TreeHouse Closes Public Note Offering - Analyst Blog

Processed food retailer TreeHouse Foods Inc. THS has closed the previously-announced offering of unsecured 8-year senior notes. The offering comprised $400 million principal amount of 4.87% Senior Notes due 2022.

Net proceeds from the notes will be utilized to fund its revolving credit facility and repurchase the outstanding 7.750% Senior Notes due 2018. TreeHouse is committed to maintain its financial discipline and solid operational performance by generating enough funds, allowing it to service its debt uninterruptedly.

TreeHouse also announced that it had received consents from the 74.6% of its holders of its outstanding 7.750% Senior Notes worth $298 million due 2018 to proposed amendments regarding the 2018 notes.

BofA Merrill Lynch, J.P. Morgan Securities LLC of J.P Morgan Chase & Co., Wells Fargo Securities, LLC of Wells Fargo & Company, BMO Capital Markets Corp. and SunTrust Robinson Humphrey, Inc. of SunTrust Bank Inc. acted as joint book-running managers for the offering.   

Last month, TreeHouse reported fourth-quarter and full-year 2013 results. The company logged net earnings of 98 cents per share, beating the Zacks Consensus Estimate of 91 cents by 7.7%. Adjusted earnings per share also surpassed the year-ago earnings of 86 cents by 14.0% backed by higher revenues in all the segments.

Total revenue increased 11.4% year over year to $660.3 million owing to acquisitions (Cains Foods and the aseptic cheese and pudding business from Associated Milk Producers Inc.) as well as higher volume and favorable mix. Revenues also beat the Zacks Consensus Estimate of $654.0 million by 1%.

Our Take

TreeHouse presently carries a Zacks Rank #3 (Hold). Some better ranked stocks in the food sector worth considering are Diamond Foods Inc. DMND, The Hain Celestial Group Inc. HAIN and Post Holdings Inc. POST. All these stocks carry a Zacks Rank #2 (Buy).