UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

For the Quarterly Period Ended ~~June 30, 2021.~~March 31, 2022.


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

For the ~~Transition Period~~transition period from to

Commission File ~~Number~~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.~~Employer Identification No.)

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

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

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


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

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

Indicate by check mark whether the registrant has submitted electronically ~~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"~~filer," "smaller reporting company," and ~~"smaller reporting~~"emerging growth 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~~The number of shares of ~~Common Stock, $0.01 par value,~~the registrant's common stock outstanding as of ~~July 30, 2021: 55,740,548.~~April 29, 2022 was 56,018,695.

Table of Contents

Part I — Financial Information

Item 1. Financial Statements

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in millions, except per share data)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	17.4	$	364.6	Cash and cash equivalents	$	192.8	$	308.6

Receivables, net	Receivables, net	259.7		308.8		Receivables, net	264.3		209.2
Inventories	Inventories	713.7		598.6		Inventories	741.6		677.8
Prepaid expenses and other current assets	Prepaid expenses and other current assets	93.1		86.1		Prepaid expenses and other current assets	78.9		60.2

Assets of discontinued operations		0		70.7

Total current assets	Total current assets	1,083.9		1,428.8		Total current assets	1,277.6		1,255.8
Property, plant, and equipment, net	Property, plant, and equipment, net	1,041.8		1,070.0		Property, plant, and equipment, net	999.6		1,019.1
Operating lease right-of-use assets	Operating lease right-of-use assets	151.0		160.7		Operating lease right-of-use assets	195.5		165.6
Goodwill	Goodwill	2,184.6		2,178.7		Goodwill	2,184.0		2,181.4
Intangible assets, net	Intangible assets, net	586.4		615.0		Intangible assets, net	539.9		555.0
Other assets, net	Other assets, net	33.7		32.5		Other assets, net	31.6		30.1

Total assets	Total assets	$	5,081.4	$	5,485.7	Total assets	$	5,228.2	$	5,207.0
Liabilities and Stockholders' Equity	Liabilities and Stockholders' Equity					Liabilities and Stockholders' Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	591.7	$	627.7	Accounts payable	$	840.5	$	786.0
Accrued expenses	Accrued expenses	292.4		340.6		Accrued expenses	240.3		274.6
Current portion of long-term debt	Current portion of long-term debt	16.0		15.7		Current portion of long-term debt	4.7		15.6
Liabilities of discontinued operations		0		6.7

Total current liabilities	Total current liabilities	900.1		990.7		Total current liabilities	1,085.5		1,076.2
Long-term debt	Long-term debt	1,916.9		2,199.0		Long-term debt	1,886.6		1,890.7
Operating lease liabilities	Operating lease liabilities	131.0		144.5		Operating lease liabilities	170.4		144.0
Deferred income taxes	Deferred income taxes	154.3		158.3		Deferred income taxes	157.8		156.5
Other long-term liabilities	Other long-term liabilities	120.6		128.2		Other long-term liabilities	80.1		94.2

Total liabilities	Total liabilities	3,222.9		3,620.7		Total liabilities	3,380.4		3,361.6
Commitments and contingencies (Note 15)		0		0
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)	0		0
Stockholders' equity:	Stockholders' equity:					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, 55.7 and 55.9 shares outstanding, respectively		0.6		0.6
Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued						Preferred stock, par value $0.01 per share, 10.0 shares authorized, none issued	—		—
Common stock, par value $0.01 per share, 90.0 shares authorized, 56.0 and 55.8 shares outstanding as of March 31, 2022 and December 31, 2021, respectively						Common stock, par value $0.01 per share, 90.0 shares authorized, 56.0 and 55.8 shares outstanding as of March 31, 2022 and December 31, 2021, respectively	0.6		0.6
Treasury stock	Treasury stock	(133.3)		(108.3)		Treasury stock	(133.3)		(133.3)
Additional paid-in capital	Additional paid-in capital	2,181.5		2,179.9		Additional paid-in capital	2,188.4		2,187.4
Accumulated deficit	Accumulated deficit	(133.3)		(143.2)		Accumulated deficit	(158.7)		(155.7)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(57.0)		(64.0)		Accumulated other comprehensive loss	(49.2)		(53.6)
Total stockholders' equity	Total stockholders' equity	1,858.5		1,865.0		Total stockholders' equity	1,847.8		1,845.4
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	5,081.4	$	5,485.7	Total liabilities and stockholders' equity	$	5,228.2	$	5,207.0

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in millions, except per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net sales	Net sales	$	1,003.2	$	1,041.9	$	2,060.5	$	2,126.8	Net sales		$	1,141.0	$	1,057.3
Cost of sales	Cost of sales	837.1		850.7		1,713.3		1,740.7		Cost of sales		986.0		876.2
Gross profit	Gross profit	166.1		191.2		347.2		386.1		Gross profit		155.0		181.1
Operating expenses:	Operating expenses:									Operating expenses:
Selling and distribution	Selling and distribution	62.9		63.0		131.6		128.1		Selling and distribution		82.7		68.7
General and administrative	General and administrative	56.3		73.7		119.6		137.3		General and administrative		63.5		63.3
Amortization expense	Amortization expense	18.0		17.4		36.4		34.9		Amortization expense		18.2		18.4

Other operating expense, net	Other operating expense, net	24.8		11.8		44.5		30.3		Other operating expense, net		31.3		19.7
Total operating expenses	Total operating expenses	162.0		165.9		332.1		330.6		Total operating expenses		195.7		170.1
Operating income		4.1		25.3		15.1		55.5
Other expense:
Operating (loss) income										Operating (loss) income		(40.7)		11.0
Other (income) expense:										Other (income) expense:
Interest expense	Interest expense	18.5		26.2		43.6		51.0		Interest expense		19.2		25.1
Loss on extinguishment of debt	Loss on extinguishment of debt	0		0		14.4		0		Loss on extinguishment of debt		—		14.4
(Gain) loss on foreign currency exchange		(1.3)		(6.5)		(2.6)		7.9
Other (income) expense, net		(6.5)		(5.6)		(33.9)		58.4
Total other expense		10.7		14.1		21.5		117.3
Gain on foreign currency exchange										Gain on foreign currency exchange		(2.8)		(1.3)
Other income, net										Other income, net		(55.5)		(27.4)
Total other (income) expense										Total other (income) expense		(39.1)		10.8
(Loss) income before income taxes	(Loss) income before income taxes	(6.6)		11.2		(6.4)		(61.8)		(Loss) income before income taxes		(1.6)		0.2
Income tax (benefit) expense		(1.4)		13.8		(1.6)		(26.4)
Net loss from continuing operations		(5.2)		(2.6)		(4.8)		(35.4)
Net income from discontinued operations		13.6		1.1		14.7		2.7
Net income (loss)		$	8.4	$	(1.5)	$	9.9	$	(32.7)
Income tax expense (benefit)										Income tax expense (benefit)		1.2		(0.2)
Net (loss) income from continuing operations										Net (loss) income from continuing operations		(2.8)		0.4
Net (loss) income from discontinued operations										Net (loss) income from discontinued operations		(0.2)		1.1
Net (loss) income										Net (loss) income		$	(3.0)	$	1.5

Earnings (loss) per common share - basic:	Earnings (loss) per common share - basic:									Earnings (loss) per common share - basic:
Continuing operations	Continuing operations	$	(0.09)	$	(0.05)	$	(0.09)	$	(0.63)	Continuing operations		$	(0.05)	$	0.01
Discontinued operations	Discontinued operations	0.24		0.02		0.26		0.05		Discontinued operations		—		0.02
Earnings (loss) per share basic (1)	Earnings (loss) per share basic (1)	$	0.15	$	(0.03)	$	0.18	$	(0.58)	Earnings (loss) per share basic (1)		$	(0.05)	$	0.03

Earnings (loss) per common share - diluted:	Earnings (loss) per common share - diluted:									Earnings (loss) per common share - diluted:
Continuing operations	Continuing operations	$	(0.09)	$	(0.05)	$	(0.09)	$	(0.63)	Continuing operations		$	(0.05)	$	0.01
Discontinued operations	Discontinued operations	0.24		0.02		0.26		0.05		Discontinued operations		—		0.02
Earnings (loss) per share diluted (1)	Earnings (loss) per share diluted (1)	$	0.15	$	(0.03)	$	0.18	$	(0.58)	Earnings (loss) per share diluted (1)		$	(0.05)	$	0.03

Weighted average common shares:	Weighted average common shares:									Weighted average common shares:
Basic	Basic	56.0		56.5		55.8		56.4		Basic		55.8		56.0
Diluted	Diluted	56.0		56.5		55.8		56.4		Diluted		55.8		56.5

(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
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
Net income (loss) $ 8.4 $ (1.5) $ 9.9 $ (32.7)
Other comprehensive income (loss):
Foreign currency translation adjustments 5.8 7.4 6.7 (8.5)
Pension and postretirement reclassification adjustment 0.2 0.1 0.3 0.2
Other comprehensive income (loss) 6.0 7.5 7.0 (8.3)
Comprehensive income (loss) $ 14.4 $ 6.0 $ 16.9 $ (41.0)


	Three Months Ended March 31,
		2022		2021
Net (loss) income		$	(3.0)	$	1.5

Other comprehensive income:
Foreign currency translation adjustments		4.3		0.9
Pension and postretirement reclassification adjustment		0.1		0.1

Other comprehensive income		4.4		1.0
Comprehensive income		$	1.4	$	2.5

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in millions)

Accumulated
Additional Other
Common Stock 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
Net loss — — — (1.5) — — — (1.5)
Other comprehensive income — — — — — — 7.5 7.5
Exercise of stock options and issuance of other stock awards 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
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
Net income — — — 8.4 — — — 8.4
Other comprehensive income — — — — — — 6.0 6.0
Treasury stock repurchases — — — — (0.5) (25.0) — (25.0)
Exercise of stock options and issuance of other stock awards — — (0.1) — — — — (0.1)
Stock-based compensation — — 4.7 — — — — 4.7
Balance, June 30, 2021 58.6 $ 0.6 $ 2,181.5 $ (133.3) (2.9) $ (133.3) $ (57.0) $ 1,858.5


											Accumulated
				Additional							Other
	Common Stock			Paid-In		Accumulated		Treasury Stock			Comprehensive		Total
	Shares	Amount		Capital		Deficit		Shares	Amount		Loss		Equity
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

Issuance of 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















Balance, January 1, 2022	58.7	$	0.6	$	2,187.4	$	(155.7)	(2.9)	$	(133.3)	$	(53.6)	$	1,845.4
Net loss	—	—		—		(3.0)		—	—		—		(3.0)
Other comprehensive income	—	—		—		—		—	—		4.4		4.4

Issuance of stock awards	0.2	—		(3.3)		—		—	—		—		(3.3)
Stock-based compensation	—	—		4.3		—		—	—		—		4.3

Balance, March 31, 2022	58.9	$	0.6	$	2,188.4	$	(158.7)	(2.9)	$	(133.3)	$	(49.2)	$	1,847.8

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in millions)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	9.9	$	(32.7)
Net income from discontinued operations		14.7		2.7
Net loss from continuing operations		(4.8)		(35.4)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Net (loss) income						Net (loss) income	$	(3.0)	$	1.5
Net (loss) income from discontinued operations						Net (loss) income from discontinued operations	(0.2)		1.1
Net (loss) income from continuing operations						Net (loss) income from continuing operations	(2.8)		0.4
Adjustments to reconcile net (loss) income to net cash used in operating activities:						Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	107.3		99.4		Depreciation and amortization	53.1		53.5

Stock-based compensation	Stock-based compensation	9.4		14.9		Stock-based compensation	4.3		4.9
Loss on extinguishment of debt	Loss on extinguishment of debt	14.4		0		Loss on extinguishment of debt	—		14.4
Unrealized (gain) loss on derivative contracts		(27.9)		59.8
Deferred income taxes		4.1		21.9
Unrealized gain on derivative contracts						Unrealized gain on derivative contracts	(50.9)		(21.7)

Other	Other	2.1		12.0		Other	(1.6)		1.0
Changes in operating assets and liabilities, net of acquisitions and divestitures:	Changes in operating assets and liabilities, net of acquisitions and divestitures:					Changes in operating assets and liabilities, net of acquisitions and divestitures:
Receivables	Receivables	49.8		4.8		Receivables	(54.4)		67.8
Inventories	Inventories	(115.8)		(84.4)		Inventories	(62.0)		(58.4)
Prepaid expenses and other assets	Prepaid expenses and other assets	(18.5)		(59.7)		Prepaid expenses and other assets	(7.6)		(28.3)
Accounts payable	Accounts payable	(19.8)		58.1		Accounts payable	64.9		(7.2)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(44.3)		31.9		Accrued expenses and other liabilities	(13.4)		(31.9)
Net cash (used in) provided by operating activities - continuing operations		(44.0)		123.3
Net cash (used in) provided by operating activities - discontinued operations		(6.8)		0.5
Net cash (used in) provided by operating activities		(50.8)		123.8
Net cash used in operating activities - continuing operations						Net cash used in operating activities - continuing operations	(70.4)		(5.5)
Net cash used in operating activities - discontinued operations						Net cash used in operating activities - discontinued operations	(0.2)		(3.1)
Net cash used in operating activities						Net cash used in operating activities	(70.6)		(8.6)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Additions to property, plant, and equipment	Additions to property, plant, and equipment	(55.1)		(49.0)		Additions to property, plant, and equipment	(27.8)		(28.0)
Additions to intangible assets	Additions to intangible assets	(6.6)		(7.6)		Additions to intangible assets	(2.7)		(3.3)
Proceeds from sale of fixed assets	Proceeds from sale of fixed assets	1.3		5.1		Proceeds from sale of fixed assets	4.8		0.9
Acquisition		(5.1)		0
Proceeds from divestitures		0		26.9

Proceeds from sale of investments	Proceeds from sale of investments	17.2		0		Proceeds from sale of investments	—		17.2
Net cash used in investing activities - continuing operations	Net cash used in investing activities - continuing operations	(48.3)		(24.6)		Net cash used in investing activities - continuing operations	(25.7)		(13.2)
Net cash provided by (used in) investing activities - discontinued operations		85.3		(0.4)
Net cash provided by (used in) investing activities		37.0		(25.0)
Net cash used in investing activities - discontinued operations						Net cash used in investing activities - discontinued operations	—		(0.4)
Net cash used in investing activities						Net cash used in investing activities	(25.7)		(13.6)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings under Revolving Credit Facility	Borrowings under Revolving Credit Facility	133.5		100.0		Borrowings under Revolving Credit Facility	30.5		30.0
Payments under Revolving Credit Facility	Payments under Revolving Credit Facility	(113.5)		(100.0)		Payments under Revolving Credit Facility	(30.5)		—
Payments on financing lease obligations	Payments on financing lease obligations	(1.1)		(0.7)		Payments on financing lease obligations	(0.5)		(0.5)
Payment of deferred financing costs	Payment of deferred financing costs	(7.5)		0		Payment of deferred financing costs	(1.6)		(7.0)
Payments on Term Loans	Payments on Term Loans	(1,129.6)		(7.0)		Payments on Term Loans	(14.3)		(1,126.0)
Proceeds from refinanced Term Loans	Proceeds from refinanced Term Loans	1,430.0		0		Proceeds from refinanced Term Loans	—		1,430.0
Repurchase of 2024 Notes		(602.9)		0

Repurchase of Notes						Repurchase of Notes	—		(602.9)
Payment of debt premium for extinguishment of debt	Payment of debt premium for extinguishment of debt	(9.0)		0		Payment of debt premium for extinguishment of debt	—		(9.0)
Repurchases of common stock		(25.0)		0
Receipts related to stock-based award activities		0		2.6

Payments related to stock-based award activities	Payments related to stock-based award activities	(7.9)		(4.0)		Payments related to stock-based award activities	(3.3)		(7.9)
Net cash used in financing activities - continuing operations	Net cash used in financing activities - continuing operations	(333.0)		(9.1)		Net cash used in financing activities - continuing operations	(19.7)		(293.3)
Net cash (used in) provided by financing activities - discontinued operations		0		0
Net cash used in by financing activities		(333.0)		(9.1)
Net cash used in financing activities - discontinued operations						Net cash used in financing activities - discontinued operations	—		—
Net cash used in financing activities						Net cash used in financing activities	(19.7)		(293.3)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(0.4)		1.9		Effect of exchange rate changes on cash and cash equivalents	0.2		(0.3)
Net (decrease) increase in cash and cash equivalents		(347.2)		91.6
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(115.8)		(315.8)

Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	364.6		202.3		Cash and cash equivalents, beginning of period	308.6		364.6
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	17.4	$	293.9	Cash and cash equivalents, end of period	$	192.8	$	48.8

Six Months Ended
June 30,
2021 2020
Supplemental cash flow disclosures:
Interest paid $ 43.6 $ 44.8
Net income taxes paid 1.2 5.2
Non-cash investing and financing activities:
Accrued purchase of property and equipment $ 20.7 $ 19.4
Accrued other intangible assets 3.0 2.8
Right-of-use assets and operating lease obligations recognized 6.0 5.2
Accrued deferred financing costs 1.0 0


	Three Months Ended March 31,
	2022		2021
Supplemental cash flow disclosures:
Interest paid	$	17.1	$	36.4
Net income taxes paid (refunded)	0.1		(0.2)

Non-cash investing and financing activities:
Accrued purchase of property and equipment	$	27.3	$	27.5
Accrued other intangible assets	1.4		3.9
Right-of-use assets obtained in exchange for lease obligations	36.0		0.9
Accrued deferred financing costs	—		1.5

See Notes to Condensed Consolidated Financial Statements.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of and for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022

(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, ~~2020.~~2021. 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 usmanagement to use ~~our~~ judgment to make estimates and assumptions that affect the reported amounts of assets and liabilities, ~~and~~the disclosures of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements, and the reported amounts of net sales and expenses during the reporting period. Actual results could differ from these estimates.

