Treehouse Foods — Q3 2024 Earnings Presentation
27 slides from Treehouse Foods's earnings presentation, Nov 12, 2024
Slide 1: Q3 2024 Results and Outlook
Q3 2024 Results and Outlook November 12, 2024 © 2024 TreeHouse Foods, Inc. 1
Slide 2: Forward Looking Statement
Forward Looking Statement From time to time, we and our representatives may provide information, whether orally or in writing, which are deemed to be "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Litigation Reform Act"). These forward-looking stat
Slide 3: Key Takeaways
Key Takeaways Delivered midpoint of Q3 Adjusted EBITDA of $103 million despite 1 lower-than-expected Adjusted Net Sales of $854 million Operating environment is challenging in the near-term with 2 decelerating consumer trends, though fundamental private brands opportunity remains intact Successfully
Slide 4: Griddle Business Update
Griddle Business Update • Initiated a voluntary recall of frozen griddle products manufactured at Brantford, Ontario, Canada facility in October 2024 out of commitment to food safety and quality • Temporarily closed facility to conduct and confirm effectiveness of sanitation and hygienic restoration
Slide 5: Q3 2024 Results
Q3 2024 Results Key Highlights • Sequential improvement of organic Metric Guidance Result net sales trend • Drove strong adjusted gross profit Adjusted margin of 18.9% on softer volume $865 million to $895 million $854 million Net Sales due to successful execution of supply chain savings initiatives
Slide 6: Consumption Trends Have Softened in TreeHouse Foods Categories
Consumption Trends Have Softened in TreeHouse Foods Categories Private Brand Unit Growth in THS Categories (Shown in percentage points) 5% Recent Trends 4% 5% 4% 3% 4% 3% 3% 2% 2% 1% 1% 1% 0% 0% -1% -1% -1% Q1 Q2 Q3 Q4 Q1 Q2 Q3 July August September October 2023 2023 2023 2023 2024 2024 2024 2024 20
Slide 7: Private Brands Continue to Gain Unit Share
Private Brands Continue to Gain Unit Share Supported by Price Gaps and Lower Levels of Promotional Activity Relative to Recent History Private Brands Gained Unit Share in Private Brands % Price Gap Elevated in Promotional Activity Has Not Returned the Third Quarter in THS Categories THS Categories v
Slide 8: Private Brands Growth is a Long-Term Fact in North America
Private Brands Growth is a Long-Term Fact in North America 2006-2024 YTD Private Brands Dollar Share of Consumer-Packaged Goods 23% 22% 21% 20% 19% 18% 17% 16% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 YTD Source: IRI Market Reports Recession-Proo
Slide 9: Grocery Retailers Are Investing in Private Brands
Grocery Retailers Are Investing in Private Brands Private Brands is an Important Element within Grocery Retailers’ Strategies Launched largest food Launched new & beverage private private brand brand in 20 years ‘Overjoyed’ +800 ~$56B stores to be added by brand launched end of 2028 in 1995 Sources:
Slide 10: Executing Initiatives to Drive Profitability
Executing Initiatives to Drive Profitability TMOS Capacity Allocation Procurement Supply Chain Margin Pricing Architecture Logistics & Initiatives Management Distribution Network © 2024 TreeHouse Foods, Inc. 10
Slide 11: Q3 Adjusted Net Sales and Profit Year-Over-Year Performance
Q3 Adjusted Net Sales and Profit Year-Over-Year Performance ADJUSTED NET SALES ADJUSTED EBITDA ADJUSTED EBITDA MARGIN Decreased 1.4% to $854.4M Increased to $102.5M Increased 160 bps to 12.0% $102.5M 12.0% $866.3M $854.4M $89.9M 10.4% (1.4)% 14.0% 160 bps 2023 2024 2023 2024 2023 2024 Q3 Q3 Q3 Q3 Q3
Slide 12: Q3 Net Sales Performance Drivers
Q3 Net Sales Performance Drivers Q3 2024 Year-over-year net sales drivers Volume/Mix (0.8)% • Volume/mix was negatively Pricing (0.5)% impacted by slowing consumption trends and Foreign Currency (0.1)% Hurricane Helene, which disrupted distribution in the Adjusted Net Sales Decrease (1.4)% Southeast
Slide 13: Adjusted EBITDA Year-Over-Year Performance Drivers
Adjusted EBITDA Year-Over-Year Performance Drivers $20M $(3)M $103M $90M $(1)M $(3)M Q3 23 Vol / Mix PNOC Operations & SG&A and Q3 24 Adjusted (including Supply Chain Other Adjusted EBITDA absorption) EBITDA Chart not drawn to scale. Adjusted EBITDA is a non-GAAP financial measure. See “Comparison o
Slide 14: Disciplined Capital Allocation Approach
