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TreeHouse Foods (THS) Q2 Earnings Beat Estimates, Sales Drop
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TreeHouse Foods, Inc. (THS - Free Report) posted mixed second-quarter 2024 results, with the top and the bottom line declining year over year. Quarterly earnings and sales beat their respective Zacks Consensus Estimates. Management reaffirmed its 2024 net sales outlook while lowering the upper end of its adjusted EBITDA guidance.
TreeHouse Foods is committed to converting sales opportunities, executing supply chain initiatives and restoring a broth facility. THS is actively transforming its business to emphasize private brands, snacking and beverages, aligning with consumer trends favoring these categories.
The Zacks Rank #1 (Strong Buy) company’s shares have gained 10.8% in the past three months against the industry’s decline of 0.9%.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
TreeHouse Foods posted adjusted earnings of 29 cents per share, beating the Zacks Consensus Estimate of 13 cents. However, the bottom line slumped from 43 cents reported in the year-ago quarter.
Net sales of $788.5 million dropped 1.9% year over year. The downside was primarily caused by pricing adjustments related to commodities. The decline was due to adverse volume/mix effects from planned distribution exits, particularly in the coffee and in-store bakery categories and the restoration of one of its broth facilities. This downtick was partially offset by increased volume/mix from the acquisition of Coffee Roasting Capability and new business wins. The top line beat the Zacks Consensus Estimate of $783.7 million.
Organic sales decreased 5% year over year. The volume/mix, excluding business acquisitions, contributed to a decline of 1.1% in the reported period. The pricing and volume/mix impacts of the restart of the broth facility further led to declines of 3% and 0.9%, respectively.
The gross margin of 16.3% contracted by 0.3 percentage points from the year-ago quarter, mainly due to the expenses associated with restoring its broth facilities.
Total operating expenses were $132.3 million, up from the $102.9 million reported in the year-ago quarter. The increase was mainly due to a $19.3 million non-cash impairment charge for exiting the Ready-to-drink beverages business. This was compounded by higher personnel and capability investments and lower TSA income, though partially offset by reduced freight costs and TSA-related expense reductions.
Adjusted EBITDA from continuing operations totaled $70.6 million, a decline from $76.3 million in second-quarter 2023. This reduction was mainly due to investments in personnel and capabilities and the restoration of one of the broth facilities. However, the plunge was partially mitigated by supply chain savings, including reduced commodity and freight costs.
Other Updates
TreeHouse Foods concluded the quarter with cash and cash equivalents of $105.8 million, long-term debt of $1,398.2 million and total shareholders’ equity of $1,550.1 million. In the first six months ended Jun 30, 2024, the company’s net cash used in operating activities from operating activities was $71.8 million.
In the second quarter, THS bought back 1.3 million shares for $44.8 million (excluding excise tax). At the end of the quarter, THS had shares worth $78 million available under its buyback authorization.
Image Source: Zacks Investment Research
2024 Guidance
For 2024, TreeHouse Foods still expects net sales of $3.43-$3.5 billion, which indicates growth of nearly flat to 2% from the 2023 reported level.
Management revised its adjusted EBITDA guidance to a range of $360-$380 million, lowering the upper end of the range by $10 million. This revision accounts for performance in the first half of the year and assumes that current consumer-driven mix trends will persist in the second half.
For 2024, management expects capital expenditures of nearly $145 million and a free cash flow of at least $130 million.
Q3 Guidance
Net sales for the third quarter are projected to be between $865 and $895 million, reflecting flat to 4% year-over-year growth. Organic volume and mix are anticipated to increase by low-single digits, while pricing is expected to remain stable.
Adjusted EBITDA from continuing operations for the third quarter is estimated to range from $98 to $108 million. This expectation takes into account a timing shift due to favorable freight costs being realized in the second quarter instead of the third.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicate growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2(Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings indicates growth of 5.8% and 6.3%, respectively, from prior-year reported levels.
Colgate-Palmolive (CL - Free Report) , which manufactures and sells consumer products, currently carries a Zacks Rank #2. CL delivered an earnings surprise of 4.8% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings suggests growth of 3.8% and nearly 10.5%, respectively, from the year-ago reported numbers.
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TreeHouse Foods (THS) Q2 Earnings Beat Estimates, Sales Drop
TreeHouse Foods, Inc. (THS - Free Report) posted mixed second-quarter 2024 results, with the top and the bottom line declining year over year. Quarterly earnings and sales beat their respective Zacks Consensus Estimates. Management reaffirmed its 2024 net sales outlook while lowering the upper end of its adjusted EBITDA guidance.
