Post Q2 2025 Earnings Call Transcript

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Operator

Welcome to the Post Holdings Second Quarter twenty twenty five 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. I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post.

Daniel O'Rourke
Daniel O'Rourke
Investor Relations at Post Holdings

Good morning. Thank you for joining us today for Post's second quarter fiscal twenty twenty five earnings call. I'm joined this morning by Rob Vitale, our President and CEO Jeff Zadix, our COO and Matt Maynard, 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.

Daniel O'Rourke
Daniel O'Rourke
Investor Relations at Post Holdings

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 forward looking statements, which are subject to risks and uncertainties that should carefully 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 a reconciliation of these non GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website.

Daniel O'Rourke
Daniel O'Rourke
Investor Relations at Post Holdings

With that, I will turn the call over to Rob.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Thank you, Daniel, and good morning, all. I'm going to make some thematic comments, and Jeff and Matt will take you through the quarter. First, we performed well in a difficult environment. I expect that to continue. Second, trade policy and regulations continue to grab headlines.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

We will manage those as they develop. Third, consumer sentiment is weak. We expect we will need to focus on demand drivers and flawless supply chain execution. First and last, uncertainty in the capital markets complicates M and A valuations. With that, I will turn the call over to Jeff and Matt, who will take you through the quarter.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Jeff?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Thanks, Rob, and good morning, everyone. Given the volatile macro backdrop and challenges associated with avian influenza, we are especially pleased with our Q2 results. Our food center team did a fantastic job navigating incredibly difficult egg markets as they prioritize customer supply, while at the same time mitigating some of the expected net cost impact. Meanwhile, our retail businesses offset volume pressures with cost control and supply chain execution. As a reminder, last quarter we guided that Q2 would be down 30,000,000 to $50,000,000 compared to Q1 as a result of avian influenza costs ahead of pricing impacts in foodservice.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Actual Q2 foodservice adjusted EBITDA was approximately $20,000,000 lower than Q1 as $30,000,000 of costs ahead of pricing impact was partially offset by manufacturing and supply chain performance improvements. Setting aside the temporary impact of avid influenza, underlying business trends versus last year remain encouraging despite a backdrop of poor food service foot traffic. Our selling proposition continues to prove out as our mix of higher value added egg products grew once again. Looking to the balance of the fiscal year, additional avian influenza pricing became effective starting in April and our flock repopulation is on track. Assuming no additional outbreaks in our network, we expect to balance our egg sourcing and demand by Q4 and we continue to expect we will recover the unfavorable cost ahead of pricing impact we saw in Q2 during the remainder of fiscal twenty twenty five.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Moving on to post consumer brands, we had a solid quarter while navigating volume declines in both grocery and pet. In grocery, our cost structure continued to benefit from last September's plant closure. However, the cereal category declines accelerated to down 3.7% with our branded portfolio slightly behind at down 4.5%. Category declines continue to pressure our manufacturing utilization and cost structure, which drove our recent decision to close two more plants by the end of the calendar year. Our pet volume consumption was down 4.5% versus a flat category as we continue to face declines in Nutrish demand and distribution and Gravy Train price elasticities.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

We were able to offset these lower pet volumes with improved supply chain and SG and A cost performance. Finally, our relaunch of the Nutrish brand is currently hitting the shelves and while it is very early, the first reactions are encouraging. Turning to Refrigerated Retail, Q2 adjusted EBITDA was down versus prior year primarily because of Easter timing, which fell during Q2 a year ago. In addition, similar to our foodservice business, we experienced cost ahead of pricing in eggs with pricing taking effect in April, which will benefit Q3. Our focus continues to be on driving volumes in our sides business, driving lower costs and integrating our newly acquired PPI business.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

At Weetabix performance improved after our ERP conversion last quarter. While we see while we still limited promotional activities in Q2, we saw yellow box consumption relatively in line with the category, which was down 1.5%. We expect to improve margins in the back half of the year through sequential volume growth as we ramp up marketing with targeted activations and further execute our cost out initiatives. Before turning the call over to Matt, a couple of comments on M and A and capital allocation. The recent tariff actions and volatility in capital markets have slowed what was an active M and A pipeline for us.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

