POST - Earnings call transcript Q4 2024

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Operator

Welcome to the Post Holdings Fourth Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post. Please go ahead.

Daniel O'Rourke

Good morning. Thank you for joining us today for Post's fourth quarter fiscal 2024 earnings call. I'm joined this morning by Rob Vitale, our President and CEO; and Jeff Zadoks, our COO; and Matt Mainer, our CFO and Treasurer. and will press remarks, remarks is release on the Matt answer afterwards, is also and portions both questions. The filings SEC's your that investors available Jeff on make website website. and prepared we'll posted of the Rob, our SEC and the supports these

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

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

measures call these posted yesterday nearest reconciliation the turn website. With non-GAAP measure, a our issued on to For release our and see over Rob. the to will press I of GAAP that,

Robert Vitale

you, results adjusted with quarter Roughly of step have in a a proud finished by and growing resulted year. are Good half strong the fiscal 'XX seen morning, the half and Thank pet the last X of from fourth full change The years organic everyone. XX%. this from EBITDA for We Daniel. growth acquisitions contribution.

offerings caught FY pricing flow, $X billion improvement approximately 'XX, generating case. over Meanwhile, continued backdrop. points our to portfolio, pet we a addition, volume cash over We remarkable manufacturing our our business X and continue into acquisition this supply converted years. past sustain offsets free provide In price in the consumer to input made In strong growth and chains diversified the to costs. up challenging at start value-added product for our Xx

more than believe provided declines environment. FY highlighted, have have cash Meanwhile, FY attractive recent profit more has return reduced well we standpoint, remain last to with a cereal volumes we generation always consumers but the to I structure. our M&A over degree pressure. fairly the a lately with years. leveled, category high I allocation by degree an algorithmic valuation. we of will described capital normalized flow competitive therefore, good pipeline, with evaluate now the react. of If be in We opportunity extremely performance point. From respect 'XX growth operating are full a while deep. to turn of receded, and growth positioned the We experienced opportunities. to by X uses capital category right in a we're Inflation and a not the optionality under And reference remain capital We itself, In position Between is net our leverage expect we 'XX, presents it's to are very disciplined priced available. continue has

Sometimes created executed allocation. for overlooked significant They and is in increased ladder providing opportunities by the refinancings we runway aggressive to the option maturity value 'XX. more capital liquidity, our for added FY

his XXXX a to Jeff? to release. before we of over Jeff, lastly, press in promotion great yesterday's I exceptional strength and of continue our would operating our a me very offering our thank product like employees XXXX. The Finally, I management Matt it plan. And in confidence turning congratulate for give deal model, want announced on all our our to diverse that successful to team

Jeff Zadoks

trend. and rate higher were with in strong cereal, which annualized performance advertising with pre-COVID decline and an very cereal the grocery is we than a growth pricing line Thanks, from both QX and lower Major more the Within saw profit cost and drivers prior contributions good as their pet grew morning. PCB exceptional manufacturing closed sustained versus year. X.X%, year slow our strong Rob, valued in offsetting product category historical volumes out of offerings, to spend. category and relative

Our branded driven in to flat consumption private accrued and some benefit. grow to Gravy price label portfolio points distribution volumes given Train. Pet elasticity our continued by the reduced Nutrish and share a label X% our category, versus which, for private were category outperformed down roughly

with Our brands a sequential overall share continuing priority remained was out relatively our the show key which acquisition. flat stabilization, premium to coming of

the As beginning strengthening relaunch our Nutrish at closure we into brands, and cereal of plant on Lancaster fiscal We XXXX, our time to the off on premium by budget. attention stabilizing calendar move kicks the our we from shifted that year. our led completed of

optimization. we our While the this the our evaluate improves the our business November, for pet start TSA will further At to continue moved onto Smucker's own network exited utilization capacity of we systems. within cereal, and

far to While cutover thus disruption. soon without has declare victory, significant the been too