TreeHouse Foods is committed to converting sales opportunities, executing supply chain initiatives and restoring a broth facility. THS is actively transforming its business to emphasize private brands, snacking and beverages, aligning with consumer trends favoring these categories.
The Zacks Rank #1 (Strong Buy) company’s shares have gained 10.8% in the past three months against the industry’s decline of 0.9%.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote
Quarter in Detail
TreeHouse Foods posted adjusted earnings of 29 cents per share, beating the Zacks Consensus Estimate of 13 cents. However, the bottom line slumped from 43 cents reported in the year-ago quarter.
Net sales of $788.5 million dropped 1.9% year over year. The downside was primarily caused by pricing adjustments related to commodities. The decline was due to adverse volume/mix effects from planned distribution exits, particularly in the coffee and in-store bakery categories and the restoration of one of its broth facilities. This downtick was partially offset by increased volume/mix from the acquisition of Coffee Roasting Capability and new business wins. The top line beat the Zacks Consensus Estimate of $783.7 million.
Organic sales decreased 5% year over year. The volume/mix, excluding business acquisitions, contributed to a decline of 1.1% in the reported period. The pricing and volume/mix impacts of the restart of the broth facility further led to declines of 3% and 0.9%, respectively.
The gross margin of 16.3% contracted by 0.3 percentage points from the year-ago quarter, mainly due to the expenses associated with restoring its broth facilities.
Total operating expenses were $132.3 million, up from the $102.9 million reported in the year-ago quarter. The increase was mainly due to a $19.3 million non-cash impairment charge for exiting the Ready-to-drink beverages business. This was compounded by higher personnel and capability investments and lower TSA income, though partially offset by reduced freight costs and TSA-related expense reductions.
Adjusted EBITDA from continuing operations totaled $70.6 million, a decline from $76.3 million in second-quarter 2023. This reduction was mainly due to investments in personnel and capabilities and the restoration of one of the broth facilities. However, the plunge was partially mitigated by supply chain savings, including reduced commodity and freight costs.
Other Updates
TreeHouse Foods concluded the quarter with cash and cash equivalents of $105.8 million, long-term debt of $1,398.2 million and total shareholders’ equity of $1,550.1 million. In the first six months ended Jun 30, 2024, the company’s net cash used in operating activities from operating activities was $71.8 million.
In the second quarter, THS bought back 1.3 million shares for $44.8 million (excluding excise tax). At the end of the quarter, THS had shares worth $78 million available under its buyback authorization.
Image Source: Zacks Investment Research
2024 Guidance
For 2024, TreeHouse Foods still expects net sales of $3.43-$3.5 billion, which indicates growth of nearly flat to 2% from the 2023 reported level.
Management revised its adjusted EBITDA guidance to a range of $360-$380 million, lowering the upper end of the range by $10 million. This revision accounts for performance in the first half of the year and assumes that current consumer-driven mix trends will persist in the second half.
For 2024, management expects capital expenditures of nearly $145 million and a free cash flow of at least $130 million.
Q3 Guidance
Net sales for the third quarter are projected to be between $865 and $895 million, reflecting flat to 4% year-over-year growth. Organic volume and mix are anticipated to increase by low-single digits, while pricing is expected to remain stable.
Adjusted EBITDA from continuing operations for the third quarter is estimated to range from $98 to $108 million. This expectation takes into account a timing shift due to favorable freight costs being realized in the second quarter instead of the third.
Other Top-Ranked Picks
Vital Farms (VITL - Free Report) offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1. VITL has a trailing four-quarter earnings surprise of 102.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicate growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Philip Morris (PM - Free Report) , a tobacco company, has a trailing four-quarter earnings surprise of 1.8%, on average. PM currently carries a Zacks Rank #2(Buy).
The Zacks Consensus Estimate for Philip Morris’ current financial-year sales and earnings indicates growth of 5.8% and 6.3%, respectively, from prior-year reported levels.
Colgate-Palmolive (CL - Free Report) , which manufactures and sells consumer products, currently carries a Zacks Rank #2. CL delivered an earnings surprise of 4.8% in the trailing four quarters, on average.
The Zacks Consensus Estimate for Colgate-Palmolive’s current fiscal-year sales and earnings suggests growth of 3.8% and nearly 10.5%, respectively, from the year-ago reported numbers.