TreeHouse Foods (THS) Q2 2019 Earnings Call Transcript

THS earnings call for the period ending June 30, 2019.

Motley Fool Transcribing
Motley Fool Transcribing
Aug 1, 2019 at 11:24PM
Consumer Goods
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TreeHouse Foods (NYSE:THS)
Q2 2019 Earnings Call
Aug 01, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, and welcome to the TreeHouse Foods second-quarter 2019 earnings conference call. [Operator instructions] I would now like to turn the conference over to PI for the reading of the safe harbor statement. Please go ahead.

PI Aquino -- Head of Investor Relations

Good morning, and thanks for joining us today. Before we get started, I'd like to point out that we've posted the accompanying slides for our call today on our website at treehousefoods.com. This conference may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by the use of words such as guidance, may, should, could, expect, seeks to, anticipates, plans, believes, estimates, approximately, nearly, intends, predicts, projects, potential, promises or continue or the negative of such terms and other comparable terminology.

These statements are only predictions. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that may cause the company or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Treehouse's Form 10-K for the period ending December 31, 2018 and other filings with the SEC discuss some of the risk factors that could contribute to these differences. You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made, when evaluating the information presented during this conference call.

The company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any other change in events, conditions or circumstances, on which any statement is based. I'd now like to turn the call over to our CEO and president, Mr. Steve Oakland.

Steve Oakland -- Chief Executive Officer and President

Thank you, PI. Good morning, everyone, and thank you for joining us today. We have a lot to cover in today's call, as we continue to make progress across to our strategic plans. On our first-quarter call, we committed to an update on the strategic review for snacks.

For anyone who missed our news on July 8, we announced an agreement to sell the snack nuts and trail mix businesses to Atlas Holdings for $90 million. Coincidentally, we are scheduled to close that transaction today. I'd like to quickly make a couple of points here. First, we believe that the business will be in very good hands with Atlas, a private equity firm with a number of businesses across the industrial and packaging spaces.

I am confident that the combination of their new leadership and our team will provide a great opportunity for this business, its customers and the employees going forward. Second, we are pleased with the outcome. While it may seem that the strategic review process took longer than many anticipated, undertaking the sale of a challenged business is a complicated process. We engaged a top tier bank and had the business in front of an exhaustive list of both strategic and financial buyers.

Our team was very thorough, considering a number of different structures, partners and buyers. I believe that of all the options in front of us, a clean sale to Atlas clearly delivered the highest shareholder value. With regard to the agreement we announced in May to sell our ready-to-eat cereal business to Post, we continue to work collaboratively with the FTC as they work through their review process. We anticipate a timely resolution of the matter, although at this point, we won't speculate on the closing date.

We continue to believe that this business fits best with Post's portfolio, and we are both committed to a smooth transition for all stakeholders. More broadly, the two divestitures complete the majority of the portfolio optimization work that we shared with you back in December. And most importantly, we are now able to immediately focus our management time and attention on the remaining core businesses and our pivot to growth. I'll quickly touch on the results and then I'll turn it over to Matthew.

Second-quarter adjusted EPS of $0.36 was $0.01 above the top end of our guidance. I'm pleased with our results and the quality of our earnings. I believe, we started to see the operational excellence initiatives pay off in the form of improved EBIT margins. However, revenue of $1.25 billion fell short of our expectations, and we still have some work to do to improve the top line for baked goods, beverages and meal solutions, where we still are lapping lost volume and will continue to do so until we get to the fourth quarter.

Additionally, our more disciplined pricing process pruned some less profitable volume also impacting the second quarter. Importantly, I'm encouraged with what I see for the future as this organization matures. Finally, we issued full-year guidance for an adjusted EPS from continuing operations of $2.33 to $2.63. Matthew will take you through the details and the math for that.

With that, let me turn it over to Matthew to cover the quarter and the outlook. And I'll come back at the end and update you on our progress around our customer-centric enterprise strategy.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Thank you, Steve, good morning, everyone. Thanks for joining us today. Before I go into the details of the quarter, let me quickly cover a few housekeeping items as noted on Slide 4. We recognized two impairment charges in the second quarter related to the sales of RTE and snacks.

The first is a $67 million asset writedown for snacks. We expect to recognize an additional noncash pre-tax loss on the snacks transaction of about $97 million upon closing. The combination of the two charges reflects the difference between the net book value of the asset and the anticipated proceeds. Secondly, we impaired $64 million in assets related to the ready-to-eat cereal business in connection with the reclassification to assets held for sale to account for the difference between the net book value of the assets and the anticipated proceeds.

We do not expect another charge in Q3. In the quarter, we booked a litigation reserve of $25 million for a pending legal settlement. This quarter, we transitioned the accounting for our pickle business inventory from LIFO to FIFO. The impact is relatively minor, approximately $0.05 for the full-year 2018 and $0.01 on a 2019 year-to-date basis.

And we've included a number of tables both in the earnings release and the 10-Q that will be filed this afternoon so you can work through the revision for your models. The transition enables us to account for inventory consistently across the entire company. Finally, and I'll get into the specifics as we cover the outlook, I want to make sure that everyone procedurally understands the accounting for the divestitures of snacks and RTE, as we move into the back half of the year. Both businesses will qualify for this discontinued operations treatment beginning in the third quarter.

Accordingly, we will present our guidance on a continuing-operations basis, which excludes both businesses for the full year. Said another way, our core business or continuing operations will consist of baked goods excluding ready-to-eat cereal, beverages and meal solutions. I'm going to try and move quickly through the second-quarter results because I know you're all eager to get to the outlook. First, turning to Slide 5 and our scorecard.

As Steve mentioned, revenue fell short of our expectations in the second quarter, as we continue to lap the volume loss as a result of the pricing actions we took more than a year ago. In addition to the knowns, as we entered the second quarter, we also faced a couple of additional headwinds. First, we lost some baked goods distribution that was well below our average company margins, reflecting our improved discipline around the bidding process; in addition, we had a large customer more tightly manage their inventory and finally, some of our co-pack business has been lumpy. Lower-than-anticipated interest expense more than offset a slightly higher tax rate.

