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 ~~September 30, 2020~~.March 31, 2021.



			☐			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~~) (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	NYSE

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
(Do not check if a 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. o

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

Yes ☐ No ☒

Number of shares of Common Stock, $0.01 par value, outstanding as of ~~October~~April 30, ~~2020: 56,509,230.~~

2021: 56,220,707.

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)


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	48.8	$	364.6

Receivables, net	241.0		308.8
Inventories	653.0		598.6
Prepaid expenses and other current assets	101.6		86.1

Assets of discontinued operations	74.5		70.7

Total current assets	1,118.9		1,428.8
Property, plant, and equipment, net	1,053.1		1,070.0
Operating lease right-of-use assets	155.2		160.7
Goodwill	2,179.9		2,178.7
Intangible assets, net	600.4		615.0
Other assets, net	35.0		32.5

Total assets	$	5,142.5	$	5,485.7
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	610.1	$	627.7
Accrued expenses	295.5		340.6
Current portion of long-term debt	15.9		15.7
Liabilities of discontinued operations	5.9		6.7
Total current liabilities	927.4		990.7
Long-term debt	1,929.8		2,199.0
Operating lease liabilities	137.1		144.5
Deferred income taxes	158.4		158.3
Other long-term liabilities	125.3		128.2

Total liabilities	3,278.0		3,620.7
Commitments and contingencies (Note 14)	0		0
Stockholders' equity:
Preferred stock, par value $0.01 per share, 10.0 shares authorized, NaN issued	0		0
Common stock, par value $0.01 per share, 90.0 shares authorized, 56.2 and 55.9 shares outstanding, respectively	0.6		0.6
Treasury stock	(108.3)		(108.3)
Additional paid-in capital	2,176.9		2,179.9
Accumulated deficit	(141.7)		(143.2)
Accumulated other comprehensive loss	(63.0)		(64.0)
Total stockholders' equity	1,864.5		1,865.0
Total liabilities and stockholders' equity	$	5,142.5	$	5,485.7

September 30, 2020 December 31, 2019
Assets

Current assets:

Cash and cash equivalents $ 365.1
$ 202.3
Receivables, net 268.4
270.6
Inventories 664.1
544.0
Prepaid expenses and other current assets 128.7
44.5
Assets held for sale 0
27.0
Assets of discontinued operations 125.5
131.1
Total current assets 1,551.8

1,219.5
Property, plant, and equipment, net 1,013.4
1,045.2
Operating lease right-of-use assets 162.6
175.3
Goodwill 2,115.1
2,107.3
Intangible assets, net 513.3
554.7
Other assets, net 29.7
37.4
Total assets $ 5,385.9

$ 5,139.4
Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable $ 555.0
$ 508.4
Accrued expenses 342.5
273.2
Current portion of long-term debt 15.6
15.3
Liabilities of discontinued operations 7.5
16.5
Total current liabilities 920.6

813.4
Long-term debt 2,201.5
2,091.7
Operating lease liabilities 144.5
158.5
Deferred income taxes 150.7
101.5
Other long-term liabilities 141.3
143.4
Total liabilities 3,558.6

3,308.5
Commitments and contingencies (Note 14)

Stockholders’ equity:

Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued 0
0
Common stock, par value $0.01 per share, 90.0 shares authorized, 56.5 and 56.2 shares issued and outstanding, respectively 0.6
0.6
Treasury stock (83.3 ) (83.3 )
Additional paid-in capital 2,174.0
2,154.6
Accumulated deficit (177.6 ) (157.0 )
Accumulated other comprehensive loss (86.4 ) (84.0 )
Total stockholders’ equity 1,827.3

1,830.9
Total liabilities and stockholders’ equity $ 5,385.9

$ 5,139.4

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 March 31,
		2021		2020
Net sales		$	1,057.3	$	1,084.9
Cost of sales		876.2		890.0
Gross profit		181.1		194.9
Operating expenses:
Selling and distribution		68.7		65.1
General and administrative		63.3		63.6
Amortization expense		18.4		17.5

Other operating expense, net		19.7		18.5
Total operating expenses		170.1		164.7
Operating income		11.0		30.2
Other expense:
Interest expense		25.1		24.8
Loss on extinguishment of debt		14.4		0
(Gain) loss on foreign currency exchange		(1.3)		14.4
Other (income) expense, net		(27.4)		64.0
Total other expense		10.8		103.2
Income (loss) before income taxes		0.2		(73.0)
Income tax benefit		(0.2)		(40.2)
Net income (loss) from continuing operations		0.4		(32.8)
Net income from discontinued operations		1.1		1.6
Net income (loss)		$	1.5	$	(31.2)

Earnings (loss) per common share - basic:
Continuing operations		$	0.01	$	(0.58)
Discontinued operations		0.02		0.03
Earnings (loss) per share basic (1)		$	0.03	$	(0.55)

Earnings (loss) per common share - diluted:
Continuing operations		$	0.01	$	(0.58)
Discontinued operations		0.02		0.03
Earnings (loss) per share diluted (1)		$	0.03	$	(0.55)

Weighted average common shares:
Basic		56.0		56.3
Diluted		56.5		56.3

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net sales $ 1,045.7
$ 1,057.3
$ 3,172.5
$ 3,149.4
Cost of sales 857.5
871.0
2,598.2
2,577.7
Gross profit 188.2

186.3

574.3

571.7
Operating expenses:
Selling and distribution 59.8
61.2
187.9
191.2
General and administrative 51.0
51.5
188.3
199.9
Amortization expense 17.6
17.7
52.5

56.4
Asset impairment 0
88.0
0
88.0
Other operating expense, net 20.0
23.5
50.3
84.2
Total operating expenses 148.4

241.9

479.0

619.7
Operating income (loss) 39.8

(55.6 )
95.3

(48.0 )
Other expense:
Interest expense 26.9
27.3
77.9
78.5
Loss on extinguishment of debt 1.2
0
1.2
0
(Gain) loss on foreign currency exchange (3.8 ) 0.4
4.1
(1.3 )
Other (income) expense, net (6.9 ) 14.1
51.5
50.5
Total other expense 17.4

41.8

134.7

127.7
Income (loss) before income taxes 22.4
(97.4 ) (39.4 ) (175.7 )
Income tax expense (benefit) 11.0
(36.4 ) (15.4 ) (50.1 )
Net income (loss) from continuing operations 11.4
(61.0 ) (24.0 ) (125.6 )
Net income (loss) from discontinued operations 0.7
(116.8 ) 3.4
(250.9 )
Net income (loss) $ 12.1

$ (177.8 )
$ (20.6 )
$ (376.5 )

Earnings (loss) per common share - basic:
Continuing operations $ 0.20
$ (1.08 ) $ (0.42 ) $ (2.23 )
Discontinued operations 0.01
(2.07 ) 0.06
(4.46 )
Earnings (loss) per share basic (1) $ 0.21
$ (3.16 ) $ (0.36 ) $ (6.70 )

Earnings (loss) per common share - diluted:
Continuing operations $ 0.20
$ (1.08 ) $ (0.42 ) $ (2.23 )
Discontinued operations 0.01
(2.07 ) 0.06
(4.46 )
Earnings (loss) per share diluted (1) $ 0.21
$ (3.16 ) $ (0.36 ) $ (6.70 )

Weighted average common shares:
Basic 56.6
56.3
56.5
56.2
Diluted 56.8
56.3
56.5
56.2


~~(1)~~	(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)

(Unaudited, in millions)


	Three Months Ended September 30,					Nine Months Ended September 30,							Three Months Ended March 31,
	2020		2019			2020			2019					2021		2020
Net income (loss)	$	12.1	$	(177.8	)	$	(20.6	)	$	(376.5	)	Net income (loss)		$	1.5	$	(31.2)

Other comprehensive income (loss):												Other comprehensive income (loss):
Foreign currency translation adjustments	5.7		(5.5		)	(2.8		)	8.5			Foreign currency translation adjustments		0.9		(15.9)
Pension and postretirement reclassification adjustment	0.2		0.1			0.4			0.4			Pension and postretirement reclassification adjustment		0.1		0.1

Other comprehensive income (loss)	5.9		(5.4		)	(2.4		)	8.9			Other comprehensive income (loss)		1.0		(15.8)
Comprehensive income (loss)	$	18.0	$	(183.2	)	$	(23.0	)	$	(367.6	)	Comprehensive income (loss)		$	2.5	$	(47.0)

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in millions)


						Retained					Accumulated
				Additional		Earnings					Other
	Common Stock			Paid-In		(Accumulated		Treasury Stock			Comprehensive		Total
	Shares	Amount		Capital		Deficit)		Shares	Amount		Loss		Equity
Balance, January 1, 2020	58.0	$	0.6	$	2,154.6	$	(157.0)	(1.8)	$	(83.3)	$	(84.0)	$	1,830.9
Net loss	—	—		—		(31.2)		—	—		—		(31.2)
Other comprehensive loss	—	—		—		—		—	—		(15.8)		(15.8)

Exercise of stock options and issuance of other stock awards	0.2	—		(3.9)		—		—	—		—		(3.9)
Stock-based compensation	—	—		8.1		—		—	—		—		8.1

Balance, March 31, 2020	58.2	$	0.6	$	2,158.8	$	(188.2)	(1.8)	$	(83.3)	$	(99.8)	$	1,788.1















Balance, January 1, 2021	58.3	$	0.6	$	2,179.9	$	(143.2)	(2.4)	$	(108.3)	$	(64.0)	$	1,865.0
Net income	—	—		—		1.5		—	—		—		1.5
Other comprehensive income	—	—		—		—		—	—		1.0		1.0

Exercise of stock options and issuance of other stock awards	0.3	—		(7.9)		—		—	—		—		(7.9)
Stock-based compensation	—	—		4.9		—		—	—		—		4.9

Balance, March 31, 2021	58.6	$	0.6	$	2,176.9	$	(141.7)	(2.4)	$	(108.3)	$	(63.0)	$	1,864.5

Retained Accumulated
Additional Earnings Other
Common Stock Paid-In (Accumulated Treasury Stock Comprehensive Total
Shares Amount Capital Deficit) Shares Amount Loss Equity
Balance, January 1, 2019 57.8
$ 0.6
$ 2,135.8
$ 204.0
(1.8 ) $ (83.3 ) $ (97.1 ) $ 2,160.0
Net loss —
—
—
(26.9 ) —
—
—
(26.9 )
Other comprehensive income —
—
—
—
—
—
6.9
6.9
Equity awards exercised 0.2
—
(4.4 ) —
—
—
—
(4.4 )
Stock-based compensation —
—
6.1
—
—
—
—
6.1
Balance, March 31, 2019 58.0
$ 0.6
$ 2,137.5
$ 177.1
(1.8 ) $ (83.3 ) $ (90.2 ) $ 2,141.7
Net loss —
—
—
(171.8 ) —
—
—
(171.8 )
Other comprehensive income —
—
—
—
—
—
7.4
7.4
Equity awards exercised —
—
(0.7 ) —
—
—
—
(0.7 )
Stock-based compensation —
—
6.7
—
—
—
—
6.7
Balance, June 30, 2019 58.0
$ 0.6
$ 2,143.5
$ 5.3
(1.8 ) $ (83.3 ) $ (82.8 ) $ 1,983.3
Net loss —
—
—
(177.8 ) —
—
—
(177.8 )
Other comprehensive loss —
—
—
—
—
—
(5.4 ) (5.4 )
Equity awards exercised —
—
0.2
—
—
—
—
0.2
Stock-based compensation —
—
5.7
—
—
—
—
5.7
Balance, September 30, 2019 58.0
$ 0.6
$ 2,149.4
$ (172.5 ) (1.8 ) $ (83.3 ) $ (88.2 ) $ 1,806.0

Balance, January 1, 2020 58.0
$ 0.6
$ 2,154.6
$ (157.0 ) (1.8 ) $ (83.3 ) $ (84.0 ) $ 1,830.9
Net loss —
—
—
(31.2 ) —
—
—
(31.2 )
Other comprehensive loss —
—
—
—
—
—
(15.8 ) (15.8 )
Equity awards exercised 0.2
—
(3.9 ) —
—
—
—
(3.9 )
Stock-based compensation —
—
8.1
—
—
—
—
8.1
Balance, March 31, 2020 58.2
$ 0.6
$ 2,158.8
$ (188.2 ) (1.8 ) $ (83.3 ) $ (99.8 ) $ 1,788.1
Net loss —
—
—
(1.5 ) —
—
—
(1.5 )
Other comprehensive income —
—
—
—
—
—
7.5
7.5
Equity awards exercised 0.1
—
2.5
—
—
—
—
2.5
Stock-based compensation —
—
7.1
—
—
—
—
7.1
Balance, June 30, 2020 58.3
$ 0.6
$ 2,168.4
$ (189.7 ) (1.8 ) $ (83.3 ) $ (92.3 ) $ 1,803.7
Net income —
—
—
12.1
—
—
—
12.1
Other comprehensive income —
—
—
—
—
—
5.9
5.9
Equity awards exercised —
—
(0.2 ) —
—
—
—
(0.2 )
Stock-based compensation —
—
5.8
—
—
—
—
5.8
Balance, September 30, 2020 58.3
$ 0.6
$ 2,174.0
$ (177.6 ) (1.8 ) $ (83.3 ) $ (86.4 ) $ 1,827.3

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


	Three Months Ended March 31,
	2021		2020

Cash flows from operating activities:
Net income (loss)	$	1.5	$	(31.2)
Net income from discontinued operations	1.1		1.6
Net income (loss) from continuing operations	0.4		(32.8)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	53.5		49.8

Stock-based compensation	4.9		7.9
Loss on extinguishment of debt	14.4		0
Unrealized (gain) loss on derivative contracts	(21.7)		64.1
Deferred income taxes	2.2		15.0
Other	(1.2)		19.2
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Receivables	67.8		(24.0)
Inventories	(58.4)		1.1
Prepaid expenses and other assets	(28.3)		(60.4)
Accounts payable	(7.2)		39.7
Accrued expenses and other liabilities	(31.9)		(11.1)
Net cash (used in) provided by operating activities - continuing operations	(5.5)		68.5
Net cash used in operating activities - discontinued operations	(3.1)		(6.0)
Net cash (used in) provided by operating activities	(8.6)		62.5
Cash flows from investing activities:
Additions to property, plant, and equipment	(28.0)		(27.3)
Additions to intangible assets	(3.3)		(3.8)
Proceeds from sale of fixed assets	0.9		5.1

Proceeds from sale of investments	17.2		0
Net cash used in investing activities - continuing operations	(13.2)		(26.0)
Net cash used in investing activities - discontinued operations	(0.4)		(0.3)
Net cash used in investing activities	(13.6)		(26.3)
Cash flows from financing activities:
Borrowings under Revolving Credit Facility	30.0		100.0

Payments on financing lease obligations	(0.5)		(0.4)
Payment of deferred financing costs	(7.0)		0
Payments on Term Loans	(1,126.0)		(3.5)
Proceeds from refinanced Term Loans	1,430.0		0
Repurchase of 2024 Notes	(602.9)		0
Payment of debt premium for extinguishment of debt	(9.0)		0

Payments related to stock-based award activities	(7.9)		(3.8)
Net cash (used in) provided by financing activities - continuing operations	(293.3)		92.3
Net cash (used in) provided by financing activities - discontinued operations	0		0
Net cash (used in) provided by financing activities	(293.3)		92.3
Effect of exchange rate changes on cash and cash equivalents	(0.3)		(0.4)

Net (decrease) increase in cash and cash equivalents	(315.8)		128.1


Cash and cash equivalents, beginning of period	364.6		202.3
Cash and cash equivalents, end of period	$	48.8	$	330.4

Nine Months Ended
September 30,
2020 2019

Cash flows from operating activities:
Net loss $ (20.6 ) $ (376.5 )
Net income (loss) from discontinued operations 3.4
(250.9 )
Net loss from continuing operations (24.0 ) (125.6 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 150.5
157.3
Asset impairment 0
88.0
Stock-based compensation 20.7
17.5
Loss on extinguishment of debt 1.2
0
Unrealized loss on derivative contracts 50.6
53.6
Deferred income taxes 50.5
(30.2 )
Other 9.3
2.4
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Receivables 2.6
45.4
Inventories (119.7 ) (84.5 )
Prepaid expenses and other assets (87.5 ) (24.2 )
Accounts payable 49.5
(61.8 )
Accrued expenses and other liabilities 20.8
(32.1 )
Net cash provided by operating activities - continuing operations 124.5
5.8
Net cash (used in) provided by operating activities - discontinued operations (1.6 ) 39.9
Net cash provided by operating activities 122.9
45.7
Cash flows from investing activities:
Additions to property, plant, and equipment (67.2 ) (85.5 )
Additions to intangible assets (11.9 ) (19.3 )
Proceeds from sale of fixed assets 5.1
5.0
Acquisition (17.5 ) 0
Proceeds from divestiture 26.9
0
Net cash used in investing activities - continuing operations (64.6 ) (99.8 )
Net cash (used in) provided by investing activities - discontinued operations (0.8 ) 71.7
Net cash used in investing activities (65.4 ) (28.1 )
Cash flows from financing activities:
Borrowings under Revolving Credit Facility 100.0
107.6
Payments under Revolving Credit Facility (100.0 ) (107.6 )
Payments on financing lease obligations (1.3 ) (1.5 )
Payment of deferred financing costs (6.9 ) 0
Payments on Term Loans (10.5 ) (135.0 )
Proceeds from issuance of 2028 Notes 500.0
0
Repurchase of 2022 Notes (375.9 ) 0
Receipts related to stock-based award activities 2.6
0.7
Payments related to stock-based award activities (4.1 ) (5.5 )
Net cash provided by (used in) financing activities - continuing operations 103.9
(141.3 )
Net cash used in financing activities - discontinued operations 0
0
Net cash provided by (used in) financing activities 103.9
(141.3 )
Effect of exchange rate changes on cash and cash equivalents 1.4
4.5


	Three Months Ended March 31,
	2021		2020

Supplemental cash flow disclosures:
Interest paid	$	36.4	$	37.8
Net income taxes (refunded) paid	(0.2)		5.0

Non-cash investing and financing activities:
Accrued purchase of property and equipment	$	27.5	$	21.1
Accrued other intangible assets	3.9		2.9

Right-of-use assets and operating lease obligations recognized	0.9		1.7
Accrued deferred financing costs	1.5		0

Nine Months Ended
September 30,
2020 2019

Net increase (decrease) in cash and cash equivalents 162.8
(119.2 )
Cash and cash equivalents, beginning of period 202.3
164.3
Cash and cash equivalents, end of period $ 365.1
$ 45.1

Supplemental cash flow disclosures:
Interest paid $ 78.3
$ 98.8
Net income taxes paid (refunded) 7.3
(7.7 )

Non-cash investing and financing activities:
Accrued purchase of property and equipment $ 23.9
$ 30.9
Accrued other intangible assets 2.9
3.7
Right-of-use assets and operating lease obligations recognized at ASU 2016-02 transition —
252.5
Right-of-use assets and operating lease obligations recognized after ASU 2016-02 transition 15.3
9.6
Accrued deferred financing costs 1.4
0

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021

(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, ~~2019.~~2020. Results of operations for interim periods are not necessarily indicative of annual results.

The preparation of our Condensed Consolidated Financial Statements in conformity with GAAP requires us to use our judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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.

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, ~~2019.~~

~~Change in Segments~~

In the first quarter of 2020, the Company changed how it manages its business, allocates resources, and goes to market, which resulted in modifications to its organizational and segment structure. All prior period information has been recast to reflect this change in reportable segments. Refer to Note 16 for additional information.

2020.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Not yet adopted

~~Adopted~~

In March 2020, the SEC amended Rules 3-10 and 3-16 of Regulation S-X regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. The final rule also allows for the simplified disclosure to be included within Management’s Discussion and Analysis of Financial Condition and Results of Operations. This rule is effective January 4, 2021 with earlier adoption permitted. The Company early adopted this new rule during the first quarter of 2020.

~~In December 2019,~~ the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2019-12,~~ ~~Simplifying the Accounting for Income Taxes (Topic 740),~~ which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020 with early adoption permitted. Amendments are to be applied prospectively, except for certain amendments that are to be applied either retrospectively or with a modified retrospective approach through a cumulative effect adjustment recorded to retained earnings. The Company early adopted this guidance during the first quarter of 2020. The adoption did not have a material impact on the Company's financial statements.