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, ~~2020.~~2021.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Not yet adopted

In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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. 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 this~~This guidance ~~from~~is effective as of March 12, 2020 through December 31, 2022 and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company ~~is currently evaluating the impact of this~~has identified agreements that reference LIBOR, including interest rate swap agreements, accounts receivable sale agreements, and debt agreements. The new guidance ~~on its Condensed Consolidated Financial Statements and related disclosures.~~will be applied as these contracts are modified to reference other rates.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. GROWTH, REINVESTMENT, AND RESTRUCTURING PROGRAMS

The Company’s growth, reinvestment, and restructuring activities are part of an enterprise-wide transformation to build long-term sustainable growth and improve profitability for the Company. These activities are aggregated into the following categories: (1) Strategic Growth Initiatives (expected completion in 2023) – a growth and reinvestment strategy ~~(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 (4)~~(2) other (collectively the "Growth, Reinvestment, and Restructuring Programs").

~~TREEHOUSE FOODS, INC.~~

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

Below is a description of each of the Growth, Reinvestment, and Restructuring Programs:

(1) Strategic Growth Initiatives

In the first quarter of 2021, the Company began executing on its growth and reinvestment initiatives designed to invest in our commercial organization, adapt the supply chain to better support long-term growth opportunities, and further enable the Company to build greater depth in growth ~~categories.~~categories which primarily reside in our Snacking & Beverages segment. 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~~customers' preferred manufacturing and distribution partner. This reinvestment will occur through 2023, and the cumulative costs incurred to date are $75.8 million. The Company currently expects the total costs will be up to $130.0 million, comprised of consulting and professional fees, employee-related costs, and investment in information technology. Consulting and professional fees are expected to include 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 severance, retention, and dedicated employee costs.

(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 were intended to increase our capacity utilization, expand operating margins, and streamline our plant structure to optimize our supply chain. This program 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, retention, severance, and other administrative costs. Retention includes one-time cash recognition payments that were expensed ratably from the fourth quarter of 2021 to the first quarter of 2022. Additional retention recognized is primarily for employees in connection with the ongoing, Board-led strategic review.

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

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
(In millions)
Strategic growth initiatives $ 14.5 $ 0 $ 30.6 $ 0
Structure to Win 0 3.0 0 10.8
TreeHouse 2020 0 8.8 0 20.9
Other 7.7 0 11.2 0
Total $ 22.2 $ 11.8 $ 41.8 $ 31.7


	Three Months Ended March 31,
		2022		2021
		(In millions)
Strategic Growth Initiatives		$	18.0	$	16.1


Other		14.1		3.5
Total		$	32.1	$	19.6

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.

~~TREEHOUSE FOODS, INC.~~

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

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 1716 for additional information.

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

TREEHOUSE FOODS, INC.

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
(In millions)
Cost of sales $ 0 $ 0 $ 0 $ 0.7
General and administrative 0 0.3 0 1.0
Other operating expense, net 22.2 11.5 41.8 30.0
Total $ 22.2 $ 11.8 $ 41.8 $ 31.7
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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


		Three Months Ended June 30,				Six Months Ended June 30,						Three Months Ended March 31,
		2021		2020		2021		2020				2022	2021
		(In millions)									(In millions)

Employee-related	Employee-related	$	7.1	$	1.9	$	12.0	$	6.7	Employee-related			$	16.6	$	4.9
Other costs	Other costs	15.1		9.9		29.8		25.0		Other costs			15.5		14.7
Total	Total	$	22.2	$	11.8	$	41.8	$	31.7	Total			$	32.1	$	19.6

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ employee-related costs primarily consisted of severance, retention, and dedicated project employee ~~cost, severance, and retention;~~cost; and other costs primarily consisted of consulting services. Employee-related and other costs are ~~primarily~~ recognized in Other operating expense, net of the Condensed Consolidated Statements of Operations.

The table below presents the exit cost ~~liability~~liabilities related to severance and retention activity for the Growth, Reinvestment, and Restructuring Programs as of ~~June 30, 2021:~~March 31, 2022:

~~Severance~~

~~(In millions)~~

~~Balance as of December 31, 2020~~

~~4.9~~

~~Expenses recognized~~

~~5.4~~

~~Cash payments~~

~~(3.3)~~

~~Balance as of June 30, 2021~~

~~7.0~~


	Severance		Retention		Total Exit Cost Liabilities
	(In millions)
Balance as of December 31, 2021	$	3.9	$	9.7	$	13.6
Expenses recognized	7.6		8.1		15.7
Cash payments	(2.0)		(14.6)		(16.6)


Balance as of March 31, 2022	$	9.5	$	3.2	$	12.7

~~Liabilities as of June 30, 2021 associated with total exit cost reserves relate to severance.~~ The severance ~~liability is~~and retention liabilities are included in Accrued expenses in the Condensed Consolidated Balance Sheets.

~~TREEHOUSE FOODS, INC.~~

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

4. RECEIVABLES SALES PROGRAM

~~In December 2017 and June 2019, the~~The Company has entered into agreements to sell certain trade accounts receivable to 2 unrelated, third-party financial institutions at a discount (collectively, "the Receivables Sales Program"). The agreements can be terminated by either party with 60 days' notice. The Receivables Sales Program is used by the Company to manage liquidity in a cost-effective manner. The Company has 0no retained interest in the receivables sold under the Receivables Sales Program; however, under the agreements, the Company does have collection and administrative responsibilities for the sold receivables. Under the Receivables Sales Program, the maximum amount of outstanding accounts receivables ~~that may be~~ sold at any time is ~~$300.0~~$500.0 million.

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


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Outstanding accounts receivable sold	Outstanding accounts receivable sold	$	236.6	$	284.3	Outstanding accounts receivable sold	$	327.0	$	357.3
Receivables collected and not remitted to financial institutions	Receivables collected and not remitted to financial institutions	143.9		202.8		Receivables collected and not remitted to financial institutions	183.5		205.0

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

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the cash flows of the Company's accounts receivables associated with the Receivables Sales Program:


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In millions)					(In millions)
Receivables sold	Receivables sold	$	781.9	$	654.5	Receivables sold	$	512.8	$	379.5
Receivables collected and remitted to financial institutions	Receivables collected and remitted to financial institutions	(829.6)		(697.4)		Receivables collected and remitted to financial institutions	(543.1)		(417.1)

The loss on sale of receivables represents the discount taken by third-party financial institutions and was $0.6 million and $0.5 million for ~~both~~ the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, and $1.1 million and $1.5 million for the six months ended June 30, 2021 and 2020,~~ respectively, and is included in Other ~~(income) expense,~~income, net in the Condensed Consolidated Statements of Operations. The Company has not recognized any servicing assets or liabilities as of ~~June 30, 2021~~March 31, 2022 or December 31, ~~2020,~~2021, as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

5. INVENTORIES

June 30, 2021 December 31, 2020
(In millions)
Raw materials and supplies $ 246.8 $ 231.0
Finished goods 466.9 367.6
Total inventories $ 713.7 $ 598.6


	March 31, 2022		December 31, 2021
	(In millions)
Raw materials and supplies	$	311.6	$	260.9
Finished goods	430.0		416.9

Total inventories	$	741.6	$	677.8

~~TREEHOUSE FOODS, INC.~~

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

6. ~~ACQUISITIONS AND DIVESTITURES~~

~~Acquisitions~~

~~Pasta Acquisition~~

On December 11, 2020, the Company completed the acquisition of the majority of the U.S. branded pasta portfolio 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 total purchase price of approximately $244.3 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. During the second quarter of 2021, the Company exercised its call option to acquire machinery and equipment utilized in the Riviana Foods Fresno, California facility, which increased the purchase consideration by $5.1 million, and was allocated to goodwill at $1.3 million and property, plant, and equipment, net at $3.8 million. 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 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 allocation of the fair value of net tangible and intangible assets acquired and liabilities assumed:~~


	~~(In millions)~~
~~Original consideration~~	$	~~239.2~~
~~Call option exercised~~	~~5.1~~
~~Total consideration transferred~~	$	~~244.3~~

~~Allocation of consideration to assets acquired and liabilities assumed:~~
~~Inventories~~	$	~~20.0~~
~~Property, plant, and equipment, net~~	~~50.9~~
~~Customer relationships~~	~~68.0~~
~~Trade names~~	~~43.0~~
~~Formulas/recipes~~	~~2.3~~
~~Goodwill~~	~~60.2~~
~~Operating lease right-of-use assets~~	~~0.1~~
~~Assets acquired~~	~~244.5~~
~~Assumed liabilities~~	~~(0.2)~~

~~Total purchase price~~	$	~~244.3~~

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. NaN expense was incurred during the three months ended June 30, 2021, and $1.0 million was expensed as a component of Cost of sales during the six months ended June 30, 2021 for the amortization of the inventory step up adjustment. The Company has allocated $60.2 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. During the second quarter of 2021, the Company recorded a purchase price adjustment which increased goodwill and decreased property, plant, and equipment, net by $1.1 million.

~~TREEHOUSE FOODS, INC.~~

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

The 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 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 business combination and related income taxes. The pro forma results may not necessarily reflect actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations.

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
(Unaudited, in millions)
Pro forma net sales from continuing operations $ 1,108.4 $ 2,237.4
Pro forma net income (loss) from continuing operations 11.2 (18.0)
DIVESTITURE

Discontinued Operations

Ready-to-eat Cereal

On June 1, 2021, the Company simultaneously entered into a definitive agreement and completed the sale of its Ready-to-eat ("RTE") Cereal business to Post Holdings, Inc. ("Post") for a base purchase price of $85.0 ~~million. The Company classified the~~million, subject to customary purchase price adjustments, resulting in cash proceeds ~~within Net cash provided by (used in) investing activities - discontinued operations, and a pre-tax gain was recognized on the transaction upon~~at closing of $18.4 million as a component of Net income from discontinued operations in the Condensed Consolidated Statements of Operations. The pre-tax gain recognized was a result of the sale proceeds received being at the high end of the range of management's previous estimate of the disposal group's fair value.$88.0 million. The sale of this business is part of the Company's portfolio optimization strategy. RTE Cereal operated as two manufacturing plants located in Lancaster, Ohio and Sparks, Nevada.

The Company entered into a Transition Services Agreement ("TSA") with Post, which is designed to ensure and facilitate an orderly transfer of business operations. The services provided under the TSA terminate at various times up to twelve months from the date of sale and ~~can be~~certain services were renewed with a maximum of an additional six-month period ~~for certain services.~~expected to end in the fourth quarter of 2022. The income received under the TSA was not material for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and is primarily classified within General and administrative expenses or Cost of sales in the Company's Condensed Consolidated Statements of Operations depending on the functions being supported by the Company.

The Company has reflected the RTE Cereal business (through the date of sale) as a discontinued operation for all periods ~~presented through the date of sale.~~presented. Unless otherwise noted, amounts and disclosures throughout these Notes to Condensed Consolidated Financial Statements relate to the Company's continuing operations. Prior to the sale, there were expected disposal loss adjustments of $0.3 million recognized as an impairment charge during both the six months ended June 30, 2021 and 2020, and 0 impairment adjustments were recognized during both the three months ended June 30, 2021 and 2020 within Net income from discontinued operations.

1412

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Results of discontinued operations are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Net sales	Net sales	$	30.9	$	60.1	$	78.4	$	116.9	Net sales		$	(0.3)	$	47.5
Cost of sales	Cost of sales	27.7		53.1		69.1		101.0		Cost of sales		—		41.4
Selling, general, administrative and other operating expenses	Selling, general, administrative and other operating expenses	3.2		4.7		7.4		10.1		Selling, general, administrative and other operating expenses		(0.1)		4.2

Gain on sale of business		(18.4)		0		(18.4)		0

Operating income from discontinued operations		18.4		2.3		20.3		5.8

Operating (loss) income from discontinued operations										Operating (loss) income from discontinued operations		(0.2)		1.9
Interest and other expense	Interest and other expense	0.3		0.8		0.7		2.1		Interest and other expense		—		0.4

Income tax expense	Income tax expense	4.5		0.4		4.9		1.0		Income tax expense		—		0.4
Net income from discontinued operations		$	13.6	$	1.1	$	14.7	$	2.7
Net (loss) income from discontinued operations										Net (loss) income from discontinued operations		$	(0.2)	$	1.1

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

~~December 31, 2020~~

~~(In millions)~~

~~Inventories~~

~~33.3~~

~~Property, plant, and equipment, net~~

~~65.9~~

~~Operating lease right-of-use assets~~

~~5.1~~

~~Goodwill~~

~~53.5~~

~~Intangible assets, net~~

~~38.6~~

~~Valuation allowance~~

~~(125.7)~~

~~Total assets of discontinued operations~~

~~70.7~~

~~Accrued expenses and other liabilities~~

~~1.1~~

~~Operating lease liabilities~~

~~5.6~~

~~Total liabilities of discontinued operations~~

~~6.7~~

~~Other Divestitures~~

~~In-Store Bakery Facilities~~

On January 10, 2020, the Company 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 April 17, 2020, the sale of these facilities was completed for $26.9 million. 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 three and six months ended June 30, 2020.

~~TREEHOUSE FOODS, INC.~~

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

7. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 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
Acquisition (1) 2.4 0 2.4
Foreign currency exchange adjustments 2.0 1.5 3.5
Balance at June 30, 2021 $ 1,327.6 $ 857.0 $ 2,184.6

~~(1)Refer to Note 6 for additional information regarding acquisition-related adjustments to goodwill.~~


	Meal Preparation		Snacking & Beverages		Total
	(In millions)
Balance at December 31, 2021, before accumulated impairment losses	$	1,337.4	$	888.5	$	2,225.9
Accumulated impairment losses	(11.5)		(33.0)		(44.5)
Balance at December 31, 2021	1,325.9		855.5		2,181.4


Foreign currency exchange adjustments	1.5		1.1		2.6
Balance at March 31, 2022	$	1,327.4	$	856.6	$	2,184.0

Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 are as follows:


			June 30, 2021				December 31, 2020								March 31, 2022						December 31, 2021
		Weighted Average Life Remaining (yrs.)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount				Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
			(In millions)												(In millions)
Intangible assets with finite lives:	Intangible assets with finite lives:															Intangible assets with finite lives:
Customer-related	Customer-related	9.5	$	851.2	$	(434.8)	$	416.4	$	848.5	$	(406.4)	$	442.1		Customer-related	$	850.6	$	(473.9)		$	376.7	$	848.6	$	(459.2)	$	389.4
Contractual agreements	Contractual agreements	—	0.5		(0.5)		0		0.5		(0.5)		0			Contractual agreements	0.5		(0.5)			—		0.5		(0.5)		—
Trademarks	Trademarks	14.7	96.4		(35.1)		61.3		96.2		(31.7)		64.5			Trademarks	96.3		(39.9)			56.4		96.2		(38.1)		58.1
Formulas/recipes	Formulas/recipes	4.3	25.3		(22.7)		2.6		25.3		(22.1)		3.2			Formulas/recipes	25.3		(23.1)			2.2		25.3		(22.9)		2.4
Computer software	Computer software	7.1	200.9		(117.7)		83.2		194.8		(112.0)		82.8			Computer software	209.7		(127.9)			81.8		207.4		(124.7)		82.7
Total finite lived intangibles	Total finite lived intangibles	9.7	1,174.3		(610.8)		563.5		1,165.3		(572.7)		592.6			Total finite lived intangibles	1,182.4		(665.3)			517.1		1,178.0		(645.4)		532.6

Intangible assets with indefinite lives:	Intangible assets with indefinite lives:															Intangible assets with indefinite lives:
Trademarks	Trademarks		22.9		—		22.9		22.4		—		22.4			Trademarks	22.8		—			22.8		22.4		—		22.4
Total intangible assets	Total intangible assets		$	1,197.2	$	(610.8)	$	586.4	$	1,187.7	$	(572.7)	$	615.0		Total intangible assets	$	1,205.2	$	(665.3)		$	539.9	$	1,200.4	$	(645.4)	$	555.0

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. INCOME TAXES

Income taxes were recognized at effective rates of ~~21.2%~~(75.0)% and ~~25.0%~~(100.0)% for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~respectively, compared to 123.2% and 42.7% for the three and six months ended June 30, 2020,~~ respectively. The change in the Company's effective tax rate for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared to ~~2020~~2021 is primarily the result of a benefit recognized in 2020 due to the enactment of the "Coronavirus Aid, Relief, and Economic Security Act" (the "CARES Act"), a tax benefit recognized in 2020 due to our cross-border intercompany financing structure, and a change in the amount of ~~non-deductible executive~~tax deductible stock-based compensation. 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.

~~TREEHOUSE FOODS, INC.~~

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

Management estimates that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by as much as ~~$4.8~~$3.9 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 $2.0~~Approximately $2.9 million of the ~~$4.8~~$3.9 million could affect net income when settled. The timing of cash settlement, if any, cannot be reasonably estimated for uncertain tax benefits.

