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Sep 30, 2022
TreeHouse Q3 2022 Earnings Report
Reported strong third quarter net sales and sequential improvement in profitability.
Key Takeaways
TreeHouse Foods reported a net sales increase of 16.4% to $875.0 million for the third quarter of 2022. The company's adjusted EBITDA margin was 8.8%, and adjusted EBITDA totaled $76.6 million.
Net sales increased by 18.0% to $1,299.4 million.
Adjusted EBITDA margin for TreeHouse prior to the divestiture exceeded expectations with sequential improvement of 130 basis points to 6.9%, and adjusted EBITDA totaled $89.4 million.
Net sales increased 16.4% to $875.0 million, primarily driven by pricing.
Adjusted EBITDA margin was 8.8%, and adjusted EBITDA totaled $76.6 million.
TreeHouse
TreeHouse
Forward Guidance
TreeHouse issued the following guidance for Q4 2022: Net sales are expected to grow 22% - 24% year-over-year, primarily driven by pricing. Adjusted EBITDA is expected to be between $105 to $120 million. Adjusted EBITDA margin is anticipated in the range of 10.5% - 12.0%, representing substantial sequential improvement from the 8.8% in the third quarter, driven by the impact of pricing actions taken to date, peak seasonality and cost savings initiatives.
Positive Outlook
- Net sales are expected to grow 22% - 24% year-over-year, primarily driven by pricing.
- Adjusted EBITDA is expected to be between $105 to $120 million.
- Adjusted EBITDA margin is anticipated in the range of 10.5% - 12.0%, representing substantial sequential improvement from the 8.8% in the third quarter, driven by the impact of pricing actions taken to date, peak seasonality and cost savings initiatives.
- The Company is making steady improvement around service which it expects to continue into 2023.
- Fiscal year 2023 net sales growth is expected to be strong due to the wraparound impact of TreeHouse's pricing actions to recover inflation in 2022.
Challenges Ahead
- Although the industry-wide labor and supply chain environment will continue to be challenging.
- Given the current economic environment, demand for private label food and beverages is expected to remain strong.
- Net interest in 2023 will reflect TreeHouse's $500 million debt repayment in October 2022, and result in a reduction of approximately $20 million in annual interest expense.
- TreeHouse expects to receive interest income of approximately $40 million in 2023 related to the note receivable issued as part of the transaction.
- Pre-pandemic growth for the Company's current portfolio of categories ranged from 3% to 5%.