Successful Q3 inspires the outlook for 2022

ST. LOUIS – Post Holding, Inc. has raised its outlook for fiscal 2022 with successful third quarter results. The company raised its guidance for Adjusted EBITDA to $930-945 million from $910-940 million. Stimulus from the spin-off of the company’s stake in BellRing Brands, Inc. helped set the stage for Post’s stronger third-quarter earnings as it coped with “continued problems” in its supply chains alongside “historic levels of inflation.”

Post’s net income for the third quarter ended June 30 was $170.2 million, equivalent to $2.77 per common share, a dramatic increase from a loss of $54.3 million for the same period last year . The most recent quarter included $131.6 million in swap income and a $35.1 million gain on the BellRing investment.

Net sales increased 22.2% to $1.5 billion, up from $1.25 billion for 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’ve managed to largely offset the impact of inflation through pricing. Input costs remain volatile and we expect additional inflation and prices. We are confident that we can deliver the prices required. Margin percentages declined year-on-year, primarily due to the mechanics of our grain-based pricing model in hospitality, as well as a mix shift across our business portfolio.”

Segment profit in the company’s post-consumer branded business fell 7% to $81.8 million in the third quarter from $87.8 million. Net sales increased 23% to $574.7 million from $468.7 million.

“The North American cereal business continues to benefit from consumption strength in key brands such as Fruity Pebbles and Honey Bunches of Oats, as well as strength in private label and value,” said Mr. Vitale. “Our brand share reached 20% and the total private label reached 6.7%. As a reminder, we are by far the largest provider of private label ready-to-eat cereals. Recent innovation, particularly Premier Protein Cereals, has also been quite well received.”

Post-consumer branded volumes grew 13.9% in the quarter.

Segment profit at the Weetabix business declined to $27.8 million, down 3% from $28.6 million in the same period last year. 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 currency translation headwinds of nearly 1,100 basis points,” said Jeff A. Zadoks, executive vice president and chief financial officer. “Net sales benefited from significant list price increases and sales from the recently acquired brand (Lacka Foods Ltd.). These benefits were offset by an 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 for the quarter, up 65% from $27.9 million a year earlier. Net sales increased 33% to $579 million from $435.1 million in the third quarter. Growth in the foodservice business was fueled by distribution gains and higher take-out demand, Mr Zadoks said.

“Revenue growth continued to outpace volume growth as revenue reflects the impact of pricing actions and the impact of our pricing model of passing on raw material costs,” he said. “Although we saw year-over-year growth for the quarter, overall segment volume remained below pre-pandemic levels.”

Refrigerated retail segment profit was lower for 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 has been hurt by bird flu, Mr Vitale said.

“Cost increases in bird flu could not be passed through quickly enough,” he said. “However, the business has made great strides year after year. Keep in mind that last year due to our supply chain constraints we were not able to build up stock ahead of the important holiday season. We have expanded our capacities with third-party manufacturers and are well prepared for the coming 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. For 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. The average price per share during the nine month period was $103.79 before the BellRing distribution and $76.43 after the BellRing distribution. As of June 30, Post had $145.8 million remaining under its share repurchase approval.

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