We food a in supply in service. eggs continued start-up. our to and from a strong HBAI-driven very led Moving both shake challenges our gains pullback quarter, were by up delivered traffic overcoming distribution X.X%, potatoes. volumes in manufacturing foot challenges restaurant constraints, Overall and

products led way, X.X%. egg precooked margin the highest Our up

expectations of While EBITDA as trailed twofold. did pricing on given were XXXX, this significant benefit year outperformance outperform expected, the set it our HBAI we the fiscal call. last prior in adjusted QX The drivers

stronger-than-expected mix. was First

our our to match of pricing adders. supply our ability to egg HBAI was cost imbalance utilize Second better our the inventory impacts with

our support year-over-year trade QX sequential control X% experienced volume cost course QX. We strong As we chain issues our manufacturing, to from dishes of less had improvement Refrigerated business. as saw expected, our recalibrated the corrected continue within support side spend. growth supply trade this despite and Retail business in in

Weetabix, volumes we QX our and as biscuits U.K. category year, heavier inventory lapped for at cereal back last promotion on year. our build branded this conversion X% for focused to pulled with ERP down we X% Lastly, the down quarter

read a off green we U.K. confidence it now We as ERP the inflation shoots progressing planned. indicates some new the standpoint, consumer our live levels on and early in are environment From improves. are seeing and is as macro

Matt. identified during of fiscal While opportunities to to recovery year margin cost-out the this the turn is encouraging, I'll our be multiyear XXXX. With to that, path call over continues execution

Matt Mainer

quarter EBITDA were and X%, sales Good billion adjusted increased net $X Jeff. $XXX morning, acquisitions. consolidated was Net million. Thanks, sales by driven everyone. Fourth

businesses our targeted offset the growth in lower primarily retail Excluding favorable our were investments volumes quarter due businesses. in overall volume marketing shift to were acquisitions, in sales increased foodservice. SG&A mix flat by in retail as and

manufacturing sales food increased QX current versus them. Segment of and X%, and year by decreased egg products. and X%, price for the Consumer and eggs. Refrigerated were and cheese Excluding X% net mix and benefits Favorable higher of the in serial volumes basis, products. sausage were performance declined reflection currency of X%, headwinds dish brands X%, net margin EBITDA Post reflect X%. a as mainly favorable strong stronger net trade non-biscuit we Deeside from cost in benefited volumes net Sales favorable and lower of Pet Revenue gains adjusted as shift benefit increased Pounds. sales currency decreased sales benefited the X% prior neutral EBITDA pet. decreased driven acquisition, manufacturing volumes and and net a the chain increased pet cost control. year. year Adjusted and precooked contribution points sales we the advertising by X%, Segment from increased side and distribution reflects increased shift lapped from and increased supply in year-over-year. branded volumes products. Smucker's and to led Average and products. year, food the in Weetabix performance X% pricing improved volumes decreased increased EBITDA while and mix basis increased decreased the we partially in offset foreign pet acquisition value-added due both X% pricing for elevated versus by year. Segment decreased prior potato ahead by primarily to losses manufactured sales retail repatriation adjusted egg X% by tailwind of These to X%. offset decline volumes spend grocery saw On egg current in driven distribution both The British X%, a and AB a XXX Foodservice volumes acquisition cost net EBITDA XX% higher adjusted volumes influenza prior Perfection

quarter, $XXX strong from cash net Turning had in spend. flow operations million cash to and generating free of CapEx $XXX approximately We flow. million another

we key and elevated plus optimization, generated for of capacity the R&D the approximately million capacity. $XXX net free behind safety, flow, year, expansion in food investments pet service network cash free For food cereal CapEx investments case fiscal of in and precooked

debt shares maintaining QX an pushed to management leverage what turned sheet billion in $X.X interest maturity in to at This balance while out approximately approximately to pullback XXXX From XXX,XXX temporary acted rates in of out of cash and share, average bringing at to at net our XXXX XXX%. bond repurchased our price debt. X.Xx. we per year issued our and added a a addition, fiscal we on be standpoint, price an shares average $XXX.XX X In total our million

to Q&A, have I get on our a comments fiscal we guidance. few Before XXXX

earnings we offsetting segments. On consolidated across night, between to release expect $X.XX As EBITDA 'XX year be $X.XX stated basis, last billion. in FY range be variations expect EBITDA the cadence balanced to we to quarterly in a billion of adjusted our the our with adjusted our

within on guidance back I in of the to will will for Finally, over same joining these of tailwind investments however, FY remains complete Most 'XX. Thank FY you in PCB million key elevated will and the that as be turn our and continue operator. some today, to we to 'XX. Foodservice 'XX, CapEx started million we the call spend $XXX there to investments us $XXX now

