Post Holdings (POST) Q2 2026 earnings call transcript

I would now like to turn the call over to Daniel O'Rourke, Investor Relations for POST. Good morning. Thank you for joining us today for POST's second quarter fiscal 2026 earnings question and answer session. I'm joined this morning by Rob Vitale, our Chairman and CEO, Nico Catozio, our COO, and Matt Maynard, our CFO and Treasurer. This call is being recorded, and an audio replay will be available on our website at postholdings. com.

During today's call, we may make 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. The press release and written management remarks that support today's call are posted on our website in the Investor section. This call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. We hope you had a chance to review our management remarks. The key highlights are that our diversified portfolio had strong performance in Q2 and delivered adjusted EBITDA above expectations.

However, given new headwinds from the conflict in the Middle East, we maintained our previous adjusted EBITDA guidance. Meanwhile, we continued aggressive share repurchases, and fiscal year to date, we have reduced our share count by 15%.

Finally, our strong cash flow, liquidity, and credit metrics continue to afford us significant flexibility for opportunistic capital allocations. With that, I'll briefly turn the call over to Matt.

Hey, thanks, Daniel. Setting aside the business performance, I'm sure you all saw our announcement yesterday on our CEO succession plans. First of all, on behalf of our whole team, congratulations to Nico. Really well deserved. You have done a fantastic job leading PCB, and we are confident that will translate to more of the same as you transition into leading POST. To Rob, we have all learned from the best and truly appreciate your leadership over the past 12 years. As much as Rob is respected by so many on this phone call, it is even more so within the walls of our company.

With that, I will turn the call over to the operator for Q&A.

Thank you. Just a question maybe on pricing for the industry and POST. I mean, I realize there is still quite a bit of uncertainty, but should the industry face another round of more significant inflation? Do you think pricing could be one of the levers used this time around, given consumers have been kind of already pushing back on price points where they are today? And some are actually lowering prices with, you know, less than stellar results thus far. I'm just curious on your view on that, and how does POST sort of think about that?

What I would say is it depends on where inflation falls. If it is in the low single digit, I think we'll see more of CPGs trying to absorb that within their P&L, and that could be in the form of maybe lowering promotional intensity. If it is more than that, we will probably see more targeted pricing.

Yeah, so let me, so on PET, I think about it in kind of three big buckets. One is a bit out of our control, that is, the category has been slower than what we anticipated, and especially dry dog food. 60% of our portfolio is dry dog food. As we shared in our remarks, that was 4% down in pounds. So, that's about 20% of our, call it, gap to the category. The rest you can think about in half and half in two buckets. One is what we share on Nine Lives. Nine Lives is we raise prices on a third of the brand that is more functional. As we raise prices, we saw higher elasticity than what we anticipated.

And we lost the inclusion in a couple of retailers. That, in our mind, is fairly straightforward. If you remember, less than a year ago, we were having the same conversation about gravy train with waste prices. Remember that these brands have lower margins, and that's why we do what we do. And we focus on profit. We remember gravy train with waste prices. We saw the same electricity. We fixed that with wallbacks in the short term. And now we fix it with price-back architecture, and that brand in one of our larger retailers is growing at 40% in pounds now. So we see it as the same playbook, right? We tried price point, elasticity was a bit higher, we can solve it in the short term with Vobox, and then longer term, call it a couple of quarters from now, we should fix it with price-back architecture.

So it's fully straightforward. And then the third bucket is Nutriche. We are in early stages of the relaunch. And that will take probably the entire Q3 to actually fully hit the market. So it's happening, it's flowing in. But it's still, especially in the foot channel, taking a bit longer to be fully reflected on shelf. That one, if you remember, we commented on that one, it's a full relaunch route. So new positioning, new packaging, and new price points. What we feel encouraged about is where it been fully relaunched one of our largest retailers we are already seeing sequential improvement week after week And the last week of April we already saw the brand flat two last year in a category that is again declining So that a positive But it still early on and we probably need a couple more months So by Q4, we should actually start seeing the category kind of showing at least flat, just like growth versus year ago.

That's how we think about that.