So while the top line was soft, we're encouraged by how the operations of our core business performed. On Slide 6, I will point out that our operational progress continues to translate into improved financial performance. Division DOI margin at 10.6% was 60 basis points better than the second quarter of last year and our adjusted EBIT margin was 50 basis points higher. As Steve mentioned earlier, Q2 adjusted EPS of $0.36 came in $0.01 above the top end of our guidance range.

We were pleased with not only the absolute result, but also the quality of the earnings. Slide 7 shows this quarter's revenue drivers. You can see that the impact of SKU rationalization is lessening, particularly in beverages and meal solutions. Revenue for our core business or continuing operations declined 6.7%, as we continue to lap some of the prior business losses and there was a bit of additional loss this quarter, as I noted earlier.

Snacks was largely in line with our expectations in the quarter. The year-over-year change in beverages has broth and non-dairy creamer volumes moving unfavorably, offset partially by strong tea growth. In broth, we did exit some low-margin, logistically challenged business, as part of our efforts to be more disciplined around profitability. However, given the seasonal nature of the business, we do expect to make some of that up in the back half of the year, as we improve our production planning process.

Pricing to recover commodity and freight inflation was up on a year-over-year basis in baked goods and meal solutions while single-serve coffee was the main driver for beverage pricing moving down as we've discussed before. Turning to Slide 8 and the key drivers. Division DOI was $0.06 below last year while snacks was $0.14 lower. snacks again weighed on our results, but the business did perform as we anticipated.

Excluding the snacks decline, this quarter's results would have been up materially versus last year. A big driver was corporate SG&A, which was $0.18 better than last year. Slide 9 bridges the DOI from 2018 to 2019 and shows the drivers of the $14 million decline. This is largely in line with the expectations we shared with you back in May.

Volume and mix, including absorption for the core business, was down $22 million while snacks was $15 million below prior year. These declines were partially offset by positive PNOC of $7 million, a $13 million contribution from operations and a $3 million improvement in SG&A year over year. Slide 10 takes you through DOI once again and drills down into the drivers by segment. Broadly speaking, volume and mix declines across all of the divisions were largely being offset by improved operations, PNOC and lower SG&A.

Turning to our balance sheet metrics, as shown on Slide 11, net debt finished the quarter at $2.2 billion. Proceeds from the snacks and cereal transactions will be used to further pay down debt and reduce our leverage. We continue to be highly focused on generating strong free cash flow through our working capital initiatives. The upcoming third quarter does tend to be a period where we build inventory ahead of the holiday season, but we will work back down as we close out the year.

Moving on to our outlook and guidance. As I mentioned earlier, both snacks and RTE will qualify for discontinued operations treatment going forward. So we are guiding Q3 and the full year on a continuing-operations basis. I'll walk you through that in a few minutes.

Let me start on Slide 12 by baselining everyone with the assumptions that we baked in and provide you with some of the data points that will help, as you model of the company going forward. We have tried to give you a comprehensive view of how we see the remainder of the year. With regard to snacks, as you know, the business is forecast to generate about $670 million in revenue this year. RTE revenue in 2019 is estimated at approximately $230 million or about $55 million to $60 million each quarter.

The net impact of moving both the snacks and RTE businesses into discontinued operations is expected to be accretive by about $0.19. Note that while we've provided you today with the combined impact of the two transactions, when we filed a snacks 8-K upon closing, we do plan to break out the two businesses separately so you'll have this historical pro forma detail available. We will have some additional adjustments to the tune of about $0.06 negative, which accounts for stranded overhead netted against $0.01 or $0.02 of interest savings in 2019. All in all, we expect the full-year 2019 impact of the snacks and cereal divestitures to be accretive by about $0.13.

And we are providing our full-year guidance range from continuing operations of $2.33 to $2.63 per share. Slide 13 walks you step-by-step through the math from our original guidance to today's outlook from continuing operations. At the far left, you can see our original EPS guidance for the year, which included snacks and RTE and total $2.35 to $2.75. As you move to the right, recall that in May, we said that the snacks business performance this year would be weaker than we had anticipated and we estimated the full-year impact of that deterioration to be $0.15 to $0.25 or a $0.20 drag at the midpoint.

This hasn't changed. Keep in mind that in May, while we announced a definitive agreement to sell cereal on the day of the call, we were still in the process of considering options for snacks, which made it very difficult to reaffirm or even modify our guidance given the range of options that we were considering and the variety of possible outcomes. The next two bars contemplate the $0.19 of accretion from both transactions and the roughly $0.06 of additional adjustments. That math gets you to $2.48, which is now the midpoint of our new guidance from continuing operations.

Now with another two quarters to go this year and the fourth quarter being our seasonal peak, we believe it's prudent to keep a wide range on this estimate consistent with last year. So we've taken that midpoint and bracketed it by $0.15 on each side to provide you with a new guidance range of EPS from continuing operations of $2.33 to $2.63. On Slide 14, we've provided each line of our new guidance from continuing operations. You'll notice that we are guiding down 2019 revenue beyond just the divestitures to $4.29 billion to $4.49 billion.

We are carrying the top-line softness from the second quarter through the balance of the year, but you will notice that the margin impact of the lost volume is not overly meaningful. The rest of the guidance changes shouldn't be much of a surprise in light of the disc ops treatment of snacks and RTE. You'll notice that we've reduced our capex to $170 million and tightened the range for free cash flow for the year to $160 million to $190 million. On Slide 15, we have laid out the impact of the divestitures across the number of key financial metrics.

The data on the left shows those metrics at the midpoint of our continuing operations guidance. On the right-hand columns, shows the change driven by the divestitures of snacks and RTE. Although the business is about $900 million smaller, our EBIT margin increases by about a 125 basis points and our EBITDA margin improves by nearly 175 basis points. These divestitures drive the $0.13 of EPS accretion and provide the ability to further delever.

Slide 16 takes you through the third-quarter guidance from continuing operations. We are anticipating net sales of $1.04 billion to $1.14 billion and EPS of $0.52 to $0.62. From an operating perspective, we expect the story to be similar to this quarter, as we continue to lap volume loss and drive operating improvements through TreeHouse 2020 initiatives and SG&A savings. Third-quarter net interest expense is anticipated to be slightly lower sequentially between $25 million and $27 million and the tax rate is expected to be 23% to 24%.