9. LONG-TERM DEBT

June 30, 2021 December 31, 2020
(In millions)
Revolving Credit Facility $ 20.0 $ 0
Term Loan A 498.7 453.4
Term Loan A-1 927.7 672.6
2024 Notes 0 602.9
2028 Notes 500.0 500.0
Finance leases 4.0 4.1
Total outstanding debt 1,950.4 2,233.0
Deferred financing costs (17.5) (18.3)
Less current portion (16.0) (15.7)
Total long-term debt $ 1,916.9 $ 2,199.0

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

Remainder of 2021 $ 8.0
2022 15.6
2023 15.1
2024 15.0
2025 14.6
Thereafter 1,882.1
Total outstanding debt $ 1,950.4


	March 31, 2022		December 31, 2021
	(In millions)

Term Loan A	$	491.3	$	496.3
Term Loan A-1	913.7		923.0


2028 Notes	500.0		500.0
Finance leases	2.7		3.1
Total outstanding debt	1,907.7		1,922.4
Deferred financing costs	(16.4)		(16.1)
Less current portion	(4.7)		(15.6)
Total long-term debt	$	1,886.6	$	1,890.7

Credit Agreement

On ~~March 26, 2021,~~February 14, 2022, the Company entered into Amendment No. ~~3 (the "Amendment")~~4 to the ~~Second Amended~~Credit Agreement. Amendment No. 4 temporarily increases the leverage covenant threshold from 4.50x to 5.50x through June 30, 2022, then 5.25x through September 30, 2022 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~~thereafter reverts 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.4.50x. The material terms and conditions under the Credit Agreement are otherwise substantially consistent with those contained in the Credit Agreement prior to ~~the Amendment.~~Amendment No. 4.

The Company's average interest rate on debt outstanding under its Credit Agreement for the three months ended ~~June 30, 2021~~March 31, 2022 was ~~1.69%~~1.89%. Including the impact of interest rate swap agreements in effect as of ~~June 30, 2021,~~March 31, 2022, the average rate is ~~3.36%~~3.64%.

Revolving Credit Facility — As of ~~June 30, 2021,~~March 31, 2022, $730.0 million of the ~~Company had $20.0 million drawn from its~~aggregate commitment of $750.0 million ~~Revolving Credit Facility. The Company had remaining availability~~ of ~~$706.9 million under~~ the Revolving Credit Facility ~~and~~was available. Under the Credit Agreement, the Revolving Credit Facility matures on March 26, 2026. In addition, as of March 31, 2022, there were ~~$23.1~~$20.0 million in letters of credit under the Revolving Credit Facility that were issued but undrawn, which have been included as a reduction to the calculation of available credit.

~~TREEHOUSE FOODS, INC.~~

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

~~2024 Notes~~ — The Company previously issued 6.000% notes in the aggregate principal amount of $775 million due on February 15, 2024 (the "2024 Notes"). On February 16, 2021 the Company, through Wells Fargo Bank, National Association, as trustee (the "Trustee"), completed a partial redemption of $200.0 million of its 2024 Notes, and on March 31, 2021, the Company completed the full redemption of the remaining $402.9 million outstanding principal of its 2024 Notes at a price of 101.50% of the principal amount, plus accrued and unpaid interest to, but not including, each redemption date (the "2024 Notes Redemption").

~~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").~~

Loss on Extinguishment of Debt — During the first quarter of 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.~~million in connection with the redemption of its 2024 Notes completed on March 31, 2021 and Credit Agreement refinancing executed on March 26, 2021.

Fair Value — At ~~June 30,~~March 31, 2022, the aggregate fair value of the Company's total debt was $1,814.9 million and its carrying value was $1,905.0 million. At December 31, 2021, the aggregate fair value of the Company's total debt was ~~$1,943.6~~$1,899.5 million and its carrying value was ~~$1,946.4 million. At December 31, 2020, the aggregate fair value of the Company's total debt was $2,250.4 million and its carrying value was $2,228.9~~$1,919.3 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 value of the Company's 2028 Notes was estimated based on quoted market prices for similar instruments due to their infrequent trading volume. Accordingly, the fair value of the Company's debt is classified as Level 2 within the valuation hierarchy.

TREEHOUSE FOODS, INC.

~~10. STOCKHOLDERS' EQUITY~~

~~Share Repurchase Authorization~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — On November 2, 2017, the Company announced that the Board of Directors adopted a stock repurchase program. The stock repurchase program authorizes the Company to repurchase up to $400 million of the Company's common stock at any time, or from time to time. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The size and timing of any repurchases will depend on price, market and business conditions, and other factors. The Company has the ability to make discretionary repurchases up to an annual cap of $150 million under the $400 million total authorization. Any shares repurchased will be held as treasury stock.(Continued)

For the three and six months ended June 30, 2021, the Company repurchased approximately 0.5 million shares of common stock at a weighted average share price of $50.88 for a total of $25.0 million. There were 0 shares repurchased during the three or six months ended June 30, 2020.

~~11.~~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 earnings (loss) per share:


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended March 31,
		2021	2020	2021	2020			2022	2021
		(In millions, except per share data)						(In millions, except per share data)

Weighted average common shares outstanding	Weighted average common shares outstanding	56.0	56.5	55.8	56.4	Weighted average common shares outstanding		55.8	56.0
Assumed exercise/vesting of equity awards (1)	Assumed exercise/vesting of equity awards (1)	0	0	0	0	Assumed exercise/vesting of equity awards (1)		—	0.5
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	56.0	56.5	55.8	56.4	Weighted average diluted common shares outstanding		55.8	56.5

(1)For the three ~~and six~~ months ended ~~June 30, 2021 and 2020,~~March 31, 2022, the weighted average common shares outstanding is the same for the computations of both basic and diluted shares outstanding because the Company had a net loss from continuing operations for the period. Equity awards, excluded from our computation of diluted earnings per share because they were anti-dilutive, were ~~1.8~~1.2 million and ~~1.5~~1.4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~respectively, and 1.5 million and 1.6 million for the three and six months ended June 30, 2020,~~ respectively.

~~TREEHOUSE FOODS, INC.~~

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

~~12.~~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~~authorized to be awarded under the Plan is approximately 17.5 million, of which approximately ~~3.6~~2.6 million remained available at ~~June 30, 2021.~~March 31, 2022.

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Compensation expense related to stock-based payments	Compensation expense related to stock-based payments	$	4.5	$	7.0	$	9.4	$	14.9	Compensation expense related to stock-based payments		$	4.3	$	4.9
Related income tax benefit	Related income tax benefit	1.1		1.8		2.5		3.9		Related income tax benefit		1.0		1.4

All amounts below include continuing and discontinued operations.

Restricted Stock Units — Employee restricted stock unit awards generally vest based on the passage of time in approximately 3three equal installments on each of the first three anniversaries of the grant date. Additionally, on December 29, 2021, the Compensation Committee of the Board approved restricted stock unit awards granted to certain executive members of management that vest on the passage of time in approximately three equal installments on each of the threesix month anniversaries of the grant date. Director restricted stock units generally vest on the first anniversary of the grant date. Certain directors have elected to defer receipt of their awards until either their departure from the Board of Directors or a specified date beyond the first anniversary of the grant date.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the restricted stock unit activity during the ~~six~~three months ended ~~June 30, 2021:~~March 31, 2022:


		Employee Restricted Stock Units	Weighted Average Grant Date Fair Value		Director Restricted Stock Units	Weighted Average Grant Date Fair Value			Employee Restricted Stock Units	Weighted Average Grant Date Fair Value		Director Restricted Stock Units	Weighted Average Grant Date Fair Value
		(In thousands)			(In thousands)				(In thousands)			(In thousands)
Outstanding, at December 31, 2020		707	$	47.92	125	$	54.67
Outstanding, at December 31, 2021								Outstanding, at December 31, 2021	660	$	48.88	50	$	48.15
Granted	Granted	346	52.04		37	48.03		Granted	586	31.01		—	—
Vested	Vested	(313)	46.77		(69)	57.03		Vested	(235)	51.50		(1)	53.84
Forfeited	Forfeited	(92)	51.22		(1)	52.46		Forfeited	(58)	44.99		—	—
Outstanding, at June 30, 2021		648	50.24		92	50.20
Vested and deferred, at June 30, 2021					50	52.32
Outstanding, at March 31, 2022								Outstanding, at March 31, 2022	953	37.49		49	48.01
Vested and deferred, at March 31, 2022								Vested and deferred, at March 31, 2022				16	48.35


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)

Fair value of vested restricted stock units	Fair value of vested restricted stock units	$	3.6	$	1.8	$	20.0	$	10.2	Fair value of vested restricted stock units		$	7.6	$	16.4
Tax benefit recognized from vested restricted stock units	Tax benefit recognized from vested restricted stock units	0.9		0.5		3.2		1.9		Tax benefit recognized from vested restricted stock units		1.2		2.3

Future compensation costs related to restricted stock units are approximately ~~$29.7~~$34.3 million as of ~~June 30, 2021~~March 31, 2022 and will be recognized on a weighted average basis over the next ~~2.1~~2.4 years. The grant date fair value of the awards is equal to the Company's closing stock price on the grant date.

~~TREEHOUSE FOODS, INC.~~

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

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

•For awards granted in years prior to 2020, for each year of the three-year performance 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,~~through 2022, performance goals are set and measured annually with one-quarter of the units eligible to accrue for each year in the three-year performance period. Accrued shares are earned at the end of each performance period but remain subject to forfeiture until the ~~three-year performance period.~~third anniversary of the grant date. Additionally, for the cumulative three-year performance period, one-quarter of the units will 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. 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 2022 and 2021, ~~the Compensation Committee of the Board approved performance unit awards granted to~~ certain executive members of management received awards that ~~include~~were measured using a relative total shareholder return market condition ~~that is measured~~ over a three-year performance period ~~in addition to the existing operating~~instead of a cumulative three-year performance ~~measures.~~goal. 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~~attainment over the three-year performance ~~measure.~~period. The fair value of the portion of the ~~award earned~~awards based on relative total shareholder return was valued using a Monte Carlo simulation model with a grant-date fair value of $26.84 on approximately 52,600 units granted in 2022 and a grant-date fair value of $59.16 on approximately 23,200 units ~~granted.~~ granted in 2021.

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.

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


	Three Months Ended March 31,
	~~2021~~
~~Dividend yield~~	0	%
~~Risk-free rate~~	~~0.30~~	%
~~Expected volatility~~	~~35.65~~	%
~~Expected term (in years)~~	~~2.75~~

~~The following table summarizes the performance unit activity during the six months ended June 30, 2021:~~

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 (88) 56.09
Unvested, at June 30, 2021 514 54.10

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
(In millions) (In millions)
Fair value of vested performance units $ 0 $ 0 $ 5.6 $ 3.3
Tax benefit recognized from performance units vested (0.1) 0 0.2 0.6

2016

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,
	2022		2021
Dividend yield	0	%	0	%
Risk-free rate	2.29	%	0.30	%
Expected volatility	36.95	%	35.65	%
Expected term (in years)	2.77		2.75

The following table summarizes the performance unit activity during the three months ended March 31, 2022:


	Performance Units	Weighted Average Grant Date Fair Value
	(In thousands)
Unvested, at December 31, 2021	480	$	54.21
Granted	190	29.82
Vested	(63)	64.55
Forfeited	(122)	60.08
Unvested, at March 31, 2022	485	38.25


	Three Months Ended March 31,
		2022		2021
	(In millions)

Fair value of vested performance units		$	2.0	$	5.6
Tax benefit recognized from performance units vested		0.2		0.3

Future compensation costs related to the performance units are estimated to be approximately ~~$13.3~~$10.6 million as of ~~June 30, 2021~~March 31, 2022 and are expected to be recognized over the next ~~1.7~~2.0 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~~the awards earned based on relative total shareholder return was valued using a Monte Carlo simulation model. For other awards, the grant date fair value is equal to the Company's closing stock price on the date of grant.

~~13.~~

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, 2019		$	(79.4)	$	(4.6)	$	(84.0)
Other comprehensive loss before reclassifications		(8.5)		0		(8.5)
Reclassifications from accumulated other comprehensive loss (2)		0		0.2		0.2

Other comprehensive (loss) income		(8.5)		0.2		(8.3)
Balance at June 30, 2020		$	(87.9)	$	(4.4)	$	(92.3)
									(In millions)
Balance at December 31, 2020	Balance at December 31, 2020	$	(67.3)	$	3.3	$	(64.0)	Balance at December 31, 2020	$	(67.3)	$	3.3	$	(64.0)
Other comprehensive income before reclassifications	Other comprehensive income before reclassifications	6.7		0		6.7		Other comprehensive income before reclassifications	0.9		—		0.9
Reclassifications from accumulated other comprehensive loss (2)	Reclassifications from accumulated other comprehensive loss (2)	0		0.3		0.3		Reclassifications from accumulated other comprehensive loss (2)	—		0.1		0.1

Other comprehensive income	Other comprehensive income	6.7		0.3		7.0		Other comprehensive income	0.9		0.1		1.0
Balance at June 30, 2021		$	(60.6)	$	3.6	$	(57.0)
Balance at March 31, 2021								Balance at March 31, 2021	$	(66.4)	$	3.4	$	(63.0)

Balance at December 31, 2021								Balance at December 31, 2021	$	(70.9)	$	17.3	$	(53.6)
Other comprehensive income before reclassifications								Other comprehensive income before reclassifications	4.3		—		4.3
Reclassifications from accumulated other comprehensive loss (2)								Reclassifications from accumulated other comprehensive loss (2)	—		0.1		0.1

Other comprehensive income								Other comprehensive income	4.3		0.1		4.4
Balance at March 31, 2022								Balance at March 31, 2022	$	(66.6)	$	17.4	$	(49.2)

(1)The tax impact of the foreign currency translation adjustment and the unrecognized pension and postretirement benefits reclassification was insignificant for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

(2)Refer to Note 1413 for additional information regarding these reclassifications.

~~14.~~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 are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Service cost	Service cost	$	0.2	$	0.4	$	0.4	$	0.8	Service cost		$	0.1	$	0.2
Interest cost	Interest cost	2.1		2.7		4.3		5.4		Interest cost		2.3		2.2
Expected return on plan assets	Expected return on plan assets	(3.4)		(3.6)		(6.9)		(7.2)		Expected return on plan assets		(3.8)		(3.5)

Amortization of unrecognized prior service cost		0.1		0		0.1		0

Amortization of unrecognized net loss	Amortization of unrecognized net loss	0.1		0.1		0.2		0.2		Amortization of unrecognized net loss		0.1		0.1
Net periodic pension benefit	Net periodic pension benefit	$	(0.9)	$	(0.4)	$	(1.9)	$	(0.8)	Net periodic pension benefit		$	(1.3)	$	(1.0)

Components of net periodic postretirement cost are as follows:


	Three Months Ended March 31,
		2022		2021
	(In millions)
Interest cost		$	0.2	$	0.2
Net periodic postretirement cost		$	0.2	$	0.2

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Components of net periodic postretirement cost are as follows:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2021 2020 2021 2020
(In millions) (In millions)
Interest cost $ 0.1 $ 0.2 $ 0.3 $ 0.4
Net periodic postretirement cost $ 0.1 $ 0.2 $ 0.3 $ 0.4

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,~~income, net of the Condensed Consolidated Statements of Operations.

~~15.~~14. COMMITMENTS AND CONTINGENCIES

~~Litigation, Investigations,~~Shareholder Class Action and ~~Audits~~ Related Derivative Actions

The Company, as nominal defendant, and certain of its directors, officers and former directors and officers are parties to the following 4 shareholder derivative suits, each of which involves substantially similar claims and allegations:

(i)~~- On November 16, 2016, a purported TreeHouse shareholder filed a class action captioned~~ ~~Tarara~~Wells v. ~~TreeHouse Foods, Inc.,~~Reed, et al., Case No. ~~1:16-cv-10632,~~2016-CH-16359 (filed Dec. 22, 2016 in the Circuit Court of Cook County, Illinois), asserting state law claims for breach of fiduciary duty, unjust enrichment and corporate waste;

(ii)Lavin v. Reed, et al., Case No. 17-cv-01014 (filed Feb. 7, 2017 in the United States District Court for the Northern District of Illinois 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.~~Illinois), ~~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~~asserting 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~~ waste;

(iii)Bartelt v. Reed, et al., Case No. 1:19-cv-00835 (filed Feb. 8, 2019 in the United States District Court for the Northern District of ~~Illinois. This complaint is purportedly brought derivatively on behalf of TreeHouse and asserts~~Illinois), asserting 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~~as well as violations of Section 14 of the Securities Exchange Act of ~~1934. Finally, on June 3, 2019, another purported TreeHouse shareholder filed an action captioned~~ 1934; and

(iv)City of Ann Arbor Employees' Retirement System v. Reed, et al., Case No. 2019-CH-06753 (filed June 3, 2019 in the Circuit Court of Cook County, ~~Illinois, against TreeHouse and certain of its officers. Like~~ ~~Wells~~Illinois), ~~Lavin, and~~ ~~Bartelt~~,~~this complaint is purportedly brought derivatively on behalf of TreeHouse and asserts~~asserting claims ~~for contribution and indemnification,~~ breach of fiduciary duty, ~~and~~ aiding and abetting breaches of fiduciary ~~duty.~~duty and contribution and indemnification from the individual defendants for losses incurred by the Company.

~~All 5 complaints make substantially similar allegations (though the amended complaint in~~ ~~Tarara~~ ~~now contains additional detail).~~ Essentially, ~~the~~all 4 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, among other things, that these actions artificially inflated the market price of TreeHouse common stock ~~during~~and resulted in harm to the Company, including the filing of the MPERS federal securities fraud class ~~period, thus purportedly harming investors.~~action (see below). 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, but note that, as described below, an agreement in principle has been reached to resolve the federal securities class action.2017.

