Post Holdings, Inc.

Thank you for your continued patience. Your meeting will begin shortly.

If you need assistance at any time, please press star zero and a member of our team will be happy to help you. ¶¶ ¶¶ ¶¶ ¦ ¦ ¦ ¦ ¦ ¦ ¶¶ ¶¶ Thank you for your continued patience.

Your meeting will begin shortly. If you need assistance at any time, please press star zero, and a member of our team will be happy to help you.

Thank you. ¶¶ ¶¶ ¶¶ THE END Please stand by.

Your meeting is about to begin. Welcome to the Post Holdings Fourth Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. Though others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Daniel O'Rourke, investor relations for POST.

Daniel O' Good morning. Thank you for joining us today for POST's fourth quarter fiscal 2025 earnings call. I'm joined this morning by Rob Vitale, our president and CEO, Jeff Zadix, our COO, and Matt Maynor, our CFO and treasurer. Rob, Jeff, and Matt will make prepared remarks and afterwards we'll answer your questions. The press release that supports these remarks is posted on both the investors and the SEC filings portions of our website and is also available on the SEC's website. As a reminder, this call is being recorded and an audio replay will be available on our website at postholdings.com. Before we continue, I would like to remind you that this call will contain certain 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. 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 and posted on our website. With that, I will turn the call over to Rob.

Thanks, Daniel, and good morning, everyone. We had a good FY25, and we ended with a strong quarter. It was an interesting year as we navigated regulatory changes, tariffs, avian flu, and uncertain consumer sentiment. Despite this challenging environment, our portfolio of businesses displayed resilience and delivered strong results. We expect that the benefits of our diversification will allow us to navigate an environment of continued uncertainty. We expect to continue volume growth in our food service business, especially in our highest value products. In retail, we remain disciplined in the face of a very challenging volume landscape, keeping our focus on cost reduction and profitable brand investments. Jeff and Matt will provide detail on our FY26 outlook, but we will focus on what we can control. And from that perspective, I like our positioning. I expect food service to provide volume growth and our retail businesses to generate considerable cash flow to fund both organic and inorganic opportunities. In that vein, a highlight of FY25 was our strong operating cash flow, which allowed us to maintain flat net leverage while making key capital investments, completing two tactical acquisitions, and buying back over 11% of the company. With a step down in capital spending and the benefits from the new tax law, we expect a meaningful increase in FY26 free cash flow. Coupled with our long-dated debt maturity ladder, we can be opportunistic with our capital allocation decisions. We continue to review M&A opportunities, and we benchmark them against buying back our own shares. I would like to thank all of our employees for another successful year. The strength and diversification of our operating model combines with dedicated employees give me a great deal of confidence in continuing our track record of value creation. Before I turn the call over to Jeff, I want to make a personal comment. Bill has been a mentor, business partner, and friend for nearly 30 years. And I expect that to continue regardless of titles. Jeff. Thanks, Rob. And good morning, everyone. We delivered strong consolidated results in Q4. Our cold chain businesses did a fantastic job in navigating HPAI. In addition, across the entire portfolio, cost reductions and manufacturing execution combined to more than offset the impact of lower retail volumes. At post-consumer brands, our branded and private label cereal businesses experienced consumption declines resulting from challenging category dynamics. In PET, our volume consumption was down versus the flat category, driven primarily by Nutrish. As a reminder, we are adjusting the value proposition and messaging for this brand with changes to be in market by the end of fiscal Q2. A bright spot in PET was Kibbles and Bits, which had a strong consumption volume versus the prior year. In spite of the volume challenges, we were successful in growing our consumer brand's EBITDA margin, excluding 8th Avenue, by 100 basis points, driven by improved mix in cereal and strong cost management across the segment. Our upcoming cereal plant closures will further help to alleviate the impact of cereal category declines. Setting aside HPAI, food service had strong underlying performance driven by growth in both egg and potato volumes. While a portion of Q4 egg volume growth was related to timing from improved egg availability and customer inventory replenishment, we continue to see strong demand, in particular for our higher value added products. Volumes for these higher margin egg products grew nearly 9% in the quarter and approximately 6% for the full year. Our HPAI impacted egg supply came back online as expected in Q4, allowing us to continue gradually winding down pricing adders. As we enter fiscal 26, we are well positioned to continue the normalized growth trend in this business. In refrigerated retail, dinner sides grew volumes in the quarter driven by targeted promotions and new private label offerings that began shipping toward the end of the quarter. Private label offerings are expected to contribute low single-digit volume growth in FY26. Segment profitability had some continued tailwinds from HPAI pricing matters again this quarter. At Weedabix, our flagship yellow box product, consumption performed in line with the improving cereal category, which was down less than 1%. A noticeable improvement in the UK cereal category over recent quarters is an encouraging trend. Meanwhile, we continue to execute against our identified cost out opportunities as we consolidate our private label production, resulting in a plant closure in mid-fiscal year. Turning to FY26, we have planned for a more normalized environment in our cold chain businesses as we begin the year with egg supply back in balance, allowing us to focus on driving volume growth in both food service and refrigerated retail. For the balance of our portfolio, we're projecting some improvement in the sealer category as we lap certain FY25 pressures. However, we do not expect a full return to historical trends. To support volumes across the entire company, we will make targeted investments, including innovation, where we see profitable opportunities. However, as Rob mentioned, we remain focused on protecting margins and our strong cash flow. With that, I'll turn the call over to Matt.

