TreeHouse Foods Q1 Earnings Highlights: 16% Sales Growth, Exceeds Analyst Expectations, Reaffirms FY23 Guidance

TreeHouse Foods Inc THS reported first-quarter sales growth of 15.8% year-over-year to $894.8 million Monday, beating the consensus estimate of $850.84 million.

The sales growth was driven by favorable pricing to recover commodity inflation and service improvements in most categories.

The gross margin for the quarter expanded 425 basis points compared to 1Q22 to 17%.

The company reported operating income of $39.2 million with an operating margin of 4.4%, compared to an operating loss in the prior year's first quarter.

Adjusted EPS improved to 68 cents from a loss per share of 16 cents, beating the consensus estimate of 40 cents.

Adjusted EBITDA from continuing operations totaled $90.6 million (+142.9% Y/Y), and the margin was 10.1%, up by 530 bps.

TreeHouse Foods' net cash used in operating activities for the quarter reduced to $30.9 million, compared to $70.6 million in the first quarter of 2022. 

The company held $14.63 million in cash and equivalents as of March 31, 2023.

Q2 Outlook: THS sees an adjusted EBITDA margin of between 7.9% to 9.4%, representing 130 to 280 basis points YoY. It expects adjusted EBITDA of $65 million to $80 million.

Q2 Revenue is expected to be in a range of $810 million to $840 million versus an $871.67-million estimate. 

FY23 Outlook Reaffirmed: TreeHouse continues to see sales growth of 6%-8% for a total of $3.66 billion to $3.73 billion versus the consensus of $3.68 billion.

It sees adjusted EBITDA of $345 million-$365 million and capital expenditures of $130 million.

THS expects first half revenue to be between $1.705 billion-$1.735 billion, representing growth of 7.7% to 9.6%.

THS Price Action: THS shares were trading down slightly at $54.30 Monday morning. 

Photo via Pixabay.