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Edited Transcript of POST earnings conference call or presentation 22-Nov-19 2:00pm GMT

Q4 2019 Post Holdings Inc Earnings Call

St. Louis Nov 22, 2019 (Thomson StreetEvents) -- Edited Transcript of Post Holdings Inc earnings conference call or presentation Friday, November 22, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jeff A. Zadoks

Post Holdings, Inc. - Executive VP & CFO

* Jennifer Meyer

Post Holdings, Inc. - Head of IR

* Robert V. Vitale

Post Holdings, Inc. - President, CEO & Director

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Conference Call Participants

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* Andrew Lazar

Barclays Bank PLC, Research Division - MD & Senior Research Analyst

* Christopher Robert Growe

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Analyst

* John Joseph Baumgartner

Wells Fargo Securities, LLC, Research Division - VP and Senior Analyst

* Kenneth Bryan Zaslow

BMO Capital Markets Equity Research - MD of Food & Agribusiness Research and Food & Beverage Analyst

* Kevin John Lehmann

Evercore ISI Institutional Equities, Research Division - Director

* Michael Scott Lavery

Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst

* William Bates Chappell

SunTrust Robinson Humphrey, Inc., Research Division - MD

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Presentation

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Operator [1]

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Welcome to Post Holdings Fourth Quarter and Fiscal Year 2019 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer; and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded. (Operator Instructions)

It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Post Holdings, for introductions. You may begin.

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Jennifer Meyer, Post Holdings, Inc. - Head of IR [2]

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Good morning, and thank you for joining us today for Post's Fourth Quarter 2019 Earnings Call. With me today are Rob Vitale, our President and CEO; and Jeff Zadoks, our CFO. Rob and Jeff will begin with prepared remarks, and afterwards, we'll have a brief question-and-answer session. The press release that supports these remarks is posted on our website in both the Investor Relations and the SEC Filings section at postholdings.com. In addition, the release is available on the SEC's website.

Before we continue, I would like to remind you that this call will contain forward-looking statements, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website.

And finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website.

With that, I will turn the call over to Rob.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [3]

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Hey, good morning. Thanks, Jennifer, and thank you all for joining us. This morning, I'm going to very briefly go over our 2019 results. Most of my comments address our strategic activities and our 2020 expectations.

Our fourth quarter came in as expected. Each business performed reasonably well. For the full year, consolidated adjusted EBITDA of $1.21 billion landed at the midpoint of our guidance range. This represents a growth rate of 5.4% on a pro forma basis, which exceeds our long-term algorithm of 3%. Jeff will discuss the breakdown of our segment performance.

The key strategic initiative for 2019 was the IPO of our Active Nutrition business, now known as BellRing Brands, Inc. that began trading on the NYSE on October 17 under the ticker BRBR. I want to thank and congratulate our teams for the exceptional effort that made the IPO possible. The legal and tax structure is complicated, but in essence, Post sold to the public approximately 29% of its equity interest in the Active Nutrition business and retained ownership of 71%. A document illustrating the structure is posted on our website and on the SEC's website. BellRing is well positioned as a leader in convenient nutrition, and we look forward to continuing to support its growth. You can hear directly from the BellRing leadership team on our conference call later this morning.

We continue to believe that we should receive government clearance for our acquisition of the TreeHouse ready-to-eat cereal business. We believe that there is intense competition in the cereal business and that this deal is unambiguously pro-consumer and the efficiencies achieved will allow us to compete more aggressively. We are surprised that this combination has received the degree of scrutiny that it has, but we are actively engaging with the FTC, and we hope to convince the FTC to approve the transaction soon.

Our outlook for fiscal 2020 adjusted EBITDA, including 100% contribution from BellRing, is $1.22 billion to $1.27 billion, which at its midpoint is in line with our 3% long-term growth algorithm. We expect modest favorability to the second half of the year. As you likely have seen, BellRing has guided for fiscal 2020 adjusted EBITDA at a range of $192 million to $202 million. Our guidance incorporates, among others, the following assumptions. We continue to see the domestic and U.K. cereal markets as flat to slightly declining. Our promotional timing favors the second half of 2020 in response to product introductions and competitive activities. Demand growth remains strong for our foodservice business, our retail side dish business and our convenient nutrition products.

