POST - Earnings call transcript Q1 2020

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Operator

Welcome to the Post Holdings First Quarter 2020 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12:00 PM Eastern Time. The dial-in number is 800-585-8367. Again the number is 800-585-8367 and the passcode is 1371013. participants placed all mode. a time this have in been listen-only At

is turn Post Mainer to my Holdings floor introductions. It pleasure Matt the now over to for of

now may begin. You

Matt Mainer

us Vitale, the our and these and you morning Rob Good our Jeff President me Web we'll session. begin and filing postholdings.com. you. Rob for Jeff CEO The that Thank will joining both are today supports today. Zadoks, thank question-and-answer site CFO. SEC have and our With prepared press on brief remarks Relations a afterwards posted sections and remarks is and Investor in release at with

In addition the Web the site. on SECs is release available

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

a being an be replay will Web recorded on is reminder, our this audio available site. and As call

And measures. finally, discuss call this non-GAAP will certain

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

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

Rob Vitale

joining I've with share XX% a domestic and I to from go before I this think I been Matt prepared going all wasn't I'm the fighting week. this. that for going of thank I But to back am us. into Thanks you sure virus do way I was you remarks, about my

results we through things for me other the with as bear share with So and you our quarter. packs

our XXXX favorability, in quarter first largely quarters communicated expectations. line consistent cadence total, our second and half expectations. the with modest We with in that, with plan with in came So a

comment update As outlook, my and additional brief around business on remarks business. are in XXXX clarity some takes a provide prepared morning, there will capital puts and allocation. the This across I some always,

I cadence. to detail some the give want start, additional around quarterly To

plan While of revenue adjusted and is to XXXX closer to continues to a EBITDA our in for compares XX% half approximately of This evenly call between split half represent XX-XX. second XX% to called for halves the year. to split first

acceleration promotional A the promotional have customer that calendar expect second half the side following constraints in to of for production We it's half, the the weighted into navigating allocations, pricing the advertising serial back timing reasons. first that moves, second plant, dish cost QX. half reductions, resulted potatoes cycling investment coupled events heavy for premier with protein for key versus customers half startup costs our and and Norwalk reductions BellRing timing of cost in the spend

remains business, focus to won't capital. the to This I will great the in is is From steal coming start. and a to promising. one on asset shortly, quite a allocate looks best strategically thunder. post be making Turning how that a off manage the perspective, up any the so story their call of and Their BellRing its

promotional club. in consumption Our as hadn't decline lapped in domestic events expected grocery we and aggressive cereal

second half. the structurally, are in impact sweets we reactions. As favors licensed More competitive and this I the were calendar promotional of our we mentioned, year early seeing

X.X%. itself continue non-measure channels We longer of the grew inclusive confident relatively promising near term be quarter, pipeline was have this trajectory The the to spot innovation in business. a of bright category that and approximately a

to a way team. continues and this build to solid Bob growth. dishes Evans like around potatoes eggs and we find would side had well to Weetabix perform Foodservice and

rural growth shortage degree Both solid in Across linger pressured some supply year. cheese. with the and will quarter. eggs otherwise Both retail integrated in to struggling a we we factors are costs in weakness incurred markets. to chain potato profit demand had tied issues key supporting we However, throughout and an the labor

that a XXXX week a Conagra. strategic peanut from manufacturing and recover acquiring purchase to progress also butter from solid executed made Avenue assets Xth

to EBITDA million repurchase of Conagra XXX consideration before [ph] adjusted the We to expect XXX million of continue

the capital the met that conclusion, agreed to believe to from assets allocation, litigation interest. it We Turning party's protracted our attempt ultimately FTC. wrong in acquire label but private we TreeHouse was with best either opposition with the TreeHouse was cereal

prospects, own continue always search but buying capital an We including to for do against choices, M&A so we of allocation our array shares.

Post acquired ended are This Post. of leverage the share that we million historically X.X to shares repurchases, quarter levels quarter commitment low. Despite at the we for

not call the over will Jeff. turn to I that With

Jeff Zadoks

everyone. year-over-year. EBITDA first X.X% for for the sales with the was net Rob Thanks quarter morning and good consolidated growing Adjusted quarter $XXX.X million

Post-consumer volume volumes attributable product to in respectively. X.X% new period the lapping pipeline and bills heavier activity promotional largely declined brands year by sales and This X.X%, net and decline is prior

Average products. benefited largely net they by private four price we of last but as improved versus branded X.X% increases, offset from quarters skewed year's mix pricing label unfavorable were to

implementing savings XXX These process. other We integrated a cost to our had from gross driven planning basis by in are initiatives. of business point savings margins $X.X continuous our improvement new million improvement incremental

