Why Is TreeHouse (THS) Up 7.3% Since Last Earnings Report?

Core Viewpoint - TreeHouse Foods reported mixed Q3 fiscal 2024 results, with adjusted earnings meeting expectations but net sales declining, leading to a downward revision of future guidance due to weak consumer demand and a product recall [2][4][8]. Financial Performance - Adjusted earnings were 74 cents per share, up from 57 cents year-over-year, aligning with the Zacks Consensus Estimate [3]. - Net sales totaled $839.1 million, a decrease of 2.8% year-over-year, missing the Zacks Consensus Estimate of $879.9 million [4]. - Organic sales fell by 2.7% year-over-year, with volume/mix contributing to a 0.8% decline [4]. Cost and Margin Analysis - Gross margin contracted to 15.6%, down 0.3 percentage points year-over-year, primarily due to the product recall, which impacted gross profit by 3.2 percentage points [5]. - Adjusted gross margin improved to 18.9%, an increase of 1.6 percentage points year-over-year, attributed to supply chain initiatives [5]. - Total operating expenses decreased to $99.4 million from $103.9 million year-over-year, driven by lower freight costs and reduced growth expenses [6]. Guidance and Outlook - For 2024, adjusted net sales are projected between $3.37 billion and $3.4 billion, indicating a decline of 1% to 2% from 2023 levels, revised from a previous forecast of $3.43 billion to $3.5 billion [8]. - Adjusted EBITDA guidance was lowered to $335 million to $345 million from $360 million to $380 million, reflecting weakening consumption trends [8]. - Q4 adjusted net sales are expected to be between $900 million and $930 million, also indicating a decline of 1% to 2% year-over-year [10]. 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 [7]. - Net cash used in operating activities from continuing operations for the first nine months of 2024 was $30.4 million [7]. Industry Comparison - TreeHouse Foods belongs to the Zacks Food - Miscellaneous industry, where competitor Sysco reported revenues of $20.48 billion, a year-over-year increase of 4.4% [15].