~~TREEHOUSE FOODS, INC.~~

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

~~Not yet adopted~~

~~In March 2020, the FASB issued ASU~~ 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. ~~The new~~ASU 2020-04 was further amended in January 2021 by ASU 2021-01, Reference Rate Reform (Topic 848): Scope. This guidance provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity. Entities may apply the ASU from March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of this new ASU on its ~~consolidated financial statements~~Condensed Consolidated Financial Statements and related disclosures.

3. GROWTH, REINVESTMENT, AND RESTRUCTURING PROGRAMS

~~3. RESTRUCTURING PROGRAMS~~

The Company’s ~~restructuring~~growth, reinvestment, and ~~margin improvement~~restructuring activities are part of an enterprise-wide transformation to build long-term sustainable growth and improve ~~long-term~~ profitability offor the Company. These activities are aggregated into ~~two~~the following categories: (1) Strategic Growth Initiatives (expected completion in 2023) – a growth and reinvestment strategy (2) Structure to Win (completed in 2020) – an operating expense improvement program, (3) TreeHouse 2020 (completed in 2020) – a long-term growth and margin improvement strategy, and ~~(2) Structure to Win – an operating expense improvement program~~(4) other (collectively the ~~"Restructuring~~"Growth, Reinvestment, and Restructuring Programs").

~~The costs by activity for the Restructuring Programs are outlined below:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions)
TreeHouse 2020 $ 9.1
$ 21.9
$ 30.0
$ 76.5
Structure to Win 11.1
2.4
21.9
13.4
Total Restructuring Programs $ 20.2
$ 24.3
$ 51.9
$ 89.9

Expenses associated with these programs are recognized in Cost of sales, General and administrative, and Other operating expense, net in the Condensed Consolidated Statements of Operations. The Company does not allocate costs associated with Restructuring Programs to reportable segments when evaluating the performance of its segments. As a result, costs associated with Restructuring Programs are not presented by reportable segment. Refer to Note 16 for additional information.

Below is a ~~summary~~description of ~~costs by line item for~~each of the Growth, Reinvestment, and Restructuring Programs:

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions)
Cost of sales $ 0.1
$ 0.6
$ 0.8
$ 3.8
General and administrative 0.2
0
1.2
1.7
Other operating expense, net 19.9
23.7
49.9
84.4
Total $ 20.2
$ 24.3
$ 51.9
$ 89.9

(1) Strategic Growth Initiatives

~~The table below presents the exit cost liability activity for the Restructuring Programs as of September 30, 2020:~~

Severance
(In millions)
Balance as of December 31, 2019 $ 5.6
Expenses recognized 4.1
Cash payments (5.5 )
Balance as of September 30, 2020 $ 4.2

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 customer's preferred manufacturing and distribution partner. This reinvestment will occur through 2023, and 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 building marketing competencies, furthering our e-commerce strategy and digital capabilities, and advancing automation and value engineering in our supply chain network. Employee-related costs primarily consist of dedicated employee costs.

~~Liabilities as of September 30, 2020 associated with total exit cost reserves relate to severance. The severance liability is included in Accrued expenses in the Condensed Consolidated Balance Sheets.~~

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~(1)~~(2) Structure to Win

In the first quarter of 2018, the Company announced an operating expenses improvement restructuring program ("Structure to Win") designed to align our organizational structure with strategic priorities. The program was intended to drive operational effectiveness, cost reduction, and position the Company for growth with a focus on a lean customer-centric go-to-market team, centralized supply chain, and streamlined administrative functions. This program was completed in 2020. Total costs within this program were $92.7 million, comprised primarily of consulting and professional fees, severance, dedicated employee costs, and Corporate office closing costs.

(3) TreeHouse 2020

In the third quarter of 2017, the Company announced TreeHouse 2020, a program intended to accelerate long-term growth through optimization of our manufacturing network, transformation of our mixing centers and warehouse footprint, and leveraging of systems and processes to drive performance. The Company’s workstreams related to these activities and selling, general, and administrative cost reductions ~~will~~were intended to increase our capacity utilization, expand operating margins, and streamline our plant structure to optimize our supply chain. This program ~~will be executed through~~was completed in 2020. Total costs within this program were $299.8 million, comprised primarily of consulting and professional fees, severance, dedicated employee costs, and accelerated depreciation for plant and other office closures.

(4) Other

Other costs include restructuring costs incurred for costs to exit facilities, information technology system implementation, and other administrative costs.

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


	Three Months Ended March 31,
		2021		2020
		(In millions)
Strategic growth initiatives		$	16.1	$	0
Structure to Win		0		7.8
TreeHouse 2020		0		12.1
Other		3.5		0
Total		$	19.6	$	19.9

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, and 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, information technology implementation, asset relocation costs, and costs to exit facilities.

Expenses associated with these programs are recorded in Cost of sales, General and administrative, and Other operating expense, net in the Condensed Consolidated Statements of Operations. The Company does not allocate costs associated with Growth, Reinvestment, and Restructuring Programs to reportable segments when evaluating the performance of its segments. As a result, costs associated with Growth, Reinvestment, and Restructuring Programs are not presented by reportable segment. Refer to Note 16 for additional information.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a summary of ~~the overall TreeHouse 2020 program~~ costs by ~~type:~~ line item for the Growth, Reinvestment, and Restructuring Programs:


	Three Months Ended March 31,
		2021		2020
		(In millions)
Cost of sales		$	0	$	0.7
General and administrative		0		0.7
Other operating expense, net		19.6		18.5
Total		$	19.6	$	19.9

Three Months Ended
September 30, Nine Months Ended
September 30, Cumulative Costs To Date Total Expected Costs
2020 2019 2020 2019
(In millions)
Asset-related $ 0.1
$ (0.1 ) $ 0.1
$ 2.4
$ 45.2
$ 45.2
Employee-related 0.9
3.1
2.6
10.5
58.7
59.5
Other costs 8.1
18.9
27.3
63.6
185.4
197.0
Total $ 9.1
$ 21.9
$ 30.0
$ 76.5
$ 289.3
$ 301.7

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


	Three Months Ended March 31,
		2021		2020
		(In millions)

Employee-related		$	4.9	$	4.8
Other costs		14.7		15.1
Total		$	19.6	$	19.9

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, asset-related costs primarily consisted of accelerated depreciation;~~ employee-related costs primarily consisted of dedicated project employee cost, severance, and ~~severance;~~retention; and other costs primarily consisted of consulting ~~costs. Asset-related costs were recognized in Cost of sales while employee-related~~services. Employee-related and other costs ~~were~~are primarily recognized in Other operating expense, net of the Condensed Consolidated Statements of Operations.

~~(2) Structure to Win~~The table below presents the exit cost liability activity for the Growth, Reinvestment, and Restructuring Programs as of March 31, 2021:


	Severance
	(In millions)
Balance as of December 31, 2020	$	4.9
Expenses recognized	0.7
Cash payments	(2.5)


Balance as of March 31, 2021	$	3.1

~~In the first quarter~~

Liabilities as of 2018, the Company announced an operating expense improvement program ("Structure to Win") designed to align our organizational structure with strategic priorities. The program is intended to drive operational effectiveness, cost reduction, and position the Company for growth with a focus on a lean customer-centric go-to-market team, centralized supply chain, and streamlined administrative functions.

~~Below is a summary of costs by type~~March 31, 2021 associated with ~~the Structure to Win program:~~

Three Months Ended
September 30, Nine Months Ended
September 30, Cumulative Costs To Date Total Expected Costs
2020 2019 2020 2019
(In millions)
Asset-related $ 0
$ 0.2
$ 0
$ 1.8
$ 4.0
$ 4.0
Employee-related 1.8
1.1
6.8
3.7
32.9
35.8
Other costs 9.3
1.1
15.1
7.9
44.8
50.2
Total $ 11.1
$ 2.4
$ 21.9
$ 13.4
$ 81.7
$ 90.0

In the first quarter of 2020, the Company changed how it manages its business, allocates resources, and goes to market, which resulted in modifications to its organizational and segment structure. Transition expenses related to the reorganization, which primarilytotal exit cost reserves relate to ~~dedicated employee cost,~~severance. The severance and consulting are included within Structure to Win. In connection with this reorganization, the Company increased the total expected costs for the Structure to Win program from $60.4 million to $90.0 million during the nine months ended September 30, 2020.

For the three and nine months ended September 30, 2020 and 2019, asset-related costs primarily consisted of accelerated depreciation; employee-related costs primarily consisted of severance; and other costs primarily consisted of consulting services. Asset-related costs areliability is included in ~~General and administrative expense and the employee-related and other costs are included~~Accrued expenses in ~~Other operating expense, net of~~ the Condensed Consolidated ~~Statements of Operations.~~

~~TREEHOUSE FOODS, INC.~~

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

Balance Sheets.

4. RECEIVABLES SALES PROGRAM

In December 2017 and June 2019, the Company entered into agreements to sell certain trade accounts receivable to 2 unrelated, third-party financial institutions (collectively, "the Receivables Sales Program"). The agreements can be terminated by either party with 60 days' notice. The Company has 0 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 receivables that may be sold at any time is $300.0 million.

The following table includes the outstanding amount of accounts receivable sold under the Receivables Sales Program and the amount collected but not yet remitted to the financial institutions:


	March 31, 2021		December 31, 2020
	(In millions)
Outstanding accounts receivable sold	$	246.7	$	284.3
Collections not remitted to financial institutions	128.8		202.8

September 30, 2020 December 31, 2019
(In millions)
Outstanding accounts receivable sold $ 226.7
$ 243.0
Collections not remitted to financial institutions 123.6
158.3

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Receivables sold under the Receivables Sales Program are de-recognized 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 amount collected but not yet remitted to the financial institutions is included in Accounts payable in the Condensed Consolidated Balance Sheets.

The loss on sale of receivables was ~~$0.4~~$0.5 million and ~~$0.8~~$0.9 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.9 million and $2.9 million for the nine months ended September 30, 2020 and 2019,~~ 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 ~~September 30, 2020~~March 31, 2021 or December 31, ~~2019,~~2020, as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

5. INVENTORIES


	March 31, 2021		December 31, 2020
	(In millions)
Raw materials and supplies	$	234.8	$	231.0
Finished goods	418.2		367.6

Total inventories	$	653.0	$	598.6

September 30, 2020 December 31, 2019
(In millions)
Raw materials and supplies $ 274.4
$ 205.5
Finished goods 389.7
338.5
Total inventories $ 664.1
$ 544.0

6. ACQUISITIONS AND DIVESTITURES

Acquisitions

~~6. DISCONTINUED OPERATIONS AND OTHER DIVESTITURES~~

Pasta Acquisition

~~Discontinued Operations~~

~~Snacks~~

During the second quarter of 2019, due to changes in market price expectations for the sale of the Company's Snacks division, the Company assessed the recoverability of the carrying value of the long-lived assets associated with the division. This assessment resulted in total long-lived asset impairment losses of $66.5 million, comprised of $63.2 million of property, plant, and equipment impairment losses and $3.3 million of intangible asset impairment losses. These losses result from the estimated fair value of the Snacks asset group, which was determined by its estimated discounted cash flows. These cash flows represent Level 3 inputs under ASC 820. The impairment loss is recognized as a component of Net income (loss) from discontinued operations in the Condensed Consolidated Statements of Operations.

On ~~August 1, 2019,~~December 11, 2020, the Company completed the ~~sale~~acquisition of ~~its Snacks division to Atlas Holdings, LLC.~~the majority of the U.S. branded pasta portfolio as well as a manufacturing facility in St. Louis, Missouri of Riviana Foods, Inc. ("~~Atlas"~~Riviana Foods"), a subsidiary of Ebro Foods, S.A. ("Ebro Foods") for ~~$90~~a purchase price of approximately $239.2 million in cash. Ebro Foods is a Spanish-based multinational food group operating primarily in the pasta and rice sectors. The acquisition includes the following brands: Skinner, No Yolks, American Beauty, Creamette, San Giorgio, Prince, Light ‘n Fluffy, Mrs. Weiss’, Wacky Mac, P&R Procino-Rossi, and New Mill. Additionally, the Company and Riviana Foods have a mutual put or call right to acquire or sell, respectively, the equipment utilized in the Riviana Foods Fresno, California facility for $5.0 million by December 31, 2021. The acquisition is expected to strengthen the Company's portfolio and expand its scale to better serve its national and regional customers. The acquisition was funded from the Company’s existing cash ~~subject to customary~~resources.

The pasta acquisition was accounted for under the acquisition method of accounting and the results of operations were included in our Consolidated Financial Statements from the date of acquisition in the Meal Preparation segment.

The following table summarizes the preliminary purchase price ~~adjustments. The Company classified the proceeds within Net cash (used in) provided by investing activities - discontinued operations and used the net proceeds~~allocation of the ~~sale to pay down debt. During the third quarter~~fair value of 2019, the Company recognized a non-cash pre-tax loss on the transaction upon closing of $97.5 million, which is recognized as a component of Net income (loss) from discontinued operations in the Condensed Consolidated Statements of Operations.net tangible and intangible assets acquired and liabilities assumed:


	(In millions)
Inventories	$	20.0
Property, plant, and equipment, net	48.2
Customer relationships	68.0
Trade names	43.0
Formulas/recipes	2.3
Goodwill	57.8
Operating lease right-of-use assets	0.1
Assets acquired	239.4
Assumed liabilities	(0.2)

Total purchase price	$	239.2

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company allocated the intangible assets acquired to the Meal Preparation segment which included $68.0 million of customer relationships with an estimated life of 20 years, $43.0 million of trade names with an estimated life of 20 years, and $2.3 million of formulas/recipes with estimated life of 5 years. The aforementioned intangible assets will be amortized over their estimated useful lives. The Company increased the cost of acquired inventories by approximately $3.1 million as of December 31, 2020 and expensed $1.0 million as a component of Cost of sales during the three months ended March 31, 2021. The Company has allocated $57.8 million of goodwill to the Meal Preparation segment. Goodwill arises principally as a result of expansion opportunities of its scale to better serve its regional and national customers and plant operation synergies across its legacy Pasta category. The goodwill resulting from this acquisition is tax deductible. The purchase price allocation in the table above is preliminary and subject to the finalization of the Company’s valuation analysis and the option to exercise its right to acquire the $5.0 million equipment utilized in the Fresno, California facility.

The ~~sale~~fair values for customer relationships at the acquisition date were determined using the excess earnings method under the income approach. Trade name fair values were determined using the relief from royalty method, while the fair value of ~~this business is~~formulas/recipes was determined using the cost approach. Real property and personal property fair values were determined using the cost approach. The fair value measurements of intangible assets are based on significant unobservable inputs, and thus represent Level 3 inputs. Significant assumptions used in assessing the fair values of intangible assets include discounted future cash flows, customer attrition rates, and royalty rates.

The following unaudited pro forma information shows the results of operations for the Company as if its pasta acquisition had been completed as of January 1, 2019. Adjustments have been made for the pro forma effects of depreciation and amortization of tangible and intangible assets recognized as part of the ~~Company's portfolio optimization strategy.~~business combination and related income taxes. The ~~Snacks division operated three plants located in Robersonville, North Carolina; El Paso, Texas; and Dothan, Alabama. A fourth plant in Minneapolis, Minnesota was~~pro forma results may not ~~included with the sale and closed during the third quarter~~necessarily reflect actual results of ~~2019.~~operations that would have been achieved, nor are they necessarily indicative of future results of operations.

The Company entered into a Transition Services Agreement ("TSA") with Atlas, which is designed to ensure and facilitate an orderly transfer of business operations. The services provided under the TSA terminated August 1, 2020. The income received under the TSA was not material for the three and nine months ended September 30, 2020 and 2019 and is primarily classified within General and administrative expenses or Cost of sales in the Company's Condensed Consolidated Statements of


	Three Months Ended March 31,
	2020
	(Unaudited, in millions)
Pro forma net sales from continuing operations	$	1,129.0
Pro forma net loss from continuing operations	(29.1)

Discontinued Operations ~~depending on the functions being supported by the Company.~~

Ready-to-eat Cereal

On May 1, 2019, the Company entered into a definitive agreement to sell its Ready-to-eat ("RTE") Cereal business to Post Holdings, Inc. ("Post"), which until that time had been a component of the Meal Preparation reporting segment. The sale of this business is part of the Company's portfolio optimization strategy. On December 19, 2019, the Federal Trade Commission objected to the sale to Post. On January 13, 2020, the sale to Post was terminated and the Company announced its intention to pursue a sale of the RTE Cereal business to an alternative buyer. The Company continues to market the business and is committed to a plan of sale to dispose of the business.

The RTE Cereal business continues to be classified as a discontinued operation as of ~~September 30, 2020. An expected~~March 31, 2021. Expected disposal ~~loss~~losses of ~~$10.7~~$0.3 million ~~and $74.6 million was~~were recognized as an asset impairment charge during both the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2021 and 2020 within Net income ~~(loss)~~ from discontinued operations. The expected disposal loss for the RTE Cereal business is remeasured each ~~quarter~~period at the lower of carrying value or estimated fair value less costs to sell and is included in the valuation allowance in the balance sheet. The Company recognized adjustments of $0.4 million and $0.1 million to the expected disposal loss as an asset impairment charge during the three and nine months ended September 30, 2020, respectively. These adjustments are classified as a component of Net income (loss) from discontinued operations in the Condensed Consolidated Statements of Operations. Completion of the sale may be for amounts that could be significantly different from the current fair value estimate. The Company's estimate of fair value will be evaluated and recognized each reporting period until the divestiture is complete.

The Company has reflected the ~~Snacks division (through the date of sale) and~~ RTE Cereal business as a discontinued ~~operations~~operation for all periods presented. 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
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Net sales $ 51.8
$ 122.1
$ 168.7
$ 581.8
Cost of sales 45.3
119.5
146.3
570.5
Selling, general, administrative and other operating expenses 3.9
15.2
13.1
51.1
Asset impairment 0.4
10.7
0.1
141.1
Loss on sale of business 0
97.5
0
97.5
Other operating (income) expense, net (0.5 ) 0
0.7
0
Operating income (loss) from discontinued operations 2.7
(120.8 ) 8.5
(278.4 )
Interest and other expense 0.7
2.5
2.8
6.1
Income tax expense (benefit) 1.3
(6.5 ) 2.3
(33.6 )
Net income (loss) from discontinued operations $ 0.7
$ (116.8 ) $ 3.4
$ (250.9 )

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Results of discontinued operations are as follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Net sales		$	47.5	$	56.8
Cost of sales		41.4		47.9
Selling, general, administrative and other operating expenses		4.2		4.9




Other operating expense, net		0		0.5
Operating income from discontinued operations		1.9		3.5
Interest and other expense		0.4		1.3

Income tax expense		0.4		0.6
Net income from discontinued operations		$	1.1	$	1.6

Assets and liabilities of discontinued operations presented in the Condensed Consolidated Balance Sheets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 include the following:


								March 31, 2021		December 31, 2020
	September 30, 2020			December 31, 2019				(In millions)
	(In millions)
Inventories	$	37.3		$	41.6		Inventories	$	37.9	$	33.3

Property, plant, and equipment, net	64.7			64.4			Property, plant, and equipment, net	66.3		65.9
Operating lease right-of-use assets	6.0			7.5			Operating lease right-of-use assets	4.2		5.1
Goodwill	53.5			53.5			Goodwill	53.5		53.5
Intangible assets, net	38.6			38.6			Intangible assets, net	38.6		38.6
Valuation allowance	(74.6		)	(74.5		)	Valuation allowance	(126.0)		(125.7)
Total assets of discontinued operations	$	125.5		$	131.1		Total assets of discontinued operations	$	74.5	$	70.7

Accrued expenses and other liabilities	$	1.0		$	8.3		Accrued expenses and other liabilities	$	1.0	$	1.1
Operating lease liabilities	6.5			8.2			Operating lease liabilities	4.9		5.6
Total liabilities of discontinued operations	$	7.5		$	16.5		Total liabilities of discontinued operations	$	5.9	$	6.7

Other Divestitures

In-Store Bakery Facilities

~~During the fourth quarter of 2019,~~On January 10, 2020, the Company ~~reached the decision~~entered into a definitive agreement to sell 2 of its In-Store Bakery facilities located in Fridley, Minnesota and Lodi, California, which manufacture breads, rolls, and cakes for in-store retail bakeries and food-away-from-home customers. These 2 facilities were included within the Snacking & Beverages reporting segment. On ~~January 10, 2020, the Company entered into a definitive agreement to sell these facilities. On~~ April 17, 2020, the sale of these facilities was completed for $24.0 million, subject to customary purchase price adjustments. The cash proceeds were classified within Net cash used in investing activities - continuing operations. The Company recognized a loss upon divestiture of $0.3 million within Other operating expense, net in the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2020.$26.9 million.

