Post Holdings Reports Results for the Third Quarter of Fiscal Year 2024; Raises Fiscal Year 2024 Outlook

ST. LOUIS, Aug. 1, 2024 /PRNewswire/ -- Post Holdings, Inc. (NYSE:POST, Financial), a consumer packaged goods holding company, today reported results for the third fiscal quarter ended June 30, 2024.

Highlights:

• Third quarter net sales of $1.9 billion
• Operating profit of $203.2 million; net earnings of $99.8 million and Adjusted EBITDA (non-GAAP)* of $350.2 million
• Raised fiscal year 2024 Adjusted EBITDA (non-GAAP)* outlook to $1,370-$1,390 million

*For additional information regarding non-GAAP measures, such as Adjusted EBITDA, Adjusted net earnings, Adjusted diluted earnings per common share and segment Adjusted EBITDA, see the related explanations presented under "Use of Non-GAAP Measures" later in this release. Post provides Adjusted EBITDA guidance only on a non-GAAP basis and does not provide a reconciliation of its forward-looking Adjusted EBITDA non-GAAP guidance measure to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including the adjustments described under "Outlook" below.

Basis of Presentation

On April 28, 2023, Post completed its acquisition of a portion of The J. M. Smucker Company's ("Smucker") pet food business ("Pet Food"), the results of which are included in the Post Consumer Brands segment. On December 1, 2023, Post completed its acquisition of substantially all of the assets of Perfection Pet Foods, LLC ("Perfection"), the results of which are also included in the Post Consumer Brands segment. On December 1, 2023, Post completed its acquisition of Deeside Cereals I Ltd ("Deeside"), the results of which are included in the Weetabix segment.

Third Quarter Consolidated Operating Results

Net sales were $1,947.7 million, an increase of 4.7%, or $88.3 million, compared to $1,859.4 million in the prior year period. Net sales included $436.4 million and $275.3 million in the third quarter of 2024 and 2023, respectively, in net sales from acquisitions completed in fiscal years 2024 and 2023. Excluding the benefit from acquisitions in the current and prior year periods, net sales declined in Post Consumer Brands (driven by volume declines in branded and non-retail cereal), Weetabix (driven by declines in branded products), Foodservice (driven by the reduction of avian influenza pricing and the pass-through of lower grain and egg market prices) and Refrigerated Retail (driven by lower net pricing). Gross profit was $577.3 million, or 29.6% of net sales, an increase of 15.1%, or $75.7 million, compared to $501.6 million, or 27.0% of net sales, in the prior year period.

Selling, general and administrative ("SG&A") expenses were $324.5 million, or 16.7% of net sales, an increase of 7.8%, or $23.6 million, compared to $300.9 million, or 16.2% of net sales, in the prior year period. The increase was primarily driven by the inclusion of Pet Food. Operating profit was $203.2 million, an increase of 28.4%, or $44.9 million, compared to $158.3 million in the prior year period.

Net earnings were $99.8 million, an increase of 11.4%, or $10.2 million, compared to $89.6 million in the prior year period. Net earnings included the following:

Diluted earnings per common share were $1.53, compared to $1.38 in the prior year period. Adjusted net earnings (non-GAAP)* were $103.1 million, compared to $104.0 million in the prior year period. Adjusted diluted earnings per common share (non-GAAP)* were $1.54, compared to $1.52 in the prior year period.

Adjusted EBITDA was $350.2 million, an increase of 3.5%, or $12.0 million, compared to $338.2 million in the prior year period.

Nine Month Consolidated Operating Results

Net sales were $5,912.6 million, an increase of 17.2%, or $867.0 million, compared to $5,045.6 million in the prior year period. Gross profit was $1,729.5 million, or 29.3% of net sales, an increase of 30.0%, or $399.2 million, compared to $1,330.3 million, or 26.4% of net sales, in the prior year period.