I think directly we're seeing the cost impact, Matt, really around fuel charges and surcharges. We've got some coverage or hedges in place, but this is exposure beyond those coverages, and just given the dramatic increase in diesel, that flows through to across the company, especially in North America. So that's really the key driver.

Yeah, I think it continues to be a bit more of the same. You know, you certainly have some assets, some private investments that haven't come to market yet, and I think that's a nod to just where public multiples are and, you know, where a clearing price might be. So there's still some potential transactions sitting on the sidelines.

That aside, you know, you continue to see some of our larger competitors talk about maybe separating portions of their portfolio. We've seen it happen already in a couple of cases in the last year. I think those are larger, more transformational transactions. Again, we look at everything, but something we would evaluate. And then I think it's a bit of a barbell. Then you have the smaller tuck-ins that are available that are, for us, more synergistic, obviously easier to digest. But I think the backdrop for us is really where our share price is trading and implied multiple. And again, we laid that out in the prepared remarks, and that's really our benchmark, our comparison. And it continues to be a high bar, but we continue to look at all that's out there.

Thank you. Thank you.

So, we still see that as the run rate. Again, in the quarter, there were so many puts and takes between lapping HBI supply constraints and pricing and costs in excess of pricing last year. But our supply and demand remain in balance, so we don't provide guidance segment by segment. We see us going back to our front rate.

Yeah. So let me start with the category. The category, as we shared in the remarks, has been better compared to where we were a year ago. So, for the quarter, the category was down 3% in pounds, and if you have a look at April, it's 2.5% down. So, it is improving. It's still not kind of where it was pre-pandemic, but it's getting there. So, that's the category. Our portfolio, you have seen some of it. We are extremely pleased with where we are. So Q2 was another quarter where we were still working through the transition assortment, especially in the foot channel, to actually better prepare or have a higher return on promotional spend. Because of that, our promotional spend was down a bit versus prior year, and still we were the only large player that actually held flat dollar market share year over year.

So we feel really good about our portfolio, and we feel good about the improvement we carry.

Sure So in terms of the switching I think that obviously a risk we evaluate but honestly given the value proposition of what we found especially in the larger operators is once they switch to our value products they able to take that labor out of their system and they see the benefits of the consistency food safety other things of the product it quite sticky I'd say that maybe the risk is around some of the smaller independent operators, which is a much smaller component of our business, where they have a little more flexibility in the back of the house to make that switch. But again, I think by and large, the majority of the portfolio sees that change as quite sticky.

Sure. So in terms of what that was, that was related to Oreo's licensing agreement that we have, and I believe we have another quarter before we fully lap that going away. But in terms of just, we think about from a volume standpoint, looking out the balance of the year, we'd expect better year-over-year performance as we lap that in the second half. I think as a reminder, we've seen the category come back to more flat, which is historically the right spot or what we've seen out of cereal in the U. K. And Weedavex continues to have, when I say Weedavex, the Yellowbox product in particular has some very strong momentum behind it and continues to outperform.

So I think as we lap the Oreo hose and that comes away as we get into Q3, we expect you to start to see better performance overall out of our portfolio with that.

Thank you.

Sure. So, Scott, I think, first of all, just a reminder, UFIT continues to grow nicely within the portfolio. It's a co-man's business, but as it grows in sales, it's a much larger, I'm sorry, lower margin business, given the co-man nature of it. So I think that's realistically taken the top off of reaching 30%, which is a good thing because we're still growing profit dollars. But in terms of just sequential improvement from where we're at now, we were able to execute some network optimization at the end of March and close a facility on the private label side, given our D-side acquisition a couple of years ago. That was part of that plan. We were able to execute it, and that will lead to better profitability in the second half.

So we expect, as you look at EBITDA margins, sequential improvement that's noticeable in Q3 and Q4 relative to the first half.

Sure. So we saw the, you know, pretty significant lift in dinner sides or sides for the business, 12% growth. The biggest driver certainly was Easter, and, you know, we see that as you look historically. When Easter falls, it's a big lift. So I'd say that's a majority of that year-over-year movement, given Easter was in Q3 last year, was in Q2 this year. But the other contributor was certainly the new private label products that we've rolled out at the beginning of the fiscal year. Those continue to do well. Arguably, they probably had a little Easter momentum behind them as well, but those are really the two drivers.

