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Post Holdings (POST) Q4 Earnings Miss Estimates, Sales Up Y/Y
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Post Holdings, Inc. (POST - Free Report) reported mixed fourth-quarter fiscal 2021 results, with the top line increasing year over year and beating the Zacks Consensus Estimate. The bottom line declined year over year and missed the consensus mark.
Performance during the quarter gained from consistent volume demand recovery in the Foodservice unit, solid growth of BellRing Brands and pricing actions. Input and freight inflation along with increased manufacturing costs is a concern. Supply chain disruptions and labor shortages caused manufacturing inefficiencies, denting the company’s top line to some extent in the quarter under review.
Post Holdings, Inc. Price, Consensus and EPS Surprise
Adjusted earnings of 44 cents per share declined from earnings of 77 cents reported in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of 79 cents.
The company registered sales of $1,695.6 million, up 20.1% from $1,411.3 million reported in the prior-year quarter. The figure exceeded the consensus mark of 1,662.2 million. The upside can be attributed to an increase in Post Consumer Brands, Weetabix, Foodservice, Refrigerated Retail and BellRing Brands.
The top line included $99.8 million in net sales from acquisitions made in fiscal 2021. This includes; Private label ready-to-eat (PL RTE) cereal business, Egg Beaters liquid egg brand, Almark Foods business and related assets as well as Peter Pan nut butter brand.
Gross profit amounted to$428.5 million, down 2.7% from $440.3 reported in the year-ago quarter. Gross margin contracted from 31.2% to 25.3% in the quarter under review.
The company’s SG&A expenses increased 5.2% year over year to $241.7 million. SG&A expenses, as a percentage of sales, came in at 14.3%, down from 16.3% reported in the year-ago quarter.
Operating profit of $137.8 million fell 23% year over year. Adjusted EBITDA inched down 0.8% to $272.5 million from $ 274.8 million in the prior-year quarter.
Segment Details
Post Consumer Brands: Sales in the segment increased 10.6% year over year to $521.7 million in the quarter under review. Segment sales included $66 million generated from the PL RTE Cereal Business and Peter Pan.
Volumes rose 7.4%, including 1,270 basis points (bps) benefits from the aforementioned acquisitions. Excluding the gains from buyouts, volumes fell on persistent softness in value and private label cereal products as well as losses from the decision to exit specific low-margin private label business and licensed brands. Segmental profit was $66.5 million, down 28.4% from the prior-year quarter’s levels.
Weetabix: Segmental sales rose 11.9% year over year to $127.2 million. Gains from favorable foreign currency movements of nearly 710 bps aided sales.
Volumes were in line with the year-ago quarter’s levels, as gains from new product launches, private label as well as drink products were offset by softness in all other products. The downside in other products was caused by the lapping of higher purchases in the year-ago quarter amid increased at-home consumption. Segmental profit of $32.8 million increased 17.1% year over year.
Foodservice: Sales increased 42.5% to $456.8 million in the quarter under review, including benefits of $13.1 million from the Almark acquisitions.
Volumes rose 23.1%, which includes a 180-bps benefit from the Almark buyout. The upside in volumes can be attributed to higher away-from-home demand. Egg volumes rose 21.1% (including a 230 bps benefit from Almark) and potato volumes rallied 34.3%. Segmental profit was $14.2 million, up from the year-ago quarter’s levels.
Refrigerated Retail: Sales in the segment were $251.1 million, up 12.4% from the year-ago quarter’s figures. Segment sales included $20.6 million generated from Egg Beaters and the Almark acquisition.
Volumes moved up 9.7%, which includes 810 bps benefits from Egg Beaters and the Almark buyout. The uptick in volumes was driven by growth in side dish and egg products. This was offset by softness in sausage and cheese products. Segmental profit declined 86.3% year over year to $3.7 million.
BellRing Brands: Sales amounted to $340 million, up20.3% year over year. Sales in the Premier Protein brand gained from the RTD (ready-to-drink) shake distribution in existing and new products, strong velocities as well as higher average net selling prices. Sales in the Dymatize brand increased 41.3% year on year and the same for all other products increased 7.6%. Segmental profit of $53.1 million increased 8.4% in the quarter under review.
Financial Details
Post Holdings ended the fiscal fourth quarter with cash and cash equivalents of $817.1 million, long-term debt of $6,922.8 million and total shareholders’ equity of $2,754.2 million.
Cash provided by operating activities was $588.2 million for the yearended Sep 30, 2021. During the fiscal fourth quarter, Post Holdings repurchased 0.7 million shares for $78.3 million. In fiscal 2021, management repurchased 4 million shares for $393.6 million.
Business Development
The company entered into an agreement with BellRing. Per the terms, Post Holdings will buy and develop land to build an aseptic manufacturing unit to produce RTD shakes for BellRing.
Post Holdings and BellRing Brands also signed a transaction agreement. The deal is related to Post Holding’s earlier-announced plan to distribute a major portion of its interest in BellRing to shareholders. The deal is aimed at providing BellRing an improved market position to undertake strategic growth, enhance trading liquidity and manage its capital structure. The distribution is likely to be completed during first-quarter 2022.