SG&A expenses were $988.7 million, or 16.7% of net sales, an increase of 28.6%, or $219.8 million, compared to $768.9 million, or 15.2% of net sales, in the prior year period. SG&A expenses in the nine months ended June 30, 2024 included $26.5 million of integration costs, which were primarily related to the Pet Food acquisition and were treated as adjustments for non-GAAP measures, and $8.6 million of restructuring and facility closure costs, which were primarily related to the scheduled closing of Post's cereal manufacturing facility in Lancaster, Ohio and were treated as adjustments for non-GAAP measures. Operating profit was $602.6 million, an increase of 35.1%, or $156.7 million, compared to $445.9 million in the prior year period.

Net earnings were $285.1 million, an increase of 21.0%, or $49.5 million, compared to $235.6 million in the prior year period. Net earnings included the following:

Diluted earnings per common share were $4.36, compared to $3.82 in the prior year period. Adjusted net earnings were $318.6 million, compared to $247.2 million in the prior year period. Adjusted diluted earnings per common share were $4.73, compared to $3.71 in the prior year period.

Adjusted EBITDA was $1,054.9 million, an increase of 19.3%, or $170.5 million, compared to $884.4 million in the prior year period.

Post Consumer Brands

North American ready-to-eat ("RTE") cereal, pet food and peanut butter.

For the third quarter, net sales were $1,008.1 million, an increase of 15.7%, or $136.8 million, compared to the prior year period. Net sales included $428.9 million and $275.3 million in the third quarter of 2024 and 2023, respectively, attributable to acquisitions. Excluding the benefit from acquisitions in both periods, volumes decreased 6.0%, primarily driven by declines in branded and non-retail cereal. Segment profit was $128.6 million, an increase of 54.9%, or $45.6 million, compared to the prior year period. Segment Adjusted EBITDA (non-GAAP)* was $193.5 million, an increase of 27.8%, or $42.1 million, compared to the prior year period.

For the nine months ended June 30, 2024, net sales were $3,062.2 million, an increase of 51.2%, or $1,037.1 million, compared to the prior year period. Segment profit was $401.0 million, an increase of 68.6%, or $163.2 million, compared to the prior year period. Segment Adjusted EBITDA was $582.3 million, an increase of 53.8%, or $203.6 million, compared to the prior year period.

Weetabix

Primarily United Kingdom ("U.K.") RTE cereal, muesli and protein-based shakes.

For the third quarter, net sales were $136.1 million, an increase of 1.4%, or $1.9 million, compared to the prior year period. Net sales included $7.5 million in the third quarter of 2024 attributable to Deeside and reflected a foreign currency exchange rate tailwind of approximately 80 basis points. Excluding the impact of Deeside, volumes decreased 5.6%, primarily driven by decreases in branded products. Segment profit was $24.1 million, an increase of 34.6%, or $6.2 million, compared to the prior year period. Segment Adjusted EBITDA was $34.2 million, an increase of 23.9%, or $6.6 million, compared to the prior year period.

For the nine months ended June 30, 2024, net sales were $403.2 million, an increase of 6.9%, or $26.0 million, compared to the prior year period. Segment profit was $63.2 million, an increase of 7.5%, or $4.4 million, compared to the prior year period. Segment Adjusted EBITDA was $92.6 million, an increase of 8.6%, or $7.3 million, compared to the prior year period.

Foodservice

Primarily egg and potato products.

For the third quarter, net sales were $589.1 million, a decrease of 5.4%, or $33.6 million, compared to the prior year period. Volumes increased 1.5%, reflecting increases due to distribution gains in both eggs and potatoes. Segment profit was $89.6 million, a decrease of 16.8%, or $18.1 million, compared to the prior year period. Segment Adjusted EBITDA was $120.4 million, a decrease of 16.7%, or $24.1 million, compared to the prior year period.

