Post (POST) 2 Feb 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to Q1 2024 Post Holdings Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Daniel O'Rourke, Investor Relations for Post. ahead. go Please

Zadoks, and thank investors First and this and of and joining today supports Rob, CEO; us by our Matt Good and CFO posted is these Fiscal you remarks, answer XXXX Post's Treasurer. Jeff and also and President Quarter Vitale, SEC joined COO; questions. Earnings for and sections afterwards, Rob is the Mainer, filings morning, Jeff our for the our Call. morning will website the Matt prepared The on your our remarks on we'll make SEC's press that available both release website. I'm

being be a this website our As an audio postholdings.com. recorded, available call on replay will is at reminder, and

These you statements, that as contain that this continue, we the obligation by call, carefully Before call are which non-GAAP from statements current and materially forward-looking uncertainties measures. subject update these remind forward-looking of to management to these should and risks be will statements. This as results discuss differ could call this certain investors considered I would statements. actual to are undertakes will of like date no

and these press the see to non-GAAP release of our on nearest measure, issued GAAP reconciliation For measures yesterday posted website. our

that, the With I call turn Rob. will over to

and Daniel, you, good Thank morning.

detailed financial opening more Daniel overview of about provide the customary call dividing this the results. Matt of a some Jeff will the will performance. mentioned, And will make comments his we're morning. state As little the the bit I provide differently business. segment of overview

performance management us back momentum built first an to start pricing to continue fiscal fiscal and quarter, the cost a with enabled business The to in is through of vastly manufacturing improved discipline off 'XX. exceptional the half we and tremendous 'XX

in and diversification channel Our point. from product, price to benefit business continues

Retail offering bag. but our benefited story volume remain resilient, a our mixed We businesses, value retail As our encouraging bit Foodservice trade stabilization business. we down more a and a result, our branded is saw saw site from Refrigerated across consumer of volume decreases of

Both well. the of Pet Consumer our platform performed and division Grocery Brands

our We continue to category. be the pet pleased extremely investment in with

We expanded expected to see margins.

been incremental build have we decent a the in we -- volume have slow investment. despite growth However, seen

incremental still will than confidence ability to our some sustain incur and margins underwriting with cost, higher is but case. We our growing volumes our to higher respect

in Our value share positioned and premium. holding Grocery in is business is well

its to to Our Refrigerated Foodservice increasing the drive mix shows each terms comments. detail in to business Retail each dramatically Suffice say, greater and our supply continues Jeff expectations will perform outlook. into in contributed stabilized environment. business well exceeding promise to rate. continues Weetabix to go and in has improved and confidence his challenging raising run a business of chain, in contributes our

and there of economically face sensitive interest the inflation consumer significant interest inflation From higher and rate remains consumers have reduced support. while back, pulled a cumulative standpoint, rates rates. Moreover, benefit

interesting purchasing. shoppers to continue We and more an shoppers see same convenience with prioritize their we In dichotomy, see spend. on-the-go selective those be

acquisitions. debt X repurchase capital quarter, we approximately as M&A on as first million far in share or As prioritized allocation spent we tuck-in the $XXX over

Despite we funding X.Xx. leverage debt, these transactions reduced our with net to

integration acquisition have tuck-in Smucker we X priorities. the commitments as and With transactions, Pet

to reduction time broader our strong underpins trend, in rates. corporate this have in or reduction decisions buybacks, it in However, a allocation capital seen the results monitor share our almost lower cost as tandem significant rates, markets leverage, respect any history. greater closely long-term We debt fixed having This and in operating M&A. optionality with our reduced Post further in than performance with

to Jeff. the now will turn I With over that, call

brands, that performance, with began this investments spoke Beginning and supported Food we as business a food exceeded our encouraging our Grocery the quarter. Pet strong and morning, both manufacturing expectations of We value in brands. stabilization and good in premium we Pet our everyone. saw last Rob, strong about making Thanks, PCB, growth signs had in quarter.

