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TreeHouse Foods (THS) Q4 Earnings Top Estimates, Sales Miss
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TreeHouse Foods, Inc. (THS - Free Report) posted fourth-quarter fiscal 2022 results, wherein the bottom line beat the Zacks Consensus Estimate and increased year over year. Net sales fell short of the Zacks Consensus Estimate but increased from the year-ago quarter. The company’s top line gained from robust pricing actions to counter inflation.
However, a tough labor supply-chain scenario was a downside.
Quarter in Detail
TreeHouse Foods reported adjusted earnings from continuing operations of 98 cents per share, which beat the Zacks Consensus Estimate of 91 cents. The bottom line grew significantly from the year-ago quarter’s reported figure of 23 cents.
Net sales of $996.2 million fell short of the Zacks Consensus Estimate of $1,029 million. The top line grew from $816.3 million reported in the year-ago quarter.
Growth in net sales was mainly driven by favorable pricing actions undertaken to recover commodity inflation. This was somewhat offset by the exit of lower margin business, especially in Pickles. Labor and supply-chain hurdles, which limited the company’s capacity to cater to demand, also remained a concern.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
The volume/mix fell 2.2%, whereas pricing increased 24.6%. Organic sales grew 22.4%. THS witnessed currency headwinds to the tune of 0.4%.
The gross margin of 17.7% expanded 2.8 percentage points from the year-ago quarter’s figure, mainly on the back of pricing actions to recover commodity and freight inflation and positive category mix. These were somewhat offset by additional costs associated with labor and supply-chain disruptions along with warehouse capacity constraints.
Total operating expenses were $105.9 million, down from $147.9 million reported in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations came in at $120 million. Adjusted EBITDA margin was 12%, up 320 basis point (bps) from the preceding quarter.
Image Source: Zacks Investment Research
Other Updates & Guidance
TreeHouse Foods concluded the quarter with cash and cash equivalents of $43 million, long-term debt of $1,394 million and total shareholders’ equity of $1,687 million. For the year ended Dec 31, 2022, the company’s net cash used in operating activities came in at $150.7 million.
On Oct 3, 2022, THS concluded the sale of a significant portion of its Meal Preparation business, which included pasta, pourable and spoonable dressing, preserves, red sauces, syrup, dry blends and baking, dry dinners, pie filling, pita chips and other sauces. From the third quarter of 2022, the divested business is presented as discontinued operations.
Management expects the macro environmental uncertainty to prevail in fiscal 2023. The company is on track to recover increased input costs via targeted pricing actions.
For fiscal 2023, THS expects net sales growth of 6-8% year over year, led by pricing. Management anticipates pricing actions to have significant impact during the first half of the year. Volume is expected to remain flat for fiscal 2023, as it continues to mitigate supply-chain issues and enhance service.
Adjusted EBITDA from continuing operations is likely to be in the $345-$365 million range, up nearly 24% year over year at the midpoint. Management expects EBITDA margins to increase every quarter, on the back of pricing actions undertaken during 2022.
In the first quarter of fiscal 2023, TreeHouse Foods anticipates net sales growth between 9-12% on the back of pricing actions undertaken to recover inflation. The company expects a 300-450 bps year-over-year improvement in adjusted EBITDA margin from continuing operations for the quarter.
In addition, TreeHouse Foods came out with its annual growth targets which are anticipated over three years starting in 2024. In this regard, the company expects net sales growth between 3-5%, in-line with the historical private label growth rates of THS’s snacking & beverage categories. The company expects adjusted EBITDA growth of 8-10%.
The Zacks Rank #3 (Hold) stock has risen 3.4% in the past three months compared with the industry’s 0.1% growth.
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggest growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggest an increase of 19.6% and 90.4%, respectively, from the year-ago reported numbers.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggest growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.
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TreeHouse Foods (THS) Q4 Earnings Top Estimates, Sales Miss
TreeHouse Foods, Inc. (THS - Free Report) posted fourth-quarter fiscal 2022 results, wherein the bottom line beat the Zacks Consensus Estimate and increased year over year. Net sales fell short of the Zacks Consensus Estimate but increased from the year-ago quarter. The company’s top line gained from robust pricing actions to counter inflation.
