Core Insights - TreeHouse Foods, Inc. (THS) reported second-quarter 2025 results with both net sales and earnings exceeding Zacks Consensus Estimates, although earnings decreased compared to the previous year [1][2]. Financial Performance - Adjusted earnings were 17 cents per share, surpassing the estimate of 10 cents, but down from 29 cents in the same quarter last year [2][10]. - Net sales reached $798 million, a 1.2% increase year over year, driven by the acquisition of the private brand tea business, favorable pricing, and distribution gains, despite volume/mix declines [3][10]. - Adjusted net sales were $801.4 million, up 1.4% from the prior year, exceeding the consensus estimate of $787 million [3][10]. Volume and Pricing Dynamics - Volume/mix negatively impacted sales by 6.2%, while a recent acquisition contributed 4.5% to sales [4]. - Pricing actions added 4.2% to net sales, but the exit from the ready-to-drink business resulted in a 1% decline [4]. Margin and Cost Analysis - Gross profit margin increased by 1.1 percentage points to 17.4%, aided by $13.1 million in insurance recoveries and supply-chain cost-saving initiatives [5][10]. - Total operating expenses decreased to $111.9 million from $132.3 million in the previous year, primarily due to a non-cash impairment charge in 2024 and ongoing cost-reduction efforts [6]. EBITDA and Cash Flow - Adjusted EBITDA rose to $73.3 million from $70.6 million in the same period of 2024, driven by cost-saving measures and contributions from the Harris Tea acquisition [7]. - The company reported cash and cash equivalents of $17.1 million, long-term debt of $1,496.7 million, and total shareholders' equity of $1,525.1 million [8]. 2025 Outlook - THS expects adjusted net sales between $3.360 billion and $3.415 billion for 2025, indicating a year-over-year change of a 0.5% decline to 1% growth [11]. - Adjusted EBITDA from continuing operations is forecasted to be between $345 million and $375 million, with capital expenditures expected to be nearly $125 million [13]. Q3 Expectations - For Q3, adjusted net sales are estimated to be between $840 million and $870 million, with organic volume and mix expected to decline in the high single digits [14]. - Pricing actions are anticipated to contribute approximately 4% gain to net sales [14].

Core Insights - TreeHouse Foods reported Q2 fiscal 2025 results with adjusted net sales of $801.4 million, surpassing analyst estimates of $788.0 million by $13.4 million [1][2] - Adjusted earnings per share (EPS) was $0.17, reflecting a 41.4% decline year-over-year from $0.29 in Q2 2024 [2] - The company experienced a net loss of $2.9 million, significantly improved from a loss of $16.7 million in the same quarter last year, marking an 82.6% reduction [2][8] Financial Performance - Adjusted net sales increased by 1.5% year-over-year from $789.9 million in Q2 2024 [2] - Adjusted EBITDA rose by 3.8% year-over-year to $73.3 million [2][8] - Gross margin improved by 1.1 percentage points to 17.4%, aided by non-recurring insurance recoveries and supply chain efficiency [2][7] Strategic Focus - The company is concentrating on high-growth, high-margin product categories, moving away from less profitable segments like meal preparations and ready-to-drink beverages [4] - Recent acquisition of Harris Tea contributed positively to sales, while the company continues to optimize its portfolio by consolidating lower-margin product lines [5][4] Operational Challenges - Organic sales volume declined by 6.2%, influenced by the exit from lower-margin offerings and a recall of frozen griddle products [6][9] - Other expenses rose to $32.9 million, primarily due to hedging losses and increased interest expenses [8] Outlook and Guidance - Management reaffirmed full-year targets for adjusted EBITDA and free cash flow, expecting adjusted net sales for FY2025 between $3.36 billion and $3.415 billion, indicating a slight decline to modest growth [11] - Anticipated flat sales growth for Q3, with adjusted net sales projected between $840 million and $870 million [11] - Continued pressure on organic volume is expected, but pricing and category recovery are anticipated to improve performance in the second half of the year [11]

[Part I — Financial Information](index=4&type=section&id=Part%20I%20%E2%80%94%20Financial%20Information) [Item 1 — Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20%E2%80%94%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements of TreeHouse Foods, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, recent activities, and financial positions [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a slight increase in total assets from $3,980.0 million at December 31, 2024, to $4,044.1 million at June 30, 2025, primarily driven by increases in receivables, inventories, goodwill, and intangible assets, while cash and cash equivalents significantly decreased | Metric | June 30, 2025 (millions) | December 31, 2024 (millions) | Change (millions) | % Change | | :-------------------------------- | :----------------------- | :------------------------- | :---------------- | :------- | | Cash and cash equivalents | $17.1 | $289.6 | $(272.5) | -94.1% | | Receivables, net | $212.0 | $146.8 | $65.2 | 44.4% | | Inventories | $634.8 | $539.3 | $95.5 | 17.7% | | Total current assets | $908.1 | $1,009.7 | $(101.6) | -10.1% | | Goodwill | $1,892.1 | $1,819.3 | $72.8 | 4.0% | | Intangible assets, net | $266.8 | $212.9 | $53.9 | 25.3% | | Total assets | $4,044.1 | $3,980.0 | $64.1 | 1.6% | | Accounts payable | $534.5 | $602.5 | $(68.0) | -11.3% | | Accrued expenses | $179.9 | $141.3 | $38.6 | 27.3% | | Total current liabilities | $720.2 | $744.9 | $(24.7) | -3.3% | | Long-term debt | $1,496.7 | $1,401.3 | $95.4 | 6.8% | | Total liabilities | $2,519.0 | $2,431.1 | $87.9 | 3.6% | | Total stockholders' equity | $1,525.1 | $1,548.9 | $(23.8) | -1.5% | | Total liabilities and stockholders' equity | $4,044.1 | $3,980.0 | $64.1 | 1.6% | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended June 30, 2025, the company reported a net loss of $(2.9) million, an improvement from $(16.7) million in the prior year, driven by increased net sales and gross profit, and significantly lower asset impairment charges. However, for the six months ended June 30, 2025, the net loss widened to $(34.7) million from $(28.4) million, primarily due to higher total other expenses | Metric (millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $798.0 | $788.5 | $1,590.0 | $1,609.2 | | Gross profit | $139.2 | $128.3 | $254.4 | $240.3 | | Operating income (loss) | $27.3 | $(4.0) | $21.8 | $(9.2) | | Loss before income taxes | $(5.6) | $(20.9) | $(49.2) | $(36.2) |\n| Net loss | $(2.9) | $(16.7) | $(34.7) | $(28.4) | | Basic EPS | $(0.06) | $(0.32) | $(0.69) | $(0.54) | | Diluted EPS | $(0.06) | $(0.32) | $(0.69) | $(0.54) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported comprehensive income of $1.5 million for the three months ended June 30, 2025, a significant improvement from a comprehensive loss of $(18.0) million in the prior year, primarily due to positive foreign currency translation adjustments. For the six months ended June 30, 2025, the comprehensive loss narrowed to $(30.1) million from $(32.3) million | Metric (millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(2.9) | $(16.7) | $(34.7) | $(28.4) | | Foreign currency translation adjustments | $4.5 | $(1.3) | $4.7 | $(3.9) | | Other comprehensive income (loss) | $4.4 | $(1.3) | $4.6 | $(3.9) | | Comprehensive income (loss) | $1.5 | $(18.0) | $(30.1) | $(32.3) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from $1,548.9 million at January 1, 2025, to $1,525.1 million at June 30, 2025, primarily due to net losses and issuance of stock awards, partially offset by stock-based compensation and other comprehensive income | Metric (millions) | Balance, January 1, 2025 | Balance, June 30, 2025 | | :------------------ | :----------------------- | :--------------------- | | Common Stock | $0.6 | $0.6 | | Treasury Stock | $(385.4) | $(385.4) | | Additional Paid-In Capital | $2,238.4 | $2,244.7 | | Accumulated Deficit | $(222.0) | $(256.7) | | Accumulated Other Comprehensive Loss | $(82.7) | $(78.1) | | Total Stockholders' Equity | $1,548.9 | $1,525.1 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash used in operating activities increased to $(100.7) million from $(71.8) million in the prior year, mainly due to a decrease in cash flows from the Receivables Sales Program. Net cash used in investing activities significantly increased to $(258.5) million, primarily driven by the acquisition of the private brand tea business. Net cash provided by financing activities was $89.2 million, a substantial improvement from net cash used of $(92.9) million in the