The uncertainty in this environment points to smaller tactical transactions such as our recent acquisition of PPI or transactions where we have clear line of sight to synergies. With that said, we have continued to lean into share repurchases and have now bought approximately 6% of the company since the beginning of the fiscal year. From both the leverage and liquidity position, we remain very well positioned for opportunistic capital allocation. With that, I'll turn the call over to Matt.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Thanks, Jeff, and good morning, everyone. Second quarter consolidated net sales were 2,000,000,000 and adjusted EBITDA was $347,000,000 Sales decreased 2% as lower overall volumes in our retail businesses were partially offset by elevated avian influenza driven pricing in foodservice and volume growth in shakes. Turning to our segments. Post consumer brands net sales decreased seven percent driven by lower volumes in both Cereal and Pet. Cereal volumes decreased 6% primarily due to category dynamics.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Pet volumes decreased 5% as we continue to lap reductions in lower margin business and gravy train pricing elasticities along with lower consumption, particularly in Nutrish. As expected, these pressures were partially offset by customer inventory recovery from deloading last quarter due to our TSA cutover. Segment adjusted EBITDA increased 2% versus prior year as we benefited from improved cost performance for both grocery and pet. Foodservice net sales increased 10% and volumes increased 3%. Revenue reflects elevated avian influenza driven pricing and higher shake sales.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Excluding shakes, volumes were down by 1% driven by HPAI dynamics impacting eggs and lower customer foot traffic impacting both eggs and potatoes. Adjusted EBITDA decreased 6% driven by avian influenza costs ahead of pricing, partially offset by improved manufacturing and supply chain performance. Refrigerated retail nut sales decreased 7% and volumes decreased 5%. Volumes across all products were affected by the timing of Easter, which was in Q2 last year. Egg volumes were impacted further by limited availability due to avian influenza.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Segment adjusted EBITDA decreased 14%, driven primarily by lower volumes and cost ahead of pricing in eggs and sows. Weetabix net sales decreased 5% versus the prior year. Foreign currency represented a headwind of 70 basis points. Volumes decreased 7% driven by lower promotions due to our Q1 ERP conversion, noncore product discontinuations and elasticities related to pricing decisions, which we will lap later in the fiscal year. Segment adjusted EBITDA increased 9% versus prior year, led by increased net pricing from our prior year profit enhancing decisions, partially offset by increased input costs and lower volumes from promotional blackouts.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Turning to cash flow. We generated $160,000,000 from operations and approximately $70,000,000 in free cash flow, net of CapEx spend. This was a decrease sequentially from last quarter, which is primarily due to working capital timing. Year to date, cash flow was $240,000,000 From a capital allocation standpoint, we favored share repurchases as we repurchased 1,700,000.0 shares at an average price of approximately $110 per share. In addition, we spent $124,000,000 to acquire PPI.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

The net effect of our capital allocation versus free cash flow this quarter increased our net leverage slightly to 4.5x. With our earnings release last night, we increased our adjusted EBITDA guidance range to $1,430,000,000 to $1,470,000,000 While we plan to recover Q2 foodservice costs ahead of pricing in the second half, we expect this to be largely offset by lower performance in PCB from continued elevated cereal category volume declines and anticipate disruption in Nutris as we fully ramp its relaunch. Thank you for joining us today, I will now turn the call back over to the operator.

Operator

The floor is now open for questions. Thank you. Our first question is coming from Andrew Lazar with Barclays. Please go ahead.

Andrew Lazar
Andrew Lazar
Managing Director at Barclays

Thanks so much. Good morning. Know Post has already raised several times its view on the structural run rate it expects from the Foodservice unit. And it looks as though the underlying segment EBITDA, again, sort of excluding the cost ahead of pricing piece, was again above that level. Is the long term run rate here now even higher than you thought previously?

Andrew Lazar
Andrew Lazar
Managing Director at Barclays

Or are there other reasons why maybe it came in so much better than we and some others had modeled this quarter?

