TreeHouse Foods Q1 2025 slides: EBITDA surges 25% despite sales decline

Introduction & Market Context

TreeHouse Foods, Inc. (NYSE:THS) presented its first quarter 2025 results and full-year outlook on May 6, 2025, highlighting improved profitability despite sales challenges. The private-label food manufacturer reported results that exceeded EBITDA guidance while maintaining its full-year outlook. TreeHouse shares, which closed at $23.45 on May 5, showed a 4.69% increase in premarket trading, indicating positive investor reaction to the results.

The company continues to position itself to capitalize on the long-term growth trend in private brands, which have increased their dollar share of consumer packaged goods from 16% in 2006 to nearly 25% in 2025 year-to-date.

Quarterly Performance Highlights

TreeHouse Foods reported Q1 2025 Adjusted Net Sales of $796.0 million, near the upper end of its guidance range of $785-800 million, though representing a 3.2% decrease from $821.6 million in Q1 2024. More impressively, Adjusted EBITDA reached $57.5 million, significantly exceeding the guidance range of $38-46 million and showing a 25% increase from the prior year.

As shown in the following chart comparing year-over-year performance, the company’s Adjusted EBITDA margin expanded by 160 basis points to 7.2% from 5.6% in Q1 2024, demonstrating meaningful profitability improvement despite the sales decline:

The company’s EBITDA improvement was driven by several factors, with operations and supply chain improvements contributing $8.0 million, volume/mix adding $2.2 million, and pricing net of commodities (PNOC) adding $1.3 million to the year-over-year increase.

However, the adjusted net sales decline of 3.2% was attributed to several factors, including margin management initiatives (-3.3%), consumption/other (-2.6%), griddle recall service impacts (-2.4%), and overall volume/mix (-8.3%). These negative factors were partially offset by acquisition contributions (+4.7%) and pricing (+1.1%).

Private Brand Market Trends

TreeHouse Foods highlighted that private brands continue to show strong fundamentals despite recent consumption challenges. While private brand unit growth has slowed and turned slightly negative in Q1 2025 (-0.4%), it continues to outperform national brands (-0.7%) in TreeHouse categories.

The company emphasized that private brands growth is a long-term trend in North America, with dollar share steadily increasing over nearly two decades. This trend is expected to continue as major grocery retailers invest significantly in their private label offerings.

TreeHouse pointed to several examples of major retailers investing in private brands, including Walmart (NYSE:WMT) launching its largest food and beverage private brand in 20 years (bettergoods), Albertsons (NYSE:ACI) introducing a new private brand called ’Overjoyed’, and ALDI planning to add over 800 stores by the end of 2028.

Strategic Initiatives & Profitability Improvement

TreeHouse Foods outlined its profitability improvement plan, which focuses on three key areas: supply chain initiatives, margin management, and streamlining cost structures. The company is implementing its TreeHouse Management Operating System (TMOS), pursuing procurement savings, optimizing its logistics network, maximizing utilization, refining pricing architecture, and reducing complexity.

The company also presented its balanced capital allocation approach, with priorities for 2025 including approximately $125 million in capital expenditures to enhance capabilities in growing categories, debt reduction to lower the Net Debt to Adjusted EBITDA ratio, and opportunistic share repurchases when cash is available. From 2022 to 2024, TreeHouse deployed $1.6 billion in capital, with 33% going to debt paydown, 31% to capital expenditures and growth, 20% to acquisitions, and 16% to share buybacks.

Forward-Looking Statements & Guidance

TreeHouse Foods reaffirmed its full-year 2025 outlook, projecting Adjusted Net Sales growth between -1% and +1% ($3.34 to $3.40 billion), Adjusted EBITDA of $345 to $375 million (representing growth of approximately 2% to 11%), and Free Cash Flow of at least $130 million.

For the second quarter of 2025, the company expects Adjusted Net Sales of $785 to $800 million (approximately flat year-over-year at the midpoint) and Adjusted EBITDA of $61 to $71 million (approximately -7% at the midpoint).

The company noted that it is on track with restoring production capacity at its Brantford frozen griddle facility, which had been impacted by a recall. Management also highlighted progress on supply chain, margin management, and other efficiency initiatives to drive profitability and cash flow improvement.

Despite the positive EBITDA performance in Q1, investors should note that the company’s net loss increased from $(11.7) million in Q1 2024 to $(31.8) million in Q1 2025, according to the reconciliation tables in the appendix of the presentation. This suggests that while operational profitability is improving, other factors such as interest expenses, taxes, or special items may be impacting bottom-line results.

As TreeHouse Foods continues to navigate a challenging consumer environment, its focus on profitability improvement and strategic positioning in the growing private brand market will be key factors to watch in the coming quarters.

Full presentation:

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