OAK BROOK, ILL. — Service level recovery that occurred ahead of schedule and price increases that took effect during the first quarter of fiscal 2023 had a positive impact on TreeHouse Foods’ quarterly results.
Net income for the quarter ended March 31 was $15.2 million, equal to 34c per share on the common stock, and an improvement over the first quarter of fiscal 2022 when the company recorded a loss of $3 million.
Quarterly sales rose to $895 million from $773 million the year prior.
“Supply chain improvement and service recovery were both ahead of our expectations in the quarter,” said Steven T. Oakland, president, chief executive and chairman of the board, during a May 8 conference call with securities analysts. “As a result, we fulfilled customer demand that was originally planned for shipment in the second quarter.”
First-quarter service levels reached 95%, according to the company. While overall service levels improved, Patrick M. O’Donnell, chief financial officer, noted some product categories remain under pressure.
“While supply chain improvement was better than we anticipated in the first quarter, we don't yet believe we have seen the last of macro disruption,” he said. “We still have a couple of categories where we have room to improve service and anticipate that it will take a couple more quarters to fully bring them back to target levels.”
Mr. Oakland added that normalized service levels may create new opportunities for TreeHouse Foods.
“The more important thing is we now can have conversations about merchandising in the back half of the year that we weren’t able to have before,” he said. “I think we’re giving the retailer confidence that we can support what they would like to do in the back half as they try to drive … a value image. Private label is a big part of that. So, that, I think, is the opportunity, and we’ll know more about that as the year unfolds.”
Price increases implemented during the quarter contributed 16.7% to the sales growth while volume/mix was down 0.6%.
“We had a strong start to the year, and I'm very pleased with our performance,” Mr. Oakland said.
The company reaffirmed its guidance for fiscal 2023, with sales in a range between $3.66 billion and $3.73 billion, up 6% to 8% year-over-year, and adjusted earnings of $345 million to $365 million, up 24% year-over-year at the midpoint.
Second-quarter sales are expected to be in a range between $810 million and $840 million.
“The second quarter represents our seasonally lowest volume quarter of the year for our new portfolio,” Mr. O’Donnell said.He added that pricing is expected to continue driving future sales growth during the year.