TreeHouse Foods, Inc. THS announced that it is not progressing with plans to sell the entire business. The company is open to divesting portions of its operations, like the Meal Preparation business. The packaged food company is committed to driving growth and enhancing shareholders' value in the higher-margin Snacking and Beverages business. TreeHouse intends to further simplify the cost structure and streamline operations.

Management highlighted that it is seeing robust demand trends in the private label category. The company is well-placed to build on its momentum in advantaged categories. THS is optimistic about its ability to support consumers' growing demand. The ongoing efforts to enhance supply chain while lowering costs and improving margins are likely to yield.

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The Zacks Rank #3 (Hold) company reaffirmed its 2022 guidance. Net sales are anticipated to grow a minimum of 11% year over year during the year. Net sales are expected to primarily gain from pricing actions, offset by volume constraints stemming from labor shortages and supply-chain disruptions. Adjusted EBITDA is likely to be $385-$415 million for 2022, suggesting growth of roughly 5% at the mid-point. Management highlighted that it is likely to see improved performance weighted toward the back half of 2022 as labor shortages and supply chain disruption will continue to affect profitability and volume in the first half.

Pricing Actions Aids

Although TreeHouse Foods' top line declined year over year in fourth-quarter 2021, it received partial respite from 5.6% gains from pricing, which helped it recover from the inflation in commodity and freight costs. The gains from the pasta acquisition, higher demand from food-away-from-home and co-manufacturing sales channels, new product sales and favorable Canadian foreign exchange also supported results. The company has been undertaking prudent pricing actions to combat inflationary trends. Pricing actions partly aided the company's gross margin and adjusted EBITDA numbers in the reported quarter.

The company intends to continue undertaking pricing actions. Pricing actions are likely to offset inflation at the end of the first quarter of 2022, which is expected to aid the adjusted EBITDA. The company expects to benefit from further actions to mitigate the impacts of labor and supply-chain disruptions, which is likely to aid volume and profitability.

TreeHouse Foods' shares have declined 22.5% so far this year compared with the industry's fall of 7.1%.