TreeHouse Foods Stock

TreeHouse Foods, Inc manufactures and distributes private brands snacks and beverages in the United States and internationally.

The company’s portfolio includes snacking offerings (crackers, pretzels, in-store bakery items, frozen griddle items, cookies, and unique candy offerings), beverages and drink mix offerings (non-dairy creamer, coffee, broths/stocks, powdered beverages and other blends, tea, and ready-to-drink-beverages), as well as other grocery offerings (pickles, refrigerated dough, hot cereal, and cheese and pudding). The company sells its products across various channels, including retail grocery, co-manufacturing, and food-away-from-home customers in shelf stable, refrigerated, and frozen formats. The company also offers its customer partners a range of value and nutritional solutions, including natural, organic and gluten free offerings, providing each the capability to meet the unique needs of their consumers.

Acquisitions

On January 2, 2024, the company completed the acquisition of pickle branded assets, including Bick’s pickles, Habitant pickled beets, Woodman’s horseradish, and McLarens pickled onions brands, from The J.M. Smucker Co., a North American producer of coffee, consumer foods, dog snacks, and cat food. The acquisition is consistent with the company’s strategy and builds depth in its Pickles category by expanding into Canada.

Strategy

The company’s strategic ambition is platform leadership in consumer trending categories. The company’s strategic plan is anchored on four strategic growth pillars that build upon the work it has accomplished over the last several years related to commercial excellence and portfolio optimization.

The company strives to have an agile, resilient supply chain that seamlessly integrates customer demand, materials availability, manufacturing capacity. The company is making investments throughout its business to build and further develop capabilities, such as innovation pipelines, additional manufacturing capacity, and/or category and consumer insights, in order to drive growth and category leadership. The company serves as the supply chain for its customers' brands.

Sales, Distribution, and Customers

The company sells its products through various distribution channels, including retailers, foodservice distributors, co-manufacturers, and industrial and export channels. Retailers include grocery, supermarkets, mass merchandisers, club stores, e-commerce grocers, non-traditional grocers, and other small outlets. The company's primary sales channel is through the retail grocery channel, with approximately 80% of net sales sold through this channel. Foodservice distributors are included in the company’s food-away-from-home sales channel, which primarily includes restaurants and other public venues. The company has an internal sales force that manages customer relationships and a broker network for sales to retail, food-away-from-home, and export accounts. Industrial food products are generally sold directly to customers without the use of a broker. Co-manufacturing agreements are entered into with certain customers to add volume capacity by manufacturing and packaging the company’s customers' product. Industrial and export channels include food manufacturers and repackagers of foodservice products. Most of the company’s customers purchase products from it either by purchase order or pursuant to contracts that generally are terminable at will. Some customers also pick up their orders at the company’s production facilities or distribution centers.

For the year ended December 31, 2023, the company’s ten largest customers accounted for approximately 56.7% of its consolidated net sales from continuing operations. For the year ended December 31, 2023, the company’s largest customer, Walmart Inc. and its affiliates, accounted for approximately 22.4% of its consolidated net sales from continuing operations.

Seasonality

In the aggregate, the company’s sales are generally weighted slightly toward the second half of the year, particularly the fourth quarter, with a more pronounced impact on profitability. Products that show a higher level of seasonality include non-dairy creamer, coffee, tea, hot cereal, in-store bakery items, and refrigerated dough products, all of which generally have higher sales in the first and fourth quarters. Additionally, sales of broth are generally higher in the fourth quarter, and sales of candy, cookies, crackers, pretzels, and cheese and pudding are generally higher in the third and fourth quarters. Frozen griddle items are generally less seasonal with consistency across each quarter. Warmer weather products, such as pickles typically have higher sales in the second quarter, while ready-to-drink beverages, powdered beverages, other blends generally show higher sales in the second and third quarters. The higher sales during seasonal periods impact the company’s profitability as its manufacturing plants run at higher capacities and has more favorable fixed cost overhead absorption due to the higher volumes.

The company’s short-term financing needs are primarily for financing working capital and are generally highest in the first half of the year as inventory levels increase relative to the second half of the year, due to the seasonal nature of its business. As a result of the company’s product portfolio and the related seasonality, its financing needs are generally highest in the first half of the year (year ended December 31, 2023), while cash flow is highest in the second half of the year following the seasonality of its sales.

Research and Development Costs

The company records research and development charges to expense as they are incurred and report them in General and administrative expense. Expenditures totaled $13.0 million for the year ended December 31, 2023.

History

TreeHouse Foods, Inc. was founded in 1862. The company was incorporated in 2005.