Post Holdings, Inc. Q1 FY2025 earnings call

• Fiscal 2025 off to good start, strong Q1 results driven by cost management and diversified portfolio. Successfully executed major ERP conversions at PCB, PET, and Weetabix. PCD's Pet and Grocery had strong quarter with improved gross margin. PCB's pound share flat, cereal category decline, pet category consumption and share changes. Focus on Pet innovation in Q2 with Nutrish relaunch and new product launches. Foodservice strong but quarter ended with avian influenza challenges. Refrigerated retail down due to various factors. Weetabix business down as expected with ERP conversion. Macro environment challenging, capital allocation focused on share repurchase while keeping net leverage flat.

PCD

• Pet and Grocery had a strong quarter with improved gross margin. Grocery benefited from plant closure completed last September and freight efficiencies. Pet benefited from improved cost and plant performance. Cereal category declined 3.2%, PCB's pound share remained flat at 22%. Pet category consumption was down approximately 1%, portfolio declined 5%, overall share slightly down.

Foodservice

• Net sales increased 9% and volumes increased 3%, driven by volume growth, avian influenza pricing, and improved supply chain performance. Volume growth in egg and potato products, higher value-added eggs up 5%.

Refrigerated retail

• Net sales decreased 5% and volumes decreased 4%, driven by lower side test volumes and increased manufacturing and input costs.

Weetabix

• Net sales decreased 1% versus prior year, on currency and acquisition-neutral basis, net sales decreased 7% and volumes decreased 12%. Segment adjusted EBITDA decreased 8% versus prior year led by lower volumes and increased input costs.

• Last night raised the bottom end of FY 2025 adjusted EBITDA guidance by $10 million to the range of $1.42 billion to $1.46 billion. Expect Q2 to be down in line with the cost of pricing dynamic in foodservice.

• Two third-party contracted farms hit with Avian Influenza in December causing sourcing and cost challenges in fiscal Q2. Macro environment pressure on consumer and collective volumes. New administration and potential policies driving uncertainty. ERP conversion potential pitfalls.

Q: Historically, when valuations in the group get to compressed levels, does Post consider a more transformational deal?

A: Jeff Zadoks says there'll be broad activity, Post is well-positioned to entertain any opportunity, pipeline is robust, depends on valuation and fit.

Q: How much flexibility does Post have to optimize supply chain in pet?

A: There are opportunities, early innings of activity, further optimization possible in longer term after stabilizing and growing nutrition brands.

Q: On foodservice EBITDA drag, any net impact in fiscal 2025?

A: Expect recovery self-contained within foodservice, not banking on overperformance elsewhere, value proposition in eggs and potatoes helps growth regardless of foot traffic.

Q: On pet demand creation and plans, how shaping up?

A: Profit-enhancing actions continue to be a drag, customer inventory levels have components, consumption a factor, innovation starts to turn tide in later fiscal year.

Q: On guidance boost, where from?

A: Largely reflection of Q1 performance with ERP conversion going better than expected, but didn't raise high end due to variables like avian influenza and broader softness in volumes.

Q: Key factors to watch for recovery in second half from flu impact?

A: Return of supply and timing/magnitude of pricing passed through compared to market changes.