Thanks, Jeff, and good morning, everyone. Fourth quarter consolidated net sales were $2.2 billion and adjusted EBITDA was $425 million. Sales increased 12% driven by our acquisition of 8th Avenue. Excluding the acquisition, net sales declined, driven by lower pet food and cereal volumes, partially offset by avian influenza-driven pricing and egg volume growth. Turning to our segments, post-consumer brands' net sales, excluding the contribution from 8th Avenue, decreased 13%, driven by lower volumes in both grocery and pet. Cereal volumes decreased 8% due to category and competitive dynamics. At pet, our volumes declined 13%, driven by lost private label business we mentioned last quarter, and we are continuing to experience consumption declines as we reset our nutritious brands. Segment adjusted EBITDA increased 2%, which includes a $20 million contribution from 8th Avenue. Excluding 8th Avenue, adjusted EBITDA decreased 8% versus prior year, as the impact of lower volumes were partially offset by improved cost management, especially in SG&A. Moving to food service, net sales increased 20% on both pricing and an 11% volume increase. Excluding the impact of our PPI acquisitions, volumes increased 9% on higher egg, potato, and shake volumes. The increased volumes and avian influenza-driven pricing drove the revenue increase. Adjusted EVA dot increased 50% driven by avian influenza-driven pricing and the previously mentioned volume growth in our value-added egg and potato products. Refrigerated retail net sales were flat and volumes, excluding the impact of PPI, fell 4%. The volume decline was driven by sausage and eggs, which experienced elasticities due to pricing to offset input costs. Segment-adjusted EBITDA increased 44%, benefiting from avian influenza pricing adders and lapping some elevated SG&A costs in the prior year. Weed-of-ex-net sales increased 4% versus the prior year. Foreign currency represented a tailwind of 360 basis points. Overall volumes decreased 3% as our core yellow box product volumes declined by 6%, offset by volume growth in UFIT, which was up 41% versus the prior year. Segment adjusted EBITDA increased 1% versus prior year due to currency tailwinds, partially offset by lower volumes and increased inflation-driven costs. Turning to cash flow in the quarter, we generated $301 million from operations. Our free cash flow for the quarter was approximately $150 million as we invested in key projects in both PCB and food service businesses. Free cash flow for the full year was nearly $500 million driven by strong operating cash flow, net of elevated CapEx. In the quarter, we repurchased 2.6 million shares, bringing our fiscal 25 total repurchases to 6.4 million shares. We were active in share repurchase following the end of quarter, buying back approximately 1 million shares. Net leverage, in accordance with our credit agreement, ended the fiscal year at 4.4 times relatively flat to how we began the year. Before we get to Q&A, I have a few comments on our fiscal 26 guidance. As stated in our earnings release last night, including two months of PASTA contribution, we expect our FY26 adjusted EBITDA to be in the range of $1.50 billion to $1.54 billion. This range reflects approximately a 1% to 4% growth rate to a normalized FY25. Relative to FY25 Q4, we expect Q1 adjusted EBITDA to decrease meaningfully, driven by HPAI normalization and seasonality declines in U.S. and U.K. cereal, partially offset by seasonality benefits in refrigerated retail. For the full year, we expect second-half favorability to the first half. Finally, our CapEx guidance of $350 million to $390 million is down notably from FY25 as we completed key investments within PCB and food service. FY26 will continue to see elevated spending in food service as we invest behind growth for both precooked and cage-free. Thank you for joining us today, and I'll now turn the call over to the operator.

