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TreeHouse Foods, Inc. (THS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net sales were $840.3M (+0.1% YoY) and adjusted net sales were $841.9M; adjusted EBITDA was $91.6M while gross margin expanded 320 bps to 18.8% on insurance recoveries and Harris Tea accretion .
  • A non-cash goodwill impairment of $289.7M drove GAAP net loss of $265.8M and diluted EPS of $(5.26); adjusted diluted EPS was $0.43 .
  • TreeHouse agreed to be acquired by Investindustrial for total enterprise value of $2.9B; shareholders to receive $22.50 per share in cash plus a CVR tied to coffee litigation proceeds; the company withdrew guidance and canceled the Q3 call .
  • Versus S&P Global consensus, Q3 missed on revenue ($840.3M vs $852.1M*) and EPS ($0.43 vs $0.565*), and was below EBITDA consensus ($91.6M vs $98.8M*) as volume/mix headwinds and margin management actions offset pricing and supply-chain savings .
  • Near-term stock reaction is anchored by the announced take-private at $22.50 per share cash plus CVR, a 38% premium to the pre-speculation close on Sept 26, 2025, creating an arbitrage framework around deal closure timing/conditions .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 18.8% (+320 bps YoY) on $17.5M insurance recoveries, Harris Tea’s favorable margin, and supply chain savings; adjusted EBITDA margin was 10.9% .
  • Management continues to execute margin management and supply chain savings initiatives; Q2 call: “We are confident the plan will meaningfully benefit results… focused on controlling what we can control and executing against our plans to drive profits and cash flow” .
  • Strategic catalyst: signed definitive agreement to be acquired by Investindustrial for EV $2.9B; CEO: “Our agreement… will provide shareholders with immediate cash value, at a substantial premium” .

What Went Wrong

  • Large non-cash goodwill impairment ($289.7M) led to GAAP net loss $(265.8)M and diluted EPS $(5.26) .
  • Volume/mix was negative (–8.6% contribution in Q3 three-month view) as margin management actions and macro consumption trends weighed on units; adjusted EBITDA fell YoY to $91.6M (vs $102.5M) .
  • Interest expense increased $7.9M YoY on higher revolver borrowings; net cash used in operations rose to $(62.5)M YTD on reduced receivables program cash flows .

Financial Results

P&L and Margins (GAAP and Adjusted)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$839.1 $792.0 $798.0 $840.3
Adjusted Net Sales ($USD Millions)$854.4 $796.0 $801.4 $841.9
GAAP Diluted EPS ($)$(0.07) $(0.63) $(0.06) $(5.26)
Adjusted Diluted EPS ($)$0.74 $0.03 $0.17 $0.43
Gross Profit Margin %15.6% 14.5% 17.4% 18.8%
Net Loss Margin % (GAAP)(0.4)% (4.0)% (0.4)% (31.6)%
Adjusted EBITDA ($USD Millions)$102.5 $57.5 $73.3 $91.6
Adjusted EBITDA Margin % (of adjusted net sales)12.0% 7.2% 9.1% 10.9%

Net Sales Drivers (Three-Month View)

Driver (% contribution)Q1 2025Q2 2025Q3 2025
Volume/Mix(8.3)% (6.2)% (8.6)%
Margin Management(3.3)% (2.6)% (3.0)%
Griddle Recall Service Impacts(2.4)% (1.2)% —
Pricing+1.1% +4.2% +6.5%
Business Acquisition (Harris Tea)+4.7% +4.5% +4.3%
Product Recall(0.3)% (0.2)% +1.7%
RTD Business Exit(0.4)% (1.0)% (0.7)%
FX(0.3)% (0.1)% (0.1)%
Total Change in Net Sales(3.5)% +1.2% +0.1%
Total Change in Adjusted Net Sales(3.2)% +1.4% (1.5)%

Consensus vs Reported – Q3 2025

MetricConsensus (S&P Global)Reported Actual
Revenue ($USD Millions)852.1*840.3
Primary EPS ($)0.565*0.43
EBITDA ($USD Millions)98.8*91.6