However, inventory we new compared of had to and the cost these factors, of declined all processes, footprint. costs these adjusted consulting Net for related to warehousing optimization EBITDA quarter including segment fees SG&A higher year. offsetting X.X% implementing prior this of our

improvement from favorable the pricing volume pricing sold less based over decline. volume benefited reflects Weetabix net promotion offset net targeted This sales mix. X.X% average increases, price year. partially X.X% increased in prior by on net Average X.X% an and

capacity in solid While on by resulting declines products. growth from products offset in constraints exclusive primarily volume non-biscuit was biscuits

the significant Weetabix segment to not dollar quarter was variable rate increased result The US the in average flat in year, EBITDA XX.X%. prior Overall adjusted sterling exchange comparison. the was with as year-over-year pound a and

increased the up Despite plants. potato in higher our potato growth in this declined costs, with egg and foodservice startup growth costs volumes supply X.X% by at egg Net both facility, strong new X%, and integrated products. EBITDA downtime X.X%, prior sales by driven driven in adjusted year, volume including precooked chain our unplanned from

constraints customer allocation. X.X% X% declined declined driven and volumes respectively. which Overall and by to volumes dish sales net retail led side Refrigerated capacity X.X%

However, and approximately declined group Bob dishes as XX% allocations business. respectively. portion to and X.X% X% this branded volumes growing we prioritize cheese faster side Retail of our Evans egg

driven Segment adjusted lower supply an by and and this declined chain products. volumes from commodity price sausage higher mentioned, These by items improved business EBITDA lower costs overall integrated sales costs. our volume partially followed cost by higher X.X% as contribution cheese for declines, previously relationship offset were quarter

BellRing net while sales adjusted XX.X%. increased grew EBITDA XX.X%,

results about You can on call this BellRing's hear later morning. further conference their detail

activities, markets the of capital an we repurchase million approximately shares our price quarter to Turning per share. average at X.X during $XXX.XX

approximately remaining repurchase Our is authorization million. $XXX share

of and subsequent our retired in transaction X% to loan repaid bond outlier we term the quarter notes, we full, our the quarter, the pricing. During legacy proceeds the our ladder one primarily eliminating for BellRing to

the a forma on are for basis other debt. As was report Post net reminder, leverage as or statistics XX. approximately this guarantors and party's of obligors Post independent BellRing of Accordingly, we five December leverage EBITDA. of times pro BellRing Post neither nor adjusted debt

from business the During in of $XX swaps, from quarter of we capital generated working million primarily several rate was segments. year across our interest operations, of million in driven which ago, and by flow $XXX.X a higher our timing cash down net settlements

dish which included manufacturing leased projects of eggs. capital the purchase Capital previously in expenditures million, of our completion approximately were side and Springs, plant growth Texas, $XX in Sulphur our

for that, Operator? questions. turn the like call to With I'd the to operator back

Operator

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

Andrew Lazar

Rob. on Good morning, everybody glad and you're demand

Rob Vitale

you. Thank

Andrew Lazar

fiscal would in guess guess, I could, last I first, to period Two it? cereals think EBITDA how timing quarter, looks in things and arena your talked growth still the even And year be and volume this to full about sales to in lower a expect if you I sort to year. of this a sense be in thinking were due more segment competitive you for in accelerate you're I year. seem of terms year-over-year that in make promotions it think what and moves I volumes begin in what expected you as of to the slight somewhat pricing expectation about the this

Rob Vitale

say. quarter, decision. material were we margin repeated the beginning the Yes These year, one be next a color, relatively expect more a of it this one to more has you which second To little half, events I would two last large which been to but quarter. fiscal of the was give discrete of acceleration in both,

lap on grow adjusted projection execute should in of event that second fully some half, as of the we terms from event we see we to we the that maintain in EBITDA, or be or as that So to expect acceleration. And able XXXX.

Andrew Lazar

say XX%, I had row attractiveness last base bit or typically sure. Post that And right Great as the be of its or about back XX% now maybe so. and fiscal a is just core allocation assume quarter the to of around which a you. but avenues that, mentioned talk what thought you second similar a I various in I the in bought Post about Thank was doesn't the guess capital X% there's share EBITDA then can I little says you what model. its about XQ making of sort sort change think split second this to you don't at of would looks quarter. think

Rob Vitale

everything's versus order Yeah, uses it's capital, last a thought of quarter. relative With in to share respect comparison. reverse same other buybacks the as we

or capabilities or comparison not Post if for So something we may rather that and of business with to X, simple M&A a always the it has XX and we're for a rate, of would alternatives. it's be just XX starts a calculus. times be a buy a Post simply in is market multiple trying that is the may growth different invest versus competitive market it analysis but relative There mathematical or different our

Andrew Lazar

much. very you thank Great,

Jeff Zadoks

Thank you.

