Treehouse Foods Misses Q4 Estimates But Stock Jumps: What's Driving The Surge?

Treehouse Foods, Inc. THS shares are trading higher on Friday.

The company reported fourth-quarter adjusted earnings per share of 95 cents, missing the street view of 97 cents. Quarterly revenues of $905.70 million (down 0.6% year over year), missed the analyst consensus estimate of 907.716 million.

“We closed a challenging 2024 with sequentially improved net sales trends, gross profit margin, and Adjusted EBITDA margin, all of which were in-line with our updated expectations,” said Steve Oakland, Chairman, Chief Executive Officer, and President.

“Despite a slower macro environment and two significant supply chain issues, our teams made steady progress executing on our supply chain initiatives amidst a difficult consumer backdrop across food and beverage categories.”

The change in net sales was nearly flat as volume/mix was positively impacted by strong performance in multiple categories including pretzels, in-store bakery, and cookies.

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The quarterly gross margin expanded to 19.5% compared to 16.7% in the year-ago period, an increase of 2.8 percentage points. 

The increase is primarily due to the execution of supply chain savings initiatives, a $10 million insurance recovery related to the broth recall, and lower commodity costs.

Adjusted EBITDA from continuing operations was $118.3 million in the fourth quarter, compared to $108.4 million a year ago. The increase is primarily due to supply chain savings initiatives.

The company exited the quarter with cash and equivalents worth $289.6 million. Inventories as of quarter end totaled $539.3 million.

Long-term debt as of quarter-end expanded to $1.401 billion, compared with $1.396 billion a year ago.

Outlook: Treehouse Foods expects FY25 adjusted net sales to range from $3.34 billion to $3.40 billion, compared with the $3.45 billion estimate. The company anticipates first-quarter adjusted net sales between $785 million and $800 million, below the $829.96 million estimate.

Price Action: THS shares are trading higher by 9.31% to $36.36 at last check Friday.

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