The associated assets met the held for sale accounting criteria as of December 31, 2019 and were classified accordingly in the Condensed Consolidated Balance Sheets. These 2 facilities did not meet the criteria to be presented as a discontinued operation.

~~The following table represents detail of assets held for sale as of December 31, 2019:~~

December 31, 2019
(In millions)
Inventories $ 9.4
Property, plant, and equipment, net 40.9
Goodwill 5.7
Intangible assets, net 9.4
Valuation allowance (41.1 )
Total assets held for sale $ 24.3

The Company also had $2.7 million of assets classified as held for sale as of December 31, 2019 related to the closure of the Minneapolis, Minnesota facility. The sale of these assets was completed during the first quarter of 2020.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. GOODWILL AND INTANGIBLE ASSETS

As a result of the changes in organizational structure completed in the first quarter of 2020, the Company now has the following 2 reportable segments: Meal Preparation and Snacking & Beverages. See Note 16 for additional information regarding the change in segment structure.Goodwill

In connection with the change in organizational structure completed in the first quarter of 2020, the Company allocated goodwill and accumulated impairment loss balances as of January 1, 2020 between reporting units using a relative fair value allocation approach. The change was considered a triggering event indicating a test for goodwill impairment was required as of January 1, 2020. The Company performed the impairment test, which did not result in the identification of any impairment losses.

Changes in the carrying amount of goodwill for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 are as follows:


	Meal Preparation		Snacking & Beverages		Total
	(In millions)
Balance at December 31, 2020, before accumulated impairment losses	$	1,334.7	$	888.5	$	2,223.2
Accumulated impairment losses	(11.5)		(33.0)		(44.5)
Balance at December 31, 2020	1,323.2		855.5		2,178.7


Foreign currency exchange adjustments	0.7		0.5		1.2
Balance at March 31, 2021	$	1,323.9	$	856.0	$	2,179.9

Meal Preparation Snacking & Beverages Total
(In millions)
Balance at January 1, 2020, before accumulated impairment losses $ 1,264.5
$ 887.3
$ 2,151.8
Accumulated impairment losses (11.5 ) (33.0 ) (44.5 )
Balance at January 1, 2020 1,253.0
854.3
2,107.3
Acquisition (1) 10.7
0
10.7
Foreign currency exchange adjustments (1.7 ) (1.2 ) (2.9 )
Balance at September 30, 2020 $ 1,262.0
$ 853.1
$ 2,115.1


~~(1)~~	On September 1, 2020, the Company completed an acquisition of a refrigerated dough business for a purchase price of $17.5 million, which included the recognition of $10.7 million of goodwill within the Meal Preparation segment.

~~Indefinite Lived~~ Intangible Assets

~~The Company has $21.7 million and $22.0 million of trademarks with indefinite lives as of September 30, 2020 and December 31, 2019, respectively.~~

~~Finite Lived Intangible Assets~~

The gross carrying amounts and accumulated amortization of intangible assets ~~with finite lives~~ as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 are as follows:

September 30, 2020 December 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
(In millions)
Intangible assets with finite lives:

Customer-related $ 775.9
$ (390.7 ) $ 385.2
$ 778.1
$ (355.2 ) $ 422.9
Contractual agreements 0.5
(0.5 ) 0
0.5
(0.5 ) 0
Trademarks 52.9
(30.2 ) 22.7
53.0
(27.1 ) 25.9
Formulas/recipes 22.9
(21.3 ) 1.6
22.1
(19.2 ) 2.9
Computer software 190.4
(108.3 ) 82.1
179.0
(98.0 ) 81.0
Total finite lived intangibles $ 1,042.6
$ (551.0 ) $ 491.6
$ 1,032.7

$ (500.0 ) $ 532.7

~~TREEHOUSE FOODS, INC.~~

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

~~Asset Impairment~~

We evaluate property, plant, and equipment and finite lived intangible assets for impairment when circumstances indicate that their carrying values may not be recoverable. Indicators of impairment include deteriorations in operating cash flows, the anticipated sale or disposal of an asset group, and other significant changes in business conditions.

During the third quarter of 2019, our assessment indicated an impairment in our Cookies and Dry Dinners asset groups, within the Snacking & Beverages and Meal Preparation segments, respectively, driven by the historical and forecasted performance of these businesses. As a result, we recognized $42.8 million of property, plant, and equipment impairment losses and $45.2 million of finite lived intangible asset impairment. The impairment charges are included in Asset impairment in the Condensed Consolidated Statements of Operations.

Impairment charges are measured by comparing the carrying values of the asset groups to their estimated fair values. The fair value of these assets were based on expected future cash flows using Level 3 inputs under ASC 820. We can provide no assurance regarding the prospect of additional impairment charges in future periods.


		March 31, 2021				December 31, 2020
	Weighted Average Life Remaining (yrs.)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
		(In millions)
Intangible assets with finite lives:
Customer-related	9.7	$	849.4	$	(420.0)	$	429.4	$	848.5	$	(406.4)	$	442.1
Contractual agreements	—	0.5		(0.5)		0		0.5		(0.5)		0
Trademarks	14.8	96.2		(33.2)		63.0		96.2		(31.7)		64.5
Formulas/recipes	4.5	25.3		(22.5)		2.8		25.3		(22.1)		3.2
Computer software	6.9	197.8		(115.2)		82.6		194.8		(112.0)		82.8
Total finite lived intangibles	9.8	1,169.2		(591.4)		577.8		1,165.3		(572.7)		592.6

Intangible assets with indefinite lives:
Trademarks		22.6		—		22.6		22.4		—		22.4
Total intangible assets		$	1,191.8	$	(591.4)	$	600.4	$	1,187.7	$	(572.7)	$	615.0

8. INCOME TAXES

Income taxes were recognized at an effective ~~rate~~rates of ~~49.1%~~(100.0)% and ~~39.1%~~55.1% for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~respectively, compared to 37.4% and 28.5% for the three and nine months ended September 30, 2019,~~ respectively. The change in the Company's effective tax rate for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 compared to ~~2019~~2020 is primarily ~~driven by~~ the ~~estimated level~~result of ~~annual pre-tax earnings, partially offset by~~ benefits recognized in 2020 due to the enactment of the ~~"Coronavirus~~“Coronavirus Aid, Relief, and Economic Security ~~Act"~~Act” (the CARES Act) ~~and~~, a change in the amount of valuation allowance recorded against certain deferred tax ~~assets.~~assets, and an increase in the amount of tax deductible stock based compensation in 2021. 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 ~~$4.6~~$5.3 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. As much as ~~$1.6~~$2.0 million of the ~~$4.6~~$5.3 million could affect net income when settled.

On March 27, 2020, the CARES Act was signed into law, which features several tax provisions and other measures that assist businesses impacted by the economic effects of the COVID-19 pandemic. The significant tax provisions include an increase in the limitation of the tax deduction for interest expense from 30% to 50% of adjusted earnings in 2019 and 2020, a five-year carryback allowance for net operating losses ("NOLs") generated in tax years 2018-2020, increased charitable contribution limitations to 25% of taxable income in 2020, and a retroactive technical correction to the 2017 Tax Cuts and Jobs Act that makes qualified improvement property placed in service after December 31, 2017 eligible for bonus depreciation. The Company has recorded a $14.0 million and $25.0 million income tax benefit related to the NOL carryback provisions of the CARES Act for the three and nine months ended September 30, 2020, respectively. The Company has also included a federal income tax refund receivable related to the CARES Act of $73.5 million in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheet as of September 30, 2020.

On July 28, 2020, the Internal Revenue Service issued final regulations under Section 163(j) of the Internal Revenue Code. The final regulations favorably impacted our ability to deduct business interest expense for tax purposes. The additional income tax benefit recognized in the third quarter of 2020 related to the NOL carryback provision of the CARES Act was primarily driven by the impact of the final regulations.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9. LONG-TERM DEBT


	March 31, 2021		December 31, 2020
	(In millions)
Revolving Credit Facility	$	30.0	$	0
Term Loan A	500.0		453.4
Term Loan A-1	930.0		672.6

2024 Notes	0		602.9
2028 Notes	500.0		500.0
Finance leases	4.0		4.1
Total outstanding debt	1,964.0		2,233.0
Deferred financing costs	(18.3)		(18.3)
Less current portion	(15.9)		(15.7)
Total long-term debt	$	1,929.8	$	2,199.0

September 30, 2020 December 31, 2019
(In millions)
Term Loan A $ 454.6
$ 458.4
Term Loan A-1 674.9
681.6
2022 Notes 0
375.9
2024 Notes 602.9
602.9
2028 Notes 500.0
0
Finance leases 4.2
3.9
Total outstanding debt 2,236.6
2,122.7
Deferred financing costs (19.5 ) (15.7 )
Less current portion (15.6 ) (15.3 )
Total long-term debt $ 2,201.5
$ 2,091.7

The scheduled maturities of outstanding debt, excluding deferred financing costs, at ~~September 30, 2020~~March 31, 2021 are as follows (in millions):


Remainder of 2021	$	12.0
2022	15.5
2023	15.0
2024	14.9
2025	14.5
Thereafter	1,892.1
Total outstanding debt	$	1,964.0

Remainder of 2020 $ 3.9
2021 15.5
2022 15.1
2023 660.2
2024 608.4
Thereafter 933.5
Total outstanding debt $ 2,236.6

Credit Agreement

On March 26, 2021, the Company entered into Amendment No. 3 (the “Amendment”) to the Second Amended and Restated Credit Agreement, dated as of December 1, 2017 (the "Credit Agreement") among the Company, the other loan parties thereto, the lenders from time to time party thereto and Bank of America N.A., as administrative agent, swing line lender and L/C issuer. Under the Amendment, among other things, the parties have agreed to: (i) amend and extend the maturity date of the Revolving Credit Facility and Tranche A-1 Term Loans until March 26, 2026 and the maturity date of the Term A Loans until March 26, 2028 (each as defined in the Credit Agreement), (ii) refinance and increase the existing Term Loan amounts by $304.0 million, and (iii) include customary provisions under the Amendment providing for the replacement of LIBOR with any successor rate. The material terms and conditions under the Credit Agreement are otherwise substantially consistent with those contained in the Credit Agreement prior to the Amendment.

The Company’s average interest rate on debt outstanding under its Credit Agreement for the three months ended ~~September 30, 2020~~March 31, 2021 was ~~1.78%~~1.74%. Including the impact of interest rate swap agreements in effect as of ~~September 30, 2020,~~March 31, 2021, the average rate increased to ~~4.04%~~2.20%.

Revolving Credit Facility — During the three months ended March 31, 2021, the Company drew $30.0 million from its $750.0 million Revolving Credit Facility. As of ~~September 30, 2020, $727.0~~March 31, 2021, the Company had remaining availability of $697.3 million ~~of the aggregate commitment of $750.0 million of~~under the Revolving Credit Facility, ~~was available. The Revolving Credit Facility matures on February 1, 2023. As of September 30, 2020,~~and there were ~~$23.0~~$22.7 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.

~~2022~~2024 Notes — The Company previously issued ~~4.875%~~6.000% notes in the aggregate principal amount of ~~$400~~$775 million due on ~~March~~February 15, ~~2022~~2024 (the ~~"2022~~"2024 Notes"). On ~~August 26, 2020,~~February 16, 2021 the Company, through Wells Fargo Bank, National Association, as trustee ~~issued~~(the "Trustee"), completed a ~~notice~~partial redemption of $200.0 million of its 2024 Notes, and on March 31, 2021, the Company completed the full redemption ~~to redeem all~~ of the ~~$375.9~~remaining $402.9 million outstanding principal of its ~~2022~~2024 Notes at a price of ~~100%~~101.50% of the principal amount, plus accrued and unpaid interest to, but not including, ~~the~~each redemption date (the ~~"2022~~"2024 Notes Redemption"). The 2022 Notes Redemption was completed on September 25, 2020. For the three and nine months ended September 30, 2020, the Company incurred a loss on extinguishment of debt totaling $1.2 million representing the write-off of deferred financing costs.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2028 Notes — — On September 9, 2020, the Company completed its public offering of $500 million aggregate principal amount of its 4.000% senior notes due September 1, 2028 (the "2028 Notes"). ~~The Company issued~~

Loss on Extinguishment of Debt — For the ~~2028 Notes pursuant to an Indenture, dated~~three months ended March ~~2, 2010 (the "Base Indenture"), by and among~~31, 2021, the Company ~~the subsidiary guarantors party thereto~~incurred a loss on extinguishment of debt totaling $14.4 million, which included a premium of $9.0 million and ~~Wells Fargo Bank, National Association, as trustee, as supplemented by~~ a Twelfth Supplemental Indenture, dated September 9, 2020 (the "Twelfth Supplemental Indenture" and, together with the Base Indenture, the "Indenture"), by and among the Company, the subsidiary guarantors party thereto (the "Guarantors") and Wells Fargo Bank, National Association, as trustee.write off of deferred financing costs of $5.4 million.

The Indenture provides, among other things, that the 2028 Notes will be senior unsecured obligations of the Company. The Company’s payment obligations under the 2028 Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company’s existing and future domestic subsidiaries that guarantee or become borrowers under its credit facility or

~~TREEHOUSE FOODS, INC.~~

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

guarantee certain other indebtedness incurred by the Company or its restricted subsidiaries. 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, beginning March 1, 2021.

The Company may redeem some or all of the 2028 Notes at any time prior to September 1, 2023 at a price equal to 100% of the principal amount of the 2028 Notes redeemed plus an applicable "make-whole" premium and accrued and unpaid interest to the redemption date. On or after September 1, 2023, the Company may redeem some or all of the 2028 Notes at redemption prices set forth in the Indenture, plus accrued and unpaid interest to the redemption date. In addition, at any time prior to September 1, 2023, the Company may redeem up to 40% of the 2028 Notes at a redemption price of 104.000% of the principal amount of the 2028 Notes redeemed, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of certain equity offerings. Subject to certain limitations, in the event of a change of control of the Company, the Company will be required to make an offer to purchase the 2028 Notes at a purchase price equal to 101% of the principal amount of the 2028 Notes, plus accrued and unpaid interest to the date of purchase.

The Indenture contains restrictive covenants that, among other things, limit the ability of the Company and the subsidiary guarantors to (i) incur additional indebtedness and issue certain preferred shares, (ii) make certain distributions, investments and other restricted payments, (iii) sell certain assets, (iv) agree to restrictions on the ability of restricted subsidiaries to make payments to the Company, (v) create liens, (vi) merge, consolidate or sell substantially all of the Company’s assets and (vii) enter into certain transactions with affiliates. The foregoing limitations are subject to exceptions as set forth in the Indenture. In addition, if in the future the 2028 Notes have an investment grade credit rating by both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services, certain of these covenants will, thereafter, be suspended with respect to the 2028 Notes, for so long as no default has occurred or is continuing, and the 2028 Notes are rated investment grade by the two rating agencies.

The Indenture provides for customary events of default that include, among other things (subject in certain cases to customary grace and cure periods): (i) non-payment of principal or interest; (ii) breach of certain covenants contained in the Indenture or the 2028 Notes; (iii) defaults in failure to pay certain other indebtedness or the acceleration of certain other indebtedness prior to maturity; (iv) the failure to pay certain final judgments; (v) the failure of certain guarantees to be enforceable; and (vi) certain events of bankruptcy or insolvency. Generally, if an event of default occurs (subject to certain exceptions), the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding 2028 Notes may declare all the 2028 Notes to be due and payable immediately.

Fair Value - At ~~September 30,~~March 31, 2021, the aggregate fair value of the Company's total debt was $1,963.8 million and its carrying value was $1,960.0 million. At December 31, 2020, the aggregate fair value of the Company's total debt was ~~$2,257.6~~$2,250.4 million and its carrying value was ~~$2,232.4 million. At December 31, 2019, the aggregate fair value of the Company's total debt was $2,146.1 million and its carrying value was $2,118.8~~$2,228.9 million. The fair values of the 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 ~~values~~value of the Company's ~~2024 Notes and~~ 2028 Notes ~~were~~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.

~~TREEHOUSE FOODS, INC.~~

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

10. 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 ~~loss~~earnings (loss) per share:


						Three Months Ended March 31,
							2021	2020
							(In millions, except per share data)

	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
	(In millions, except per share data)
Weighted average common shares outstanding	56.6	56.3	56.5	56.2	Weighted average common shares outstanding		56.0	56.3
Assumed exercise/vesting of equity awards (1)	0.2	0	0	0	Assumed exercise/vesting of equity awards (1)		0.5	0
Weighted average diluted common shares outstanding	56.8	56.3	56.5	56.2	Weighted average diluted common shares outstanding		56.5	56.3

~~(1)~~

For the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019, 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 for the period. Equity awards excluded from our computation of diluted earnings per share because they were anti-dilutive, were 1.5 million for both the three and nine months ended September 30, 2020, and 1.7 million and 1.6 million for the three and nine months ended September 30, 2019, respectively.

(1)For the three months ended March 31, 2020, 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 for the period. Equity awards, excluded from our computation of diluted earnings per share because they were anti-dilutive, were 1.4 million and 2.1 million for the three months ended March 31, 2021 and 2020, respectively.

11. 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. The maximum number of shares available to be awarded under the Plan is approximately 17.5 million, of which approximately ~~4.0~~3.4 million remained available at ~~September 30, 2020.~~March 31, 2021.

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


	Three Months Ended March 31,
		2021		2020
	(In millions)
Compensation expense related to stock-based payments		$	4.9	$	7.9
Related income tax benefit		1.4		2.1

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Compensation expense related to stock-based payments $ 5.8
$ 5.5
$ 20.7
$ 17.5
Related income tax benefit 1.5
1.2
5.4
4.4

All amounts below include continuing and discontinued operations.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Stock Options —~~The following table summarizes stock option activity during the nine months ended September 30, 2020. Stock options generally vest in approximately 3 equal installments on each of the first three anniversaries of the grant date and expire ten years from the grant date.

Employee
Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (yrs)

Aggregate
Intrinsic
Value
(In thousands) (In millions)
Outstanding, at December 31, 2019 1,528
$ 74.58
3.7 $ 0.8
Forfeited (8 ) 82.77

Exercised (57 ) 46.47

Expired (106 ) 70.92

Outstanding, at September 30, 2020 1,357
75.98
3.2 0.4
Vested/expected to vest, at September 30, 2020 1,357
75.99
3.2 0.4
Exercisable, at September 30, 2020 1,357
76.00
3.2 0.4

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Intrinsic value of stock options exercised $ 0
$ 0.1
$ 0.3
$ 0.1
Tax benefit recognized from stock option exercises 0
0
0.1
0

Future compensation costs related to unvested options totaled less than $0.1 million at September 30, 2020 and will be recognized over the remaining vesting period of the grants, which averages 0.3 years.

Restricted Stock Units — Employee restricted stock unit awards generally vest based on the passage of ~~time. These awards generally vest~~time in approximately 3 equal installments on each of the first three anniversaries of the grant date. Director restricted stock units generally vest on the first anniversary of the grant date. Certain directors have ~~deferred~~elected to defer receipt of their awards until either their departure from the Board of Directors or a specified ~~date. As~~date beyond the first anniversary of ~~September 30, 2020, director restricted stock units that have been earned and deferred totaled approximately 91,130.~~the grant date.

The following table summarizes the restricted stock unit activity during the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

Employee
Restricted
Stock Units

Weighted
Average
Grant Date
Fair Value

Director
Restricted
Stock Units

Weighted
Average
Grant Date
Fair Value
(In thousands) (In thousands)
Outstanding, at December 31, 2019 615
$ 54.58
116
$ 58.30
Granted 422
44.14
29
52.46
Vested (233 ) 55.63
(24 ) 66.79
Forfeited (81 ) 55.36
0
0
Outstanding, at September 30, 2020 723
48.04
121
55.04


	Employee Restricted Stock Units	Weighted Average Grant Date Fair Value		Director Restricted Stock Units	Weighted Average Grant Date Fair Value
	(In thousands)			(In thousands)
Outstanding, at December 31, 2020	707	$	47.92	125	$	54.67
Granted	335	52.18		1	53.84
Vested	(307)	46.64		0	0
Forfeited	(37)	52.48		0	0
Outstanding, at March 31, 2021	698	50.33		126	54.66
Vested and deferred, at March 31, 2021				91	55.88

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Fair value of vested restricted stock units $ 0.6
$ 0.4
$ 10.8
$ 19.1
Tax benefit recognized from vested restricted stock units 0
0.1
1.9
3.5


	Three Months Ended March 31,
		2021		2020
	(In millions)

Fair value of vested restricted stock units		$	16.4	$	8.4
Tax benefit recognized from vested restricted stock units		2.3		1.4

~~TREEHOUSE FOODS, INC.~~

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

Future compensation costs related to restricted stock units are approximately ~~$23.1~~$34.8 million as of ~~September 30, 2020~~March 31, 2021 and will be recognized on a weighted average basis over the next ~~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.