Operator

comes question next from with Chris Growe Your line of Stifel.

Chris Growe

morning. good Hi,

Rob Vitale

morning, Chris. Good

Chris Growe

question better Hi – hope about the a curious was Post I business. feel consumer on Rob, brands there. you just

how in and through, mentioned some run with for you assume through. Does should that savings business you some Jeff, and occurred same hitting that those up type cost think, division? QX, last up then coming kick lot are I I sustainable X that of rate curious are savings activity coming that continue EBITDA a planning you integrated or just those in year. influences X

Jeff Zadoks

Yeah, throughout it's a progression the year.

half QX to inflation the loading that's to of seeing And savings [indiscernible]. a reasons but we second the achieved So expect throughout of Rob And of our progression. the were in plan. for of some that one that's business, build savings definitely overall out the would offset course, necessary in incremental the called upon we're with some of that that

Chris Growe

Okay and if is that the would those division's giving it foodservice effect in bit maybe continue idea, you're quarter did those a a could year And you great? the for those this just on QX, into quantify on number then then to like division costs if understand for on be you profitability? Norwalk, sounds there the an the could I just versus

Jeff Zadoks

up ramp costs One There's effectively efficiencies two roughly X which and different tracked isolated. buckets. are is direct in bucks. which not costs, have a separately is there's But we just million that also

So the there there's the handful to low operational difference versus is curve in estimate – between as would fully a get the the factory of I dollars. millions process learning running

Chris Growe

Okay, thank the for time. you

Jeff Zadoks

Thank you.

Operator

the next Your from John comes Wells line Baumgartner question with Fargo. of

John Baumgartner

the Good morning. Thanks question. for

Rob Vitale

John. Hey,

John Baumgartner

the Rob, at growth we've look of generally stronger it's that the out as is they you we end loyalty your been? value and ever the of of run, category changes as to And that's are TCD curious, cereal stable at obviously outperformed and very pretty time. folks in category and trading wage Are up, dynamic? low seeing are niche terms over segment consumer, this we had trading stable, of or go the I'm given been

Rob Vitale

good loyalty segment. the seeing we're entire No, within bag

So changes up trading we of consumer it. seen out any and haven't of

John Baumgartner

or prepared of foodservice, seeing then you're how terms foods, Bobby, a levels high in And I up down how level follow from any coming C terms doubling post wondering or new just cross on we Okay. in opportunity down breakfast, do or QSR do guess, set for how activity going speak you having you selling stores forward? could if would the or of gain stores pre at C – and emerge – growth volume you in doubling just on in

Rob Vitale

of have become you've has gone Well, not but significant – source C QSRs, convenient and a Wendy's breakfast. stores breakfast seen to QS probably

is material country. the we rates. potato across So in quite seeing it to best growth our seen extraordinary we're as we're where of results a the really selling have Evans where the Bob trend cross business acquisition continuing see And and

and it's really competitive, in in some egg we're where in excuse sausage, a potato more a We but commoditized that bit more – business, unique sausage me, is have category. that seen

John Baumgartner

up selling already So that you're the in ramping space? cross well pretty

Rob Vitale

Particularly in potatoes.

John Baumgartner

Great, Rob. thanks

Rob Vitale

Thank you.

Operator

Your from Chappell next question line Bill comes with the of SunTrust.

Bill Chappell

Thanks, morning. good

Rob Vitale

morning, Good Bill.

Bill Chappell

and downtime the little going Hey, could what quarter just plant within I'm the give at the color just refrigerated unplanned on me had side in sorry, actual you forward? and a it more impact

Rob Vitale

down talked one our but last downtime, plants unforeseen on about misspeak – a unplanned failures bit going that I'm plant it at coil take was in the required refrigerator that in a mechanical It quarter. particular little the some replace to to us the To was of we of to kind. some order here, a

up And other events, ended that some some that then couple of that this days us hit production. we sacrificing we of So events so off a get kind the one also replacement weather in were of related there downtime quarter.