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Go ahead.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Andrew, think it's hard to completely parse out avian influenza, but I think your comment that, hey, does that indicate $126,000,000 relative to the 105,000,000 we've talked about in the past. I think in reality, it's somewhere between those two numbers. But we need a couple of quarters of normalcy, get the avian influenza behind us and back in balance in terms of our supply demand and then we can make a better call what that run rate is, but clearly higher than 01/2005.

Andrew Lazar
Andrew Lazar
Managing Director at Barclays

Okay. Thanks for that. And then in the quarter, looks like you were able to maintain pretty solid margins in PCB despite the volume declines you saw in ready to eat and pet. I guess would your expectation be that the recent announcements you made around the incremental asset optimization moves in cereal should allow you to maintain strong profitability in this segment going forward even if sort of cereal category volume trends remain as challenged as what we saw this past quarter? Thanks so much.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So Andrew, I clearly, that's the objective is to do our best to manage our costs to maintain the profitability. If we're seeing 4% or 5% year on year declines, that's going to be challenging. Our expectation would be in the medium term at least that that would start to temper and that we would get back to 1% to 2% down, probably not in the second half of this year, but longer term. So if we can get the category to more of that historic decline, we think that those actions would enable us to maintain our margins along with the normal cost out activities that we would do on a regular basis.

Andrew Lazar
Andrew Lazar
Managing Director at Barclays

Great. Thanks so much.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Thank you.

Operator

Thank you. And your next question comes from the line of David Palmer with Evercore ISI. Please go ahead.

David Palmer
Analyst at Evercore

Thanks. So just building on that line of questioning from Andrew. I'm thinking about PCB for fiscal twenty twenty six and how you're generally thinking about the setup there. Clearly, you have the plant closures and the tailwinds continuing there and then the big two with Pet and Cereal. And I can imagine that Cereal might be a back weighted situation or one that just slowly gets better in your thinking.

David Palmer
Analyst at Evercore

And maybe that's offset by maybe some of the things that you've been talking about the drags ending in the co man agreements and the improvements in nutrition. Maybe you'd be thinking about that Pet business perhaps offsetting cereal next year. So rough strokes, how are you thinking about the your businesses within PCB and your ability to have at least a little bit of EBITDA growth from PCB next year? Thanks.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

I think you laid it out exactly how we're thinking about it. This year has been a transition year for Pet. So we had to get off the TSA with Smucker. We had to do some of the heavy lifting on the brand relaunch for Nutrish. And obviously, we expect that those activities will bear some fruit into next year and would enable us to offset some of the headwinds that we're seeing in the cereal business.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

At the same time, we're going to do what we can on the cereal side to manage our costs, look to innovation and renovation to drive some volume even if the category continues to be challenged. So the combination of those things we think will enable us to mitigate the headwinds we're seeing to the best of our ability.

David Palmer
Analyst at Evercore

Thank you.

Operator

Thank you. And our next question comes from the line of Ken Goldman with JPMorgan. Please go ahead.

Ken Goldman
Ken Goldman
Managing Director at J.P. Morgan

Hi, thank you. On PCB, the pricemix downturn this quarter, I'm just wondering if you could elaborate a little bit on the key drivers there and how we might think about that line item ahead for the rest of the year?

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Yes. I think as I talked about second half PCB down over first half, it's going to offset some of the pricing recovery we have in foodservice. And our expectation in the near term is the category remains where it's at for the balance of the fiscal year, which will put some pressure on cereal year over year for sure. Again, we've seen in terms of a mix standpoint this past quarter, we saw customers shift to larger pack sizes, which hurts mix a little bit. Bit.

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

I think for right now, we're kind of holding firm to what we saw in Q2 for the balance of the year.

Ken Goldman
Ken Goldman
Managing Director at J.P. Morgan

All right. And then just as we get closer to the debt maturities for Eighth Avenue, do you have any updated thoughts on the potential optionality of that business and maybe Post's potential role within that?