prior year, due to increased borrowings from the Revolving Credit Facility and no common stock repurchases | Cash Flow Activity (millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(100.7) | $(71.8) | | Net cash used in investing activities | $(258.5) | $(49.7) | | Net cash provided by (used in) financing activities | $89.2 | $(92.9) | | Net decrease in cash and cash equivalents | $(272.5) | $(214.5) | | Cash and cash equivalents, end of period | $17.1 | $105.8 | - **The increase in cash used in investing activities** was primarily due to the **$209.3 million acquisition** of the private brand tea business in Q1 2025[21](index=21&type=chunk)[153](index=153&type=chunk) - **The shift to cash provided by financing activities** was mainly due to **$105.0 million** in borrowings from the Revolving Credit Facility in H1 2025 and the absence of common stock repurchases (**$88.7 million** in H1 2024)[21](index=21&type=chunk)[154](index=154&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies, recent accounting pronouncements, restructuring activities, receivables sales program, inventory valuation, acquisitions, property, plant, and equipment, goodwill and intangible assets, income taxes, long-term debt, stockholders' equity, earnings per share, stock-based compensation, accumulated other comprehensive loss, employee benefits, commitments and contingencies, derivative instruments, and segment information [1. Basis of Presentation](index=10&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The unaudited condensed consolidated financial statements are prepared in accordance with SEC rules for quarterly reporting on Form 10-Q, using GAAP, and include all necessary adjustments for fair presentation. Management uses judgment and estimates, which may differ from actual results - The financial statements are **unaudited** and **prepared in conformity with GAAP**, with certain information condensed or omitted as permitted by SEC rules for Form 10-Q[24](index=24&type=chunk) - Management uses judgment and estimates in preparing the financial statements, and actual results may differ from these estimates[25](index=25&type=chunk) [2. Recent Accounting Pronouncements](index=10&type=section&id=2.%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The company has identified two recent FASB ASUs not yet adopted: ASU 2024-03 (Income Statement - Expense Disaggregation Disclosures) effective for annual periods after December 15, 2026, and ASU 2023-09 (Income Taxes - Improvements to Income Tax Disclosures) effective for annual periods after December 15, 2024. Both are expected to primarily impact financial statement notes - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted[27](index=27&type=chunk) - ASU 2023-09 (Income Tax Disclosures) is effective for annual periods beginning after December 15, 2024, on a prospective basis, with early adoption permitted[28](index=28&type=chunk) - The impact of both ASUs upon adoption is **expected to be limited to certain notes** to the Consolidated Financial Statements[27](index=27&type=chunk)[28](index=28&type=chunk) [3. Restructuring Programs](index=11&type=section&id=3.%20RESTRUCTURING%20PROGRAMS) TreeHouse Foods is undergoing enterprise-wide restructuring to improve profitability, involving organizational changes, business exits, and facility closures. Recent activities include a corporate support function reorganization in April 2025, the exit of the Ready-to-drink (RTD) business in Q1 2025, and the closure of the New Hampton, Iowa facility in Q1 2025. Tentative plans were also announced in July 2025 to close Chicago (pickle) and South Beloit (cookie) facilities - In April 2025, the Company announced an **organizational restructuring** to drive **operational efficiency, cost-savings, and enhance profitability and cash flow**[30](index=30&type=chunk) - **Production for the Ready-to-drink (RTD) business ceased in Q1 2025** as part of a portfolio optimization strategy, with **total exit costs expected to be approximately $5.0 million**[31](index=31&type=chunk) - The **New Hampton, Iowa facility closure** was announced in Q1 2025 due to shifts in non-dairy creamer demand, with **total costs expected around $8.0 million**[32](index=32&type=chunk) - **Tentative plans were announced on July 31, 2025, to close the Chicago, Illinois pickle facility and the South Beloit, Illinois cookie facility**, with **expected cash costs of approximately $12 million**[36](index=36&type=chunk)[37](index=37&type=chunk) Restructuring Program Costs (In millions) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales | $2.9 | $— | $5.7 | $— | | Other operating expense, net | $12.7 | $11.5 | $28.2 | $18.2 | | **Total** | **$15.6** | **$11.5** | **$33.9** | **$18.2** | | Employee-related | $0.3 | $4.7 | $10.4 | $7.3 | | Other costs | $13.3 | $6.8 | $17.6 | $10.9 | | Asset-related | $2.0 | $— | $5.9 | $— | [4. Receivables Sales Program](index=13&type=section&id=4.%20RECEIVABLES%20SALES%20PROGRAM) The company utilizes a Receivables Sales Program to manage liquidity by selling trade accounts receivable to a third-party financial institution. As of June 30, 2025, $213.3 million in accounts receivable were outstanding under this program, with $171.7 million collected but not yet remitted. The loss on sale of receivables (discount) was $4.2 million for the six months ended June 30, 2025 - The Receivables Sales Program allows the company to **sell trade accounts receivable to a third-party financial institution for liquidity management**[40](index=40&type=chunk) Receivables Sales Program Status (In millions) | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | Outstanding accounts receivable sold | $213.3 | $375.0 | | Receivables collected and not remitted | $171.7 | $237.7 | Cash Flows and Loss on Sale (In millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Receivables sold | $633.7 | $495.5 | | Receivables collected and remitted | $(795.4) | $(608.7) | | Loss on sale of receivables | $4.2 | $3.9 | [5. Inventories](index=13&type=section&id=5.%20INVENTORIES) Total inventories increased to $634.8 million at June 30, 2025, from $539.3 million at December 31, 2024, primarily driven by an increase in finished goods Inventory Category (In millions) | Inventory Category (In millions) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Raw materials and supplies | $223.2 | $217.4 | | Finished goods | $411.6 | $321.9 | | **Total inventories** | **$634.8** | **$539.3** | [6. Acquisitions](index=14&type=section&id=6.%20ACQUISITIONS) On January 2, 2025, TreeHouse Foods acquired Harris Freeman & Co, Inc.'s private brand tea business for approximately $207.6 million, aligning with its strategy to build capabilities in higher-growth categories. This acquisition contributed $74.1 million in net sales and $4.3 million in income before income taxes through June 30, 2025, and resulted in $69.7 million in goodwill and $77.9 million in other intangible assets. In January 2024, the company also acquired Pickle Branded Assets for $25.9 million - On January 2, 2025, the Company acquired the private brand tea business of Harris Freeman & Co, Inc. for approximately **$207.6 million** in cash[44](index=44&type=chunk) - The Harris Tea acquisition contributed approximately **$74.1 million** in net sales and **$4.3 million** in income before income taxes from acquisition date through June 30, 2025[45](index=45&type=chunk) Preliminary Purchase Price Allocation for Harris Tea Acquisition (In millions) | Asset/Liability Category | Amount | | :----------------------- | :----- | | Total consideration transferred | $207.6 |\n| Goodwill | $69.7 | | Customer relationships | $65.0 | | Trademarks | $12.9 | | Inventories | $41.8 | | Property, plant, and equipment | $19.0 | - On January 2, 2024, the Company acquired Pickle Branded Assets for approximately **$25.9 million** in cash, including **$25.2 million** in inventories and **$0.7 million** in trademarks[51](index=51&type=chunk)[52](index=52&type=chunk) [7. Property, Plant, and Equipment](index=16&type=section&id=7.%20PROPERTY,%20PLANT,%20AND%20EQUIPMENT) Net property, plant, and equipment increased to $758.5 million at June 30, 2025, from $748.6 million at December 31, 2024. Depreciation expense for the three and six months ended June 30, 2025, was $28.9 million and $57.2 million, respectively. In Q2 2024, a $19.3 million impairment charge was recognized on the RTD asset group due to the decision to exit the business Property, Plant, and Equipment, Net (In millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Land | $35.3 | $35.0 | | Buildings and improvements | $383.1 | $378.1 | | Machinery and equipment | $1,114.4 | $1,063.3 | | Construction in progress | $117.8 | $120.6 | | Total | $1,650.6 | $1,597.0 | | Less accumulated depreciation | $(892.1) | $(848.4) | | **Property, plant, and equipment, net** | **$758.5** | **$748.6** | Depreciation Expense (In millions) | Period | 2025 | 2024 | | :----- | :--- | :--- | | Three Months Ended June 30 | $28.9 | $24.1 | | Six Months Ended June 30 | $57.2 | $48.6 | - A **$19.3 million asset impairment charge** on property, plant, and equipment was recognized in Q2 2024 due to the decision to exit the Ready-to-drink (RTD) business[55](index=55&type=chunk) [8. Goodwill and Intangible Assets](index=17&type=section&id=8.