Bill Chappell

like, the to for Anyway compatibility. quantify just what was impact

Rob Vitale

pretty loss is sales, that I couple, to have that further mean, We two, what it of difficult. to hard it's it of into to in a because it's it production, might really three do but that qualify, was really but difficult know terms to been profit do. days led translating

Bill Chappell

to Got has uptick quite seemed had just that help it switching Avenue, the quarters on Is of like with Xth then some Avenue and in business kind one the margins acquisition, meaningfully? as it better a Xth that the and does of time. the

Rob Vitale

right say in is it would stabilization. I now

So a foundation to got of stable which we've build. we've bottomed sure that are making kind and upon

second high certainly will your a at the return so dollar what bit profit. expand very but it capital part business question, margin of of common This a is terms for. lower, In we average of it'll paid that's largely come

Bill Chappell

you. thank Great,

Rob Vitale

you. Thank

Operator

a question Piper Michael next with Sandler. Lavery line Your comes of from

Michael Lavery

morning. Thank you. Good

Rob Vitale

Hey, Michael.

Michael Lavery

sure trying this cereal label have that? other my the objections of any FTCs imagine just do you make around TreeHouse, how on I'm the what potential Or how of you do specifically, sort deals? private With I specific? is is to much hands much on issues visibility have that within And foreshadow could

Rob Vitale

market of in believe market, private consumer found was in actually and XXX% friendly, and segment X% label we felt Post in that it competition TreeHouse they was to the bigger sub label the of and appropriate we we the competition that effectively argued having No, eliminate novel such category would felt private was combination specific, we that and narrow a that of definition our the but opinion drive what counterintuitive, avail. no is and that it

Michael Lavery

how – really And and they've – pass you helpful. just some manageable much you that No, can That's on Yeah. that – being? you. give thank turned that it's just through you more how then us on potatoes color inflationary, how see

Rob Vitale

is inflation We potato have been inflation able struggling we're factories. of unrelated quite to potato to pass the through some effectively. the labor crop, Where the bit a ingredient the but related to

Michael Lavery

if through And year. persist doesn't anything the might

Rob Vitale

able persist be should it, price the it eventually at but We quarter. – to for will through least

Michael Lavery

Okay, you very much. thank

Rob Vitale

you. Thank

Operator

comes line Your with the Evercore ISI as next David from question Palmer

David Palmer

morning. good Hi,

Rob Vitale

Dave. Hey,

David Palmer

Good morning.

about might a but breakfast but supermarkets, Just feelings a there's both. feels channel like going observation, different have also it wars the in participant quick inside in the and you on are certainly either restaurant you one, –

on promotional teeing to for trying and Kellogg's up seeing get perhaps calendar taste bracing You're more half and bit the obviously but of little well. suppose the home, cereals impact year. breakfast getting game not I the McDonald's has very Wendy's, this from perhaps you're side activity a there. also a And But away the with fun sandwich new breakfast in in Duncan the successful first there. And is as game just

are this side good really What for but imagine a six there? shaping in a supermarkets I months from is way be special year next least. thoughts very on the foodservice competitively the looking you're would So demand your perspective, demand the might year, at perhaps at up a tough that

Rob Vitale

were both a we to long had competitive prepared based of licensed that the there been good as intensity that good Mills. nothing expect. And that it very retail bolder onslaught Kellogg's over We've would there that's was as feel compete quarter saturated. effectively categories reaction innovation new. pipeline greater that I Oreo XXXX. than commented what said as my to about is And fairly. and to And But potentially I growth, we to our share need in decision going we with around. early a better I at pretty from seen probably and remarks we've seeing gets round And state level we And just licensed conscious XXXX, say think and as General innovation our a what think immediate in seed in an early competitive environment Well, that demand fight for we're overheated. was product sweets is I'm on I said is now. rather some Well, bit right in a you think territory in our that innovation category sweets

not for add pick you foodservice, to in just that don't fight and most all of across So retail. the our said. you have in unit share mentioned. be carefully, – I In growth we're what trying volume to very right to the battles strong We're our categories much what of share seeing selective you support trend

David Palmer

in On that mean, year. these double past egg we the the new added in months, boost you're the should How could you during fiscal capacity foodservice this million added imagine side terms EBITDA value this we costs on I and in good if thinking spent particular, it should that that of very like XX one think of kicking $XX, at friction would $XX next some a be be some I there. manufacturing side, eggs. incrementality up millions of about a point get for digit on benefiting seems EBITDA? that value you

Rob Vitale

about exactly year run – characterize it's to think you all the as just don't rate. think I a it exiting reasonable in as it

David Palmer

you. Thank Okay.