Turning to Slide 17. You've heard us talk about the importance of pivoting the company to volume growth and the cadence of the top line this year. As we look forward, we're guiding to a third-quarter decline that is approaching flat, while our fourth quarter is expected to be up slightly. The fourth-quarter year-over-year dollars sales growth is expected to be modest.

However, we believe the most important takeaway here is that we're moving in the right direction and we're delivering sequential improvement in our year-over-year comparisons. And finally, on Slide 18, this is when we first introduced at our December investor day. With the majority of our announced portfolio optimization efforts nearing completion, we continue to believe that beyond 2019, for the next few years, we can grow the top line of our business of 1% to 2% organically, deliver 10% or more EPS growth and about $300 million in cash generation on an annual basis. As we look toward 2020, it will be our final year of the TreeHouse 2020 restructuring.

And so although we will need some contribution from improved working capital to deliver the $300 million, I'm confident that we're putting the tools and capabilities in place to achieve these goals. Let me just close by saying I'm proud of the work the organization has accomplished to date. Beyond our day-to-day operational improvements, we have transacted one business and are in the process of completing another that, at the end of the day, will help refocus our portfolio, improve our profit and margin profile and better position us to drive shareholder value. With that, let me turn it back over to Steve for his closing remarks.

Steve Oakland -- Chief Executive Officer and President

Thank you, Matthew. Such a great segue for me. When I think back to our investor day, we rolled out a new version and a new customer-centric enterprise strategy. We detailed the operational excellence work under way, we identified the need to improve our commercial capabilities and we talked about our commitments to invest in our people and talent.

At that time, we also shared our plans to execute against the change course areas of our portfolio. While we have some work to do, Slide 19 gives you a sense of where we are in that journey. The last two years have largely been about TreeHouse 2020 efforts. In that time, we've done some really heavy lifting.

We've simplified our portfolio through SKU rationalization. We've centralized our supply chain and the work to optimize the plant and warehouse network is in the final few innings. The TMOS work to engage and educate our plant employees and define common metrics for the organization is well under way, while our lean initiatives are aimed at building a continuous improvement mindset. All of these efforts had been with the goal in mind of improving customer service levels.

That hard work is paying off, as our customer service levels are now above 98.1%, the highest we've been in over two years. It's been about 7 months from our investor day and in that short period of time, we have made material progress against that strategy, as snacks and cereal announcements complete the majority of our portfolio optimization initiatives. Upon their closing, these transactions will allow us to focus our efforts, pay down debt and have a healthier margin structure to drive shareholder value. We launched our commercial excellence organization just a few weeks ago.

As you know, we hired a new commercial leader earlier this year. Some of you had a chance to meet Dean in May. And in four months, he has engaged our customer base, launched his new leadership team and together, they have designed our new commercial structure. This team is now staffed with the combination of talent from outside along with key internal leaders who've been promoted from within.

The result is a seasoned team with stronger capabilities. They have a much clearer sense about what it means to be one TreeHouse organization and to partner with our customers. They're structured and resourced to gain a greater, more in-depth understanding of our customers' goals and strategies and their consumers' needs. And by doing this, we are uniquely positioning ourselves within the industry to provide strategic thought leadership and network scale advantage for our customers.

The steps we've taken to focus on people and talent have been a real boost to our organization. I'd mentioned last quarter that we'd be rolling out a new expression of our companywide values. The effort was sponsored by a cross-functional team from across our organization. And you can go to our website in the About Us section and learn more about what our values mean to each and every person that works at TreeHouse.

Our work to stabilize and simplify the business has helped us return service levels to their peak and regain consumer confidence. As I've said in the past, outstanding customer service is table stakes. Today, we're in a much better position to become the preferred supplier for our customers' brands. That credibility will enable us to drive organic growth over time.

Now it's really up to us to execute as we enter the next phase of our journey. Private label continues to be one of the few growth areas in packaged foods. Retailers have more than simply declared their commitment to their own brands. They're developing strategies to support their private label growth goals, as we become more commercially excellent, get closer to the customer and better align ourselves, we will naturally be better positioned to drive organic growth next year and beyond.

I'd like to close by thanking those teams for their hard work and dedication throughout this journey. I continue to be impressed by that magnitude and accomplishments and our employees' dedication and commitment to moving our organization forward. With that, let's open the call up to your questions.


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Questions & Answers:


Operator

[Operator instructions] Our first question today comes from Andrew Lazar with Barclays.

Andrew Lazar -- Barclays Capital -- Analyst

I guess probably this first one is for Matthew. I was hoping you could give us a bit more color if you can around the sort of the first-half, second-half EPS from continuing operations. I know we don't have sort of restated financials around that just yet, but for sort of modeling purposes a little help around that would be great.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes, no, that's a good question and frankly, one I expected if I was sitting on your side of the call. As we go through closing this deal, there's a couple of steps we'll go through in terms of furnishing you guys with information. One will be to furnish some filings within -- I think we've got four days of the close of the snacks business that will give you some halves and some full-year data, and we're going to do that just as quickly as we can. So don't expect us to use the four days.

I think we'll be out pretty quickly with that. And then at the very latest, we'll give you the historical numbers by quarter, the latest date, I think we can do that is the Q3 call, but again, the quicker we can get back to you, the better. As I've been reviewing what the guys are pulling together and these are estimates at this point in time. But when you look back at a recast '18, we think that number is going to come in, this is with the LIFO, FIFO adjustment and disc ops, at about $1.94 a share for the full year with $0.40 of that in the first half.

So we had about a 21% 1H, 79% 2H. As I look to the midpoint of the guidance that we've given you for this year at $2.48, under those same continuing ops principles and with the LIFO, FIFO in, we'll be at $0.69 through the first half, which will be about 28% of our full-year earnings. So if you think of calendarization for this year, we're actually ahead of last year with a slightly flatter back half. And I know it's been a concern, last year, the hockey stick, this year's actually going to be a bit flatter.

Andrew Lazar -- Barclays Capital -- Analyst

Got it. Got it. That's really helpful. I appreciate that.

And then Steve, in thinking about the TreeHouse entity going forward sort of ex snacks and ready-to-eat cereal, one of the aspects or the benefits here obviously is hopefully less volatility with respect to the top line moving forward, so you can kind of more consistently hit the 1% to 2% guidance. In the second quarter, you mentioned a number of things that transpired outside of snacks that that still pressured sales a bit. Some may be a little bit out of your purview. There's always some unexpected inventory, retailer management that happens from time to time.

