Company: THS
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001320695-25-000107
Chunk: 93

Company: TreeHouse Foods, Inc.
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 1
Chunk 93
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ated Financial Statements.

Critical Accounting Estimates

A description of the Company's other critical accounting estimates is included in our Annual Report on Form 10-K for the year ended December 31, 2024. We have included an update to our critical accounting estimates to Goodwill for the three and nine months ended September 30, 2025. 

Goodwill — In each quarter subsequent to our annual goodwill and indefinite lived intangible asset impairment analysis, we review events that occur or circumstances that change, including macroeconomic conditions, our financial performance, and our market capitalization, to determine if a quantitative impairment assessment is necessary. 

During the third quarter of 2025, we concluded that the sustained decrease in our share price and market capitalization was a triggering event requiring an interim goodwill impairment analysis. We performed an interim impairment test as of the last day of our third quarter, September 30, 2025, and utilized the discounted cash flow method under the income approach to estimate the fair value of the Company, which was corroborated by the market approach. As a result of the impairment analysis, we recognized a non-cash goodwill impairment loss of $289.7 million.

The Company has one reporting unit within its single reportable and operating segment. The Company believes the income approach is the most reliable indicator of the fair value of the reporting unit. Significant assumptions used in the income approach include growth and discount rates, margins, and the Company’s weighted average cost of capital. We used historical performance and management estimates of future performance to determine margins and growth rates. The income approach utilizes projected cash flow estimates developed by the Company to determine fair value, which are unobservable, Level 3 inputs. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available. The Company developed our estimates using the best information available at the time. 

Our weighted average cost of capital included a review and assessment of market and capital structure assumptions. Considerable management judgment is necessary to evaluate the impact of operating changes and to estimate future cash flows. Assumptions used, such as forecasted growth rates and our cost of capital, are consistent with our internal projections and operating plans. Changes in our estimates or any of our other assumptions used in our analysis could result in a different conclusion. If current expectations of future growth rates and margins are not met, if market factors outside of our control change; such as discount rates, market capitalization, or inflation, or if management’s expectations or plans otherwise change, including updates to our long