TreeHouse(US:THS)2023-02-13 16:28Financial Data and Key Metrics Changes - In Q4 2022, revenue grew by 22% to $996 million, driven by a 24.6% increase in pricing to recover inflation, while volume and mix declined by 2.2% [3][128] - Adjusted EBITDA for Q4 was $120 million, representing a 12% EBITDA margin, which is a 320 basis point improvement sequentially [128][143] - The company ended the year with a covenant leverage of 3.2 times and liquidity of over $500 million [5] Business Line Data and Key Metrics Changes - The core retail grocery business, which accounts for approximately 80% of annual revenue, achieved 3% volume growth across both measured and unmeasured channels [8] - Operations declined by $35 million in Q4 due to supply chain disruptions and investments in employee retention [9] Market Data and Key Metrics Changes - The overall retail landscape saw a 17% increase in pricing to recover higher input costs, while total edible consumption on a unit basis declined over 3% [139][140] - Private label units grew almost 3.5% within retail measured channels, outperforming national brands, which saw a 5% decline [140][141] Company Strategy and Development Direction - The company is focusing on becoming a higher growth, higher margin private label snacking and beverage business, with strategic partnerships and investments in capabilities [6][21] - The long-term growth ambition includes annual revenue growth of 3% to 5% and adjusted EBITDA growth of 8% to 10% starting in 2024 [127] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the macro environment supporting private label growth, with expectations for improved service levels and capacity investments to drive growth [133][144] - The company anticipates mid-single-digit inflation in 2023, with pricing actions already taken to offset some of the inflation [34][126] Other Important Information - The company plans to invest approximately $130 million in capital expenditures in 2023, with half focused on growth and supply chain initiatives [18] - The divestiture of a significant portion of the Meal Preparation business has allowed the company to optimize its portfolio and strengthen its balance sheet [20][137] Q&A Session Summary Question: How much of the supply chain recovery can be expected in 2023? - Management indicated that while they have not provided an exact number, they expect to make progress in recovering from supply chain impacts [16][17] Question: What is the expected magnitude of net inflation in 2023? - Management expects mid-single-digit inflation, with some pricing already in place to offset it [26][34] Question: How does the company plan to address capacity constraints? - Management acknowledged capacity constraints but expressed confidence in their ability to recover and optimize operations to meet demand [28][39] Question: What is the outlook for private label growth in 2023? - Management believes that private label growth will continue, supported by strong demand and strategic investments [69][72] Question: How will capital investments support growth? - Management stated that capital investments will facilitate capacity expansion and improve operational efficiency, which is crucial for achieving growth targets [41][82]