The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question comes from Andrew Lazar with Barclays. Please go ahead. Your line is open.

Morning. Thanks so much. Maybe, Rob, to start off, we've certainly seen industry volume remain challenged. We can see some of that reflected in your PCB segment in cereal and pet. You've been aggressively buying back your own shares in lieu of more interesting portfolio opportunities. The last time valuations in the group were really under this much pressure was the late 90s. The group got out of it through larger-scale M&A. Perhaps this time is different. I think some investors maybe see the current weaknesses maybe more structural rather than cyclical. I guess I'm curious how this dynamic informs your capital allocation decisions. you know, is M&A still the right approach given how cheap assets are or, you know, is buying back stock at these levels more sensible if one believes, you know, the terminal growth rate of potential acquisition candidates is simply lower going forward? I guess what I'm asking is whether this represents another buying opportunity in the space like the late 90s or is it somewhat different?

Well, if the ultimate question is it structural or cyclical, I think you have to tell us how long the cycle will last. I think it's different in the following manner. I think the big difference is the cost of capital has changed dramatically. We've been in a long-term decline. And now we're in what could be an inflection point where we see more increased pressure than decrease. And I think that starts to develop the strategy. And I think in lieu of a reflexive position of, We're just going to use M&A to get bigger. It needs to be a little more thoughtful and perhaps a little bit more focused around focus so that we can look at opportunities to be better rather than just bigger. And that sounds a little bit cliche, but I think it's true. Where we have opportunities to be more focused in some area, I think we should take them. and where there are opportunities to be more efficient in other areas, we should take them. From our perspective, we don't necessarily differentiate between M&A and buybacks. What we try to do is compare them from a potential return perspective and a risk perspective, and then compare them. So we really don't look at it and say, if we buyback shares were going to shrink or look at our multiple different. We look at that and say, you know, what is the best risk return adjusted way to use our capital?

Great. Thank you for that. I know on the last earnings call, I think you talked about all the asset optimization efforts, right, that you're undertaking in ready-to-eat cereal and that those could kind of get plant utilization maybe back up to around the mid-80s. But that, you know, if the cereal category continued to be weak or below its historic rate of decline, maybe further action on the cost side sort of would need to be considered. And I guess I'm curious, what sort of actions could we be talking about? And maybe are you considering any additional ones, given, I think, your comments and the prepared remarks that were made? don't see the category in fiscal 26 necessarily getting back to what's been its longer or historical rate of decline. Thanks so much.

Certainly there are additional opportunities we can take on cost reduction, but I think the magnitudes start to get smaller as the bigger things like plant closure have occurred. So we are looking at things like line optimization rather than plant optimization. So they continue to be opportunities, but we've obviously taken the larger ones first.

Thank you.

And we'll move next to Tom Palmer with J.P. Morgan. Please go ahead.

