Earnings call transcript Q1 2023

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Operator

Welcome to Post Holdings’ First Quarter 2023 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer; and Matt Mainer, Chief Financial Officer and Treasurer. Today’s call is being recorded and will be available for replay beginning at 12:00 p.m. Eastern Time. The dial-in number is 800-839-6136. required. is code pass No At this listen-only placed a have all participants mode. been in time,

now turn for It to pleasure my is to Investor of Jennifer the Relations Post Holdings introductions. Meyer, over floor

You may begin.

Jennifer Meyer

quarter our thank and you Treasurer. our me us Post’s call. Good morning CEO; fiscal release Rob and remarks. for earnings prepared Vitale, both and question-and-answer And afterwards, XXXX supports have are CFO Matt posted and today will Rob joining for is and first brief President press the the today Mainer, SEC in with With we session. filings postholdings.com. a on The section begin that and website remarks these at will our Investors Matt

the release available addition, SEC’s is website. the In on

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

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

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

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

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

Rob Vitale

the our shake online year. EBITDA approximately million has to comes encouragingly, outlook we contributed $XXX our from late level while solid Jennifer, performed and the are ready-to-drink to considering Thanks, thank for well, expectations, for to Most confident you us. Foodservice of Post all fiscal that segments quarter, this and performance all sustainable XXXX. that quite plan a the joining had prior for reset Foodservice balance exceeded revision contribution

by talked about basis points. margin XXX margin last Last gross quarter, restoration. we to expanded year, Compared we

some dip throughout the the give a and the in including expect quarter. take of year balance second We

achievable pricing expansion categories drivers and Supply offset price by rates driven results. better expected at a below most remains the this mix. remain rate. largely relatively However, Data low. increases be supply full-year to environment margin elasticities levels. The quarter's and in mirror pre-pandemic continue slower execution, chains to of our are fill pricing demonstrably remain include Key expansion is but chain inflationary,

supply the XX.X%. As mentioned, believe process maintained on businesses, share we To seen a private you we category level position have intensity, is the than more in recovery our advertising stepped-up accretive. price category. as I have brands be. grew for constructive which expected is label XX.X%. we dollar we Meanwhile, some dollar than perspective margin overall view a detail Post an more points consumer the chain towards Interestingly, it more singular of ongoing shift of to once event is a branded a value competitor individual most of and give Meanwhile, of our business headwind

mentioned, strong both and I remained Foodservice pricing. As in volume

forms influenza half We of we For from the the expectation position. is some operate estimate and becoming rapidly challenges emerge year. signaled time, at Notably, have an we of that gave in would improved EBITDA. level that this avian expect COVID and believe business approximately sustainable this clear I surrounding that second to our fiscal in the

continues show retail to results. Refrigerated mixed

private We make in category, not do this expansion improved recovery markedly growth has chain side of volume supply core XX% some time label. label our do Our versus In see distribution. That year. category. this supported last private dish we

highest eggs elasticities and We among our pressure velocities. high into both grocery. path pricing support influenza remain Liquid expanded in and leaning distribution heavier in to avian brand driven are costs the under as investment have resulted

year. expected challenging well highlighted as last and energy elevated throughout from which prices, be to Weetabix continues year, in the The pressure developed environment. a we managed will margin persist

incremental on higher label. consumers to impact costs, addition towards drives In mix private the

small the with well compared pre-acquisition sales of over up gone period. XX%, the to when exceptionally has prior Our acquisition brands UFIT

markets, last M&A. markets, small remain both mentioned for quarter, debt capital we Post provide could opportunities challenges that business to we category. a As opportunities create We an continue new in interested believe in the in existing or large the entry especially to current and complement the

This that prices. attractive capital repurchases market allocation rather than as debt created quarter, our skewed unusually share bond towards same volatility

generated told, see after This investment story quarter, in brands. over $XXX BellRing I'm The develop. and BellRing remaining future distribution little of is in $X stake an our billion shareholders to a and a to $X to excited the our billion. resulted bright tax All we sold proceeds of additional of million continue

Last EBITDA range least, of outlook an results adjusted reflect $X.XXX our to revised an optimism guidance year-to we but evening. of our in yesterday -date to and condition to increased not the billion increased billion the business. $X.XXX We

maintain plan ’XX, yet some we While to to that our initial non-repeatable or fiscal XXXX. fiscal EBITDA overall we grow benefit, have in expect thinking current year is despite

that, over the turn me With Matt, on into detail go let more call who to will the quarter.