But I think there are two other things that you mentioned. And I guess where I'm getting at is to hopefully maybe get some perspective from you on how comfortable you are with this legacy entity going forward being able to deliver the top line more consistently? And -- or we still -- should we still expect there's going to be -- it's private label at the end of the day, there's more volatility quarter to quarter, there could be more movement or do you think we really are entering a phase where -- again, it's not perfect predictability, but a little bit more consistency on the top line for the legacy going forward. I hope that sort of gets to the --

Steve Oakland -- Chief Executive Officer and President

Yes. I get exactly what you're asking, Andrew. There is no question the current portfolio will have less volatility than the prior portfolio. I would also argue the operating performance of the business is going to be much more predictable, not just on the top line but the bottom line.

The work that we're doing from an operational excellence piece, the Lean, the TMOS work, and I think we are starting to see that bubble through. But we're seeing more consistent operating numbers through our standards, right? So in the last year, I think we've seen that number, not going with -- right, we're coming to the heaviest periods of our year. But we've seen that improve dramatically. So I think more than just top line, I think top line will be more stable.

We talk a lot about the pivot to service and, in my prepared remarks, I talked about building customer confidence. I can't script this. I entered -- obviously, you come in early on the earnings call today, so I was here very early this morning. And one of the things that greeted me was an email from our new commercial leader that one of our largest national customers has committed for a couple of large categories for multiple years.

Those are categories that add pricing in them, that had volatility. So we're starting to -- and that was the customer that, quite frankly, was one of my tougher meetings when I first came onboard. So for me to see that 15 months later makes me feel better about the fact that the customer recognizes we're doing what we need to commit to their needs, right? So I think it's fair to say, we will be more predictable. We don't own the brands, we don't make the decision when they promote, we don't make the decision.

So we will have some lumpiness between quarters. We have some of that in the numbers today. But I think you'll -- I think the combination of the operational excellence and, quite frankly, our service levels will make us much more predictable.

Operator

The next question today comes from Chris Growe with Stifel.

Chris Growe -- Stifel Financial Corp. -- Analyst

I'd like to just, if I could follow on Andrew's question there, and I think it's somewhat related in that you do have a wider guidance range for the year. But would -- if I consider the cost savings coming through, you start lapping some of those SKU rationalization, lapping the lost distribution, I guess I wanted to understand are there any watch-outs worth noting? Is it input costs? Obviously, you've talked about single-serve beverage pricing competition, just to name a couple. Anything like that you think that causes to have your potential degree of volatility in the guidance in the second half of the year?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. I think if you look at the way we've guided in the past, this is the same kind of range we had last year. So we do have, as I said earlier, 72% of the earnings in the back half. So there's a lot of action that happens for us.

Some of that is cost reductions kicking in, more TMOS activity. But also seasonally, we're still heavily weighted to the holiday season. So there's a lot still to happen. I think from an input cost perspective, the cost side of this business has not provided any major surprises, as we've gone through the first half.

So we see that as relatively benign for the balance of the year. And frankly, there are some ups and downs as we get our early look into next year, but nothing lurking as a time bomb. I think the biggest concern is the top line and delivering the improvements and that's what we are focused on.

Chris Growe -- Stifel Financial Corp. -- Analyst

OK. And just one final question if I could. If you look at this quarter, if it's possible, I know there's a lot of moving parts here. But could you say what your categories grew? But -- even we took out the businesses that you are divesting.

And maybe how you think you performed against those categories? It may be hard to kind of line up perfectly against that. But just to understand, like, how the businesses and how the categories are performing here. It would be helpful to understand the future growth potential.

Steve Oakland -- Chief Executive Officer and President

Sure. I think that is a very difficult question because they're not apples and oranges, right? There's 30 different categories even without the divestitures, right? So when you take the divestitures out, I think we're in 29 categories. So I would suggest total category growth is consistent, maybe even a little bit better than what we've talked, around the 2% area, right? I would suggest that we are improving. We were losing share in those categories.

I mean they -- I think it's pretty simple math there. But I -- but we are seeing that improve. Some of the bigger categories like pasta, those kinds of places we're seeing our performance improve a little bit. And our forecast for the back half, the growth that we have in the back half and the improvement to flat is us improving our performance.

So I don't know if that helps. If I took you through each one of the detail, I think we'd be on for quite a while. So I think it's fair to say that we feel good that we're improving our performance in those core categories in the -- if you think about the top 10 or so.

Operator

The next question today comes from Ken Goldman with JP Morgan.

Ken Goldman -- J.P. Morgan -- Analyst

I have two clarification questions if I can. On Slide 13, the orange bar, this is the guidance where you're reconciling from $2.55 to $2.48. The orange bar, the May estimate, where you're talking about snacks deterioration of $0.15 to $0.25. That was your original estimate for -- or your previous estimate for the year, but you no longer have snacks for the whole year.

So I was wondering why that number is -- that range is still the same range? Of course, it's a wide range and maybe that you're still within the same range and you just don't want to change it. But you no longer have snacks dragging you down in the back half. So why isn't that range a little bit less of an impact? That's my first question.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. The way to think about that chart, Ken, is, to the left of the dotted line there is what we told you previously. So we started the year with that $2.55 midpoint, and we called out a drag of $0.20 on the last call. So think of that as history.

Now we get the chance to remove snacks and RTE for the full year as an absolute and that's what drives the $0.19 of goodness and then there is about $0.06 of stranded overhead net of interest that brings us to this $2.48. So what you've got here in $2.48 is a clean full year with no snacks in, no ready-to-eat in.

Steve Oakland -- Chief Executive Officer and President

But we do have those stranded overheads.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes.

Ken Goldman -- J.P. Morgan -- Analyst

Right. Yes. And my other point of clarification is I just want to make sure I 100% understand the base that you're working off for the first half of your guidance. So you reported roughly $0.50 in the first half.

Matthew, you talked about $0.69 being the number if we're just looking at a pro forma continuing operations in that first half. So I think those are right numbers, roughly.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

So $0.59 is -- $0.69 is correct, yes.

