Post(POST) - 2024 Q2 - Quarterly Results

Financial Highlights and Outlook This section provides an overview of Post Holdings' financial performance for the second quarter of fiscal year 2024 and its updated outlook for the full fiscal year Second Quarter Fiscal 2024 Highlights Post Holdings reported strong second-quarter fiscal 2024 results, with net sales reaching $2.0 billion and net earnings of $97.2 million, reflecting robust operational performance and contributions from recent acquisitions Q2 FY2024 Key Metrics | Metric | Value (in millions) | | :--- | :--- | | Net Sales | $2,000.0 | | Operating Profit | $190.1 | | Net Earnings | $97.2 | | Adjusted EBITDA | $345.2 | Fiscal Year 2024 Outlook The company has raised its fiscal year 2024 Adjusted EBITDA guidance to a range of $1,335-$1,375 million, up from the previous $1,290-$1,340 million, with capital expenditures projected between $420-$445 million for facility expansions and pet food integration - Raised fiscal year 2024 Adjusted EBITDA guidance to $1,335-$1,375 million[26] - Fiscal year 2024 capital expenditures are expected to range between $420-$445 million[26] - Significant investments include $100-$110 million for Foodservice facility expansions and $90-$100 million for Pet Food network investments[26] Consolidated Financial Performance This section details Post Holdings' consolidated operating results for the second quarter and six months of fiscal year 2024, highlighting significant growth in net sales, gross profit, operating profit, and net earnings Second Quarter Consolidated Operating Results For the second quarter, net sales grew 23.4% to $2.0 billion, largely driven by $467.9 million in sales from acquisitions, leading to a 40.1% increase in gross profit to $579.6 million and a 79.7% rise in net earnings to $97.2 million Q2 FY2024 vs Q2 FY2023 Consolidated Results (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,999.0 | $1,619.9 | +23.4% | | Gross Profit | $579.6 | $413.8 | +40.1% | | Operating Profit | $190.1 | $137.7 | +38.1% | | Net Earnings | $97.2 | $54.1 | +79.7% | | Adjusted EBITDA | $345.2 | $276.3 | +24.9% | - Net sales growth included a $467.9 million contribution from recent acquisitions, primarily in the Pet Food business[4] - Diluted earnings per common share increased to $1.48 from $0.92 in the prior year period[7] Six Month Consolidated Operating Results For the six months ended March 31, 2024, net sales increased by 24.4% to $3.96 billion, with gross profit growing 39.0% to $1.15 billion, operating profit rising 38.9% to $399.4 million, and net earnings increasing 26.9% to $185.3 million Six Months FY2024 vs FY2023 Consolidated Results (in millions) | Metric | Six Months 2024 | Six Months 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,964.9 | $3,186.2 | +24.4% | | Gross Profit | $1,152.2 | $828.7 | +39.0% | | Operating Profit | $399.4 | $287.6 | +38.9% | | Net Earnings | $185.3 | $146.0 | +26.9% | | Adjusted EBITDA | $704.7 | $546.2 | +29.0% | - SG&A expenses for the six-month period included $14.1 million of integration costs related to the Pet Food acquisition and $8.8 million in restructuring costs for a facility closure[9] - Diluted earnings per common share for the six months were $2.83, compared to $2.44 in the prior year period[10] Segment Performance This section provides a detailed analysis of the financial performance of Post Holdings' individual operating segments, including Post Consumer Brands, Weetabix, Foodservice, and Refrigerated Retail Post Consumer Brands The Post Consumer Brands segment saw a significant 77.9% increase in Q2 net sales to $1.07 billion, primarily due to $460.7 million from acquisitions, driving an 85.0% rise in segment profit to $139.7 million and a 74.0% increase in Segment Adjusted EBITDA to $199.0 million Post Consumer Brands Q2 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,065.5 | $599.1 | +77.9% | | Segment Profit | $139.7 | $75.5 | +85.0% | | Segment Adjusted EBITDA | $199.0 | $114.4 | +74.0% | - Acquisitions contributed $460.7 million to net sales in the second quarter[12] - Excluding acquisitions, volumes decreased by 3.9%, driven by declines in non-retail cereal and peanut