OAK BROOK, ILL. — TreeHouse Foods is benefiting from a more focused business structure and more consumers choosing private label brands. The company raised its full-year guidance in anticipation of additional momentum later in the year.
Private label dollar sales across all US retail outlets rose 8.2% to $108 billion during the first half of 2023, ended June 18, according to data from the market researcher Circana, Chicago. Store brand unit sales for the six-month period dipped 0.5% but outperformed national brand unit sales, which fell 3.4%.
At TreeHouse Foods, the market dynamics translated into a net income of $23.3 million, equal to 41c per share on the common stock for the second quarter ended June 30, an improvement over the same quarter of the previous year when the company recorded a loss of $29.4 million.
Quarterly sales rose to $843.6 million from $810.2 million the year before.
“Pricing drove the top line, contributing double-digit growth versus the prior year,” said Patrick M. O’Donnell, chief financial officer, during an Aug. 7 conference call to discuss second-quarter results. “This reflects our cumulative efforts to recover inflation.
“Volume and mix declined versus the prior year. Our performance in the second quarter was, in part, timing related. Recall that last quarter, we talked about how our ability to restore service levels faster than anticipated in certain categories enabled us to fulfill customer shipments in the first quarter that were initially planned for the second quarter.”
For the year, management raised the company’s financial guidance to sales coming in 7.5% to 9.5% higher year-over-year and in a range between $3.71 billion and $3.78 billion. The increase includes new volume from the company’s acquisition of a coffee processing plant in Northlake, Texas.
Earnings before interest, taxes, depreciation and amortization also was narrowed to a range of $360 million to $370 million, up approximately 27% year-over-year at the midpoint, according to the company.
“ … We expect our top-line growth to be driven primarily by volume and mix, including the volume from the coffee acquisition,” Mr. O’Donnell said. “It's worth noting that the pricing contribution will step down in the second half of the year as we lap additional pricing actions taken last year.”
Steve Oakland, chairman, chief executive officer and president, added, “Looking forward, we expect to continue to benefit from our more focused portfolio, higher service levels and our strategic investments in capabilities, including our recently completed coffee acquisition. With favorable industry trends and a clear strategy, we are confident in achieving our near- and long-term financial goals and see a long runway for continued growth and value creation."
For the first six months of fiscal 2023, TreeHouse Foods earned $38.5 million, equal to 68c per share, and an improvement over the first half of fiscal 2022 when the company recorded a loss of $32.4 million.First-half sales reached $1.74 billion, up from $1.58 billion the year before.