Post Holdings (POST) Raises EBITDA View on Q3 Earnings Beat
Post Holdings, Inc. POST reported strong third-quarter fiscal 2023 results, as both the top and bottom lines improved year over year and surpassed the Zacks Consensus Estimate. Encouragingly, management raised its adjusted EBITDA guidance for fiscal 2023.
On Mar 10, 2022, Post Holdings concluded the distribution of 80.1% of its interest in BellRing Brands, Inc. (BellRing) to its shareholders. The historical results of the BellRing business now form part of POST’s discontinued operations. On Apr 28, 2023, the company concluded the acquisition of part of The J.M. Smucker Co.’s pet food business, which is included in the company’s Post Consumer Brands segment.
Quarter in Detail
Adjusted earnings from continuing operations of $1.52 per share increased significantly from 69 cents reported in the prior-year quarter. The bottom line comfortably surpassed the Zacks Consensus Estimate of 89 cents.
POST registered sales of $1,859.4 million, up 21.9% year over year. The figure exceeded the consensus mark of $1,819 million. Net sales included $275.3 million from the Pet Food acquisition.
The gross profit amounted to $501.6 million, up 37.5% from the $364.7 million reported in the year-ago quarter. The gross margin expanded from 23.9% to 27% in the quarter under review. The upside was backed by robust pricing actions, which helped counter cost inflation. While supply-chain hurdles eased in the quarter, increased manufacturing costs and lower-than-optimal customer order fulfillment rates were downsides.
Post Holdings’ SG&A expenses escalated 33.7% year over year to $300.9 million. SG&A expenses as a percentage of sales came in at 16.2%, up from 14.8% reported in the year-ago quarter. Adjusted EBITDA surged 34.8% to $338.2 million.
Post Holdings, Inc. Price, Consensus and EPS Surprise
Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote
Segment Details
Post Consumer Brands: Sales in the segment increased 51.6% year over year to $871.3 million in the quarter under review, which included gains from Pet Food. Excluding the benefits of Pet Food, volumes dropped 5.7% due to softness in peanut butter and branded cereal, somewhat negated by growth in private-label cereal. The segment’s adjusted EBITDA increased 28.2% to $151.4 million.
Weetabix: Segment sales increased 7.4% year over year to $134.2 million, including currency headwinds of nearly 50 basis points. Volumes fell 4.7% as strength in private-label biscuits was negated by softness in branded biscuits. Segmental adjusted EBITDA of $27.6 million tumbled 25.8% year over year.
Foodservice: Sales increased 7.5% to $622.7 million in the quarter under review. Volumes rose 3% on higher away-from-home demand for eggs and potatoes. Egg volumes rose 2.3%, and potato volumes climbed 6.8%. Segmental adjusted EBITDA was $144.5 million, up 67.2% year over year.
Refrigerated Retail: Sales in the segment were $230.7 million, down 6.4% from the year-ago quarter’s figure. Volumes slipped 11% year over year, primarily due to elasticities resulting from inflation-driven price increases as well as a shift toward private-label products. Segmental adjusted EBITDA jumped 25.3% year over year to $37.1 million.
Other Financial Details
Post Holdings ended the quarter with cash and cash equivalents of $208.8 million, long-term debt of $6,186.1 million and total shareholders’ equity of $3,959.8 million.
Cash provided by operating activities was $480.5 million for the nine months ended Jun 30, 2023. In the third quarter, Post Holdings repurchased 1.9 million shares for $166.8 million. In the first nine months of fiscal 2023, POST bought back 2.9 million shares for $250.5 million. As of Jul 31, 2023, the company had remaining share repurchase availability of $278.5 million.
Guidance
This Zacks Rank #2 (Buy) company raised its fiscal 2023 expectation for adjusted EBITDA. It is now expected in the range of $1,180-$1,200 million compared with the earlier view in the band of $1,090-$1,130 million. POST expects capital expenditures in the range of $275-$300 million in fiscal 2023.
Other Solid Staple Stocks
Some other top-ranked consumer staple stocks are Energizer Holdings, Inc. ENR, TreeHouse Foods THS and Ingredion Incorporated INGR.
Energizer Holdings, which manufactures, markets and distributes household batteries, specialty batteries and lighting products, currently carries a Zacks Rank #2. ENR has a trailing four-quarter earnings surprise of 7.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Energizer Holdings’ current fiscal-year earnings suggests growth of about 2% from the year-ago reported numbers.
TreeHouse Foods, a food and beverage product company, currently has a Zacks Rank #2. THS has a trailing four-quarter earnings surprise of 49.3%, on average.
The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year earnings suggests growth of 120.1% from the year-ago reported figures.
Ingredion Incorporated, which produces and sells sweeteners, starches, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank #2. The Zacks Consensus Estimate for INGR’s current fiscal-year earnings per share has increased from $9.10 to $9.23 over the past seven days.
The consensus mark for Ingredion Incorporated’s current fiscal-year earnings suggests growth of 23.9% from the year-ago reported numbers.
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