~~TREEHOUSE FOODS, INC.~~

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

~~Due~~Each of these cases involves allegations similar to ~~the similarity of the complaints, the parties~~those 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. On July 12, 2021, the parties entered a joint status report, informing the court that theearlier-filed, recently resolved federal securities class action, ~~settlement was not yet approved.The July 15 status hearing was stricken, and another status hearing is set for October 18, 2021.~~

~~Since its initial docketing, the~~ ~~Tarara~~ ~~matter has been re-captioned as~~ Public Employees' Retirement Systems of Mississippi v. TreeHouse Foods, Inc., et al., Case No. 1:16-cv-10632 (originally captioned Tarara v. TreeHouse Foods, Inc., ~~in accordance with the Court's order appointing Public Employees' Retirement Systems of Mississippi as the lead plaintiff. On May 26, 2017, the~~ et al.~~Public Employees'~~) (“ ~~defendants filed a motion to dismiss, which the court denied on February 12, 2018. On April 12, 2018, the~~ MPERS~~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~~”) (filed Nov. 16, 2016), in the United States District Court ~~of Appeals~~ for the ~~Seventh Circuit~~Northern District of Illinois brought on ~~March 11, 2020. After ordering lead plaintiff to file~~behalf of 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 mediationclass of all purchasers of TreeHouse common stock from January 20, 2016 through and ~~the court extended then-upcoming deadlines~~including November 2, 2016. The MPERS complaint asserted claims under ~~the case schedule, pending a further status report from the parties regarding the extent~~Sections 10(b) and 20(a) of the ~~stay needed~~Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and sought, among other things, damages and costs and expenses based on essentially the same facts described above. Following denial of defendants’ motion to ~~facilitate mediation. The court subsequently issued multiple general orders as~~dismiss, grant of plaintiff’s motion to certify a ~~result~~class, limited discovery, and extended mediator-facilitated negotiations with Greg Lindstrom 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, and the parties proceeded to mediate remotely. On April 19, 2021, the 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. OnPhillips ADR, on July 14, 2021, the parties filed a stipulation of settlement ~~and moved~~to resolve the case for ~~preliminary approval of the settlement. The agreement includes~~ a cash payment of $27.0 million (funded by D&O insurance) in exchange for dismissal with prejudice of the class claims and full releases. After briefing, preliminary approval, notice and a hearing, on November 17, 2021, the Court granted final approval of the settlement and entered final judgment dismissing the case with prejudice on a classwide basis. On November 18, 2021, the Court granted lead counsel’s request for attorneys’ fees and expenses and approved a plan of allocation.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Due to the similarity of the derivative complaints, Bartelt was consolidated with Lavin, Ann Arbor was consolidated with Wells, and the parties entered stipulations deferring all of the derivative cases until either summary judgment or settlement of the MPERS class action. Pursuant to a schedule entered in light of the resolution of the MPERS class action, plaintiffs in the consolidated Wells case filed an amended, consolidated complaint on February 28, 2022. A briefing schedule has been set if defendants move to dismiss. The parties are to appear for a status conference or hearing on June 27, 2022. The consolidated Lavin case remains stayed pending a ruling on dispositive motions in the Wells case. The court has asked the parties to submit a status report on July 13, 2022. As a result of these developments, the Company has an accrual for a $27.0 million liability and a corresponding insurance receivable within Accrued expenses and Prepaid expenses and other current assets, respectively, in the Condensed Consolidated Balance Sheets as of ~~June 30, 2021. On July 27, 2021, the court granted the motion for preliminary approval of the settlement and scheduled a final approval hearing for November 16, 2021.~~March 31, 2022.

Employment Related Claims

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, (the first of which was filed in California state court on October 20, 2015) 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~~3 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~~$9.4 million. On January 13, 2022, the Court orally approved the settlement at a final hearing. 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 expensespayment was completed in the ~~Condensed Consolidated Balance Sheets as~~first quarter of ~~June 30, 2021.~~2022 and settled the Company's accrued liability of $9.0 million.

Other Claims

~~TREEHOUSE FOODS, INC.~~

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

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.~~matter. In the Company's opinion, the ~~settlement~~eventual resolution of ~~any~~ such ~~currently pending~~matters, either individually or ~~threatened matter~~in the aggregate, is not expected to have a material impact on the Company's financial position, results of operations, or cash flows. However, litigation is inherently unpredictable and resolutions or dispositions of claims or lawsuits by settlement or otherwise could have an adverse impact on our financial position, results of operations or cash flows for the reporting period in which any such resolution or disposition occurs.

In February 2014, TreeHouse, along with its 100% owned subsidiaries, Bay Valley Foods, LLC and Sturm Foods, Inc., filed suit against Keurig Dr. Pepper Inc.'s wholly-owned subsidiary, Keurig Green Mountain ("KGM"), in the U.S. District Court for the Southern District of New York ("SDNY") captioned TreeHouse Foods, Inc. et al. v. Green Mountain Coffee Roasters, Inc. et al. TreeHouse asserted claims under the federal antitrust laws and various state antitrust laws and unfair competition statutes, contending that KGM had monopolized alleged markets for single serve coffee brewers and single serve coffee pods. TreeHouse is seeking monetary damages, declaratory relief, injunctive relief, and attorneys' fees. The matter remains pending, with summary judgment, motions to exclude certain expert opinions, and discovery sanctions motions fully briefed. On March 28, 2022, the Magistrate Judge issued a non-public Opinion and Order (which will eventually be made public, subject to any confidentiality redactions that are deemed appropriate) granting in part and denying in part the TreeHouse sanctions motion against KGM and denying the KGM sanctions motion against TreeHouse. There is the possibility of an appeal of the Opinion and Order to the U.S. District Court Judge. KGM is denying the allegations made by TreeHouse in the litigation. ~~As such,~~ TreeHouse has not recorded any amount in its Condensed Consolidated Financial Statements as of ~~June 30, 2021.~~March 31, 2022.

~~16.~~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, commodity price risk, and market 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 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 June 30, 2021, the~~The Company ~~had~~has entered into ~~$875.0 million of~~ long-term interest rate swap agreements to lock into a fixed LIBOR interest rate ~~base.~~base that have a notional value of $875.0 million as of both March 31, 2022 and December 31, 2021. Under the terms of the agreements, $875.0 million in variable-rate debt ~~was~~is 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.~~

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Foreign Currency 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 ~~June 30,~~March 31, 2022 and December 31, 2021, the ~~Company had $6.1 million~~notional value of the foreign currency contracts outstanding was $5.4 million and $5.5 million, respectively. These foreign currency contracts have maturities expiring throughout ~~2021 and~~2022 as of March 31, 2022.

Commodity Contracts - Certain commodities the Company uses in the production and distribution of its products are exposed to market price risk. The Company utilizes derivative contracts to manage this risk. The majority of commodity forward contracts are not derivatives, and those that are generally qualify for the normal purchases and normal sales scope exception under the guidance for derivative instruments and hedging activities and, therefore, are not subject to its provisions. For derivative commodity contracts that do not qualify for the normal purchases and normal sales scope exception, the Company ~~records their fair value on~~accounts for the ~~Condensed Consolidated Balance Sheets, with changes in value being recognized in the Condensed Consolidated Statements of Operations.~~contracts as derivatives.

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.

~~TREEHOUSE FOODS, INC.~~

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

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 ~~June 30,~~March 31, 2022 and December 31, 2021, the ~~Company had~~notional value of the commodity contracts outstanding was $62.5 million and $58.8 million, respectively. These commodity contracts ~~for the purchase of 0.1 million megawatts of electricity,~~have maturities expiring throughout 2021 and 2022; 8.0 million gallons of diesel, expiring throughout 2021; 5.2 million dekatherms of natural gas, expiring throughout 2021 and 2022; 2.2 million pounds of coffee, expiring throughout 2021; 12.3 million pounds of resin, expiring throughout 2021 and 2022 and ~~0.4 million bushels~~2023 as of ~~flour, expiring throughout 2021.~~March 31, 2022.

Total Return Swap Contract - ~~In March 2021, the~~The Company ~~entered into~~has 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 ~~June 30,~~March 31, 2022 and December 31, 2021, the notional value of the total return swap contract was ~~$7.2 million.~~$5.6 million and $7.0 million, respectively.

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


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In millions)					(In millions)
Asset derivatives	Asset derivatives					Asset derivatives
Commodity contracts	Commodity contracts	$	17.1	$	12.6	Commodity contracts	$	16.0	$	3.9

Total return swap contract		0.1		0

		$	17.2	$	12.6		$	16.0	$	3.9
Liability derivatives	Liability derivatives					Liability derivatives
Commodity contracts	Commodity contracts	$	0	$	0.7	Commodity contracts	$	1.3	$	0.9
Foreign currency contracts	Foreign currency contracts	0.8		0		Foreign currency contracts	0.1		0.2
Interest rate swap agreements	Interest rate swap agreements	74.0		97.4		Interest rate swap agreements	12.1		51.2

		$	74.8	$	98.1		$	13.5	$	52.3

Asset derivatives are included within Prepaid expenses and other current assets and liability derivatives are included within Accrued expenses in the Condensed Consolidated Balance Sheets.

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair values of the commodity contracts, foreign currency contracts, 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, 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.

~~TREEHOUSE FOODS, INC.~~

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

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 June 30,				Six Months Ended June 30,					Location of Gain (Loss)	Three Months Ended March 31,
		Recognized in Net Income (Loss)	2021		2020		2021		2020			Recognized in Net Income (Loss)		2022		2021
			(In millions)				(In millions)						(In millions)
Mark-to-market unrealized gain (loss)	Mark-to-market unrealized gain (loss)										Mark-to-market unrealized gain (loss)
Commodity contracts	Commodity contracts	Other (income) expense, net	$	3.0	$	8.5	$	5.2	$	(4.1)	Commodity contracts	Other income, net		$	11.7	$	2.2
Foreign currency contracts	Foreign currency contracts	Other (income) expense, net	(0.5)		(0.4)		(0.8)		0.1		Foreign currency contracts	Other income, net		0.1		(0.3)
Interest rate swap agreements	Interest rate swap agreements	Other (income) expense, net	3.7		(3.8)		23.4		(55.8)		Interest rate swap agreements	Other income, net		39.1		19.7
Total return swap contract	Total return swap contract	General and administrative	0		0		0.1		0		Total return swap contract	General and administrative		—		0.1
Total unrealized gain (loss)			$	6.2	$	4.3	$	27.9	$	(59.8)
Total unrealized gain											Total unrealized gain			$	50.9	$	21.7
Realized gain (loss)	Realized gain (loss)										Realized gain (loss)
Commodity contracts	Commodity contracts	Manufacturing related to Cost of sales and transportation related to Selling and distribution	$	7.9	$	(4.2)	$	15.5	$	(5.7)	Commodity contracts	Manufacturing related to Cost of sales and transportation related to Selling and distribution		$	3.1	$	7.6
Foreign currency contracts	Foreign currency contracts	Cost of sales	0		0.3		0		0.4		Foreign currency contracts	Cost of sales		(0.1)		—
Interest rate swap agreements	Interest rate swap agreements	Interest expense	(6.2)		(5.3)		(12.3)		(6.1)		Interest rate swap agreements	Interest expense		(6.0)		(6.1)
Total return swap contracts	Total return swap contracts	General and administrative	0.6		0		0.6		0		Total return swap contracts	General and administrative		(0.4)		—
Total realized gain (loss)			$	2.3	$	(9.2)	$	3.8	$	(11.4)
Total gain (loss)			$	8.5	$	(4.9)	$	31.7	$	(71.2)
Total realized (loss) gain											Total realized (loss) gain			$	(3.4)	$	1.5
Total gain											Total gain			$	47.5	$	23.2

~~17.~~

TREEHOUSE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

16. SEGMENT INFORMATION

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 2 reportable segments, as presented below, are consistent with the manner in which the Company reports its results to the Chief Executive Officer, who has been identified as our 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 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, ~~2020.~~2021.

~~TREEHOUSE FOODS, INC.~~

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

Financial information relating to the Company's reportable segments on a continuing operations basis is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Net sales to external customers:	Net sales to external customers:									Net sales to external customers:
Meal Preparation	Meal Preparation	$	647.6	$	667.7	$	1,326.1	$	1,341.3	Meal Preparation		$	728.1	$	678.5
Snacking & Beverages	Snacking & Beverages	355.6		374.2		734.4		785.5		Snacking & Beverages		412.9		378.8

Total	Total	$	1,003.2	$	1,041.9	$	2,060.5	$	2,126.8	Total		$	1,141.0	$	1,057.3
Direct operating income:	Direct operating income:									Direct operating income:
Meal Preparation	Meal Preparation	$	65.2	$	102.3	$	145.7	$	188.6	Meal Preparation		$	59.8	$	80.5
Snacking & Beverages	Snacking & Beverages	36.9		52.5		78.6		100.6		Snacking & Beverages		22.1		41.7

Total	Total	102.1		154.8		224.3		289.2		Total		81.9		122.2
Unallocated selling, general, and administrative expenses	Unallocated selling, general, and administrative expenses	(59.9)		(82.5)		(128.9)		(153.9)		Unallocated selling, general, and administrative expenses		(71.6)		(69.0)
Unallocated cost of sales ~~(1)~~	Unallocated cost of sales ~~(1)~~	4.7		(17.7)		0.6		(14.5)		Unallocated cost of sales ~~(1)~~		(1.5)		(4.1)
Unallocated corporate expense and other (1)	Unallocated corporate expense and other (1)	(42.8)		(29.3)		(80.9)		(65.3)		Unallocated corporate expense and other (1)		(49.5)		(38.1)
Operating income		$	4.1	$	25.3	$	15.1	$	55.5

Operating (loss) income										Operating (loss) income		(40.7)		11.0
Other income (expense)										Other income (expense)		39.1		(10.8)
(Loss) income before income taxes										(Loss) income before income taxes		$	(1.6)	$	0.2

(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

Segment revenue disaggregated by product category groups ~~are~~is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Center store grocery	Center store grocery	$	438.6	$	413.3	$	852.7	$	845.3	Center store grocery		$	459.5	$	414.1
Main course	Main course	209.0		254.4		473.4		496.0		Main course		268.6		264.4
Total Meal Preparation	Total Meal Preparation	647.6		667.7		1,326.1		1,341.3		Total Meal Preparation		728.1		678.5
Sweet & savory snacks	Sweet & savory snacks	273.4		273.2		546.4		578.2		Sweet & savory snacks		303.5		273.0
Beverages & drink mixes	Beverages & drink mixes	82.2		101.0		188.0		207.3		Beverages & drink mixes		109.4		105.8
Total Snacking & Beverages	Total Snacking & Beverages	355.6		374.2		734.4		785.5		Total Snacking & Beverages		412.9		378.8
Total net sales	Total net sales	$	1,003.2	$	1,041.9	$	2,060.5	$	2,126.8	Total net sales		$	1,141.0	$	1,057.3

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In millions)				(In millions)					(In millions)
Retail grocery	Retail grocery	$	783.9	$	880.6	$	1,636.0	$	1,766.1	Retail grocery		$	549.0	$	524.8
Food-away-from-home	Food-away-from-home	78.9		48.1		144.1		122.1		Food-away-from-home		72.0		61.7
Industrial, co-manufacturing, and other	Industrial, co-manufacturing, and other	140.4		113.2		280.4		238.6		Industrial, co-manufacturing, and other		107.1		92.0
Total Meal Preparation										Total Meal Preparation		728.1		678.5
Retail grocery										Retail grocery		351.0		327.3
Food-away-from-home										Food-away-from-home		1.9		3.5
Industrial, co-manufacturing, and other										Industrial, co-manufacturing, and other		60.0		48.0
Total Snacking & Beverages										Total Snacking & Beverages		412.9		378.8
Total net sales	Total net sales	$	1,003.2	$	1,041.9	$	2,060.5	$	2,126.8	Total net sales		$	1,141.0	$	1,057.3

2724

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 operate in 29 product categories across our Meal Preparation and Snacking & Beverages divisions and have approximately 40 production facilities across North America and ~~Italy,~~Italy. Across our diverse portfolio, we offer better-for-you, natural and organic products and hold a private label leadership position across many of 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.categories. Our purpose is to make high quality food and beverages affordable to all. Our vision is to be the undisputed solutions leader for our custom brands. Our mission is to create value as our customers' preferred manufacturing and distribution partner, providing thought leadership, superior innovation, and a relentless focus on execution. Our long-term strategic objective is to build a company that is well positioned to deliver long-term sustainable growth and create value for our shareholders, as enabled by our two-segment structure.

Our two segments have distinct focuses and approaches based upon their underlying categories as described below:

~~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~~generating stable, predictable cash flow and ~~cash flow. Operational progress is driven by continuous improvement~~improving profitability. Its strategic initiatives include mastering the fundamentals of cost, quality and ~~value engineering. The organizational focus allows the Company~~service, managing product and channel mix to ~~apply resources that better align with customers' goals for~~improve margin, and driving value ~~within the center~~from product optimization. This segment is primarily comprised of ~~the retail grocery store. This segment~~mature categories and includes center of the store grocery items ~~(single-serve~~(such as 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,~~(such as dough, dry dinners, hot cereals, and pasta) in shelf stable and refrigerated formats for retail, food-away-from-home, co-manufacturing, industrial, ingredient, and 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 improving revenue and profit growth. Its strategic initiatives include building depth and category leadership to drive growth, both organic growth and ~~research, development~~inorganic growth through acquisitions, and ~~commercialization~~mastering the fundamentals of cost, quality, and service. This segment 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~~primarily comprised of growth categories and ~~differentiation in private label. This segment~~ produces and sells a comprehensive portfolio of sweet and savory baked food items ~~(cookies,~~(such as cookies, crackers, frozen waffles, pita chips, pretzels, snack bars, and unique candy products) and beverages and drink mixes ~~(powdered~~(such as 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~~formats primarily for retail 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.~~co-manufacturing customers.