However, a tough labor supply-chain scenario was a downside.
Quarter in Detail
TreeHouse Foods reported adjusted earnings from continuing operations of 98 cents per share, which beat the Zacks Consensus Estimate of 91 cents. The bottom line grew significantly from the year-ago quarter’s reported figure of 23 cents.
Net sales of $996.2 million fell short of the Zacks Consensus Estimate of $1,029 million. The top line grew from $816.3 million reported in the year-ago quarter.
Growth in net sales was mainly driven by favorable pricing actions undertaken to recover commodity inflation. This was somewhat offset by the exit of lower margin business, especially in Pickles. Labor and supply-chain hurdles, which limited the company’s capacity to cater to demand, also remained a concern.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote
The volume/mix fell 2.2%, whereas pricing increased 24.6%. Organic sales grew 22.4%. THS witnessed currency headwinds to the tune of 0.4%.
The gross margin of 17.7% expanded 2.8 percentage points from the year-ago quarter’s figure, mainly on the back of pricing actions to recover commodity and freight inflation and positive category mix. These were somewhat offset by additional costs associated with labor and supply-chain disruptions along with warehouse capacity constraints.
Total operating expenses were $105.9 million, down from $147.9 million reported in the year-ago quarter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations came in at $120 million. Adjusted EBITDA margin was 12%, up 320 basis point (bps) from the preceding quarter.
Image Source: Zacks Investment Research
Other Updates & Guidance
TreeHouse Foods concluded the quarter with cash and cash equivalents of $43 million, long-term debt of $1,394 million and total shareholders’ equity of $1,687 million. For the year ended Dec 31, 2022, the company’s net cash used in operating activities came in at $150.7 million.
On Oct 3, 2022, THS concluded the sale of a significant portion of its Meal Preparation business, which included pasta, pourable and spoonable dressing, preserves, red sauces, syrup, dry blends and baking, dry dinners, pie filling, pita chips and other sauces. From the third quarter of 2022, the divested business is presented as discontinued operations.
Management expects the macro environmental uncertainty to prevail in fiscal 2023. The company is on track to recover increased input costs via targeted pricing actions.
For fiscal 2023, THS expects net sales growth of 6-8% year over year, led by pricing. Management anticipates pricing actions to have significant impact during the first half of the year. Volume is expected to remain flat for fiscal 2023, as it continues to mitigate supply-chain issues and enhance service.
Adjusted EBITDA from continuing operations is likely to be in the $345-$365 million range, up nearly 24% year over year at the midpoint. Management expects EBITDA margins to increase every quarter, on the back of pricing actions undertaken during 2022.
In the first quarter of fiscal 2023, TreeHouse Foods anticipates net sales growth between 9-12% on the back of pricing actions undertaken to recover inflation. The company expects a 300-450 bps year-over-year improvement in adjusted EBITDA margin from continuing operations for the quarter.
In addition, TreeHouse Foods came out with its annual growth targets which are anticipated over three years starting in 2024. In this regard, the company expects net sales growth between 3-5%, in-line with the historical private label growth rates of THS’s snacking & beverage categories. The company expects adjusted EBITDA growth of 8-10%.
The Zacks Rank #3 (Hold) stock has risen 3.4% in the past three months compared with the industry’s 0.1% growth.
Solid Food Picks
Some better-ranked stocks are Conagra Brands (CAG - Free Report) , Lamb Weston (LW - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra, a consumer-packaged goods food company, currently sports a Zacks Rank #1 (Strong Buy). CAG has a trailing four-quarter earnings surprise of 8.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Conagra’s current fiscal-year sales and earnings suggest growth of 7.2% and 12.7%, respectively, from the corresponding year-ago reported figures.
Lamb Weston, which is a frozen potato product company, currently sports a Zacks Rank #1. LW has a trailing four-quarter earnings surprise of 52.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggest an increase of 19.6% and 90.4%, respectively, from the year-ago reported numbers.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2 (Buy). MDLZ has a trailing four-quarter earnings surprise of 7.5%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggest growth of 9% and 7.5%, respectively, from the corresponding year-ago reported figures.