Matt Mainer

Rob, good Thanks, morning, everyone. and

and by each net was overall volumes as segment to Net actions $X.X sales $XXX relatively were pricing a saw modest shift million. private adjusted of First label. Certain business increased in billion consolidated were quarter our flat. sales EBITDA pockets XX%, driven

chain improvement and We in order continue performance rates. customer incremental to see fill supply

the quarter, do to moderation. below of signs levels. in contained be remain there inflation And significant optimal both appear while However,

consumer cost gains declines X%. Turning unfavorable offset product by partially government and increased X% Adjusted net MOM our EBITDA saw to increased bags. and sales driven These actions, Oats, and X% significant private by higher business pricing and as our versus and starting mix prior XX%, segments pricing actions growth Average and We inflation year incremental of expenses. outweighed offset net by in were pricing Pan decreased in increased Bunches Peter volumes with cereal. manufacturing Honey label promotion. brands, strong Post

from basis unfavorable currency products. mix in list a price headwind In caused from last Weetabix net increases UFIT XX%, contribution year-over-year. weaker sales April's by acquisition These offset local and brand. approximately currency, benefited up reflecting foreign sales were benefits translation X,XXX approximately growth were flat British however, sales of the Net significantly a label partially significant private of pound were points.

Excluding the declined not X%. by which from volumes to decline chain driven was and enough branded related in declined were benefit offset largely constraints and sales in products, fulfillment. supply X% label private in UFIT, order shortfalls Growth

was EBITDA year, adjusted primarily XX% than headwinds. of translation prior currency Segment lower foreign because

higher Additionally, our stepped by adjusted down constraints compounded EBITDA and costs. supply warehousing as margin were input

in overall the the Given are throughout macro margins environment XXXX. our outlook assumes compressed U.K., challenging

actions, to continued our model commodity and Turning revenue volume influenza-driven from Segment actions eggs pricing on offset improved and to the driven the grew effect produce. million, growth, pass-through pricing cost growth to sales benefiting spot higher outpace volume reflects and as of to market. which EBITDA net inflation higher the mitigated average $XXX volume avian of grew pricing an Foodservice, combined and net the growth Revenue cost pricing of procure X% to to respectively. XX% impact impact adjusted

volumes limited and average availability Willamette margins. increases that Farms for egg X%. levels the dish -- elevated and Refrigerated is the sales volumes avian us free meet XX%, influenza XX% cost volumes holiday allowed Egg sales selling Egg increased all net inventory average Pricing improved reflecting that actions pricing decreased demand Side case both products. divested X%. from volume to increased decline Note increased retail season. hurt drove business, net net while net and across in excluding X%, volumes increased

EBITDA from offset inflation. improved benefits. adjusted levers. also Segment advertising promotion cost these The significant primarily Higher to XX%, increased drove of benefiting to offset and manufacturing volumes reinstatement access wasn't

profitability $XX million we flow. generated cash quarter, profitability the versus year-over-year by capital. driven was from -- working first higher In to by higher Turning and operations continuing offset

turn Our net decreased adjusted X.X quarter leverage by this in times half to growth EBITDA. a driven

our at $XX repurchased quarter, per million an average In the at Moving an and of of average capital our on share shares approximately price XXX,XXX to of allocation. discount debt $XX first we of XX%.

share our under authorization. remaining repurchase million $XXX have We

the With over to that, back to questions. like turn for the operator I would call

Operator

Instructions] take first Lazar [Operator Barclays. from our question We'll Andrew with

Andrew Lazar

everybody. morning, Good

Rob Vitale

Hey, morning, good Andrew.

Matt Mainer

morning. Good

Andrew Lazar

in you rate. elevated. for Foodservice first XQ, And well obviously I as normalized think it And I XQ. in the you segment think did still as of to obviously about a run strong the start, similarly talked XQ, didn't come guess you expect XQ, as quarter you as fiscal I see what be strong EBITDA to said was but ahead Rob,

little drivers EBITDA business as same trying I'm sense color more I get different? keep in outperformance? XQ the beyond? from to a of a on or that guess of bit XQ And this would what So level fiscal into it or drove Was that what delivering

Rob Vitale

bit patterns identical longer. virtually some has has to And the we normal think is that occurrences that were XQ I that longer The influenza impact caused linger of the the been outside expected, to a there seasonal avian than Q. some have first are persisted that drivers reality