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious Guidance (Q2)Current Guidance (Q3)Change
Adjusted Net Sales ($B)FY 2025$3.360 – $3.415 Withdrawn Lowered/Withdrawn
Adjusted EBITDA ($M)FY 2025$345 – $375 Withdrawn Withdrawn
Free Cash Flow ($M)FY 2025≥ $130 Withdrawn Withdrawn
Net Interest Expense ($M)FY 2025$80 – $90 Withdrawn Withdrawn
Capital Expenditures ($M)FY 2025~ $125 Withdrawn Withdrawn
Adjusted Net Sales ($M)Q3 2025$840 – $870 Reported $841.9 adj. net sales N/A (actual)
Adjusted EBITDA ($M)Q3 2025$90 – $110 Reported $91.6 N/A (actual)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Supply chain savings/operations$250M gross savings target through 2027; improved execution and service levels; margin management to enhance profitability Insurance recoveries and Harris Tea accretion aided margins; unfavorable fixed cost absorption noted Improving operational efficiency; margin aided by one-offs
Margin management & volume/mixDeliberate exits/narrowing assortment to run plants efficiently; volumes pressured near-term Volume/mix negative (–8.6%); margin management actions cited Ongoing; largely implemented
Pricing/commodities & tariffsPricing to offset commodity inflation (coffee, oils); monitoring tariff impacts (Brazil coffee) Pricing +6.5% contribution; FX drag minimal Pricing contributing positively; tariff risk remains
Category/product recovery (griddle/broth)Griddle lines running; recovery expected H2; broth service strong, forecast for soup season Insurance recoveries recognized; griddle service impacts not a Q3 driver Recovery in motion
Regulatory/legalFDA ingredient policy and reformulation; CVR linked to Keurig litigation explained in M&A release Transaction CVR details reiterated Litigation optionality highlighted
AI/technologyNot discussedNot discussedN/A

Note: Q3 earnings call was canceled due to announced transaction; company withdrew outlook .

Management Commentary

  • “We are confident the plan will meaningfully benefit results… focused on controlling what we can control and executing against our plans to drive profits and cash flow” (CEO, Q2 call) .
  • “We are taking actions to deliver our commitment of $250 million gross supply chain savings through 2027… focused on profitability and cash flow” (CEO, Q2 call) .
  • “Our agreement with Investindustrial… will provide shareholders with immediate cash value, at a substantial premium” (CEO on M&A) .
  • CFO on Q2 drivers: “Operations and supply chain delivered a $10.6M benefit vs prior year… pricing net of commodities was a drag of $9.7M… volumes/mix drag of $1.1M” .

Q&A Highlights

  • Private label vs brands promotions: price gaps healthy; retailer support for both; promotional spend efficiency questioned; volumes expected similar in Q3, stronger in Q4 .
  • Innovation: TreeHouse as fast follower; investments in pretzels and coffee enable quick scaling where trends proven .
  • Coffee/tariffs: Ground coffee demand strong; Brazilian tariffs potential impact; hedging and formulation alternatives considered; private label price point advantage .
  • Broth recovery: Service near 100%; poised for competitive soup season .
  • Margin management: Assortment streamlining and plant optimization to remove complexity and unlock capacity; discipline on bids .

Estimates Context

  • Q3 revenue missed S&P Global consensus ($840.3M vs $852.1M*) largely on negative volume/mix and margin management impacts despite strong pricing and Harris Tea accretion .
  • Adjusted diluted EPS of $0.43 missed $0.565* as adjusted EBITDA declined YoY and interest expense rose $7.9M; mark-to-market hedging helped other expense but not enough to offset headwinds .
  • Adjusted EBITDA of $91.6M was below $98.8M* with volume/mix pressure and fixed cost absorption offsetting supply-chain savings and insurance recoveries .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Deal-driven setup: The Investindustrial transaction (cash $22.50/share + CVR) reframes near-term trading around deal spread, regulatory approvals, shareholder vote, and litigation optionality embedded in the CVR .
  • Fundamental print: Q3 showed margin improvement (gross margin +320 bps) aided by insurance recoveries/Harris Tea, but volumes remained weak; adjusted EBITDA down YoY and missed consensus .
  • Guidance withdrawn/call canceled: The company will not provide outlook going forward while the deal is pending—reduces fundamental visibility; specialty investors may focus on merger-arb dynamics .
  • Cost actions intact: Margin management and supply chain savings continue to underpin adjusted profitability; fixed cost absorption remains a watch item if volumes don’t recover .
  • Interest expense/working capital: Higher interest expense and reduced receivables program cash flows pressured cash generation YTD—monitor financing and revolver balances through closing .
  • Category trajectory: Griddle and broth recoveries support H2 run-rate quality (seen in insurance recoveries/service improvements); broader consumption trends still soft .
  • Post-close lens: If the deal completes, valuation upside is capped at terms; focus shifts to timing certainty and CVR mechanics (85% of net proceeds from Keurig litigation) .