butter[12] Weetabix The Weetabix segment reported a 10.5% increase in Q2 net sales to $138.0 million, aided by a 440 basis point foreign currency tailwind and the Deeside acquisition, though segment profit decreased by 6.7% to $18.1 million and Segment Adjusted EBITDA was nearly flat at $27.8 million Weetabix Q2 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $138.0 | $124.9 | +10.5% | | Segment Profit | $18.1 | $19.4 | -6.7% | | Segment Adjusted EBITDA | $27.8 | $28.0 | -0.7% | - Net sales growth was supported by a favorable foreign currency exchange rate tailwind of approximately 440 basis points and $7.2 million from the Deeside acquisition[14] Foodservice The Foodservice segment experienced a 12.4% decline in Q2 net sales to $554.8 million, with volumes down 2.2% due to a slowdown in away-from-home demand for eggs, resulting in a 17.4% fall in segment profit to $64.5 million and a 7.5% decrease in Segment Adjusted EBITDA to $101.7 million Foodservice Q2 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $554.8 | $633.2 | -12.4% | | Segment Profit | $64.5 | $78.1 | -17.4% | | Segment Adjusted EBITDA | $101.7 | $110.0 | -7.5% | - Volumes decreased by 2.2%, primarily driven by a decline in egg volumes, partially offset by an increase in potato volumes[17] Refrigerated Retail In the Refrigerated Retail segment, Q2 net sales decreased by 8.5% to $240.4 million, with volumes down 5.1% due to distribution losses in lower-margin egg and cheese products, though segment profit increased by 23.1% to $22.4 million and Segment Adjusted EBITDA grew 2.5% to $40.5 million Refrigerated Retail Q2 Performance (in millions) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $240.4 | $262.7 | -8.5% | | Segment Profit | $22.4 | $18.2 | +23.1% | | Segment Adjusted EBITDA | $40.5 | $39.5 | +2.5% | - Overall volumes decreased by 5.1%, with egg volumes down 16.6% and cheese volumes down 10.7%, while sausage volumes grew 6.9%[19][47] Other Financial Information This section covers additional financial details, including interest expense, debt, swap performance, income tax rates, and share repurchase activities Interest, Debt, Swaps, and Income Tax Net interest expense for Q2 2024 was $80.0 million, up from $63.8 million in the prior year, driven by higher debt and interest rates, while the company recorded a net income of $13.3 million on swaps compared to a $9.0 million expense last year, and the effective income tax rate for the quarter was 22.7% - Net interest expense increased to $80.0 million in Q2 2024 from $63.8 million in Q2 2023, primarily due to lower interest income and higher average debt balances[21] - The company recorded income on swaps of $13.3 million in Q2 2024, a reversal from an expense of $9.0 million in the prior-year period[23] - The effective income tax rate for Q2 2024 was 22.7%, compared to 25.4% in Q2 2023[24] Share Repurchases During the second quarter, Post repurchased 0.1 million shares for $8.1 million, with total repurchases amounting to 0.5 million shares for $44.8 million for the first six months of the fiscal year, leaving $377.8 million remaining under the share repurchase authorization as of April 30, 2024 Share Repurchase Activity | Period | Shares Repurchased (millions) | Cost (in millions) | Average Price | | :--- | :--- | :--- | :--- | | Q2 2024 | 0.1 | $8.1 | $103.88 | | Six Months Ended 3/31/24 | 0.5 | $44.8 | $87.23 | - As of April 30, 2024, Post had $377.8 million remaining under its share repurchase authorization[25] Financial Statements and Non-GAAP Reconciliations This section presents the condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, along with detailed reconciliations of non-GAAP financial measures Condensed Consolidated Financial Statements The condensed consolidated financial statements provide detailed unaudited results, including the statements of operations, balance sheets, and cash flows for the three and six months ended March 31, 2024, compared to the prior year Statements of Operations The statement of operations shows a year-over-year increase in net sales to $1,999.0 million for the quarter and $3,964.9 million for the six-month period, with net earnings rising to $97.2 