Performance Units — Performance unit awards are granted to certain members of management. These awards contain both service and performance conditions. For awards granted in years prior to 2020, for each year of the 3three-year performance ~~periods,~~period, one-third of the units will accrue, multiplied by a predefined percentage generally 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. For performance unit awards granted in 2020 and 2021, 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 the three-year performance period. Additionally, for the cumulative three-year performance period, ~~a number~~one-quarter of the units will ~~accrue,~~accrue. In 2021, certain executive members of management received awards that had a market condition as described below. 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, less any units previously accrued.~~measures. Accrued units will be converted to stock or cash, at the discretion of the Compensation Committee, generally, on the third anniversary of the grant date. The Company intends to settle these awards in stock and has the shares available to do so.

In 2021, the Compensation Committee of the Board approved performance unit awards granted to certain executive members of management that include a relative total shareholder return market condition that is measured over a three-year performance period in addition to the existing operating performance measures. The units will accrue, multiplied by a predefined percentage generally between 0% and 200% for the operating performance measures and 0% and 150% for the relative total shareholder return measure, depending on the achievement attained for each performance measure. The fair value of the portion of the award earned based on relative total shareholder return was valued using a Monte Carlo simulation model with a grant-date fair value of $59.16 on approximately 23,200 units granted. 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. The Company intends to settle these awards in stock and has the shares available to do so.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The assumptions used in the Monte Carlo simulation were as follows:


	Three Months Ended March 31,
	2021
Dividend yield	0	%
Risk-free rate	0.14	%
Expected volatility	35.65	%
Expected term (in years)	2.75

The following table summarizes the performance unit activity during the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

Performance
Units

Weighted
Average
Grant Date
Fair Value
(In thousands)
Unvested, at December 31, 2019 482
$ 61.28
Granted 221
44.19
Vested (75 ) 60.12
Forfeited (80 ) 75.57
Unvested, at September 30, 2020 548
52.45


	Performance Units	Weighted Average Grant Date Fair Value
	(In thousands)
Unvested, at December 31, 2020	541	$	52.38
Granted	166	52.80
Vested	(105)	45.79
Forfeited	(47)	58.14
Unvested, at March 31, 2021	555	54.07


	Three Months Ended March 31,
		2021		2020
	(In millions)

Fair value of vested performance units		$	5.6	$	3.3
Tax benefit recognized from performance units vested		0.3		0.6

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Fair value of vested performance units $ 0
$ 0
$ 3.3
$ 0.9
Tax benefit recognized from performance units vested 0
0
0.6
0.2

Future compensation costs related to the performance units are estimated to be approximately ~~$11.3~~$18.0 million as of ~~September 30, 2020~~March 31, 2021 and are expected to be recognized over the next ~~1.2~~1.9 years. The grant date fair value of the awards is equal to the Company’s closing stock price on the date of grant. The fair value of the portion of certain awards earned based on relative total shareholder return was valued using a Monte Carlo simulation model.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12. 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
	Foreign Currency Translation (1)			Unrecognized Pension and Postretirement Benefits (1)			Accumulated Other Comprehensive Loss
	(In millions)
Balance at December 31, 2018	$	(91.7	)	$	(5.4	)	$	(97.1	)
Other comprehensive income before reclassifications	8.5			0			8.5
Reclassifications from accumulated other comprehensive loss (2)	0			0.4			0.4
Other comprehensive income	8.5			0.4			8.9
Balance at September 30, 2019	$	(83.2	)	$	(5.0	)	$	(88.2	)
											(In millions)
Balance at December 31, 2019	$	(79.4	)	$	(4.6	)	$	(84.0	)	Balance at December 31, 2019	$	(79.4)	$	(4.6)	$	(84.0)
Other comprehensive loss before reclassifications	(2.8		)	0			(2.8		)	Other comprehensive loss before reclassifications	(15.9)		0		(15.9)
Reclassifications from accumulated other comprehensive loss (2)	0			0.4			0.4			Reclassifications from accumulated other comprehensive loss (2)	0		0.1		0.1

Other comprehensive (loss) income	(2.8		)	0.4			(2.4		)	Other comprehensive (loss) income	(15.9)		0.1		(15.8)
Balance at September 30, 2020	$	(82.2	)	$	(4.2	)	$	(86.4	)
Balance at March 31, 2020										Balance at March 31, 2020	$	(95.3)	$	(4.5)	$	(99.8)

Balance at December 31, 2020										Balance at December 31, 2020	$	(67.3)	$	3.3	$	(64.0)
Other comprehensive income before reclassifications										Other comprehensive income before reclassifications	0.9		0		0.9
Reclassifications from accumulated other comprehensive loss (2)										Reclassifications from accumulated other comprehensive loss (2)	0		0.1		0.1

Other comprehensive income										Other comprehensive income	0.9		0.1		1.0
Balance at March 31, 2021										Balance at March 31, 2021	$	(66.4)	$	3.4	$	(63.0)


~~(1)~~	The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three and nine months ended September 30, 2020 and 2019.


~~(2)~~	~~Refer to Note 13 for additional information regarding these reclassifications.~~

(1)The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three months ended March 31, 2021 and 2020.

(2)Refer to Note 13 for additional information regarding these reclassifications.

13. 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~~benefit are as follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Service cost		$	0.2	$	0.4
Interest cost		2.2		2.7
Expected return on plan assets		(3.5)		(3.6)


Amortization of unrecognized net loss		0.1		0.1
Net periodic pension benefit		$	(1.0)	$	(0.4)

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Service cost $ 0.4
$ 0.4
$ 1.2
$ 1.3
Interest cost 2.7
3.2
8.1
9.7
Expected return on plan assets (3.7 ) (3.6 ) (10.9 ) (10.8 )
Amortization of unrecognized prior service cost 0.1
0
0.1
0.1
Amortization of unrecognized net loss 0.1
0.1
0.3
0.3
Net periodic pension (benefit) cost $ (0.4 ) $ 0.1
$ (1.2 ) $ 0.6

Components of net periodic postretirement cost are as follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Interest cost		$	0.2	$	0.2
Net periodic postretirement cost		$	0.2	$	0.2

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Interest cost $ 0.2
$ 0.3
$ 0.6
$ 0.9
Net periodic postretirement cost $ 0.2
$ 0.3
$ 0.6
$ 0.9

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

~~Multiemployer Pension Plans~~ - The Company contributes to several multiemployer pension plans on behalf of employees covered by collective bargaining agreements. These plans are administered jointly by management and union representatives and cover substantially all full-time and certain part-time union employees who are not covered by other plans. The risks of participating in multiemployer plans are different from single-employer plans in the following aspects: (1) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers, and (3) if the Company chooses to stop participating in a multiemployer plan, we could, under certain circumstances, be liable for unfunded vested benefits or other expenses of jointly administered union/management plans.

In the second quarter of 2019, the Company executed a complete withdrawal from the Retail, Wholesale, and Department Store International Union and Industry Pension Fund. Absent agreement with the Fund on a withdrawal payment, the Company estimated a withdrawal liability of $4.1 million. The Company settled the withdrawal liability in the fourth quarter of 2019.

14. COMMITMENTS AND CONTINGENCIES

Litigation, Investigations, and Audits - On November 16, 2016, a purported TreeHouse shareholder filed a class action captioned Tarara v. TreeHouse Foods, Inc., et al., Case No. 1:16-cv-10632, in the United States District Court for the Northern District of Illinois against TreeHouse and certain of its officers. The complaint, amended on March 24, 2017, is purportedly brought on behalf of all purchasers of TreeHouse common stock from January 20, 2016 through and including November 2, 2016. It asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks, among other things, damages and costs and expenses. On December 22, 2016, another purported TreeHouse shareholder filed an action captioned Wells v. Reed, et al., Case No. 2016-CH-16359, in the Circuit Court of Cook County, Illinois, against TreeHouse and certain of its officers. This complaint, purportedly brought derivatively on behalf of TreeHouse, asserts state law claims against certain officers for breach of fiduciary duty, unjust enrichment, and corporate waste. On February 7, 2017, another purported TreeHouse shareholder filed an action captioned Lavin v. Reed, et al., Case No. 17-cv-01014, in the Northern District of Illinois, against TreeHouse and certain of its officers. This complaint is also purportedly brought derivatively on behalf of TreeHouse, and it asserts state law claims against certain officers for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste. On February 8, 2019, another purported TreeHouse shareholder filed an action captioned Bartelt v. Reed, et al., Case No. 1:19-cv-00835, in the United States District Court for the Northern District of Illinois. This complaint is purportedly brought derivatively on behalf of TreeHouse and asserts state law claims against certain officers for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and corporate waste, in addition to asserting violations of Section 14 of the Securities Exchange Act of 1934. Finally, on June 3, 2019, another purported TreeHouse shareholder filed an action captioned City of Ann Arbor Employees’ Retirement System v. Reed, et al., Case No. 2019-CH-06753, in the Circuit Court of Cook County, Illinois, against TreeHouse and certain of its officers. Like Wells, Lavin, and Bartelt, this complaint is purportedly brought derivatively on behalf of TreeHouse and asserts claims for contribution and indemnification, breach of fiduciary duty, and aiding and abetting breaches of fiduciary duty.

All 5 complaints make substantially similar allegations (though the amended complaint in Tarara now contains additional detail). Essentially, 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 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 that these actions artificially inflated the market price of TreeHouse common stock during the class period, thus purportedly harming investors. The Bartelt action also includes substantially similar allegations concerning events in 2017, and the Ann Arbor complaint also seeks contribution from the individual defendants for losses incurred by the company in these litigations. We believe that these claims are without merit and intend to defend against them ~~vigorously.~~vigorously, but note that, as described below, an agreement in principle has been reached to resolve the federal securities class action.

Due to the similarity of the complaints, the parties in Wells and Lavin entered stipulations deferring the litigation until the earlier of (i) the court in Public Employees’ entering an order resolving defendants’ anticipated motion to dismiss therein or (ii) plaintiffs’ counsel receiving notification of a settlement of Public Employees’ or until otherwise agreed to by the parties. On September 27, 2018, the parties in Wells and Lavin filed joint motions for entry of agreed orders further deferring the matters in light of the Public Employees’ Court’s denial of the motion to dismiss in February 2018. The Wells and Lavin Courts entered the agreed orders further deferring the matters on September 27, 2018 and October 10, 2018, respectively. On June 25, 2019, the parties jointly moved to consolidate the Bartelt matter with Lavin, so that it would be subject to the Lavin deferral order. This motion was granted on June 27, 2019, and Bartelt is now consolidated with Lavin and deferred. The parties filed a status report on April 13, 2021. Similarly, Ann Arbor was consolidated with Wells on August 13, 2019, and is now deferred. On February 8, 2021, the plaintiffs in Wells moved to modify the deferral order to lift the stay, and defendants thereafter opposed the motion. On April 15, 2021, the court denied the motion and set a status hearing for July 15, 2021.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Since its initial docketing, the Tarara matter has been re-captioned as Public Employees’ Retirement Systems of Mississippi v. TreeHouse Foods, Inc., et al., in accordance with the Court’s order appointing Public Employees’ Retirement Systems of Mississippi as the lead plaintiff. On May 26, 2017, the Public Employees’ defendants filed a motion to dismiss, which the court denied on February 12, 2018. On April 12, 2018, the Public Employees’ defendants filed their answer to the amended complaint. On April 23, 2018, the parties filed a joint status report with the Court, which set forth a proposed discovery and briefing schedule for the Court’s consideration. On July 13, 2018, lead plaintiff filed a motion to certify the class, and defendants filed their response in opposition to the motion to certify the class on October 8, 2018. On November 12, 2018, the parties filed an agreed motion to stay proceedings to allow them to explore mediation. The motion was granted on November 19. The parties thereafter engaged in mediation but failed to resolve the dispute. On March 29, 2019, the parties resumed litigation by filing an agreed motion for extension of time, which was granted on April 9. Under that schedule, lead plaintiff filed its reply class certification brief on May 17, 2019.

On February 26, 2020, the court granted lead plaintiff’s motion for class certification. Defendants then filed a petition for permissive appeal of the class certification order in the United States Court of Appeals for the Seventh Circuit on March 11, 2020. After ordering lead plaintiff to file a response, the court denied the petition on May 4, 2020.

On December 16, 2019, the parties agreed to extend the case schedule 90 days. This agreed motion was granted on December 25, 2019. At a status conference on March 10, 2020, the parties informed the court that they intended to engage in a second mediation and the court extended then-upcoming deadlines under the case schedule, pending a further status report from the parties regarding the extent of the stay needed to facilitate mediation. The court subsequently issued multiple general orders as a result of the COVID-19 outbreak, which together postponed all case deadlines for a total of 77 days. On June 9, 2020, the parties filed a joint status report informing the court that mediation had been scheduled for July 9, 2020. The next day, the court stayed the case pending the outcome of mediation. Any in-person mediation was thereafter postponed due to ongoing COVID-19 concerns, ~~until at least November 17, 2020.~~

~~Due~~and the parties proceeded to mediate remotely. On April 19, 2021, the ~~similarity~~parties advised the Court that they have reached an agreement in principle to resolve the matter, subject to various conditions, definitive documentation, and Court approval. The agreement contemplates a cash payment of $27.0 million (funded by D&O insurance) in exchange for dismissal with prejudice of the ~~complaints,~~class claims and full releases. As a result of these developments, the ~~parties~~Company has recorded a $27.0 million liability and a corresponding insurance receivable within Accrued expenses and Prepaid expenses and other current assets, respectively, in ~~Wells~~ ~~and~~ ~~Lavin~~ ~~entered stipulations deferring~~ the ~~litigation until the earlier~~Condensed Consolidated Balance Sheets as of ~~(i) the court in~~ ~~Public Employees’~~ ~~entering an order resolving defendants’ anticipated motion to dismiss therein or (ii) plaintiffs’ counsel receiving notification of a settlement of~~ ~~Public Employees’~~ ~~or until otherwise agreed to by the parties. On September 27, 2018, the parties in~~ ~~Wells~~ ~~and~~ ~~Lavin~~ ~~filed joint motions for entry of agreed orders further deferring the matters in light of the~~ ~~Public Employees’~~ ~~Court’s denial of the motion to dismiss in February 2018. The~~ ~~Wells~~ ~~and~~ ~~Lavin~~ ~~Courts entered the agreed orders further deferring the matters on September 27, 2018 and October 10, 2018, respectively. On June 25, 2019, the parties jointly moved to consolidate the~~ ~~Bartelt~~ ~~matter with~~ ~~Lavin, so that it would be subject to the~~ ~~Lavin~~ ~~deferral order. This motion was granted on June 27, 2019, and~~ ~~Bartelt~~ ~~is now consolidated with~~ ~~Lavin~~ ~~and deferred. There is no set status date in~~ ~~Lavin~~ ~~at this time. Similarly,~~ ~~Ann Arbor~~ ~~was consolidated with~~ ~~Wells~~ ~~on August 13, 2019, and is now deferred. In~~ ~~Wells~~,~~the next status conferenceis scheduled to take place on January 15,~~March 31, 2021.

The Company is party to matters challenging its wage and hour practices. These matters include a number of class actions consolidated under the caption Negrete v. Ralcorp Holdings, Inc., et al, pending in the U.S. District Court for the Central District of California, in which plaintiffs allege a pattern of violations of California and/or federal law at three former Company manufacturing facilities in California. The Company has notified the Court that it has reached a preliminary settlement understanding with the Negrete plaintiffs that would resolve all associated matters for a payment by the Company of $9.0 million. The preliminary understanding reached with the Negrete plaintiffs involves procedural requirements and Court approval which may continue through 2021. As a result of these developments, the Company has an accrual for a $9.0 million liability within Accrued expenses in the Condensed Consolidated Balance Sheets as of ~~September 30, 2020.~~March 31, 2021.

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, none of which are significant. In the Company’s opinion, the settlement of any such currently pending or threatened matter is not expected to have a material impact on the Company’s financial position, results of operations, or cash flows.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15. DERIVATIVE INSTRUMENTS

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by derivative instruments include interest rate risk, foreign currency risk, ~~and~~ commodity price ~~risk.~~risk, and risk associated with the unfunded portion of the Company's deferred compensation liability. Derivative contracts are entered into for periods consistent with the related underlying exposure and do not constitute positions independent of those exposures. The Company does not enter into derivative instruments for trading or speculative purposes.

Interest Rate ~~Risk~~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.

As of ~~September 30, 2020,~~March 31, 2021, the Company had entered into $875.0 million of long-term interest rate swap agreements to lock into a fixed LIBOR interest rate base. Under the terms of the agreements, $875.0 million in variable-rate debt was swapped for a weighted average fixed interest rate base of approximately 2.68% in 2020 and 2.91% from 2021 through 2025. These instruments are not accounted for under hedge accounting and the changes in their fair value are recognized in the Condensed Consolidated Statements of Operations.

Foreign Currency ~~Risk~~Contracts - Due to the Company’s foreign operations, it is exposed to foreign currency risk. The Company enters into foreign currency contracts to manage the risk associated with foreign currency cash flows. This includes, but is not limited to, using foreign currency contracts to establish a fixed foreign currency exchange rate for the net cash flow requirements for purchases of inventory, sales of finished goods, and future settlement of foreign-denominated assets and liabilities. These contracts do not qualify for hedge accounting and changes in their fair value are recognized in the Condensed Consolidated Statements of Operations. As of ~~September 30, 2020,~~March 31, 2021, the Company had ~~$2.9~~$7.8 million of foreign currency contracts outstanding, expiring throughout 2021 and 2022.

Commodity ~~Risk~~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 records their fair value on the Condensed Consolidated Balance Sheets, with changes in value being recognized in the Condensed Consolidated Statements of Operations.

The Company’s derivative commodity contracts may include contracts for diesel, oil, plastics, natural gas, electricity, resin, corn, coffee, flour, 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. Contracts for natural gas and electricity are used to manage the Company’s risk associated with the utility costs of its manufacturing facilities, and 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 ~~September 30, 2020,~~March 31, 2021, the Company had outstanding contracts for the purchase of 0.1 million megawatts of electricity, expiring throughout ~~2020~~2021 and 2022; ~~24.2~~12.0 million gallons of diesel, expiring throughout ~~2020 and~~ 2021; ~~3.6~~5.5 million dekatherms of natural gas, expiring throughout ~~2020~~2021 and ~~2021; 4.2~~2022; 1.5 million pounds of coffee, expiring throughout ~~2020 and~~ 2021; ~~and 28.8~~17.5 million pounds of resin, expiring throughout ~~2020~~2021, and 2.2 million bushels of flour, expiring throughout 2021.

Total Return Swap Contract - In March 2021, the Company entered into an economic hedge program that uses 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 have a duration of one month and are rebalanced and re-hedged at the end of each monthly term. While the total return swap contract is treated as an economic hedge, the Company has not designated it as a hedge for accounting purposes. The total return swap contract is 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. As of March 31, 2021, the notional value of the total return swap contract was $10.3 million.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Fair Value
September 30, 2020 December 31, 2019
Asset Derivatives (In millions)
Commodity contracts $ 3.1
$ 0.8
Interest rate swap agreements 0
0.8
$ 3.1
$ 1.6
Liability Derivatives
Commodity contracts $ 3.4
$ 0.6
Foreign currency contracts 0
0.1
Interest rate swap agreements 105.9
56.5
$ 109.3
$ 57.2


	March 31, 2021		December 31, 2020
	(In millions)
Asset derivatives
Commodity contracts	$	14.4	$	12.6


Total return swap contract	0.1		0
	$	14.5	$	12.6
Liability derivatives
Commodity contracts	$	0.3	$	0.7
Foreign currency contracts	0.3		0
Interest rate swap agreements	77.7		97.4

	$	78.3	$	98.1

~~As of September 30, 2020 and December 31, 2019, asset~~Asset derivatives are included within ~~Other~~Prepaid expenses and other current assets ~~net~~ and liability derivatives are included within Accrued expenses in the Condensed Consolidated Balance Sheets.