Rob Vitale

Dave. you, Thank

Operator

next Ken Your Bank Zaslow Montreal. line of from of comes with the question

Ken Zaslow

morning good Hey, everyone.

Rob Vitale

Hey, Ken.

Ken Zaslow

UK? the Weetabix the a just capacity trying there, little taken How the Can to take were the you and serial believe up on thought it have I you business? is give some that you and in about progressing up dynamics talk dynamics,

Rob Vitale

Yeah, slightly flat the general is demand down. to

our a pricing more have We sought margin because moves market and the prices. than had decline dynamic in traditional volume bit We to restore aggressive the of on structure.

to have capital capacity the have make some having We to a little my service we savings, well We like we're significant and 'XX. 'XX a we that there cost and to up they putting sure and capacity. overshot taking as gone little FY where be approach annualized be. may that keep because out now bit need has in last expect taken back our levels end fully of answer, again, and But we

Ken Zaslow

appreciated. greatly Thank Great, you.

Rob Vitale

Ken. Thank you,

Operator

of Dickerson Jefferies. with next from question line the Rob comes Your

Rob Dickerson

[technical difficulty] in QX. year-over-year

Rob Vitale

I'm We Rob. sorry. of first the your didn't hear part question,

Rob Dickerson

Yeah, a could So a in I'm SG&A, just bucket decent any let's Is not just gross or amount year? what's sorry. say then that up. it growth. SG&A why of of cadence increase and net for question the as was I despite in then you up kind on right Impressive trends a might in quick just ease simplistically decent offset go QX there profit way kind have through why we follow that the driving And year

Rob Vitale

no there's that smaller add to up. so tend items single Sure, several significant its driver,

driving of BellRing As And of have it's activities more there warehousing a ranging segment. far it. as that's gotten as stabilized. segment the costs inventories handful It's the some most from their increase

in PCB Some cost in company, around activities consulting cost business. but the the consulting we some mentioned not BellRing, in for some the in as

sort year we an expect a really IPO dollars during fees be to as on. of that of incremental the as cost ongoing. will it's The company on I the quarter couple mention So and did BellRing, would the to that's there's items. thing earlier the goes And diminish a handful we consulting million public neglected

Rob Dickerson

ahead. sorry, – Okay, go great. And then

Rob Vitale

So we ahead. were Go done.

Rob Dickerson

great. Okay,

just – And decent of history have Sorry. year you. low is past, the pay of obviously, leverage in dividend. kind like to for And structure, said you terms cash and you in don't balance, then, relative the then finished capital yeah as you

went So rationale. you you back some bought stock. through In QX that

today Just repurchase – that the – it kind kind let's still so expensive is rational and �� thinking at or balance for we're strong, just to where say of less is think very your the front. cash forward of to if is you of be activity opportunistic. it tradeoff. say even is And stock overall pay or the We're on could pipeline M&A obviously, up or we're always as always our strong looking the relative now year history do

Rob Vitale

you in but would wouldn't say framework our what pipeline would do to we're for the there. get I it you work to rather the Well, want of choices of latter, going is look always the I all next. conceptual predicting the I we into just strong, from let allocating context give at capital. and

Rob Dickerson

so fair. Okay, Thank you much.

Rob Vitale

Rob. Thanks

Operator

comes question the of next Brian with Your Holland line D.A. from Davidson.

Brian Holland

Most my have been Good questions morning, gentlemen. answered. Thanks. of

this your you, appears about here. alluded I your in in landscape perhaps now. with beachhead the than remarks. visibility now little in Rob, right challenging to market palatable you there I'm presume But thoughts Weetabix solid valuation for prepared UK, So the think a M&A obviously curious a right perhaps is more I

just So about pond? looking I for refresh landscape thoughts the that on the a guess your on side of

Rob Vitale

more. pleased has that two think do performed the we're Well, that the it's very the a can team in years. team last with And we execution

would the now we you've at least time, to to But is same rightly it's Brexit less It's more. just occur. So at highlighted, do that going a opportunity give incrementally have that choppy environment. choppy like to we clarity that as them the

occurs. in milestone of how exactly understanding it another terms have We

give expanded but not tuck both there. dominion feet, So with wouldn't in to under them we're small rush to in and we finding likely something mind them

Brian Holland

the Thank Appreciate color. you.

Rob Vitale

you. Thank

background I want here. apologize and just think again, question our coughing that's of to the hacking I last and for in the some

you we'll So you and to all next quarter. thank talk

Operator

for today's conference. your you Thank participation in

You may now disconnect.

Post (POST) 7 Feb 202020 Q1 Earnings call transcript