Ken Goldman -- J.P. Morgan -- Analyst

OK. And then I just want to make sure when you're guiding to that $2.33 to $2.63 range, does that assume $0.50 first half or $0.69 first half? I just want to make 100% sure because obviously it makes a difference in how we're thinking about the fourth quarter.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. No, great question. The midpoint of that range, the $2.48, assumes the $0.69 first half.

Operator

The next question comes from Bill Chappell with SunTrust.

Bill Chappell -- SunTrust Robinson Humphrey -- Analyst

Steve, can you just help us a bit? I think -- certainly happy to hear you reiterate that return to growth in the fourth quarter, but with the kind of setbacks on revenue this quarter. I'm just trying to understand how we bridge that if that really changed your outlook. Maybe you're thinking you could do 2%, 3%, 4%, 5% organic growth in the fourth quarter, now it's come back down with some of the category and customer issues in the quarter. Just -- maybe help us bridge how we walk over the next two quarters up to that positive number?

Steve Oakland -- Chief Executive Officer and President

Sure. Here is what I would say. We forecast our numbers at the beginning of the fiscal year that we guided to, suggested we'd be flattish. I think this is a terminology we were using for the third quarter and growing slightly in the fourth quarter.

The -- one of the first things, quite frankly, that that new commercialization and Dean's team has put together is a much more robust forecasting process. So we went through those numbers in much more detail by customer with promotional plans, things we didn't know at the beginning of the year in place and that's what we've guided to today. So the difference in flattish and maybe down, just a tad, is some of the things that we did, it's not surprising with as many categories and customers. You take hundreds of customers across 30 categories.

As we've gone through this thing with a fine-tooth comb, we've got a much more robust pricing process. There's a few things that aren't so profitable in that mix. And I think Matthew touched on that, I've touched on it in our comments today. We've pruned a little bit of that out.

That may have taken a little bit of cushion out for us, but we still think that we've also had some gains in that. We've had some small singles and doubles in there that we've picked up in the interim. So I think we feel pretty comfortable. We're going to be flattish, probably down just a tiny bit in the third quarter, and we'll be up just a tiny bit in the fourth.

We actually think that the momentum and the change in momentum is what's important. There will not be a lot of new commercialization in the fourth quarter. That's another reason we feel good about this. We know what the numbers are.

Given the NLEA changes, all the labeling changes that are going on in the industry, I think even the customer base, most of the customers aren't trying to commercialize new items in the fourth quarter, they're trying to get that behind them. So I think we have a pretty good look at it. I think it will be modest. But it's really not the absolute number, whether it's $10 million or whatever the number is, $5 million, whatever it is, it's more the fact that we pivoted.

So I don't know Matthew if you want to --

Matthew Foulston -- Executive Vice President and Chief Financial Officer

I think I'd just add one thing. If you take a quick look at Slide 17, you can see the bar for Q3 on pounds shipped is significantly closer to breakeven year over year. I looked at the sales report last night for 21 of the 22 shipping days, and we're on track for the first month of that. So I can't tell you what months two and three look like, but so far so good in terms of what is actually one of the bigger step improvements we've committed to in the year.

Bill Chappell -- SunTrust Robinson Humphrey -- Analyst

Got it. And then just a follow-up. As we look at some of the scanner data, especially in June, it seems like private label, overall, weakened a little bit. And I didn't know if that showed up in your results.

It's kind of obviously tough to figure out when it doesn't track your specific categories and share or if you're seeing any real change in kind of the private label momentum.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

I think one thing we struggle with is how to use that data because only about half of our business goes through it. So it's, at best, a sort of crude indicator. June wasn't a great month for us when I looked back on the quarter, to be honest.

Steve Oakland -- Chief Executive Officer and President

Yes. Yes, I think that's difficult. But I would suggest some of the untracked channels, some of the discount retailers and things that are doing very well. So I think it's tough measure to extrapolate.

We think it's directionally important, but it's a tough measure to look at in an individual month.

Operator

The next question comes from Steve Strycula with UBS.

Steve Strycula -- UBS -- Analyst

Question for Matthew. So on the free cash flow to hit the $300 million, just wanted to get a little bit of an update as to when we think, given all the puts and takes of these divestitures, when is like a reasonable time period to kind of meet that goal? And help us understand at least just directionally where cash restructuring, working capital and capex each might do in the next year versus kind of like how we're tracking 2019 just to understand how we can bridge that forward? And then I have a follow-up.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. Great question. I think I -- I've said in my prepared remarks, next year is the year that we said we can deliver the $300 million, but it would be dependent on some contribution from working capital improvements. We've got still TreeHouse 2020 going on next year.

So I think our cash restructuring drops from that $1.40, $1.50 range to more like the $0.70 range. So that gives us some nice pickup year over year. Capex next year, we haven't looked at the plan yet, but you saw we reduced this year from $190 million to $170 million. I would think that's the top end of our consideration as we go into next year.

So I think how we get there next year will be a combination of reduced restructuring spend, continued improvement in working capital and then once we get into 2021, I think the business will be generating that kind of free and clear with flat working capital.

Steve Strycula -- UBS -- Analyst

Yes. That's helpful. And then Steve, just wanted to get a sense of -- we've heard from a lot of the branded competitors in packaged foods that they've been able to get isolated cases of price increases through the channel. In some cases, they called out that their volume elasticities have not been very favorable because private label or retail store brands haven't followed in certain instances.

And so my question to you is that is that impacting TreeHouse's ability to pull through net pricing in this current environment? Or is that just a retail trade basically electing to fund that discount or keep that price gap wide at their expense rather than your expense?

Steve Oakland -- Chief Executive Officer and President

You know what, I would just suggest on that that we've talked a lot about pricing and our pricing timing was some time ago in what we did. I would suggest that private label has changed, right? Private label is now a strategic tool when the retailers do pricing, do competitive pricing models. When they want to set a pricing image to the consumer, I think -- it wasn't very long ago where private label was not part of that toolbox. Private label is clearly part of that toolbox.

So I think the retailers are pulling those levers. We see those things moving around all the time. So I think it's more the latter than the former.

Operator

The next question today comes from Scott Mushkin with Wolfe Research.