However, some slower ramped we costs up expected. than

pricing were or loss inflation. us X%, volumes category gross to in performance, although the enabled strong the quarter. cost and category with Grocery, moderated recover remained some carryover profit which For the declined, down rate U.S. main dynamics unchanged drivers margin Cereal late volume relatively of

category SNAP trends volume the its the benefits that in in remains pre-pandemic expectation to March. pullback we lap Our will as return

hold Similarly, to the are network. prepare and Smucker's and manufacturing agreement From a on network at dollar our Pet off quarter come we ending network. From cereal working on chain were perspective, optimization optimizing year, supply we perspective, into a the for share XX.X%. share are Pet, we prior to integrate with Perfection focused manufacturing our pleased versus we as contract

year influenza We a by We our no in contribute to Foodservice. beyond December. may improvement very strong mitigate quarter-to-quarter had any This we in precooked modest quarter impact products, some and the reported over egg of significant network confident volume two to continued outbreaks course Shifting remain our our the egg the within avian and especially develop a driven cost higher-margin service levels. that had growth, pricing. with can additional We've will in volatility.

January, Lastly, production. up to to we RTD we continue and began in selling shakes BellRing ramp

business. improved nice to the and performance source Manufacturing to UFIT a Weetabix. continued of volume provide growth to Turning

the challenging. continued to operating However, be environment

manufacturing the first fiscal Retail inventory levels. us peak Refrigerated enabled holiday on meet year less to demand stable customer with entered This quarter poised business reliance to take advantage and the third-party improved co-packers. with season Our of

profit translated combination of Additionally, the factors performance to our within cost outstanding. manufacturing the was facilities strong segment. performance for The these

off a Overall, is XXXX fast fiscal start. to year

the to to peers, model our provide volume diversified same pockets continue most face our of challenges business continues growth. we retail as Although of us

significant encouraged most company, dividends. across are We paying performance by supply the which is chain

With call I'll turn to Matt. that, the over

and Jeff, everyone. morning, Thanks, good

sales consolidated over acquisitions. EBITDA increased adjusted by $XXX quarter billion our Net and sales First net $X recent was driven XX%, million.

driven U.S. decreased volumes declines retail by continued Cereal. U.K. acquisitions, and these Excluding in

by other order we our performance the increase, portfolio, service levels. On volumes products improved and chain the rates. to our in improvement a Across fill sequential hand, higher-margin Foodservice saw and driven continued supply customer

Food have sugar in especially improved and businesses. and our in freight Pet pressures persisted opportunities, still such grain Inflationary by prices offset we and However, partially labor costs. as costs, areas Weetabix

as facility continue charges costs the increased marketing our closing retail to see incurred of SG&A investments across scheduled we business manufacturing for and targeted Finally, in Ohio. our our cereal in Lancaster, businesses

starting with Consumer our Turning Post to segments and Brands.

strong net adjusted and food, net peanut to year and and increased the in from sales Food declines Pet and of Food XXX non-retail British we benefit saw improved excluding increased We cereal of year-over-year, XX% foreign as Average decreased translation acquisitions, contribution branded pet X% pricing, tailwind volume volumes sales of Excluding X%. increased lapping the which benefited led EBITDA X% net butter. by Pet performance. basis grocery points. Segment pound, currency a X%. weaker prior benefited a Weetabix versus increased

On lower increased pricing X%, basis, offset net Segment a driven and X% a while by partially were list manufacturing adjusted volumes costs. and branded currency EBITDA and acquisition as decline to by X% increased products. decreased volumes favorable increased neutral attributable in versus sales increased net FX year price increases, prior

Revenue net improved grain service costs. impacted are in of demand avian period line avian recovery pricing of and sales reflect over they and reflects X%. premiums influenza significantly compressed, with volumes Volumes strong the Foodservice remain lower increased levels margins declined plan. elimination multiyear the prior X% and by While our pass-through influenza.