Hey, good morning, and thanks for the question. You have normalized growth outlooks you've given for your segments, and I guess maybe thinking through those segments for fiscal 26, which ones do you kind of see as being more consistent with that normalized outlook after we adjust for M&A and avian flu, and maybe which ones are light? I mean, I know there was the PCB commentary, but kind of curious, I guess, in the other areas. Thank you.

sure so i think when we look at the pcb legacy business we see that as more flat so not growing the two percent we have in our algorithm this year given what we've got going on in cereal but also the nutrition reset that it won't take place until mid-year and in the balance of the portfolio honestly we see in line with those algos okay uh thank you for that and i guess follow up on on the others the um a quarter ago you talked about

in food service around 115 million, EBITDA being like a normalized run rate. We have seen real volume strength in that segment. And I appreciate, you know, the past year had some avian flu, but why is 115 still the right number or should we be thinking about something maybe a bit higher to start out the year?

No, I mean, we think 115 is the right number. And that was really a benchmark we put last quarter. And that's how we think about Fiscal 25, I think fair to assume that grows in line with algo for fiscal 26. So by the end of the year would be, you know, obviously something more like 120. But again, I think we talked about it last quarter as well. We would like to have a quarter or two of some normalcy so we can get a better read on that. As you pointed out, there's a lot of noise with avian influenza. We definitely had some catch up this past quarter. with customer inventory levels given some of the challenges with AI, but really do see the base business continue to perform quite well. So I think we'll revisit in another quarter, but how we benchmark normal and normalize run rate was against that 115 and then growing 5% in fiscal 26. Thank you.

We'll go next to Matt Smith with Stifel. Please go ahead.

Hi, good morning. I wanted to ask about the performance in refrigerator retail. You had a nice 20% EBITDA margin in the quarter, but you called out some AI pricing benefits there. As we look forward, is this a business that's on solid footing to maintain kind of a high-teens EBITDA margin in a normal environment?

Sure. So we definitely... Similar to food service, but on a much smaller scale. We had some pricing benefits that fell away at the end of the quarter. So that was a little bit inflated because of that, but we are seeing better performance and better volume performance around private label, which is improving capacity utilization. I think with that said, in the holiday season for them, we've always had significant seasonality. I think high teens is reasonable. When you talk about those periods in our slower part of the year, you're going to return to more, you know, call it 16% or so margins. It's not going to be a high teens.

Thanks, Matt. And, and Rob, as a follow up to some of the commentary about the industry, we are seeing private label trends vary across post categories, gaining some share in pet categories while having a softer performance in the cereal category currently. Is there anything to read through in terms of category by category, how consumers are trading down into private label, any observation you have, whether it's price gap dependent or really category dependent? Thank you.

You took the words right out of my mouth. It's really interesting. price gap dependent, we're starting to see consumers be a little bit more drawn to promotional activity, and it moves inversely to that.

And our next question comes from Scott Marks with Jefferies. Please go ahead.

Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask about in the prepared comments, you mentioned making targeted investments in 2026 with some innovation potential. Just wondering if you can kind of share some details about how you're thinking about some of those investments and maybe what categories you would like to invest in and anything else you can comment on that. Thanks.

it's the typical type of investment for brand innovation that you have seen historically, we took a pause on some of those during the pandemic. And it's been something that we haven't been quick to renew in the last couple of years, but it's going to be line extensions in in really every retail category. So in Cereal, as an example, we're going to be bringing some protein products. We're going to be bringing some granola products, which are areas of the category that are more, that are growing better than the rest of the category. But you're going to see that sort of thing in our refrigerator retail business as well. And in Pettit's, a lot of that is directed towards the nutrition relaunch. although we'll see some smaller innovations in some of the other brands as well.

Got it. Thanks for that. Next question for me, just as we look at the food service business and some of the demand for some of those value-add products, it sounds like you're expecting some of that momentum to sustain as we get into next fiscal year. Maybe what gives you confidence that some of your operator partners will continue to demand these products at these high levels? And just any comments you can care about the overall backdrop for your operators right now.