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS) Goodwill increased to $1,892.1 million at June 30, 2025, from $1,819.3 million at December 31, 2024, primarily due to the Harris Tea acquisition. Total intangible assets, net, also increased to $266.8 million from $212.9 million, driven by customer-related intangibles and trademarks from the acquisition Goodwill Changes (In millions) | Metric | Amount | | :-------------------------- | :----- | | Balance at December 31, 2024 | $1,819.3 |\n| Foreign currency exchange adjustments | $3.1 | | Acquisition | $69.7 | | **Balance at June 30, 2025** | **$1,892.1** | Intangible Assets, Net (In millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Customer-related | $197.3 | $150.4 | | Trademarks (finite lives) | $13.9 | $2.2 | | Computer software | $49.4 | $53.9 | | Trademarks (indefinite lives) | $6.0 | $6.0 | | **Total intangible assets** | **$266.8** | **$212.9** | - The increase in goodwill and intangible assets is **primarily attributable to the acquisition of the private brand tea business**[57](index=57&type=chunk)[58](index=58&type=chunk)[46](index=46&type=chunk) [9. Income Taxes](index=18&type=section&id=9.%20INCOME%20TAXES) The effective income tax rate for the three months ended June 30, 2025, was 48.2% (29.5% for six months), significantly higher than the prior year, primarily due to changes in non-deductible executive compensation and estimated annual pre-tax earnings. The company is assessing the impact of the recently signed One Big Beautiful Bill Act (OBBBA) on future financial results Effective Income Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Three Months Ended | **48.2%** | **20.1%** | | Six Months Ended | **29.5%** | **21.5%** | - The change in effective tax rate is **mainly due to changes in non-deductible executive compensation and estimated annual pre-tax earnings**[59](index=59&type=chunk) - The company is **assessing the impact of the One Big Beautiful Bill Act (OBBBA)**, signed on July 4, 2025, which includes tax reform provisions that may affect the effective tax rate and deferred tax assets in 2025 and subsequent periods[61](index=61&type=chunk) [10. Long-Term Debt](index=18&type=section&id=10.%20LONG-TERM%20DEBT) Total outstanding debt increased to $1,513.4 million at June 30, 2025, from $1,409.1 million at December 31, 2024. This increase is primarily due to $105.0 million drawn from the Revolving Credit Facility and an increase in Term Loan A, partially offset by a decrease in Term Loan A-1. The company refinanced its credit agreement in January 2025, extending maturities and adjusting loan sizes, and incurred a $2.6 million loss on extinguishment of debt Outstanding Debt (In millions) | Debt Instrument | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Revolving Credit Facility | $105.0 | $— | | Term Loan A | $480.0 | $316.4 | | Term Loan A-1 | $423.9 | $588.6 | | 2028 Notes | $500.0 | $500.0 | | Finance leases | $4.5 | $4.1 | | **Total outstanding debt** | **$1,513.4** | **$1,409.1** | - On January 17, 2025, the Company entered into the **Third Amended and Restated Credit Agreement**, **extending maturities and decreasing the aggregate size of Term Loan A to $480.0 million and Term Loan A-1 to $425.0 million**[63](index=63&type=chunk)[64](index=64&type=chunk) - A **$2.6 million loss on extinguishment of debt** was incurred in Q1 2025 due to the credit agreement refinancing[66](index=66&type=chunk) - As of June 30, 2025, the Company had **$362.2 million remaining availability** under its **$500.0 million Revolving Credit Facility**[67](index=67&type=chunk) [11. Stockholders' Equity](index=21&type=section&id=11.%20STOCKHOLDERS'%20EQUITY) The Board authorized a $400 million stock repurchase program on November 13, 2024, with $393.5 million remaining available as of June 30, 2025. No shares were repurchased during the three or six months ended June 30, 2025, compared to 1.3 million shares ($44.8 million) and 2.5 million shares ($88.7 million) repurchased in the corresponding 2024 periods, respectively - A **$400 million stock repurchase program** was authorized on November 13, 2024, with **$393.5 million** remaining available as of June 30, 2025[76](index=76&type=chunk) Common Stock Repurchases (In millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Shares repurchased | — | **1.3 million shares** | — | **2.5 million shares** | | Weighted average price per share | $— | $35.81 | $— | $36.20 | | Total cost | $— | **$44.8 million** | $— | **$88.7 million** | [12. Earnings Per Share](index=21&type=section&id=12.%20EARNINGS%20PER%20SHARE) Basic and diluted earnings per share were both $(0.06) for the three months ended June 30, 2025, and $(0.69) for the six months ended June 30, 2025. Due to net losses, the weighted average common shares outstanding were the same for both basic and diluted calculations, with 1.6 million and 1.2 million equity awards excluded as anti-dilutive for the three and six months ended June 30, 2025, respectively Earnings (Loss) Per Common Share (In millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(0.06) | $(0.32) | $(0.69) | $(0.54) | | Diluted EPS | $(0.06) | $(0.32) | $(0.69) | $(0.54) | | Weighted average common shares (Basic) | 50.5 | 52.3 | 50.5 | 53.0 | | Weighted average common shares (Diluted) | 50.5 | 52.3 | 50.5 | 53.0 | - **Equity awards of 1.6 million and 1.2 million were excluded** from diluted EPS calculations for the three and six months ended June 30, 2025, respectively, because they were **anti-dilutive** due to the company's **net loss**[78](index=78&type=chunk) [13. Stock-Based Compensation](index=22&type=section&id=13.%20STOCK-BASED%20COMPENSATION) Total stock-based compensation expense was $4.8 million for the three months ended June 30, 2025, and $10.4 million for the six months ended June 30, 2025. The company grants stock options, restricted stock units (RSUs), and performance units under its Equity and Incentive Plan. Unrecognized compensation costs for nonvested RSUs are $24.1 million (2.1 years weighted average period) and for performance units are $8.6 million (1.9 years weighted average period) as of June 30, 2025 Stock-Based Compensation Expense (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Compensation expense related to stock-based payments | $4.8 | $5.3 | $10.4 | $11.0 | | Related income tax benefit | $1.1 | $1.2 | $2.4 | $2.6 | - **Unrecognized compensation costs for nonvested restricted stock units are approximately $24.1 million** as of June 30, 2025, to be recognized over a weighted average period of **2.1 years**[85](index=85&type=chunk) - **Unrecognized compensation costs for nonvested performance units are estimated to be approximately $8.6 million** as of June 30, 2025, to be recognized over a weighted average period of **1.9 years**[90](index=90&type=chunk) [14. Accumulated Other Comprehensive Loss](index=24&type=section&id=14.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Accumulated other comprehensive loss improved to $(78.1) million at June 30, 2025, from $(82.7) million at December 31, 2024, primarily due to positive foreign currency translation adjustments Accumulated Other Comprehensive Loss (In millions) | Component | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Foreign Currency Translation | $(92.9) | $(88.2) | | Unrecognized Pension and Postretirement Benefits | $10.2 | $10.1 | | **Accumulated Other Comprehensive Loss** | **$(82.7)** | **$(78.1)** | - **Other comprehensive income before reclassifications was $4.7 million** for the six months ended June 30, 2025, primarily from **foreign currency translation adjustments**[91](index=91&type=chunk) [15. Employee Retirement and Postretirement Benefits](index=25&type=section&id=15.%20EMPLOYEE%20RETIREMENT%20AND%20POSTRETIREMENT%20BENEFITS) For the six months ended June 30, 2025, the company reported a net periodic pension benefit of $(0.2) million, an improvement from a cost of $0.2 million in the prior year, mainly due to expected return on plan assets offsetting interest cost. Net periodic postretirement cost remained stable at $0.2 million Net Periodic Pension (Benefit) Cost (In millions) | Component | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Service cost | $0.1 | $0.2 | | Interest cost | $5.4 | $5.2 | | Expected return on plan assets | $(5.8) | $(5.4) | | Amortization of unrecognized net loss | $0.1 | $0.2 | | **Net periodic pension (benefit) cost** | **$(0.2)** | **$0.2** | Net Periodic Postretirement Cost (In millions) | Component | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Interest cost | $0.4 | $0.4 | | Amortization of unrecognized net gain | $(0.2) | $(0.2) | | **Net periodic postretirement cost** | **$0.2** | **$0.2** | [16. Commitments and Contingencies](index=26&type=section&id=16.