Treehouse Foods, Inc.

Welcome to the Three House Foods Third Corner 2024 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, press the pound key. Please note, this event is being recorded. At this time, I would like to turn the call over to Matt Siller of Treehouse Goods for the reading of the Safe Harbor Statement.

Good morning, and thank you for joining us today. Earlier this morning, we issued our third quarter earnings release and posted our earnings deck. These items are available within the investor relations section of our website at treehousefoods.com. Before we begin, I would 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 September 29th, 2023, we completed the divestiture of our snack bars business. Consistent with prior quarters, we will discuss 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 tables of today's earnings deck. With that, let me now turn the call over to our Chairman, CEO, and President, Mr. Steve Oakland.

Thank you, Matt, and good morning, everyone. Today, I will discuss our third quarter financial results and provide an update on our operations and our outlook for the remainder of the year. Before we get to the results, I would like to update you on the voluntary recall of frozen griddle products, which we announced last month. As you can see on slide four, Treehouse Foods initiated the recall of products made in our Brantford, Ontario facility out of a commitment to food safety and quality. The recall was initiated as a result of routine quality assurance testing of our products made at the facility. We have temporarily closed the facility to conduct a deep cleaning, sanitation, and hygienic restoration. Our entire organization is committed to food safety, and we are extremely disappointed to have this event occur in our system. But it recommits all of us to be relentless when it comes to food safety. We expect the facility to resume manufacturing in the first quarter of 2025. Moving to our third quarter results, outlined on slide 5, our organic net sales trend improved. We delivered adjusted net sales of $854 million, which was just below our guidance range. Our performance was impacted by weakening consumer trends across our industry, and specifically our categories, as the third quarter progressed. Additionally, Hurricane Helene caused some delays in shipping volume out of our North Carolina distribution center in the final days of the quarter, which we estimate was an impact of between $5 and $10 million of our top line. Despite these sales results, we still recorded adjusted EBITDA of $103 million, which was at the midpoint of our guidance range. This was driven by our strong adjusted gross profit, a result of the savings associated with our supply chain initiatives. We executed well against the savings initiatives in our supply chain, securing anticipated procurement savings, which provided the benefits expected this quarter. Importantly, the progress we are making on these initiatives should lead to positive momentum for next year. Let's take a closer look at the consumer trends that we experienced during the third quarter. in the categories in which we operate, which are detailed on slide 6. While private brand unit sales were positive in the quarter, we did see a significant deceleration as the quarter progressed, which you can see on the right side of the page. This slowdown was a result of continued pressure on the consumer that impacted the broader market. This trend persisted through October, and we assume that it likely continues in the near term. With that said, overall, private brand industry dynamics remain favorable when compared to historic levels. As you can see on slide seven, specifically, price gaps are healthy and private brands continue to take share. But given the lower consumption environment, the share gains are coming from a smaller pie. Finally, as it relates to promotional levels, we have seen the traditional pattern of gradual increases as the calendar year has progressed. While we do expect the typical seasonal ramp in the fourth quarter, we would note that promotions are still below the historic levels seen prior to the pandemic. As you can see on slide 8, private brands have been consistently gaining share over the last two decades, which we believe will continue over the long term. Treehouse remains attractively positioned at the intersection of two incredibly powerful long-term consumer trends. the growth of private brand groceries in North America, and a consumer's shift towards snacking. Continuing with the discussion of the long-term opportunity on slide 9, it's clear that many grocery retailers also see further runway for growth in private brands and are making their own strategic investments accordingly. Walmart and Albertsons both launched new private brands recently. Costco's Kirkland brand is well established globally, and Aldi continues its store-based expansion across the U.S. with an assortment that is focused almost exclusively on private brands. This emphasis underscores the opportunity available to Treehouse to partner with our retail customers, gain share, and create value over the long term. I would like to conclude by providing some additional perspective on how we plan to manage the business in the near term, which incorporates both challenging consumer trends and slower category growth. Given these trends, we continue to focus on the things we can control as an organization, primarily in our supply chain. We have made significant progress on a number of areas, but we still have the opportunity to improve our execution and consistency. The foundation we've built with our supply chain initiatives remains strong, and we are focusing on executing what you see outlined on slide 10. We have visibility to delivering our commitment of $250 million of gross supply chain savings through 2027. The building blocks of these initiatives include driving manufacturing efficiencies through TMOS, our treehouse management operating system, procurement savings opportunities, and improving the efficiency of our network. Additionally, I believe we've positioned the company in the right categories and will capitalize on opportunities to invest in those categories to improve our competitive positioning, depth, capabilities, and execution. In this environment, we think it's prudent to focus on profitability and cash flow. We are building a strong margin management function. which should allow us to enhance our profitability by allocating our capacity to the most attractive mix of businesses that drives profitability for both Treehouse and our customers. Additionally, we have the opportunity to develop a more efficient pricing architecture. I'm confident in our ability to drive improved profitability as a result of the progress on these initiatives, despite a slower growth environment. With that, I will now turn the call over to Pat for further detail on our third quarter results and our updated outlook. Pat?