So there's a couple of things we would point to. One is really a long history of that business moving customers up the value chain. So starting from lower value-added products, moving them up to higher value-added products, and the value proposition that they see when doing so. It's a function of the labor dynamic in their operations when they move up the value chain. So that's been a multi-year, almost decade-long, maybe multi-decade-long trajectory of the category, which we don't see any slowdown in that happening. The one more perhaps unique situation with avian influenza and the pricing dynamic that has been caused by that in shell eggs is has caused some customers to convert to liquid eggs, the ones that are able to convert. Because over this period of time, liquid eggs have been less expensive than shell eggs. What we have seen in the past, probably on a smaller scale than what we've seen this last cycle, is that there's some stickiness to people who have converted to liquid eggs initially just for the pure price play. because they find that the efficiency in their operations is such that even if the prices are more competitive with one another between liquid and shell eggs, that they find efficiencies in remaining with liquid eggs. So we have some belief that, given what we've seen over the last 12 to 18 months, that the stickiness of those customers that have converted will continue.

Thanks so much. We'll pass it on.

We'll go next to Michael Lavery with Piper Sandler. Please go ahead.

Thank you. Good morning. Hey, Mike. Just on PET, can you maybe unpack some of the key moving parts there and maybe just remind us the cadence of some of the private label cuts and distribution losses or the command cuts and when you lap those and just how to think about the puts and takes through the year.

Sure. So a year ago, we were working our way through fiscal 25 through some profit-enhancing decisions we had made, and we've fully lapped those as we exited 25. So in 26, what we've yet to lap then is we developed during 25 as we lost some private label business. We continue to pursue opportunities there, but we won't lap that until we get to the midpoint of the fiscal year. So I think as we think about the business and the volume trajectory, first half of the year, see really more down mid to high single digits. And then as we get to the midpoint of the year and nutrition is on shelf and we lap that private label loss, we'd be back to more flat to maybe some slight growth year over year.

Okay, great. That's helpful. And then you touched on some of the price gaps. Maybe just specifically for cereal, can you help us understand what you're seeing there? How rational does pricing seem? And maybe any sense of why you're not seeing a little bit more benefits from trading down?

We've had some pretty competitive pressure and promotional activities over the last several months. They seem to be changing. And, you know, I think it's no more complicated than that. As some of our competitors have been more promotional, the The private label offering has been less competitive.

Okay, thanks so much.

We'll go next to Mark Turrente with Wells Fargo Securities. Please go ahead.

Hey, good morning, and thank you for the question. I guess first on the EBITDA upgrade into 26, Any changes to your underlying assumptions for the go-forward 8,000 new business? I think you previously called out 45 to 50 million EBITDA annualized plus the 15 million synergies exiting the year. And then any color on contribution baked in for the positive business for the first quarter top line in the EBITDA?

Sure. So no change to the outlook of 45 to 50 is how we think about the contribution in fiscal 26. and then do have confidence in getting to a run rate in synergies by the end of the year. It's going to take some time given all that's going on there. And then in terms of the pasta business, in Q4, we called out about a $20 million contribution from 8th Avenue, so a little under the run rate, obviously. About half of that was pasta.

so again we're expecting just two months of pasta contribution this fiscal year so two-thirds of 10 million before we close on the transaction in december okay thank you and then um just a little more on the volume trends and core grocery um any color on uh progress through the quarter and how things have trended into the first quarter have you seen any incremental pressure That's from SNAP. And then just what's factored into your outlook for this year?

Yeah, so I think what we factored in is fairly conservative. Again, I think we believe we'll see some category improvement as we lap some challenges in the back half of next year, given some of our fiscal 26, I should say, given that some of the challenges we saw with Maha and some other things that happened in the spring. But, you know, we're not calling for a category getting back to normal in the back half of the year. So some marginal improvement year over year is really what we have. And I think Q1 and Q2 looking a lot like what we saw in Q3 and Q4 and then seeing some improvement in Q3 and Q4 is what's baked in our guidance.