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Well, we have a lot of confidence in the business operations itself. Obviously, we have to resolve the near term maturities and we will have a resolution one way or the other fairly soon.

Ken Goldman
Ken Goldman
Managing Director at J.P. Morgan

Okay. Thank you.

Operator

Thank you. And our next question comes from the line of Michael Lavery with Piper Sandler. Please go ahead.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

Thank you. Good morning. Good morning. Just was looking to get a little better sense of how to think about some of the savings from the cereal plant closures you just announced. And we can get a little bit of an idea of the timing just that it's the end of the calendar year.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

But are there potential offsets? Or how do any maybe magnitude you can give? Or just how to think about the impact from that?

Matthew Mainer
Matthew Mainer
EVP, CFO & Treasurer at Post Holdings

Yes. I think we called out about a $20,000,000 annualized benefit from the plant closures as that half calendar year. So you would get three quarters of that next fiscal year. I think if the category slows down to a more normalized down 1% to 2% that's going to be in line with what we're seeing on a volume decline impact versus the cost savings of the plant shutdown. I think the challenge is that the category doesn't slow down then we've got some more optimization to do and we have some more leverage we can pull.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

And I guess maybe specifically was trying to get at how much that's net or gross relative to things like operating deleverage or just the lost volume piece? Is that just the gross piece from the facility savings or does it kind of bundle it all together?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

That would be the gross So to the extent that there's incremental deleveraging beyond that, that would be an offset.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Yes. And to be fair, we are in the early stages of our planning for FY 2026. So we don't want to run our plan and expose it until we're ready.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

No, fair enough. And just on the pet piece of the business, if you have a consumer that's getting more cautious, I know you have a few brands positioned differently, but how much can you characterize the benefit from trade down? Would that generally be a net positive? How do you think about just the impact from those share moves if you get a more stretched or cautious consumer overall?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Yes. There's a meaningful shift down that would tend to favor us because we a large number of our brands tend to be on the value side of the equation. We do have some brands that play in the more premium side as well. But we tend to be up and down the value chain with a skew towards the lower margin excuse me, lower price point products, particularly in dog dry dog food.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

And would it be fair to characterize this similar to cereal where obviously you could lose some share on the branded side, but more than make up for it with what you gain on the low end?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Well, that depends on a lot of variables. I mean, clearly in cereal, we have a much higher percentage of the low end of the value chain given our position in private label as well as bagged cereal. Our position in pet on the low end is not nearly the same market share that we have in Cereal.

Michael Lavery
Michael Lavery
Senior Equity Research Analyst at Piper Sandler Companies

Fair enough. That's great color. Thanks.

Operator

Thank you. And our next question comes from the line of John Baumgartner with Mizuho Securities. Please go ahead.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Good morning. Thanks for the question.

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Hey, John.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Hey, good morning. I wanted to come back to Refrigerated Retail and the Bob Evans, the side dishes.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Think expansion opportunities have been one of the aspirations there over the years, and we've seen some innovation here and there and some emphasis and de emphasis on different segments. And I think in general, we've seen some encouraging volume signs at retail in the last couple of quarters. I'm wondering if you could speak at this point to what you're seeing in the category expectations for distribution expansion over the next twelve months in terms of what your supply chain allows, returns on recent efforts and innovation? Just kind of broader thoughts on expectations for retail going forward. Thank you.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Yes. So clearly, the PPI acquisition gives us capacity to do a number of things that maybe we couldn't have done before. We've also improved our capacity through internal improvements in our own plants that we've owned even prior to the PPI acquisition. So we've got you've been with us a long time. So you remember the years when we had to stop preparing certain products because we meet customer demand.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Those days are behind us. So now we can play more offense than we have in the past. What we're seeing in the category is there's a trade down that's occurring with private label, which is a phenomenon that has not been an issue in that category years ago. What we saw years ago was that private label really didn't have the quality and it would come in and out, but it never really stuck. This time around, we're seeing that private label has better quality and it's taking some demand away from products like ours.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So with the new capacity that we have available, it enables us to think about how we look at other categories. Does it make sense to play in private label? Does it make sense to play up and down the value chain, while continuing to maintain our significant market share in the Bob Evans brand. In terms of innovation or renovation in that brand, we put a lot of that on hold given the issues that we had through COVID and even prior to COVID with our capacity utilization. Now with the availability of capacity, we can begin to do more of that, which we would expect to do in the latter half of this year and into next year.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Okay. Thanks for that. And then just to come back to PCB and some of the cereal category headwinds. I mean, I think you had seen this about a decade ago where birth rates were down, you had some shift to two products. Think, you know, back then it was frozen breakfast and restaurants.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Now you could argue it's, you know, more protein shakes. So the macro headwinds we've seen in cycles before. And I'm curious if you put that to the side, do you see anything else fundamentally having changed, whether it's, you know, post inflation price points for the category, whether it's a broader shift, you know, towards protein that's stickier this time around? I guess, is there anything in the environment that that's maybe more structurally changed that would sort of, change how you grow the category, your aspirations for the category, your ability to kind of circle the wagons on the value price point? Any thoughts there