So a longer. that could persist bit

think and giving We But we have driving and really that on that non-related have is the the you number. XQ are you and EBITDA XQ. to between strip a perspective to business tried give a conditions changed out not that sustainable what

Andrew Lazar

those Rob, in the you of weren't to advantage was competitors a as take able advantage say were. And being last is just I part of you conditions, quarter mean said supply that it let's -- position

shorter-term other that's piece guess into then part, just can But of of the you I things the was a hoping that's the So is it. little that the driving just bit for one procurement? I get pricing pricing profitability at spot what drive the versus for market a need higher pay period of time? you on to least detail in how the And helps

Rob Vitale

prices small cost in can affecting to separate breaking details to of stock. of has the want more Well, What dynamics. that don't do piece that, But get been tried it pricing the I is we so around There visibility some that quarter. into you is continue remain decline the get to elevated. have

Andrew Lazar

MOM given pricing Or still trading like that thought else distribution. you've a just trade volume seeing then previously I some there? Because pointed talked out something guess and and private of brands interesting purely obviously you sounds just even it down is the it though -- bag, is was function just And last in you're down trends about there that Okay. cereal was label? of elasticity? incremental down I shelf

Rob Vitale

had needed between of I be to MOM you dynamic fixed, been going and that price to gaps some correction see brands some fixed -- We private and should those label forward. since think have we expect

MOM peer dynamic the a simply price. while quite a bag, is as attractive point steeper entry ounce other on price is The per

levels. see a we more with of bit dynamic price start some balance migration of as would to the a year, seeing of go through point towards I the we're MOM opening brands But So that reverse. expect you

Andrew Lazar

Yes. Thank you.

Rob Vitale

Andrew. you, Thank

Operator

question We'll with Stifel. next take our from Chris Growe

Chris Growe

Hi, good morning.

Rob Vitale

morning, Good Chris.

Chris Growe

and Obviously, Foodservice is obviously is Hi. early performing And nice the well. a EBITDA and obviously, Rob, clearly which the guidance lot mentioned of in it ahead of in had that our predicts business. increased confidence here had you year model you in as expectations,

driver main initially for or the a what the for to the sense probably EBITDA was be get cite would retail that indicated of higher for little any than you the you just where want you refrigerator think other I of expected? whether year. the year performance PCB potential you're I seeing guidance that businesses stronger even a it

Rob Vitale

there's QX to One items. that, Yes. but is we to Well, for sure say remaining three would increased the reflect expectation we make our so quarters. want also I beat, the three then

Weetabix of uncertainty we U.S. we amount currency our would a the fairly have hit to incremental the and I is would is ongoing between have the Foodservice, first move it's P&L. -- meaningful but be, quarter. translation in Weetabix given that significant and second The sterling elasticities, pricing the specifically upside/outside pound the taken of in And in be dollars for course estimate then that relationship pricing the think Chris? still elasticity. yet the of potential the outside of revised The last

Operator

take… And we'll

Rob Vitale

All right. operator. Go ahead,

Operator

question next from our Sachs. Jason with take We'll English Goldman

Jason English

[Multiple Hey, folks. Speakers] quick Thanks morning, of questions. good for Couple

incremental do you will -- How thank that's to rate Foodservice, to progressing? take for to When do very color us shake to long much with run how capacity. you from most Can of up helpful. Foodservice, by get the speed So the mentioned expect importantly, running? growth you? And And much, that like coming up and bring levels? source the the business to on on it how you sticking way, off so for profit throw you be expect it you

Rob Vitale

to around online to million year, or very currently In so incremental so. reverse EBITDA. The $XX right the September are that we expectation million order, being going of we've talked about end the be it of XX-ish is $XX

Hope we capacity horizon, but full hedge a hedge will that We XXXX, early times every calendar are to give that better at do a of little to in met running and so that, that But want I'm up challenging. the a bit every will and far. are a bit. and year bit than by building calendar say be XXXX. that early to factory We've that the going milestone I little end it

Jason English

And some why we a Yes, side new like talk around dishes. of launches promotional mounting what refrigerated et your appreciate sort And cetera? Can price yes, I about label should would. into defend, more more a that? the context threat put sounds be private business. how expect you and looking intensity, to It that's not and Thank P&L whether you're to to impact there's back you. going or get from you

Rob Vitale

We've in continued would Private and Well, quite the be of warrant that. of irrespective category number label has expanded revisions been managing would our innovation, which levers of and pack worked. brand traditional advertising, of first tried been of in not the sizes times label. private all a think the more successful continued we presence

highlighting we've ever it environment is. bit in category because widespread it inflation a we’re a than this as are We in been with different of as

successful expect we that competition, So wanted we would to managing in incremental highlight be relatively is new. because but it it to

Jason English

question and Are founded I expecting we looking U.S. rising at maybe cost about when advertising those on centric side, food alluded you're cereal should residual price cereal? we abating coming we're mentioned seeing concerned be in last which us curve you more lot a a recovery. And compete, the think to of Or sort in? see you we see to bit expectations of I it seen the cost are think and and decent margin Cool.