The fair values of the commodity contracts, foreign currency 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, foreign currency 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)	Three Months Ended March 31,
	Recognized in Net Income (Loss)		2021		2020
		(In millions)
Mark-to-market unrealized gain (loss)
Commodity contracts	Other (income) expense, net		$	2.2	$	(12.6)
Foreign currency contracts	Other (income) expense, net		(0.3)		0.5
Interest rate swap agreements	Other (income) expense, net		19.7		(52.0)
Total return swap contract	General and administrative		0.1		0
Total unrealized gain (loss)			$	21.7	$	(64.1)
Realized gain (loss)
Commodity contracts	Manufacturing related to Cost of sales and transportation related to Selling and distribution		$	7.6	$	(1.5)
Foreign currency contracts	Cost of sales		0		0.1
Interest rate swap agreements	Interest expense		(6.1)		(0.8)

Total realized gain (loss)			$	1.5	$	(2.2)
Total gain (loss)			$	23.2	$	(66.3)

Location of Gain (Loss) Three Months Ended
September 30, Nine Months Ended
September 30,
Recognized in Net Income (Loss) 2020 2019 2020 2019
(In millions) (In millions)
Mark-to-market unrealized gain (loss)

Commodity contracts Other (income) expense, net $ 3.6
$ (0.2 ) $ (0.5 ) $ (1.2 )
Foreign currency contracts Other (income) expense, net 0
0.5
0.1
(1.4 )
Interest rate swap agreements Other (income) expense, net 5.6
(12.7 ) (50.2 ) (51.0 )
Total unrealized gain (loss) 9.2
(12.4 ) (50.6 ) (53.6 )
Realized (loss) gain
Commodity contracts Manufacturing related to Cost of sales and transportation related to Selling and distribution (2.4 ) (1.2 ) (8.1 ) 0.1
Foreign currency contracts Cost of sales 0
(0.1 ) 0.4
0.5
Interest rate swap agreements Interest expense (6.4 ) 1.5
(12.5 ) 5.9
Total realized (loss) gain (8.8 ) 0.2
(20.2 ) 6.5
Total gain (loss) $ 0.4
$ (12.2 ) $ (70.8 ) $ (47.1 )

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16. SEGMENT INFORMATION

~~On January 1, 2020,~~The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources in total rather than on a segment-level basis. The Company has designated reportable segments based on how management views its business. The Company does not segregate assets between segments for internal reporting. Therefore, asset-related information has not been presented. The reportable segments, as presented below, are consistent with the manner in which the Company ~~changed how it manages~~reports its ~~business, allocates resources, and goes~~results to ~~market, which resulted in modifications to its organizational and segment structure. As a result,~~ the Company reorganized from a 3 segment structure previously organized by product category (Baked Goods, Beverages, and Meal Solutions) to a 2 segment structure organized by market dynamics (Meal Preparation and Snacking & Beverages). In connection with this segment reorganization, the Company also recast expenses related to its commercial sales organization from direct selling, general, and administrative expense previously included within the segments to corporate unallocated selling, general, and administrative expense to align with the revised organizational structure. All prior period information has been recast to reflect this change in reportable segments.Chief Operating Decision Maker.

The principal products that comprise each segment are as follows:

Meal Preparation – Our Meal Preparation segment sells aseptic cheese & pudding; baking and mix powders; hot cereals; jams, preserves, and jellies; liquid and powdered non-dairy creamer; macaroni and cheese; mayonnaise; Mexican, barbeque, and other sauces; pasta; pickles and related products; powdered soups and gravies; refrigerated and shelf stable dressings and sauces; refrigerated dough; single serve hot beverages; skillet dinners; and table and flavored syrups.

Snacking & Beverages – Our Snacking & Beverages segment sells bars; broths; candy; cookies; crackers; in-store bakery products; pita chips; powdered drinks; pretzels; ready-to-drink coffee; retail griddle waffles, pancakes, and French toast; specialty teas; and sweeteners.

The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources in total rather than on a segment-level basis. The Company has designated reportable segments based on how management views its business. The Company does not segregate assets between segments for internal reporting. Therefore, asset-related information has not been presented. The reportable segments, as presented above, are consistent with the manner in which the Company reports its results to the Chief Operating Decision Maker.

The Company evaluates the performance of its segments based on net sales dollars and direct operating income. Direct operating income is defined as gross profit less freight out, sales commissions, and direct selling, general, and administrative expenses. The amounts in the following tables are obtained from reports used by senior management and do not include income taxes. Other expenses not allocated include unallocated selling, general, and administrative expenses, unallocated costs of sales, and unallocated corporate expenses (amortization expense, other operating expense, and asset impairment). The accounting policies of the Company’s segments are the same as those described in the summary of significant accounting policies set forth in Note 1 to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

~~TREEHOUSE FOODS, INC.~~

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

Financial information relating to the Company’s reportable segments on a continuing operations basis ~~revised to reflect the new segment structure,~~ is as follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Net sales to external customers:
Meal Preparation		$	678.5	$	673.6
Snacking & Beverages		378.8		411.3



Total		$	1,057.3	$	1,084.9
Direct operating income:
Meal Preparation		$	80.5	$	86.3
Snacking & Beverages		41.7		48.1


Total		122.2		134.4
Unallocated selling, general, and administrative expenses		(69.0)		(71.4)
Unallocated cost of sales (1)		(4.1)		3.2
Unallocated corporate expense and other (1)		(38.1)		(36.0)
Operating income		$	11.0	$	30.2

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Net sales to external customers:

Meal Preparation $ 642.7
$ 656.5
$ 1,984.0
$ 1,984.7
Snacking & Beverages 403.0
400.8
1,188.5
1,164.7
Total $ 1,045.7
$ 1,057.3
$ 3,172.5
$ 3,149.4
Direct operating income:
Meal Preparation $ 80.1
$ 92.4
$ 268.7
$ 273.5
Snacking & Beverages 65.7
41.3
166.3
134.2
Total 145.8
133.7
435.0
407.7
Unallocated selling, general, and administrative expenses (56.5 ) (56.8 ) (210.4 ) (213.3 )
Unallocated cost of sales (1) (12.0 ) (3.3 ) (26.5 ) (13.8 )
Unallocated corporate expense and other (1) (37.5 ) (129.2 ) (102.8 ) (228.6 )
Operating income (loss) $ 39.8
$ (55.6 ) $ 95.3
$ (48.0 )


~~(1)~~	Includes charges related to restructuring programs and other costs managed at corporate. Other costs include incremental expenses directly attributable to our response to the COVID-19 pandemic, which included supplemental pay to our front-line personnel, additional protective equipment for employees, and additional sanitation measures.

~~Disaggregation of Revenue~~

~~Segment revenue disaggregated by product category groups, revised to reflect the new segment structure, is as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Center store grocery $ 415.7
$ 432.7
$ 1,261.0
$ 1,331.0
Main course 227.0
223.8
723.0
653.7
Total Meal Preparation 642.7
656.5
1,984.0
1,984.7
Sweet & savory snacks 283.8
295.4
862.0
893.5
Beverages & drink mixes 119.2
105.4
326.5
271.2
Total Snacking & Beverages 403.0
400.8
1,188.5
1,164.7
Total net sales $ 1,045.7
$ 1,057.3
$ 3,172.5
$ 3,149.4

~~Segment revenue disaggregated by sales channel is as follows:~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In millions) (In millions)
Retail grocery $ 850.7
$ 835.4
$ 2,616.8
$ 2,498.0
Food-away-from-home 64.2
94.5
186.3
271.1
Industrial, co-manufacturing, and other 130.8
127.4
369.4
380.3
Total net sales $ 1,045.7
$ 1,057.3
$ 3,172.5
$ 3,149.4

(1)Includes charges related to growth, reinvestment, and restructuring programs and other costs managed at corporate. Other costs include incremental expenses directly attributable to our response to the COVID-19 pandemic, which included supplemental pay to our front-line personnel, additional protective equipment for employees, and additional sanitation measures.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Disaggregation of Revenue

~~17. SUBSEQUENT EVENTS~~

Segment revenue disaggregated by product category groups are as follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Center store grocery		$	414.1	$	432.0
Main course		264.4		241.6
Total Meal Preparation		678.5		673.6
Sweet & savory snacks		273.0		305.0
Beverages & drink mixes		105.8		106.3
Total Snacking & Beverages		378.8		411.3
Total net sales		$	1,057.3	$	1,084.9

~~On November 5, 2020, the Company announced it will acquire the majority of the U.S. branded pasta portfolio~~Segment revenue disaggregated by sales channel are as well as a manufacturing facility in St. Louis, Missouri of Riviana Foods, Inc. (“Riviana Foods”), a subsidiary of Ebro Foods, S.A. (“Ebro Foods”) for a purchase price of approximately $242.5 million in cash, subject to customary purchase price adjustments. Ebro Foods is a Spanish-based multinational food group operating primarily in the pasta and rice sectors. The acquisition includes the following regional brands: Skinner, No Yolks, American Beauty, Creamette, San Giorgio, Prince, Light ‘n Fluffy, Mrs. Weiss’, Wacky Mac, P&R Procino-Rossi, and New Mill. The asset acquisition is expected to strengthen the Company's portfolio and expand its scale to better serve its national and regional customers. The transaction is currently scheduled to close in the fourth quarter of 2020, subject to antitrust and third party approvals, and other customary closing conditions. It will be funded from the Company’s existing cash resources.follows:


	Three Months Ended March 31,
		2021		2020
	(In millions)
Retail grocery		$	852.1	$	885.5
Food-away-from-home		65.2		74.0
Industrial, co-manufacturing, and other		140.0		125.4
Total net sales		$	1,057.3	$	1,084.9

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

Business Overview

TreeHouse Foods, Inc. is a leading manufacturer and distributor of private label foods and beverages in North America. We have ~~nearly~~approximately 40 production facilities across North America and Italy, and our vision is to be the undisputed solutions leader for custom brands for our customers. Our extensive product portfolio includes snacking, beverages, and meal preparation products, available in shelf stable, refrigerated, frozen, and fresh formats. We have a comprehensive offering of packaging formats and flavor profiles, and we also offer clean label, organic, and preservative-free ingredients across almost our entire portfolio. Our purpose is to make high quality food and beverages affordable to all.

~~Effective January 1, 2020, our~~Our reportable segments, and the principal products that comprise each segment, are as follows:

•Meal Preparation - Our Meal Preparation segment is focused on productivity, efficiency and cash flow. Operational progress is driven by continuous improvement and value engineering. The organizational focus allows the Company to apply resources that better align with customers’ goals for driving value within the center of the retail grocery store. This segment includes center of the store grocery items (single-serve coffee, powdered creamer, dressings, dips, sauces, salsas, syrups, pasta sauces, jams and jellies, pickles, and cheese sauces) and main course meal items (dough, dry dinners, hot cereals, and pasta) in shelf stable and refrigerated formats for retail, food-away-from-home, industrial, ingredient, export and co-pack customers. We play a private label leadership role in several categories and offer clean label, organic, or better-for-you formulas in nearly every category.

•Snacking & Beverages - Our Snacking and Beverages segment is focused on revenue growth, and research, development and commercialization is geared toward evolving consumer trends. The organizational focus enables the Company to apply the proper resources to meet its retail customers’ goals around experience, uniqueness and differentiation in private label. This segment produces and sells a comprehensive portfolio of sweet and savory baked food items (cookies, crackers, frozen waffles, pita chips, pretzels, snack bars and unique candy products) and beverages and drink mixes (powdered drinks, broths/stocks, ready-to-drink beverages, coffee/tea concentrates and bagged specialty tea) for retail, food-away-from-home and co-pack customers in shelf stable, refrigerated and frozen formats. Across many of our categories, we have a private label leadership role and can offer our customer partners a range of value and nutritional solutions, including clean label, organic and gluten free, so that they can meet the unique needs of their consumers.

~~Net sales are distributed across segments in the following manner:~~

The following discussion and analysis presents the factors that had a material effect on our financial condition, changes in financial condition, and results of ~~continuing~~ operations for the three ~~and nine~~ month periods ended ~~September 30, 2020~~March 31, 2021 and ~~2019. Also discussed is our financial position as of the end of the current period.~~2020. 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

~~Pasta Acquisition~~Debt Refinancing

On ~~November 5, 2020,~~March 26, 2021, the Company ~~announced it will acquire~~amended its Second Amended and Restated Credit Agreement, dated as of December 1, 2017 (the "Credit Agreement") which extended the ~~majority~~maturity date of the ~~U.S. branded pasta portfolio~~Revolving Credit Facility and Tranche A-1 Term Loans until March 26, 2026 and the maturity date of the Term A Loans until March 26, 2028, and the amendment refinanced and increased the existing Term Loan amounts by $304.0 million. Additionally, the Company drew $30.0 million from its $750.0 million Revolving Credit Facility. The net proceeds from Term Loan A-1, Term Loan A, and Revolving Credit Facility as well as a manufacturing facility in St. Louis, Missouri of Riviana Foods, Inc. (“Riviana Foods”), a subsidiary of Ebro Foods, S.A. (“Ebro Foods”) for a purchase price of approximately $242.5 million inavailable cash subject to customary purchase price adjustments. Ebro Foods is a Spanish-based multinational food group operating primarily in the pasta and rice sectors. The acquisition includes the following regional brands: Skinner, No Yolks, American Beauty, Creamette, San Giorgio, Prince, Light ‘n Fluffy, Mrs. Weiss’, Wacky Mac, P&R Procino-Rossi, and New Mill. The asset acquisition is expected to strengthen the Company's portfolio and expand its scale to better serve its national and regional customers. The transaction is currently scheduled to close in the fourth quarter of 2020, subject to antitrust and third party approvals, and other customary closing conditions. It will be funded from the Company’s existing cash resources.

~~Debt Refinancing~~

~~On September 9, 2020, the Company completed its public offering of $500 million aggregate principal amount of its 4.000% senior notes due September 1, 2028 (the "2028 Notes"). The Company~~on hand were used ~~the net proceeds of $491.7 million (after deducting the underwriting discount and offering expenses) from the offering of the 2028 Notes~~ to fund the redemption of all of the ~~$375.9~~$602.9 million outstanding principal amount of the ~~previously issued 4.875% notes due March 15, 2022 Notes (the "2022 Notes"), to pay transaction-related fees and expenses of the 2022 Notes redemption, and for general corporate purposes.~~2024 Notes. Refer to Note 9 to our Condensed Consolidated Financial Statements for additional information.

COVID-19

In December 2019, a novel coronavirus disease ("COVID-19") was first reported and subsequently characterized by the World Health Organization ("WHO") as a pandemic in March 2020. InThe spread of COVID-19 throughout the United States and the rest of the world continues to have an ~~effort to reduce~~impact on the global ~~transmission of COVID-19, various policies~~economy, our business, and initiatives have been implemented by governments around the world, including orders to close businesses not deemed "essential", shelter-in-place orders enacted by state and local governments, and the practice of social distancing measures when engaging in essential activities.

Local, state, and national governments continue to emphasize the importance of the food supply during this pandemic and asked that food manufacturers and retailers remain open to meet the needs of our communities. Our number one priority continues to be the health and safety of our employees and others we may come in contact with as we serve our purpose of making high quality food and beverages affordable to all. We have taken numerous steps to keep our employees safe including increased sanitation stations, implementation of physical barriers and social distancing protocols at our manufacturing operations, masks and personal protective equipment for employees across our facilities, preventative temperature screenings across all manufacturing locations, incentives for employees, including supplemental pay and additional paid leave, and remote work arrangements for administrative support functions.industry. Our cross-functional task force continues to monitor and coordinate the Company's response to ~~COVID-19.~~COVID-19 including the ongoing defense of the health and safety of our employees.

~~Consumers have modified their purchasing habits~~The COVID-19 pandemic impacted consumer behavior and resulted in at-home consumption compared to ~~more food-at-home in response to~~food-away-from-home consumption. This consumer consumption trend has continued through the ~~pandemic. As a result, we have experienced favorable revenue~~first quarter of 2021 and ~~earnings impacts within~~benefits our retail grocery business which comprises approximately 80% of total net sales. ~~These favorable impacts~~The majority of food-away-from home channel sales are within our Meal Preparation segment, and the impact of the COVID-19 pandemic partially offsets the benefit from retail grocery ~~channel more than offset the unfavorable impacts due to the prolonged weakness in demand~~ within ~~the food-away-from-home channel. To date, there have not been material disruptions to~~this segment. However, our ~~supply chain network, including the supply~~Snacking & Beverages segment is mostly comprised of ~~our ingredients, packaging, or other sourced materials, though it is possible that more significant disruptions could occur if the duration~~retail grocery, and ~~severity of COVID-19~~therefore, this segment continues to ~~increase within North America or Italy. However, there have been production limitations~~benefit from the at-home consumption as a result of ~~a tighter labor market. This has affected~~the COVID-19 pandemic. Changes in consumer behavior consumption patterns have impacted and could continue to impact our ~~ability to service certain categories.~~revenues and earnings.

We continue to monitor the possible near-term impact of a COVID-19 resurgence on at-home food consumption, as well as COVID-19-related challenges, such as a tighter labor market and the potential for supply limitations as we head into the fourth quarter. Looking longer term, we remain confident in the private label opportunity and believe that at-home food consumption demand will remain elevated. We expect store brands will benefit as consumer behavior resumes the long-established shift toward private label and consumers begin to feel the impact of the ~~economic recession. In addition, we believe that macro trends around demographics~~COVID-19 pandemic on our supply chain network and ~~the retailer landscape will continue to be supportive of private label growth over time. We expect to~~ continue to incur incremental costs related to COVID-19 to address the safety and welfare of our employees. Further, there have been increased costs associated with a tighter labor market due to COVID-19 related absenteeism and labor-related restrictions. The COVID-19 environment has also caused freight rates to increase due to tighter capacity and stronger demand in the trucking market with the higher shipping volume of products and groceries at-home. These trends have impacted and could continue to impact our margins and pricing.

The impact of COVID-19 continues to remain uncertain and depends on the duration and severity of the pandemic; federal, state, and local government actions taken in response; the macroeconmonic environment; and the rollout of the vaccination programs and potential risks of new strains of the virus. We will continue to evaluate the nature and extent to which COVID-19 will impact our business, consumer consumption patterns, supply chain, results of operations, and financial condition.

~~Change in Segments~~

On January 1, 2020, the Company changed how it manages its business, allocates resources, and goes to market, which resulted in modifications to its organizational and segment structure. As a result, the Company reorganized from a three segment structure previously organized by product category (Baked Goods, Beverages, and Meal Solutions) to a two segment structure organized by market dynamics (Snacking & Beverages and Meal Preparation). All prior period information has been recast to reflect this change in reportable segments. Refer to Note 16 to our Condensed Consolidated Financial Statements for additional information.

