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Jun 30, 2023
TreeHouse Q2 2023 Earnings Report
TreeHouse Foods' financial performance improved with increased net sales and adjusted EBITDA.
Key Takeaways
TreeHouse Foods reported a 4.1% increase in net sales to $843.6 million and a significant rise in net income from continuing operations to $21.7 million, compared to a loss of $27.3 million in the prior year. Adjusted EBITDA from continuing operations also increased by $23.3 million to $76.4 million. The company raised its full year net sales outlook and narrowed its adjusted EBITDA outlook.
Net sales increased by 4.1% year-over-year, exceeding guidance expectations.
Net income from continuing operations was $21.7 million, a significant improvement from the prior year's net loss.
Adjusted EBITDA from continuing operations rose by $23.3 million, reaching the high-end of the company's guidance.
Full year net sales outlook raised to 7.5% to 9.5% growth, with adjusted EBITDA outlook narrowed to $360 to $370 million.
TreeHouse
TreeHouse
Forward Guidance
TreeHouse updated its full year 2023 guidance, expecting net sales growth of 7.5% to 9.5% and adjusted EBITDA in the range of $360 to $370 million.
Positive Outlook
- Net sales growth is now expected to be 7.5% to 9.5% year-over-year, representing a range of $3.71 to $3.78 billion.
- The increase primarily reflects the volume from the acquisition of the Northlake, Texas coffee facility that closed in June 2023.
- The Company narrowed its adjusted EBITDA range to $360 to $370 million, up approximately 27% year-over-year at the midpoint.
- Third quarter revenue is expected in the range of $950 to $970 million, representing approximately 10% year-over-year growth at the midpoint, primarily driven by volume/mix, including the volume from the coffee acquisition.
- Third quarter adjusted EBITDA is anticipated in the range of $81 to $89 million, representing approximately 11% year-over-year growth at the midpoint.
Challenges Ahead
- Net interest expense is now expected to be $27 million to $32 million, due to increased usage of the Revolving Credit Facility to fund the aforementioned coffee acquisition and investment in inventory to service customers.
- Approximately $5 million to $7 million in temporary operating expenses in the fourth quarter resulting from the expected wind down of substantial portions of the transition services agreement related to the Meal Preparation divestiture.
- Unspecified risks related to the impact that the divestiture of a significant portion of our Meal Preparation Business or any such divestiture might have on the Company’s operations
- Unspecified disruptions or inefficiencies in our supply chain and/or operations
- Unspecified loss of key suppliers