We faced commodity inflation in our retail businesses, but we have various tools to offset it, including pricing and cost reduction. Labor markets remain tight through most of our manufacturing footprint. Accelerating demand in foodservice and retail refrigerated potato products have pressured category-wide capacities. We will incur costs associated with expanding trapped capacity and third-party sourcing as we navigate the supply constraint. These capacity limitations will temporarily dampen consumption growth.

BellRing adjusted EBITDA growth is expected to be below historical trends for 2020 as we invest to support substantial top line growth and incur approximately $7 million of incremental public company cost. And last, we assume a pound-to-dollar exchange ratio of 1.28.

Again, we expect these assumptions to build to a year that will be in line with our long-term algorithm both with respect to growth and with respect to cash generation. Recall that Post owns approximately 6% of the common equity of 8th Avenue Food & Provisions. We do not consolidate 8th Avenue because the capital structure and the control provisions are more akin to a minority investment. 8th Avenue had a challenging 2019, and its adjusted EBITDA forecast for 2020 is a range of $100 million to $105 million. The capital structure includes net debt and preferred equity of $920 million at September 30. These estimates exclude any impact of the plant acquisition we announced last week.

Regarding capital allocation. In 2019, we generated $688 million in operating cash flow, and we invested approximately $270 million in internal capital projects. We repurchased 3.3 million shares of common stock for $331 million. Considering adjusted EBITDA growth, organically generated cash flow and the proceeds from the IPO, we meaningfully reduced leverage.

For 2020, I would anticipate a similar approach to capital allocation, which earmarks free cash flow towards investment in shares, M&A or debt reduction and opportunistically uses the balance sheet depending on capital market conditions.

With that, I will now turn the call over to Jeff.

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Jeff A. Zadoks, Post Holdings, Inc. - Executive VP & CFO [4]

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Thanks, Rob, and good morning, everyone. Our consolidated results this quarter met our expectations. Adjusted EBITDA for the quarter and fiscal year were $303.6 million and $1.21 billion, respectively. Pro forma net sales for the quarter grew 2.4%. Post Consumer Brands grew net sales and volumes by 3.5% and 1.6%, respectively. Average net pricing improved 1.9% despite unfavorable mix primarily resulting from private-label volume gains.

We saw good improvement in segment adjusted EBITDA this quarter, which grew 6% compared to the prior year, primarily benefiting from the growth in net sales. Consistent with the third quarter, pricing fully offset year-over-year systemic inflation in commodities, freight and wages this quarter.

Weetabix net sales decreased 2.6% over the prior year quarter pressed by the weak British pound, which created a headwind to net sales growth of approximately 550 basis points. Average net pricing increased 12.5% year-over-year as we continue to lap our promotional strategy reset.

Strong volume growth in private-label biscuit volumes was offset by declines in non-biscuit products resulting from capacity constraints on extruded products. Core Weetabix branded biscuit volumes continued to stabilize.

Weetabix' adjusted EBITDA declined 8%, more than half of which resulted from the unfavorable currency exchange rate. The balance of the decline was caused by greater investments in brand building, restoration of incentive compensation at a premium level and increased raw material costs.

It is important to note that for the full year, the Weetabix segment grew adjusted EBITDA approximately 2% in spite of a currency headwind in excess of 500 basis points and the increased investments in brand building and incentive compensation.

Net sales in foodservice increased 4.5% with volumes up 3.7%, driven by strong growth in both egg and potato products. Volume growth and favorable product mix, supported by gains in higher value-added egg products, drove year-over-year adjusted EBITDA growth of 6%.

The refrigerated retail segment had good fourth quarter -- had a good fourth quarter, with net sales and volumes growing 2% and 3%, respectively. Side dish volumes remained healthy, growing 9.4% this quarter. While Bob Evans-branded side dish has continued to grow with volumes up nearly 15%, the capacity constraints Rob mentioned will temporarily inhibit the growth rate in 2020.

