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TreeHouse Foods Plans Closure of Two Facilities

TreeHouse Foods Plans Closure of Two Facilities

Wednesday, May 25th, 2016

Following an analysis of customer needs and business operations, TreeHouse Foods, Inc. has announced that it plans to close two of its manufacturing plants. The closing facilities are located in Azusa, CA, and Ripon, WI.

Both facilities were part of the company’s acquisition of ConAgra Foods private brand business in February of this year. TreeHouse stated that the decision came with intents to cutback excess manufacturing capacities in efforts to align future and current consumer needs, according to a recent press release.

Tree House Foods Stock

The Azusa, CA, currently employs roughly 660 people, and primarily produces bars and snack products for retail customers. Products from the plant will be moved to other manufacturing facilities within the TreeHouse network. The plant is slated to close in the second quarter of 2017, the company does not expect supply disruptions during the transition. 

The Ripon, WI, facility employs approximately 60 people, and primarily produces private label sugar wafer cookies for grocery retailers. Treehouse has decided to discontinue to product after researching the declining demand and various options for the product. Full closure is expected to occur in the fourth quarter of 2016

TreeHouse expects costs to close the plants to be approximately $17 million, or $0.19 per fully diluted share. $14.5 million of that number, or $0.17 per fully diluted share, is expected to be in cash. Other financial components as associated with the closure are as follows:

  • Non-cash asset write-offs of approximately $2.5 million
  • Employee-related costs of about $4.3 million
  • Other closure costs of approximately $10.2 million
  • $1.1 million of charges expected to incur in second quarter of 2016
  • Approximately $4.0 million in charges will occur on a quarterly basis beginning in 2016 Q3 through Q2 of 2017 

The company stated that it will provide severance benefits, transitional support, and outplacement services to employees affected by the closures. TreeHouse also stated that it is announcing the closure of the Azura plant this early to provide time for employees to transition.

TreeHouse Foods, Inc.