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Post Holdings (POST) Q1 Earnings Top Estimates on High Demand
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Post Holdings, Inc. (POST - Free Report) reported first-quarter fiscal 2021 results, with the top and the bottom lines surpassing the Zacks Consensus Estimate. Results gained from the pandemic-led higher at-home consumption. The company saw healthy demand for its products, online as well as through food, drug, mass and club channels. However, the Foodservice business has been adversely impacted by lower demand from full-service restaurants, quick-service restaurants, education, and travel and lodging amid the pandemic.
Q1 in Detail
Adjusted earnings were 72 cents per share, which beat the Zacks Consensus Estimate of 64 cents. This compares unfavorably with earnings of 76 cents per share reported in the year-ago quarter.
The company registered sales of $1,458 million, up 0.1% from $1,457 million reported in the prior-year quarter. Further, the figure exceeded the consensus mark of 1,417 million. Net sales growth in BellRing Brands, Weetabix, Post Consumer Brands and Refrigerated Retail more than offset the sluggishness in the Foodservice business.
Further, gross profit of $455.4 million declined from $471.5 reported in the year-ago quarter. Gross margin contracted 120 basis points (bps) to 31.2% in the quarter under review.
Meanwhile, the company witnessed SG&A expenses of $251.1 million, up from $235.3 in the year-ago quarter. SG&A expenses, as a percentage of sales, expanded 100 bps to 17.2% in the reported quarter.
Post Holdings generated operating profit of $166.3 million in the reported quarter. This depicts a decline of 15.2% from $196 million in the year-ago quarter.
Adjusted EBITDA declined 6.2% to $284.4 million from $303.1 million in the prior-year quarter, thanks to a sluggish foodservice business.
Segment Details
Post Consumer Brands: Sales in the segment inched up 0.9% year over year to $445 million in the quarter. Volumes remained flat, owing to declines in private label and government bid business, Malt-O-Meal bag cereal, and licensed brand cereal. These were somewhat offset by growth in Post branded cereals. Segmental profit was $70.5 million, down 12.5% from the prior-year quarter level.
Weetabix: Segmental sales increased 11.8% to $113.5 million in the reported quarter. The metric gained from favorable foreign currency movements to the tune of roughly 280 basis points. Volumes increased 8.3%. Volume growth was driven by gains from extruded products, biscuit products, and private label products and exports. These were somewhat offset by declines in drink products, stemming from lower on-the-go consumption amid the COVID-19 pandemic. Segmental profit of $28.1 million increased 18.6% year over year.
Foodservice: Sales slumped 15.7% to $354.5 million in the quarter under review, which included benefits of 210 basis points from Henningsen. Volumes declined 20% due to reduced away-from-home demand amid COVID-19 in various foodservice channels like full-service restaurants, quick-service restaurants, lodging, education and travel. Segmental profit was $10.8 million, down 77% on a year-over-year basis.
Refrigerated Retail: Sales in the segment were $263.1 million, up 5.3% from the year-ago quarter’s levels. Average net pricing in side dish and cheese products remained favorable during the quarter. Volumes grew 1.1% year over year, thanks to higher side dish volumes. Segmental profit of $33.7 million improved 29.6% year over year.
BellRing Brands: Sales amounted to $282.4 million, up 15.7% year over year. Sales in the Premier Protein brand were up 17.4%, while volumes increased 21.9%. Net sales improved on the back of RTD shake distribution gains, higher promotional activity and a marginal increase in customer trade inventory levels in the year-ago quarter. Moreover, sales in the Dymatize brand increased 16.2% year over year. However, segmental profit of $47.8 million fell 3% in the quarter under review.
Post Holdings, Inc. Price, Consensus and EPS Surpris
The company concluded the quarter with cash and cash equivalents of $1,118 million, long-term debt of $6,972.1 million and total shareholders’ equity of $2,904.5 million. At the end of the quarter, the company had $730.6 million remaining under its revolving credit facility.
Cash provided by operating activities was $114.5 million for the year ended Dec 31, 2020. During the quarter under review, Post Holdings bought back 1.7 million shares for $159.9 million. It also noted that 0.8 million shares of common stock were repurchased on Feb 3, 2021, for $80.6 million. Moreover, a new share repurchase program worth $400 million was approved by the board on Feb 2.
Business Development
So far in 2021, Post Holdings concluded the buyout of the Peter Pan peanut butter brand from Conagra Brands (CAG - Free Report) . Also, Post Holdings acquired one of the leading suppliers of hard-cooked and deviled egg products — Almark Foods.
Outlook
Management continues to expect adjusted EBITDA of $520-$550 million for the first half of fiscal 2021, with the metric likely to recover in the second half of fiscal 2021. Further, the company still anticipates capital expenditure between $225 million and $250 million in fiscal 2021, including nearly $4 million attributable to BellRing.
Price Performance
Notably, shares of this Zacks Rank #3 (Hold) company have gained 3.9% in the past three months compared with the industry’s growth of 6%.
Blue Apron Holdings , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 30.3%, on average.
