Dive Brief:
- TreeHouse Foods' first quarter net sales were $1.5 billion, an increase year-over-year of 20.9%, according to its latest earnings report.
- Net income for the first quarter of 2017 came in at $28.2 million, a large increase compared to a net loss of $3.2 million year-over-year. Despite the positive results, the earnings missed analysts' estimates by 4 cents.
- Selling and distribution expenses saw a sharp increase of $19.1 million, or 22.3%, compared to last year. According to the report, this takes into account an extra month of business in 2017 as well as temporarily higher freight costs associated with one customer.
Dive Insight:
The nation's largest private-label manufacturer has been buoyed by an increased interest in the kinds of brands it produces, which continue to grow in popularity.
“This quarter we took meaningful actions to deliver on our transformation,” Sam K. Reed, TreeHouse Foods’ chairman and CEO, said in the report. “We are particularly pleased with the excellent progress we have made toward the integration of Private Brands. Our information technology work is progressing ahead of schedule and will strengthen our ability to support our customers' private label growth initiatives.”
The company’s net sales increase from $1.3 billion to $1.5 billion can be best attributed to an additional month of sales from the acquisition of the private brands operations of Conagra Brands. Additionally, the company announced a favorable volume/mix, primarily in the beverages segment, which was partially offset by lower pricing.
Sales across the board look promising for TreeHouse Foods. In a year’s span, its Baked Goods segment grew 55.4%; the Beverages segment increased 19.2%; its Condiments segment saw an uptick of 4.9%; its Meals segment grew 18.9%; and its Snacks segment increased 12.7%.
In the midst of the explosive growth, the company has recently worked to focus on core segments. Last week, the company announced it was selling its soup and infant feeding business to PE-owned Riverbend Foods LLC.
In trading Thursday morning, TreeHouse's shares fell sharply, down as much as 12%. Seeking Alpha analysts attributed the declines to the large increase in selling and distrubution expenses, as well as "anemic and uneven" sentiment across the space.