Segment adjusted EBITDA grew 3.8% this quarter and benefited from volume growth and an improved price/cost relationship for sausage products. Higher side dish manufacturing costs were a modest offset to this growth.

In our Active Nutrition segment, net sales decreased 2.5%, while adjusted EBITDA grew 4.7%, benefiting from favorable input costs. You can hear further detail about Active Nutrition's results this quarter on the BellRing fourth quarter conference call, which will be held later this morning.

Before moving to our guidance, I would like to provide a brief explanation of how we will report the Active Nutrition business going forward. As Rob mentioned, the structure of the IPO and related transactions was complicated, but I will keep this discussion at a high level. The IPO did not impact our fourth quarter of fiscal 2019 reporting. Prospectively, Post will continue to consolidate the BellRing business but will report a noncontrolling interest for the 29% beneficially owned by its public shareholders. BellRing Brands, Inc. will have its own SEC filings, earnings releases and conference calls, which may overlap but not necessarily duplicate Post disclosures.

We have designated BellRing Brands, Inc. and its subsidiaries as unrestricted under the terms of our credit agreements. As such, neither BellRing nor Post are obligors or guarantors of the other party's debt. Accordingly, we will report leverage statistics for Post independent of BellRing debt and adjusted EBITDA. Post pro forma net leverage on this basis is approximately 4.8x. This reflects the $1.225 billion term loan repayment we made in October following the close of the IPO.

Turning to guidance. We expect adjusted EBITDA for fiscal 2020 to be in the range of $1.22 billion to $1.27 billion, including 100% contribution from BellRing. Additionally, we expect to make capital expenditure investments in fiscal 2020 of between $240 million and $260 million.

Finally, exclusive of BellRing, we estimate cash taxes for fiscal 2020 will be approximately $95 million, and we expect cash interest expense to be approximately $315 million.

With that, I'd like to turn the call back over to the operator for questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Chris Growe of Stifel.

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Christopher Robert Growe, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Analyst [2]

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I just wanted to ask, if I could, first, Rob, in relation to the guidance you gave for the year for Post, I guess, first of all, you talked about a 3% long-term rate. Is that a reasonable rate for the company going forward?

And then just to understand kind of the factors that could push it to the upper end or the lower end, are there some areas, whether it be costs or maybe some of the capacity constraints, that may limit your EBITDA growth in 2020?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [3]

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Yes. We've long talked about the 3% being the long-term algorithm when you break the portfolio into roughly half cash generation, half growth. And those aren't pure definitions because both sides of the business do both aspects of growing and generating cash flow. But the -- in terms of what would make the guidance higher or lower, it's a $50 million range on -- at the midpoint, just shy of 1.25. So relatively small changes could impact that range.

A cereal category being 0 instead of down 1% is a meaningful contribution to that. Slight changes in the demand equation on any of our more rapidly growing businesses could change that. And then certainly, there are cost implications throughout the portfolio. It's a 6-business unit portfolio, so there are a lot of moving pieces that could impact that guidance range.

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Christopher Robert Growe, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Analyst [4]

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Okay. And just one follow-on question to that, I -- and you have 6 different businesses, as you've noted. But just from like an input cost inflation and maybe in relation to whether it be pricing or opportunities you have to offset that inflation, how would you look at that balance, without going through each business, but in general for fiscal '20?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [5]

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So I think it's important to note that I precisely mentioned inflation in the context of the retail business because the foodservice business, while it has inflation, has a different pricing mechanism that we've talked about. So we tend to think about inflation different in that sector. So it really impacts our more traditionally priced retail businesses.

And I think that when you look at the commodity infrastructure around sugar, grains, corn, we are seeing -- oats, we're seeing what I would characterize as modest but persistent inflation across that -- across the categories and that through mix pricing, promotional activities and cost reduction, we expect to be able to offset enough of it to maintain the 3% growth that we have predicted.

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Christopher Robert Growe, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Analyst [6]

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And just to -- sorry, one quick follow-up. Are there any businesses where you've announced price increases already for this year for any of your divisions?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [7]

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Carryover but not new.

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Operator [8]

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Our next question comes from the line of Andrew Lazar of Barclays.

