TreeHouse Foods: Reports Third Quarter 2022 Results

Oak Brook / IL. (thf) TreeHouse Foods Inc. reported results for Q3-2022, that ended on September 30.

«I’m proud of how we have successfully reshaped our business. Today we have greater strategic focus on accelerating our growth, improving operational efficiency and enhancing the value we deliver to our customers and consumers – all reflected in our recently unveiled statement of corporate purpose: to engage and delight – one customer at a time,» said Steve Oakland, Chief Executive Officer and President. «The successful divestiture of a significant portion of our Meal Preparation assets positions us well to execute on our strategy: to capitalize on strong consumer demand trends in order to accelerate growth across our higher-margin private label snacking and beverage categories while driving long-term shareholder value.»

«In the third quarter, we delivered solid sequential improvement across both revenue and profitability, reflecting the progress we are making to mitigate the disruption resulting from the challenging macro environment,» Oakland continued. «I’m confident that our portfolio of private label snacking and beverage products is poised to benefit from increasing consumer demand for snacking and beverages as well as broader trends driving private label demand.»

«Completing the transaction marked a significant step forward in our efforts to simplify our business, improve operational execution and accelerate growth. We have reduced debt by USD 500 million and meaningfully strengthened our balance sheet, positioning us to continue investing in our business and customer relationships,» said Patrick O’Donnell, Interim Chief Financial Officer and Chief Accounting Officer. «We continued to improve execution and profitability in a challenging environment, and we expect this momentum to build in the fourth quarter as we reach our seasonal peaks, capture further impact of pricing to recover inflation and deliver on our cost savings initiatives.»

Continuing Operations Outlook

TreeHouse issued the following guidance for Q4 2022:

  • Net sales are expected to grow 22 percent – 24 percent year-over-year, primarily driven by pricing.
  • Adjusted Ebitda is expected to be between USD 105 to USD 120 million. Adjusted Ebitda margin is anticipated in the range of 10.5 percent – 12.0 percent, representing substantial sequential improvement from the 8.8 percent in the third quarter, driven by the impact of pricing actions taken to date, peak seasonality and cost savings initiatives.
  • Although the industry-wide labor and supply chain environment will continue to be challenging, the Company is making steady improvement around service which it expects to continue into 2023.

With regard to 2023, the Company noted:

  • Given the current economic environment, demand for private label food and beverages is expected to remain strong.
  • Pre-pandemic growth for the Company’s current portfolio of categories ranged from 3 percent to 5 percent. Fiscal year 2023 net sales growth is expected to be strong due to the wraparound impact of TreeHouse’s pricing actions to recover inflation in 2022.
  • Net interest in 2023 will reflect TreeHouse’s USD 500 million debt repayment in October 2022, and result in a reduction of approximately USD 20 million in annual interest expense. In addition, TreeHouse expects to receive interest income of approximately USD 40 million in 2023 related to the note receivable issued as part of the transaction.
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