The following discussion and analysis presents the factors that had a material effect on our financial condition, changes in financial condition, and results of operations for the three ~~and six~~ month periods ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. 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

~~RTE Cereal Divestiture~~Strategic Review Process

On ~~June 1,~~November 8, 2021, the Company ~~simultaneously entered into~~announced that its Board of Directors has approved a ~~definitive agreement~~plan to explore strategic alternatives, including a possible sale of the Company or a transaction to allow the Company to focus on its higher growth Snacking & Beverages business segment by divesting a significant portion of its Meal Preparation business segment.

On March 14, 2022, after extensive discussion and ~~completed~~careful deliberation, and with input from independent legal and financial advisors, the Board has concluded that the focus of its ongoing strategic review will be to continue reshaping TreeHouse by building leadership and depth around a focused group of categories in its higher-growth Snacking & Beverages business. TreeHouse will continue its exploration of potential divestiture transactions, including the sale of ~~its Ready-to-eat ("RTE") Cereal~~portions of the Meal Preparation business, either in a single transaction or in a series of transactions. The Board also has unanimously determined it is not the right time to ~~Post Holdings, Inc. ("Post"). A pre-tax gain was recognized~~pursue a sale of the whole Company, but it remains open to all alternatives to maximize shareholder value.

There can be no assurance that any divestitures of any portions of the Meal Preparation assets or any other transaction will be achieved. In connection with the foregoing, the Company has incurred certain legal and advisory costs and may incur additional restructuring, impairment, disposal or other related charges in future periods as a result of the strategic plan.

Executive Summary

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


	Three Months Ended March 31,
		2022		2021		% Change
Net sales		$	1,141.0	$	1,057.3	7.9	%


Net (loss) income from continuing operations		(2.8)		0.4		(800.0)
Adjusted EBITDA from continuing operations (1)		57.5		101.7		(43.5)
Adjusted net (loss) income from continuing operations (1)		(8.6)		20.5		(142.0)
Diluted (loss) earnings per share from continuing operations		(0.05)		0.01		(600.0)
Adjusted diluted EPS from continuing operations (1)		(0.15)		0.36		(141.7)

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

First Quarter 2022 Financial Highlights

The following are highlights in our net sales and earnings for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Refer to the "Results of Operations" section for further discussion and analysis.

•Net sales increased primarily due to our pricing actions to recover commodity and freight cost inflation as we continue to manage through the current inflationary macro environment. Ongoing labor and supply chain disruption continued to constrain our ability to service growing demand within private label.

•Earnings were primarily adversely impacted by commodity and freight cost inflation, as our pricing actions to recover inflation inherently lag the rise in costs, and the global supply chain disruption which has continued to pressure our margins and service levels.

Known Trends or Uncertainties

Macroeconomic Conditions

In the first quarter of 2022, the private label value proposition is becoming increasingly important for consumers as inflation is reflected in higher shelf price, and we are seeing demand for private label strengthen. Our ability to service this strengthening demand continues to be impacted by the macro environment, including industry-wide labor availability challenges and supply chain disruption. These items are not only impacting our ability to service demand on the ~~transaction upon closing~~top-line, but they are also adversely impacting our profitability. Coupled with commodity inflation and increased freight costs, our cost to service the customer has increased. In response, we have implemented pricing actions to recover costs that we expect will continue to build throughout 2022. Additionally, rising interest rates are new challenges entering the first quarter of ~~$18.4 million~~2022 that are impacting the economy.

Supply Chain Disruption and Labor Shortages

During the first quarter of 2022, we have experienced significant disruptions in the global supply chain network when compared to first quarter of 2021. These disruptions include, but are not limited to, items such as freight transportation availability, labor challenges, and raw materials and packaging availability challenges, which have negatively impacted our margins and ability to service demand during the first quarter of 2022. In response, we are implementing labor and supply initiatives, which includes actions such as increasing hourly labor rates, awarding bonuses to our hourly employees in order to better attract and retain talent, securing additional suppliers, and engaging additional transportation partners. As part of our labor initiatives in the first quarter of 2022, we accrued and paid a one-time employee recognition award to drive retention for all incentive-eligible participants. We will continue to actively monitor and manage our response to these disruptions, but depending on duration and severity, these trends could continue to negatively impact our margins and service levels.

Commodity Inflation

Since the inflationary environment began in 2021, the overall food and beverage industry has been facing significant cost increases across raw materials, packaging materials, fuel, energy, and agricultural commodities, including but not limited to edible oils (soybean, coconut, canola, and palm), wheat, durum, coffee, corn, oats, tomatoes, cucumbers, and eggs. In particular, the price of eggs has risen in 2022 in part due to a wave of avian flu which has impacted the supply of chickens and turkeys in the United States.

Additionally, in February 2022 as a ~~component~~result of ~~Net income~~the invasion of Ukraine by Russia, the United States and other countries imposed economic sanctions on Russian financial institutions, oil and gas imports, and other businesses. TreeHouse Foods is primarily a North American focused company with no direct exposure to Russia or Ukraine. As such, the impact to TreeHouse has not been material to date. However, sanctions imposed by the United States on Russia oil and gas imports, as well as disruption caused to Ukraine's wheat and other agricultural supply due to the ongoing military conflict, is causing further inflation to our commodity costs. We will continue to monitor any broader economic impact from ~~discontinued operations~~the current conflict.

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

Rising Interest Rates

The ~~sale~~Federal Reserve has raised and is expected to continue to raise the federal funds interest rate throughout 2022 in its effort to take action against domestic inflation. The Company has long-term interest rate swap agreements to lock into a fixed LIBOR interest rate base in order to mitigate the Company's exposure to interest rate risk. As of ~~this business is part~~March 31, 2022, we have an outstanding variable-rate debt balance of $1,405.0 million, and our interest rate swap agreements with a fixed LIBOR interest rate base are at $875.0 million. The rising interest rates have had a favorable impact to the fair value of the Company's ~~portfolio optimization strategy. RTE Cereal operated as two manufacturing plants located~~interest rate swap agreements, and the Company recorded a $39.1 million mark-to-market unrealized gain in ~~Lancaster, Ohio and Sparks, Nevada. The RTE Cereal business had been classified as a discontinued operation through~~ the ~~date~~first quarter of ~~the sale.~~2022. Refer to Note 615 to our Condensed Consolidated Financial Statements for additional information.

For additional information regarding the Company's exposure to interest rate risk, refer to Item 7A,
Quantitative and Qualitative Disclosures About Market Risk,

~~Debt Refinancing~~

~~On March 26,~~ within the Company's 2021 the Company amended its Second Amended and Restated Credit Agreement, dated as of December 1, 2017 (the "Credit Agreement") which extended 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, and the amendment refinanced and increased the existing Term Loan amounts by $304.0 million. The net proceeds from Term Loan A-1, Term Loan A, and a draw from the Revolving Credit Facility as well as available cashAnnual Report on hand were used to fund the redemption of all of the $602.9 million outstanding principal amount of the 2024 Notes. Refer to Note 9 to our Condensed Consolidated Financial Statements for additional information.

~~COVID-19~~

The COVID-19 pandemic significantly impacted consumer behavior resulting in a surge of at-home food consumption and reduced food-away-from-home consumption in the first six months of 2020. After the initial surge, at-home food consumption remains elevated in comparison to pre-pandemic levels through the second quarter of 2021. However, macroeconomic factors, such as increased unemployment benefits and government stimulus, are temporarily impacting consumer demand for at-home private label food and beverages which adversely affects our retail grocery business that comprises approximately 80% of total net sales. We expect the impact to private label in retail channels to be transitory in nature, as retailers continue to be supportive of private label. In the first six months of 2021, we began to see recovery in food-away-from-home consumption due to more consumers dining out at restaurants and other public venues given increased vaccination rollout and easing of government restrictions in public venues.

We continue to monitor the impact of the COVID-19 pandemic on our supply chain network and continue to incur incremental costs related to COVID-19 to address the safety and welfare of our employees. During the first six months of 2021, our costs related to COVID-19 have declined and could continue to decline if there continues to be a reduction in COVID-19 infection rates. Our margins and pricing continue to be impacted by higher freight rates and labor challenges resulting from the current COVID-19 environment. These trends have impacted and could continue to impact our margins and pricing.

Form 10-K.

2927

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 June 30,								Six Months Ended June 30,									Three Months Ended March 31,
		2021				2020				2021				2020						2022	2021
		Dollars		Percent		Dollars		Percent		Dollars		Percent		Dollars		Percent					Dollars		Percent		Dollars		Percent
		(Dollars in millions)								(Dollars in millions)									(Dollars in millions)
Net sales	Net sales	$	1,003.2	100.0	%	$	1,041.9	100.0	%	$	2,060.5	100.0	%	$	2,126.8	100.0	%	Net sales			$	1,141.0	100.0	%	$	1,057.3	100.0	%
Cost of sales	Cost of sales	837.1		83.4		850.7		81.6		1,713.3		83.1		1,740.7		81.9		Cost of sales			986.0		86.4		876.2		82.9
Gross profit	Gross profit	166.1		16.6		191.2		18.4		347.2		16.9		386.1		18.1		Gross profit			155.0		13.6		181.1		17.1
Operating expenses:	Operating expenses:																	Operating expenses:
Selling and distribution	Selling and distribution	62.9		6.3		63.0		6.0		131.6		6.4		128.1		6.0		Selling and distribution			82.7		7.2		68.7		6.5
General and administrative	General and administrative	56.3		5.6		73.7		7.1		119.6		5.8		137.3		6.5		General and administrative			63.5		5.6		63.3		6.0
Amortization expense	Amortization expense	18.0		1.8		17.4		1.7		36.4		1.8		34.9		1.6		Amortization expense			18.2		1.6		18.4		1.7

Other operating expense, net	Other operating expense, net	24.8		2.5		11.8		1.1		44.5		2.2		30.3		1.4		Other operating expense, net			31.3		2.7		19.7		1.8
Total operating expenses	Total operating expenses	162.0		16.2		165.9		15.9		332.1		16.2		330.6		15.5		Total operating expenses			195.7		17.1		170.1		16.0
Operating income		4.1		0.4		25.3		2.5		15.1		0.7		55.5		2.6
Other expense:
Operating (loss) income																		Operating (loss) income			(40.7)		(3.5)		11.0		1.1
Other (income) expense:																		Other (income) expense:
Interest expense	Interest expense	18.5		1.8		26.2		2.5		43.6		2.1		51.0		2.4		Interest expense			19.2		1.7		25.1		2.4
Loss on extinguishment of debt	Loss on extinguishment of debt	—		—		—		—		14.4		0.7		—		—		Loss on extinguishment of debt			—		—		14.4		1.4
(Gain) loss on foreign currency exchange		(1.3)		(0.1)		(6.5)		(0.6)		(2.6)		(0.1)		7.9		0.4
Other (income) expense, net		(6.5)		(0.6)		(5.6)		(0.5)		(33.9)		(1.6)		58.4		2.7
Total other expense		10.7		1.1		14.1		1.4		21.5		1.1		117.3		5.5
Gain on foreign currency exchange																		Gain on foreign currency exchange			(2.8)		(0.2)		(1.3)		(0.1)
Other income, net																		Other income, net			(55.5)		(4.9)		(27.4)		(2.6)
Total other (income) expense																		Total other (income) expense			(39.1)		(3.4)		10.8		1.1
(Loss) income before income taxes	(Loss) income before income taxes	(6.6)		(0.7)		11.2		1.1		(6.4)		(0.4)		(61.8)		(2.9)		(Loss) income before income taxes			(1.6)		(0.1)		0.2		—
Income tax (benefit) expense		(1.4)		(0.1)		13.8		1.3		(1.6)		(0.1)		(26.4)		(1.3)
Net loss from continuing operations		(5.2)		(0.6)		(2.6)		(0.2)		(4.8)		(0.3)		(35.4)		(1.6)
Net income from discontinued operations		13.6		1.4		1.1		0.1		14.7		0.7		2.7		0.1
Net income (loss)		$	8.4	0.8	%	$	(1.5)	(0.1)	%	$	9.9	0.4	%	$	(32.7)	(1.5)	%
Income tax expense (benefit)																		Income tax expense (benefit)			1.2		0.1		(0.2)		—
Net (loss) income from continuing operations																		Net (loss) income from continuing operations			(2.8)		(0.2)		0.4		—
Net (loss) income from discontinued operations																		Net (loss) income from discontinued operations			(0.2)		—		1.1		0.1
Net (loss) income																		Net (loss) income			$	(3.0)	(0.2)	%	$	1.5	0.1	%

3028

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~

~~Continuing Operations~~

~~Net Sales~~ ~~— Second quarter net sales decreased by $38.7 million, or 3.7%, in~~March 31, 2021 ~~compared to 2020. The change in net sales from the second quarter of 2020 to the second quarter of 2021 was due to the following:~~

Dollars Percent
(In millions)
2020 Net sales $ 1,041.9
Volume/mix excluding acquisitions and divestitures (77.2) (7.4) %
Pricing 1.3 0.1
Volume/mix related to divestitures (2.9) (0.3)
Acquisition 32.7 3.2
Foreign currency 7.4 0.7
2021 Net sales $ 1,003.2 (3.7) %
Volume/mix related to divestitures 0.3
Acquisition (3.2)
Foreign currency (0.7)
Percent change in organic net sales (1) (7.3) %

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

~~Organic net sales decreased 7.3% in the second quarter of 2021 compared to 2020 driven by:~~

•Volume/mix excluding acquisitions and divestitures was unfavorable 7.4% year-over-year primarily reflecting the lap of significant COVID-19 related retail grocery volume in the second quarter of 2020 and reduced private label retail grocery demand in the second quarter of 2021 as a result of the macro environment, including government stimulus and higher disposable income, which has impacted consumer purchasing behavior in favor of branded retail grocery. These reductions in volume/mix were partially offset by increased demand for food-away-from-home, distribution gains, and new product sales.

•~~Pricing was slightly favorable driven by pricing actions to cover commodity and freight cost inflation.~~

Additionally, volume/mix related to the divestiture of the two In-Store Bakery facilities was unfavorable 0.3%. This was more than offset by the favorable impact of the inclusion of the business from the pasta acquisition of 3.2% and favorable foreign exchange of 0.7% resulting in a year-over-year decrease in reported net sales of 3.7%.

~~Gross Profit~~ — Gross profit as a percentage of net sales was 16.6% in the second quarter of 2021, compared to 18.4% in the second quarter of 2020, a decrease of 1.8 percentage points. The decrease is primarily due to the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand, commodity inflation, unfavorable channel mix, and warehouse overflow storage costs. This was partially offset by favorable volume/mix from the inclusion of the business from the pasta acquisition and lower costs necessary to respond to the COVID-19 pandemic, such as increased production shifts, supplemental pay, protective equipment for employees, and additional sanitation measures.

~~Total Operating Expenses~~ — Total operating expenses as a percentage of net sales were 16.2% in the second quarter of 2021 compared to 15.9% in the second quarter of 2020, an increase of 0.3 percentage points. The increase is primarily attributable to the execution of strategic growth initiatives and integration costs associated with the recent pasta acquisition. This was offset by lower employee incentive compensation expense during the second quarter of 2021 and non-recurring litigation expense during the second quarter of 2020.

~~Total Other Expense~~ —Total other expense decreased by $3.4 million to $10.7 million in the second quarter of 2021 compared to $14.1 million in the second quarter of 2020. The decrease was primarily attributed to lower interest expense as a result of debt refinancing completed in the first quarter of 2021 and third quarter of 2020. This was partially offset by lower favorable currency exchange rate impacts between the U.S. and Canadian dollar currency during the second quarter of 2021 when compared to the second quarter of 2020.

~~Income Taxes~~ — Income taxes were recognized at an effective rate of 21.2% in the second quarter of 2021 compared to 123.2% recognized in the second quarter of 2020. The change in the Company's effective tax rate is primarily the result of a benefit recognized in 2020 due to the enactment of the CARES Act, a tax benefit recognized in 2020 due to our cross-border intercompany financing structure, and a change in the amount of non-deductible executive compensation.

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 from discontinued operations increased $12.5 million in the second quarter of 2021 compared to the second quarter of 2020. The increase is primarily due to the completion of the sale of the Ready-to-eat Cereal business resulting in the recognition of a pre-tax gain of $18.4 million. This was partially offset by the related tax expense from the gain on sale and lower Ready-to-eat Cereal volume due to a partial period from its sale on June 1, 2021. Refer to Note 6 of our Condensed Consolidated Financial Statements for additional details.

