Executive Summary

Q4 2024 revenue was $905.7M (down 0.6% y/y), with adjusted net sales of $911.4M; Adjusted EBITDA was $118.3M, and gross margin expanded 280 bps y/y to 19.5% as supply chain savings and a $10M insurance recovery offset griddle recall headwinds .
GAAP diluted EPS from continuing ops was $1.15 vs. $0.12 y/y; adjusted diluted EPS was $0.95 vs. $0.77 y/y, reflecting lower mark‑to‑market drag and cost actions despite recall impacts .
FY25 outlook: adjusted net sales $3.34–$3.40B (≈‑1% to +1%), adjusted EBITDA $345–$375M, free cash flow ≥$130M; Q1 FY25 guide implies a softer start (adjusted net sales $785–$800M; adj. EBITDA $38–$46M) due to griddle recall timing and flat organic volume .
Strategic pivot: management is prioritizing margin management (willing to trade 1–2 pts of volume for profitability), supply chain efficiencies (gross savings target $250M by 2027), and lower growth capex to drive higher free cash flow conversion as categories normalize .
Estimates context: Wall Street consensus via S&P Global was unavailable at time of analysis due to API limits; we benchmark results against company guidance and prior periods (met internal Q4 expectations) .

What Went Well and What Went Wrong

What Went Well

Margin expansion and profitability execution: Q4 gross margin rose to 19.5% (+280 bps y/y) on supply chain savings, procurement, and a $10M insurance recovery on the broth recall; Adjusted EBITDA grew to $118.3M (13.0% adj. margin) .
Volume/mix recovery in select categories: Underlying Q4 volume/mix +3.8% driven by pretzels, in‑store bakery, cookies; management highlighted “significant cost savings” and that Q4 adjusted net sales/EBITDA were “in line with expectations” .
Strategic repositioning for cash flow: FY24 CFO was $265.8M; FCF from continuing ops reached $126.1M as working capital improved; share repurchases totaled $149.7M for the year, with $393.5M authorization remaining .

What Went Wrong

Recall and restoration headwinds: Griddle recall reduced Q4 net sales drivers (facilities restoration ‑2.8%, recall returns ‑0.8%) and will weigh on Q1; management expects “no significant financial contribution from Griddle in the first quarter” .
Macro volume softness: Private‑label unit growth decelerated late in Q4 amid “slower macro environment,” with management planning for flat organic volume and higher brand promotions in 2025 .
Pricing and FX drag: Q4 net sales change included pricing (‑0.7%) and minor FX (‑0.1%) headwinds; PDOC was a negative driver in Q4 as commodity inflation (coffee/cocoa and some edible oils) persisted .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Net Sales ($USD Millions)	$910.8	$839.1	$905.7
Adjusted Net Sales ($USD Millions)	$909.1	$854.4	$911.4
Gross Margin % (GAAP)	16.7%	15.6%	19.5%
Adjusted EBITDA ($USD Millions)	$108.4	$102.5	$118.3
Adjusted EBITDA Margin % (of adjusted sales)	11.9%	12.0%	13.0%
Diluted EPS – Continuing Ops (GAAP)	$0.12	$(0.07)	$1.15
Adjusted Diluted EPS – Continuing Ops (Non‑GAAP)	$0.77	$0.74	$0.95

Notes: Q4 GAAP/Non‑GAAP EPS reconciliations reflect recall costs, mark‑to‑market derivative adjustments, FX remeasurement, and restructuring costs .

Net Sales Drivers (YoY % contribution):

Driver	Q3 2024 (3 mo)	Q4 2024 (3 mo)
Volume/Mix	(0.8%)	+3.8%
Facilities Restoration Impact	—	(2.8%)
Product Recall Returns	(1.4%)	(0.8%)
Pricing	(0.5%)	(0.7%)
Foreign Currency	(0.1%)	(0.1%)
Total Change in Net Sales	(2.8%)	(0.6%)
Adjusted Net Sales Change	—	+0.2%

KPIs and Capital Allocation:

KPI	Q4 2024 / FY 2024
Cash From Operations (FY)	$265.8M
Capital Expenditures (FY)	$139.7M
Free Cash Flow from Continuing Ops (FY)	$126.1M
Share Repurchase (Q4 / FY)	1.7M shares; $61.0M in Q4; $149.7M in FY; $393.5M remaining authorization
Cash & Equivalents (12/31/24)	$289.6M
Long‑Term Debt (12/31/24)	$1,401.3M

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Net Sales	FY 2025	N/A (initial)	$3.340B–$3.400B	New
Adjusted EBITDA	FY 2025	N/A (initial)	$345M–$375M	New
Free Cash Flow	FY 2025	N/A (initial)	≥$130M	New
Net Interest Expense	FY 2025	N/A (initial)	$80M–$90M	New
Capital Expenditures	FY 2025	N/A (initial)	≈$125M	New
Adjusted Net Sales	Q1 2025	N/A (initial)	$785M–$800M	New
Adjusted EBITDA	Q1 2025	N/A (initial)	$38M–$46M	New