Operator

come Our Barclays. Lazar with from question Instructions] [Operator first Andrew will

Andrew Lazar

EBITDA not are lower-margin I at segments. top sort food more ultimately, point I declines line focus I But Rob, is, do enables right, past declines question are the sort for which opportunity over start know quarter, be top in obviously, the shift is continued the some to post this growth I decline much what in the growth a TSA there and concern of all that is reasons that other each capital some guess other realize different line in case, sort some of the or of businesses. growth's allocation. of line EBITDA more of than of of maybe in my margin maybe top once in sake. And line service know top and the leveraged. But on

Robert Vitale

over volume primarily volumes upward good our our don't cereal reduction. it we ] And really focused at more to do back -- believe a Sure. flash network. trends momentum. worry and manage to about we I same [ what do response with is as point time ability when time. an which deleveraged, a to business compiled have that have in closer we to not purchased but shrink the prosperity. having there's start We cereal, the footprint and issue the that because the plants have way have that But come the miles on business have I'm a to result, flexible we by argument shrink We're can't of On Foodservice go and ] the ways out become the but some of businesses. because optimizing the to portfolio volatility, respect -- margin -- we becomes of the longer most Meanwhile lower But from to no quite a will pretty strong this [ plants. think aggressively any capacity. is we

Andrew Lazar

Great. That's this like I'm I mass guess in categories label your wondering this third the seen you've private the earlier the really private private label saw their label categories. large quarter. week helpful. in channel something declined in volume if just in player in second,

latest it's guess where options to and I'm I puzzle at your running sort a stage of because where still excuses thoughts this of And bit the me. it's around on sort volume age-old going the out on it's question, what's going, a is of so of or

Robert Vitale

seen erosion not in of have private penetration. label our We any in terms categories

Eighth mentioned seen true So on it's think is Jeff in Avenue. as I private that [ cereal and as ] some growth the -- same label we've of

think it's category-by-category a much very I So question.

and of settling see the think down to able that terms I will will with to In the a volumes, norm, we to then stop down we post-election things reversion start settling be guessing. a inflation with that bit

Operator

Goldman Ken with Our next question JPMorgan. from come will

Kenneth Goldman

asking been eggs. need you've down. the went price volatile. about really the your in know your I on price, an wanted to that ag take your story, world. on your underlying how in start to Obviously, HBAI-type just price. Just the has What some I know latest talked thoughts ability some you've tell but market doesn't price by taken are past the take and to

just kind the again, on volatility And latest so wanted your given some I prices. market situation, thoughts that there to get just in of just we're of the seeing,

Robert Vitale

our of a customers, the pricing that to volatility less or taking compatriots offering. do value-added face And bag susceptible leave in when Shell occur, allocating cost we're are than they generally general, discretion. position to of in our we some But Well, because and we either obviously their we pressures. to

influenza, a market we while mitigated of value-added immune are are effect pricing the a pass-through from our not on terms and on both in so model, So basis. of avian basis we

Kenneth Goldman

Okay. And just shifting topics.

EBITDA products so As factors lower and and the we besides about your the and range, upper just think obvious for forth. of demand efficiencies end, operational the

Just think do you the toward a for about that end, in this any that phrase of factors your how might particular? factors better about toward x thinking year Are kind that upper lack key year end? that of lower bring unique there you're

Robert Vitale

need there's There threats think, our of pressure we see on the locations year of upon end. to aspects a that attention ERP that Evans to had bit back and We to to. of uncertainty. some dishes bring some we are number There's to when any pay side is the areas of But guidance got conversions strong. other, opportunities couple ended that lower been Bob build growth the in quite guidance little a one occurring of where I

end, range, ended at that's So the on rather but much we where algorithm high with low comfortable where function end soft, a we're you than of the of we very a start. our as little if the look it's

Operator

Smith Our next with Stifel. come question from will Matt

Matthew Smith

million. talked Again, you follow I talk Foodservice specifically a on specifically the being on Foodservice rate question the Can fiscal tough up for side, quarter, and last around wanted run year $XXX face levers for growth the you to about for the more EBITDA 'XX upcoming the EBITDA on pretty about you comparison.

business and your So from just for next expectations starting the understanding where you're year.