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Post Holdings (POST) Q1 Earnings Top Estimates on High Demand
Post Holdings, Inc. (POST - Free Report) reported first-quarter fiscal 2021 results, with the top and the bottom lines surpassing the Zacks Consensus Estimate. Results gained from the pandemic-led higher at-home consumption. The company saw healthy demand for its products, online as well as through food, drug, mass and club channels. However, the Foodservice business has been adversely impacted by lower demand from full-service restaurants, quick-service restaurants, education, and travel and lodging amid the pandemic.
Q1 in Detail
Adjusted earnings were 72 cents per share, which beat the Zacks Consensus Estimate of 64 cents. This compares unfavorably with earnings of 76 cents per share reported in the year-ago quarter.
The company registered sales of $1,458 million, up 0.1% from $1,457 million reported in the prior-year quarter. Further, the figure exceeded the consensus mark of 1,417 million. Net sales growth in BellRing Brands, Weetabix, Post Consumer Brands and Refrigerated Retail more than offset the sluggishness in the Foodservice business.
Further, gross profit of $455.4 million declined from $471.5 reported in the year-ago quarter. Gross margin contracted 120 basis points (bps) to 31.2% in the quarter under review.
Meanwhile, the company witnessed SG&A expenses of $251.1 million, up from $235.3 in the year-ago quarter. SG&A expenses, as a percentage of sales, expanded 100 bps to 17.2% in the reported quarter.
Post Holdings generated operating profit of $166.3 million in the reported quarter. This depicts a decline of 15.2% from $196 million in the year-ago quarter.
Adjusted EBITDA declined 6.2% to $284.4 million from $303.1 million in the prior-year quarter, thanks to a sluggish foodservice business.
Segment Details
Post Consumer Brands: Sales in the segment inched up 0.9% year over year to $445 million in the quarter. Volumes remained flat, owing to declines in private label and government bid business, Malt-O-Meal bag cereal, and licensed brand cereal. These were somewhat offset by growth in Post branded cereals. Segmental profit was $70.5 million, down 12.5% from the prior-year quarter level.
Weetabix: Segmental sales increased 11.8% to $113.5 million in the reported quarter. The metric gained from favorable foreign currency movements to the tune of roughly 280 basis points. Volumes increased 8.3%. Volume growth was driven by gains from extruded products, biscuit products, and private label products and exports. These were somewhat offset by declines in drink products, stemming from lower on-the-go consumption amid the COVID-19 pandemic. Segmental profit of $28.1 million increased 18.6% year over year.
Foodservice: Sales slumped 15.7% to $354.5 million in the quarter under review, which included benefits of 210 basis points from Henningsen. Volumes declined 20% due to reduced away-from-home demand amid COVID-19 in various foodservice channels like full-service restaurants, quick-service restaurants, lodging, education and travel. Segmental profit was $10.8 million, down 77% on a year-over-year basis.
Refrigerated Retail: Sales in the segment were $263.1 million, up 5.3% from the year-ago quarter’s levels. Average net pricing in side dish and cheese products remained favorable during the quarter. Volumes grew 1.1% year over year, thanks to higher side dish volumes. Segmental profit of $33.7 million improved 29.6% year over year.
BellRing Brands: Sales amounted to $282.4 million, up 15.7% year over year. Sales in the Premier Protein brand were up 17.4%, while volumes increased 21.9%. Net sales improved on the back of RTD shake distribution gains, higher promotional activity and a marginal increase in customer trade inventory levels in the year-ago quarter. Moreover, sales in the Dymatize brand increased 16.2% year over year. However, segmental profit of $47.8 million fell 3% in the quarter under review.
Post Holdings, Inc. Price, Consensus and EPS Surpris
Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote
Financial Details
The company concluded the quarter with cash and cash equivalents of $1,118 million, long-term debt of $6,972.1 million and total shareholders’ equity of $2,904.5 million. At the end of the quarter, the company had $730.6 million remaining under its revolving credit facility.
Cash provided by operating activities was $114.5 million for the year ended Dec 31, 2020. During the quarter under review, Post Holdings bought back 1.7 million shares for $159.9 million. It also noted that 0.8 million shares of common stock were repurchased on Feb 3, 2021, for $80.6 million. Moreover, a new share repurchase program worth $400 million was approved by the board on Feb 2.
Business Development
So far in 2021, Post Holdings concluded the buyout of the Peter Pan peanut butter brand from Conagra Brands (CAG - Free Report) . Also, Post Holdings acquired one of the leading suppliers of hard-cooked and deviled egg products — Almark Foods.
Outlook
Management continues to expect adjusted EBITDA of $520-$550 million for the first half of fiscal 2021, with the metric likely to recover in the second half of fiscal 2021. Further, the company still anticipates capital expenditure between $225 million and $250 million in fiscal 2021, including nearly $4 million attributable to BellRing.
Price Performance
Notably, shares of this Zacks Rank #3 (Hold) company have gained 3.9% in the past three months compared with the industry’s growth of 6%.
Some Solid Food Bets
Pilgrim’s Pride (PPC - Free Report) , with a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 5.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Blue Apron Holdings , with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 30.3%, on average.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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