Management notes FY25 volume/mix down ≈1% (organic down ≈1%; Harris Tea offset by RTD exit, margin actions, and one‑time griddle recall); pricing ≈+1% .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Supply chain savings	Procurement/logistics/TMOS as main levers; building to $50M gross 2H24; multiyear $250M by 2027	Q3 adjusted gross margin up; 2H supply chain savings flowing; on track for $250M by 2027	Q4 benefited from supply chain savings; gross margin +280 bps; reiterates visibility to $250M by 2027	Improving
Recalls & restoration	Broth facility ramp ongoing; plan for 2H contribution	Announced griddle recall; Q4 guide trimmed; broth improving but not fully recovered by Q4	Griddle facility resumed shipments “recent weeks,” limited Q1 contribution; $10M broth insurance recovery aided Q4	Near‑term drag, improving
Margin management	—	Building “margin management” capability to prioritize profitable mix	Will accept 1–2 pts volume drag to enhance margins; focus on high‑return customers/SKUs	Increasing emphasis
Capex glide path	FY24 capex ≈$145M; growth investments under way	Reinforced focus on profitability/cash; capex to moderate	FY25 capex ≈$125M; multiyear glide path to lower capex as growth projects conclude	Downshifting
Macro/consumption	Private label share up; gaps elevated; expect brand promos to rise	Category deceleration late Q3; Q4 private label still gains share of smaller pie	Q4 slowdown continued; planning flat organic volume; expect more brand promo in 2025	Softer demand
Commodities	Cocoa actions, coffee pass‑through	Noted commodity dynamics; procurement offset	Low‑to‑mid single digit inflation, concentrated in coffee/cocoa; pass‑through on coffee	Mixed inflation

Management Commentary

“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.” – CEO Steve Oakland .
“We are executing a plan to drive more profitable business… making strategic decisions on margin management… prioritizing gross profit dollars… additional efficiency opportunities… and declining levels of capex… to drive improved profitability and cash flow.” – CEO .
“We have visibility to delivering our commitment of $250 million of gross supply chain savings through 2027.” – CEO .
“We expect adjusted EBITDA in a range of $345 million to $375 million in 2025… free cash flow of at least $130 million… net interest expense $80–$90 million… capex ≈$125 million.” – CFO Patrick O’Donnell .
Harris Tea acquisition completed in January adds scale and vertical integration in private label tea; early synergies expected alongside coffee investments .

Q&A Highlights

Volume cadence: Underlying volume/mix up ~3.8% in Q4 ex one‑time items; Q1 organic volume roughly flat as broth normalizes and macro remains soft .
Margin management: Company will selectively exit low‑return bids and de‑emphasize complex, high‑cost tail volume; expects ≈1–2 pts of volume headwind but better profitability through 2025 .
Promotions & macro: Expect brand promotions to increase; private label price gaps remain healthy; TreeHouse’s contracts make promo impact different from brand “trade” mechanics .
Commodity backdrop: Low‑to‑mid single digit inflation, mainly coffee/cocoa; coffee largely pass‑through under hedged arrangements .
Leverage & capital deployment: Near lower end of 3.0–3.5x target; balanced capital allocation across organic/inorganic investments and buybacks; expect year‑end leverage to trend lower even after Harris Tea .

Estimates Context

S&P Global consensus estimates for revenue/EPS/EBITDA were unavailable due to API rate limits at the time of retrieval. As a result, we cannot present vs‑consensus beats/misses for Q4 2024 at this time (we rely on company guidance and historical comparisons) .
Management stated Q4 adjusted net sales and adjusted EBITDA were “in line with expectations,” and FY24 results met the updated Q3 outlook ranges .

Key Takeaways for Investors

Profitability > growth near term: TreeHouse is explicitly trading marginal volume for structurally higher margins via margin management and disciplined bidding; expect EBITDA growth on flattish sales in FY25 .
Cost‑out flywheel intact: Procurement, TMOS, and logistics underpin ongoing gross savings (aiming for $250M by 2027), visible in Q4 gross margin/EBITDA expansion despite recall headwinds .
Recall overhang fading but impacts Q1: Griddle facility restarted with limited Q1 benefit; broth recovery aided by $10M insurance in Q4; expect improving trajectory into 2H as operations normalize .
FCF and capex inflect: FY25 capex moderates to ~3.7% of sales, supporting ≥$130M FCF; balance sheet near leverage target with flexibility for tuck‑ins and opportunistic buybacks .
Category/macro sensitivity: Softer consumer and higher brand promos could pressure top line; private label gaps remain favorable and category leadership in pretzels/cookies provides growth pockets .
Harris Tea synergy and portfolio pruning: Tea adds vertical integration and category depth; RTD exit and selective de‑complexing should lift returns over cycle .
Trading stance: Near‑term catalysts include sustained margin expansion, execution on FY25 EBITDA/FCF targets, and visibility on recall normalization; risks include deeper macro volume declines and commodity volatility .

TreeHouse Foods, Inc. (THS)·Q4 2024 Earnings Summary