TreeHouse(THS) - 2025 Q2 - Quarterly Report

Part I — Financial Information Item 1 — Financial Statements (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 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 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) 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 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 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][153] - 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][154] Notes to Condensed Consolidated Financial Statements 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 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] - Management uses judgment and estimates in preparing the financial statements, and actual results may differ from these estimates[25] 2. Recent Accounting Pronouncements 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] - 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] - The impact of both ASUs upon adoption is expected to be limited to certain notes to the Consolidated Financial Statements[27][28] 3. Restructuring Programs 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] - 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] - 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] - 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][37] 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 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] 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 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 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] - 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] 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][52] 7. Property, Plant, and Equipment 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] 8. Goodwill and Intangible Assets 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][58][46] 9. Income Taxes 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] - 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] 10. Long-Term Debt 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][64] - A $2.6 million loss on extinguishment of debt was incurred in Q1 2025 due to the credit agreement refinancing[66] - As of June 30, 2025, the Company had $362.2 million remaining availability under its $500.0 million Revolving Credit Facility[67] 11. Stockholders' Equity 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] 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 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] 13. Stock-Based Compensation 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] - 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] 14. Accumulated Other Comprehensive Loss 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] 15. Employee Retirement and Postretirement Benefits 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 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][97] - The product recall liability for griddle products was $13.7 million as of June 30, 2025[95] - 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] 17. Derivative Instruments 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] - 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] 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 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] 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 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 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] - 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] - Products are sold across retail grocery, co-manufacturing, and food-away-from-home channels, with offerings including natural, organic, and gluten-free options[114] Recent Developments 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] - An organizational restructuring, including corporate support functions, was announced in April 2025 to drive operational efficiency and cost-savings[117] - 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] - The company refinanced its credit agreement on January 17, 2025, extending maturities and adjusting the sizes of its Term Loans[119][120] - 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] - 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] - 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] - The exit of the Ready-to-drink (RTD) business was completed in Q1 2025, with production ceasing and related machinery and equipment sold[124]