For the nine months ended June 30, 2024, net sales were $1,711.0 million, a decrease of 7.8%, or $145.4 million, compared to the prior year period. Segment profit was $229.8 million, a decrease of 13.3%, or $35.1 million, compared to the prior year period. Segment Adjusted EBITDA was $327.9 million, a decrease of 9.8%, or $35.6 million, compared to the prior year period.

Refrigerated Retail

Primarily side dish, egg, cheese and sausage products.

For the third quarter, net sales were $214.4 million, a decrease of 7.1%, or $16.3 million, compared to the prior year period. Volumes decreased 0.5%, as growth in side dishes was offset by distribution losses in lower margin egg products. Volume information by product is disclosed in a table presented later in this release. Segment profit was $5.1 million, a decrease of 71.7%, or $12.9 million, compared to the prior year period. Segment Adjusted EBITDA was $23.3 million, a decrease of 37.2%, or $13.8 million, compared to the prior year period.

For the nine months ended June 30, 2024, net sales were $735.7 million, a decrease of 6.4%, or $50.7 million, compared to the prior year period. Segment profit was $63.1 million, an increase of 10.3%, or $5.9 million, compared to the prior year period. Segment Adjusted EBITDA was $117.4 million, an increase of 0.7%, or $0.8 million, compared to the prior year period.

Interest, Gain on Extinguishment of Debt, (Income) Expense on Swaps and Income Tax

Interest expense, net was $78.8 million in the third quarter of 2024, compared to $72.7 million in the third quarter of 2023. Interest expense, net was $236.9 million in the nine months ended June 30, 2024, compared to $202.4 million in the prior year period. The increase in interest expense, net in the nine months ended June 30, 2024 was primarily driven by higher average outstanding principal amounts of debt, a higher weighted-average interest rate and lower interest income compared to the prior year period.

Gain on extinguishment of debt, net of $1.8 million and $4.6 million was recorded in the three and nine months ended June 30, 2024, respectively. Gain on extinguishment of debt, net of $6.4 million and $21.2 million was recorded in the three and nine months ended June 30, 2023, respectively, primarily in connection with Post's partial repurchase of its 4.50% senior notes due September 2031 and 4.625% senior notes due April 2030.

(Income) expense on swaps, net relates to mark-to-market adjustments on interest rate swaps. Income on swaps, net was $3.1 million in the third quarter of 2024, compared to $17.1 million in the prior year period. Expense on swaps, net was $4.7 million in the nine months ended June 30, 2024, compared to income of $20.4 million in the prior year period.

Income tax expense was $31.7 million in the third quarter of 2024, an effective income tax rate of 24.1%, compared to $26.8 million in the third quarter of 2023, an effective income tax rate of 21.4%. Income tax expense was $88.8 million in the nine months ended June 30, 2024, an effective income tax rate of 23.7%, compared to $70.4 million in the prior year period, an effective income tax rate of 22.1%.

Share Repurchases and New Share Repurchase Authorization

During the third quarter of 2024, Post repurchased 2.0 million shares of its common stock for $207.9 million at an average price of $104.18 per share. During the nine months ended June 30, 2024, Post repurchased 2.5 million shares for $252.7 million at an average price of $100.71 per share. Subsequent to the end of the third quarter of 2024 through July 31, 2024, Post repurchased 0.3 million shares for $36.4 million at an average price of $105.43 per share. On July 30, 2024, Post's Board of Directors approved a new $500 million share repurchase authorization. Share repurchases under the new authorization may begin on August 5, 2024. As of July 31, 2024, Post had $147.7 million remaining under its existing $400 million share repurchase authorization, which became effective on February 5, 2024 and will be cancelled effective August 4, 2024.

Repurchases may be made from time to time in the open market, in private purchases, through forward, derivative, accelerated repurchase or automatic purchase transactions, or otherwise. Any shares repurchased would be held as treasury stock. The authorization does not, however, obligate Post to acquire any particular number of shares, and repurchases may be suspended or terminated at any time at Post's discretion.

