Why TreeHouse Foods Shares Are Slumping Friday

TreeHouse Foods, Inc. THS shares are trading lower after the company reported mixed fourth-quarter results and issued FY24 outlook below estimates.

The company reported fourth-quarter adjusted EPS of 77 cents, beating the analyst consensus of 73 cents. Quarterly net sales of $910.8 million missed the consensus of $925.44 million.

The net sales decreased by 4.8%, primarily driven by volume/mix in the retail business, which was impacted by its previously disclosed supply chain disruption at one of the broth facilities and in its pretzels and cookies categories.

Adjusted EBITDA from continuing operations was $108.4 million in the fourth quarter of 2023, compared to $118.5 million in the year-ago period.

Gross profit as a percentage of net sales was 16.7% in the quarter under review, lower than 18.3% in the year-ago period. The decrease primarily stemmed from supply chain disruption, combined with unfavorable fixed cost absorption, increased labor and manufacturing plant maintenance costs, and an unfavorable category mix.

During the fourth quarter of 2023, the company repurchased approximately 1.2 million shares of common stock for a total of $50.0 million, excluding excise tax.

Outlook: TreeHouse Foods expects FY24 revenues to be $3.43 billion-$3.50 billion versus $3.56 billion estimate. The company expects first-quarter net sales of $780 million-$810 million versus the $887.38 million estimate.

The company estimates FY24 net sales and adjusted EBITDA impact of roughly $60 million and $20 million, respectively, owing to ongoing efforts to restart one of the broth facilities.

Price Action: THS shares are trading lower by 9.9% to $38.50 premarket on the last check Friday.