~~Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020 — Results by Segment~~

Three Months Ended June 30, 2021
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
Net sales $ 647.6 100.0 % $ 355.6 100.0 %
Cost of sales 546.1 84.3 295.7 83.2
Gross profit 101.5 15.7 59.9 16.8
Freight out and commissions 27.4 4.2 17.2 4.8
Direct selling, general, and administrative 8.9 1.4 5.8 1.6
Direct operating income $ 65.2 10.1 % $ 36.9 10.4 %

Three Months Ended June 30, 2020
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
Net sales $ 667.7 100.0 % $ 374.2 100.0 %
Cost of sales 534.7 80.1 298.3 79.7
Gross profit 133.0 19.9 75.9 20.3
Freight out and commissions 26.3 3.9 16.4 4.4
Direct selling, general, and administrative 4.4 0.7 7.0 1.9
Direct operating income $ 102.3 15.3 % $ 52.5 14.0 %

~~The change in net sales by segment from the second quarter of 2020 to the second quarter of 2021 was due to the following:~~
Three Months Ended June 30,
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
2020 Net sales $ 667.7 $ 374.2
Volume/mix excluding acquisitions and divestitures (56.7) (8.5) % (20.5) (5.5) %
Pricing (0.7) (0.1) 2.0 0.5
Volume/mix related to divestitures — — (2.9) (0.7)
Acquisition 32.7 4.9 — —
Foreign currency 4.6 0.7 2.8 0.7
2021 Net sales $ 647.6 (3.0) % $ 355.6 (5.0) %
Volume/mix related to divestitures — 0.7
Acquisition (4.9) —
Foreign currency (0.7) (0.7)
Percent change in organic net sales (8.6) % (5.0) %

~~Meal Preparation~~

Net sales in the Meal Preparation segment decreased $20.1 million, or 3.0%, in the second quarter of 2021 compared to the second quarter of 2020. The decrease in net sales primarily reflects the lap of significant COVID-19 related retail grocery volume in the second quarter of 2020 and reduced private label retail grocery demand in the second quarter of 2021 as a result of the macro environment, including government stimulus and higher disposable income, which has impacted consumer purchasing behavior in favor of branded retail grocery. This was partially offset by the favorable impact of the inclusion of the business from the pasta acquisition, increased demand for food-away-from-home, and distribution gains. Organic net sales in the Meal Preparation segment decreased by 8.6% year-over-year.

Direct operating income as a percentage of net sales decreased 5.2 percentage points in the second quarter of 2021 compared to the second quarter of 2020. This decrease was due to commodity and freight cost inflation, unfavorable channel mix, and the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand. This was partially offset by favorable volume/mix from the inclusion of the business from the pasta acquisition.

~~Snacking & Beverages~~

Net sales in the Snacking & Beverages segment decreased $18.6 million, or 5.0%, in the second quarter of 2021 compared to the second quarter of 2020. The decrease in net sales primarily reflects the lap of significant COVID-19 related retail grocery volume in the second quarter of 2020. This was partially offset by distribution gains which outpaced distribution losses, new product sales, and favorable pricing actions to cover commodity and freight cost inflation. Organic net sales in the Snacking & Beverages segment decreased by 5.0% year-over-year.

Direct operating income as a percentage of net sales decreased 3.6 percentage points in the second quarter of 2021 compared to the second quarter of 2020. The decrease was due to the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand, commodity and freight cost inflation, warehouse overflow storage costs, and increased labor costs due to a tighter labor market.

~~Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020~~

Continuing Operations

Net Sales — Net sales ~~decreased by $66.3~~for the first quarter of 2022 totaled $1,141.0 million compared to $1,057.3 million for the same period last year, an increase of $83.7 million, or ~~3.1%, in the first six months of 2021 compared to the first six months of 2020.~~7.9%. The change in net sales from ~~2020~~2021 to ~~2021~~2022 was due to the following:

Dollars Percent
(In millions)
2020 Net sales $ 2,126.8
Volume/mix excluding acquisitions and divestitures (128.0) (6.1) %
Pricing (1.8) (0.1)
Volume/mix related to divestitures (21.4) (1.0)
Acquisition 73.6 3.6
Foreign currency 11.3 0.5
2021 Net sales $ 2,060.5 (3.1) %
Volume/mix related to divestitures 1.0
Acquisition (3.6)
Foreign currency (0.5)
Percent change in organic net sales (6.2) %

~~Organic net sales decreased 6.2% in 2021 compared to 2020 driven by:~~


	Dollars		Percent
	(In millions)
2021 Net sales	$	1,057.3
Volume/mix	(38.8)		(3.7)	%
Pricing	123.3		11.7



Foreign currency	(0.8)		(0.1)
2022 Net sales	$	1,141.0	7.9	%




Foreign currency			0.1
Percent change in organic net sales (1)			8.0	%

•(1)~~Volume/mix excluding acquisitions and divestitures was unfavorable 6.1% year-over-year primarily reflecting~~Organic net sales is a Non-GAAP financial measure. Refer to the lap of significant COVID-19 related retail grocery volume in the first six months of 2020 and reduced private label retail grocery demand in the second quarter of 2021 as a result of the macro environment, including government stimulus and higher disposable income, which has impacted consumer purchasing behavior in favor of branded retail grocery. These reductions in volume/mix were partially offset by increased demand"Non-GAAP Measures" section for ~~food-away-from-home, distribution gains, and new product sales.~~

•Pricing was slightly unfavorable 0.1% driven by the carryover impact of prior year pricing adjustments. This was partially offset by favorable pricing actions to cover commodity and freight cost inflation.additional information.

Additionally, volume/mix related to the divestiture of the two In-Store Bakery facilities was unfavorable 1.0%. This was more than offset by the favorable impact of the inclusion of the business from the pasta acquisition of 3.6% and favorable foreign exchange of 0.5% resulting in a year-over-year decrease in reported net sales of 3.1%.


The net sales increase of 7.9% was primarily driven by favorable pricing to partially recover commodity and freight cost inflation. This was partially offset by labor and supply chain disruption, which constrained our ability to service growing demand in private label.

Gross Profit — Gross profit as a percentage of net sales was 16.9% in the first six months of 2021, compared to 18.1% in the first six months of 2020, a decrease of 1.2 percentage points. The decrease is primarily due to the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand, commodity inflation, unfavorable channel mix, increased labor costs due to a tighter labor market, and increased operational costs as a result of severe winter weather in certain regions of the U.S during the first quarter of 2021. This was partially offset by favorable volume/mix from the inclusion of the business from the pasta acquisition and lower costs necessary to respond to the COVID-19 pandemic, such as increased production shifts, supplemental pay, protective equipment for employees, and additional sanitation measures. ~~Total Operating Expenses~~ — Total operating expenses as a percentage of net sales were 16.2% in the first six months of 2021 compared to 15.5% in the first six months of 2020, an increase of 0.7 percentage points. The increase is primarily attributable to the execution of strategic growth initiatives, integration costs associated with the recent pasta acquisition, and freight cost inflation. This was offset by lower employee incentive compensation expense and non-recurring litigation expense. — Gross profit as a percentage of net sales was 13.6% in the first quarter of 2022, compared to 17.1% in the first quarter of 2021, a decrease of 3.5 percentage points. The decrease is primarily due to commodity inflation, which was partially offset by favorable pricing actions to recover inflation. Additionally, incremental costs related to labor and supply chain disruption, unfavorable fixed cost overhead absorption due to lower volume, and unfavorable inbound freight costs due to freight cost inflation contributed to the decrease. This was partially offset by lower costs necessary to respond to the COVID-19 pandemic, such as protective equipment for employees and additional sanitation measures, and favorable category mix.

Total Operating Expenses — Total operating expenses as a percentage of net sales were 17.1% in the first quarter of 2022 compared to 16.0% in the first quarter of 2021, an increase of 1.1 percentage points. The increase is primarily attributable to higher freight costs of $17.1 million due to freight cost inflation and lower utilization of full truck load shipments, retention expense increase of $8.1 million which included one-time employee recognition payments, higher severance due to restructuring, and higher professional fees in connection with the Board led strategic review. This was partially offset by lower marketing spend.

Total Other (Income) Expense —Total other expense of $10.8 million in the first quarter of 2021 decreased by $49.9 million to be total other income of $(39.1) million in the first quarter of 2022. The decrease was primarily due to higher favorable non-cash mark-to-market impacts from hedging activities of $50.9 million in the first quarter of 2022 compared to $21.7 million in the first quarter of 2021, largely driven by interest rate swaps and commodity contracts. Additionally, the non-recurrence of a loss on extinguishment of debt of $14.4 million in the first quarter of 2021 and lower interest expense as a result of debt refinancing completed in the first quarter of 2021 contributed to the decrease.

Income Taxes — Income taxes were recognized at an effective rate of (75.0)% in the first quarter of 2022 compared to (100.0)% recognized in the first quarter of 2021. The change in the Company's effective tax rate is primarily the result of a change in the amount of tax deductible stock-based compensation.

3429



~~Total Other Expense~~ —Total other expense decreased by $95.8 million to $21.5 million in the first six months of 2021 compared to $117.3 million in the first six months of 2020. The decrease was primarily related to favorable non-cash mark-to-market impacts from hedging activities, driven by interest rate swaps and commodity contracts, and favorable currency exchange rate impacts between the U.S. and Canada compared to unfavorable mark-to-market and currency exchange impacts in the prior year. Additionally, the Company incurred lower interest expense as a result of debt refinancing completed in the first quarter of 2021 and third quarter of 2020. This was partially offset by a loss on extinguishment of debt. ~~Income Taxes~~ — Income taxes were recognized at an effective rate of 25.0% in the first six months of 2021 compared to 42.7% recognized in the first six months of 2020. The change in the Company's effective tax rate is primarily the result of a benefit recognized in 2020 due to the enactment of the CARES Act, a tax benefit recognized in 2020 due to our cross-border intercompany financing structure, and a change in the amount of non-deductible executive compensation. 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 from discontinued operations increased $12.0 million in the first six months of 2021 compared to the first six months of of 2020. The increase~~


Discontinued Operations — Net (loss) income from discontinued operations decreased $1.3 million in the first quarter of 2022 compared to the first quarter of 2021. The decrease is ~~primarily~~ due to the completion of the sale of the Ready-to-eat Cereal business resulting in the recognition of a pre-tax gain of $18.4 million. This was partially offset by the related tax expense from the gain on sale and lower Ready-to-eat Cereal volume due to a partial period from its sale on June 1, 2021. Refer to Note 6 of our Condensed Consolidated Financial Statements for additional details.

~~Six~~Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021 — Results by Segment


		Six Months Ended June 30, 2021								Three Months Ended March 31, 2022
		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	Net sales	$	1,326.1	100.0	%	$	734.4	100.0	%			Net sales	$	728.1	100.0	%	$	412.9	100.0	%
Cost of sales	Cost of sales	1,106.5		83.4		607.4		82.7				Cost of sales	625.4		85.9		359.1		87.0
Gross profit	Gross profit	219.6		16.6		127.0		17.3				Gross profit	102.7		14.1		53.8		13.0
Freight out and commissions	Freight out and commissions	55.5		4.2		36.5		5.0				Freight out and commissions	37.2		5.1		26.7		6.5
Direct selling, general, and administrative	Direct selling, general, and administrative	18.4		1.4		11.9		1.6				Direct selling, general, and administrative	5.7		0.8		5.0		1.2
Direct operating income	Direct operating income	$	145.7	11.0	%	$	78.6	10.7	%			Direct operating income	$	59.8	8.2	%	$	22.1	5.3	%


		Six Months Ended June 30, 2020								Three Months Ended March 31, 2021
		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	Net sales	$	1,341.3	100.0	%	$	785.5	100.0	%			Net sales	$	678.5	100.0	%	$	378.8	100.0	%
Cost of sales	Cost of sales	1,088.8		81.2		637.3		81.1				Cost of sales	560.4		82.6		311.7		82.3
Gross profit	Gross profit	252.5		18.8		148.2		18.9				Gross profit	118.1		17.4		67.1		17.7
Freight out and commissions	Freight out and commissions	51.6		3.8		35.0		4.5				Freight out and commissions	28.1		4.1		19.3		5.1
Direct selling, general, and administrative	Direct selling, general, and administrative	12.3		0.9		12.6		1.6				Direct selling, general, and administrative	9.5		1.4		6.1		1.6
Direct operating income	Direct operating income	$	188.6	14.1	%	$	100.6	12.8	%			Direct operating income	$	80.5	11.9	%	$	41.7	11.0	%

3530

The change in net sales by segment from the first ~~six months~~quarter of ~~2020~~2021 to the first ~~six months~~quarter of ~~2021~~2022 was due to the following:
Six Months Ended June 30,
Meal Preparation Snacking & Beverages
Dollars Percent Dollars Percent
(unaudited, dollars in millions)
2020 Net sales $ 1,341.3 $ 785.5
Volume/mix excluding acquisitions and divestitures (93.8) (7.0) % (34.2) (4.4) %
Pricing (1.9) (0.1) 0.1 —
Volume/mix related to divestitures — — (21.4) (2.7)
Acquisition 73.6 5.5 — —
Foreign currency 6.9 0.5 4.4 0.6
2021 Net sales $ 1,326.1 (1.1) % $ 734.4 (6.5) %
Volume/mix related to divestitures — 2.7
Acquisition (5.5) —
Foreign currency (0.5) (0.6)
Percent change in organic net sales (7.1) % (4.4) %


	Three Months Ended March 31,
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
2021 Net sales	$	678.5			$	378.8
Volume/mix	(39.6)		(5.9)	%	0.8		0.2	%
Pricing	90.0		13.3		33.3		8.8



Foreign currency	(0.8)		(0.1)		—		—
2022 Net sales	$	728.1	7.3	%	$	412.9	9.0	%




Foreign currency			0.1				—
Percent change in organic net sales			7.4	%			9.0	%

Meal Preparation

Net sales in the Meal Preparation segment decreased $15.2 million, or 1.1%, in the first six months of 2021 compared to the first six months of 2020. The decrease in net sales primarily reflects the lap of significant COVID-19 related retail grocery volume in the first six months of 2020 and reduced private label retail demand in the second quarter of 2021 as a result of the macro environment, including government stimulus and higher disposable income, which has impacted consumer purchasing behavior in favor of branded retail grocery. This was partially offset by the favorable impact of the inclusion of the business from the pasta acquisition, increased demand for food-away-from-home, and distribution gains. Organic net sales in the Meal Preparation segment decreased by 7.1% year-over-year.

Direct operating income as a percentage of net sales decreased 3.1 percentage points in the first six months of 2021 compared to the first six months of 2020. This decrease was due to commodity and freight cost inflation, the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand, unfavorable channel mix, and increased operational costs as a result of severe winter weather in certain regions of the U.S during the first quarter of 2021. This was partially offset by favorable volume/mix from the inclusion of the business from the pasta acquisition.


Net sales in the Meal Preparation segment increased $49.6 million, or 7.3%, in the first quarter of 2022 compared to the first quarter of 2021. The increase in net sales was primarily driven by favorable pricing to partially recover commodity and freight cost inflation. This was partially offset by lower volume due to labor and supply chain constraints.

Direct operating income as a percentage of net sales decreased 3.7 percentage points in the first quarter of 2022 compared to the first quarter of 2021. This decrease was primarily due to commodity and freight cost inflation, which was partially offset by favorable pricing actions to recover inflation. Additionally, incremental costs related to labor and supply chain disruption and unfavorable fixed cost overhead absorption due to lower volume contributed to the decrease. This was partially offset by favorable category mix and lower marketing spend.

Snacking & Beverages

Net sales in the Snacking & Beverages segment decreased $51.1 million, or 6.5%, in the first six months of 2021 compared to the first six months of 2020. The decrease in net sales primarily reflects the lap of significant COVID-19 related retail grocery volume in the first six months of 2020 and lower volume/mix due to divestitures. This was partially offset by distribution gains which outpaced distribution losses and new product sales. Organic net sales in the Snacking & Beverages segment decreased by 4.4% year-over-year.

Direct operating income as a percentage of net sales decreased 2.1 percentage point in the first six months of 2021 compared to the first six months of 2020. The decrease was due to the unfavorable fixed cost absorption impact of lower volume from reduced COVID-19 related retail grocery demand, increased labor costs due to a tighter labor market, commodity and freight cost inflation, and overflow warehouse storage costs.


Net sales in the Snacking & Beverages segment increased $34.1 million, or 9.0%, in the first quarter of 2022 compared to the first quarter of 2021. The increase in net sales was primarily driven by favorable pricing to partially recover commodity and freight cost inflation. Increasing private label demand resulted in strong category performance, particularly in businesses such as Pretzels and In-Store Bakery. However, volume growth was largely muted due to labor and supply chain disruption.

Direct operating income as a percentage of net sales decreased 5.7 percentage points in the first quarter of 2022 compared to the first quarter of 2021. The decrease was primarily due to commodity, freight, and manufacturing cost inflation, which was partially offset by favorable pricing actions to recover inflation.

3631

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, ~~performing acquisitions,~~ and managing its capital structure on a short and long-term basis. The Company has the ability to strategically manage customer payment terms and counterparty risk by selling receivables in a cost-effective manner through its Receivables Sales Program. Approximately $173.0 million was available under the Receivables Sales Program as of March 31, 2022. See Note 4 to our Condensed Consolidated Financial Statements for additional information regarding our Receivables Sales Program. Our Receivables Sales Program provides us lower cost access to liquidity when compared to the Revolving Credit Facility. If additional borrowings are needed, approximately ~~$706.9~~$730.0 million was available under the Revolving Credit Facility as of ~~June 30, 2021.~~March 31, 2022. 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,~~Our cash earnings and liquidity have been impacted by global macroeconomic challenges with commodity inflation and supply chain disruption, but we anticipate our current cash balances, cash flows from operations, and our available sources of liquidity will be sufficient to meet our cash requirements. Under the CARES Act, we deferred the payment of $22.8 million in payroll taxes in 2020, ~~which will be~~with $1.3 million paid ~~equally~~ in the fourth ~~quarters~~quarter of 2021, $11.0 million paid in the first quarter of 2022, and ~~2022.~~the remaining $10.5 million to be paid in the first quarter of 2023. We filed refund claims from the Internal Revenue Service of $73.5 million and $8.3 million related to the net operating loss carryback provisions of the CARES Act for the 2019 and 2020 federal tax losses, respectively. We received $71.4 million in the fourth quarter of 2020 related to the 2019 refund claim and $8.3 million in the fourth quarter of 2021 related to the 2020 refund claim. We expect to receive the remaining $2.1 million related to the 2019 refund claim within the next twelve months. Given the ~~dynamic nature of COVID-19,~~macro environment, 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:


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In millions)					(In millions)
Net Cash Flows Provided By (Used In):
Net Cash Flows Used In:						Net Cash Flows Used In:
Operating activities of continuing operations	Operating activities of continuing operations	$	(44.0)	$	123.3	Operating activities of continuing operations	$	(70.4)	$	(5.5)
Investing activities of continuing operations	Investing activities of continuing operations	(48.3)		(24.6)		Investing activities of continuing operations	(25.7)		(13.2)
Financing activities of continuing operations	Financing activities of continuing operations	(333.0)		(9.1)		Financing activities of continuing operations	(19.7)		(293.3)
Cash flows from discontinued operations	Cash flows from discontinued operations	78.5		0.1		Cash flows from discontinued operations	(0.2)		(3.5)

Operating Activities From Continuing Operations

Cash used in operating activities of continuing operations was $44.0 million in the first six months of 2021 compared to cash provided by operating activities of $123.3 million in the first six months of 2020, a decrease in cash provided of $167.3 million. The decrease was primarily attributable to lower cash earnings, slower inventory turnover as a result of the lap of significant COVID-19 related retail grocery volume in the first six months of 2020, increased inventory levels to improve service, and lower accounts payable.


