September 26, 2022
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Successful Q3 buoys Post 2022 outlook

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ST. LOUIS — Showing successful results in the third quarter, Post Holding, Inc. has raised its outlook for fiscal year 2022. The company elevated its guidance for adjusted EBITDA to $930 million to $945 million from $910 million to $940 million. Momentum from the spin-off of the company’s interest in BellRing Brands, Inc. helped provide the basis for Post’s stronger third-quarter earnings as it navigated “lingering problems” in its supply chains alongside “historical levels of inflation.”

Net income at Post in the third quarter ended June 30 was $170.2 million, equal to $2.77 per share on the common stock, up dramatically from a loss of $54.3 million in the same period a year ago.  The most recent quarter included income from swaps of $131.6 million and a $35.1 million gain on the investment in BellRing.

Net sales increased 22.2% to $1.5 billion, up from $1.25 billion in the same period a year ago.

“Post had a successful quarter,” Robert V. Vitale, president and chief executive officer, said during an Aug. 5 conference call with analysts. “We are building momentum for the final quarter of the year and into next year.

“First, we have largely managed to offset the impact of inflation with pricing. Input costs remain volatile, and we anticipate additional inflation and additional pricing. We are confident in our ability to deliver the needed pricing. Percentage margins declined year-over-year primarily resulting from the mechanics of our grain-based pricing model in foodservice as well as a mix shift in our overall business portfolio.”                   

Segment profit within the company’s Post Consumer Brands business fell in the third quarter to $81.8 million, down 7% from $87.8 million. Net sales increased to $574.7 million, up 23% from $468.7 million.

“North American cereal business continues to benefit from consumption strength in key brands like Fruity Pebbles and Honey Bunches of Oats as well as strength in private label and value,” Mr. Vitale said. “Our branded share reached 20%, and total private label reached 6.7%. Recall, we are by far the largest provider of private label ready-to-eat cereal. The recent innovation, most specifically Premier Protein cereal, has also been quite well received.”

Volumes in the Post Consumer Brands business increased 13.9% in the quarter.

Segment profit in the Weetabix business eased to $27.8 million, down 3% from $28.6 million in the same period a year ago. Net sales increased 1% to $124.9 million from $123.4 million.

“Weetabix net sales increased 1% despite a significantly stronger US dollar against the British pound, which caused a foreign currency translation headwind of nearly 1,100 basis points,” said Jeff A. Zadoks, executive vice president and chief financial officer. “Net sales benefited from the significant list price increases and sales from recently acquired (Lacka Foods Ltd.) brand. These benefits were offset by unfavorable mix reflecting growth in private label products.”

In April, Post acquired Lacka, a UK-based distributor of high-protein, ready-to-drink shakes.

Foodservice profit totaled $45.9 million in the quarter, up 65% from $27.9 million a year ago. Net sales in the third quarter increased 33% to $579 million from $435.1 million. Growth in the foodservice business was lifted by distribution gains and higher away-from-home demand, said Mr. Zadoks.

“Revenue growth continued to outpace volume growth as revenue reflects the impacts of pricing actions and the effect of our commodity cost pass-through pricing model,” he said. “Although we saw year-over-year growth in this quarter, total segment volumes remained below pre-pandemic levels.”

Segment profit in Refrigerated Retail was lower in the quarter, falling 27% to $10.4 million from $14.3 million. Net sales increased 12% to $246.4 million from $220.8 million. The Refrigerated Retail segment was hurt by the avian flu, Mr. Vitale said.

“Avian Influenza cost increases could not be passed through quickly enough,” he said. “However, the business made great strides year-over-year. Recall that last year, our supply chain limitations left us unable to build inventory ahead of the key holiday season. We have expanded our capacity with third-party manufacturers, and we are fully prepared for the upcoming season.”

During the three months ended June 30, Post repurchased 1.9 million shares for $145.8 million at an average price of $76.43 per share. During the nine months ended June 30, Post repurchased 3.8 million shares for $338.9 million at an average price of $89.94 per share. Average price per share during the nine-month period was $103.79 prior to the BellRing distribution and $76.43 after the BellRing distribution. As of June 30, Post had $145.8 million remaining under its share repurchase authorization. 



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