net Adjusted Retail freight [ a eggs sales price shift precooked Refrigerated offset and ] premiums. and elimination EBITDA of mix favorable year X% both as by X%. decreased volume, HBAI to volumes decreased costs the were prior

and side average EBITDA the side dish However, commodities net led increased dish in Segment volumes cost with up plant flat were X%. by performance, prices selling quarter in improvements XX%, freight. adjusted

quarter, cash by in increased from In first the profitability generated we $XXX million operations flow. Turning the quarter. to driven

per a leverage an net X.Xx. to repurchased decreased average of we XXX,XXX at Our quarter, X/XX price $XX.XX of In the turn share. shares

purchased $XX we average of million worth approximately of at discount addition, an our XX%. debt of In

authorization Our approved new $XXX share week. begins Board next repurchase that a million

the were of shake And this quarters co-manufacturing balanced to strong given guidance driven the range, Iowa the new the in finally, $XX remaining we facility. as precooked expenditures and then protein see new start guidance year Capital of each our million, raised we our approximately fairly significantly. Norwalk, facility other. quarter the year, by to expansion the Within

I today. the us for will call turn for Q&A. that, over joining With Thanks to the operator

first Our question Barclays. from line comes Instructions] from of [Operator Andrew Lazar the

And Rob, just you really, really great to have back.

you. Thank

for is here. Maybe that's margin just thinking we quarter of on what EBITDA question contribution Pet, the back to low of first EBITDA to a we a in of excluding million the business, envelope, range or mean just from My the the of high $XXX EBITDA put about that of and $XX x from of company's like kind about end if legacy would just -- Pet margins your margins. normalized of look PCB Pet, and and about mid-XXs sort sort PCB the mid-XXs go XX% through where Pet EBITDA million

last it benefits a some And want might due in kind quarter transitory be that know XX% quarter. you margins also would of range, were but I to in bit the

forward. pipeline need on think investment you've a I fill the for and some incremental about moving talked

if so least first the at us in the would it as anyway, to quarter. that beginning sounded revert And margins

fair now with to I accurate. this my what is X under guess, So Pet? level I and drove guess, moving reasonably the performance wondering assume this belt, second, at sort if is margin forward then your And just level it for first, math strong of quarters

beyond a more than And We seeing reiterated, I to continue accurate. investment, it time expanded at we in And expect than slower favor. expected. for purposes. and capacity meanwhile, and report math do but to a mentioned Jeff manufacturing pacing as what Matt when I in of think both benefits our can't cadence see demand some we're segment at comments your required reasonably is moving the incremental is my is -- we do we

premium time, in seeing investment At products. we're we're incremental brands. the of putting So into our better our some same value relaunching volume some

while So the volumes. articulated to percentage should dollars the some margin seek growing see structure a on by reasonable, basis we grow you but pressure is

if companies And yet to at But about number having like shift also at that's not so, consumers then, budget home. your guess that you're from away-from-home their of is in with eating. I sort real seeing stretching is? a least I guess, guess, And the both worlds, benefit food you of seen talked second, foot with food any have from sounds the consistent why at-home think too? do case? I It it what

sure to of as still terms And strength could bit emoji, find our the terms I breakfast, away-from-home your in that new was time, see some think that differently behaves some price continuing change would quite what business. than We I piece we're -- with the of, our other give we interesting in shoulder would a familiarity skew are dayparts be shrug, some some consumers in are I the and But daypart in think good price. to At even an they dayparts, gain pretty little trying behavior a reference I the think environment. reference I If pricing not you business of historical away-from-home emoji, use. and start soften. the same which to of may other until

of But head a still there. Jeff we there's story. volume loan unknown resumptions of bit it, lot maybe is it's out SNAP still So total mentioned, in scratcher big component a think it. the are a of component SNAP, of a a terms student of

question Mizuho Securities. line from Baumgartner next the comes of from John Our

to Rob, hear from really Welcome great back. you.