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Andrew Lazar, Barclays Bank PLC, Research Division - MD & Senior Research Analyst [9]

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So first off, I think there seems to be some building concern over the fact that Post has been a pretty consistent market share gainer in the RTE business for some time and that category competitive dynamics are going to somehow catch up to the company, so to speak, this coming fiscal year. I guess given -- one wouldn't expect either of the 2 largest players to accept being, I guess, share donors sort of consistently. So I guess maybe can you perhaps discuss this in the context of your expectations for RTE in the coming year, maybe expectations for category growth, sort of share performance and the type of maybe flexibility or so if you are building in to account for some of that potentially?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [10]

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Well, certainly, I think we would be naive to assume that competitors as resourced and as talented as ours would consistently be share donors. So we certainly expect them to be aggressive and vibrant competitors this year and each year. We have had good fortune in the last handful of years. And I think a large part of that good fortune is that we were early in moving into some of the growthier areas around licensed sweetened products and that each state has been perhaps overly addressed. And that as we now look forward, we've talked about all this, I think, in some detail that we need to, as a category and as a company, look at innovation in a bit bolder and broader manner.

And many of the changes that we have made over the last 18 months, starting with changing leadership all the way to looking at planning processes to free up cost for reinvestment, are aimed at driving that category growth, so that it's real category growth rather than kicking up dust within a handful of licensed sweet products. But we look at that as an ongoing both challenge and opportunity and fully expect each, if not all, of our key competitors to be highly engaged and to compete for share. I would tell you that not all share is created equal. So that we look at trying to make sure that we are focused our competitive activities on fighting for the right share rather than eat share.

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Andrew Lazar, Barclays Bank PLC, Research Division - MD & Senior Research Analyst [11]

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Okay. And then I know it gets a little harder to sort of track deal sort of synergies and cost saves a little bit as integration sort of progresses. But can you remind us again what you have that is sort of expected to be incremental cost saves from some of the recent deals that still flow into fiscal '20? Just trying to get a sense of how much of the EBITDA growth essentially can kind of come from discrete areas like deal cost saves that you would have better clarity to.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [12]

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Sure. So I'm going to beg some latitude because I'm going now from memory on deals that are a couple of years old and have blended between deal results and just additional continuous improvement. So give me a relatively high margin for error. But we are...

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Andrew Lazar, Barclays Bank PLC, Research Division - MD & Senior Research Analyst [13]

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That's how I live my life, Rob.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [14]

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Yes. We closed the Clinton facility that we acquired with the Weetabix transaction at the end of the year. So that will roll over a $5 million to $7 million cost reduction into 2020. We have an ongoing cost reduction effort at Weetabix aimed at closing half of a facility that will occur in 2020. And then we have an ongoing integration in the supply chain at Bob Evans that is actually in excess of the amounts we announced at acquisition but longer in duration and more expensive because it involves more aggressive IT conversions than we announced when we undertook it.

All told, in the portfolio, there is between $10 million and $20 million of cost reduction flowing through '20. But given that number and the magnitude of the EBITDA, it's difficult to directly track it from that number to where it flows through on the P&L.

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Operator [15]

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Our next question comes from the line of David Palmer of Evercore ISI.

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Kevin John Lehmann, Evercore ISI Institutional Equities, Research Division - Director [16]

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Kevin Lehmann on for David. Question about CapEx this year. You had a step-up of about $85 million. Most of that, I think, was to boost capacity in value-added eggs. So 2 questions on that. Will some of that spend bleed into 2020? Then also, how will you plan on measuring and ultimately judging the ROI on that spending? And then what is the growth rate in value-added eggs that you're assuming to get there?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [17]

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In reverse order, the growth rate on value-added eggs is mid-single digits. Skipping to the first part of your question, there will be some spillover from 2019 to 2020 as we finalize the factory, which has now been commissioned and is producing product. So yes, there is some carryover.

And with respect to this project, we will look towards the utilization of the factory, a year out, the utilization of all capacity related to value-added eggs and measure the lift. And that should be the resulting return on the capital invested. We are being more aggressive in capital investments as labor costs are higher and capital costs are lower. So we are being a bit more active in terms of identifying internal capital opportunities.

