Post Holdings, Inc.

Welcome to the Post Holdings Second Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today for Post are Rob Vitale, President and Chief Executive Officer, and Jeff Zedokes, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12 p.m. Eastern Time. The dial-in number is 800-925-9356. No passcode is required. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Post Holdings, for introductions. You may begin.

Good morning, and thank you for joining us today for Post's second quarter fiscal 2022 earnings call. With me today are Rob Vitale, our President and CEO, and Jeff Saddux, 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 the investor relations 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 reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday posted on our website. With that, I will turn the call over to Rob.

Thank you, Jennifer, and good morning, everyone. We had a successful quarter, and despite some near-term challenges, we remained quite upbeat about the year. I want to start by expressing my appreciation to our colleagues who worked towards the bell ring transaction. As you know, this quarter we completed the spinoff of 80% of our position. The transaction required an enormous effort from many people across our organizations, and I'm grateful to each person for their sacrifice and effort. I'm excited for the next chapter of the bell ring story. The Premier Protein brand remains the leader in the developing category with considerable runway for expanding household penetration and innovation. Dymatize has become a clear leader in sports nutrition. This business has tremendous fundamentals in terms of both growth and cash generation. We believe the transaction will also improve its technical support with greater liquidity in its shares. We are pleased with post-performance this quarter. Nonetheless, the business is not firing on all cylinders, and we are still earning below our potential. The expected second half increase reinforces that thesis. Meanwhile, labor conditions are improving. Controllable manufacturing performance is improving. Transportation is improving. I make the distinction about controllable manufacturing because we continue to face sporadic ingredient shortages that create inefficiencies in our factories and in our broader supply chains. Our procurement team has developed a triage approach to identifying flashpoints at the earliest possible moment, starting with better demand planning. However, because it is triage, it does lead to downstream inefficiencies. I expect the supply chains to continue to improve, and our management of shortages will continue to improve. But the combination of pandemic disruption, labor imbalance, inflation, and now geopolitical instability has led to a more lingering macro problem than we anticipated. Speaking of inflation, we have seen rampant cost increases across our business. For the most part, we have been able to raise prices to offset the cost increases, but the timing varies across our segments. Speaking briefly to each segment, most consumer brands had a solid performance. Again, it was not perfect as we managed both supply interruptions and the resulting inefficiencies. We have reversed distribution losses in our key multi-meal franchise with expanded distribution available in stores in April. And at the same time, we are continuing to see a modest shift towards value price consumption. Weedabix continues to navigate challenging waters exceptionally well. UK and European consumers are more directly feeling the impact of Ukraine-related disruption reflected in higher energy and food prices. Meanwhile, we will face a currency headwind as the pound has weakened against the dollar. Our refrigerated retail platform is improving nicely. Our side dish business resumed growth as capacity recovered. We are approaching a level of capacity at which we can resume our brand building efforts. On the other hand, we have struggled with commodity volatility in both our cheese and sausage categories. Food service continues to move towards recovery. Obviously, the $55 million in adjusted EBITDA reflects both a sequential and year-over-year improvement. We continue to expect to exit the year on an EBITDA run rate in line with our pre-pandemic level of profitability. We now expect this to occur at slightly lower volumes, with better margin as the business has modestly shifted to higher value added products. This spring, we have seen the first emergence of high pathogenic avian influenza since 2015. We have thus far depopulated two farms. We are working to mitigate the lost supply, albeit at materially higher prices. Last night, we affirmed our adjusted EBITDA outlook range of $910 to $940 million. These outlook numbers reflect the impact of known events which we do not expect to have a material effect. It does not incorporate a significant expansion in the direct impact on post supply. With one exception, our recent acquisitions are performing quite well. Henningsen, Private Label Cereal, and Eggbeaters are exceeding our underwriting case. Peter Pan is meeting expectations, but synergies begin to hit the P&L in 2023. Allmark is underperforming our underwriting case as costs have escalated faster than we have priced. While it is not terribly material, we hold ourselves accountable to getting these right and we expect to correct this in time. We were an active buyer of our shares again this quarter, although we had some constraints in our ability to acquire shares near the spend date. Since we last reported to you, we have repurchased an additional 1.2 million shares. Since 2017, we have now purchased approximately 23 million shares. you are all aware that borrowing costs are on the rise. Our capital structure anticipated this. Our long-dated and fixed-rate bond ladder positions us quite well to manage through increases in the cost of capital. The war in Ukraine has several impacts on our business. While we do not sell into Russia or Ukraine, both countries contribute to the global grain and energy trade. The realized and potential threat to Ukraine commodities and the potential sanctions of Russian energy will have a lingering impact on price and potentially availability. While the environment is choppy, our business is gaining momentum. I find it enormously encouraging because this is where we perform best, when volatility drives opportunities for significant change. We expect to find such opportunities on both a strategic and a tactical level. Thank you for your time this morning and your continued support, and with that, I will turn the call over to Jeff.