Treehouse Foods, Inc.

Welcome to the Treehouse Foods fourth quarter 2022 conference call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again press star one. Please note this event is being recorded. At this time, I would like to turn the call over to Treehouse Foods for the reading of the Safe Harbor Statement.

Good morning, and thank you for joining us today. Earlier this morning, we issued our earnings release and posted our earnings deck, both of which are available within the investor relations section of our website at treehousefoods.com. Before we begin, we'd like to advise you that all forward-looking statements made on today's call are intended to fall within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations and projections and involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statements. Information concerning those risks is contained in the company's filings with the SEC. On October 3, 2022, we completed the divestiture of a significant portion of our meal preparation business. As such, we'll be discussing our results on an adjusted continuing operations basis. A reconciliation of non-GAAP measures to their most direct comparable GAAP measures can be found in the release and the appendix of today's earnings deck. With that, let me now turn the call over to our CEO and President, Mr. Steve Oakland.

Thank you, PI, and thank you all for joining us today. I'm pleased to be here to report our progress on the strategic transformation of Treehouse. Starting with our strong Ford quarter, in continuing in our outlook for 2023 and beyond. On slide three, we've shared the key messages that I'd like you to take away from today's call. First, we've accomplished a great deal in 2022, reaching a major strategic milestone in early October by divesting a significant portion of our meal prep business at a compelling valuation. We reshaped our portfolio, sharpening our focus as a higher growth, higher margin private label snacking and beverage business. This will enable us to improve the consistency of our execution and our results. Second, our fourth quarter results are evidence of this improved execution as we outperformed the broader private label market in terms of unit growth across our core retail business. Third, our guidance for 2023 reflects the compelling opportunity we expect to capture as a new treehouse, including top-line growth of 6% to 8% and significant profit improvement with adjusted EBITDA expected to be in the range of $345 to $365 million. This represents a year-over-year growth rate of approximately 24% at the midpoint. Fourth, we have a clear purpose and strategic ambition to drive long-term growth across private label stacking and beverages. We believe that beginning in 2024, we can grow revenue 3% to 5% and adjusted EBITDA 8% to 10% on an annual basis based on the portfolio as it's constructed today. and deliver free cash flow of at least $200 million for the next three plus years. We have the right team in place, and our portfolio has never been better positioned to win and drive sustainable growth and shareholder value. Let me now turn to slide four, which summarizes our fourth quarter results. Sales in the fourth quarter grew 22% to $996 million. driven by pricing to recover inflation. Adjusted EBITDA of $120 million was at the top end of our guidance range. Importantly, EBITDA margin of 12% represents a 320 basis point improvement on a sequential basis. I'm very proud of our strong finish to the year, and I want to thank the entire Treehouse organization, their hard work and dedication in making all of this happen. Before I turn it over to Pat to give you more color on the quarter, I want to spend a few minutes putting our fourth quarter performance in context with the rest of the retail landscape. As we all know, over the past two years, we've seen unprecedented input cost escalation and pricing to recover that inflation. During the fourth quarter, Pricing was up about 17% across the entire retail landscape, as everyone has had to recover higher input costs. On slide five, we've provided a look at how volumes are faring across the industry. We used measured channel data to give you an apples to apples comparison. You can see total edible consumption on a unit basis, declined over 3% as a result of high prices. When you move to the right, we've narrowed the data set to capture just those categories in which we operate. Units for national brands, shown by the wine-colored bar, declined 5%, while private label and total, indicated in gold, outperformed and was slightly positive. Treehouse specifically did better than that. In the fourth quarter, our units grew almost 3.5% within retail measured channels. I'd like to point out that our unit growth for our core retail business was more than 3% in both measured and unmeasured channels. Pat will take you through the sales walk in his comments. The pressure on today's consumer is significant. Shoppers are seeking value. and the private label value proposition continues to gain momentum, supporting unit share gains, which we've now seen for the last 54 consecutive weeks. We continue to invest in our business to support our customers in capturing that demand. With that, let me turn it over to Pat to take you through our fourth quarter and guidance. You'll find that the rest of our typical macro slides on shelf prices, price gaps, and shopper basket are in the appendix of our deck today. I'll come back at the end to share with you how we're going to build on the progress we've made and how that translates into the long-term outlook of the business. Then we'll open the call up to your questions. Pat?