Disciplined Capital Allocation Approach 2024 Investment in the Business Continued investments to enhance depth and capabilities in growing categories Debt Service Maintain current balance sheet strength Share Repurchase Opportunistically repurchase shares © 2024 TreeHouse Foods, Inc. 14
Slide 15: Revising 2024 Sales and EBITDA Outlook
Revising 2024 Sales and EBITDA Outlook FY 24 Q4 Guidance Guidance Adjusted Net Sales $3.37 to $3.40 billion $900 to $930 million Approx. (2)% to (1)% Approx. (1)% to +2% growth Adjusted EBITDA $335 to $345 million $116 to $126 million Free Cash Flow At least $120 million Net Interest $56 to $62 mill
Slide 16: Initial 2025 Perspectives
Initial 2025 Perspectives Macro Considerations TreeHouse Foods Actions • Strained consumer • New business growth and strength in Broth business offset by impact of griddle • Category growth deceleration recall and potential for recent softness in consumer trends to persist • Continued retailer inves
Slide 17: Key Takeaways
Key Takeaways Delivered midpoint of Q3 Adjusted EBITDA of $103 million despite 1 lower-than-expected Adjusted Net Sales of $854 million Operating environment is challenging in the near-term with 2 decelerating consumer trends, though fundamental private brands opportunity remains intact Successfully
Slide 18: Appendix
Appendix © 2024 TreeHouse Foods, Inc. 18
Slide 19: Long-Term Growth Algorithm
Long-Term Growth Algorithm At Least 3-5% 8-10% $200m Revenue Adjusted EBITDA Free Cash Flow The Company is not able to reconcile prospective adjusted EBITDA or free cash flow, which are Non-GAAP financial measures, to the most comparable GAAP financial measures without unreasonable effort due to the
Slide 20: Comparison of Non-GAAP Information to GAAP Information
Comparison of Non-GAAP Information to GAAP Information The Company has included in this presentation measures of financial performance that are not defined by GAAP ("Non-GAAP"). Adjusted Net Sales, Adjusted Cost of Sales, Adjusted Gross Profit, Adjusted Total Operating Expenses, Adjusted Operating A
Slide 21: Reconciliation of Net Loss to EBITDA
TreeHouse Foods, Inc. Reconciliation of Net (Loss) Income From Continuing Operations to EBITDA and Adjusted EBITDA from Continuing Operations Three Months Ended Nine Months Ended September 30, September 30, 2024 2023 2024 2023 (unaudited, in millions) Net (loss) income from continuing operations (GA
Slide 22: Reconciliation of Non-GAAP Measures
TreeHouse Foods, Inc. Reconciliation of Non-GAAP Measures Three Months Ended September 30, 2024 Net (loss) Total Income tax income from operating Operating Total other (benefit) continuing (Unaudited, in millions, except per share amounts) Net sales Cost of sales Gross profit expenses income expense
Slide 23: Reconciliation of Non-GAAP Measures
TreeHouse Foods, Inc. Reconciliation of Non-GAAP Measures Three Months Ended September 30, 2023 Net income Total from operating Operating Total other Income tax continuing (Unaudited, in millions, except per share amounts) Net sales Cost of sales Gross profit expenses income expense expense operatio
Slide 24: Reconciliation of Non-GAAP Measures
TreeHouse Foods, Inc. Reconciliation of Non-GAAP Measures Nine Months Ended September 30, 2024 Net (loss) Total Income tax income from operating Operating Total other (benefit) continuing (Unaudited, in millions, except per share amounts) Net sales Cost of sales Gross profit expenses income expense
Slide 25: Reconciliation of Non-GAAP Measures
TreeHouse Foods, Inc. Reconciliation of Non-GAAP Measures Nine Months Ended September 30, 2023 Net income Total from operating Operating Total other Income tax continuing (Unaudited, in millions, except per share amounts) Net sales Cost of sales Gross profit expenses income expense expense operation
Slide 26: Reconciliation of Organic Net Sales
TreeHouse Foods, Inc. Reconciliation of Organic Net Sales Three Months Ended September 30 Dollars Percent (In millions) 2023 Net sales $ 863.3 Product recall returns (12.3) (1.4) % Volume/mix (6.7) (0.8) Pricing (5.0) (0.5) Foreign currency (0.2) (0.1) 2024 Net sales $ 839.1 (2.8) % Foreign currency
Slide 27: Reconciliation of Free Cash Flow
TreeHouse Foods, Inc. Reconciliation of Net Cash (Used In) Provided By Operating Activities from Continuing Operations to Free Cash Flow from Continuing Operations Nine Months Ended September 30, 2024 2023 (unaudited, in millions) Cash flow (used in) provided by operating activities from continuing