Outlook

For fiscal year 2024, Post management has raised its guidance range for Adjusted EBITDA to $1,370-$1,390 million from $1,335-$1,375 million. Post management expects fiscal year 2024 capital expenditures to range between $420-$445 million, which includes Foodservice investment in the expansion of the Norwalk, Iowa precooked egg facility and the start of the Phase II expansion of the Bloomfield, Nebraska cage-free egg facility, for aggregate expenditures of $100-$110 million. This also includes $90-$100 million for Pet Food quality, safety, capacity, pilot plant and distribution network investments and approximately $20 million related to the scheduled closing of the Lancaster, Ohio cereal manufacturing facility.

Post provides Adjusted EBITDA guidance only on a non-GAAP basis and does not provide a reconciliation of its forward-looking Adjusted EBITDA non-GAAP guidance measure to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for income/expense on swaps, net, gain/loss on extinguishment of debt, net, integration and transaction costs, mark-to-market adjustments on commodity and foreign exchange hedges and equity securities, equity method investment adjustment and other charges reflected in Post's reconciliations of historical numbers, the amounts of which, based on historical experience, could be significant. For additional information regarding Post's non-GAAP measures, see the related explanations presented under "Use of Non-GAAP Measures."

Use of Non-GAAP Measures

Post uses certain non-GAAP measures in this release to supplement the financial measures prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP"). These non-GAAP measures include Adjusted net earnings/loss, Adjusted diluted earnings/loss per common share, Adjusted EBITDA, segment Adjusted EBITDA, Adjusted EBITDA as a percentage of Net Sales and segment Adjusted EBITDA as a percentage of Net Sales. The reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measure is provided later in this release under "Explanation and Reconciliation of Non-GAAP Measures."

Management uses certain of these non-GAAP measures, including Adjusted EBITDA and segment Adjusted EBITDA, as key metrics in the evaluation of underlying company and segment performance, in making financial, operating and planning decisions and, in part, in the determination of bonuses for its executive officers and employees. Additionally, Post is required to comply with certain covenants and limitations that are based on variations of EBITDA in its financing documents. Management believes the use of these non-GAAP measures provides increased transparency and assists investors in understanding the underlying operating performance of Post and its segments and in the analysis of ongoing operating trends. Non-GAAP measures are not prepared in accordance with GAAP, as they exclude certain items as described later in this release. These non-GAAP measures may not be comparable to similarly titled measures of other companies. For additional information regarding Post's non-GAAP measures, see the related explanations provided under "Explanation and Reconciliation of Non-GAAP Measures."

Conference Call to Discuss Earnings Results and Outlook

Post will host a conference call on Friday, August 2, 2024 at 9:00 a.m. ET to discuss financial results for the third quarter of fiscal year 2024 and fiscal year 2024 outlook and to respond to questions. Robert V. Vitale, President and Chief Executive Officer, Jeff A. Zadoks, Executive Vice President and Chief Operating Officer, and Matthew J. Mainer, Senior Vice President, Chief Financial Officer and Treasurer, will participate in the call.

Interested parties may join the conference call by dialing (800) 343-4136 in the U.S. and (203) 518-9856 from outside of the U.S. The conference identification number is POSTQ324. Interested parties are invited to listen to the webcast of the conference call, which can be accessed by visiting the Investors section of Post's website at www.postholdings.com.

A replay of the conference call will be available through Friday, August 9, 2024 by dialing (800) 934-2127 in the U.S. and (402) 220-1139 from outside of the U.S. A webcast replay also will be available for a limited period on Post's website in the Investors section.

Prospective Financial Information

Prospective financial information is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the prospective financial information described above will not materialize or will vary significantly from actual results. For further discussion of some of the factors that may cause actual results to vary materially from the prospective financial information provided in this release, see "Forward-Looking Statements" below. Accordingly, the prospective financial information provided in this release is only an estimate of what Post's management believes is realizable as of the date of this release. It also should be recognized that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecasted. In light of the foregoing, the information should be viewed in context and undue reliance should not be placed upon it.

