an annual cap of $150 million under the $400 million total authorization. The stock repurchase program does not have an expiration date. Any shares repurchased will be held as treasury stock.

The following table presents the total number of shares of common stock purchased during the first quarter of 2024, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program:


Period	Weighted Average Price Paid per Share		Total Number of Shares Purchased	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Maximum Number of Shares that may yet be Purchased under the Program
	(In millions)
January 1 through January 31, 2024	$	—	—	—	$	166.7
February 1 through February 29, 2024	36.55		0.3	0.3	157.5
March 1 through March 31, 2024	36.63		0.9	0.9	122.8
For the Quarter Ended March 31, 2024	$	36.61	1.2	1.2	$	122.8

For the quarter ended March 31, 2024, the Company repurchased approximately 1.2 million shares of common stock for a total of $43.9 million, excluding excise tax. Weighted average price per share excludes any excise tax imposed on stock repurchases.

Subsequent to March 31, 2024, the Company repurchased approximately 0.6 million shares of common stock at a weighted average share price of $36.95 for a total of $20.6 million.

Item 5. Other Information

During the quarter ended ~~June 30, 2023,~~March 31, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement.

Item 6. Exhibits


3.1			Restated Certificate of Incorporation of TreeHouse Foods, Inc., as amended May 26, 2023, is incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K dated May 30, 2023.
3.2			Amended and Restated By-Laws of TreeHouse Foods, Inc. is incorporated by reference to Exhibit 3.3 of the Company’s Current Report on Form 8-K dated May 30, 2023.
10.1,*			~~Amendment No. 1 to Seller Note Credit Agreement, dated April 4, 2023, by and among~~ TreeHouse Foods, Inc.~~, Rushmore Investment II LLC, and Rushmore Investment III LLC.~~ 202 4 Performance Unit Agreement.
22*			List of Guarantor Subsidiaries.
31.1*			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*			Inline XBRL Instance Document.
101.SCH*			Inline XBRL Taxonomy Extension Schema Document.
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*			The cover page from TreeHouse Foods, Inc.'s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2023,~~March 31, 2024, formatted in Inline XBRL (included as Exhibit 101).

*Filed herewith.

**Management contract or compensatory plan or arrangement.

4342

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



			TREEHOUSE FOODS, INC.

Date: ~~August 7, 2023~~May 6, 2024			/s/ Patrick M. O'Donnell
			Patrick M. O'Donnell
			Executive Vice President and Chief Financial Officer

4443


			Page
Part I — Financial Information

Item 1 — Financial Statements (Unaudited)			3

Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations			26

Item 3 — Quantitative and Qualitative Disclosures About Market Risk			4240

Item 4 — Controls and Procedures			4240



Part II — Other Information

Item 1 — Legal Proceedings			4341

Item 1A — Risk Factors			4341

Item 2 — Unregistered Sale of Equity Securities and Use of Proceeds			4341

Item 5 — Other Information			4341

Item 6 — Exhibits			4342

Signatures			4443


	Severance		Retention		Total Exit Cost Liabilities
	(In millions)
Balance as of December 31, 2022	$	8.8	$	4.2	$	13.0
Expenses recognized	0.3		2.3		2.6
Cash payments	(5.0)		(6.2)		(11.2)


Balance as of June 30, 2023	$	4.1	$	0.3	$	4.4


		Location in Condensed	Three Months Ended June 30,				Six Months Ended June 30,
		Consolidated Statements of Operations	2023		2022		2023		2022
			(Unaudited, in millions)
(1)	Growth, reinvestment, and restructuring programs	Other operating (income) expense, net	$	8.9	$	13.9	$	24.2	$	44.0



(2)	Divestiture, acquisition, integration, and related costs	General and administrative	4.6		6.6		7.7		8.5
		Other operating (income) expense, net	0.2		0.1		0.9		0.1
		Cost of sales	—		0.5		—		1.6

(3)	Shareholder activism	General and administrative	—		1.1		0.3		1.7


(4)	Tax indemnification	Other (income) expense, net	0.1		—		0.3		—
(5)	Foreign currency (gain) loss on re-measurement of intercompany notes	(Gain) loss on foreign currency exchange	(2.5)		0.4		(2.7)		(0.4)
(6)	Mark-to-market adjustments	Other (income) expense, net	(9.4)		(11.5)		(3.5)		(62.3)
(7)	Central services and conveyed employee costs	Cost of sales	—		4.9		—		9.9
		General and administrative	—		16.8		—		33.6

(8)	Litigation matter	General and administrative	—		—		—		0.4




(9)	Stock-based compensation expense included as an adjusting item	Other operating (income) expense, net	2.4		1.7		4.6		2.2