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,
		2021	2020
			Dollars		Percent		Dollars		Percent
	(Dollars in millions)
Net sales			$	1,057.3	100.0	%	$	1,084.9	100.0	%
Cost of sales			876.2		82.9		890.0		82.0
Gross profit			181.1		17.1		194.9		18.0
Operating expenses:
Selling and distribution			68.7		6.5		65.1		6.0
General and administrative			63.3		6.0		63.6		5.9
Amortization expense			18.4		1.7		17.5		1.6

Other operating expense, net			19.7		1.8		18.5		1.7
Total operating expenses			170.1		16.0		164.7		15.2
Operating income			11.0		1.1		30.2		2.8
Other expense:
Interest expense			25.1		2.4		24.8		2.3
Loss on extinguishment of debt			14.4		1.4		—		—
(Gain) loss on foreign currency exchange			(1.3)		(0.1)		14.4		1.3
Other (income) expense, net			(27.4)		(2.6)		64.0		5.9
Total other expense			10.8		1.1		103.2		9.5
Income (loss) before income taxes			0.2		—		(73.0)		(6.7)
Income tax benefit			(0.2)		—		(40.2)		(3.7)
Net income (loss) from continuing operations			0.4		—		(32.8)		(3.0)
Net income from discontinued operations			1.1		0.1		1.6		0.1
Net income (loss)			$	1.5	0.1	%	$	(31.2)	(2.9)	%

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Dollars Percent Dollars Percent Dollars Percent Dollars Percent
(Dollars in millions) (Dollars in millions)
Net sales $ 1,045.7
100.0 % $ 1,057.3
100.0 % $ 3,172.5
100.0 % $ 3,149.4
100.0 %
Cost of sales 857.5
82.0
871.0
82.4
2,598.2
82.0
2,577.7
81.8
Gross profit 188.2
18.0
186.3
17.6
574.3
18.0
571.7
18.2
Operating expenses:

Selling and distribution 59.8
5.7
61.2
5.8
187.9
5.9
191.2
6.1
General and administrative 51.0
4.9
51.5
4.9
188.3
5.9
199.9
6.3
Amortization expense 17.6
1.7
17.7
1.7
52.5
1.7
56.4
1.8
Asset impairment —
—
88.0
8.3
—
—
88.0
2.8
Other operating expense, net 20.0
1.9
23.5
2.2
50.3
1.6
84.2
2.7
Total operating expenses 148.4
14.2
241.9
22.9
479.0
15.1
619.7
19.7
Operating income (loss) 39.8
3.8
(55.6 ) (5.3 ) 95.3
2.9
(48.0 ) (1.5 )
Other expense:

Interest expense 26.9
2.6
27.3
2.6
77.9
2.5
78.5
2.5
Loss on extinguishment of debt 1.2
0.1
—
—
1.2
—
—
—
(Gain) loss on foreign currency exchange (3.8 ) (0.4 ) 0.4
—
4.1
0.1
(1.3 ) —
Other (income) expense, net (6.9 ) (0.7 ) 14.1
1.3
51.5
1.6
50.5
1.6
Total other expense 17.4
1.6
41.8
3.9
134.7
4.2
127.7
4.1
Income (loss) before income taxes 22.4
2.1
(97.4 ) (9.2 ) (39.4 ) (1.2 ) (175.7 ) (5.6 )
Income tax expense (benefit) 11.0
1.1
(36.4 ) (3.4 ) (15.4 ) (0.6 ) (50.1 ) (1.6 )
Net income (loss) from continuing operations 11.4
1.0
(61.0 ) (5.8 ) (24.0 ) (0.6 ) (125.6 ) (4.0 )
Net income (loss) from discontinued operations 0.7
0.1
(116.8 ) (11.0 ) 3.4
0.1
(250.9 ) (8.0 )
Net income (loss) $ 12.1
1.1 % $ (177.8 ) (16.8 )% $ (20.6 ) (0.5 )% $ (376.5 ) (12.0 )%

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019~~March 31, 2020

Continuing Operations

Net Sales — ~~Third~~First quarter net sales decreased by ~~$11.6~~$27.6 million, or ~~1.1%~~2.5%, in ~~2020~~2021 compared to ~~2019.~~2020. The change in net sales from the ~~third~~first quarter of ~~2019~~2020 to the ~~third~~first quarter of ~~2020~~2021 was due to the following:


	Dollars		Percent
	(In millions)
2020 Net sales	$	1,084.9
Volume/mix excluding acquisitions and divestitures	(50.8)		(4.7)	%
Pricing	(3.1)		(0.3)
Volume/mix related to divestitures	(18.5)		(1.7)
Acquisition	40.9		3.8

Foreign currency	3.9		0.4
2021 Net sales	$	1,057.3	(2.5)	%

Volume/mix related to divestitures			1.7
Acquisition			(3.8)

Foreign currency			(0.4)
Percent change in organic net sales (1)			(5.0)	%

Dollars Percent
(In millions)
2019 Net sales $ 1,057.3

Volume/mix excluding SKU rationalization and divestitures 4.2
0.4 %
Pricing 2.7
0.3
Volume/mix related to divestitures (17.9 ) (1.7 )
Foreign currency (0.6 ) (0.1 )
2020 Net sales $ 1,045.7
(1.1 )%

Volume/mix related to divestitures 1.7
Foreign currency 0.1
Percent change in organic net sales (1) 0.7 %

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

Organic net sales ~~increased 0.7%~~decreased 5.0% in the ~~third~~first quarter of ~~2020~~2021 compared to ~~2019~~2020 driven by:

•Volume/mix excluding ~~SKU rationalization~~acquisitions and divestitures was ~~favorable 0.4%~~unfavorable 4.7% year-over-year primarily due to ~~increased~~decreased retail demand as a result of lapping consumer pantry stocking in March 2020 from the uncertainty of the COVID-19 ~~pandemic, which outpaced the impact of carryover distribution losses and decreased food-away-from-home demand.~~

~~Pricing was slightly favorable driven by the Snacking & Beverages division.~~

~~The year-over-year increase in organic net sales~~pandemic. This was partially offset by distribution gains which outpaced distribution losses.

•Pricing was slightly unfavorable driven by the carryover impact of prior year pricing adjustments.

Additionally, lower volume/mix related to the divestiture of the two In-Store Bakery facilities ~~which~~ was unfavorable 1.7%. This was more than offset by the favorable impact of the inclusion of the business from the pasta acquisition of 3.8% and favorable foreign exchange of 0.4% resulting in a year-over-year decrease in reported net sales of 2.5%.

Gross Profit — Gross profit as a percentage of net sales was 17.1% in the first quarter of 2021, compared to 18.0% in the ~~third~~first quarter of 2020, ~~compared to 17.6% in the third quarter~~a decrease of ~~2019, an increase of 0.4~~0.9 percentage points. The ~~increase~~decrease is primarily due to ~~favorable channel mix of more retail~~lower volume from reduced COVID-19 pandemic demand, commodity inflation, and ~~less food-away-from-home business and lower operational costs of goods sold. This was partially offset by~~ incremental costs incurred in response to the COVID-19 pandemic, including increased production shifts, supplemental pay, protective equipment for employees, and additional sanitation measures. This was partially offset by increased volume from the inclusion of the business from the pasta acquisition and favorable channel mix.

Total Operating Expenses — Total operating expenses as a percentage of net sales were ~~14.2%~~16.0% in the ~~third~~first quarter of 2021 compared to 15.2% in the first quarter of 2020, ~~compared to 22.9% in the third quarter~~an increase of ~~2019, a decrease of 8.7~~0.8 percentage points. The ~~decrease~~increase is primarily attributable to ~~non-recurring impairment charges recognized~~integration costs associated with the recent pasta acquisition, higher freight costs due to reduced market capacity and an increase in ~~the third quarter of 2019~~spot market usage, and professional services fees related to ~~long-lived assets in the Cookies and Dry Dinners categories and~~shareholder activism. This was partially offset by lower ~~restructuring expenses as the TreeHouse 2020 program winds down.~~employee incentive compensation expense.

Total Other Expense — Total other expense decreased by ~~$24.4~~$92.4 million to ~~$17.4~~$10.8 million in the ~~third~~first quarter of ~~2020~~2021 compared to ~~$41.8~~$103.2 million in the ~~third~~first quarter of ~~2019.~~2020. The decrease was primarily related to a favorable non-cash mark-to-market ~~impact~~impacts from hedging activities, driven by interest rate swaps and commodity contracts, and favorable currency exchange rate impacts between the U.S. and ~~Canadian dollar during~~Canada compared to unfavorable mark-to-market and currency exchange impacts in the ~~third quarter of 2020.~~prior year. This was partially offset by a loss on extinguishment of debt.

Income Taxes — Income ~~tax expense was~~taxes were recognized at ~~a higher~~an effective rate of (100.0)% in the ~~third~~first quarter of ~~2020~~2021 compared to ~~income tax benefit~~55.1% recognized in the ~~third~~first quarter of ~~2019.~~2020. The change in the Company’s effective tax rate is primarily ~~driven by~~ the ~~estimated level~~result of ~~annual pre-tax earnings, partially offset by~~ benefits recognized in 2020 due to the enactment of the CARES Act and a change in the amount of valuation allowance recorded against certain deferred tax ~~assets.~~assets, and an increase in the amount of tax deductible stock based compensation in 2021.

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

Net income ~~(loss)~~ from discontinued operations ~~increased $117.5~~decreased $0.5 million in the ~~third~~first quarter of ~~2020~~2021 compared to the ~~third~~first quarter of ~~2019.~~2020. The ~~increase~~decrease is primarily related to lower Ready-to-eat Cereal volume due to decreased retail demand as a ~~non-recurring loss on~~result of lapping consumer pantry stocking in March 2020 from the ~~sale~~uncertainty of the ~~Snacks division and a non-recurring impairment charge related to the expected loss on disposal of the Ready-to-eat Cereal business recognized in the third quarter of 2019.~~COVID-19 pandemic. Refer to Note 6 of our Condensed Consolidated Financial Statements for additional details.

Three Months Ended ~~September 30, 2020~~March 31, 2021 Compared to Three Months Ended ~~September 30, 2019~~March 31, 2020 — Results by Segment


	Three Months Ended March 31, 2021
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
Net sales	$	678.5	100.0	%	$	378.8	100.0	%
Cost of sales	560.4		82.6		311.7		82.3
Gross profit	118.1		17.4		67.1		17.7
Freight out and commissions	28.1		4.1		19.3		5.1
Direct selling, general, and administrative	9.5		1.4		6.1		1.6
Direct operating income	$	80.5	11.9	%	$	41.7	11.0	%


	Three Months Ended September 30, 2020									Three Months Ended March 31, 2020
	Meal Preparation				Snacking & Beverages					Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent			Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)									(unaudited, dollars in millions)
Net sales	$	642.7	100.0	%	$	403.0	100.0	%	Net sales	$	673.6	100.0	%	$	411.3	100.0	%
Cost of sales	531.7		82.7		313.9		77.9		Cost of sales	554.1		82.3		339.0		82.4
Gross profit	111.0		17.3		89.1		22.1		Gross profit	119.5		17.7		72.3		17.6
Freight out and commissions	24.2		3.8		18.1		4.5		Freight out and commissions	25.3		3.7		18.6		4.5
Direct selling, general, and administrative	6.7		1.0		5.3		1.3		Direct selling, general, and administrative	7.9		1.2		5.6		1.4
Direct operating income	$	80.1	12.5	%	$	65.7	16.3	%	Direct operating income	$	86.3	12.8	%	$	48.1	11.7	%

Three Months Ended September 30, 2019
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
Net sales $ 656.5
100.0 % $ 400.8
100.0 %
Cost of sales 531.9
81.0
335.8
83.8
Gross profit 124.6
19.0
65.0
16.2
Freight out and commissions 24.6
3.7
18.5
4.6
Direct selling, general, and administrative 7.6
1.2
5.2
1.3
Direct operating income $ 92.4
14.1 % $ 41.3
10.3 %

The change in net sales by segment from the ~~third~~first quarter of ~~2019~~2020 to the ~~third~~first quarter of ~~2020~~2021 was due to the following:


	Three Months Ended March 31,
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
2020 Net sales	$	673.6			$	411.3
Volume/mix excluding acquisitions and divestitures	(37.1)		(5.5)	%	(13.7)		(3.4)	%
Pricing	(1.2)		(0.2)		(1.9)		(0.5)
Volume/mix related to divestitures	—		—		(18.5)		(4.4)
Acquisition	40.9		6.1		—		—

Foreign currency	2.3		0.3		1.6		0.4
2021 Net sales	$	678.5	0.7	%	$	378.8	(7.9)	%

Volume/mix related to divestitures			—				4.4
Acquisition			(6.1)				—

Foreign currency			(0.3)				(0.4)
Percent change in organic net sales			(5.7)	%			(3.9)	%

Three Months Ended September 30,
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
2019 Net sales $ 656.5
$ 400.8

Volume/mix excluding SKU rationalization and divestitures (9.6 ) (1.4 )% 13.8
3.6 %
Pricing (3.8 ) (0.6 ) 6.5
1.6
Volume/mix related to divestitures —
—
(17.9 ) (4.6 )
Foreign currency (0.4 ) (0.1 ) (0.2 ) (0.1 )
2020 Net sales $ 642.7
(2.1 )% $ 403.0
0.5 %

Volume/mix related to divestitures —
4.6
Foreign currency 0.1
0.1
Percent change in organic net sales (2.0 )% 5.2 %

Meal Preparation

Net sales in the Meal Preparation segment ~~decreased $13.8~~increased $4.9 million, or ~~2.1%~~0.7%, in the ~~third~~first quarter of ~~2020~~2021 compared to the ~~third~~first quarter of ~~2019.~~2020. The change in net sales was driven by unfavorable volume/mix as a result of the impact of carryover distribution losses and decreased food-away-from-home demand, which outpaced distribution gains. Unfavorable pricing was primarily due to carryover pricing actions that continue to impact Single Serve Beverages. Organic net sales in the Meal Preparation segment decreased by 2.0% year-over-year.

Direct operating income as a percentage of net sales decreased 1.6 percentage points in the third quarter of 2020 compared to the third quarter of 2019. This decrease was due to COVID-19 increased operational costs primarily from labor shortages and increased warehouse expansion costs to service retail demand.

~~Snacking & Beverages~~

Net sales in the Snacking & Beverages segment increased $2.2 million, or 0.5%, in the third quarter of 2020 compared to the third quarter of 2019. The change in net sales was due to favorable volume/mix from increased distribution gains and innovation, as well as non-recurring pricing which outpaced the impact of carryover distribution losses and lower volume/mix due to divestitures. Organic net sales in the Snacking & Beverages segment increased 5.2% year-over-year.

Direct operating income as a percentage of net sales increased 6.0 percentage points in the third quarter of 2020 compared to the third quarter of 2019. The increase primarily resulted from productivity gains associated with higher operational throughput at our network of manufacturing and distribution facilities in response to the increased demand due to COVID-19, non-recurring pricing, and lower operational costs of goods sold.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019~~

~~Continuing Operations~~

~~Net Sales~~ ~~— Net sales increased by $23.1 million, or 0.7%, in the first nine months of 2020 compared to the first nine months of 2019. The change in net sales from 2019 to 2020 was due to the following:~~

Dollars Percent
(In millions)
2019 Net sales $ 3,149.4

Volume/mix excluding SKU rationalization and divestitures 75.2
2.4 %
Pricing (4.5 ) (0.1 )
Volume/mix related to divestitures (40.3 ) (1.4 )
SKU rationalization (3.4 ) (0.1 )
Foreign currency (3.9 ) (0.1 )
2020 Net sales $ 3,172.5
0.7 %

Volume/mix related to divestitures 1.4
SKU rationalization 0.1
Foreign currency 0.1
Percent change in organic net sales 2.3 %

~~Organic net sales increased 2.3% in 2020 compared to 2019 driven by:~~

Volume/mix excluding SKU rationalization and divestitures was favorable 2.4% year-over-year primarily due to distribution gains, new items, and increased retail demand as a result of the COVID-19 pandemic, which outpaced the impact of carryover distribution losses and decreased food-away-from-home demand.

~~Pricing was unfavorable 0.1% driven by the carryover impact of prior year pricing adjustments.~~

The year-over-year increase in organic net sales was partially offset by lower volume/mix related to the divestiture of the two In-Store Bakery facilities, which was unfavorable 1.4%. Our efforts to simplify and rationalize low margin SKUs from our product portfolio was unfavorable 0.1% within our Snacking & Beverages segment and foreign exchange was unfavorable 0.1% year-over-year.

~~Gross Profit~~ — Gross profit as a percentage of net sales was 18.0% in the first nine months of 2020, compared to 18.2% in the first nine months of 2019, a decrease of 0.2 percentage points. The decrease is primarily due to incremental costs incurred in response to the COVID-19 pandemic, including increased production shifts, supplemental pay, protective equipment for employees, additional sanitation measures, and higher employee expenses. This was partially offset by higher operational throughput at our network of manufacturing and distribution facilities.

~~Total Operating Expenses~~ — Total operating expenses as a percentage of net sales were 15.1% in the first nine months of 2020 compared to 19.7% in the first nine months of 2019, a decrease of 4.6 percentage points. The decrease is primarily attributable to a non-recurring impairment charge recognized in the third quarter of 2019 related to long-lived assets in the Cookies and Dry Dinners categories, lower restructuring expenses as the TreeHouse 2020 program winds down, continued SG&A discipline, and lower freight costs due to rate favorability and a reduction in spot market usage. This was partially offset by higher employee expenses.

~~Total Other Expense~~ —Total other expense increased by $7.0 million to $134.7 million in the first nine months of 2020 compared to $127.7 million in the first nine months of 2019. The increase was primarily related to unfavorable currency exchange rates between the U.S. and Canadian dollar during the respective periods and a loss on extinguishment of debt. This was partially offset by lower non-cash mark-to-market expense from hedging activities, driven by foreign currency contracts, interest rate swaps, and commodity contracts.

~~Income Taxes~~ ~~— Income tax benefit was recognized at a higher effective rate in the first nine months of 2020 compared to the first nine months of 2019. The change is~~ primarily driven by the ~~estimated level of annual pre-tax earnings, partially offset by benefits recognized in 2020 due to the enactment~~favorable impact of the ~~CARES Act and a change in the amount of valuation allowance recorded against certain deferred tax assets.~~

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 expirationinclusion of the ~~statute of limitations in relation to unrecognized tax benefits.~~

~~Discontinued Operations~~

Net income (loss) from discontinued operations increased $254.3 million in the third quarter of 2020 compared to the third quarter of 2019. The increase is primarily related to a non-recurring impairment charge recognized in the second quarter of 2019 related to long-lived assets in the Snacks division, a non-recurring impairment charge related to the expected loss on disposal of the Ready-to-eat Cereal business recognized in the second and third quarters of 2019, and a non-recurring loss on the sale of the Snacks division recognized in the third quarter of 2019. Refer to Note 6 of our Condensed Consolidated Financial Statements for additional details.

~~Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019 — Results by Segment~~

Nine Months Ended September 30, 2020
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
Net sales $ 1,984.0
100.0 % $ 1,188.5
100.0 %
Cost of sales 1,620.5
81.7
951.2
80.0
Gross profit 363.5
18.3
237.3
20.0
Freight out and commissions 75.8
3.8
53.1
4.5
Direct selling, general, and administrative 19.0
1.0
17.9
1.5
Direct operating income $ 268.7
13.5 % $ 166.3
14.0 %

Nine Months Ended September 30, 2019
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
Net sales $ 1,984.7
100.0 % $ 1,164.7
100.0 %
Cost of sales 1,610.0
81.1
953.8
81.9
Gross profit 374.7
18.9
210.9
18.1
Freight out and commissions 75.8
3.8
58.8
5.0
Direct selling, general, and administrative 25.4
1.3
17.9
1.6
Direct operating income $ 273.5
13.8 % $ 134.2
11.5 %

~~The change in net sales by segment~~ from the ~~first nine months of 2019 to the first nine months of 2020 was due to the following:~~

Nine Months Ended September 30,
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
2019 Net sales $ 1,984.7
$ 1,164.7

Volume/mix excluding SKU rationalization and divestitures 9.1
0.5 % 66.1
5.9 %
Pricing (7.0 ) (0.4 ) 2.5
0.2
Volume/mix related to divestitures —
—
(40.3 ) (3.6 )
SKU rationalization —
—
(3.4 ) (0.3 )
Foreign currency (2.8 ) (0.1 ) (1.1 ) (0.2 )
2020 Net sales $ 1,984.0
— % $ 1,188.5
2.0 %

Volume/mix related to divestitures —
3.6
SKU rationalization —
0.3
Foreign currency 0.1
0.2
Percent change in organic net sales 0.1 % 6.1 %

~~Meal Preparation~~

~~Net sales in the Meal Preparation segment decreased $0.7 million in the first nine months of 2020,~~pasta acquisition and it was flat on a percentage point basis compared to the first nine months of 2019. The change in net sales was due to unfavorable pricing due to the carryover impact of prior year pricing adjustments, unfavorable foreign currency and the impact of carryoverdistribution gains that outpaced distribution losses. This was partially offset by ~~favorable volume/mix mostly from increased~~decreased retail demand as a result of lapping consumer pantry stocking in March 2020 from the uncertainty of the COVID-19 pandemic. Organic net sales in the Meal Preparation segment ~~increased 0.1%~~decreased by 5.7% year-over-year.

Direct operating income as a percentage of net sales decreased ~~0.3~~0.9 percentage points in the first ~~nine months~~quarter of ~~2020~~2021 compared to the first ~~nine months~~quarter of ~~2019.~~2020. This decrease was ~~primarily~~ due to ~~unfavorable pricing~~lower volume from reduced COVID-19 pandemic demand, increased operational costs as a result of severe winter weather in certain regions of the U.S., commodity inflation, and ~~increased warehouse expansion~~higher freight costs due to ~~service retail demand.~~reduced market capacity and an increase in spot market usage. This was partially offset by increased volume from the inclusion of the business from the pasta acquisition and favorable ~~SG&A as a result of continued discipline and lower freight costs.~~channel mix.