Scott Mushkin -- Wolfe Research -- Analyst

I had a couple of clarifications and then a question. So the $0.05 that you referenced on the change in accounting, that's a benefit, right? I don't think you've said, but I'm assuming that's a benefit to the year?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

That's in the back of the press release. We've laid out every quarter's impact of that change going back through '17. So I think in this quarter, was $0.01.

Scott Mushkin -- Wolfe Research -- Analyst

And you said for the year, $0.05, is that correct?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

That was last year, $0.05 drag.

Scott Mushkin -- Wolfe Research -- Analyst

OK. So what's the impact for this year?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

About $0.01.

Scott Mushkin -- Wolfe Research -- Analyst

About $0.01 so far?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. And that's all we expect going forward.

Steve Oakland -- Chief Executive Officer and President

That's all we expect, yes.

Scott Mushkin -- Wolfe Research -- Analyst

That's all you expect. OK. That's what I was wondering. OK.

Then I didn't see anything around the TSA contribution turning, so I was wondering what that number is?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. We've got two TSAs and we've got time frames that are indeterminate right now in terms of how long they're going to carry on. So we're probably not going to be able to break that out until we get further into it. I do think as we go into next year, there'll be a couple of phenomenon, right? But we'll will have the benefit of proceeds that will help us from an interest expense for the full year, but we'll also have some additional stranded overhead we need to work through related to that TSA revenue rolling off.

So I expect the net of those two to probably be close to a wash, but we've got to get a little bit further into the process here. We have -- we're not at day one on either TSA yet.

Scott Mushkin -- Wolfe Research -- Analyst

OK. Perfect. And then my question had to do with the sales underperformance in 2Q. I guess as you looked at it, I say, three months ago, what surprised you in 2Q? And what drove the underperformance as far as the surprise? I mean obviously, you have a lot of visibility on some of these contracts, but sales continue to lag a little bit.

What your expectations are? So I was wondering what surprised you in the quarter?

Steve Oakland -- Chief Executive Officer and President

Sure. I think it's really what Matthew detailed earlier. We had some contact -- when you have a contract on co-pack, those things -- there are time lines, specific time lines where they take a product. So we had a little lumpiness in co-pack.

We had one retailer take some inventory down. I think I've seen that in a couple of other releases so far this year. So -- and then some of that could be self-inflicted, right? Our improved service may allow some of our retailers to have a little less inventory, right? They -- I'm sure they were buffering inventory based on our poor service levels. So we could take that actually, as a good thing, assuming it's a one-time thing. And then we did pair some volume.

We did -- as we dug into some things, I would expect that to dissipate. I think we've been going through this disciplined pricing project for almost a year now and so -- or about a year now. So I think we've been through much of our volume. I wouldn't say, there'll never be a category we uncovered that needs to be pruned, but I think most of that should be behind us.

Scott Mushkin -- Wolfe Research -- Analyst

So Steve, you think the chances of a surprise in the third and fourth -- third quarter and fourth quarter is much less than what we've seen so far this year, is that fair to say?

Steve Oakland -- Chief Executive Officer and President

Yes, I think so. And so much of ours -- remember, we're in categories like refrigerated dough and we're in big promoted categories during the -- baked goods during the holiday season. Most of those programs are pretty well set now. But I mean there always could be something changed, I'd hate to say never.

But I think we feel pretty good about the promotional plans that are in place. This is the one time of the year where that is really relevant for us, the fall time of the year. So I think we feel good about that. I would say there is less chance for -- or there's less -- should be less volatility without snacks than we've had in the past.

Operator

The next question comes from Robert Moskow with Credit Suisse.

Robert Moskow -- Credit Suisse -- Analyst

I guess two questions. One is, we've certainly heard many times about volume declines related to business that just wasn't profitable to chase after, makes total sense. But at some point, Steve, does that create a capacity utilization problem for the fixed asset that you have? It seems that if it accumulates enough that it would, heading into 2020. And I guess the second question is, I just want to make sure I understand the fourth-quarter guidance pretty well.

I think it comes out to be about, I think I have it, about a $10 million to $15 million increase in operating income. Is that a fair assessment for what fourth quarter has to do?

Steve Oakland -- Chief Executive Officer and President

Sure. Let me take the first one and Matthew can grab the other one. There is no question, we are very cognizant about the overhead structure of TreeHouse. We understand the volume that needs to happen.

The opportunity for us with our TMOS and our lean efforts is actually volume-related savings, right, the savings -- the improved operating performance. The only way you generate that is if you run boxes through the factory, right? So in order for us to prune something, it's got to be pretty low, quite frankly. So I think there is a pretty conscious effort on that. There's also a targeted effort on where we need either contract-pack volume or additional volume going forward.

So I think we'll be aggressive in those places where we need the volume to cover overhead. And we'll be prudent in the others. So I think we have a pretty good look across the network at the impact of volume and where we need it and where, quite frankly, we can be prudent.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. And I think to answer the second question, I'll talk about the midpoint of guidance just to make it simple. We guided to $2.48 at the midpoint for the year. We had $0.69 in the first half, we've got $0.57 at the midpoint for Q3 and that leaves $1.22 in Q4.

Obviously, as you guys now realize since the Private Brands acquisition, we do have heavier seasonality in this business in Q4. When I look at Q4 as a percentage of the total year, it's actually about three points lower than it was last year. So I don't think there's anything here that's particularly abnormal for our business. We do have continuing roll out of TMOS, continuing roll out of the Lean and cost reductions plan to ramp up as we go through the year.

So we feel pretty good about the trajectory between 1H and the end of the year.

Robert Moskow -- Credit Suisse -- Analyst

And Matthew, just another question. The EBIT guidance for continuing ops is now $275 million to $300 million. At the start of '18, it was $290 million to $325 million. Is the delta between these two really the breakfast cereal business because snacks might have been maybe a zero for the year? Like can you help us bridge those two numbers?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. I think as you go through there, clearly a chunk of that is this stranded overhead that we're left with. That's about $10 million in round numbers of the stranded overhead we're sitting on.

Steve Oakland -- Chief Executive Officer and President

And breakfast cereal was positive.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

For sure.

Steve Oakland -- Chief Executive Officer and President

Yes. Gives a lot, those two things.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes, yes.

Operator

The next question comes from Amit Sharma with BMO Capital Markets.

