Post(US:POST)2021-05-07 16:39Financial Data and Key Metrics Changes - Consolidated net sales for Q2 2021 were $1.5 billion, a decline of 0.7% compared to the prior year, with adjusted EBITDA at $263.8 million [28] - Adjusted EBITDA guidance for the second half is set between $590 million to $620 million, reflecting higher cost inflation assumptions than initially expected [25][26] - The company’s aggregate market share remained stable at 19.5% despite inflationary pressures [10] Business Line Data and Key Metrics Changes - Post Consumer Brands saw net sales and volumes decline by 5.5% and 11.6% respectively, with Peter Pan contributing approximately 340 basis points to net sales growth [29] - The Foodservice segment experienced a 2.4% decline in net sales and an 11.1% decline in volumes, with adjusted EBITDA down 25% to $41.2 million [32] - Refrigerated retail net sales increased by 0.8%, while adjusted EBITDA decreased by 11.6% to $42.5 million due to higher input costs [34] Market Data and Key Metrics Changes - The Foodservice business is currently tracking at approximately 80% of pre-pandemic volume levels, with expectations for recovery as channels like education and business travel reopen [13][66] - Weetabix maintained steady performance, with net sales flat year-over-year, but faced an 8.5% volume decline [31] Company Strategy and Development Direction - The company is focusing on innovation in protein and snacking, with plans to accelerate distribution of new products [11] - There is an active review of M&A opportunities across business segments, with a robust pipeline expected to expand due to increased seller activity [22] - The company aims to maintain profit and margin levels through revenue management and ongoing cost reduction strategies amid inflation [10] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued recovery in the Foodservice segment, with expectations to reach pre-pandemic profitability during fiscal 2022 [17][26] - The ongoing labor shortage is expected to persist through September, impacting production capabilities [16][95] - Management expressed optimism about the potential for a shift back to pre-pandemic consumption patterns over time [46][56] Other Important Information - The company has been aggressive in share repurchases, buying back 1.6 million shares at an average price of $98.27 during the quarter [38] - The company is navigating challenges related to supply chain execution and labor shortages, which are affecting production and margins [86] Q&A Session Summary Question: Foodservice results were better than expected; what is the outlook for the second half? - Management expects continued recovery in volumes, but cautioned that inflation will impact sales dollars [44] Question: How does the company view the cereal category's growth potential? - Management believes the cereal category will remain slightly elevated from pre-pandemic levels, requiring ongoing innovation to stay competitive [56] Question: What are the biggest uncontrollable variables for the back half of the fiscal year? - The pace of reopening and consumer buying patterns in both retail and foodservice are key variables [86] Question: How is the company managing pricing in the face of commodity inflation? - Management indicated that the shape of the pricing curve is more important than the level, focusing on mix management and cost reduction [92] Question: What is the outlook for labor constraints across divisions? - Labor constraints are widespread, but management anticipates some easing after the expiration of extended unemployment benefits [95]