%20COMMITMENTS%20AND%20CONTINGENCIES) The company recognized $10.0 million in insurance recovery for the griddle product recall and an additional $3.1 million for the broth product recall in Q2 2025. The product recall liability for griddle products was $13.7 million as of June 30, 2025. The long-standing antitrust lawsuit against Keurig Green Mountain remains pending, with the company's economic expert estimating damages between $719.4 million and $1.5 billion before trebling - A **$10.0 million insurance recovery** for the voluntary griddle product recall and an additional **$3.1 million** for the broth product recall were recognized in Q2 2025[96](index=96&type=chunk)[97](index=97&type=chunk) - The product recall liability for griddle products was **$13.7 million** as of June 30, 2025[95](index=95&type=chunk) - The antitrust lawsuit against Keurig Green Mountain (KGM) is **pending**, with the company's economic expert estimating monetary damages between **$719.4 million** and **$1.5 billion** for antitrust claims (before trebling) and **$358.0 million** for false advertising claims[98](index=98&type=chunk) [17. Derivative Instruments](index=27&type=section&id=17.%20DERIVATIVE%20INSTRUMENTS) The company uses interest rate swaps and commodity contracts to manage market risks. As of June 30, 2025, interest rate swaps had a notional value of $875.0 million, hedging variable-rate debt at a weighted average fixed rate of approximately 3.69% through February 29, 2028. Commodity contracts, with a notional value of $77.6 million, are used to manage risks related to diesel, oil, plastics, resin, and other raw material costs. The company recognized a total net loss of $(16.9) million from derivative contracts for the six months ended June 30, 2025, primarily due to mark-to-market unrealized losses - **Interest rate swap agreements had a notional value of $875.0 million** as of June 30, 2025, fixing variable-rate debt at a weighted average fixed interest rate of approximately **3.69%** through February 29, 2028[101](index=101&type=chunk) - **Commodity contracts, with a notional value of $77.6 million** as of June 30, 2025, are used to manage price risk for diesel, oil, plastics, resin, and other raw materials[103](index=103&type=chunk) Fair Value of Derivative Instruments (In millions) | Type | Balance Sheet Location | June 30, 2025 | December 31, 2024 | | :------------------------ | :-------------------------------- | :------------ | :---------------- | | Asset derivatives: | | | | | Commodity contracts | Prepaid expenses and other current assets | $1.6 | $9.1 | | Interest rate swap agreements | Prepaid expenses and other current assets | $— | $2.2 | | Interest rate swap agreements | Other assets, net | $0.1 | $7.6 | | **Total Asset Derivatives** | | **$1.7** | **$18.9** | | Liability derivatives: | | | | | Commodity contracts | Accrued expenses | $7.8 | $— | | Interest rate swap agreements | Accrued expenses | $7.1 | $0.4 | | **Total Liability Derivatives** | | **$14.9** | **$0.4** | Derivative Gains and Losses Recognized in Net Loss (In millions) | Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Mark-to-market unrealized (loss) gain | $(31.7) | $8.5 | | Realized gain | $14.8 | $15.0 | | **Total (loss) gain** | **$(16.9)** | **$23.5** | [18. Segment Information](index=28&type=section&id=18.%20SEGMENT%20INFORMATION) TreeHouse Foods operates as a single reportable segment, focusing on private brands food and beverages across snacking, beverages & drink mixes, and grocery categories. The CEO, as CODM, manages operations on a consolidated basis. Net sales for the three months ended June 30, 2025, were $798.0 million, with Beverages & drink mixes showing growth, while Snacking and Grocery declined. Retail grocery remains the largest sales channel - **TreeHouse Foods operates as one reportable segment**, manufacturing and distributing **private brands** food and beverages primarily in North America[106](index=106&type=chunk) Net Sales by Product Category Group (In millions) | Product Category Group | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Snacking | $289.3 | $308.9 | $554.8 | $623.7 | | Beverages & drink mixes | $285.9 | $244.5 | $589.0 | $512.2 | | Grocery | $222.8 | $235.1 | $446.2 | $473.3 | | **Total net sales** | **$798.0** | **$788.5** | **$1,590.0** | **$1,609.2** | Net Sales by Sales Channel (In millions) | Sales Channel | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Retail grocery | $625.6 | $607.5 | $1,250.0 | $1,257.4 | | Co-manufacturing | $84.0 | $104.2 | $175.4 | $204.2 | | Food-away-from-home and other | $88.4 | $76.8 | $164.6 | $147.6 | | **Total net sales** | **$798.0** | **$788.5** | **$1,590.0** | **$1,609.2** | [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202%20%E2%80%94%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting recent developments such as facility closures, organizational restructuring, debt refinancing, and the Harris Tea acquisition. It also discusses macroeconomic trends, detailed financial results for the three and six months ended June 30, 2025, liquidity, capital resources, and non-GAAP financial measures [Business Overview](index=31&type=section&id=Business%20Overview) TreeHouse Foods is a leading North American private brands snacking and beverage manufacturer, focused on customer service, capabilities, and operational efficiencies. The company operates across attractive growth categories including snacking, beverages & drink mixes, and other grocery offerings, serving retail grocery, co-manufacturing, and food-away-from-home channels - **TreeHouse Foods is a leading private brands snacking and beverage manufacturer** in North America, focused on **customer service, capabilities, and operational efficiencies**[113](index=113&type=chunk) - The company's portfolio includes snacking (crackers, pretzels, cookies, candy, frozen griddle), beverages & drink mixes (non-dairy creamer, coffee, broths/stocks, powdered beverages, tea), and other grocery offerings (pickles, refrigerated dough, hot cereal, cheese & pudding)[114](index=114&type=chunk) - Products are sold across **retail grocery, co-manufacturing, and food-away-from-home channels**, with offerings including natural, organic, and gluten-free options[114](index=114&type=chunk) [Recent Developments](index=31&type=section&id=Recent%20Developments) Recent developments include tentative plans to close Chicago (pickle) and South Beloit (cookie) facilities, an organizational restructuring in April 2025, and the closure of the New Hampton, Iowa facility in Q1 2025. The company also refinanced its credit agreement in January 2025 and completed the acquisition of Harris Tea's private brand tea business. Production of frozen griddle products resumed at the Brantford facility after a voluntary recall, and insurance recoveries were recognized for both griddle and broth product recalls. The RTD business exit was completed in Q1 2025 - **Tentative plans were announced on July 31, 2025, to close the Chicago, Illinois pickle facility and the South Beloit, Illinois cookie facility** to optimize manufacturing footprint[116](index=116&type=chunk) - An **organizational restructuring**, including corporate support functions, was announced in April 2025 to drive **operational efficiency and cost-savings**[117](index=117&type=chunk) - The **New Hampton, Iowa facility closure** was announced in Q1 2025 due to shifts in non-dairy creamer demand, with a definitive agreement to sell the facility in Q3 2025[118](index=118&type=chunk) - The company refinanced its credit agreement on January 17, 2025, **extending maturities and adjusting the sizes of its Term Loans**[119](index=119&type=chunk)[120](index=120&type=chunk) - The acquisition of Harris Tea's private brand tea business was completed on January 2, 2025, for approximately **$207.6 million**, **aligning with the strategy to build capabilities in higher-growth categories**[121](index=121&type=chunk) - **Production of frozen griddle products at the Brantford facility resumed by the end of Q2 2025** following a voluntary recall, which had adversely impacted sales volumes in H1 2025[122](index=122&type=chunk) - A **$10.0 million insurance recovery** for the griddle recall and an additional **$3.1 million** for the broth recall were recognized in Q2 2025[123](index=123&type=chunk) - The **exit of the Ready-to-drink (RTD) business was completed in Q1 2025**, with production ceasing and related machinery and equipment sold[124](index=124&type=chunk)