Okay, thank you.

And once again, if you do have a question, you may press star 1 on your telephone keypad at this time. We'll go next to John Baumgardner with Mizuho Securities. Please go ahead.

Good morning. Thanks for the question.

Good afternoon, John.

I wanted to go back, Rob, to some of your comments around strategy and cyclical versus structural. Over the years, Post has built this portfolio that's tilted more to value, whether it's cereal, pet food, the 8th Avenue business here again. And the value has held up well against the macro over time. So it's been prudent. But I'm curious, given the headwinds now for lower middle-income consumers, higher debt, snap reductions, and you're seeing the consistency from the premium eggs, does it maybe warrant more initiatives in terms of addressing premium products, higher-income households? Just how do you think about that in terms of future M&A or organic innovation and the capacity to tilt the portfolio differently going forward?

I think I would disagree that the The portfolio is built around value. I think the portfolio is built around choice. Because if you look at each line we are in, we have an array of price points. And that is true of eggs, cereal, potatoes. So what we really like to do is appeal to an array of consumers. And I think that the trends that you're raising, rather than dictating the construct of the portfolio in total really dictate the direction of innovation. And I think in that context, it does suggest if we have the opportunity to do so to innovate more towards higher or middle income consumers.

Okay. And then maybe just, you know, building on that in the refrigerated retail business, you know, thinking about, you know, some of the side dishes. I think, you know, that's been an area where private labels have been a little bit of a challenge the last year or two. As we look forward now, you know, supply chain issues have been, you know, cleared away. How do you think about investing in that business, you know, in terms of a vehicle for innovation, you know, hitting the convenience angle for consumers, expanding, you know, distribution growth? Where does your plan sort of sit for that side dishes business going forward now?

So John, you've got a long history with it. So we went through a period of time when we first acquired the business that it was in private label and branded. So to Rob's comment, we were participating up and down the value of that segment, different price points. Then we went through a period of time when we did not have enough capacity to meet our branded demand. So we exited private label so that we could focus on the brand. In the meantime, some competitive private brand products got some traction, and we have now gotten to the point where we have our capacity better aligned to the point where we have capacity that can meet both private label and branded demand. And because of that, we're choosing to pick and choose where we go, but to go after attractive private label opportunities in that category, while also maintaining the brand and continuing to invest in the brand. So the longer-term or medium-term goal in that category would be to do exactly what Rob said, play at the multiple price points, not to be the omnipresent party in private label, but to be the party that wins where private label is most relevant at those retailers.

Gotcha. Thanks, Jeff. Thanks, Rob.

Thank you.

Our last question comes from Carla Casella with J.P. Morgan. Please go ahead.

Hi. We talked a lot about the M&A as part of the strategy over the past. I'm just wondering how that environment looks today and if there are a lot of opportunities. And then also if you're focused more on opportunities within any of your key segments or would you add another leg to the stool?

We tend to be entirely opportunistic on the last part of your question. You know, I think in order to have a successful transaction, we obviously need a counterparty. And I think with the multiples where they are today, we've seen some reluctance to transact. And, again, we don't necessarily look at M&A as – an objective in and of itself, we look at it as something at an allocation of capital choice that we can use compared to, uh, find our share shares back or paying down debt.

Okay. And, and given the eighth Avenue's behind you, um, any thoughts on coming to market to refinance, um, some of the, the draw on the revolver that you used for eighth Avenue?

Yeah, so we continue to monitor, Carla. Obviously, we keep a close eye on that and the bond market, but we'll continue to look for the right pocket to do that.

Okay, great. Thank you.

Thank you. This concludes today's question and answer session, as well as Post Holdings' fourth quarter 2025 earnings conference call and webcast. Please disconnect your line at this time and have a wonderful day. Thank you.