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

in terms think

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

include GLP-1s in that. So there's certainly some impact on GLP-1s in the demand. And I think there will be some lapping that has to occur in the next six to eighteen months. So that's the one difference in the next in the prior decade that we didn't have.

John Baumgartner
Managing Director, Equity Research at Mizuho Securities

Okay. Thanks, Rob. Thanks, Jeff.

Operator

Thank you. And your next question comes from the line of Scott Marks with Jefferies. Please go ahead.

Scott Marks
Scott Marks
Equity Research Analyst at Jefferies

Hey, good morning guys. Thanks for taking my questions. First one I wanted to ask about is we've heard from some of your competitors recently, notably in cereal, about more so increasing promotional activity to drive value for consumers. And I don't think I heard that mentioned kind of in your prepared remarks more so around innovation and renovation. So just wondering if you can share any color on your thoughts into kind of the trade spend piece.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So our view of the category cereal we're talking about is that promotional activities are at what we would call normal levels. Certainly, you go through ebbs and flows in a given year or a given time period within a year where one producer might be promoting more and others not and vice versa in subsequent periods. So we haven't seen anything that we would consider to be out of the ordinary for any significant stretch of time. Our personal approach is to continue to do the types of programs that drive value. So we have seen that promotion for promotion sake does not generate the return in volume that you give up in price.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So you have to find the sweet spot that works for your products and works for your profitability. And that's the plan that we have now and going forward.

Scott Marks
Scott Marks
Equity Research Analyst at Jefferies

Got it. And then last one from me. I know it's still early in the acquisition of PPI, but just wondering if you can share any color on initial learnings or insights that you have from that and how you plan on leveraging that? Thanks.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Yes, it is early. I think the thing I would say is that there are some synergies that we probably didn't realize are there that in the longer or medium to long term that will be there. Probably the other learning is that the initial integration or we had some upset in our employee population there that was probably a little bit more significant than we thought going in. So the ramp up that we're going to see is going to be slower than perhaps we initially expected. But it's going to fit well into our network.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

It's going

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

to provide us opportunities like I mentioned before to think about that category in a different way compared to the way we've had to think about it based on some constraints we've had before we acquired it.

Scott Marks
Scott Marks
Equity Research Analyst at Jefferies

Understood. Thanks so much.

Operator

Thank you. And your next question comes from the line of Mark Turrente with Wells Fargo. Please go ahead.

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

Hey, good morning and thank you for the questions. I guess just first, grocery in general, category volumes remain under pressure. A lot of that's consumer pressure that we're seeing out there. But thinking more in terms of relative performance, who are you seeing outperforming? Is it more value in private label?

