Why Food Processing Firm TreeHouse Foods Shares Are Diving Today

Zinger Key Points
  • TreeHouse Foods posts Q1 revenue declined to $820.70 million, Adjusted EPS of $(0.03) missed the analyst consensus.
  • TreeHouse expects Q2 net sales of $770 million-$800 million, down approximately 2% at the midpoint.

TreeHouse Foods Inc THS shares are trading lower after the company’s first-quarter revenue declined 3.9% and the adjusted EPS missed the consensus.

The company reported a first-quarter FY24 sales of $820.70 million, beating the analyst consensus estimate of $797.18 million.

The revenue decrease was primarily driven by unfavorable volume/mix due to planned distribution exits primarily in coffee and in-store bakery categories, as well as the restart of one of the broth facilities, which contributed to approximately half of the volume decline. 

Gross margin for the quarter contracted 440 basis points Y/Y to 13.6%. Adjusted EBITDA from continuing operations totaled $46 million, and the margin was 5.6%.

The company reported an operating loss of $(5.2) million compared to an operating income of $40.9 million last year. The operating expenses climbed 4% Y/Y to $117.2 million.

Adjusted EPS of $(0.03) missed the analyst consensus of $(0.01).

TreeHouse repurchased approximately 1.2 million shares of common stock for a total of $43.9 million in the first quarter. The company held $191.8 million in cash and equivalents as of March-end.

“While the downtime at our broth facility impacted first quarter profitability, restart of that facility coupled with our meaningful supply chain savings initiatives position us well to expand margin through the rest of the year and deliver our full year profitability guidance,” said Chairman, CEO and President Steve Oakland.

Outlook: TreeHouse reaffirmed its FY24 sales outlook of $3.43 billion – $3.50 billion against an estimate of $3.447 billion. The company expects FY24 adjusted EBITDA of $360 million – $390 million and capital expenditure of $145 million.

TreeHouse anticipates second-quarter net sales of $770 million – $800 million, down approximately 2% at the midpoint and versus the consensus of $796.24 million.

Price Action: THS shares are trading lower by 8.27% at $34.18 at the last check Monday.

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