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TreeHouse Foods (THS) Q1 Earnings Top Estimates, Sales Grow Y/Y
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TreeHouse Foods, Inc. (THS - Free Report) started 2023 on a solid note, with the first-quarter top and bottom lines increasing year over year and cruising ahead of the Zacks Consensus Estimate.
The company continued to gain from robust pricing actions to counter inflation. Despite a dynamic macro landscape, TreeHouse Foods witnessed supply-chain improvements, which helped it enhance services and cater to high customer demand.
The company remains well-placed for 2023 due to its actions to focus on greater-margin private-label snacking and beverage categories.
Quarter in Detail
TreeHouse Foods reported adjusted earnings from continuing operations of 68 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line grew significantly from the year-ago quarter’s loss of 16 cents.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
Net sales of $894.8 million advanced 15.8% year over year and came ahead of the Zacks Consensus Estimate of $849 million.
Growth in net sales was mainly driven by favorable pricing actions undertaken to recover commodity inflation, along with improved services in most categories that enabled the company to cater to the high demand. This was somewhat offset by the exit of the lower-margin business, especially in Pickles.
The volume/mix fell 0.6%, whereas pricing increased 16.7%. Organic sales grew 16.1%. THS witnessed currency headwinds to the tune of 0.3%.
The gross margin of 17% expanded 4.2 percentage points from the year-ago quarter’s figure, mainly due to pricing actions to recover commodity and freight inflation and a positive category mix. These were somewhat offset by additional costs associated with investments to improve the supply chain and warehouse capacity.
Total operating expenses were $113 million, down from the $155 million reported in the year-ago quarter.
Adjusted EBITDA from continuing operations came in at $90.6 million, up from $37.3 million in the year-ago period. The upside can be attributed to the same factors that drove the gross margin.
Other Updates
TreeHouse Foods concluded the quarter with cash and cash equivalents of $14.6 million, long-term debt of $1,432.5 million and total shareholders’ equity of $1,704.4 million. In the first three months of 2023, the company’s net cash used in operating activities was $30.9 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.
Guidance
Management reiterated its fiscal 2023 guidance. For fiscal 2023, TreeHouse Foods expects net sales growth of 6-8% year over year to the $3.66-$3.73 billion band. Adjusted EBITDA is likely to be in the $345-$365 million range, up nearly 24% year over year at the midpoint.
In the first half of fiscal 2023, TreeHouse Foods anticipates revenues in the range of $1.705-$1.735 billion, suggesting 7.7-9.6% growth from the year-ago period.
For the second quarter of 2023, revenues are projected in the range of $810-$840 million, indicating flat to 4% growth from the second quarter of 2022. The company expects adjusted EBITDA in the band of $65-$80 million for the second quarter. The adjusted EBITDA margin is likely to be 7.9-9.4% in the quarter, calling for a 130-280 bps improvement.
This Zacks Rank #3 (Hold) stock has risen 11.1% in the past three months compared with the industry’s 8.8% growth.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number.
General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests increases of 7.1% and 16.5%, respectively, from the year-ago reported numbers.
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TreeHouse Foods (THS) Q1 Earnings Top Estimates, Sales Grow Y/Y
TreeHouse Foods, Inc. (THS - Free Report) started 2023 on a solid note, with the first-quarter top and bottom lines increasing year over year and cruising ahead of the Zacks Consensus Estimate.
The company continued to gain from robust pricing actions to counter inflation. Despite a dynamic macro landscape, TreeHouse Foods witnessed supply-chain improvements, which helped it enhance services and cater to high customer demand.
The company remains well-placed for 2023 due to its actions to focus on greater-margin private-label snacking and beverage categories.
Quarter in Detail
TreeHouse Foods reported adjusted earnings from continuing operations of 68 cents per share, which beat the Zacks Consensus Estimate of 39 cents. The bottom line grew significantly from the year-ago quarter’s loss of 16 cents.
TreeHouse Foods, Inc. Price, Consensus and EPS Surprise
TreeHouse Foods, Inc. price-consensus-eps-surprise-chart | TreeHouse Foods, Inc. Quote
Net sales of $894.8 million advanced 15.8% year over year and came ahead of the Zacks Consensus Estimate of $849 million.
Growth in net sales was mainly driven by favorable pricing actions undertaken to recover commodity inflation, along with improved services in most categories that enabled the company to cater to the high demand. This was somewhat offset by the exit of the lower-margin business, especially in Pickles.
The volume/mix fell 0.6%, whereas pricing increased 16.7%. Organic sales grew 16.1%. THS witnessed currency headwinds to the tune of 0.3%.
The gross margin of 17% expanded 4.2 percentage points from the year-ago quarter’s figure, mainly due to pricing actions to recover commodity and freight inflation and a positive category mix. These were somewhat offset by additional costs associated with investments to improve the supply chain and warehouse capacity.
Total operating expenses were $113 million, down from the $155 million reported in the year-ago quarter.
Adjusted EBITDA from continuing operations came in at $90.6 million, up from $37.3 million in the year-ago period. The upside can be attributed to the same factors that drove the gross margin.
Other Updates
TreeHouse Foods concluded the quarter with cash and cash equivalents of $14.6 million, long-term debt of $1,432.5 million and total shareholders’ equity of $1,704.4 million. In the first three months of 2023, the company’s net cash used in operating activities was $30.9 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.
Guidance
Management reiterated its fiscal 2023 guidance. For fiscal 2023, TreeHouse Foods expects net sales growth of 6-8% year over year to the $3.66-$3.73 billion band. Adjusted EBITDA is likely to be in the $345-$365 million range, up nearly 24% year over year at the midpoint.
In the first half of fiscal 2023, TreeHouse Foods anticipates revenues in the range of $1.705-$1.735 billion, suggesting 7.7-9.6% growth from the year-ago period.
For the second quarter of 2023, revenues are projected in the range of $810-$840 million, indicating flat to 4% growth from the second quarter of 2022. The company expects adjusted EBITDA in the band of $65-$80 million for the second quarter. The adjusted EBITDA margin is likely to be 7.9-9.4% in the quarter, calling for a 130-280 bps improvement.
This Zacks Rank #3 (Hold) stock has risen 11.1% in the past three months compared with the industry’s 8.8% growth.
Solid Food Picks
Some better-ranked food stocks are Lamb Weston (LW - Free Report) , General Mills (GIS - Free Report) and Conagra Brands (CAG - Free Report) .
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number.
General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.
Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests increases of 7.1% and 16.5%, respectively, from the year-ago reported numbers.