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

Is it smaller players? And then since quarter end, have you seen any sequential improvement in any of your category trends?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So the first part of your question, I think it's a real dichotomy. There's take cereal category as an example. You see some of the more premium organic natural marketed as healthier for you, but fairly expensive not fairly, really expensive price points doing well in the category while the overall category is not performing well. So I think what we're seeing in consumers is there's a pocket of consumers that are spending for what they perceive as better for them and are willing to pay essentially whatever necessary to get that type of product. And then you've got other consumers who are cutting back significantly and deloading their pantries and buying less frequently, which is affecting the expandable demand that we see in more normal times with cereal where people have products in their pantry and they tend to eat it when it's available.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

What we're seeing is that they're just deloading their pantries because they don't have the money to go and restock. And then I'm sorry, I zoned out on the second part of your question.

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

Yes. Just any sequential improvement since quarter end in any of your

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

categories?

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Yes. It's not great improvement, but the worst months for cereal were February and March, a little bit of improvement in April, but we're clearly not ready to claim victory in that regard.

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

Okay. And then just an update on the RTD shake manufacturing ramp. Shakes were called out as the driver of positive foodservice volumes. Did you make better progress during the quarter than you expected? And is your outlook for the contribution there still consistent with prior?

Marc Torrente
Marc Torrente
Vice President - Equity Research at Wells Fargo

Thanks.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

Keep in mind that the baseline comparison was essentially zero for shakes. So compared to last year, any production would have been an improvement. We are seeing improvement sequentially. It's slower than what we would like it to be, but it is trending in a favorable direction. But it is still not a material contributor to profit at the current levels.

Jeff Zadoks
Jeff Zadoks
Executive VP and Chief Operating Officer at Post Holdings

So we would expect continued ramp up, again, maybe a little bit slower than we had hoped when we communicated this six, nine months ago. But in the long run, we still see the same finish line in terms of where that profitability can take us.

Operator

Thank you. And your next question comes from the line of Carla Casella with JPMorgan. Please go ahead.

Carla Casella
Carla Casella
Managing Director at JP Morgan

Hi. Thank you. One follow-up on Ken's question about Eighth Avenue. What are the options there? And is there scenario where you buy in and reconsolidate that business?

Robert Vitale
Robert Vitale
President & CEO at Post Holdings

Well, I think I would start with recalling that we wrote this to zero, two or three years ago. With that, we consider it like a new investment opportunity with which we have a great deal of prayer experience and knowledge. Beyond that, I'm not going to comment on the various iterations of opportunities that could exist for the company.

Carla Casella
Carla Casella
Managing Director at JP Morgan

Okay, great. Thank you.

Operator

Thank you. This concludes today's Post Holdings second quarter twenty twenty five earnings conference call and webcast. Please disconnect your line at this time and have a wonderful day.

Executives
    • Daniel O'Rourke
      Daniel O'Rourke
      Investor Relations
    • Robert Vitale
      Robert Vitale
      President & CEO
    • Jeff Zadoks
      Jeff Zadoks
      Executive VP and Chief Operating Officer
    • Matthew Mainer
      Matthew Mainer
      EVP, CFO & Treasurer
Analysts

Key Takeaways

  • Post delivered solid Q2 results despite avian influenza headwinds, with Foodservice costs ahead of pricing partially offset by supply chain improvements and pricing effective April set to recover Q2 impacts by Q4.
  • The Foodservice segment saw net sales up 10% (volumes +3%) driven by elevated pricing and shake growth, while Adjusted EBITDA fell 6% due to $30 M of costs ahead of pricing, partly mitigated by manufacturing gains.
  • Post Consumer Brands faced cereal volumes down 4.5% in a category off 3.7% and pet down 4.5%, but will close two cereal plants by year-end for ~$20 M annual cost savings and reported encouraging early responses to the Nutrish relaunch.
  • Refrigerated Retail’s Q2 Adjusted EBITDA declined on Easter timing and egg cost pressure ahead of April pricing, with management focused on driving sides volumes, cost reduction, and integrating the PPI acquisition.
  • Capital allocation emphasized share repurchases (6% of shares ytd) over large M&A amid market uncertainty, while FY25 Adjusted EBITDA guidance was raised to $1.43–$1.47 B.
AI Generated. May Contain Errors.
Earnings Conference Call
Post Q2 2025
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