OAK BROOK, ILL. — TreeHouse Foods Inc. is adapting to US-imposed tariffs and changes in federal policy on food ingredients.

In reporting fiscal 2025 first-quarter results, Steven Oakland, chairman, president and chief executive officer, said TreeHouse has only a limited exposure to the tariffs enacted by the Trump administration because the private label food manufacturer’s trade is mostly covered by the US-Mexico-Canada Agreement (USMCA).

“As for tariffs, our manufacturing footprint consists of 22 plants in the United States and 5 in Canada,” Oakland told analysts in a May 6 conference call. “All of the products made in Canada that are shipped into the United States do so duty-free, as they qualify for the USMCA agreement. That said, we do ship a limited subset of finished goods into Canada that are subject to tariffs, and we buy some raw materials and packaging from international sources. To mitigate this, we are executing alternative sourcing strategies or pricing to address these costs.”

Oakland also commented on shifting federal regulations for food ingredients. In April, the Food and Drug Administration unveiled a plan to phase out all petroleum-based synthetic dyes from the nation’s food supply. The FDA also said it aims to set a national standard and timeline for the food industry to transition from those dyes to natural options. 

“With respect to the public policy changes regarding food ingredients, we have been working on reformulation for some time and, in some cases, are already meeting the future standards,” Oakland said. “We do applaud the efforts of the FDA to establish one national standard.”

At the bottom line, Oak Brook-based TreeHouse followed up year-end earnings for fiscal 2024 with a net loss to start off fiscal 2025.

For the first quarter ended March 31, TreeHouse sustained a loss of $31.8 million, down from a loss of $11.7 million a year ago. The company said the result reflects the impact of mark-to-market adjustments, depreciation expense from its long-term profitability plan, costs from its frozen griddle and broth product recalls, and a loss on the extinguishment of debt, as well as acquisition, integration, divestiture and related costs.

Adjusted EBITDA came in at $57.5 million, up from $46 million a year earlier, with adjusted EBITDA margin ticking up 160 basis points to 7.2%.

“Based on the current environment, our guidance contemplates what is in place as it relates to tariff policies as of today,” Patrick O’Donnell, chief financial officer, said in the call. “With that said, we will continue to monitor and evaluate any potential additional impacts as new information becomes known.”

TreeHouse reaffirmed its fiscal 2025 guidance for adjusted net sales of $3.34 billion to $3.40 billion, representing a 1% decline to a 1% gain, and adjusted EBITDA of $345 million to $375 million, which would mark 2% to 11% growth from $337.4 million in 2024.

Treehouse said a plan to boost profitability, including supply chain and organizational changes, remains in early stages. | Source: ©JHVEPHOTO – STOCK.ADOBE.COM

First-quarter net sales fell 3.5% to $792 million from $820.7 million a year earlier. Adjusted net sales decreased 3.2% on a 1% uptick in pricing from commodity adjustments and an 8.3% decline in volume/mix, the latter reflecting the impact of planned margin management activities, the frozen griddle recall and broader macro consumption trends, TreeHouse said. The Harris Tea acquisition, made earlier this year, provided a 4.7% lift to net sales, according to the company.

“We achieved adjusted net sales within our guidance range, and adjusted EBITDA came in above the upper end of our guidance range,” Oakland said. “Note that adjusted EBITDA saw a benefit of approximately $6 million of planned expenses that shifted from the first quarter to the second quarter. Despite this shift, the company was well above the upper end of our range, reflecting early returns on the execution of the margin improvement plan we previously discussed.”

When reporting fiscal 2024 results back in February, TreeHouse unveiled a broad plan to bolster profitability. On the supply chain side, the initiative includes the rollout of the TreeHouse Management Operating System (TMOS) and efforts to sharpen procurement, logistics and distribution and margin management, as well as optimize plant capacity, which led to the closing of the New Hampton, Iowa, non-dairy creamer facility. The plan, too, includes organizational changes. In April, TreeHouse announced plans to lay off 150 corporate staff and eliminate a C-suite post, with the latter move resulting in the exit of chief commercial officer Scott Tassani effective May 30.

“While we are in the early stages, we are confident that the plan will meaningfully benefit results in the current year and beyond,” Oakland said. “The operating environment is clearly much more dynamic than we or anyone anticipated when we last spoke in February, but we are focused on controlling what we can control and executing against our plans to drive profits and cash flow regardless of the economic environment.”

Oakland also gave an update on the recovery of TreeHouse’s Brantford, Ont., facility involved in the wide recall of frozen waffle and pancake products due to potential Listeria contamination. Though shipping resumed in the first quarter, the company reported a 2.4% negative impact on net sales from the griddle service recall during the period.

“The team at our Brantford, Ont., frozen griddle facility is making great progress,” he said. “As of today, all of our lines are running, and we are in the process of filling the customer pipeline. We are on plan to have this business in place to positively impact the second half of the year.”