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Operator [18]

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Our next question comes from the line of Bill Chappell of SunTrust.

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William Bates Chappell, SunTrust Robinson Humphrey, Inc., Research Division - MD [19]

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Rob, I won't ask the -- what does the M&A pipeline look like, but I would want to know kind of the thought process behind kind of the aggressive share repurchase in the quarter versus holding some of that cash back for potential M&A.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [20]

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Well, I think as you know, we tend to look at relative value on a constant basis and make capital allocation decisions accordingly. We don't necessarily look at just the cash on our balance sheet as the source of capital available for M&A. So we look at it as a dynamic equation and look more for the opportunity side and then source it. I will -- let me rephrase that. We opportunistically look at both the investment side and the sourcing side and act independently of each other.

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William Bates Chappell, SunTrust Robinson Humphrey, Inc., Research Division - MD [21]

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So is that a way to say that you felt like your stock was cheaper than some of the deals that you're looking at?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [22]

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I think I'm just going to repeat what I said so that I don't...

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William Bates Chappell, SunTrust Robinson Humphrey, Inc., Research Division - MD [23]

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All right. Well, then moving to private brands, which I mean we don't talk about as much, or 8th Avenue. Just can you help us understand, I mean, are things improving there? I think the original thought was the business would have had close to $100 million of EBITDA a year ago or in this year we just completed. So -- and that's kind of the goal for next year. Where are we in that path? And what signs do we see for improvement?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [24]

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I think you precisely laid it out, we're about a year behind. We intended for 2019 to be the year in which we took these 3 disparate businesses and melted them into one go-to-market and one integrated model, and that went poorly. So the execution of that has set us back 12 months. It is going better. We have overresourced it now. I think we underresourced it.

So when you look at the categories and you look at the strategic outlook, I expect to have some skepticism on this comment, but I remain fairly optimistic on the business. But we executed poorly, and we need to fix that.

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Operator [25]

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(Operator Instructions) Our next question comes from the line of Ken Zaslow of Bank of Montreal.

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Kenneth Bryan Zaslow, BMO Capital Markets Equity Research - MD of Food & Agribusiness Research and Food & Beverage Analyst [26]

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Can you just talk about the capacity constraints and how you get over the 2 of them? You said in the cereal in Weetabix and then you obviously said the one in the U.S. Can you talk about how that came about? And what's the way to overcome it and timing?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [27]

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Let me start with the one in the U.S. It's really a dual-sided issue. We've had terrific growth in demand of our refrigerated potato product, both in foodservice and in retail. So that's driving very high category utilization. So intermediate term, we have plans to address trapped capacity. Longer term, we likely need to add capacity to the category. Unfortunately, at the same time, in our Mars Hill facility, which is a relatively smaller facility in Maine, we have 3 lines. One of them had a failure related to an equipment breakdown that we have consciously chosen to defer the repair of until after our busy season so as not to add disruption. That takes high single digits of capacity out that we have to manage through retail inventory and trying to drive output elsewhere. So it's a -- as I said, a dual-sided equation of a very positive problem that we need a fix for and a short-term unfortunate that will be fixed in January.

In the U.K., we have had some capacity that we are trying to take out. So in taking out the capacity, we probably overshot a bit and are having a little bit of customer service execution issues that we will rebuild in the next handful of months, no more than 2 quarters, to get the customer service levels back where they need to be.

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Kenneth Bryan Zaslow, BMO Capital Markets Equity Research - MD of Food & Agribusiness Research and Food & Beverage Analyst [28]

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Okay. And then my second question is, what is the progress on your licensed cereals? And then I'll leave it there.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [29]

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I'm sorry, can you ask that question again? What is the progress what?

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Kenneth Bryan Zaslow, BMO Capital Markets Equity Research - MD of Food & Agribusiness Research and Food & Beverage Analyst [30]

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Of your license cereals, how they do, which ones you're going to keep, how you think about it now that you've kind of tested them out, what the prognosis is.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [31]

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Yes. So I'm not going to comment on specific brand-level products. What I will share with you is that I think it's an important part of our overall portfolio, it's an important part of the category, but it can't be the only tool in the innovation toolbox. So we need to broaden it. But it is and remains and will remain an important part of our overall product mix.