Amit Sharma -- BMO Capital Markets -- Analyst

Steve, going back to your response to Rob's question, and I think that's a wider discussion for us too, right? So you talked about this willingness to walk away from lower margins volumes, right? I think this is a new muscle for TreeHouse, right? So can you just talk about like how widespread is it? You did say that in some categories you do need the volume. Can you talk about, broadly speaking, like, how wide is this muscle throughout the organization, right? And how willing are you to use it? And then just a corollary to that, should we start to focus a little bit more on your profitability rather than just focusing on the top line?

Steve Oakland -- Chief Executive Officer and President

Sure. Maybe I'll ask Matthew to go backwards and I'll go forwards, right?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. Let me go back and I lose track of time here, but probably at least 18 months. And I think the first manifestation of our focus on profitability was really the SKU rationalization program. That did a couple of things.

It eliminated, what I will call, no and low profit business, which gave us immediately a positive contribution. But more importantly, when you take 25-plus percent of the SKUs out, it allows the plants to run so much better. So that was the first manifestation of, "Hey, we got to get after the stuff that's dragging us down." I think the second piece goes back about the same amount of time, maybe a bit longer, was really giving more scrutiny to these bids as they came in. And any bids over a certain threshold and it means most of them, frankly, come in front of Steve and myself from the executive team and they get scrutiny.

And as Steve said, over the last year, we've cycled through a lot of this business, have a really good understanding of the market clearing price and hence, what we should be in and what doesn't make sense to be in. And I think we've been very prudent stewards of the margin.

Steve Oakland -- Chief Executive Officer and President

Yes. And I don't want us to think that going forward that we're going to cut away this the prosperity. I think we're through most of that. I'm sure there's something we will uncover as you think about hundreds of customers across 30 categories.

But I think we understand most of the material items in that. I think it's really a mindset of growth from now on. I think our commercial organization, I think our operations, everyone is focused on where are those opportunities for us to serve the customer better. How do we grow? So I think it will be the exception, not the rule.

That doesn't mean there won't ever be any. But I think it will be the exception, not the rule. I think we're through most of it.

Amit Sharma -- BMO Capital Markets -- Analyst

And just a follow-up on that, Steve. So we are seeing a pretty significant margin improvement, even though -- at least for now, right? The volume losses are coming in and they were mostly from last year, right? But going forward, should we expect that, as this drag goes away, you just see a pretty substantial operating benefit from a margin perspective as volumes pick up?

Steve Oakland -- Chief Executive Officer and President

Well, I'll let Matthew comment on that. But I think and I would suggest, so if we are -- when we talk about discipline, you could argue that's maybe an oversimplification. I mean if we're walking away from stuff and our margins are improving, I think you can guess where those things were priced, right? So maybe Matthew, if you want to talk about going forward?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. I think the other thing that's important is volume provides great leverage in this business. When we were at investor day and we talked about the 1% to 2% growth of that midpoint, that delivers close to two thirds of the 10% improvement we've committed to in EPS each year. So as Steve said, the focus is on growth, the leverage from it is great, and we're actually in a position or a part in the market that is growing.

So we think we're in a good spot and it's certainly the primary focus in here.

Operator

The next question today comes from Bryan Spillane with Bank of America.

Bryan Spillane -- Bank of America Merrill Lynch -- Analyst

Just one question for me. Matthew, I guess in terms of use of proceeds from the two divestitures to pay down debt, can you just help us, is there anything from a timing perspective that would sort of affect when you actually do that? So are you waiting for maturities or something else in order to be able to put that money to work and pay down debt? And then any sort of color you could give on how that might affect interest expense? So kind of below the operating line leverage related to paying down debt next year?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes, good. Good question. We've got a really incredibly flexible debt structure here. So there is no penalty, no maturities.

We can pay down as and when and have been. So we would anticipate stepping into that fairly aggressively. I think when you think about how much leverage do you get from -- getting on from $200 million of proceeds, if you think of sort of 4% interest rate as a way to count that going forward, I think that's a way to think about it. I would caution you a little bit before you flow too much interest good news through next year, just to think back to the earlier comments about the TSA and when we roll off there, we've got some costs that we'll need to deal with. I'm confident, we will, but it won't be like a light switch.

So those two could be a -- it will be a wash.

Steve Oakland -- Chief Executive Officer and President

We'll be to guide once we have more visibility.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Visibility.

Steve Oakland -- Chief Executive Officer and President

The other thing I would suggest is we expect to be closed today on the snacks transaction, the other one's going to happen, we hope, shortly, but that may flex a month or two, right? Some period of time before we pin that down -- before we see any interest or so. So given that there maybe -- we'll guide that when we have more visibility.

Bryan Spillane -- Bank of America Merrill Lynch -- Analyst

OK. And just to be clear, the TSA payments will flow through the net interest line?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

No, no they won't come through interest. And I'm just matching those --

Steve Oakland -- Chief Executive Officer and President

And those are usually designed. Those are big -- those are designed to cover the cost and quite honestly, it gives us -- as Matthew talked about, gives us some time to manage through the stranded overhead. But that overhead will be -- we'll be fulfilling those services through the period of time and gives us time to build a plan to adjust those.

Operator

The next question comes from Carla Casella with J.P. Morgan.

Carla Casella -- J.P. Morgan -- Analyst

My question was along the same lines. And so I guess if you can't give us the debt expected or timing of the exact debt pay-down, can you help us with just about the EBITDA of those businesses? I know you gave revenue for the businesses, but I guess the EBITDA -- I understand that you'll have stranded costs as well, but the pure EBITDA that will travel with those.

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. We haven't disclosed all those details to date.

Carla Casella -- J.P. Morgan -- Analyst

OK. OK. And I don't think I ever saw -- did you ever give a sale price for the ready-to-eat cereal?

Steve Oakland -- Chief Executive Officer and President

No, no. That's not been disclosed. No. Obviously, the volumes will come out on that eventually, but that is not yet -- that is yet to be disclosed.

Carla Casella -- J.P. Morgan -- Analyst

OK. Great. And that's not part of the FTC kind of further looking into it, doesn't have to do with price, it's just the overall transaction, it's that correct?

Steve Oakland -- Chief Executive Officer and President

That's correct. Yes. I wouldn't say they're running a normal process. They're just running a process.