Snacking & Beverages

Net sales in the Snacking & Beverages segment ~~increased $23.8~~decreased $32.5 million, or ~~2.0%~~7.9%, in the first ~~nine months~~quarter of ~~2020~~2021 compared to the first ~~nine months~~quarter of ~~2019.~~2020. The change in net sales was due to ~~favorable volume/mix mostly from increased~~decreased retail demand as a result of lapping consumer pantry stocking in March 2020 from the uncertainty of the COVID-19 pandemic ~~which outpaced the impact of carryover distribution losses~~ and lower volume/mix due to divestitures. This was partially offset by ~~efforts to simplify~~distribution gains which outpaced distribution losses and ~~rationalize low margin SKUs and unfavorable foreign currency.~~innovation with new items. Organic net sales in the Snacking & Beverages segment ~~increased 6.1%~~decreased 3.9% year-over-year.

Direct operating income as a percentage of net sales ~~increased 2.5~~decreased 0.7 percentage ~~point~~points in the first ~~nine months~~quarter of ~~2020~~2021 compared to the first ~~nine months~~quarter of ~~2019.~~2020. The ~~increase primarily resulted from productivity gains associated with higher operational throughput at our network of manufacturing and distribution facilities in response to the increased demand~~decrease was due to lower volume from reduced COVID-19 pandemic demand and ~~lower~~higher freight ~~costs.~~

costs due to reduced market capacity and an increase in spot market usage.

Liquidity and Capital Resources

Cash Flow

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. If additional borrowings are needed, approximately ~~$727.0~~$697.3 million was available under the Revolving Credit Facility as of ~~September 30, 2020.~~March 31, 2021. See Note 9 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.

At this time, COVID-19 has not had a material adverse impact on our operations, and we anticipate our current cash balances, cash flows from operations, and our available sources of liquidity will be sufficient to meet our cash requirements. ~~We expect that the provisions included within the CARES Act will help offset incremental cash expenses incurred by the Company as we respond to the COVID-19 pandemic.~~ Under the CARES Act, we ~~expect to defer~~deferred the payment of ~~approximately $20 million to $25~~$22.8 million in payroll taxes ~~through the remainder of~~in 2020, which will be paid equally in the fourth quarters of 2021 and 2022. We expect to receive a refund from the Internal Revenue Service of $73.5 million related to the NOL carryback provisions of the CARES Act. $71.4 million of this amount has been received to date in the fourth quarter of 2020. In addition, we are actively monitoring the collectability of all of our outstanding trade receivables, including those within our food-away-from-home channel, which comprises less than 10% of our revenue. Given the dynamic nature of COVID-19, we will continue to assess our liquidity needs while additionally managing our discretionary spending and investment strategies.

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


	Nine Months Ended September 30,							Three Months Ended March 31,
	2020			2019				2021		2020
	(In millions)							(In millions)
Net Cash Flows Provided By (Used In):							Net Cash Flows Provided By (Used In):
Operating activities of continuing operations	$	124.5		$	5.8		Operating activities of continuing operations	$	(5.5)	$	68.5
Investing activities of continuing operations	(64.6		)	(99.8		)	Investing activities of continuing operations	(13.2)		(26.0)
Financing activities of continuing operations	103.9			(141.3		)	Financing activities of continuing operations	(293.3)		92.3
Cash flows from discontinued operations	(2.4		)	111.6			Cash flows from discontinued operations	(3.5)		(6.3)

Operating Activities From Continuing Operations

Cash ~~provided by~~used in operating activities of continuing operations was ~~$124.5~~$5.5 million in the first ~~nine~~three months of ~~2020~~2021 compared to ~~$5.8~~cash provided by operating activities of $68.5 million in the first ~~nine~~three months of ~~2019, an increase~~2020, a decrease of ~~$118.7~~$74.0 million. The ~~increase~~decrease was primarily attributable to ~~higher~~lower cash earnings, slower inventory turnover as a result of lapping consumer pantry stocking in March 2020 from the uncertainty of the COVID-19 pandemic, and ~~improved working capital. The Company's working capital management emphasis continues~~increased inventory levels to ~~be focused on driving faster collection~~improve service. This was partially offset by higher usage of ~~receivables, reducing inventory, and extending vendor payment terms.~~the Receivables Sales Program. Refer to Note 4 to our Condensed Consolidated Financial Statements for additional information.

Investing Activities From Continuing Operations

Cash used in investing activities of continuing operations was ~~$64.6~~$13.2 million in the first ~~nine~~three months of ~~2020~~2021 compared to ~~$99.8~~$26.0 million in the first ~~nine~~three months of ~~2019,~~2020, a decrease in cash used of ~~$35.2 million,~~$12.8 million. This was driven by ~~lower capital expenditures and~~proceeds received from the sale of our investments during the three months ended March 31, 2021 as the Company entered into a total return swap contract to hedge the market risk associated with the unfunded portion of the Company's deferred compensation liability. Refer to Note 15 to our Condensed Consolidated Financial Statements for additional information. This was partially offset by the non-recurrence of the receipt of proceeds from the sale of the ~~In-Store Bakery facilities~~Minneapolis, Minnesota facility in the ~~second quarter of 2020. This was partially offset by an acquisition of a refrigerated dough business in the third quarter of 2020.~~prior year.

Financing Activities From Continuing Operations

Net cash ~~provided by~~used in financing activities of continuing operations was ~~$103.9~~$293.3 million in the first ~~nine~~three months of ~~2020~~2021 compared to cash ~~used in~~provided by financing activities of ~~$141.3~~$92.3 million in the first ~~nine~~three months of ~~2019, an increase~~2020, a decrease in cash provided by financing activities of ~~$245.2~~$385.6 million. The ~~increase~~decrease is primarily attributable to ~~non-recurring early payments made~~the redemption of the 2024 Notes and smaller draw on the Company's ~~term loan~~Revolving Credit Facility during the first ~~nine~~three months of ~~2019 and debt refinancing activity during~~2021 compared to the first ~~nine~~three months of 2020. This ~~debt refinancing~~was partially offset by the amendment of the Credit Agreement which resulted in an increase in ~~cash due~~Term Loan balances used to ~~the issuance of 2028 Notes which was partially offset by~~fund the redemption of the ~~2022~~2024 Notes.

Cash Flows From Discontinued Operations

Our cash used in discontinued operations was ~~$2.4~~$3.5 million in the first ~~nine~~three months of ~~2020~~2021 compared to ~~cash provided by discontinued operations of $111.6~~$6.3 million in the first ~~nine~~three months of ~~2019,~~2020, a decrease in cash ~~provided~~used of ~~$114.0~~$2.8 million. The decrease in cash used in discontinued operations is primarily attributable to a non-recurring ~~proceeds~~payment of a working capital adjustment from the 2019 sale of the Snacks division ~~in the third quarter of 2019 and non-recurring cash flows from operations from the Snacks division~~that occurred during the ~~nine~~three months ended ~~of September 30, 2019.~~March 31, 2020. This was partially offset by ~~lower capital expenditures during~~a decrease in cash flow provided by operating activities from the ~~nine months ended September 30, 2020.~~Ready-to-eat Cereal business.

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) provided by operating activities from continuing operations less capital expenditures. We believe free cash flow is an important measure of operating performance 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) provided by operating activities from continuing operations (a GAAP measure) to our free cash flow from continuing operations (a Non-GAAP measure).


	Three Months Ended March 31,
	2021		2020
	(In millions)
Cash flow (used in) provided by operating activities from continuing operations	$	(5.5)	$	68.5
Less: Capital expenditures	(31.3)		(31.1)
Free cash flow from continuing operations	$	(36.8)	$	37.4

Nine Months Ended
September 30,
2020 2019
(In millions)
Cash flow provided by operating activities from continuing operations $ 124.5
$ 5.8
Less: Capital expenditures (79.1 ) (104.8 )
Free cash flow from continuing operations $ 45.4
$ (99.0 )

Debt Obligations

At ~~September 30, 2020,~~March 31, 2021, we had ~~$454.6~~$30.0 million outstanding under the Revolving Credit Facility, $500.0 million outstanding under Term Loan A, ~~$674.9~~$930.0 million outstanding under Term Loan A-1, ~~$602.9 million of the 2024 Notes outstanding,~~ $500.0 million of the 2028 Notes outstanding, and ~~$4.2~~$4.0 million of other obligations. In addition, at ~~September 30, 2020,~~March 31, 2021, there were ~~$23.0~~$22.7 million in letters of credit of which under the Revolving Credit Facility that were issued but undrawn.

Also, at ~~September 30, 2020,~~March 31, 2021, our Revolving Credit Facility provided for an aggregate commitment of $750 million, of which ~~$727.0~~$697.3 million was available. Interest rates on debt outstanding under the Revolving Credit Facility, Term Loan A, and Term Loan A-1 (collectively known as the "Amended and Restated Credit Agreement") for the three months ended ~~September 30, 2020~~March 31, 2021 averaged ~~1.78%~~1.74%. Including the interest rate swap agreements in effect as of ~~September 30, 2020,~~March 31, 2021, the average rate ~~increases~~increased to ~~4.04%~~2.20%.

We are in compliance with all applicable financial debt covenants as of ~~September 30, 2020.~~March 31, 2021. See Note 9 to our Condensed Consolidated Financial Statements for additional information regarding our indebtedness and related agreements.

Guarantor Summarized Financial Information

The ~~2024 Notes and~~ 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 Statements of Operations			Three Months Ended March 31, 2021
			(unaudited, in millions)
Net sales			$	997.1
Gross profit			162.4
Net loss from continuing operations			(6.1)
Net income from discontinued operations			1.1
Net loss			(5.0)

	TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet	March 31, 2021		December 31, 2020
	(unaudited, in millions)
Current assets	$	971.5	$	1,201.9
Noncurrent assets	3,686.1		3,754.0
Current liabilities	852.5		912.2
Noncurrent liabilities	2,303.2		2,618.1

TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Statements of Operations Nine Months Ended September 30, 2020
(unaudited, in millions)
Net sales $ 2,983.6
Gross profit 538.9
Net loss from continuing operations (28.1 )
Net income from discontinued operations 3.4
Net loss (24.7 )

TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet September 30, 2020 December 31, 2019
(unaudited, in millions)
Current assets $ 1,346.2
$ 1,142.2
Noncurrent assets 3,542.6
3,626.5
Current liabilities 845.6
858.9
Noncurrent liabilities 2,625.4
2,515.6

The following is a description of the transactions between the combined TreeHouse Foods, Inc. and Guarantor Subsidiaries with Non-Guarantor Subsidiaries:


			TreeHouse Foods, Inc. and Guarantor Subsidiaries
			Three Months Ended March 31, 2021
			(unaudited, in millions)
Net sales to Non-Guarantor Subsidiaries			$	19.5
Purchases from Non-Guarantor Subsidiaries			65.4

	TreeHouse Foods, Inc. and Guarantor Subsidiaries
	March 31, 2021		December 31, 2020
	(unaudited, in millions)
Amount due from Non-Guarantor Subsidiaries	$	7.4	$	10.6

TreeHouse Foods, Inc. and Guarantor Subsidiaries
Nine Months Ended September 30, 2020
(unaudited, in millions)
Net sales to Non-Guarantor Subsidiaries $ 51.7
Purchases from Non-Guarantor Subsidiaries 186.4

TreeHouse Foods, Inc. and Guarantor Subsidiaries
September 30, 2020 December 31, 2019
(unaudited, in millions)
Amount due from/(to) Non-Guarantor Subsidiaries $ 9.5
$ (10.2 )
Known Trends and Uncertainties

Commodity Inflation

The costs of raw materials, ingredients, packaging materials, fuel, and energy have been volatile in recent years and future changes in such costs may cause our results of operations and our operating margins to fluctuate significantly. We believe the overall food and beverage industry is facing significant inflation across several agricultural commodities, specifically edible oils (soybean, coconut, canola, and palm), wheat, durum, coffee, and oats. 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, we offset the effect of increased costs by raising prices to our customers. However, for competitive reasons, we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

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. We believe these measures provide useful information to the users of the financial statements as we also have included these measures in other communications and publications.

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 SKU rationalization, the net sales associated with the pasta acquisition from Riviana Foods, foreign currency, and the net sales associated with the divestiture of the In-Store Bakery facilities, which closed on April 17, 2020. 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 Continuing Operations, Adjusting for Certain Items Affecting Comparability

Adjusted earnings per diluted share from continuing operations ("adjusted diluted EPS") reflects adjustments to GAAP earnings (loss) per diluted share from continuing operations to identify items that, in 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 earnings performance between periods and to view the 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 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, the impact of the COVID-19 pandemic, 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.

The reconciliation of adjusted diluted EPS from continuing operations, excluding certain items affecting comparability, to the relevant GAAP measure of diluted EPS from continuing operations as presented in the Condensed Consolidated Statements of Operations, is as follows:


		Three Months Ended March 31,
			2021		2020
		(unaudited)
Diluted earnings (loss) per share from continuing operations (GAAP)			$	0.01	$	(0.58)
Growth, reinvestment, restructuring programs & other	(1)		0.35		0.36
Loss on extinguishment of debt	(2)		0.25		—
COVID-19	(3)		0.16		(0.09)
Acquisition, integration, divestiture, and related costs	(4)		0.09		—
Shareholder activism	(5)		0.04		—
Tax indemnification	(6)		—		0.01

Foreign currency (gain) loss on re-measurement of intercompany notes	(7)		(0.03)		0.26
Mark-to-market adjustments	(8)		(0.38)		1.13
Taxes on adjusting items			(0.13)		(0.72)

Adjusted diluted EPS from continuing operations (Non-GAAP)			$	0.36	$	0.37

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(unaudited) (unaudited)
Diluted earnings (loss) per share from continuing operations (GAAP) $ 0.20
$ (1.08 ) $ (0.42 ) $ (2.23 )
Restructuring programs & other (1) 0.37
0.44
0.95
1.60
Mark-to-market adjustments (2) (0.17 ) 0.22
0.89
0.95
COVID-19 (3) 0.06
—
0.22
—
Litigation matters (4) —
—
0.16
0.44
Foreign currency (gain) loss on re-measurement of intercompany notes (5) (0.06 ) 0.01
0.09
(0.05 )
Tax indemnification (6) 0.06
0.02
0.09
0.02
Change in regulatory requirements (7) —
0.10
0.02
0.10
Loss on extinguishment of debt (8) 0.02
—
0.02
—
Impairment (9) —
1.56
—
1.56
Multiemployer pension plan withdrawal (10) —
—
—
0.07
Taxes on adjusting items 0.23
(0.72 ) (0.36 ) (1.18 )
Adjusted diluted EPS from continuing operations (Non-GAAP) $ 0.71
$ 0.55
$ 1.66
$ 1.28

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the Company entered into transactions that affected the year-over-year comparison of its financial results from continuing operations as follows:

~~(1)~~

(1) 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. For the three months ended March 31, 2021 and ~~margin improvement activities are part of an enterprise-wide transformation to improve the long-term profitability of the Company. For the three months ended September 30,~~ 2020, and 2019, the Company incurred restructuring program costs of approximately $20.2 million and $24.3 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company incurred restructuring program costs of approximately $51.9 million and $89.9 million, respectively. Refer to Note 3 to our Condensed Consolidated Financial Statements for additional details. Additionally, the Company recognized other items affecting comparability including recovery of insurance proceeds related to a prior period product recall, and other acquisition, integration, divestiture, and related costs. These other items were approximately $0.8 million and $0.3 million for the three months ended September 30, 2020 and 2019, and approximately $1.8 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively.

~~(2)~~

The Company’s derivative contracts are marked-to-market each period with the unrealized changes in fair value being recognized in the Condensed Consolidated Statements of Operations. These are non-cash charges. As the contracts are settled, realized gains and losses are recognized. The mark-to-market impacts only are treated as Non-GAAP adjustments. Refer to Note 15 to our Condensed Consolidated Financial Statements for additional details.

~~(3)~~

During 2020, the Company incurred incremental expenses directly attributable to our response to the COVID-19 pandemic, which included supplemental pay to our front-line personnel, additional protective equipment for employees, and additional sanitation measures. These costs were approximately $17.4 million and $37.7 million for the three and nine months ended September 30, 2020 respectively. These costs were partially offset by an income tax benefit due to the enactment of the CARES Act of approximately $14.0 million and $25.0 million for the three and nine months ended September 30, 2020 respectively.

~~(4)~~

During the nine months ended September 30, 2020, the Company recognized a $9.0 million accrual related to a litigation matter challenging wage and hour practices at three former manufacturing facilities in California. Refer to Note 14 to our Condensed Consolidated Financial Statements for additional details. During the nine months ended September 30, 2019, the Company recognized a $25.0 million accrual for a litigation matter related to allegations of certain purported label misrepresentations as to the nature of its Grove Square coffee products. This matter was settled on April 21, 2020.

~~(5)~~

The Company has Canadian dollar denominated intercompany loans and incurred foreign currency gains of $3.1 million and foreign currency losses of $0.4 million for the three months ended September 30, 2020 and 2019 to re-measure the loans at quarter end. For the nine months ended September 30, 2020 and 2019, the Company incurred foreign currency losses of $5.3 million and foreign currency gains of $2.6 million, respectively. These charges are non-cash and the loans are eliminated in consolidation.


~~(6)~~	The tax indemnification line 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.


~~(7)~~	During the nine months ended September 30, 2020 and the three and nine months ended September 30, 2019, the Company incurred regulatory compliance costs related to upcoming changes in nutrition labeling requirements. These costs included both consulting services and inventory write-downs.


~~(8)~~	For the three and nine months ended September 30, 2020, the Company incurred a loss on extinguishment of debt totaling $1.2 million representing the write-off of deferred financing costs. Refer to Note 9 to our Condensed Consolidated Financial Statements for additional details.

~~(9)~~

In the third quarter of 2019, the Company incurred $88.0 million of non-cash impairment charges related to the Cookies and Dry Dinners asset groups within its Snacking & Beverages and Meal Preparation divisions, respectively. This amount is comprised of non-cash impairment charges of $45.2 million of finite lived intangible asset impairment losses and $42.8 million of property, plant, and equipment impairment losses.

~~(10) In the second quarter of 2019,~~ the Company ~~executed~~incurred growth, reinvestment, and restructuring program costs of approximately $19.6 million and $19.9 million, respectively. Refer to Note 3 to our Condensed Consolidated Financial Statements for additional details. Additionally, the Company recognized other items affecting comparability including recovery of insurance proceeds related to a ~~complete withdrawal from~~prior period product recall, consulting fees associated with the ~~Retail, Wholesale,~~CFO transition, and ~~Department Store International Union~~regulatory compliance costs related to changes in nutrition labeling requirements. These other items were approximately $(0.1) million and ~~Industry Pension Fund~~$0.6 million for ~~$4.1~~the three months ended March 31, 2021 and 2020, respectively.

(2) For the three months ended March 31, 2021, the Company incurred a loss on extinguishment of debt totaling $14.4 million, which included a premium of $9.0 million and a write off of deferred financing costs of $5.4 million. Refer to Note 9 to our Condensed Consolidated Financial Statements for additional details.

(3) During 2021 and 2020, the Company incurred incremental expenses directly attributable to our response to the COVID-19 pandemic, which included supplemental pay to our front-line personnel, additional protective equipment for employees, and additional sanitation measures. These costs were approximately $8.8 million and $0.9 million for the three months ended March 31, 2021 and 2020, respectively. For the three months ended March 31, 2020, these costs were more than offset by an income tax benefit due to the enactment of the CARES Act of approximately $6.0 million.

(4) Acquisition, integration, divestiture, and related costs represents costs associated with completed and potential divestitures, completed and potential acquisitions, the related integration of the acquisitions, and gains or losses on the divestiture of a business. Refer to Note 6 to our Consolidated Financial Statements for additional details.

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

(6) The tax indemnification line 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.

(7) The Company has Canadian dollar denominated intercompany loans and incurred foreign currency gains of $1.5 million and foreign currency losses of $14.9 million for the three months ended March 31, 2021 and 2020, respectively, to re-measure the loans at quarter end. These charges are non-cash and the loans are eliminated in consolidation.

(8) 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 ~~withdrawal liability in the fourth quarter of 2019.~~mark-to-market impacts are treated as Non-GAAP adjustments. Refer to Note 15 to our Condensed Consolidated Financial Statements for additional details.

The tax impact on adjusting items is calculated based upon the tax laws and statutory tax rates applicable in the tax jurisdiction of the underlying Non-GAAP adjustments.

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

Adjusted net income from continuing operations represents GAAP net income (loss) 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 from continuing operations before interest expense, interest income, and income tax expense. Adjusted EBITDA from continuing operations represents adjusted EBIT from continuing operations before depreciation and amortization expense and non-cash stock-based compensation expense. Effective January 1, 2021, non-cash stock-based compensation expense was added as an adjustment to our calculation of Adjusted EBITDA in order to better reflect our core operating performance. Prior period amounts have been recast to conform to this presentation. Adjusted EBIT from continuing operations and adjusted EBITDA from continuing operations are performance measures commonly used by management to assess operating performance, 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 margin from continuing operations, adjusted EBIT margin from continuing operations, and adjusted EBITDA 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 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.