Cash used in operating activities of continuing operations was $70.4 million in the first three months of 2022 compared to $5.5 million in the first three months of 2021, an increase in cash used of $64.9 million. The increase was primarily attributable to lower cash earnings, which reflect the impact of commodity and freight cost inflation. Working capital changes have been impacted by higher sales as a result of price increases in response to commodity and freight cost inflation, which have increased receivables and inventories. This was partially offset by an increase in cash flow from accounts payable due to improved working capital management, lower incentive compensation paid in the first quarter of 2022 compared to the first quarter of 2021 based on prior year performance, and an increase in cash flows from the Receivables Sales Program. Refer to Note 4 to our Condensed Consolidated Financial Statements for additional information. The Company's working capital management emphasis continues to be focused on improving inventory turnover, driving faster collection of receivables, and extending vendor terms.

Investing Activities From Continuing Operations

Cash used in investing activities of continuing operations was $48.3 million in the first six months of 2021 compared to $24.6 million in the first six months of 2020, an increase in cash used of $23.7 million. This was primarily driven by the non-recurrence of proceeds received from the sale of the Minneapolis, Minnesota and In-Store Bakery facilities in the prior year, higher capital expenditures for manufacturing plant improvements, and the additional purchase consideration transferred to acquire machinery and equipment utilized in the Riviana Foods Fresno, California facility. Refer to Note 6 to our Condensed Consolidated Financial Statements for additional information. This was partially offset by the proceeds received from the sale of our investments during the six months ended June 30, 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 16 to our Condensed Consolidated Financial Statements for additional information.


Cash used in investing activities of continuing operations was $25.7 million in the first three months of 2022 compared to $13.2 million in the first three months of 2021, an increase in cash used of $12.5 million. This was primarily driven by the non-recurrence of proceeds received from the sale of our investments during the first quarter of 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 proceeds received from the sale of fixed assets during the first quarter of 2022.

Financing Activities From Continuing Operations

Net cash used in financing activities of continuing operations was $333.0 million in the first six months of 2021 compared to $9.1 million in the first six months of 2020, an increase in cash used of $323.9 million. The increase is primarily attributable to the redemption of the 2024 Notes and the repurchase of common stock during the first six months of 2021. This was partially offset by the amendment to the Credit Agreement, which resulted in an increase in Term Loan balances used to fund the redemption of the 2024 Notes, and a greater draw on the Company's Revolving Credit Facility during the first six months of 2021 compared to the first six months of 2020.


Net cash used in financing activities of continuing operations was $19.7 million in the first three months of 2022 compared to $293.3 million in the first three months of 2021, a decrease in cash used of $273.6 million. The decrease in cash used is attributable to the debt refinancing in the prior year, which primarily included the non-recurrence of the redemption of the 2024 Notes in the prior year. This was partially offset by the non-recurrence of the Amendment to the Credit Agreement in the prior year, which resulted in an increase in Term Loan balances as the proceeds were used to fund the redemption of the 2024 Notes during the first three months of 2021. Additionally, the Company prepaid all of the quarterly term loan payments for 2022.

Cash Flows From Discontinued Operations

Net cash provided by discontinued operations was $78.5 million in the first six months of 2021 compared to $0.1 million in the first six months of 2020, an increase in cash provided of $78.4 million. The increase in cash provided by discontinued operations is primarily attributable to proceeds received from the completion of the sale of the Ready-to-eat Cereal business and the non-recurring payment of a working capital adjustment from the 2019 sale of the Snacks division that occurred during the six months ended June 30, 2020. This was partially offset by a decrease in cash flow provided by operating activities from the Ready-to-eat Cereal business. Refer to Note 6 to our Condensed Consolidated Financial Statements for additional information.

~~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).~~

Six Months Ended
June 30,
2021 2020
(In millions)
Cash flow (used in) provided by operating activities from continuing operations $ (44.0) $ 123.3
Less: Capital expenditures (61.7) (56.6)
Free cash flow from continuing operations $ (105.7) $ 66.7


Net cash used in discontinued operations was $0.2 million in the first three months of 2022 compared to $3.5 million in the first three months of 2021, a decrease in cash used of $3.3 million. The decrease in cash used in discontinued operations is due to the completion of the sale of the Ready-to-eat Cereal business on June 1, 2021. Refer to Note 6 to our Condensed Consolidated Financial Statements for additional information.

Debt Obligations

At ~~June 30, 2021,~~March 31, 2022, we had ~~$20.0 million outstanding under the Revolving Credit Facility, $498.7~~$491.3 million outstanding under Term Loan A, ~~$927.7~~$913.7 million outstanding under Term Loan A-1, $500.0 million of the 2028 Notes outstanding, and ~~$4.0~~$2.7 million of ~~other~~finance lease obligations.

As of March 31, 2022, $730.0 million of the aggregate commitment of $750.0 million of the Revolving Credit Facility was available. Under the Credit Agreement, the Revolving Credit Facility matures on March 26, 2026. In addition, ~~at June 30, 2021,~~as of March 31, 2022, there were ~~$23.1~~$20.0 million in letters of credit ~~of which~~ under the Revolving Credit Facility that were issued but ~~undrawn.~~undrawn, which have been included as a reduction to the calculation of available credit.

~~Also, at June 30, 2021, our Revolving Credit Facility provided for an aggregate commitment~~Certain tax positions have been challenged by the Canadian Revenue Agency ("CRA") in 2022. Management is appealing any such assessment but is expected to provide additional letters of ~~$750~~credit totaling approximately $17.1 million to proceed with the appeal. The Company believes these positions are more-likely-than-not to be sustained upon final adjudication of ~~which $706.9 million was available. Interest rates~~these matters.

The Company’s average interest rate on debt outstanding under ~~the Revolving~~its Credit ~~Facility, Term Loan A, and Term Loan A-1 (collectively known as the "Amended and Restated Credit Agreement")~~Agreement for the three months ended ~~June 30, 2021 averaged 1.69%~~March 31, 2022 was 1.89%. Including the impact of interest rate swap agreements in effect as of ~~June 30, 2021,~~March 31, 2022, the average rate is ~~3.36%~~3.64%.

The Credit Agreement contains various financial and restrictive covenants and requires that the Company maintain a consolidated net leverage ratio of no greater than 4.50 to 1.0, and our debt obligations contain customary representations and events of default. On February 14, 2022, the Company entered into Amendment No. 4 (the “Amendment”) to the Credit Agreement. This Amendment temporarily increases the leverage covenant threshold from 4.50x to 5.50x through June 30, 2022, then 5.25x through September 30, 2022 and thereafter reverts to 4.50x. The material terms and conditions under the Credit Agreement are otherwise substantially consistent with those contained in the Credit Agreement prior to the Amendment. We are in compliance with all applicable ~~financial~~ debt covenants as of ~~June 30, 2021.~~ March 31, 2022.

See Note 9 to our Condensed Consolidated Financial Statements for ~~additional~~ information ~~regarding~~on our ~~indebtedness and related agreements.~~debt obligations.

38Lease Obligations and Right-of-use Assets

Our operating lease liabilities were $170.4 million at March 31, 2022 and $144.0 million at December 31, 2021, an increase of $26.4 million. Our operating lease right-of-use assets were $195.5 million at March 31, 2022 and $165.6 million at December 31, 2021, an increase of $29.9 million. Both the increase of the operating lease liabilities and operating lease right-of-use assets were primarily a result of extending two distribution center leases through 2027.

Guarantor Summarized Financial Information

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

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

TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Statements of Operations Six Months Ended June 30, 2021
(unaudited, in millions)
Net sales $ 1,938.9
Gross profit 309.1
Net loss from continuing operations (17.9)
Net income from discontinued operations 14.7
Net loss (3.2)
TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet June 30, 2021 December 31, 2020
(unaudited, in millions)
Current assets $ 935.9 $ 1,201.9
Noncurrent assets 3,659.4 3,754.0
Current liabilities 822.2 912.2
Noncurrent liabilities 2,289.1 2,618.1

~~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
Six Months Ended June 30, 2021
(unaudited, in millions)
Net sales to Non-Guarantor Subsidiaries $ 37.9
Purchases from Non-Guarantor Subsidiaries 124.0
TreeHouse Foods, Inc. and Guarantor Subsidiaries
June 30, 2021 December 31, 2020
(unaudited, in millions)
Amount due (to)/from Non-Guarantor Subsidiaries $ (6.0) $ 10.6


	TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Statement of Operations	Three Months Ended March 31, 2022
	(unaudited, in millions)
Net sales	$	1,075.4
Gross profit (1)	143.7
Net loss from continuing operations	(2.4)
Net loss from discontinued operations	(0.2)
Net loss	(2.6)

3934

~~Known Trends and Uncertainties~~


	TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet	March 31, 2022		December 31, 2021
	(unaudited, in millions)
Current assets	$	1,111.5	$	1,098.9
Noncurrent assets	3,620.7		3,624.8
Current liabilities	976.7		967.7
Noncurrent liabilities (2)	2,243.6		2,244.3

~~Commodity Inflation~~(1)For the three months ended March 31, 2022, TreeHouse Foods, Inc. and Guarantor Subsidiaries recorded $19.3 million of net sales to the Non-Guarantor Subsidiaries and $67.4 million of purchases from the Non-Guarantor Subsidiaries.

(2)Includes an amount due from/(to) Non-Guarantor Subsidiaries of $7.7 million and $(0.3) million as of March 31, 2022 and December 31, 2021, respectively.

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 in packaging materials and across several agricultural commodities, including but not limited to 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 market conditions or competitive reasons, our pricing actions may also lag commodity cost changes temporarily, or we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

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 ~~the net sales associated with the pasta acquisition from Riviana Foods,~~acquisitions, divestitures, and foreign ~~currency, and the net sales associated with the divestiture of the In-Store Bakery facilities, which closed on April 17, 2020.~~currency. This information is provided in order to allow investors to make meaningful comparisons of the Company's sales between periods and to view the Company's business from the same perspective as Company management.

Adjusted Earnings Per Diluted Share From Continuing Operations, Adjusting for Certain Items Affecting Comparability

Adjusted (loss) earnings per diluted share from continuing operations ("adjusted diluted EPS") reflects adjustments to GAAP ~~loss~~(loss) earnings 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, impairment of assets, 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.

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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 June 30,				Six Months Ended June 30,						Three Months Ended March 31,
			2021		2020		2021		2020					2022		2021
			(unaudited)				(unaudited)						(unaudited)
Diluted loss per share from continuing operations (GAAP)			$	(0.09)	$	(0.05)	$	(0.09)	$	(0.63)
Diluted (loss) earnings per share from continuing operations (GAAP)											Diluted (loss) earnings per share from continuing operations (GAAP)			$	(0.05)	$	0.01
Growth, reinvestment, restructuring programs & other	Growth, reinvestment, restructuring programs & other	(1)	0.39		0.22		0.74		0.58		Growth, reinvestment, restructuring programs & other	(1)		0.58		0.35
Acquisition, integration, divestiture, and related costs											Acquisition, integration, divestiture, and related costs	(2)		0.19		0.09
COVID-19											COVID-19	(3)		—		0.16
Loss on extinguishment of debt	Loss on extinguishment of debt	(2)	—		—		0.26		—		Loss on extinguishment of debt	(4)		—		0.25
COVID-19		(3)	0.08		0.25		0.24		0.16
Acquisition, integration, divestiture, and related costs		(4)	0.12		0.02		0.21		0.02
Shareholder activism	Shareholder activism	(5)	0.01		—		0.05		—		Shareholder activism	(5)		0.01		0.04
Litigation matter											Litigation matter	(6)		0.01		—
Tax indemnification	Tax indemnification	(6)	0.01		0.02		0.01		0.03		Tax indemnification	(7)		—		—

Foreign currency (gain) loss on re-measurement of intercompany notes		(7)	(0.02)		(0.11)		(0.05)		0.15
Foreign currency gain on re-measurement of intercompany notes											Foreign currency gain on re-measurement of intercompany notes	(8)		(0.04)		(0.03)
Mark-to-market adjustments	Mark-to-market adjustments	(8)	(0.11)		(0.07)		(0.49)		1.06		Mark-to-market adjustments	(9)		(0.91)		(0.38)
Litigation matters		(9)	—		0.16		—		0.16
Taxes on adjusting items	Taxes on adjusting items		(0.13)		0.14		(0.25)		(0.58)		Taxes on adjusting items			0.06		(0.13)

Adjusted diluted EPS from continuing operations (Non-GAAP)	Adjusted diluted EPS from continuing operations (Non-GAAP)		$	0.26	$	0.58	$	0.63	$	0.95	Adjusted diluted EPS from continuing operations (Non-GAAP)			$	(0.15)	$	0.36

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ the Company entered into transactions that affected the year-over-year comparison of its financial results from continuing operations as follows:


(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 June 30, 2021 and 2020, the Company incurred growth, reinvestment, and restructuring program costs of approximately $22.2 million and $11.8 million, respectively. For the six months ended June 30, 2021 and 2020, the Company incurred growth, reinvestment, and restructuring program costs of approximately $41.8 million and $31.7 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, consulting fees associated with the 2019 CFO transition, and regulatory compliance costs related to changes in nutrition labeling requirements. There were no other items recognized during the three months ended June 30, 2021, and these other items were approximately $0.7 million for the three months ended June 30, 2020. Other items were approximately $(0.1) million and $1.3 million for the six months ended June 30, 2021 and 2020, respectively. (2) For the three and six months ended June 30, 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 $4.5 million and $19.4 million for the three months ended June 30, 2021 and 2020, and approximately $13.3 million and $20.3 million for the six months ended June 30, 2021 and 2020, respectively. For the three and six months ended June 30, 2020, these costs were partially offset by an income tax benefit due to the enactment of the CARES Act of approximately $5.0 million and $11.0 million, respectively. (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.			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, 2022 and 2021, the Company incurred growth, reinvestment, and restructuring program costs of approximately $32.1 million and $19.6 million, respectively. Additionally, the Company recognized other items affecting comparability including regulatory compliance cost reimbursements related to changes in nutrition labeling requirements. There were no other items recognized during the three months ended March 31, 2022. These other items were approximately $(0.1) million for the three months ended March 31, 2021.

			Refer to Note 3 to our Condensed Consolidated Financial Statements for additional information.

(2)			Acquisition, integration, divestiture, and related costs represent 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 Condensed Consolidated Financial Statements for additional information.

(3)			During 2021, the Company incurred incremental expenses directly attributable to our response to the COVID-19 pandemic, which included additional protective equipment for employees and additional sanitation measures. These costs were approximately $8.8 million for the three months ended March 31, 2021.

(4)			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 in connection with the redemption of its 2024 Notes and Credit Agreement refinancing.

			Refer to Note 9 to our Condensed Consolidated Financial Statements for additional information.

4236

~~(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 $1.3 million and $6.5 million for the three months ended June 30, 2021 and 2020, respectively, to re-measure the loans at quarter end. For the six months ended June 30, 2021 and 2020, the Company incurred foreign currency gains of $2.8 million and foreign currency losses of $8.4 million, respectively. 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 mark-to-market impacts are treated as Non-GAAP adjustments. Refer to Note 16 to our Condensed Consolidated Financial Statements for additional details.

(9) During the three and six months ended June 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 15 to our Condensed 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)			During the three months ended March 31, 2022, the Company recognized $0.4 million incremental expense for the settlement payment of the $9.0 million accrual related to a litigation matter challenging wage and hour practices at three former manufacturing facilities in California.

			Refer to Note 14 to our Condensed Consolidated Financial Statements for additional information.

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

(8)			The Company has foreign currency denominated intercompany loans and incurred foreign currency gains of $2.0 million and $1.5 million for the three months ended March 31, 2022 and 2021, respectively, to re-measure the loans at quarter end. These charges are non-cash and the loans are eliminated in consolidation.

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

			Refer to Note 15 to our Condensed Consolidated Financial Statements for additional information.