Robert Vitale

drivers key mix value-added in the volume greater migration are to Well, foot products. QSRs, traffic and secondly,

X within meeting the we of growth targets Foodservice. between comfortable feel trends, So those our

than AI just for. on a planned reaction as uncertainty. other pricing an just the something Now ledger, the side And we rather talked as is AI of about we

Matthew Smith

maybe a follow-up. And

the We haven't the progress manufacturing aseptic room continued footprint you're running Is improvement about shake the output today? business is in there? How talked on making the there still for there.

Robert Vitale

lot of in for output. a improvement the room There's continued

rate. our run at We than running are lower expected

had to challenges the equipment. we expect the of later run We to to in lead get year the to replacement We've about And challenges and receiving in times 'XX, with fact. deliver. parts to We've half issues in closer getting labor parts had that critical than delay a led some second a is expected. have rate some we've run then with which year FY all finally, some need to rate had we

Operator

Our next Piper Michael question with will come Sandler. Lavery from

Michael Lavery

on through? timing able there a that us just think could the like planned perfection give you savings exceeding might is to I bit. but the your or some be of of about how of pet doubling coming what Can should and a we approach sense little what rearrange efficiencies the your more and look also how deal, than with touched You geographical EBITDA, think you're kind

Robert Vitale

in if the looking built are and we X by that Well, at both network right Smucker had have I acquired that the we and acquisitions been the still ultimately, geography. to trying think, determine we

So there's that be Perfection in manufacturing part network to some to to and opportunity continue Western optimization acquisition distribution. gain done. will work The an access was

also a It was co-man. was network it So an entry opportunity. into

move ultimately the some likely customers. business delivering optimal shrink out of co-man some west our of and for we We to determine as what business will is that our footprint

the So embedded we've 'XX guidance. in that FY

work. that I network from won't that come complete when think additional 'XX we until benefit optimization

Michael Lavery

significant really That's had Weetabix, ago. those pressure helpful. years And at pretty X looking margins Okay. just some

can long for that think kind of what margins of back, the to caused terms runway take? in and get back that -- should had, the you might some of how you we You've

Matt Mainer

Yes.

QX, in QX little current see to that at a half ERP we that in again, cost in and looking multi-journey we're the talked of going as our that simplify year, level. when year conversion. think the of of we saw about get we the disruption QX conversion around portfolio. and big given to multiyear our is. momentum margin, what regain say bit out. about the done kind back that to So identify to work talked as we've to of I'd And That's some put on cost little a multiyear a we or a But journey, how and couple expect just pressure some you towards path out little a sequential and the back certainly probably a opportunities bit along XX% about we've path a And would X-year

Operator

Palmer question next Evercore from will ISI. Our come David with

David Palmer

to the at type all you refrigerated, single-digit down XX data, last consumption low were looking consumption at doing in weeks. pet, if the look we're Just cereal,

So maybe consistent starting points.

your -- do had your looking to terms If those the organic growth sequentially What of for fiscal that guess from out each plan how to you likelihood plans you in here? through are the may likelihood 'XX. return what's playing plans, be And growth? at going areas of

Robert Vitale

cereal as Well, in we think tend very single-digit of long-term sequential decline. to low

X% and between it in But bearish categories, for X%. we it a think bit our X% expect we 'XX. other term, So range. some with of our X% more be And We've to assumptions growth. to gets to longer been that

David Palmer

that well. you're 'XX fiscal thinking as about for And how it

Robert Vitale

Yes.

