Treehouse Foods Inc (THS, Financial) released its Q3 2023 earnings report on November 6, 2023. The company reported net sales from continuing operations of $863.3 million, marking a 3.6% increase compared to the same period last year. The company's adjusted net sales, including the divested Snack Bars business, were $906.6 million, which was adversely impacted by approximately $15 million due to a voluntary product recall and a discrete supply chain disruption late in the quarter.
Financial Highlights
Treehouse Foods reported a net income from continuing operations of $9.8 million, a significant turnaround from the net loss of $12.0 million in the prior year. The company's adjusted EBITDA from continuing operations increased by $10.3 million to $89.9 million, with an adjusted EBITDA margin of 10.4%.
The company also completed the repurchase of approximately $50 million in company shares during the quarter. Following the end of the quarter, Treehouse Foods received a $427.5 million repayment of its Seller Note from the Meal Preparation divestiture.
Performance Analysis
Treehouse Foods' net sales increase of 3.6% was primarily driven by the acquisition of the Coffee Roasting Capability, favorable pricing to recover commodity inflation, and an increase in retail volume. However, these gains were partially offset by declines in co-manufacturing and food-away-from-home volume, in line with broader macroeconomic consumption trends. Additionally, supply chain disruptions, including a voluntary product recall, impacted select categories.
Gross profit as a percentage of net sales was 15.9% in the third quarter of 2023, a slight decrease from 16.0% in the third quarter of 2022. Total operating expenses decreased by $34.7 million to $103.9 million in the third quarter of 2023, primarily due to lower professional fees for strategic growth initiatives, lower retention bonus and severance expense, and lower freight costs.
Outlook
For the full year, Treehouse Foods updated its adjusted net sales outlook to $3,435 to $3,465 million, reflecting the Snack Bars business sale, the ongoing impact of a voluntary recall, and the continuation of current consumer demand trends. The company reaffirmed its full-year adjusted EBITDA outlook from continuing operations of $360 to $370 million.
Explore the complete 8-K earnings release (here) from Treehouse Foods Inc for further details.