you. Thank

case, Food. extent Pet in looking case value you your what I to the growth. or Nutrish guess, to premium and first stronger subsequent for brands, wondering might or growth about back today In weren't segment revenue your first to underwriting you be volume Recipe. underwriting that struggle maybe really given the the sales your now your But opportunities opening reevaluating assuming going and maybe acquisition thought forward off, propositions comments at initial I'm material coming

a I at changing segment contrarian the with time that Well, we had It position we fair, to premium could a some anticipated expect in be underwrite value value think was of bit economic be that, in did growth, growth an segment. the the all the at expense somewhat been opportunities but environment, the didn't segment, of to point. the we and inflection at because the be there

do in focus to to and on capacity continue So of so, we on some do cautious value to but constraints, just over favor the equation we cautious some of are cost constraints can do value, we somewhat so. will And of because in offerings, if to so that. move are we'll which opportunities and inhibit But will continue that there we there margin continues cautiously. be Those some we'll tend the some demand think time. be relieved do growth we be growth, and to on constitutionally, expand

different So a considerable but case, than it's caution. contained case terribly amount not our underwriting our underwriting of

-- stands Weetabix, sequential business on rate 'XX. business nice you Can the of far this in margin we recovery Okay. fiscal sort which where drag label either at And execution mix the going and that of still some XX% this break point restore segment that extent saw prior in private below quarter, more or the and to the can margin is on normalized terms but profit business to out improvements forward? from

process, we the recovery. in but going driven the close quarter. performance can are in the be imagine to very multiyear can choppiness to is going by cost-out of you to by if We multiyear margin which activities, return, Ultimately, think activities. John, a were the Bright, along certainly fully first multi-quarter, So largely not encouraged Bright, expectation there's be the we way to terms it's sometimes

would XX% XX% we -- be will below of that towards where years. are the the over even go what the margins will those see, today we though fiscal perhaps to So couple choppiness next from way line sequential expect there trend along

next comes Piper the from Lavery of Sandler. question line Michael Our from

great Rob, back, you. Welcome to have

Thanks.

sustainable? start Just any had much to on love specifically, understand onetime strength guess the to Refrigerated being of And benefits would more versus love margin I I maybe how Retail. would

Is that it -- a how and you of run that obviously in-house pretty flexibility. sticky? we that better in-house production, there something mentioned that share some a but of way terms think as the that looks of outsourced about do that Is is volume? piece a rate have the You in versus

to -- mind quarter for thing keep first in first is that fiscal The peak our is business. the quarter first seasonal

costs. So of in manufacturing our a good we lot leverage get

speaking, is quarter not very from something portion to But So that I specific and repeat. that margin wouldn't believe absolute first a consider performance, necessarily that is manufacturing an generally should it say considered we your you question the about perspective sticky. from certainly dollar of to

level that. Now hesitate performance, set that be it the but quarter to the leverage manufacturing the for we cost will rightsized terms And the that going the after the ebb the be We run fundamental in high flow -- to we word permanently, is again, volumes in -- footprint of through high plants. for in But with first that watermark quarter use believe business. have we that to efficiencies successful is we've and think I quarter. up

maybe just Foodservice. on That's helpful. specifically And

run quarter around that? about thoughts You've seen obviously your keep a the the ran rate sticky as Obviously, Or million. of update, you mix thinking to that there? any kind there think of And this on that just to given ahead just $XX shifts kind revised well. that where is you it of raised level beating how

We're be $XX get the quarter, run rate million our things mix few more precooked under by eggs, things the margin were some then our that there significantly. us. absolutely we which that like being Well, we're but I not commented rate optimism last a on for the the against shift the some but could And that belt. saw ready football that to on quarters would run have we some that, of structure to encouraged in went north that helps certainly quarter went we north to spike of us, that our

to was permanent yet there's basis, So proclaim We signs victory that may strong it case. certainly the encouraging don't but a a quarter. be want on

next JPMorgan. from line Goldman comes question from Ken the Our of

welcome Rob, back.

