TreeHouse Foods Q2 Earnings Beat Estimates, Sales Rise Y/Y

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].