So, obviously, Easter will fall away, but we'll be left with continued, you know, lapping of private label introduction until we get to the end of the year.

Scott, I would add that there was some underlying volume growth for our branded portfolio. So it's just, of course, it's the 12. I mean, if you had two heads, it's call it a third or third or third, but between underlying volume growth, probably the one and ETH, you would take.

Sure. So we certainly are seeing the impacts as we got to the end of Q2 and end of the beginning of Q3 here. So pretty consistent, I would say, depending on the level of hedges we had in place through the balance of the year. But I think you can think of it about as a pretty average run rate, assuming the war extends to the end of the fiscal year, which is what's in our base assumption. And then in terms of pricing, so I can, so that one is business by business, but for the most part, right now, we're assuming that we'll absorb that through the P&L. If this expands beyond this fiscal year, we will probably then consider about pricing.

But again, it really depends on where inflation falls. I mean, right now we're saying it in fuel and a little bit in packaging. If these things actually get worse, we will have to think about pricing and it's probably going to be in the new fiscal year. But again, way too early to say.

Yeah. So the underlying business performance is in line with the deal model, so we're pleased. We put some takes on kind of some kind of slightly better, some kind of slightly worse, but for the most part, it's in line with the deal model. So we feel really good And then the integration is growing extremely well Synergies are a bit ahead of the plan So and we should be hitting run rates over the end of this fiscal as we anticipated But we feel really good about the combination of both right So the team stay focused no distractions And so the business is performing and we are probably over on the synergies Thank you.

Thank you.

Yeah, I mean, I think that we have to be careful about questions that we answer from a perspective of Belgrade. I think it's entirely appropriate to answer questions as a manager, but not as a brand opener. So I'll let you talk about the...

Yeah, again, I think, you know, in terms of the Shake business, you know, I think we continue to see, you know, opportunities there to grow with Bellring. We're a key supplier of theirs. We've gotten our house in better order in terms of just volume on the Shake side, so I think we're feeling better about that business. We've talked about just some higher costs that we're trying to work through in terms of higher than anticipated around just the manufacturing process and some of the costs we're absorbing. But on the volume side, we're seeing better performance, and there's certainly demands for the volume that we are pulling through on the dollaring side.

I think you said it right. That's a lot of what the Bob Iwant business is, right? So, it does leverage a lot of the assets from Michael Ford.

Kind of expanding to other categories, I think that the Bob Iwant team, like any of our teams, assess that all the time, It depends on kind of what they see as their ability to win in the category and returns. But I would actually highlight that the ballroom is essentially that business that leverages the Michael Ford's assets.

So, Post-Consumer Rans is where we have the largest private-level brand, and the highest in terms of percentage of the total business, and it's around 20% of the business is private-level.

If I understood your question, what is our position? And we have a very strong position in Cereal, in Granada, and Peanut Butter. We are a smaller player in private-level. In PET, we are more of a premium private-level player in PET. And in terms of opportunities, we see opportunities in all those carriers.

There is a private label in WIDABIX, yes, and that has been the case for years now. Now we are growing faster in refrigerated because essentially we make the decision of actually reengaging with the private-level business in that category, so it's growing from essentially nothing.

And so we see it as an opportunity, ongoing opportunity. For now it's targeted on fewer retailers, but it's an opportunity there as well.

It's difficult to say. I mean, it's higher than 20%. Yeah, the Weedbox is, from a category standpoint, private label is much larger in the U. K. than the U. S. , obviously a much smaller market. But our share is in line with the category in terms of branded versus private labels. So private labels north of 40% for us over there. But I think in line, I don't know if there's a lot of opportunities there. We feel really good about having the alternative price points just like we do at post-consumer brands. And we think that gives us a competitive advantage and inroads with retailers, both on the branded side and, you know, with that private label presence.

Sure. We generally think about it, call it $150 million of just cash on the balance sheet for working capital purposes, and just, you know, given our Weedabix office as well as international, that's about the right level of cash that's needed for daily operations.