Shares of TreeHouse Foods (THS +0.00%) were falling today after the food wholesaler missed estimates on the top line in its fourth-quarter earnings report and offered weak guidance for the first quarter.
As of 2:02 p.m. ET, the stock was down 14.8%.
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Why TreeHouse Foods missed the mark
The company, which specializes in private-label foods, said revenue in the quarter fell 4.8% to $910.8 million, which missed estimates of $925.4 million.
Part of the decline in sales was due to a supply chain disruption at one of its broth facilities, as well as lower volume and a change in sales mix. The company raised prices aggressively earlier in the year, but prices were essentially flat in the fourth quarter.
Gross margin also fell 160 basis points to 16.7% as the supply chain issue impacted profitability, and TreeHouse reported adjusted earnings per share (EPS) of $0.77 on the bottom line, which was down from $0.97 in the quarter a year ago, but better than the consensus at $0.73.
CEO Steve Oakland said, "TreeHouse Foods made important progress in 2023 to advance our portfolio strategy focused on higher-growth, higher-margin categories, enhance our supply chain capabilities, and improve our service levels."
NYSE: THS
Key Data Points
What 2024 looks like for TreeHouse
TreeHouse's guidance also failed to give investors confidence. The company expects revenue of $3.43 billion to $3.5 billion, or growth of 0% to 2% as it plans for "modest, targeted, deflationary pricing." That was below the analyst consensus for $3.56 billion.
It also projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $360 million to $390 million, which compares to $365.9 million.
TreeHouse touted gains in market share, but the forecast for 2024 shows that growth in the business isn't automatic. While the stock trades at a reasonable valuation, investors should expect more modest growth at this point, barring the possibility of an acquisition.