perhaps the wrongly, that a was quarters EBITDA assume of this comment I are phrase terms the about about I think I fairly assume means Just was we as curious, means balanced. dollars. in this think made they there -- remaining

sure understanding Just I wanted what balanced fairly to in make the was context. term meant that

correct. Yes, Ken, that's

$XX Great. And million. beat EBITDA a XQ the consensus, than then less little

You $XX by raised so. midpoint the million guidance of or

previously say it that you're range that assuming the fair I result, that of expectation, am somewhere With than Or a as XX% in too is, degree, I much anticipated? is -- you are to XX%, the your not similar your is reading the understanding as into quarters that? internal X better consensus that expectation same not remaining beat and kind a the question internal XQ by guess

No, COVID confidence and have think gaining in of -- considerable going in the we of closed in I with out context year. think the the our to maybe And think are some with the X years, guidance Foodservice, of we year. I balance in avian put April we starting last X acquired planning influenza. you years assets of I of We've into pet come and volatility

considerable F entering these 'XX margin on fairly talked morning. of of this some range had we we've our and about uncertainties a even plan, structure So some

through gain So where comments, where margin greater will we're respect I Foodservice hence, as will as my we the land I And give on and information year land. the get incremental and guidance. in to further level to gaining to along Pet and that we're with both the able precision margin actual structure confidence and confidence think mentioned

Our next of Matt Smith from the question Stifel. comes from line

to or will weak think around value to of the a offerings? the seen how store volumes wanted center-of-the-store to in the as progress back pricing. your 'XX, continue entire We've perspective environment and conversation a decline. volumes through reset consumers retail you start branded and have in view go you your either Do fiscal index I remain to business on retail broadly

economic to feel with develop about of demand because that what up do price the ability consumer throughout good I think will portfolio portfolio. hit different our Well, points is different volumes we cycles, across a manage very we try match to the we and

with ball have and the go think what is, where points. flexibility may don't ability to I where we the they to actual respect we pivot is have with price Andrew, with greater answered to demand respect into different may I crystal as consumer greater So a

So a than volume we may be sensitive bit others. less

outlook optionality optionality the rate to valuation wanted the over lower if And you talk expectations also sellers talked for One unprecedented funnel? nearly that caused time ask, you for about has has you're Post. I Can what to M&A. outlook in seeing about been for change?

that Well, the become talked an in sit market up the move -- for they the not is And longer price dramatically, But occurred. when to discussion such accustomed available, this That think the it's sidelines. from we past, reference the Those this they in the way about consumers multiple owners or sellers around the no the dramatic opposite skip that may XX-year multiples. selling. go to at because who so level morning. the we've reference about rates where least what interesting up a there's rates a we've business had price because may before period dissimilar sellers deferred come on for the a is certain they're multiples This glut adjustment where back are morning spiking leave waiting interesting for sellers expecting is at higher bit, direction were shift we of have now, down.

to that. think we time I more need answer

it, simply and cost a but pipeline our deals at looking certainly of integration plan makes our that our of value But along ahead that on of on comes And are course, plenty of we'll it. opportunities have we're in plate more capital we're executing got if from to pipeline. luxury M&A tuck-in. both multiple the an needing sense drive -- Our a perspective and active from transformative not always plate we've of perspective. pursue us is not pretty of Great, couple always needing a us we M&A necessarily gives

JPMorgan. question Casella of from from next Carla comes the Our line

back bonds Could you say -- bought the quarter? you in

to hear. hard again? were Could say you you that Carla,

bonds give kind to look do in I and versus it us the in back revolver the debt It as you was balancing what then wondering quarter between could if color which bought bank of think on any quarter the you acquisitions. bonds you you as integrate looked well. like some you

Sure.