David Palmer

in impact with I I to to was rough and you big Dunkin, was and hasn't Starbucks thing yet better in It's was better getting know getting quarter really ask we've with Dunkin. about in players. seen degree of what wanted it value-add are those I line those some the for top a other bracing that The for Foodservice, people been Starbucks. really of It demand pick on type And for because do if as really animal the the that of type quarter and much better EBITDA. year how QSR see, wondering in get a lot how the a the Starbucks get that are I'm run here. up anticipating, is spirits much million could per -- example, margins help if $XXX variable from customers. big we rate

Robert Vitale

Well, that be the that is benefit that to in they of particular tend you named products. the accounts more value-added growth

the of benefit volume, of benefit the of there's the So and absorption benefit mix.

is So on in that, out We that not term term. to short the changes show that coming in the us benefits spirits some use of extent plan trends do to major meaningfully. your animal vibrancy there

term. So we intact that kind tend is to longer opportunity keep trend assume the and of

Operator

with Our next Baumgartner from question John will come Mizuho.

John Baumgartner

Rob, I assess some future in whether I the by reinvestment you have across think, branded to thinking and back sort of And business? are now, as sort for brands, smaller or you're private tier to producer label you landscape, wanted it's your terms pet, development, that the of accelerate deploy inherent to come or think price rebranding alternatively, you willing assets, or in you business. much the How drive a efforts how being do in about of just brands. best-in-class to growth value manufacturing

your Just and the pursuing relative the each thoughts risks sort relative on capital, on entailed those and of returns paths. of rewards

Robert Vitale

term, When in and job good we think the of sure look have are to we we some longer perspective the we're some channels, investment whether opportunity need I that they back do the for appropriately. our to plants. or the investment is and I to all, our at go productivity baked a already guidance. step you into be there may assets A manufacturing opportunities there portfolio shrinking of them. meaningful is -- case that question short an a FY fewer relaunching amount in greatest to is Well, the term, period think asset 'XX had time, neglect other or suffered existing to first willing are answer and drive that make have, brands. the the may Those greater of premium if use private from do label be, certainly But at utilization opportunities and we also contract the assets whatever more your look behind

category as at the way inorganic direction growth because rich remains wouldn't an We in about just the presume and I in another organic opportunity growth that growth So opportunities. then with we've both area X yet. to some look show talked or some

that saw to probably are us, You we a point price and makes that sense more there one others in yesterday, are those. for evaluate continue

drive look at both that that can and certainly we we an we So for it acquire. growth, can ourselves as opportunity

John Baumgartner

Okay.

whipsaws fundamentals eggs Okay. potatoes. And you referenced bit discuss retail of the more, dislocations really Foodservice, excess sustaining some a in segment, then are given do found either value the at we're marginal potatoes of deep do you QSRs. of see good potato mean, still seeing value-added frozen segment? How Is seeing about capacity, industry, the changing momentum of just on refrigerated you interest? Can growth distribution the the the the you're within you and the promotions the for the sort business? challenging these of you I growth conversations the accelerating guess, new I How think or some with operators? side there in

Robert Vitale

I think than it's the category business. a different frozen Well,

users users. So we And we on succeed fresh value-added tend by that to converting to from no trend. pressure see

of and service trend. making more where we the of seeing So from a competitive to are are on feel some on with Where margin But a perspective, the very side, growth both is Potatoes volume food some all believe are a dynamics side. we a we comfortable pressure Foodservice, that the volume it and retail continue trends Refrigerated, challenging. segment. bit that the

Operator

come will question with Dickerson Jefferies. Rob next Our from

Robert Dickerson

Great.

categories. made kind better. as at adds, in the right, comment But quick hopefully, the little simple. bit first, year, question, kind get within the right? start comment a pressure, to next a bottom should the kind a of of EBITDA kind Maybe some Just guide of gets of we We the the kind consumer through that volume for we least balanced the these of year find then kind a you of year, expect you fairly I made per also of It's think quarter. just EBITDA

a Is fair? maybe the as gets that that of EBITDA guide the expectation of little maybe revenue just stays similar kind just hopefully kind So growth better bit simplistically, of within like fashion. is year, get the but in a we kind through

Matt Mainer

not significant that's in think changes I in forecasting our I again, plan. we're Rob fair. trajectories current volume think mentioned I really mean,

have level got year in it's get as So some But we half the like is status cereal into or of from changes like down more come some late. we're of example, as next think, do have terms our year, we X% back an lifts of X% we this quo transitory, X% so But a of category in really being into and of guidance to seen as of now. terms in normalize down that any seeing to that. in again, category significant right don't the

Robert Dickerson

Okay. Good. Fair enough. And then just secondly, on cereal.