million and $185.3 million, respectively Condensed Consolidated Statements of Operations (in millions) | | Three Months Ended March 31, | Six Months Ended March 31, | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Net Sales | $1,999.0 | $1,619.9 | $3,964.9 | $3,186.2 | | Gross Profit | $579.6 | $413.8 | $1,152.2 | $828.7 | | Operating Profit | $190.1 | $137.7 | $399.4 | $287.6 | | Net Earnings | $97.2 | $54.1 | $185.3 | $146.0 | | Diluted EPS | $1.48 | $0.92 | $2.83 | $2.44 | Balance Sheets As of March 31, 2024, total assets stood at $12.19 billion, up from $11.65 billion at September 30, 2023, with total liabilities increasing to $8.20 billion from $7.80 billion, while total shareholders' equity rose to $3.99 billion Condensed Consolidated Balance Sheets (in millions) | | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $1,810.9 | $1,478.5 | | Total Assets | $12,191.1 | $11,646.7 | | Total Current Liabilities | $839.5 | $805.3 | | Long-term debt | $6,414.6 | $6,039.0 | | Total Liabilities | $8,200.4 | $7,795.4 | | Total Shareholders' Equity | $3,990.7 | $3,851.3 | Cash Flows For the six months ended March 31, 2024, cash provided by operating activities was $424.0 million, a significant increase from $198.3 million in the prior year, while investing activities used $432.6 million and financing activities provided $237.1 million Condensed Consolidated Cash Flows (in millions) | Six Months Ended March 31, | 2024 | 2023 | | :--- | :--- | :--- | | Cash provided by operating activities | $424.0 | $198.3 | | Cash used in investing activities | $(432.6) | $(134.0) | | Cash provided by (used in) financing activities | $237.1 | $(161.7) | | Net increase (decrease) in cash | $230.4 | $(94.0) | Segment and Supplemental Information This section provides a detailed breakdown of net sales and profit by operating segment for the three and six-month periods, along with supplemental volume percentage changes for the Refrigerated Retail segment, showing declines in egg and cheese but growth in sausage Q2 Net Sales by Segment (in millions) | Segment | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Post Consumer Brands | $1,065.5 | $599.1 | | Weetabix | $138.0 | $124.9 | | Foodservice | $554.8 | $633.2 | | Refrigerated Retail | $240.4 | $262.7 | Refrigerated Retail Q2 Volume Change vs Prior Year | Product | Volume Percentage Change | | :--- | :--- | | Side dishes | (0.6%) | | Egg | (16.6%) | | Cheese | (10.7%) | | Sausage | 6.9% | Reconciliation of Non-GAAP Measures The report provides detailed reconciliations of GAAP measures to non-GAAP measures, such as Adjusted Net Earnings and Adjusted EBITDA, with Q2 2024 Net Earnings of $97.2 million reconciling to an Adjusted EBITDA of $345.2 million after various adjustments - The company uses non-GAAP measures like Adjusted EBITDA to evaluate underlying company performance, make financial decisions, and determine executive bonuses[28][49] Q2 Reconciliation of Net Earnings to Adjusted EBITDA (in millions) | | Three Months Ended March 31, 2024 | | :--- | :--- | | Net Earnings | $97.2 | | Income tax expense | $28.6 | | Interest expense, net | $80.0 | | Depreciation and amortization | $119.6 | | Non-cash stock-based compensation | $20.7 | | Other adjustments | $(0.9) | | Adjusted EBITDA | $345.2 | Disclosures This section outlines important disclosures, including forward-looking statements and the various risks and uncertainties that could impact the company's future financial results Forward-Looking Statements The report contains forward-looking statements regarding the company's fiscal year 2024 outlook for Adjusted EBITDA and capital expenditures, outlining numerous risks and uncertainties that could cause actual results to differ materially, including economic conditions, input cost volatility, supply chain disruptions, and the ability to integrate acquisitions - The report includes forward-looking statements concerning the fiscal year 2024 Adjusted EBITDA and capital expenditure outlook[32] - Key risks identified include consumer reaction to pricing, changes in economic conditions, volatility in input costs, supply chain disruptions, and successful integration of acquisitions like Pet Food[33]