TreeHouse Foods optimistic about upcoming quarter following sale of meal prep business

In addition, previously announced price increases are beginning to take effect – easing inflationary pressure without compromising consumer interest in less expensive store brand products helping to boost the company’s sequential profitability, executives told investment analysts yesterday during it is third quarter earnings call.

The company now expects net sales to rise between 22% and 24% in the coming fourth quarter year-over-year, driven primarily by pricing, helping to push up predicted Q4 adjusted EBITDA to between $105 to $120m and boosting EBITDA margins into the range of 10.5% to 12% from 8.8% in the third quarter.

The company’s optimism extends into next year, during which it anticipates consumer demand for private label food and beverages will “remain strong” ​even as it benefits from “the wraparound”​ of pricing actions taken this year to recover inflation from 2022.

“Pricing net commodities was positive for the first time in several quarters and contributed $33m versus last year,”​ chief accounting officer Pat O’Donnell said, explaining that “pricing is now catching up to the commodity inflation we incurred earlier this year consistent with the lag effect we have discussed previously.”

He added that while some commodity category prices are beginning to fall, most remain elevated on a year-over-year basis, which could signal the need for additional pricing in the future.

If the company pursues additional pricing, there is plenty of room to do so with the gap between private label and national brands around 27%, “which is at the high end of the historical range of 21% to 24% for the categories within the new TreeHouse,”​ CEO Steve Oakland said.

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