- Consolidated Net Sales: $1.9 billion, increased 5% driven by recent acquisitions.
- Adjusted EBITDA: $350 million.
- Net Sales (Excluding Acquisitions): Declined 5%.
- Post Consumer Brands Net Sales: Decreased 3% (excluding pet food acquisitions).
- Post Consumer Brands Volumes: Decreased 6% (excluding pet food acquisitions).
- Average Net Pricing (Excluding Pet Food): Increased 3%.
- Segment Adjusted EBITDA (Post Consumer Brands): Increased 28% versus prior year.
- Weetabix Net Sales: Increased 1% year over year.
- Weetabix Segment Adjusted EBITDA: Increased 24% versus prior year.
- Foodservice Net Sales: Decreased 5%.
- Foodservice Volumes: Increased 2%.
- Foodservice Adjusted EBITDA: Decreased 17% versus prior year.
- Refrigerated Retail Net Sales: Decreased 7%.
- Refrigerated Retail Volumes: Flat.
- Refrigerated Retail Segment Adjusted EBITDA: Decreased 37% versus prior year.
- Cash Flow from Operations (Q3): $272 million.
- Capital Expenditures (Q3): Approximately $110 million.
- Free Cash Flow (Last 12 Months): $575 million.
- Net Leverage: 4.3 times.
- Share Repurchases (Q3): 2 million shares at an average price of approximately $104 per share.
- Share Repurchases (July): 300,000 shares at an average price of approximately $105 per share.
- New Share Repurchase Authorization: $500 million.
- Raised Guidance: New range of $13.70 to $13.90.
Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Post Holdings Inc (POST, Financial) delivered a solid quarter, enabling an increase in full-year guidance.
- Strong consumption of both branded and private label cereal products.
- Ongoing outperformance in the pet business versus underwriting case.
- Significant mix improvement and value-added eggs.
- Leverage is at historically low levels, allowing for reactive capital allocation.
Negative Points
- Refrigerated retail segment underperformed due to trade investment cannibalizing base volume.
- Cereal volumes were challenged, with a 4.1% decline in the category.
- Delays in achieving full RTD Shake manufacturing run rates.
- Refrigerated retail business faced significant pullback in profitability due to higher-than-expected freight costs.
- SG&A increased, driven by targeted marketing investments and elevated stip or bonus within some segments.
Q & A Highlights
Q: On foodservice, where do you see the ongoing run rate for foodservice EBITDA now?
A: We think the run rate is around $105 million. The difference between that and the $100 million is pressure we're going to see in Q4 related to avian influenza costs we're going to incur ahead of pricing kicking in. - Matthew Mainer, CFO
Q: In measured channel data for Pet, it looked like consumption decelerated pretty meaningfully on a sequential basis in the quarter. Has something changed in terms of trade down to mainstream in Pet?
A: The sequential decline is driven by seasonality in the pet food category and new distribution gains in Q2, which included a pipeline fill for 9Lives. Other than that, we're in line with where we'd expect to be. - Matthew Mainer, CFO
Q: Any change to the M&A landscape since last quarter?
A: If anything, it has accelerated in terms of the amount of opportunities we've been considering. The market feels very active right now. - Robert Vitale, CEO
Q: How are you feeling about pet synergies, productivity, and visibility heading into fiscal '25?
A: On the cereal side, the Lancaster closing is on track to be a positive contribution. We also saw SKU rationalization in Canada and a general pullback in government volumes. Lancaster is expected to contribute $25 million for the full year. - Matthew Mainer, CFO
Q: Is there any change in the timing of the Michael plant opening?
A: The plant is open, but the ramp-up has been slower than expected. The expected profitability from that has been delayed beyond what we had previously communicated. - Jeff Zadoks, COO
Q: How should we think about SG&A levels for '25?
A: We have some targeted additional investments in A&C and elevated stip or bonus within some segments that would reset next year. - Matthew Mainer, CFO
Q: Can you talk about the promotional activity in the refrigerated retail business and why the lift wasn't as strong as anticipated?
A: We overshot on promotional activity. We expected a higher lift in sides, but instead, we subsidized some base sales that were on promotion, which deteriorated profitability. We are recalibrating our promotional strategy. - Matthew Mainer, CFO
Q: How do you reconcile the cereal dynamics with the consumer being stretched?
A: Private label outperformed branded in the quarter. The consumer is in a transitional mode, moving from a super-hot labor market to a cooling one. This should be constructive for volumes and more value products. - Robert Vitale, CEO
Q: Can you give an update on the spending trajectory in Pet and how it's directed?
A: The incremental investment is mostly around our more premium brands. We are focusing on advertising and other investments in these areas. - Robert Vitale, CEO
Q: Is there an expectation that trade spending will pick up in the back half of this year?
A: We will likely see a little uptick in trade spend, but it will be targeted and not reactive. The primary focus is on potatoes and side dishes. - Robert Vitale, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