Rob Vitale

position necessarily I that coming a incremental the for think from leaders our is bad category advertising in thing category. don't

support different marketing. and forms that interest compete packaging in-store think category I terms in overall maintain and we -- kind in we of need to the on order will of in with and

intensity. in promotional We're I as within don't to think a intensity And more range. sensitive So necessarily negative. advertising view any I that the way normal that's far than

Jason English

Makes sense. Thank you.

Rob Vitale

Thanks, Jason.

Operator

Michael question take from Lavery with We'll Piper Sandler. next our

Rob Vitale

Hi, Michael.

Michael Lavery

morning. Good you. Thank you. Thank

Rob Vitale

morning. Good

Michael Lavery

capacity Just a some you a of with helpful just though sort color year, one it's Where of in that. quick little up you would but on fiscal the lifts a to be year. flat that that Would this lift? super shake or like even early, ‘XX like clarification of on excluding bit next obviously the of for it'd even think with said be kind a driving

Rob Vitale

uncertainty in to when I What the particularly level. some to within that for $XX going is level of the will whether can the that is communicate sustainability to that the that level of whether achieved. of there your effect that not it's not We're as full-year of overall -- share XXXX, in that be incremental the we sit say million haven't we to But here today. extent yet granularity don't around We that to million $XX you precision factor EBITDA the matter. concern incorporates that's were capacity, we that trying

Michael Lavery

we we at quarter. see Is the No, margins, obviously, likely pressure color moderate might run over the kind of what Weetabix enough. the XQ about, rest all? the in rate you get fair think better? a that just Or to to about of yes, do that little expect magnitude indicative But of, talk Is the still. good on year. or When bit how this

Rob Vitale

or I level, maintain think a the where think be a but face will bit. margin choppy levels, we indicative At at we that plus there. gross level the With of minus. restored, inventory I margin we will that but EBITDA think may it here EBITDA fluctuate it's we be can Longer-term,

Michael Lavery

segment if segments clear, that one, that you one just helpful. that's this some the apply I that but And yet. missed pricing is or hasn't was may to? -- would hit last it mentioned P&L No, which Okay. have quick

Rob Vitale

retail. refrigerated and PCB

Michael Lavery

give And can the any of magnitude? you sense

Rob Vitale

rather into not No, that discussion pricing I'd this level get of in form.

Michael Lavery

Okay. Thanks so much.

Rob Vitale

you. Thank

Operator

next Palmer take with from ISI. question We'll David Evercore our

Rob Vitale

Hey, David.

David Palmer

something refrigerated I to back way the in but give about provides year, fiscal of earnings if going catch but leave shaping chain in an maybe ahead Thanks. all Thanks. are just you that the those Good progressing there's particularly price morning, perhaps be that for will this brands, for look of I'm not that's year improvements it out a to foodservice, hunches. be happen, ‘XX. get continuing we're know net some up in guidance up I give year but Rob. into wondering about the curious in is consumer and going and commodities that imagine power could to this supply you way I'm imprint could as an going would to sense ’XX? insights way that your is some ways

Rob Vitale

variables are asked answer The I think question and you you any it. better through on. don't just could I cadence the went spot than

David Palmer

quick. pricing but you get front that for that, far as when the of as That a you to that do quarter, have cereal, the a don't will to the -- Okay. on down With timing to Is was how think -- goes be commodities soon? start better?

Rob Vitale

quarter. Current

now the that builds So year. starts and throughout

David Palmer

Okay. Thank much. you very

Rob Vitale

Thank you, Dave.

Operator

over have I We turn time will the now for program closing allotted to back presenters or for Q&A. additional any remarks. our the reached

Rob Vitale

Thank and Goodbye. soon. you us you joining we'll all with speak for

Operator

That you for concludes today's participation. your Thank teleconference.

You may now disconnect.

Post (POST) 3 Feb 232023 Q1 Earnings call transcript