Treehouse Foods, a prominent player in the food and beverage industry, has adjusted its full-year core profitability outlook while maintaining its sales expectations following the release of its second-quarter financial results that exceeded Wall Street's predictions. As the company navigates a dynamic market environment, it now anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2024 to be in the range of $360 million to $380 million.
This marks a downward adjustment from its previous outlook of up to $390 million for the year. "This update accounts for our performance for the first half of the year where our adjusted EBITDA was a few million dollars short of the upper end of our guidance range," stated Chief Financial Officer Patrick O'Donnell during an earnings conference call.
This revised outlook also considers that certain consumer-driven mix trends are likely to persist into the second half of 2024, O'Donnell added. On the trading floor, TreeHouse's shares experienced a decline of 3.2% during Monday afternoon trading amidst a broader stock market selloff. Despite these market challenges, the company is maintaining a comprehensive full-year net sales estimate between $3.43 billion and $3.50 billion.
Analysts surveyed by Capital IQ have forecasted $3.46 billion, reflecting cautious optimism as the company focuses on strategic initiatives. The company’s broth business is expected to become a more substantial contributor in the latter half of the year, as mentioned by O'Donnell, who emphasized that the company's organic volume and product mix remain vital drivers of sales growth throughout 2023. From a pricing perspective, O'Donnell acknowledged that a slight decline in commodity pricing year-over-year is anticipated.
However, he underscored that this expected decline is likely to be mostly mitigated by a modest volume and mix benefit derived from recent acquisitions in the coffee and pretzel segments completed last year. In reviewing their performance for the quarter ending June 30, TreeHouse reported adjusted earnings of $0.29 per share, a decrease from $0.43 the previous year.
Additionally, net sales fell by 1.9% to $788.5 million, although these results surpassed analysts’ expectations, which were set at $0.13 and $785.4 million, respectively. The company attributed this sales decline to necessary pricing adjustments and unfavorable volume and mix associated with planned distribution exits primarily in its coffee and in-store bakery categories. O'Donnell noted, "Importantly, we are now through the impact of those business exits, and coupled with pipeline wins and strong private brand consumer trends, we have great confidence in returning to volume growth in the third and fourth quarters." Furthermore, the adjusted EBITDA from continuing operations for the second quarter fell to $70.6 million, down from $76.3 million from the same quarter last year. Looking ahead to the current quarter, TreeHouse projects net sales between $865 million and $895 million, indicating a potential growth of approximately flat to 4% compared to the previous year.
Analysts surveyed by Capital IQ are predicting figures closer to $889 million. Adjusted EBITDA from continuing operations is expected to range between $98 million and $108 million, with pricing remaining relatively stable. Chief Executive Steve Oakland asserted, "We have positioned the business well to deliver on our annual net sales targets and achieve our updated profitability guidance.
Importantly, this is occurring at a time when the private brand consumer landscape is also improving." In conclusion, while TreeHouse Foods navigates challenges in the current economic landscape, it has strategically positioned itself to meet its sales and profitability targets, reflecting both resilience and adaptability in a competitive market..