TreeHouse Foods Closes Out Strong Year With Sluggish Q4
TreeHouse Foods closed out a solid fiscal year with a decline in net sales in the fourth quarter due in part to a supply chain disruption at one of its facilities and the company’s decision to exit certain categories.
Net sales for the fourth quarter were $910.8 million, down 4.8% when compared to the similar quarter the previous year. Company officials pinned the decline on issues at one of its broth facilities and in our pretzels and cookies categories.
Additionally, planned distribution exits primarily in its in-store bakery and coffee categories contributed to the decrease. These items were partially offset by volume/mix from the acquisition of a coffee roasting facility from Farmers Brothers Company.
Net income from continuing operations in the quarter was $6.4 million, compared to $39.7 million in the fourth quarter of 2022. Adjusted EBITDA from continuing operations was $108.4 million in the fourth quarter of 2023, compared to $118.5 million in the fourth quarter of 2022, a decrease of $10.1 million.
The decrease is primarily due to supply chain disruption at one of our broth facilities and from a packaging quality matter within our cookies and pretzels categories, a decrease of TSA income, unfavorable fixed cost absorption due to lower volume, increased costs for labor and manufacturing plant maintenance, and unfavorable category mix. This was partially offset by favorable commodity costs, lower freight costs, and lower brokerage commissions.
For the full fiscal year, TreeHouse net sales were $3.4 billion, an increase of 4.1%. Net income from continuing operations of $59.0 million increased by $68.2 million versus the prior year. Adjusted EBITDA. of $365.9 million increased by $74.2 million versus the prior year.
"TreeHouse Foods made important progress in 2023 to advance our portfolio strategy focused on higher-growth, higher-margin categories, enhance our supply chain capabilities, and improve our service levels," said Steve Oakland, TreeHouse’s chairman, chief executive officer and president. "As we enter 2024, despite a difficult consumer environment in the food and beverage industry, I am confident in the positioning of our business”
With continued growth of private label product sales, Oakland said the company has developed a robust sales pipeline that is expected to contribute to significant growth in the second half of 2024 and beyond.
“While we expect our first half performance to be constrained by our broth business, we believe we've made the appropriate investments to maintain our path to our long-term targets and strengthen our position as a leading private brands food and beverage supplier in North America,” he said.
Looking ahead, the company is forecasting net sales for the fiscal year in the range of $3.43 to $3.50 billion, which represents growth of approximately 0% to 2% year-over-year. Organic volume and mix are expected to be slightly positive for the year, offset by modest, targeted deflationary pricing.
