Post Holdings (POST) Q4 Earnings Beat, Sales Increase Y/Y
Post Holdings, Inc. POST reported decent fourth-quarter fiscal 2023 results, with the top and the bottom line increasing year over year. Earnings surpassed the Zacks Consensus Estimate, while sales missed the same.
Quarter in Detail
Adjusted earnings from continuing operations of $1.63 per share increased from 85 cents reported in the prior-year quarter. The bottom line comfortably surpassed the Zacks Consensus Estimate of $1.38.
POST registered sales of $1,945.4 million, up 23.2% year over year. The consensus mark was pegged at $1,948.9 million. Net sales included $404.5 million from the Pet Food acquisition.
The gross profit amounted to $551.4 million, up 40.4% from the $392.6 million reported in the year-ago quarter. The gross margin expanded from 24.9% to 28.3% in the quarter under review.
Post Holdings’ SG&A expenses escalated 38.3% year over year to $309.5 million. SG&A expenses, as a percentage of sales, came in at 15.9%, up from 14.2% reported in the year-ago quarter. Adjusted EBITDA surged 24.8% to $349 million.
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Segment Details
Post Consumer Brands: Sales in the segment increased 71.5% year over year to $1,008 million in the quarter under review, which included gains from Pet Food to the tune of $404.5 million. Excluding the benefits of Pet Food, volumes dropped 6.2%, mainly due to softness in peanut butter and branded cereal, somewhat negated by growth in private-label cereal. The segment’s adjusted EBITDA increased 73.1% to $199.7 million.
Weetabix: Segment sales increased 15.5% year over year to $134.9 million, including a currency tailwind of nearly 810 basis points. Volumes grew 2% on strength in private-label biscuits and protein-based shakes. Segmental adjusted EBITDA of $24.9 million tumbled 32.7% year over year.
Foodservice: Sales decreased 9% to $569.5 million in the quarter under review. Volumes fell 1.1% on reduced egg volumes to the tune of 2.1%. Potato volumes climbed 3.9%. Segmental adjusted EBITDA was $117 million, up 6.8% year over year.
Refrigerated Retail: Sales in the segment were $233.3 million, down 6.4% from the year-ago quarter’s figure. Volumes slipped 8.2% year over year, primarily due to elasticities stemming from inflation-driven price increases and a shift toward private-label products. Segmental adjusted EBITDA fell 14.2% year over year to $30.7 million.
Other Financial Details & Guidance
The Zacks Rank #2 (Buy) company ended the quarter with cash and cash equivalents of $93.3 million, long-term debt of $6,039 million and total shareholders’ equity of $3,851.3 million.
Cash provided by operating activities was $750.3 million for the year ended Sep 30, 2023. In the fourth quarter, Post Holdings repurchased 1.6 million shares for $136.5 million. In fiscal 2023, POST bought back 4.4 million shares for $387 million. As of Nov 16, 2023, the company had a remaining share repurchase availability of $178.7 million.
Post Holdings expects fiscal 2024 adjusted EBITDA in the range of $1,200-$1,260 million. POST anticipates capital expenditures in the range of $400-$425 million in fiscal 2024, which reflects foodservice investment in the expansion of the Norwalk, IA, precooked egg facility and the start of Phase II expansion of the Bloomfield, among others.
POST’s shares have dropped 3.1% in the past three months compared with the industry’s 9.4% decline.
3 Appetizing Picks
Lamb Weston LW, which offers frozen potato products, sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 46.2% on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
The Kraft Heinz Company KHC, a food and beverage product company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 9.9% on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal year sales suggests growth of 1.2% from the corresponding year-ago reported figure.
Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently has a Zacks Rank #2. VITL has a trailing four-quarter earnings surprise of 145% on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales suggests growth of 29.4% from the year-ago reported figure.
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