during Carla. repurchase the quarter, those the the all XXXX, of terms were in So

could. focused are that just we we yield So the best on retired getting

capital think, of where about during Perfection And revolver. and we'll takes we'll quarter, Pet opportunities got funded that and that's where our the In see terms entire then are, our us. markets We I eye for but obviously, rates correct. look with closely complex, as we've on the think we transaction the

a what And you your Can would all acquisitions that full the then leverage Okay. for sense X.X. you year if be give a for you acquisitions. had reported forma pro net the for

is so XX business the pro like facility the calculation, does the for we And credit it that for the Pet didn't Perfection forma for include we business. months the contribution own X own months a for didn't and

is all So in. it

next from question line Securities. Chappell the Truist of from comes Our Bill

of in just -- Rob, a that food tenure I the be mean -- that fully welcome so understand Two quoting U.S. industry. back. guess the questions. but volumes not concerned emojis One, you, little throwing you're even I back kind means should out consumer I and help matter you're what quickly, obviously, packaged chair. just and Weetabix us kind for it's whole and on it's of the

And think move step do advertising, start growth to it this changes to as stabilize? does get you to through going? do Does Or volume to? what So promotions things will kind again marketing to industry year? just naturally up need you need of the the Post growth actually -- we

Part resumption. part the of it it student loan is lapping is camp I think latter of SNAP. we're because lapping of more

levels. So trends. time the think the past to are then some fairly run-up you've got resignation that And to the exogenous the in volume variables new getting I rapid for price allow impacting inflation psychological enough that

a it. don't perspective, to in it's I think So change behavior cure allowing of from our more major time it's some

it. Got

So it packaged level your you or cereal peers, promotional the stepping even goods see up other be don't categories? from

We're seeing levels fairly what would prepandemic normal, we promotion. of consider

being been the But cereal, that rule, as case promote general promotional competitors of not our through periods certain historically. in will more been there a time others. some it landscape of as in has seeing what So of all be pockets time will has the we're history different fundamentally than than

the follow-up, then profit And great. on Pet. That's sure making a I understand just

what is raised and timing what -- and Or high maybe beat longer? not quarter the marketing it's are to would that trying you again to then be thinking that guidance, just and just behind thought of a it you as actual little these is you're looking the you get merchandising for? you spend kind the as understand, -- need thought to advertising brands the of is is growth the So the

Well, sure we're yet. not

the I is bit. delayed but spend the mean -- think certainly lower timing same the on higher anything could of a glib, the could to it spend. be to mean depending results from don't And I

changing packing, margin invest bit some term margin that. bringing in-house, them we've -- take in to behind we're accretive, to the it also but of a because a luxury over and to actually to get our that will bit be we that about we're to case got So Ultimately, have the dilutive because of of relationships, insourcing we're it time contract where the incremental short strategic to base manufacturing there. Part in be some want decisions going invest. is will volume manufacturing contract going is make some little

line from comes of from question LLC. Securities Marc next Torrente Our the Wells Fargo

the online January. shipments sort back target would of get the with rate EBITDA ramp welcome Is as initially to is expect came our that Rob, during well. facility million quarter 'XX? you of team shake sort exiting looking? that fiscal the When manufacturing, $XX to first On How the [indiscernible] from level. run in

issues curve month us being a the last quarter a is run or more but X to 'XX, target like rate full I think learning fiscal that some from we've run start-up push and of being the rate. It start-up fourth year the exiting had costs

call be XX So behind we're this time. at it, where we expected to probably, days

closer ourselves going of forward, slower issues I curve expand will think learning be as there Tetra be. have some and it to with position to it bit a but to expected been to some the we we benefits proximity has ready this than

more meaningful looking Great. segment, you're the on and term? margin that of deal profile somewhat but and how I think we to type relative about small Weetabix acquisition, near Deeside, segment And should this the contribution the for is to the then guess

Deeside neutral then The factory neutral essentially small. us be very contribute in some small or label profit basically need small. pounds very, It We'll some handful U.K., we and in was capacity XXXX, very a XXXX product margin business. gave that specific but the private in of million for

further you. you questions Thank Thank for time. are joining this There no today. at us

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