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Post Holdings (POST) Q4 Earnings Top Estimates, Sales Jump Y/Y

Post Holdings, Inc. POST reported robust fourth-quarter fiscal 2022 results, wherein the top and bottom lines improved year over year and surpassed the Zacks Consensus Estimate.

Results reflected pricing to counter input and freight cost inflation. While supply-chain headwinds eased a little during the quarter, these continued to lead to increased manufacturing costs and lower-than-optimal-level customer order fulfillment rates.

We note that Post Holdings acquired Lacks Foods Limited in April 2022, which forms part of its Weetabix segment. 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.

Moreover, POST divested the Willamette Egg Farms business on Dec 1, 2021. The results of Willamette Egg Farms used to form part of the company’s Refrigerated Retail unit.

Post Holdings, Inc. Price, Consensus and EPS Surprise

Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote

Quarter in Detail

Adjusted earnings from continuing operations of 85 cents per share increased significantly from the 11 cents reported in the prior-year quarter. The bottom line easily surpassed the Zacks Consensus Estimate of 71 cents.
 
POST registered sales of $1,579.1 million, up 16.5% year over year. The figure exceeded the consensus mark of 1,555 million.

The gross profit amounted to $392.6 million, up 18.1% from the $332.5 million reported in the year-ago quarter. This Zacks Rank #4 (Sell) company’s gross margin contracted from 24.5% to 18.1% in the quarter under review.

Post Holdings’ SG&A expenses increased 9.9% year over year to $223.8 million. SG&A expenses as a percentage of sales came in at 14.2%, down 80 basis points from the year-ago quarter’s level. Adjusted EBITDA surged 31.9% to $279.7 million.

Segment Details

Post Consumer Brands: Sales in the segment increased 12.6% year over year to $587.6 million in the quarter under review. Volumes rose 2.1% on strength in Peter Pan nut butter, Malt-O-Meal bag cereal, Pebbles and private label cereal, somewhat negated by softness in Honey Bunches of Oats. The segment’s adjusted EBITDA jumped 9.7% to $115.4 million.

Weetabix: Segment sales dipped 8.2% year over year to $116.8 million, including the contribution of $6.7 million from the Lacka acquisition and currency headwinds of nearly 1,500 basis points. Volumes slid 2.9%.
Excluding gains from the Lacka buyout, volumes dropped 9.4% due to a decline in branded products, somewhat offset by growth in private label products. Segmental adjusted EBITDA of $37 million tumbled 13.3% year over year.

Foodservice: Sales increased 36.9% to $625.5 million in the quarter under review. Volumes rose 3.6%. Egg volumes rose 5.2%, and potato volumes climbed 2.1%. Segmental adjusted EBITDA was $109.6 million, up 97.1% year over year.

Refrigerated Retail: Sales in the segment were $249.2 million, down 0.8% from the year-ago quarter’s figure. Net sales in the year-ago period included contributions from the divested Willamette business. Volumes slipped 15% year over year.

Excluding Willamette’s contribution in the year-ago period, volumes fell 7.1%, mainly due to softness in the egg and cheese categories. Segmental adjusted EBITDA jumped 49.2% year over year to $35.8 million.

Other Financial Details

Post Holdings ended the quarter with cash and cash equivalents of $585.6 million, long-term debt of $5,956.6 million and total shareholders’ equity of $3,265.7 million.

Cash provided by operating activities was $384.2 million for the year ended Sep 30, 2022. In the fourth quarter, Post Holdings repurchased 1.1 million shares for $100 million. In fiscal 2022, POST bought back 4.9 million shares for $483.9 million. As of Nov 16, 2022, the company has remaining share repurchase availability of $283.3 million.

Guidance

Post Holdings anticipates fiscal 2023 adjusted EBITDA between $990 million and $1,040 million. POST expects capital expenditures in the range of $300-$325 million in fiscal 2023. These include roughly investments of $100 million in RTD shake manufacturing, precooked and cage-free eggs and North American RTE cereal manufacturing optimization.

Shares of the company have risen 0.7% in the past three months against the industry’s dip of 1.8%.

Looking for Consumer Staple Stocks? Check These

Some better-ranked stocks from the sector are Lamb Weston LW, The J.M. Smucker SJM and Conagra Brands CAG.

Lamb Weston, a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 14.6% and 45.7%, respectively, from the year-ago reported numbers.

The J.M. Smucker, which manufactures and markets branded food and beverage products, sports a Zacks Rank #1 at present. The J.M. Smucker has a trailing four-quarter earnings surprise of 20.8%, on average.

The Zacks Consensus Estimate for SJM’s current financial-year sales suggests growth of 4.6% from the year-ago reported number.

Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average.

The Zacks Consensus Estimate for Conagra Brands’ current financial-year sales and EPS suggests growth of 5.2% and around 3%, respectively, from the corresponding year-ago reported figures.


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