Unlocking Success: TreeHouse Foods’ Innovative Strategy to Boost Profitability

TreeHouse Foods Inc., based in Oak Brook, Illinois, has launched a new plan to increase its profits. This comes after the company reported earnings for the fourth quarter and the entire year of 2024 that didn’t meet Wall Street’s expectations.

Recently, TreeHouse resumed shipping from its Brantford, Ontario plant, which had been involved in a recall of frozen waffles and pancakes due to possible contamination. The facility is back on track as of the first quarter of 2025.

Steven Oakland, the company’s CEO, shared insights on their strategy for 2025 during a February conference call. He emphasized focusing on factors the company can control, such as improving supply chain performance and managing costs. While they have made some progress, Oakland noted there’s still room for better execution and consistency.

TreeHouse is working on various improvements. They are implementing the TreeHouse Management Operating System (TMOS) to enhance procurement and logistics. The company is also looking to manage margins better through smart capacity allocation and pricing strategies. Oakland expressed confidence in achieving $250 million in supply chain savings by 2027, which should help boost profitability and win new business.

Despite the tough circumstances, TreeHouse reported a net income of $26.9 million for 2024, down from $53.1 million in 2023. Adjusted net earnings also dropped, falling to $100.5 million. While analysts expected adjusted earnings per share of $1.96, TreeHouse’s performance hit the lower end at $1.91.

In the fourth quarter, however, things looked better with net income climbing to $58.7 million, compared to just $7.5 million the previous year. This result showed an impressive jump for adjusted earnings per share, which reached 95 cents, slightly above the lower end of Wall Street’s expectations.

TreeHouse pointed out that these earnings were affected by product recalls and restructuring costs. Oakland suggested the company sees potential in the near term for increasing net sales and cash flow, particularly through improving production efficiency at its Maryland facility and resolving issues from the griddle recall.

Sales for 2024 fell by 2.3% to $3.35 billion, but there was a silver lining in that organic sales increased slightly by 0.2% in the fourth quarter. The volume growth in various product categories, especially pretzels and cookies, helped offset some declines seen earlier due to operational troubles.

While TreeHouse faced slower private brand sales during the quarter, Oakland remains optimistic about the private label sector’s overall health and growth. The company is bracing for more promotional activity in the future, which they believe is necessary given the current industry dynamics.

Looking ahead, TreeHouse expects its recent acquisition of Harris Tea to strengthen its position in the coffee and tea markets. For fiscal 2025, they forecast adjusted net sales to be between $3.34 billion and $3.40 billion and anticipate adjusted EBITDA to grow between 2% to 11% from the previous year.