Operator

The next question comes John Baumgartner with Wells Fargo.

John Baumgartner -- Wells Fargo -- Analyst

Steve, I just wanted to come back to the back-half revenue build because there's been an expectation for I guess fair amount of new volume to come through including some of the business that you lost from the pricing last year. But it sounds as though, maybe that development is running a bit behind plan at this point. Can you just talk a little bit more about that new business or recovered business as you kind of see it now and the moving parts there?

Steve Oakland -- Chief Executive Officer and President

I wouldn't go that far. I think those things that we lost, actually, the pieces, they have come back, are just beginning to ship. So I think those things are in place. I mean we did -- we've pruned a couple of things out.

We have a little closer look at it. But no, I wouldn't suggest that. I think those things are pretty good. I do think there's some new items and there are some new businesses that are maybe a little delayed because of the commercialization challenges around NLEA and getting all the labeling right.

But none of that's material. I think we're very close to where we thought we would be. We have taken out, as we said, a couple of things. We've had -- we're going to carry the -- some of the things that we've done in the second quarter through a little bit.

But I think that what we've guided to at the beginning appears to be what's happening in the fourth quarter.

John Baumgartner -- Wells Fargo -- Analyst

OK. And then just to build on the capacity question in light of the volume declines in the first half of the year, TreeHouse 2020 had been targeting I think a 20-percentage-point capacity utilization improvement. And I think entering 2019, you are about halfway there in terms of the progress. Is that 20% still a good number? And then in getting there from here, how do we think about the balance of the drivers? Is it more a function of gaining new volumes on a fixed asset base? Is it more from taking down additional capacity? Just a balance there would be helpful.

Steve Oakland -- Chief Executive Officer and President

I would suggest we're starting to see the benefit of that. And I think it's going to be -- there is -- you missed one other thing. There's some capital expense we won't have to make going forward. I think we're going to see our broth business rebound in the third and second half, really the second -- the third and fourth quarters.

Some of that volume ships in the third quarter for Thanksgiving. But we're going to see our broth business bounce back. And that's really an effective TMOS, right? They will ship significantly more cases of the same assets than they did a year ago. The same thing is going to happen in our waffle business in the back half.

So I think the impact of TMOS is also going to be capital avoidance. We had some long-range capital plans for assets that the TMOS impact will cause us to avoid. So I think it's a combination of those things. I don't know, Matthew, if you want --

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. I think when you look back over time, the easy capacity we realigned was the taking lines out where we could load other facilities. That was easy stuff. We've gone through a sizable number of plant closures now and done the majority of that structural work.

And we've also done a lot of work on warehousing sites, down dramatically, since the Private Brands acquisition. And as we've seen volumes come through even in this year, we've been making shift adjustments, as we speak, going from three shifts to two shifts and taking those chunks of costs out to align with the latest demand. So it's an ongoing thing that we're working on day in, day out.

Steve Oakland -- Chief Executive Officer and President

Yes.

Operator

And our last question today comes from Jon Andersen with William Blair.

Jon Andersen -- William Blair and Company -- Analyst

Most of mine have been asked. Just a couple of quick ones. One on, if you could comment on pricing, in general, where you sit. I know that you talked about getting the vast majority of the pricing you're looking for, but there was perhaps a little bit more that you would be looking to implement by midyear.

So just kind of an update there with respect to your plan. And then a broader question, Steve, with all of the conversations you've had with your retail customers over the past 12 months or so, can you talk a little bit about how you see the private brand opportunity for you evolving? I'm thinking about what are retailers focused on right now? Is it mostly opening price point to create a price halo, a price image? Is it more specialty and premium products? And kind of where you're intending to focus your efforts going forward?

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Yes. Let me just take the first one on pricing. I mean we really do have the vast majority of this behind us now. I think we're down to a couple of million, but we're still floating around deciding the best way to tactically approach it and where the crop markets are going to be.

But it's literally $2 million or less I think we're still wrestling with. So nothing that the second half is depending on.

Steve Oakland -- Chief Executive Officer and President

Yes. And I think the answer to the question on the dialogue with retailers, really is dependent on their strategy. The hard discount retailer has a focus on, even though, they want innovation, they want some of those things, it's really focused on value. The superregional, the chain that's doing really well in their market, wants innovation that gives them -- that drives traffic and makes them unique, that insulates them against e-com.

So they're looking for unique items. So I think what we're starting to do and what the teams at the commercial group have built -- are designed to do is make sure we put the right resources. On the value team, it's the logistics group, it's a bunch of value engineering folks; on the experiential team, it's innovation, right? And it's R&D. So I think we are pivoting to putting the right resources on the right team.

And I would say that's where we see growth coming next year and the year beyond. So I can't answer that question easily because it's so different, every meeting is so 360-degree different.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Steve Oakland for any closing remarks.

Steve Oakland -- Chief Executive Officer and President

Yes, I'd just like to say thank you to everybody for being with us today. It's been an amazing journey. If you think about what we've done since we were together in New York in December, we've gone from five divisions to three. We've executed on what we've done to really position the company to take advantage of private label growth.

So we'll be working hard, as you know, for the rest of the year and we look forward to talking to you all after the third quarter, if not before. Thanks so much. Have a great day.

Operator

[Operator signoff]

Duration: 71 minutes

Call participants:

PI Aquino -- Head of Investor Relations

Steve Oakland -- Chief Executive Officer and President

Matthew Foulston -- Executive Vice President and Chief Financial Officer

Andrew Lazar -- Barclays Capital -- Analyst

Chris Growe -- Stifel Financial Corp. -- Analyst

Ken Goldman -- J.P. Morgan -- Analyst

Bill Chappell -- SunTrust Robinson Humphrey -- Analyst

Steve Strycula -- UBS -- Analyst

Scott Mushkin -- Wolfe Research -- Analyst

Robert Moskow -- Credit Suisse -- Analyst

Amit Sharma -- BMO Capital Markets -- Analyst

Bryan Spillane -- Bank of America Merrill Lynch -- Analyst

Carla Casella -- J.P. Morgan -- Analyst

John Baumgartner -- Wells Fargo -- Analyst

Jon Andersen -- William Blair and Company -- Analyst

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