• Fourth Quarter Adjusted Net Sales: $911.4 million.
• Fourth Quarter Adjusted EBITDA: $118.3 million.
• Fourth Quarter Adjusted EBITDA Margin: 13%.
• Fiscal Year 2024 Adjusted Net Sales: $3.38 billion.
• Fiscal Year 2024 Adjusted EBITDA: $337 million.
• Volume and Mix Growth (Q4): 3.8% increase.
• Procurement Savings (2024): $60 million in gross savings.
• Shareholder Returns (2024): $150 million through share repurchase program.
• 2025 Adjusted Net Sales Guidance: $3.34 billion to $3.4 billion.
• 2025 Adjusted EBITDA Guidance: $345 million to $375 million.
• 2025 Free Cash Flow Guidance: At least $130 million.
• 2025 Capital Expenditures Guidance: Approximately $125 million.
• First Quarter 2025 Adjusted Net Sales Guidance: $785 million to $800 million.
• First Quarter 2025 Adjusted EBITDA Guidance: $38 million to $46 million.

• Warning! GuruFocus has detected 5 Warning Signs with THS.

Release Date: February 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Treehouse Foods Inc (NYSE:THS) completed the acquisition of Harris Tea, enhancing its competitive positioning in the private label tea category.
• Fourth-quarter adjusted net sales of $911.4 million and adjusted EBITDA of $118.3 million were in line with expectations, demonstrating effective cost management.
• The company achieved significant cost savings through procurement initiatives, contributing to improved adjusted gross margin performance.
• Treehouse Foods Inc (NYSE:THS) is focusing on optimizing costs across its supply chain to drive improved profitability and has visibility to delivering $250 million of gross supply chain savings through 2027.
• The company is strategically positioned to benefit from the long-term growth trends in private brand groceries and consumer snacking preferences.

Negative Points

• Treehouse Foods Inc (NYSE:THS) experienced a voluntary recall of frozen griddle products, impacting supply chain operations and financial contributions in the first quarter.
• Private brand unit sales saw a sharp deceleration during the fourth quarter due to macroeconomic pressures affecting the broader food and beverage market.
• The company anticipates a challenging macro food environment and slowing category growth in 2025, with expected flat adjusted net sales.
• Volume and mix are expected to decline approximately 1% year-over-year in 2025, influenced by the frozen griddle product recall and other margin management actions.
• Treehouse Foods Inc (NYSE:THS) is facing low to mid-single-digit inflation in commodities such as coffee and cocoa, which could impact profitability.

Q & A Highlights

Q: In the fourth quarter, excluding the impact of exiting businesses and the griddle recall, underlying volume rose 3.8%. Why is the underlying volume expected to be flattish in the first quarter? A: Patrick O'Donnell, CFO, explained that the ramp-up of the broth facility contributed to the fourth quarter's performance. However, category deceleration and slightly positive but largely flat category trends are expected to result in flattish volume for the first quarter.

Q: Are the current challenges in the food industry more enduring or structural compared to past challenges? A: Steven Oakland, CEO, noted that while the current environment is challenging with high inflation and consumer pressure, TreeHouse Foods is focusing on operational excellence and efficiency. The company is preparing to leverage financial opportunities when the market normalizes, as it has in the past.

Q: Can you elaborate on the margin management actions planned for 2025 and their impact on volume? A: Steven Oakland, CEO, stated that margin management will focus on aligning efficient operations with customer needs, potentially resulting in a 1-2% volume drag. However, this is expected to be offset by cost savings. The approach will be gradual, starting in the second quarter and building throughout the year.

Q: How should we think about the supply chain cost savings program and capital expenditure glide path for the coming years? A: Patrick O'Donnell, CFO, mentioned that procurement cost savings initiatives will continue to provide benefits in 2025, though at a slightly reduced rate. The capital expenditure is expected to decrease to 3-3.5% of sales over the next few years as multiyear projects conclude.

Q: What is the outlook for promotional activity in the current low-volume environment? A: Steven Oakland, CEO, anticipates an increase in branded promotions, which is factored into TreeHouse's flat volume guidance. Private label promotions are managed with retailers and are not expected to have a significant financial impact on TreeHouse.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.