Company: THS
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001320695-25-000089
Chunk: 2

Company: TreeHouse Foods, Inc.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 2
Chunk 2
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 additional information.

Impact of Griddle Voluntary Recall

In the third quarter of 2024, our results of operations were impacted by a voluntary recall of frozen griddle products produced at our Brantford, Ontario, Canada facility that were still within their shelf-life, which required us to perform plant restoration activities during the fourth quarter of 2024. As of the first quarter of 2025, we have resumed production of frozen griddle products at the Brantford facility and are continuing to advance production capacity and capability. Given the facility has not yet reached full capacity, we expect to have impacts to our sales volumes during the first half of 2025. Refer to Note 16 to our Condensed Consolidated Financial Statements for additional information.

The Company is seeking to recover the recall-related costs through its insurance coverage, and such recoveries are recorded in the period in which the recoveries are determined to be probable of realization.

RTD Business Exit

During the second quarter of 2024, the Company made the decision to exit the RTD business as part of the Company's portfolio optimization strategy to focus on higher-growth, higher margin categories. During the first quarter of 2025, production for the RTD business ceased, and the Company sold the related machinery and equipment. Refer to Note 3 to our Condensed Consolidated Financial Statements for additional information.

Macroeconomic Conditions and Trends

Persistent inflationary pressures on U.S. households are contributing to sluggish overall food and beverage consumption trends. In the categories where TreeHouse operates, private brands have consistently gained unit market share when compared to national brands, which we believe demonstrates the advantages of the private brands market. We continue to monitor consumption trends including the increased use and/or prevalence of certain weight loss drugs, which may or may not impact consumer preferences and consumption patterns. Additionally, economic uncertainty may further impact consumer spending and thus, consumption trends.

Many of our ingredients and packaging input costs remain elevated when compared to historical levels, including the prices of coffee and cocoa. In response, from time to time we will implement pricing actions to recover these higher costs. We will continue to monitor the inflationary environment, as well as regulatory impacts on food ingredients, to determine if additional pricing actions will be necessary.

As it relates to tariffs, our manufacturing footprint consists of 22 production facilities in the United States and five in Canada. A substantial portion of our products manufactured in Canada that are shipped to the United States qualify for duty-free treatment under the United States-Mexico-Canada Agreement ("US