Forward-Looking Statements

Certain matters discussed in this release and on Post's conference call are forward-looking statements, including Post's Adjusted EBITDA outlook for fiscal year 2024 and Post's capital expenditure outlook for fiscal year 2024. These forward-looking statements are sometimes identified from the use of forward-looking words such as "believe," "should," "could," "potential," "continue," "expect," "project," "estimate," "predict," "anticipate," "aim," "intend," "plan," "forecast," "target," "is likely," "will," "can," "may" or "would" or the negative of these terms or similar expressions, and include all statements regarding future performance, earnings projections, events or developments. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include, but are not limited to, the following:

• disruptions or inefficiencies in Post's supply chain, inflation, labor shortages, public health crises, climatic events, avian influenza and other agricultural diseases and pests, fires and other events beyond Post's control;
• consumer and customer reaction to Post's pricing actions;
• changes in economic conditions, financial instability, disruptions in capital and credit markets, changes in interest rates and fluctuations in foreign currency exchange rates;
• volatility in the cost or availability of inputs to Post's businesses (including raw materials, energy and other supplies and freight);
• Post's ability to hire and retain talented personnel, leaves of absence of key employees, increases in labor-related costs, employee safety, labor strikes, work stoppages and unionization efforts;
• Post's reliance on third parties for the manufacture of many of its products;
• Post's high leverage, its ability to obtain additional financing and service its outstanding debt (including covenants restricting the operation of Post's businesses) and a potential downgrade in Post's credit ratings;
• Post's and its customers' ability to compete in their respective product categories, including the success of pricing, advertising and promotional programs and the ability to anticipate and respond to changes in consumer and customer preferences and behaviors;
• the success of new product introductions;
• allegations that Post's products cause injury or illness, product recalls and withdrawals, product liability claims and other related litigation;
• compliance with existing and changing laws and regulations;
• the impact of litigation;
• Post's ability to successfully integrate Pet Food and the assets from the Perfection acquisition, deliver on the expected financial contribution, cost savings and synergies from these acquisitions and maintain relationships with employees, customers and suppliers for the acquired businesses, while maintaining focus on Post's pre-acquisition businesses;
• Post's and Smucker's ability to comply with certain ancillary agreements associated with the Pet Food acquisition;
• Post's ability to identify, complete and integrate or otherwise effectively execute acquisitions or other strategic transactions;
• Post's ability to successfully implement business strategies to reduce costs;
• differences in Post's actual operating results from any of its guidance regarding its future performance;
• costs, business disruptions and reputational damage associated with cybersecurity incidents, information technology failures or information security breaches;
• impairment in the carrying value of goodwill or other intangibles;
• risks related to the intended tax treatment of Post's divestitures of its interest in BellRing Brands, Inc. ("BellRing");
• the loss of, a significant reduction of purchases by or the bankruptcy of a major customer;
• costs associated with the obligations of Bob Evans Farms, Inc. ("Bob Evans") in connection with the sale of its restaurants business, including certain indemnification obligations and Bob Evans's payment and performance obligations as a guarantor for certain leases;
• Post's ability to protect its intellectual property and other assets and to license third-party intellectual property;
• risks associated with Post's international businesses;
• business disruption or other losses from political instability, terrorism, war or armed hostilities or geopolitical tensions;
• changes in critical accounting estimates;
• losses or increased funding and expenses related to Post's qualified pension or other postretirement plans;
• conflicting interests or the appearance of conflicting interests resulting from any of Post's directors and officers also serving as directors or officers of other companies; and
• other risks and uncertainties described in Post's filings with the Securities and Exchange Commission.

These forward-looking statements represent Post's judgment as of the date of this release. Post disclaims, however, any intent or obligation to update these forward-looking statements.

