OAK BROOK, ILL. — TreeHouse Foods Inc. is banking on private label tailwinds and supply chain improvements to help spur financial performance despite a lingering impact in its fiscal 2024 second quarter from a broth facility restart and recent distribution exits.

For the quarter ended June 30, TreeHouse sustained a loss of $16.7 million, which compared with net income of $23.3 million, equal to 41¢ per share on the common stock, in the same period a year ago. The most recent quarter was dragged down by plant and equipment impairment charges; broth facility restoration and product recall expenses; growth, reinvestment and restructuring costs; and other items.

TreeHouse has made strides in restoring the broth facility involved in the September 2023 recall, said Steven Oakland, president and chief executive officer.

“I'm happy to report that we are running the key broth production lines and shipping product from this facility today,” Oakland told analysts in an Aug. 5 conference call on second-quarter results. “We have upgraded our equipment, refined and improved our processes, and are progressing against our internal timeline. Looking ahead, we will continue to work with our customers to fulfill current needs and prepare for the upcoming broth season. We believe the restoration of this facility will provide the planned contributions to net sales and profitability in the back half.”

Second-quarter net sales decreased 1.9% to $788.5 million from $803.5 million a year ago. TreeHouse attributed the dip primarily to targeted commodity-driven price adjustments.

On an organic basis, sales fell 5% on declines of 3 percentage points in pricing and 2 points in volume/mix. The latter reflected the impact of planned distribution exits — mainly in coffee and in-store bakery categories — and the broth facility restoration, partially offset by new business wins and added volume/mix from last year’s Farmer Brothers coffee acquisition, TreeHouse said.

“TreeHouse remains attractively positioned at an intersection of two incredibly powerful long-term consumer trends: the growth of private brand groceries in North America, and the consumers’ shift toward snacking,” Oakland said. “Private brands have consistently gained share over the last two decades, and we believe private brands have significant runway for growth. Many grocery retailers also see significant runway for growth in private brands and are making their own strategic investments.”

In product categories where TreeHouse operates, private label unit share climbed 130 basis points to about 22.5% in the 2024 second quarter from just over 21% in the 2019 second quarter, the company said. Helping to drive the volume growth has been a widening price gap between private and national brands, with TreeHouse reporting that private label pricing stood at 26.8% less through the second quarter, up from 21.9% in second-quarter 2019.

TreeHouse expects a second-half boost from seasonal categories like broth, coffee, creamer, hot cereal and refrigerated dough, as well as from the conversion of new business from a “net sales pipeline that we are excited about,” Oakland said.

“We are executing well against our plan for 2024,” he explained. “We’ve secured a variety of opportunities throughout the first half of the year, including wins in cookies, refrigerated dough, pretzels and pickles, bolstering my confidence in our ability to deliver volume growth not only in the third and fourth quarters, but beyond.”

Also in the second half, TreeHouse projects a $50 million gross cost savings from supply chain optimization, namely manufacturing efficiencies achieved through the TreeHouse management operating system, procurement savings opportunities and a more efficient distribution network.

“Our supply chain initiatives are core to our company’s strategy of driving profitable growth,” Oakland said. “We continue to invest directly in our supply chain to drive consistent execution throughout our network, enhancing our competitive position and strengthening our partnership with customers.”

For the first half, TreeHouse recorded a loss of $28.4 million, which compared with income of $38.5 million, or 68¢ per share, in the prior-year period. Net sales in the six months fell 2.9% to $1.61 billion and were down 6.3% organically.

TreeHouse fine-tuned its full-year 2024 guidance. The company still projects net sales growth of between 0% to 2% to $3.43 billion to $3.50 billion but narrowed its forecast for adjusted EBITDA to $360 million to $380 million, compared with $360 million to $390 million previously.