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

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

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

4337

The following table reconciles the Company's net ~~loss~~(loss) income from continuing operations as presented in the Condensed Consolidated Statements of Operations, the relevant GAAP measure, to Adjusted net (loss) income from continuing operations, Adjusted EBIT from continuing operations, Adjusted EBITDA from continuing operations, and Adjusted ~~EBITDA~~EBITDAS from continuing operations for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


			Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended March 31,
			2021			2020			2021			2020						2022			2021
			(unaudited in millions)															(unaudited in millions)
Net loss from continuing operations (GAAP)			$	(5.2)		$	(2.6)		$	(4.8)		$	(35.4)
Net (loss) income from continuing operations (GAAP)															Net (loss) income from continuing operations (GAAP)			$	(2.8)		$	0.4
Growth, reinvestment, restructuring programs & other	Growth, reinvestment, restructuring programs & other	(1)	22.2			12.5			41.7			33.0			Growth, reinvestment, restructuring programs & other	(1)		32.1			19.5
Acquisition, integration, divestiture, and related costs															Acquisition, integration, divestiture, and related costs	(2)		10.5			5.3
COVID-19															COVID-19	(3)		—			8.8
Loss on extinguishment of debt	Loss on extinguishment of debt	(2)	—			—			14.4			—			Loss on extinguishment of debt	(4)		—			14.4
COVID-19		(3)	4.5			14.4			13.3			9.3
Acquisition, integration, divestiture, and related costs		(4)	6.5			1.2			11.8			1.1
Shareholder activism	Shareholder activism	(5)	1.0			—			3.1			—			Shareholder activism	(5)		0.6			2.1
Litigation matter															Litigation matter	(6)		0.4			—
Tax indemnification	Tax indemnification	(6)	0.2			0.9			0.2			1.7			Tax indemnification	(7)		0.2			—
Foreign currency (gain) loss on re-measurement of intercompany notes		(7)	(1.3)			(6.5)			(2.8)			8.4
Foreign currency gain on re-measurement of intercompany notes															Foreign currency gain on re-measurement of intercompany notes	(8)		(2.0)			(1.5)
Mark-to-market adjustments	Mark-to-market adjustments	(8)	(6.2)			(4.3)			(27.8)			59.8			Mark-to-market adjustments	(9)		(50.9)			(21.6)
Litigation matters		(9)	—			9.0			—			9.0
Less: Taxes on adjusting items	Less: Taxes on adjusting items		(6.9)			8.4			(13.8)			(33.2)			Less: Taxes on adjusting items			3.3			(6.9)
Adjusted net income from continuing operations (Non-GAAP)			14.8			33.0			35.3			53.7
Adjusted net (loss) income from continuing operations (Non-GAAP)															Adjusted net (loss) income from continuing operations (Non-GAAP)			(8.6)			20.5
Interest expense	Interest expense		18.5			26.2			43.6			51.0			Interest expense			19.2			25.1
Interest income	Interest income		—			—			(4.1)			(4.0)			Interest income			(4.1)			(4.1)
Income taxes (excluding COVID-19 tax benefit)			(1.4)			18.8			(1.6)			(15.4)
Income taxes															Income taxes			1.2			(0.2)
Add: Taxes on adjusting items	Add: Taxes on adjusting items		6.9			(8.4)			13.8			33.2			Add: Taxes on adjusting items			(3.3)			6.9
Adjusted EBIT from continuing operations (Non-GAAP)	Adjusted EBIT from continuing operations (Non-GAAP)		38.8			69.6			87.0			118.5			Adjusted EBIT from continuing operations (Non-GAAP)			4.4			48.2
Depreciation and amortization	Depreciation and amortization		53.8			49.6			107.3			99.4			Depreciation and amortization			53.1			53.5
Adjusted EBITDA from continuing operations (Non-GAAP)															Adjusted EBITDA from continuing operations (Non-GAAP)			57.5			101.7
Stock-based compensation expense	Stock-based compensation expense	(10)	4.1			6.4			8.6			14.3			Stock-based compensation expense	(10)		4.0			4.5
Adjusted EBITDA from continuing operations (Non-GAAP)			$	96.7		$	125.6		$	202.9		$	232.2
Adjusted EBITDAS from continuing operations (Non-GAAP)															Adjusted EBITDAS from continuing operations (Non-GAAP)			$	61.5		$	106.2

Adjusted net income margin from continuing operations			1.5		%	3.2		%	1.7		%	2.5		%
Net (loss) income margin from continuing operations															Net (loss) income margin from continuing operations			(0.2)		%	—		%
Adjusted net (loss) income margin from continuing operations															Adjusted net (loss) income margin from continuing operations			(0.8)		%	1.9		%
Adjusted EBIT margin from continuing operations	Adjusted EBIT margin from continuing operations		3.9		%	6.7		%	4.2		%	5.6		%	Adjusted EBIT margin from continuing operations			0.4		%	4.6		%
Adjusted EBITDA margin from continuing operations	Adjusted EBITDA margin from continuing operations		9.6		%	12.1		%	9.8		%	10.9		%	Adjusted EBITDA margin from continuing operations			5.0		%	9.6		%
Adjusted EBITDAS margin from continuing operations															Adjusted EBITDAS margin from continuing operations			5.4		%	10.0		%

4438


			Location in Condensed	Three Months Ended June 30,				Six Months Ended June 30,									Location in Condensed	Three Months Ended March 31,
			Consolidated Statements of Operations	2021		2020		2021		2020							Consolidated Statements of Operations			2022		2021
				(unaudited in millions)																(unaudited in millions)
(1)	(1)	Growth, reinvestment, restructuring programs & other	Other operating expense, net	$	22.2	$	11.5	$	41.8	$	30.0	(1)	~~(3)~~	Growth, reinvestment, restructuring programs & other		Other operating expense, net			$	32.1	$	19.6
			General and administrative	—		0.3		—		1.0
			Cost of sales	—		0.4		(0.1)		1.0							Cost of sales			—		(0.1)
			Selling and distribution	—		0.3		—		1.0
(2)	(2)	Loss on extinguishment of debt	Loss on extinguishment of debt	—		—		14.4		—		(2)			Acquisition, integration, divestiture, and related costs		General and administrative			9.2		3.9
																	Cost of sales			1.1		1.3
																	Other operating expense, net			0.2		0.1

~~(3)~~	~~(3)~~	COVID-19	Cost of sales	4.5		17.8		13.3		18.7		(3)			COVID-19		Cost of sales			—		8.8
			General and administrative	—		1.6		—		1.6
			Income tax (benefit) expense	—		(5.0)		—		(11.0)
(4)	(4)	Acquisition, integration, divestiture, and related costs	General and administrative	3.8		0.9		7.7		0.8		(4)			Loss on extinguishment of debt		Loss on extinguishment of debt			—		14.4
			Cost of sales	0.1		—		1.4		—
			Other operating expense, net	2.6		0.3		2.7		0.3

(5)	(5)	Shareholder activism	General and administrative	1.0		—		3.1		—		(5)			Shareholder activism		General and administrative			0.6		2.1

(6)	(6)	Tax indemnification	Other (income) expense, net	0.2		0.9		0.2		1.7		(6)			Litigation matter		General and administrative			0.4		—

(7)	(7)	Foreign currency (gain) loss on re-measurement of intercompany notes	(Gain) loss on foreign currency exchange	(1.3)		(6.5)		(2.8)		8.4		(7)			Tax indemnification		Other income, net			0.2		—
(8)	(8)	Mark-to-market adjustments	Other (income) expense, net	(6.2)		(4.3)		(27.8)		59.8		(8)			Foreign currency gain on re-measurement of intercompany notes		Gain on foreign currency exchange			(2.0)		(1.5)
(9)	(9)	Litigation matters	General and administrative	—		9.0		—		9.0		(9)			Mark-to-market adjustments		Other income, net			(50.9)		(21.6)

(10)	(10)	Stock-based compensation expense included as an adjusting item	Other operating expense, net	0.4		0.6		0.8		0.6		(10)			Stock-based compensation expense included as an adjusting item		Other operating expense, net			0.3		0.4

Free Cash Flow From Continuing Operations

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

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


	Three Months Ended March 31,
	2022		2021
	(In millions)
Cash flow used in operating activities from continuing operations	$	(70.4)	$	(5.5)
Less: Capital expenditures	(30.5)		(31.3)
Free cash flow from continuing operations	$	(100.9)	$	(36.8)

4539

Other Commitments and Contingencies

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

See Note 1514 to our Condensed Consolidated Financial Statements included herein and Note 19 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020~~2021 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, 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~~Estimates

A description of the Company's critical accounting ~~policies~~estimates is contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. There were no material changes to the Company's critical accounting ~~policies~~estimates in the three ~~and six~~ months ended ~~June 30, 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.March 31, 2022.

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.

4640

The words ~~"anticipate,"~~ "believe," "estimate," "project," "expect," ~~"intend,~~"anticipate," "plan," "intend," "foresee," "should," "would," "could," and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. We do not intend to update these forward-looking statements following the date of this report. In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q and other public statements we make. Such factors include, but are not limited to: risks related to the impact of the 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; loss of key suppliers; disruptions or inefficiencies in our supply chain and/or operations, including from the ongoing COVID-19 outbreak; our ability to continue to make acquisitions and execute on divestitures in accordance with our business strategy or effectively manage the growth from acquisitions; impairment of goodwill or long lived assets; 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,~~activism; disruptions in or failures of our information technology systems; disruptions resulting from the announcement of the exploration of strategic alternatives; changes in weather conditions, climate changes, and natural disasters; labor strikes or work stoppages; multiemployer pension plans; labor shortages and increased competition for labor; 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, ~~2020,~~2021, and from time to time in our filings with the Securities and Exchange 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 1615 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 ~~2020~~2021 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 ~~2020~~2021 year-end.

Item 4. Controls and Procedures

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

As of ~~June 30, 2021,~~March 31, 2022, management, with the participation of our ~~Chief Executive Officer ("CEO")~~CEO and ~~Chief Financial Officer ("CFO"),~~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~~

In the ordinary course of ~~management's assessment of~~business, the ~~effectiveness of~~Company reviews its internal control over financial reporting asand makes changes to systems and processes to improve such controls and increase efficiency. During the fourth quarter of ~~June 30,~~ 2021, ~~includes all~~we began to work with a outsourced third-party partner to further simplify and standardize processes and focus on scalable, transactional processes across the Company. We continue to transition some of our transactional data processing from our financial shared service center to one outsourced third-party partner. Pursuant to our service agreement, 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 maycontrols previously established around these accounting functions will be ~~omitted from the scope of management's assessment of~~maintained by us, and they are subject to management’s 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 3.6% and 4.8%, respectively, of the Condensed Consolidated Financial Statement amounts as of and for the six months ended June 30, 2021.testing.

~~There has~~

Other than as described in the preceding paragraph, there have been no ~~change~~changes in the Company's internal control over financial reporting that occurred during the quarter ended ~~June 30, 2021~~March 31, 2022 that has materially affected or isare reasonably likely to materially affect the Company's internal control over financial reporting.

4742

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 ~~June 30, 2021,~~March 31, 2022, the related condensed consolidated statements of operations, comprehensive income (loss), ~~and~~ stockholders' equity, ~~for the three-month~~ and ~~six-month periods ended June 30, 2021 and 2020, and of~~ cash flows for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ 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, ~~2020,~~2021, 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 ~~11, 2021,~~15, 2022, 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, ~~2020,~~2021, 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

~~August 5, 2021~~May 9, 2022

4843

Part II — Other Information

Item 1. Legal Proceedings

Information regarding legal proceedings is available in Note 1514 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, ~~2020.~~2021. 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, ~~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 stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any shareholder activism.2021.

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

On November 2, 2017, the Company announced that the Board of Directors adopted a stock repurchase program. The stock repurchase program authorizes the Company to repurchase up to $400 million of the Company's common stock at any time, or from time to time. Any repurchases under the program may be made by means of open market transactions, negotiated block transactions, or otherwise, including pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The size and timing of any repurchases will depend on price, market and business conditions, and other factors. The Company has the ability to make discretionary repurchases up to an annual cap of $150 million under the $400 million total authorization. Any shares repurchased will be held as treasury stock.

The following table presents the total number of shares of common stock purchased during the second quarter of 2021, the average price paid per share, the number of shares that were purchased as part of a publicly announced repurchase program, and the approximate dollar value of the maximum number of shares that may yet be purchased under the share repurchase program:

Period Weighted Average Price Paid per Share Total Number of Shares Purchased Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Maximum Number of Shares that may not yet be Purchased under the Program
(In millions)
April 1 through April 30, 2021 $ — — — $ 291.7
May 1 through May 31, 2021 50.88 0.5 0.5 266.7
June 1 through June 30, 2021 — — — 266.7
For the Quarter Ended June 30, 2021 $ 50.88 0.5 0.5 $ 266.7

~~For the quarter ended June 30, 2021, the Company repurchased approximately 0.5 million shares of common stock for a total of $25.0 million.~~Not applicable.

4944

Item 6. Exhibits


3.1			Amended and Restated Certificate of Incorporation of TreeHouse Foods, Inc., as amended April 28, 2011, is incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 28, 2011.
3.2			Amended and Restated By-Laws of TreeHouse Foods, Inc. is incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K dated April 28, 2011.
4.1			Indenture, dated March 2, 2010, among the Company, the subsidiary guarantors party thereto and the Trustee is incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated March 2, 2010.
4.2			Ninth Supplemental Indenture, dated as of January 29, 2016, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee is incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K dated January 29, 2016.
4.3			Tenth Supplemental Indenture, dated as of February 1, 2016, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee is incorporated by reference to Exhibit 4.3 to our Current Report on Form 8-K dated January 29, 2016.
4.4			Eleventh Supplemental Indenture, dated as of March 31, 2016, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee is incorporated by reference to Exhibit 4.3 to our Quarterly Report on Form 10-Q filed with the Commission on May 5, 2016.
4.5			Twelfth Supplemental Indenture, dated as of September 9, 2020, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee is incorporated by reference to Exhibit 4.2 to the Form 8-K filed with the Securities and Exchange Commission on September 9, 2020.
10.1			Amendment No. 4 to Second Amended and Restated Credit Agreement, dated ~~June 28, 2021,~~February 14, 2022 , is incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K dated February 15, 2022.
10.2			Letter Agreement, dated April 12, 2022, by and between ~~Thomas E. O'Neill~~the Company and ~~TreeHouse Foods, Inc. (incorporated~~JANA Partners LLC is incorporated by reference to Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on ~~June 29, 2021).~~April 12, 2022.

~~10.2~~			~~Advisory Agreement, dated June 28, 2021, by and between Thomas~~ E. O '~~Neill and TreeHouse Foods, Inc. (incorporated by reference to Exhibit 10.2 to the Form 8-K filed with the Securities and Exchange Commission on June 29, 2021).~~

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*
101.INS,*			Inline XBRL Instance Document.

101.SCH*			Inline XBRL Taxonomy Extension Schema Document.

101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase Document.

101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase Document.

104,*			~~Cover Page Interactive Data File.~~The cover page from TreeHouse Foods, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL (included as Exhibit 101).

*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.

5045

SIGNATURES

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



			TREEHOUSE FOODS, INC.

Date: ~~August 5, 2021~~May 9, 2022			/s/ William J. Kelley Jr.
			William J. Kelley Jr.
			Executive Vice President and Chief Financial Officer

Date: ~~August 5, 2021~~May 9, 2022			/s/ Patrick M. O'Donnell
			Patrick M. O'Donnell
			Vice President, Corporate Controller, and Principal Accounting Officer

5146


						Page
Part I — Financial Information

Item 1 — Financial Statements (Unaudited)						3

Item 2 — ~~Management~~'sManagement's Discussion and Analysis of Financial Condition and Results of Operations						28 25

Item 3 — Quantitative and Qualitative Disclosures About Market Risk						47 41

Item 4 — Controls and Procedures						47 41

Report of Independent Registered Public Accounting Firm						48 43

Part II — Other Information

Item 1 — Legal Proceedings						49 44

Item 1A — Risk Factors						49 44

Item 2 — Unregistered Sale of Equity Securities and Use of Proceeds						49 44

Item 6 — Exhibits						50 45

Signatures						51 46


	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	(Unaudited, in millions)
Pro forma net sales from continuing operations	$	1,108.4	$	2,237.4
Pro forma net income (loss) from continuing operations	11.2		(18.0)


Remainder of 2021	$	8.0
2022	15.6
2023	15.1
2024	15.0
2025	14.6
Thereafter	1,882.1
Total outstanding debt	$	1,950.4


	Three Months Ended June 30, 2021
	Meal Preparation				Snacking & Beverages
	Dollars		Percent		Dollars		Percent
	(unaudited, dollars in millions)
Net sales	$	647.6	100.0	%	$	355.6	100.0	%
Cost of sales	546.1		84.3		295.7		83.2
Gross profit	101.5		15.7		59.9		16.8
Freight out and commissions	27.4		4.2		17.2		4.8
Direct selling, general, and administrative	8.9		1.4		5.8		1.6
Direct operating income	$	65.2	10.1	%	$	36.9	10.4	%


			TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Statements of Operations			Six Months Ended June 30, 2021
			(unaudited, in millions)
Net sales			$	1,938.9
Gross profit			309.1
Net loss from continuing operations			(17.9)
Net income from discontinued operations			14.7
Net loss			(3.2)

	TreeHouse Foods, Inc. and Guarantor Subsidiaries
Summarized Balance Sheet	June 30, 2021		December 31, 2020
	(unaudited, in millions)
Current assets	$	935.9	$	1,201.9
Noncurrent assets	3,659.4		3,754.0
Current liabilities	822.2		912.2
Noncurrent liabilities	2,289.1		2,618.1


Period	Weighted Average Price Paid per Share		Total Number of Shares Purchased	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Maximum Number of Shares that may not yet be Purchased under the Program
	(In millions)
April 1 through April 30, 2021	$	—	—	—	$	291.7
May 1 through May 31, 2021	50.88		0.5	0.5	266.7
June 1 through June 30, 2021	—		—	—	266.7
For the Quarter Ended June 30, 2021	$	50.88	0.5	0.5	$	266.7