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Operator [32]

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Our next question comes from the line of John Baumgartner of Wells Fargo.

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John Joseph Baumgartner, Wells Fargo Securities, LLC, Research Division - VP and Senior Analyst [33]

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Rob, wondering if you could just dig a bit more into the foodservice business. Just given the lack of visibility with the exposure to non-measured channels, can you just walk through expectations for F '20 in terms of how we should think about the timing of the ramp in precook capacity? Are there any new business wins you're anticipating in potatoes? Just any highlights that would be helpful in terms of just how you're thinking about business development from here.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [34]

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I would assume that the outlook for Michael looks a lot like the recent past for Michael, that it's consistent steady growth. There's not -- this is not a business that should see major step-ups. It's a business that, given our considerable position in the categories we're in, grows steadily as we drive demand within the categories.

As it relates to the ramp-up tied to Norwalk, just logistically, what we will do is first fill Norwalk where we have better cost because it's a newer facility. That will deleverage some of our older facilities as we backfill them. So there will be a margin pickup, but it won't be as full as it will be once the entire system remains or is returned to optimal capacity, just the step function of a new factory.

I think -- was there a third part of the question? Or was that it?

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John Joseph Baumgartner, Wells Fargo Securities, LLC, Research Division - VP and Senior Analyst [35]

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That was it. But actually, I had a follow-up. In terms of cereal, just getting back to Andrew's question, thinking about some, I guess, maybe the game theory, the competitive environment. I'm curious, one of the things that I've noticed is you look at General Mills getting great growth on Lucky Charms, Cheerios is down, Kellogg is back to growth in some of their taste cereals, the health and wellness cereals are lower. When you think about the cereal category in totality, do you think that it's reasonable to think that both the taste and the health and wellness cereals can both grow at the same time? Or is it really kind of a trade-off, one or the other, based on what's kind of more or less on trend for that period? And based on that, how does it really inform how you're thinking about the level of reinvestment or more promotion or aggressive pricing in some parts of the category?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [36]

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Well, I don't want to sound pollyannish because a lot of people have tried to solve that equation of great taste and great health. But like those other people who have tried, we believe it can be solved; it just hasn't been solved effectively. And the first step in driving that solution is to create the resources to do it, which is what we've been attempting to do the last 18 months with some of the changes we're making. So I don't want to be the latest person to say we're going to have a great-tasting product that cures whatever ails you. But we continue to strive towards being able to grow the entirety of our portfolio and not just one subsegment of it.

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Operator [37]

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Our next question comes from the line of Michael Lavery of Piper Jaffray.

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Michael Scott Lavery, Piper Jaffray Companies, Research Division - Principal & Senior Research Analyst [38]

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Just 2 more quick ones on cereal. One is, historically, you've had outperformance in unmeasured channels. Is there any reason to think that might not continue? And I guess just as we look at the scanner data and try to model out from current momentum and looking ahead, is that something that has any shift in the dynamic or that will keep going on? And then second, just as you've talked about some of the opportunity to look at more maybe premiumization or white spaces, how do you see the portfolio revolving there? Is there some ways you can give a little peak ahead of how you might be able to look at some new innovation?

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [39]

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Taking those in reverse order. I wouldn't want to talk in this kind of forum about our innovation. What I would tell you is that the questions you're asking are the right questions, but this isn't the right forum to respond to that.

With respect to non-measured channels, I would tell you, over the course of multiple quarters or a year, there shouldn't be material changes. But what I would caution you is that quarter-to-quarter, there can be material changes because club is such a big portion of non-measured channel that as they have promotional events, they can swing short-term results fairly meaningfully.

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Operator [40]

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And ladies and gentlemen, we have reached the allotted time for Q&A today. This will conclude today's conference call. We wish you a great day. You may now disconnect.

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Robert V. Vitale, Post Holdings, Inc. - President, CEO & Director [41]

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Thank you.