TreeHouse Foods Q3 Earnings Meet, View Cut on Weak Consumption Trends

Core Insights - TreeHouse Foods, Inc. (THS) reported mixed results for Q3 fiscal 2024, with adjusted earnings of 74 cents per share matching the Zacks Consensus Estimate, while net sales of $839.1 million declined 2.8% year over year, missing expectations [1][3][4] Financial Performance - Adjusted net sales decreased to $854.4 million, down 1.4% year over year, primarily due to a voluntary recall of frozen griddle products and unfavorable volume/mix performance [4][5] - Organic sales fell by 2.7% year over year, with volume/mix contributing to a 0.8% decline, pricing adjustments leading to a 0.5% drop, and product recall accounting for a 1.4% decrease [5] - Gross margin contracted to 15.6%, down 0.3 percentage points from the previous year, impacted by the recall, but adjusted gross margin improved to 18.9%, up 1.6 percentage points due to supply chain initiatives [6] Cost Management - Total operating expenses decreased to $99.4 million from $103.9 million year over year, driven by lower freight costs and reduced growth expenses [7] - Adjusted EBITDA from continuing operations rose to $102.5 million, up from $89.9 million in Q3 2023, attributed to supply chain savings [7] Financial Health - As of the end of the quarter, TreeHouse Foods had cash and cash equivalents of $102 million, long-term debt of $1,399.9 million, and total shareholders' equity of $1,552.6 million [8] 2024 Outlook - For 2024, adjusted net sales are expected to be between $3.37 billion and $3.4 billion, indicating a decline of 1% to 2% from 2023 levels, revised down from previous guidance [9] - Adjusted EBITDA guidance was also lowered to a range of $335 million to $345 million, reflecting weakening consumption trends and the impact of the product recall [10] - Management anticipates capital expenditures of nearly $145 million and free cash flow of at least $120 million for 2024 [11] Q4 Projections - Adjusted net sales for Q4 are projected to be between $900 million and $930 million, indicating a decline of 1% to 2% year over year, with organic volume expected to increase by low-single digits [12]