Treehouse Foods, Inc.

Welcome to the Treehouse Foods second quarter 2025 conference call. All participants will be in a 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 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 second quarter earnings release and posted our earnings deck. These items are available within the investment 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 these risks is contained in the company's filings with the SEC. 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, Pat and I will discuss our second quarter financial results and provide an update on our operations and our outlook for the remainder of the year. Our results are outlined on slide four. I'm pleased to report we achieved adjusted net sales and adjusted EBITDA results that exceeded the upper end of our guidance ranges. This performance further demonstrates the execution of our margin improvement plan we discussed with you earlier this year. We are confident the plan will meaningfully benefit results for the remainder of this year and beyond. The operating environment remains dynamic, but we are focused on controlling what we can control and executing against our plans to drive profits and cash flow, regardless of the macro headwinds. Our comments today will reflect efforts to reduce structural costs and to better align our business with what we're experiencing in the near term, while we position the business to create value over the longer term. Additionally, we are focused on execution, maintaining our improved service levels, and our griddle business is now in a place to positively impact our results in the second half of the year. Shifting gears, let's take a look at the consumer trends we experienced during the second quarter in the categories in which we operate, which are detailed on slide five. The progression on volume this quarter unfolded largely as we expected. We began our margin management activities as early as the fourth quarter of last year, leading to some deliberate pricing and distribution choices to make our manufacturing network more efficient. In some cases, we now serve a narrow set of customer needs, but do that more efficiently. This, combined with softer ongoing consumer trends, which were felt across the broader market, put pressure on units during the quarter, pricing more than offset the unit volumes, driving growth for the quarter. We expect these volumes and pricing dynamics to continue in the third quarter, with unit volumes improving in the fourth quarter. At a macro level, the private brand industry dynamics remain favorable relative to national brands, as you can see on slide six. Specifically, price gaps are healthy and private brands continue to either take or maintain share despite the lower consumption environment. As it relates to promotion levels, what we have experienced thus far in 2025 is similar to what we experienced a year ago. With that said, you have probably heard plenty of commentary about promotions from others in our industry. So we thought it would be helpful to spend some time on historical levels of national brand promotion within our categories. On slide seven, you can see a 10-year view of national brand promotion levels as a percent of total sales within our categories. The current level of promotion remains well below to levels seen prior to the pandemic. Now, looking ahead, we do anticipate some increase in promotional intensity in some of our categories, which is reflected in our guidance today. As you move to slide eight, you'll notice that private brands have consistently gained share over the last two decades, which we believe will continue over the longer term. This gradual share growth occurred despite higher levels of promotion and a variety of promotional strategies over this period of time. Continuing with the discussion of the long-term private brand opportunity on slide nine, it's clear that many grocery retailers also see further runway for growth in private brands and are making their own strategic investments accordingly. Private brands provide an opportunity to deliver higher margins at a time when retailers across the industry are dealing with cost pressures, whether it be labor, input cost inflation, or tariffs. Some examples of these retailers include Aldi, which continues its store-based expansion across the U.S. with an assortment that is focused almost exclusively on private brands. Walmart is focused on growing better goods, a private brand which makes quality, trend-forward, and chef-inspired food approachable, and affordable. These are two of many examples that underscore the opportunity available to Treehouse to partner with our retail customers, gain share, and create value over the long term. I'd like to conclude by providing some perspective on how we continue to manage the business to align with the near-term realities of slower category growth. The foundation we've built with our supply chain initiatives remains strong, and we're focused on executing what you see outlined on slide 10. We're taking action to deliver our commitment of $250 million of gross supply chain savings through 2027. In the current environment, we think it's prudent to focus on profitability and cash flow. We have strengthened our margin management function allowing us to enhance our profitability by allocating our capacity to the most attractive mix of businesses that best drives benefits for both our customers and Treehouse. This quarter's results are another example of our disciplined approach. While this is impacting our volumes, it aligns with our strategic focus on margin and cash flow. Ultimately, the impact will be seen in our adjusted EBITDA. Finally, we are also focused on our cost structure. We are empowering our organization to make faster decisions to better serve the complex needs of our customers. We are focused on running a lean organization and driving synergies through a broader utilization of shared services. We also have an opportunity to optimize our plants and their capacity. In most of our categories, we have multiple production locations. This allows us to move production to gain efficiency, depending on the needs of the business, as we discussed last quarter within our non-dairy creamer business. Furthering this effort, we recently made the decision to close two plants to right-size our network within our pickles and cookies businesses. We believe these strategic decisions improve our competitive positioning and also allow us to be more flexible with capital, focusing our investments in areas that will provide better margin profiles and growth potential, all in an effort to drive improved profit and cash flow. I'll now turn the call over to Pat for further detail on our second quarter results and our outlook. Pat?