the just decline comment is now guess, earlier around made bad, bit. little less starting, rate You just The get was that of to kind improving. kind I of just right? is unpack of a Maybe

you're you Just profit cereal, what opportunity? just margin which of let's a and promotional could say, we slight And you're it a to if not just levels to of the attractive understand scaled were is get category maybe also to opportunity seeing in just respect it to of to given back, to competitive not or activity, profit secular is our say, through of were trying kind though normalize, it, Even for also right? you category, go projecting back kind flat it really that's volume just fairly maybe down are let's go attractive speak is as that up on if more year, let's with like of big kind to stepping a if kind category? declining I'm like say, next

Matt Mainer

to meaningful Obviously, level retailers think of or Yes, category get around something our that I or think business, you that, terms we of return point end in I'd some expect, put in if hearing a to to to environment. is have be pretty as shelf any But the the in But rational more would say we're the additional we slight remain where -- a rational more from flat it's now, of second of seeing get sure, distribution. for space would about it currently right from can as terms standpoint. what promotional Sure. be in the category, competitors growth we're that. that,

Operator

Our next come Fargo. question Marc Torrente with will from Wells

Marc Torrente

to you those some algorithm. it appears of to to would of puts of 'XX outlook. call layering on that in changes then could and drivers there the above X% where Looking out. Maybe context the takes EBITDA those at some your be base And growth segments with EBITDA targets recent expect rebalanced to any on underlying other X% presentation, you frame guide, long-term here, the bridging longer-term the help or you the below then

Matt Mainer

Sure.

So the we accelerated that prior a in Obviously, what I than coming ago, I had we pet. in our think lot around updates we we and what think growth made we given significant expected. year just more PCB saw presentation of growth a more over-deliver

and that. you but see time terms growth think be network over the We've half a commodity in and well. Weetabix, driven more The lower and in base, horizon will some continue pullback a recalibrated high other CAGR. to optimization see is we portfolio back last on we order, Foodservice, category more that flat that in it category line by driver our X-year out both exposed out provide that. challenges a projects I driven about be a that the rate, And get startup, when updated margin. a think, obviously, X%. shake year as a just still past are portfolio, the sides. over like we'll the the in simplification we that's is the you the for off we half and that and get to to in X% have Again, Refrigerated same. of updated single we've but So we in a given growth again, by And pet the cost of the rate really identified think through talked seen that's that cost to working and digits. growth confident we'll driven combined then cereal that of we about, by flattening growth portfolio growth, historical really and gets we've in We in little X% the with co-man much that's and

this year-over-year, to terms exception the I to see with of generating the would we cause of fiscal them In is Weetabix, said, relation a conversion think drag algo. say that in the like growth ERP don't year, going I so

then think, disruption the in conversion potentially then line we little over cause from changing I with of been a definitely expect about the our some And terms Smuckers Nutrish think the the in now. also X, of other shelf. The the more within midpoint. some But live [indiscernible] half guidance reset year conservative as that you right about in have, given talked second we're think reset more of again, and the pet, obviously, side conservatism the I of algo some higher we've algo with is combined and we on to ERP the new Rob around that

Marc Torrente

That's helpful. some And cycle this profitable color long business. out on the continue then through? called losses those some Any products. areas there, very more shift of the will retail, of and distribution And refrigerated Okay. you backfill will lower-margin some look to just focus you on more to impact how to or

Matt Mainer

Sure.

in was and that cheese. eggs So

in lapped side year. cheese of QX to in the fiscal business things, continue Again, a of that's alternatives we terms there. this that On evaluate of we

QX. of side egg We've loss the things, improved lap distribution that on in think supply. we I will

days, there avian is a business. these We've the challenge spot. elevated in that pressure some general which prices and better are in influenza supply extremely egg put think I got on

say, get pricing. can So egg in environment I'd terms I of opportunities think some, normal if more we

Operator

Please we Conference and conclude This Holdings disconnect today's XXXX Earnings Q&A Call time, of Post this time, reached Webcast. this day. session. your line at end you. have a the also Fourth have Quarter will Thank At our wonderful and

Post (POST) 15 Nov 242024 Q4 Earnings call transcript