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 from continuing operations, Adjusted EBIT from continuing operations, and Adjusted EBITDA from continuing operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019:~~2020:


		Three Months Ended March 31,
			2021			2020
			(unaudited in millions)
Net income (loss) from continuing operations (GAAP)			$	0.4		$	(32.8)
Growth, reinvestment, restructuring programs & other	(1)		19.5			20.5
Loss on extinguishment of debt	(2)		14.4			—
COVID-19	(3)		8.8			(5.1)
Acquisition, integration, divestiture, and related costs	(4)		5.3			(0.1)
Shareholder activism	(5)		2.1			—
Tax indemnification	(6)		—			0.8

Foreign currency (gain) loss on re-measurement of intercompany notes	(7)		(1.5)			14.9
Mark-to-market adjustments	(8)		(21.6)			64.1
Less: Taxes on adjusting items			(6.9)			(41.6)
Adjusted net income from continuing operations (Non-GAAP)			20.5			20.7
Interest expense			25.1			24.8
Interest income			(4.1)			(4.0)
Income taxes (excluding COVID-19 tax benefit)			(0.2)			(34.2)
Add: Taxes on adjusting items			6.9			41.6
Adjusted EBIT from continuing operations (Non-GAAP)			48.2			48.9
Depreciation and amortization			53.5			49.8
Stock-based compensation expense	(9)		4.5			7.9
Adjusted EBITDA from continuing operations (Non-GAAP)			$	106.2		$	106.6

Adjusted net income margin from continuing operations			1.9		%	1.9		%
Adjusted EBIT margin from continuing operations			4.6		%	4.5		%
Adjusted EBITDA margin from continuing operations			10.0		%	9.8		%

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(unaudited in millions)
Net income (loss) from continuing operations $ 11.4
$ (61.0 ) $ (24.0 ) $ (125.6 )
Restructuring programs & other (1) 21.0
24.6
53.7
90.4
Mark-to-market adjustments (2) (9.2 ) 12.4
50.6
53.6
COVID-19 (3) 3.4
—
12.7
—
Litigation matters (4) —
—
9.0
25.0
Foreign currency (gain) loss on re-measurement of intercompany notes (5) (3.1 ) 0.4
5.3
(2.6 )
Tax indemnification (6) 3.5
1.4
5.2
1.8
Change in regulatory requirements (7) —
5.5
1.4
5.5
Loss on extinguishment of debt (8) 1.2
—
1.2
—
Impairment (9) —
88.0
—
88.0
Multiemployer pension plan withdrawal (10) —
—
—
4.1
Less: Taxes on adjusting items 12.3
(40.3 ) (20.9 ) (67.6 )
Adjusted net income from continuing operations (Non-GAAP) 40.5
31.0
94.2
72.6
Interest expense 26.9
27.3
77.9
78.5
Interest income —
(0.3 ) (4.0 ) (4.6 )
Income taxes (excluding COVID-19 tax benefit) 25.0
(36.4 ) 9.6
(50.1 )
Add: Taxes on adjusting items (12.3 ) 40.3
20.9
67.6
Adjusted EBIT from continuing operations (Non-GAAP) 80.1
61.9
198.6
164.0
Depreciation and amortization (11) 50.9
50.7
150.3
154.0
Adjusted EBITDA from continuing operations (Non-GAAP) $ 131.0
$ 112.6
$ 348.9
$ 318.0

Adjusted net income margin from continuing operations 3.9 % 2.9 % 3.0 % 2.3 %
Adjusted EBIT margin from continuing operations 7.7 % 5.9 % 6.3 % 5.2 %
Adjusted EBITDA margin from continuing operations 12.5 % 10.6 % 11.0 % 10.1 %


		Location in Condensed	Three Months Ended March 31,
		Consolidated Statements of Operations		2021		2020
				(unaudited in millions)
(1)	Growth, reinvestment, restructuring programs & other	Other operating expense, net		$	19.6	$	18.5
		General and administrative		—		0.7
		Cost of sales		(0.1)		0.6
		Selling and distribution		—		0.7
(2)	Loss on extinguishment of debt	Loss on extinguishment of debt		14.4		—
(3)	COVID-19	Cost of sales		8.8		0.9

		Income tax benefit		—		(6.0)
(4)	Acquisition, integration, divestiture, and related costs	General and administrative		3.9		(0.1)
		Cost of sales		1.3		—
		Other operating expense, net		0.1		—
(5)	Shareholder activism	General and administrative		2.1		—


(6)	Tax indemnification	Other (income) expense, net		—		0.8





(7)	Foreign currency (gain) loss on re-measurement of intercompany notes	(Gain) loss on foreign currency exchange		(1.5)		14.9
(8)	Mark-to-market adjustments	Other (income) expense, net		(21.6)		64.1
(9)	Stock-based compensation expense included as an adjusting item	Other operating expense, net		0.4		—

Location in Condensed Three Months Ended
September 30, Nine Months Ended
September 30,
Consolidated Statements of Operations 2020 2019 2020 2019
(unaudited in millions)
(1 ) Restructuring programs & other Other operating expense, net $ 20.0
$ 23.7
$ 50.3
$ 84.4
General and administrative 0.8
0.3
2.5
2.2
Cost of sales 0.2
0.6
0.9
3.8
(2 ) Mark-to-market adjustments Other (income) expense, net (9.2 ) 12.4
50.6
53.6
(3 ) COVID-19 Cost of sales 17.3
—
36.0
—
General and administrative 0.1
—
1.7
—
Income tax expense (benefit) (14.0 ) —
(25.0 ) —
(4 ) Litigation matters General and administrative —
—
9.0
25.0
(5 ) Foreign currency (gain) loss on re-measurement of intercompany notes (Gain) loss on foreign currency exchange (3.1 ) 0.4
5.3
(2.6 )
(6 ) Tax indemnification Other (income) expense, net 3.5
1.4
5.2
1.8
(7 ) Change in regulatory requirements Cost of sales —
4.0
0.3
4.0
Selling and distribution —
1.2
1.0
1.2
General and administrative —
0.3
0.1
0.3
(8 ) Loss on extinguishment of debt Loss on extinguishment of debt 1.2
—
1.2
—
(9 ) Impairment Asset impairment —
88.0
—
88.0
(10 ) Multiemployer pension plan withdrawal Cost of sales —
—
—
4.1
(11 ) Depreciation included as an adjusting item Cost of sales 0.2
0.1
0.2
1.7
General and administrative —
—
—
1.6

Other Commitments and Contingencies

WeThe Company also ~~have the following commitments and contingent liabilities, in addition to contingent liabilities related to the ordinary course of litigation, investigations, and tax audits:~~

~~certain lease obligations, and~~

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

See Note 14 to our Condensed Consolidated Financial Statements included herein and Note 2019 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020 for additional information about our commitments and contingent obligations.

Except for changes to the scheduled maturities of debt obligations and debt interest payments due to the Company's debt refinancing as disclosed in Note 9 to our Condensed Consolidated Financial Statements, there were no material changes outside the ordinary course of business within the Contractual Obligations table in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is provided in Note 2 to the Company’s Condensed Consolidated Financial Statements.

Critical Accounting Policies

A description of the Company’s critical accounting policies is contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. There were no material changes to the Company's critical accounting policies in the three ~~and nine~~ months ended ~~September 30, 2020.~~March 31, 2021.

Off-Balance Sheet Arrangements

We do not have any obligations that meet the definition of an off-balance sheet arrangement, other than letters of credit, which have or are reasonably likely to have a material effect on our Condensed Consolidated Financial Statements.

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 "anticipate," "believe," "estimate," "project," "expect," "intend," "plan," "should," 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 of the ~~recent~~ongoing COVID-19 outbreak on our business, suppliers, consumers, customers and employees; the 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; customer concentration and consolidation; raw material and commodity costs; competition; disruptions or inefficiencies in our supply chain and/or operations, including from the ~~recent~~ongoing COVID-19 outbreak; our ability to continue to make acquisitions in accordance with our business ~~strategy;~~strategy or effectively manage the growth from acquisitions; changes and developments affecting our industry, including customer preferences; the outcome of litigation and regulatory proceedings to which we may be a party; product recalls; changes in laws and regulations applicable to us; costs associated with shareholder activism, disruptions in or failures of our information technology systems; and labor strikes or work stoppages; 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, ~~2019,~~2020, and from time to time in our filings with the Securities and Exchange ~~Commission.~~Commission ("SEC").

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 15 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 ~~2019~~2020 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 ~~2019 year-end.~~2020 year-end except for the Total Return Swap Contract as disclosed in Note 15.

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 ~~Securities and Exchange Commission.~~SEC. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

As of ~~September 30, 2020,~~March 31, 2021, management with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("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 internal control over financial reporting as of March 31, 2021 includes all of the Company’s subsidiaries with the exception of the operations of the pasta acquisition from Riviana Foods, which was completed on December 11, 2020. This exclusion is in accordance with the general guidance from the Staff of the SEC that an assessment of a recently acquired business may be omitted from the scope of management’s assessment of internal control over financial reporting for up to one year following the acquisition. We are in the process of implementing the Company’s internal control over financial reporting of the pasta acquisition. The net sales and total assets of the pasta acquisition represented approximately 3.9% and 4.8%, respectively, of the Condensed Consolidated Financial Statement amounts as of and for the three months ended March 31, 2021.

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended ~~September 30, 2020~~March 31, 2021 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of TreeHouse Foods, Inc.

Results of Review of Interim Financial Information

We have reviewed the accompanying condensed consolidated balance sheet of TreeHouse Foods, Inc. and subsidiaries (the "Company") as of ~~September 30, 2020,~~March 31, 2021, the related condensed consolidated statements of operations, comprehensive income (loss), stockholders' equity, ~~for the three-month~~ and ~~nine-month periods ended September 30, 2020 and 2019, and of~~ cash flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, ~~2019,~~2020, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated February ~~13, 2020,~~11, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2019,~~2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ DELOITTE & TOUCHE LLP

Chicago, IL

May 6, 2021

~~November 5, 2020~~

Part II — Other Information

Item 1. Legal Proceedings

Information regarding legal proceedings is available in Note 14 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, ~~2019.~~2020. 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, ~~2019~~2020 with the exception of the following:

Shareholder activism could cause us to incur significant expense, disrupt our business, and impact our stock price.

We have recently been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management’s and our board’s attention and resources from our business. Additionally, such shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with our employees, customers or service providers, and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant fees and other expenses related to activist shareholder matters, including for third-party advisors. Our ~~business, results of operations, and financial condition may~~stock price could be subject to significant fluctuation or otherwise be adversely affected by ~~pandemic infectious diseases, particularly~~ the ~~novel coronavirus strain known as COVID-19.~~events, risks and uncertainties of any shareholder activism.

Pandemic infectious diseases, such as the current COVID-19 strain, may adversely impact our business, consolidated results of operations, and financial condition. The COVID-19 pandemic has negatively impacted the global economy and created significant volatility and disruption of financial markets. This volatility could impact our operations in a variety of ways, including as follows:

If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with COVID-19, our operations may be negatively impacted;

~~A shutdown of one or multiple of our manufacturing facilities due to government restrictions or illness in connection with COVID-19;~~

~~Decreased demand in the food-away-from-home business (including due to COVID-19) may adversely affect our operations within this channel;~~

~~Volatility in commodity and other input costs could substantially impact our results of operations;~~

~~A fluctuation in foreign currency exchange rates or interest rates could result from market uncertainties;~~

~~Supply chain disruptions due to COVID-19 could impair our ability to manufacture or sell our products;~~

~~An increase in regulatory restrictions or continued market volatility could hinder our ability to execute strategic business activities including acquisitions and divestitures; and~~

It may become more costly or difficult to obtain debt or equity financing to fund operations or investment opportunities, or to refinance our debt in the future, in each case on terms and within a time period acceptable to us.

Additionally, COVID-19 could negatively affect our internal controls over financial reporting as a portion of our workforce is required to work from home and therefore new processes, procedures, and controls could be required to respond to changes in our business environment. Further, should any key employees become ill from the coronavirus and unable to work, the attention of the management team could be diverted.

We are unable to accurately predict the impact that COVID-19 will have on our business in the future due to various uncertainties, including the severity and transmission rate of the virus, the extent and effectiveness of containment, measures taken by governmental authorities and private actors to limit the spread of the virus, and the impact of these and other factors on our employees and customers. If we are not able to respond to and manage the impact of such events effectively, our business could be harmed.

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

Not applicable.

Item 6. Exhibits




~~4.1~~10.1			~~Twelfth Supplemental Indenture,~~Executive Severance Plan Severance and Release Agreement, dated as of ~~September 9, 2020, among the Company, the subsidiary guarantors party thereto~~January 1, 2021, by and ~~Wells Fargo Bank, National Association, as trustee~~between Dean General and TreeHouse Foods, Inc. (incorporated by reference to Exhibit ~~4.2~~10.1 to the Form 8-K filed with the Securities and Exchange Commission on ~~September 9, 2020)~~January 4, 2021).

15.1*10.2			Cooperation Agreement, dated March 2, 2021, by and between TreeHouse Foods, Inc. and JANA Partners LLC (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on March 2, 2021).

10.3			Amendment No. 3 to Second Amended and Restated Credit Agreement, dated March 26, 2021 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on April 1, 2021).

10.4*			TreeHouse Foods, Inc. 2021 Performance Unit Agreement

15.1*			Awareness Letter from Deloitte & Touche LLP regarding unaudited financial information.

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,*			XBRL Instance Document.

101.SCH*			XBRL Taxonomy Extension Schema Document.

101.CAL*			XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*			XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*			XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF*			XBRL Taxonomy Extension Definition Linkbase Document.

104,*			Cover Page Interactive Data File.

*Filed herewith.

**The XBRL Instance Document and Cover Page Interactive Data File do not appear in the Interactive Data File because the XBRL tags are embedded within the Inline XBRL document.

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: ~~November 5, 2020~~May 6, 2021		/s/ William J. Kelley Jr.
		William J. Kelley Jr.
		Executive Vice President and Chief Financial Officer

Date: ~~November 5, 2020~~May 6, 2021		/s/ Patrick M. O'Donnell
		Patrick M. O'Donnell
		Vice President, Corporate Controller, and Principal Accounting Officer



			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			302

Item 3 — Quantitative and Qualitative Disclosures About Market Risk			5017

Item 4 — Controls and Procedures			5017

Report of Independent Registered Public Accounting Firm			5118

Part II — Other Information

Item 1 — Legal Proceedings			5219

Item 1A — Risk Factors			5219

Item 2 — Unregistered Sale of Equity Securities and Use of Proceeds			5219

Item 6 — Exhibits			5320

Signatures			5421



	Severance
	(In millions)
Balance as of December 31, 2019	$	5.6
Expenses recognized	4.1
Cash payments	(5.5		)
Balance as of September 30, 2020	$	4.2



	Three Months Ended September 30,					Nine Months Ended September 30,				Cumulative Costs To Date		Total Expected Costs
	2020		2019			2020		2019		Cumulative Costs To Date		Total Expected Costs
	(In millions)
Asset-related	$	0.1	$	(0.1	)	$	0.1	$	2.4	$	45.2	$	45.2
Employee-related	0.9		3.1			2.6		10.5		58.7		59.5
Other costs	8.1		18.9			27.3		63.6		185.4		197.0
Total	$	9.1	$	21.9		$	30.0	$	76.5	$	289.3	$	301.7



Remainder of 2020	$	3.9
2021	15.5
2022	15.1
2023	660.2
2024	608.4
Thereafter	933.5
Total outstanding debt	$	2,236.6



	Employee Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (yrs)	Aggregate Intrinsic Value
	(In thousands)					(In millions)
Outstanding, at December 31, 2019	1,528		$	74.58	3.7	$	0.8
Forfeited	(8	)	82.77
Exercised	(57	)	46.47
Expired	(106	)	70.92
Outstanding, at September 30, 2020	1,357		75.98		3.2	0.4
Vested/expected to vest, at September 30, 2020	1,357		75.99		3.2	0.4
Exercisable, at September 30, 2020	1,357		76.00		3.2	0.4



	Fair Value
	September 30, 2020		December 31, 2019
Asset Derivatives	(In millions)
Commodity contracts	$	3.1	$	0.8
Interest rate swap agreements	0		0.8
	$	3.1	$	1.6
Liability Derivatives
Commodity contracts	$	3.4	$	0.6
Foreign currency contracts	0		0.1
Interest rate swap agreements	105.9		56.5
	$	109.3	$	57.2



	Three Months Ended September 30,										Nine Months Ended September 30,
	2020					2019					2020					2019
	Dollars			Percent		Dollars			Percent		Dollars			Percent		Dollars			Percent
	(Dollars in millions)										(Dollars in millions)
Net sales	$	1,045.7		100.0	%	$	1,057.3		100.0	%	$	3,172.5		100.0	%	$	3,149.4		100.0	%
Cost of sales	857.5			82.0		871.0			82.4		2,598.2			82.0		2,577.7			81.8
Gross profit	188.2			18.0		186.3			17.6		574.3			18.0		571.7			18.2
Operating expenses:
Selling and distribution	59.8			5.7		61.2			5.8		187.9			5.9		191.2			6.1
General and administrative	51.0			4.9		51.5			4.9		188.3			5.9		199.9			6.3
Amortization expense	17.6			1.7		17.7			1.7		52.5			1.7		56.4			1.8
Asset impairment	—			—		88.0			8.3		—			—		88.0			2.8
Other operating expense, net	20.0			1.9		23.5			2.2		50.3			1.6		84.2			2.7
Total operating expenses	148.4			14.2		241.9			22.9		479.0			15.1		619.7			19.7
Operating income (loss)	39.8			3.8		(55.6		)	(5.3	)	95.3			2.9		(48.0		)	(1.5	)
Other expense:
Interest expense	26.9			2.6		27.3			2.6		77.9			2.5		78.5			2.5
Loss on extinguishment of debt	1.2			0.1		—			—		1.2			—		—			—
(Gain) loss on foreign currency exchange	(3.8		)	(0.4	)	0.4			—		4.1			0.1		(1.3		)	—
Other (income) expense, net	(6.9		)	(0.7	)	14.1			1.3		51.5			1.6		50.5			1.6
Total other expense	17.4			1.6		41.8			3.9		134.7			4.2		127.7			4.1
Income (loss) before income taxes	22.4			2.1		(97.4		)	(9.2	)	(39.4		)	(1.2	)	(175.7		)	(5.6	)
Income tax expense (benefit)	11.0			1.1		(36.4		)	(3.4	)	(15.4		)	(0.6	)	(50.1		)	(1.6	)
Net income (loss) from continuing operations	11.4			1.0		(61.0		)	(5.8	)	(24.0		)	(0.6	)	(125.6		)	(4.0	)
Net income (loss) from discontinued operations	0.7			0.1		(116.8		)	(11.0	)	3.4			0.1		(250.9		)	(8.0	)
Net income (loss)	$	12.1		1.1	%	$	(177.8	)	(16.8	)%	$	(20.6	)	(0.5	)%	$	(376.5	)	(12.0	)%



	Three Months Ended September 30, 2019
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
Net sales	$	656.5	100.0	%	$	400.8	100.0	%
Cost of sales	531.9		81.0		335.8		83.8
Gross profit	124.6		19.0		65.0		16.2
Freight out and commissions	24.6		3.7		18.5		4.6
Direct selling, general, and administrative	7.6		1.2		5.2		1.3
Direct operating income	$	92.4	14.1	%	$	41.3	10.3	%



	Nine Months Ended September 30, 2020
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
Net sales	$	1,984.0	100.0	%	$	1,188.5	100.0	%
Cost of sales	1,620.5		81.7		951.2		80.0
Gross profit	363.5		18.3		237.3		20.0
Freight out and commissions	75.8		3.8		53.1		4.5
Direct selling, general, and administrative	19.0		1.0		17.9		1.5
Direct operating income	$	268.7	13.5	%	$	166.3	14.0	%



	Nine Months Ended September 30, 2019
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
Net sales	$	1,984.7	100.0	%	$	1,164.7	100.0	%
Cost of sales	1,610.0		81.1		953.8		81.9
Gross profit	374.7		18.9		210.9		18.1
Freight out and commissions	75.8		3.8		58.8		5.0
Direct selling, general, and administrative	25.4		1.3		17.9		1.6
Direct operating income	$	273.5	13.8	%	$	134.2	11.5	%