Financial Data and Key Metrics Changes - Adjusted net sales increased by 1.4% year over year, reaching approximately $3.36 billion to $3.415 billion for the full year [15][20] - Adjusted EBITDA was $73.3 million, up about 4% year over year, with an adjusted EBITDA margin rising by 20 basis points to 9.1% [15][16] - The company anticipates a full year adjusted EBITDA guidance range of $345 million to $375 million [20] Business Line Data and Key Metrics Changes - The acquisition of Harris Teas contributed nearly 5% to net sales, while pricing adjustments provided a benefit of approximately 4% [16] - Volume and mix negatively impacted adjusted EBITDA by $1.1 million, primarily due to planned margin management actions [17] - Operations and Supply Chain delivered a benefit of $10.6 million year over year, driven by cost savings and improved execution [17] Market Data and Key Metrics Changes - The private brand industry dynamics remain favorable, with private brands maintaining or gaining market share despite a lower consumption environment [7][9] - The current level of national brand promotion is below pre-pandemic levels, with expectations of increased promotional intensity in certain categories [8][9] Company Strategy and Development Direction - The company is focused on margin improvement and cost control, with a commitment to $250 million in gross supply chain savings through 2027 [11][12] - Strategic decisions include closing two plants to optimize the network within the pickles and cookies businesses, enhancing competitive positioning [14] - The company aims to leverage its supply chain initiatives and improved service levels to pursue profitable new business opportunities [21] Management's Comments on Operating Environment and Future Outlook - The operating environment is dynamic, but the company is focused on executing plans to drive profits and cash flow [5][6] - Management expects unit volumes to improve in the fourth quarter, with pricing dynamics continuing to support growth [7][21] - The company anticipates organic volume and mix to decline by high single digits in the third quarter, with a recovery expected in the fourth quarter [21][60] Other Important Information - The company is committed to maintaining a disciplined capital allocation strategy, focusing on organic and inorganic investments that enhance shareholder returns [18] - The company is monitoring tariff policies and their potential impacts on operations and pricing [20] Q&A Session Summary Question: Competitive environment and private label performance - Management noted that private label pricing increases were similar to branded units, and they performed well in four of their top five categories [25][30] Question: Innovation and its impact on private label - Management emphasized that private label acts as a fast follower in innovation, leveraging trends established by branded products [40][42] Question: Ground coffee demand and pricing - Management confirmed strong demand for ground coffee and noted that private label would benefit from lower price points due to tariff impacts [51][55] Question: Broth market share recovery - Management reported improved service levels in the broth category and anticipated regaining market share as production stabilizes [56][57] Question: Expectations for organic volume decline - Management indicated that underlying consumer trends are expected to remain steady, with some tailwinds from recovering production [60][62] Question: Gross margin evolution - Management expects gross margin to remain flat in Q3, with improvements anticipated in Q4 as efficiencies and cost savings materialize [83][84]

TreeHouse Foods (THS) came out with quarterly earnings of $0.17 per share, beating the Zacks Consensus Estimate of $0.1 per share. This compares to earnings of $0.29 per share a year ago. These figures are adjusted for non-recurring items. Over the last four quarters, the company has surpassed consensus EPS estimates two times. TreeHouse, which belongs to the Zacks Food - Miscellaneous industry, posted revenues of $801.4 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.8 ...

Q2 2025 Performance - Adjusted Net Sales reached $801.4 million, exceeding the upper end of guidance[7, 8] - Adjusted EBITDA was $73.3 million, also surpassing the upper end of guidance[7, 8] - Adjusted EBITDA margin increased by 20 bps to 9.1%[38] - Adjusted Net Sales increased 1.4% year-over-year[38, 40] Full Year 2025 Outlook - The company anticipates Adjusted EBITDA in the range of $345 million to $375 million[7] - Free Cash Flow is expected to be at least $130 million[7] - Adjusted Net Sales growth is projected to be between -0.5% and 1.0%, equating to $3.360 to $3.415 billion[7, 48] Sales Drivers - Volume/mix had a negative impact of (6.2)%, influenced by margin management and the griddle recall[40] - The Harris Tea acquisition contributed positively with 4.5%[40] - Pricing adjustments resulted in a benefit of 4.2%[40] Capital Allocation - Capital expenditures are planned at approximately $125 million to enhance capabilities in growing categories[44, 48]

[Executive Summary](index=1&type=section&id=Executive%20Summary) TreeHouse Foods reported strong Q2 2025 results, exceeding guidance and maintaining confidence in full-year targets, driven by improved execution and private brand strength [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) TreeHouse Foods, Inc. reported strong second-quarter 2025 financial results, with adjusted net sales and adjusted EBITDA exceeding guidance, and remains confident in achieving its full-year 2025 guidance | Metric | Q2 2025 (Millions) | | :------------------- | :----------------- | | Net Sales | $798.0 | | Adjusted Net Sales | $801.4 | | Net Loss | $(2.9) | | Adjusted EBITDA | $73.3 | - **Adjusted net sales** and **adjusted EBITDA** both exceeded the upper-end of the company's guidance range[2](index=2&type=chunk) - The Company remains confident in its ability to achieve its **2025 guidance**[4](index=4&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Steve Oakland highlighted strong Q2 results, attributing success to improved execution driving margin improvement and cash flow growth, and believes private brands are well-positioned to offer value and achieve profit and cash flow growth - CEO Steve Oakland appreciated the team's effort for **strong Q2 results**, with **adjusted net sales** and **adjusted EBITDA** exceeding guidance[2](index=2&type=chunk) - The company is focused on driving **margin improvement** and **cash flow growth** through improved execution[2](index=2&type=chunk) - **Private brands** are considered attractively positioned, offering needed value to customers and consumers, enabling **profit and cash flow growth**[2](index=2&type=chunk) [Second Quarter 2025 Financial Results](index=1&type=section&id=SECOND%20QUARTER%202025%20FINANCIAL%20RESULTS) This section details TreeHouse Foods' Q2 2025 financial performance, including net sales growth, improved gross profit, reduced operating expenses, and changes in net loss and cash flow [Net Sales](index=1&type=section&id=Net%20Sales) Net sales for Q2 2025 increased by 1.2% to $798.0 million, primarily driven by the acquisition of a private brand tea business, favorable pricing, and distribution gains, partially offset by volume/mix declines due to margin management, macroeconomic trends, a frozen griddle product recall, and the RTD business exit | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Change (%) | | :---------------- | :----------------- | :----------------- | :---------------- | :--------- | | Net Sales | $798.0 | $788.5 | $9.5 | 1.2% | Drivers of Net Sales Change (Q2 2025 vs. Q2 2024) | Factor | Three Months (%) | | :-------------------------- | :--------------- | | Business acquisition | 4.5% | | Pricing | 4.2% | | Margin management | (2.6)% | | Consumption/other | (2.4)% | | Griddle recall service impacts | (1.2)% | | Volume/mix | (6.2)% | | Business exit | (1.0)% | | Product recall returns | (0.2)% | | Foreign currency | (0.1)% | | **Total change in net sales** | **1.2%** | - The **net sales increase** was primarily due to the **acquisition of the private brand tea business**, **favorable pricing** to recover commodity inflation, and **distribution gains**[5](index=5&type=chunk) - Offsetting factors included **volume/mix declines** related to planned **margin management**, **macroeconomic consumption trends**, service impacts from a **frozen griddle product recall**, and the **RTD business exit**[5](index=5&type=chunk) [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit as a percentage of net sales increased by 1.1 percentage points to 17.4% in Q2 2025, mainly due to insurance recoveries from product recalls, favorable margins from the Harris Tea acquisition, and supply chain savings, partially offset by commodity cost inflation and unfavorable fixed cost absorption | Metric | Q2 2025 | Q2 2024 | Change (pp) | | :-------------------------- | :------ | :------ | :---------- | | Gross Profit (% of net sales) | 17.4% | 16.3% | +1.1 | | Gross Profit (Millions) | $139.2 | $128.3 | +$10.9 | - The increase in **gross profit percentage** was primarily due to **$13.1 million of insurance recoveries** related to voluntary product recalls, **favorable margin from the Harris Tea acquisition**, and **supply chain savings initiatives**[6](index=6&type=chunk) - Partially offset by **commodity cost inflation** and **unfavorable fixed cost absorption** due to declining consumption trends[6](index=6&type=chunk) [Total Operating Expenses](index=2&type=section&id=Total%20Operating%20Expenses) Total operating expenses decreased by $20.4 million to $111.9 million in Q2 2025, mainly due to a non-cash impairment charge recorded in Q2 2024 related to the Ready-to-drink beverages asset group and ongoing cost reduction activities in 2025 | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :---------------------- | :----------------- | :----------------- | :---------------- | | Total Operating Expenses | $111.9 | $132.3 | $(20.4) | - The decrease was primarily due to a **$19.3 million non-cash impairment charge** in Q2 2024 related to the Ready-to-drink beverages asset group[7](index=7&type=chunk) - **Cost reduction activities** in 2025 also contributed to the decrease[7](index=7&type=chunk) [Total Other Expense](index=2&type=section&id=Total%20Other%20Expense) Total other expense increased by $16.0 million to $32.9 million in Q2 2025, driven by an unfavorable $16.2 million change in non-cash mark-to-market impacts from hedging activities and a $6.6 million increase in interest expense due to higher borrowings, partially offset by a favorable currency exchange rate impact | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :----------------- | :----------------- | :----------------- | :---------------- | | Total Other Expense | $32.9 | $16.9 | $16.0 | - Increase due to a **$16.2 million unfavorable change** in non-cash mark-to-market impacts from hedging activities (commodity contracts, interest rate swaps)[8](index=8&type=chunk) - Increase of **$6.6 million in interest expense** primarily due to increased borrowings on the Revolving Credit Facility[8](index=8&type=chunk) - Partially offset by a **favorable currency exchange rate impact of $6.2 million** between the U.S. and Canada[8](index=8&type=chunk) [Income Taxes](index=2&type=section&id=Income%20Taxes) The effective income tax rate significantly increased to 48.2% in Q2 2025 from 20.1% in Q2 2024, primarily due to shifts in non-deductible executive compensation and the estimated annual pre-tax earnings | Metric | Q2 2025 | Q2 2024 | Change (pp) | | :-------------------- | :------ | :------ | :---------- | | Effective Tax Rate | 48.2% | 20.1% | +28.1 | | Income Tax Benefit (Millions) | $(2.7) | $(4.2) | +$1.5 | - The change in **effective tax rate** is primarily driven by changes in **non-deductible executive compensation** and **estimated annual pre-tax earnings**[9](index=9&type=chunk) [Net Loss and Adjusted EBITDA](index=2&type=section&id=Net%20Loss%20and%20Adjusted%20EBITDA) Net loss improved to $(2.9) million in Q2 2025 from $(16.7) million in Q2 2024, while Adjusted EBITDA increased by $2.7 million to $73.3 million, driven by supply chain savings, the Harris Tea acquisition, and cost reduction activities, partially offset by commodity cost inflation and unfavorable fixed cost absorption | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | | :---------------- | :----------------- | :----------------- | :---------------- | | Net Loss | $(2.9) | $(16.7) | +$13.8 | | Adjusted EBITDA | $73.3 | $70.6 | +$2.7 | - The increase in **Adjusted EBITDA** is primarily due to **supply chain savings initiatives**, the **accretive impact of the Harris Tea acquisition**, and **cost reduction activities**[10](index=10&type=chunk) - Offset by **commodity cost inflation** and **unfavorable fixed cost absorption** due to declining consumption trends[10](index=10&type=chunk) [Net Cash Used In Operating Activities](index=2&type=section&id=Net%20Cash%20Used%20In%20Operating%20Activities) Net cash used in operating activities increased by $28.9 million to $100.7 million in the first six months of 2025, mainly due to a decrease in cash flows from the Receivables Sales Program, partially mitigated by higher cash earnings from pricing actions to recover commodity inflation | Metric | 6 Months 2025 (Millions) | 6 Months 2024 (Millions) | Change (Millions) | | :-------------------------------- | :----------------------- | :----------------------- | :---------------- | | Net Cash Used In Operating Activities | $(100.7) | $(71.8) | $(28.9) | - The increase in **cash used** was primarily attributable to a **decrease in cash flows from the Receivables Sales Program**[10](index=10&type=chunk) - Partially offset by **higher cash earnings** reflecting the Company's pricing actions to recover commodity inflation[10](index=10&type=chunk) [Outlook](index=3&type=section&id=OUTLOOK) TreeHouse Foods provides its full-year 2025 guidance, maintaining adjusted EBITDA and free cash flow targets while updating adjusted net sales, and outlines expectations for the third quarter [Full Year 2025 Guidance](index=3&type=section&id=Full%20Year%202025%20Guidance) TreeHouse Foods is maintaining its 2025 adjusted EBITDA and free cash flow guidance, while updating adjusted net sales guidance to reflect commodity-based pricing actions, now expecting adjusted net sales to range from $3.360 billion to $3.415 billion, representing a slight decline to modest growth year-over-year - TreeHouse Foods is maintaining its previously issued **2025 adjusted EBITDA** and **free cash flow guidance**[11](index=11&type=chunk) - **Adjusted net sales guidance** updated to reflect commodity-based pricing actions[11](index=11&type=chunk) Full Year 2025 Guidance | Metric | Guidance Range | | :-------------------- | :-------------------------------- | | Adjusted Net Sales | $3.360 billion to $3.415 billion (0.5% decline to 1% growth YoY) | | Adjusted EBITDA | $345 million to $375 million | | Free Cash Flow | At least $130 million | | Net Interest Expense | $80 million to $90 million | | Capital Expenditures | Approximately $125 million | - **Volume/mix** is still expected to decline approximately **1% year-over-year**, while **pricing** is expected to provide a **low-single-digit benefit**[14](index=14&type=chunk) [Third Quarter 2025 Expectations](index=3&type=section&id=Third%20Quarter%202025%20Expectations) For the third quarter of 2025, TreeHouse Foods expects adjusted net sales between $840 million and $870 million, indicating approximately flat growth at the mid-point, with adjusted EBITDA projected to be in the range of $90 million to $110 million Third Quarter 2025 Expectations | Metric | Guidance Range | | :-------------------- | :-------------------------- | | Adjusted Net Sales | $840 million to $870 million | | Adjusted EBITDA | $90 million to $110 million | - Third quarter **adjusted net sales** are expected to represent approximately **flat growth at the mid-point**[14](index=14&type=chunk) - **Organic volume and mix** are expected to decline **high-single digits**, driven primarily by continued margin management actions, with **pricing** providing an approximately **4% benefit**[14](index=14&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=COMPARISON%20OF%20NON-GAAP%20INFORMATION%20TO%20GAAP%20INFORMATION) This section explains the company's use of Non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Sales, and Free Cash Flow, to provide clearer insights into operational performance [Overview of Non-GAAP Measures](index=4&type=section&id=Overview%20of%20Non-GAAP%20Measures) The company uses Non-GAAP financial measures to provide additional insights into financial performance, believing they offer useful information for investors to make meaningful comparisons between periods and view the business from management's perspective, with reconciliations to GAAP measures provided - **Non-GAAP financial measures** are included to provide useful information to financial statement users, allowing for meaningful comparisons of earnings performance between periods[15](index=15&type=chunk)[16](index=16&type=chunk) - Management uses **Non-GAAP measures** for assessing operating performance, incentive compensation, and resource