Treehouse Foods, Inc. ( THS ) shares fell more than 7% Thursday after the company reported second-quarter results that beat Wall Street expectations on both earnings and revenue.

The packaged food maker posted adjusted earnings of 17 cents per share, surpassing the 10 cents consensus, while sales rose 1.2% year over year to $801.4 million, above the $787 million estimate.

Despite the earnings beat and a raised full-year revenue forecast, investor reaction remained muted, sending the stock lower in morning trade.

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The net sales increase was primarily due to the acquisition of the private brand tea business, favorable pricing to recover commodity inflation, and distribution gain.

Gross profit as a percentage of net sales was 17.4% in the second quarter of 2025, compared to 16.3% in the year-ago period.

The increase is primarily due to $13.1 million of insurance recoveries related to voluntary product recalls received during the second quarter of 2025, favorable margin from the Harris Tea acquisition and supply chain savings initiatives.

Adjusted EBITDA was $73.3 million in the second quarter, compared to $70.6 million in the year-ago period, an increase of $2.7 million.

The increase in Adjusted EBITDA is primarily due to the supply chain savings initiatives, the accretive impact of the Harris Tea acquisition, and cost reduction activities.

Adjusted EBITDA margin expanded to $9.1% from 8.9% in the year-ago period. The company exited the quarter with cash and equivalents worth $17.1 million. Inventories totaled $634.8 million.

Outlook

Treehouse Foods ( THS ) has raised its FY2025 sales guidance to a range of $3.360 billion to $3.415 billion, up from the prior range of $3.340 billion to $3.400 billion, and above the $3.357 billion consensus estimate.

The forecast reflects a 1% decline in organic volume/mix, offset by modest gains from the Harris Tea acquisition and pricing actions, partially weighed by the RTD business exit and a frozen griddle recall. Pricing is expected to contribute a low-single-digit increase, primarily from commodity-related adjustments.

The company expects third quarter sales to come in between $840.0 million and $870.0 million, compared to the analyst estimate of $858.41 million.

Price Action: THS shares are trading lower by 7.19% to $19.09 at last check Thursday.

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