About Post Holdings, Inc.

Post Holdings, Inc., headquartered in St. Louis, Missouri, is a consumer packaged goods holding company with businesses operating in the center-of-the-store, refrigerated, foodservice and food ingredient categories. Its businesses include Post Consumer Brands, Weetabix, Michael Foods and Bob Evans Farms. Post Consumer Brands is a leader in the North American ready-to-eat cereal and pet food categories and also markets Peter Pan^® peanut butter. Weetabix is home to the United Kingdom's number one selling ready-to-eat cereal brand, Weetabix^®. Michael Foods and Bob Evans Farms are leaders in refrigerated foods, delivering innovative, value-added egg and refrigerated potato side dish products to the foodservice and retail channels. Post participates in the private brand food category through its ownership interest in 8th Avenue Food & Provisions, Inc. For more information, visit www.postholdings.com.

Contact:
Investor Relations
Daniel O'Rourke
[email protected]
(314) 806-3959

Media Relations
Tara Gray
[email protected]
(314) 644-7648

EXPLANATION AND RECONCILIATION OF NON-GAAP MEASURES

Post uses certain non-GAAP measures in this release to supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). These non-GAAP measures include Adjusted net earnings/loss, Adjusted diluted earnings/loss per common share, Adjusted EBITDA, segment Adjusted EBITDA, Adjusted EBITDA as a percentage of Net Sales and segment Adjusted EBITDA as a percentage of Net Sales. The reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measure is provided in the tables following this section. Non-GAAP measures are not prepared in accordance with GAAP, as they exclude certain items as described below. These non-GAAP measures may not be comparable to similarly titled measures of other companies.

Adjusted net earnings/loss and Adjusted diluted earnings/loss per common share
Post believes Adjusted net earnings/loss and Adjusted diluted earnings/loss per common share are useful to investors in evaluating Post's operating performance because they exclude items that affect the comparability of Post's financial results and could potentially distort an understanding of the trends in business performance.

Adjusted net earnings/loss and Adjusted diluted earnings/loss per common share are adjusted for the following items:

Adjusted EBITDA, segment Adjusted EBITDA, Adjusted EBITDA as a percentage of Net Sales and segment Adjusted EBITDA as a percentage of Net Sales
Post believes that Adjusted EBITDA is useful to investors in evaluating Post's operating performance and liquidity because (i) Post believes it is widely used to measure a company's operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, (ii) it presents a measure of corporate performance exclusive of Post's capital structure and the method by which the assets were acquired and (iii) it is a financial indicator of a company's ability to service its debt, as Post is required to comply with certain covenants and limitations that are based on variations of EBITDA in its financing documents. Post believes that segment Adjusted EBITDA is useful to investors in evaluating Post's operating performance because it allows for assessment of the operating performance of each reportable segment. Management uses Adjusted EBITDA to provide forward-looking guidance and uses Adjusted EBITDA and segment Adjusted EBITDA to forecast future results. Post believes that Adjusted EBITDA as a percentage of Net Sales and segment Adjusted EBITDA as a percentage of Net Sales are measures useful to investors in evaluating Post's operating performance because they allow for meaningful comparison of operating performance across periods.

Adjusted EBITDA and segment Adjusted EBITDA reflect adjustments for income tax expense/benefit, interest expense, net and depreciation and amortization, and the following adjustments discussed above: income/expense on swaps, net, integration costs and transaction costs, mark-to-market adjustments on commodity and foreign exchange hedges and warrant liabilities, inventory revaluation adjustment on acquired businesses, restructuring and facility closure costs, mark-to-market adjustments on equity securities, gain on dissolution of PHPC, adjustment to/gain on bargain purchase, costs expected to be indemnified, net, provision for legal settlements, gain/loss on sale of business and advisory income. Additionally, Adjusted EBITDA and segment Adjusted EBITDA reflect adjustments for the following items:

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SOURCE Post Holdings, Inc.