allocation decisions[17](index=17&type=chunk)[18](index=18&type=chunk) - **Reconciliations between GAAP and Non-GAAP measures** are provided, but forward-looking Non-GAAP measures cannot be reconciled to GAAP without unreasonable effort due to inherent uncertainties[16](index=16&type=chunk)[19](index=19&type=chunk) [EBITDA and Adjusted EBITDA](index=4&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) EBITDA is defined as net loss before interest expense, interest income, income tax benefit, and depreciation and amortization, while Adjusted EBITDA further adjusts for items significantly affecting comparability between periods, such as product recalls, restructuring, acquisitions, impairments, and mark-to-market adjustments, to provide a clearer view of core operating performance - **EBITDA** is defined as net loss before interest expense, interest income, income tax benefit, and depreciation and amortization expense[17](index=17&type=chunk) - **Adjusted EBITDA** reflects adjustments to EBITDA for items that management believes significantly affect the assessment of earnings results between periods, such as product recalls, restructuring programs, acquisition costs, impairment of assets, and mark-to-market adjustments on derivative contracts[17](index=17&type=chunk) - These measures are used by management to assess operating performance and incentive compensation, and by investors as a measure of operating performance and for debt covenant calculations[17](index=17&type=chunk) [Adjusted Net Sales and Other Adjusted Measures](index=4&type=section&id=Adjusted%20Net%20Sales%20and%20Other%20Adjusted%20Measures) Adjusted net sales, cost of sales, gross profit, operating expenses, operating income, other expense, income tax expense, and net income are GAAP line items adjusted for specific items like product recalls, restructuring, acquisition costs, and mark-to-market impacts to provide a comparable view of performance, with Adjusted diluted EPS calculated based on adjusted net income - **Adjusted net sales**, cost of sales, gross profit, total operating expenses, operating income, total other expense, income tax expense, and net income are GAAP measures adjusted for items impacting comparability[18](index=18&type=chunk) - Adjustments include product recalls, restructuring programs, acquisition/divestiture costs, loss on extinguishment of debt, asset impairment, foreign currency exchange impact, and mark-to-market adjustments on derivative contracts[18](index=18&type=chunk) - **Adjusted diluted EPS** is determined by dividing adjusted net income (loss) by the weighted average diluted common shares outstanding, reflecting adjustments to GAAP EPS for items significantly affecting earnings results between periods[18](index=18&type=chunk) [Free Cash Flow](index=5&type=section&id=Free%20Cash%20Flow) Free cash flow, a Non-GAAP measure, is calculated as net cash used in operating activities less capital expenditures and proceeds from sales of fixed assets, and is considered an important liquidity measure indicating cash generated from operations available for mandatory payments and investment opportunities - **Free cash flow** is a Non-GAAP measure representing net cash used in operating activities, less capital expenditures and proceeds from sales of fixed assets[20](index=20&type=chunk) - It is an important measure of **liquidity**, providing insight into cash available for mandatory payment obligations and investment opportunities[20](index=20&type=chunk) [About TreeHouse Foods](index=5&type=section&id=ABOUT%20TREEHOUSE%20FOODS) TreeHouse Foods, Inc. is a leading North American private brands snacking and beverage manufacturer focused on customer engagement, delivering excellent service, and building capabilities to drive mutually profitable growth, supported by investments in depth, capabilities, and operational efficiencies - **TreeHouse Foods, Inc.** is a leading private brands snacking and beverage manufacturer in North America[21](index=21&type=chunk) - The company's purpose is to engage and delight customers, striving to deliver **excellent service** and build capabilities to drive **mutually profitable growth**[21](index=21&type=chunk) - This purpose is supported by investment in depth, capabilities, and operational efficiencies aimed at capitalizing on **long-term growth prospects** in its operating categories[21](index=21&type=chunk) [Forward-Looking Statements](index=6&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements based on current beliefs and assumptions, subject to various risks and uncertainties that could cause actual results to differ materially, and the company does not intend to update these statements, cautioning against undue reliance - The press release contains **forward-looking statements** based on current beliefs and assumptions, subject to risks and uncertainties[23](index=23&type=chunk) - **Actual results may vary materially** from those described due to factors such as quality issues, supply chain disruptions, raw material and commodity costs, labor issues, and market changes[23](index=23&type=chunk) - The company does not intend to update these statements and cautions readers not to unduly rely on them[23](index=23&type=chunk) [Financial Statements](index=7&type=section&id=FINANCIAL%20INFORMATION) This section presents the company's condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows for the reported periods [Condensed Consolidated Balance Sheets](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, TreeHouse Foods reported total assets of $4,044.1 million, an increase from $3,980.0 million at December 31, 2024, with key changes including a significant decrease in cash and cash equivalents, an increase in receivables and inventories, and an increase in long-term debt Condensed Consolidated Balance Sheets (Selected Items, in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $17.1 | $289.6 | | Receivables, net | $212.0 | $146.8 | | Inventories | $634.8 | $539.3 | | Total current assets | $908.1 | $1,009.7 | | Goodwill | $1,892.1 | $1,819.3 | | Total assets | $4,044.1 | $3,980.0 | | Total current liabilities | $720.2 | $744.9 | | Long-term debt | $1,496.7 | $1,401.3 | | Total liabilities | $2,519.0 | $2,431.1 | | Total stockholders' equity | $1,525.1 | $1,548.9 | - **Cash and cash equivalents** decreased significantly from **$289.6 million** at December 31, 2024, to **$17.1 million** at June 30, 2025[25](index=25&type=chunk) - **Long-term debt** increased from **$1,401.3 million** to **$1,496.7 million**[25](index=25&type=chunk) [Condensed Consolidated Statements of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three months ended June 30, 2025, net sales were $798.0 million, an increase from $788.5 million in the prior year, and the company reported a net loss of $(2.9) million, an improvement from $(16.7) million in Q2 2024, while for the six months, net sales decreased slightly and net loss widened to $(34.7) million Condensed Consolidated Statements of Operations (Selected Items, in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $798.0 | $788.5 | $1,590.0 | $1,609.2 | | Gross profit | $139.2 | $128.3 | $254.4 | $240.3 | | Total operating expenses | $111.9 | $132.3 | $232.6 | $249.5 | | Operating income (loss) | $27.3 | $(4.0) | $21.8 | $(9.2) | | Total other expense | $32.9 | $16.9 | $71.0 | $27.0 | | Loss before income taxes | $(5.6) | $(20.9) | $(49.2) | $(36.2) | | Net loss | $(2.9) | $(16.7) | $(34.7) | $(28.4) | | Diluted EPS | $(0.06) | $(0.32) | $(0.69) | $(0.54) | - **Net sales** for the three months ended June 30, 2025, increased by **$9.5 million (1.2%)** year-over-year[3](index=3&type=chunk)[27](index=27&type=chunk) - **Net loss** for the three months ended June 30, 2025, improved to **$(2.9) million** from **$(16.7) million** in the prior year[10](index=10&type=chunk)[27](index=27&type=chunk) - For the six months ended June 30, 2025, **net sales decreased by $19.2 million (1.2%)** year-over-year, and **net loss widened to $(34.7) million** from $(28.4) million[3](index=3&type=chunk)[27](index=27&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash used in operating activities increased to $(100.7) million from $(71.8) million in the prior year, net cash used in investing activities significantly increased to $(258.5) million primarily due to a $209.3 million acquisition, and net cash provided by financing activities was $89.2 million, a reversal from cash used in the prior year, driven by increased borrowings and refinanced term loans Condensed Consolidated Statements of Cash Flows (Selected Items, in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(100.7) | $(71.8) | | Net cash used in investing activities | $(258.5) | $(49.7) | | Net cash provided by (used in) financing activities | $89.2 | $(92.9) | | Net decrease in cash and cash equivalents | $(272.5) | $(214.5) | | Cash and cash equivalents, end of period | $17.1 | $105.8 | - **Net cash used in investing activities** increased significantly due to a **$209.3 million acquisition**, net of cash acquired[29](index=29&type=chunk) - **Financing activities** shifted from using **$92.9 million** in 2024 to providing **$89.2 million** in 2025, largely due to borrowings and refinanced term loans[29](index=29&type=chunk) [Reconciliation of Non-GAAP to GAAP Measures](index=11&type=section&id=Reconciliation%20of%20Non-GAAP%20to%20GAAP%20Measures) This section provides detailed reconciliations of various Non-GAAP financial measures, such as EBITDA, Adjusted EBITDA, adjusted net income, and free cash flow, to their most directly comparable GAAP counterparts [Reconciliation of Net Loss to EBITDA and Adjusted EBITDA](index=11&type=section&id=RECONCILIATION%20OF%20NET%20LOSS%20TO%20EBITDA%20AND%20ADJUSTED%20EBITDA) This section provides a reconciliation of GAAP net loss to Non-GAAP EBITDA and Adjusted EBITDA, showing that for Q2 2025, Adjusted EBITDA was $73.3 million, up from $70.6 million in Q2 2024, with key adjustments including mark-to-market impacts, restructuring costs, acquisition-related costs, foreign currency effects, product recalls (including insurance recoveries), loss on extinguishment of debt, and impairment charges Reconciliation of Net Loss to EBITDA and Adjusted EBITDA (in millions) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :------------------------------------------------ | :------ | :------ | :------------ | :------------ | | Net loss (GAAP) | $(2.9) | $(16.7) | $(34.7) | $(28.4) | | EBITDA (Non-GAAP) | $58.5 | $30.8 | $72.8 | $63.7 | | Adjustments (total) | $14.8 | $39.8 | $58.0 | $52.9 | | Adjusted EBITDA (Non-GAAP) | $73.3 | $70.6 | $130.8 | $116.6 | | Adjusted EBITDA margin (% of adjusted net sales) | 9.1% | 8.9% | 8.2% | 7.2% | - Adjustments for Q2 2025 included **$14.7 million for mark-to-market impacts**, **$12.7 million for restructuring**, **$0.7 million for acquisition costs**, **$(3.7) million for foreign currency gain**, and **$(9.6) million for product recalls** (net of insurance recoveries)[32](index=32&type=chunk) - Product recall adjustments for Q2 2025 included **$(10.0) million insurance recovery** for frozen waffle products and **$(3.1) million for broth products**, offset by estimated product returns and claims[33](index=33&type=chunk)[34](index=34&type=chunk) [Reconciliation of Adjusted Financial Measures](index=13&type=section&id=RECONCILIATION%20OF%20NON-GAAP%20MEASURES) This section reconciles various GAAP financial measures (Net Sales, Cost of Sales, Gross Profit, Operating Expenses, Operating Income, Other Expense, Income Tax Expense, Net Income) to their adjusted Non-GAAP counterparts for the three and six months ended June 30, 2025 and 2024, detailing the impact of specific adjustments to derive adjusted performance metrics and adjusted diluted EPS Adjusted Net Income and EPS (Q2 2025, in millions, except per share) | Metric | As reported (GAAP) | Adjustments | As adjusted (Non-GAAP) | | :-------------------- | :----------------- | :---------- | :--------------------- | | Net (loss) income | $(2.9) | $11.7 | $8.8 | | Diluted EPS | $(0.06) | | $0.17 | Adjusted Net Income and EPS (6 Months 2025, in millions, except per share) | Metric | As reported (GAAP) | Adjustments | As adjusted (Non-GAAP) | | :-------------------- | :----------------- | :---------- | :--------------------- | | Net (loss) income | $(34.7) | $45.0 | $10.3 | | Diluted EPS | $(0.69) | | $0.20 | - Adjustments for Q2 2025 included **$14.7 million for mark-to-market impacts**, **$15.6 million for restructuring**, **$0.7 million for acquisition costs**, **$(3.7) million for foreign currency gain**, **$(9.6) million for product recalls** (net of insurance recoveries), and **$6.0 million for taxes on adjusting items**[39](index=39&type=chunk) - For Q2 2024, significant adjustments included **$19.3 million for impairment** and **$7.5 million for product recalls**, which significantly improved adjusted net income and EPS compared to GAAP[41](index=41&type=chunk) [Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow](index=15&type=section&id=RECONCILIATION%20OF%20NET%20CASH%20USED%20IN%20OPERATING%20ACTIVITIES%20TO%20FREE%20CASH%20FLOW) This section reconciles net cash used in operating activities (GAAP) to free cash flow (Non-GAAP), showing that for the six months ended June 30, 2025, free cash flow was $(149.9) million, a decrease from $(121.5) million in the prior year, primarily due to increased capital expenditures and higher net cash used in operating activities Reconciliation of Net Cash Used in Operating Activities to Free Cash Flow (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash flow used in operating activities (GAAP) | $(100.7) | $(71.8) | | Capital expenditures | $(54.0) | $(51.1) | | Proceeds from sales of fixed assets | $4.8 | $1.4 | | Free cash flow (Non-GAAP) | $(149.9) | $(121.5) | - **Free cash flow** for the first six months of 2025 was **$(149.9) million**, compared to **$(121.5) million** in the same period of 2024, indicating a larger cash outflow[44](index=44&type=chunk) - The change was influenced by an increase in **capital expenditures** from **$(51.1) million** to **$(54.0) million**[44](index=44&type=chunk)

Core Insights - TreeHouse Foods reported strong financial results for Q2 2025, with adjusted net sales and adjusted EBITDA exceeding guidance [2][3] - The company is focused on margin improvement and cash flow growth, emphasizing the importance of private brands in the current market [2][3] Financial Performance - Net sales for Q2 2025 were $798.0 million, a 1.2% increase from $788.5 million in Q2 2024 [3] - Adjusted EBITDA for Q2 2025 was $73.3 million, up from $70.6 million in Q2 2024, reflecting a $2.7 million increase [8][11] - Gross profit margin improved to 17.4% in Q2 2025 from 16.3% in Q2 2024, primarily due to insurance recoveries and supply chain savings [4] Operating Expenses - Total operating expenses decreased to $111.9 million in Q2 2025 from $132.3 million in Q2 2024, largely due to a prior non-cash impairment charge [5] - Total other expenses increased to $32.9 million in Q2 2025 from $16.9 million in Q2 2024, driven by unfavorable changes in hedging activities and increased interest expenses [6] Tax and Net Loss - The effective tax rate rose to 48.2% in Q2 2025 from 20.1% in Q2 2024, influenced by non-deductible executive compensation [7] - The net loss for Q2 2025 was $2.9 million, an improvement from a net loss of $16.7 million in Q2 2024 [8][11] Cash Flow and Outlook - Net cash used in operating activities was $100.7 million in the first half of 2025, compared to $71.8 million in the same period of 2024 [9] - The company maintains its 2025 adjusted EBITDA and free cash flow guidance, with adjusted net sales expected to range from $3.360 billion to $3.415 billion [10][12] Future Expectations - For Q3 2025, adjusted net sales are projected to be between $840 million and $870 million, with organic volume expected to decline [25] - Adjusted EBITDA for Q3 2025 is anticipated to be in the range of $90 million to $110 million [25]

Company Overview - TreeHouse Foods (THS) is currently rated with a Zacks Rank 1 (Strong Buy) and has a Value grade of A [4][3] - The stock is trading at a P/E ratio of 10.68, significantly lower than its industry's average of 16.42 [4] Valuation Metrics - THS has a P/B ratio of 0.69, compared to the industry's average P/B of 1.86, indicating it may be undervalued [5] - The P/CF ratio for THS is 6.61, which is attractive when compared to the industry's average P/CF of 15.14 [6] Investment Potential - The combination of THS's low valuation metrics and strong earnings outlook suggests it is likely being undervalued, making it a compelling value stock at this time [7]

Group 1 - TreeHouse Foods, Inc. will report its financial results for the second quarter ended June 30, 2025, on July 31, 2025, before market open [1] - An earnings call and webcast will be held at 8:30 a.m. ET to discuss the results and provide an outlook for the remainder of the fiscal year [1][2] - A replay of the webcast will be available on the company's investor relations website after the call [2] Group 2 - TreeHouse Foods is a leading private brands snacking and beverage manufacturer in North America, focusing on customer engagement and satisfaction [3] - The company aims to deliver excellent service and build capabilities to drive mutually profitable growth for itself and its customers [3] - Investments in operational efficiencies and capabilities are intended to capitalize on long-term growth prospects in its operating categories [3]