Pandemic Impacts
The company continues to monitor the impact of the COVID-19 pandemic on its operations. During the first half of fiscal 2021, products sold through retail channels witnessed an uptick in sales, courtesy of increased at-home consumption amid the pandemic. During the back half of fiscal 2021, most of the company’s retail channel product categories shifted toward growth rates and were in line with pre-pandemic levels.
Post Holdings highlighted that volumes in certain channels and product categories in the foodservice business have almost fully recovered to pre-pandemic levels. In aggregate, overall foodservice volumes are still below pre-pandemic levels. Management expects foodservice business to return to pre-pandemic profitability during fiscal 2023. Volume growth in the refrigerated retail business is likely to be constrained till supply chain performance has not returned to normalcy.
The company is facing challenges related to labor shortages, input and freight inflation as well as other supply chain disruptions, like input availability. These factors are exerting pressure on the company’s supply chains across all segments. These headwinds are leading to lower sales and increased manufacturing costs, primarily in foodservice and refrigerated retail.
Image Source: Zacks Investment Research
Outlook
Post Holdings anticipates fiscal 2022 adjusted EBITDA between $1.16 and $1.20 billion, including BellRing. Management highlighted that it expects fiscal 2022 to be more weighted toward the second half of the year, as the company battles price inflation and navigates through lingering supply chain disruptions. The company expects the fiscal first quarter to be particularly impacted, while performance is expected to improve sequentially in the next quarters. The company expects fiscal 2022 capital expenditures in the range of $250-$300 million.
For BellRing Brands, the company expects fiscal 2022 net sales in the range of $1.36-$1.41 billion. The projection suggests an increase of up 9-13% year over year. Fiscal 2022 adjusted EBITDA for the segment is expected to be $255-$265 million, calling for 9-13% increase year over year.
Shares of the Zacks Rank #4 (Sell) company have fallen 7.5% in the past three months compared with the industry’s decline of 0.7%.
Upcoming Earning Releases in the Consumer Staples Sector
Hormel Foods Corporation (HRL - Free Report) is slated to report earnings on Dec 9, 2021. The company is likely to register a bottom-line increase when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for quarterly earnings per share (EPS) has remained unchanged in the past 30 days at 50 cents. The figure suggests an increase of 16.3% from the year-ago quarter’s reported number.
Hormel Foods’ top line is also expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3,216 million, which suggests an increase of 32.9% from the figure reported in the prior-year quarter. HRL presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The J. M. Smucker Company (SJM - Free Report) is slated to report earnings on Nov 23, 2021. The company is likely to register a decline in the bottom line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly EPS has remained unchanged in the past 30 days at $2.04. The figure suggests a slump of 14.6% from the year-ago quarter’s reported number.
The J. M. Smucker’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,966 million, suggesting a decline of 3.1% from the figure reported in the prior-year quarter. SJM carries a Zacks Rank #4.
Campbell Soup Company (CPB - Free Report) is slated to report earnings on Dec 8, 2021. The company is likely to register a bottom-line decline when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly EPS has moved down a penny in the past 30 days to 80 cents, suggesting a fall of 21.6% from the year-ago quarter’s number.
Campbell Soup’s top line is expected to fall year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2,278 million, suggesting a drop of 2.7% from the figure reported in the prior-year quarter. CPB carries a Zacks Rank #4.
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Post Holdings (POST) Q4 Earnings Miss Estimates, Sales Up Y/Y
Post Holdings, Inc. (POST - Free Report) reported mixed fourth-quarter fiscal 2021 results, with the top line increasing year over year and beating the Zacks Consensus Estimate. The bottom line declined year over year and missed the consensus mark.
Performance during the quarter gained from consistent volume demand recovery in the Foodservice unit, solid growth of BellRing Brands and pricing actions. Input and freight inflation along with increased manufacturing costs is a concern. Supply chain disruptions and labor shortages caused manufacturing inefficiencies, denting the company’s top line to some extent in the quarter under review.
Post Holdings, Inc. Price, Consensus and EPS Surprise
Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote
Q4 in Detail
Adjusted earnings of 44 cents per share declined from earnings of 77 cents reported in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of 79 cents.
The company registered sales of $1,695.6 million, up 20.1% from $1,411.3 million reported in the prior-year quarter. The figure exceeded the consensus mark of 1,662.2 million. The upside can be attributed to an increase in Post Consumer Brands, Weetabix, Foodservice, Refrigerated Retail and BellRing Brands.
The top line included $99.8 million in net sales from acquisitions made in fiscal 2021. This includes; Private label ready-to-eat (PL RTE) cereal business, Egg Beaters liquid egg brand, Almark Foods business and related assets as well as Peter Pan nut butter brand.
Gross profit amounted to$428.5 million, down 2.7% from $440.3 reported in the year-ago quarter. Gross margin contracted from 31.2% to 25.3% in the quarter under review.
The company’s SG&A expenses increased 5.2% year over year to $241.7 million. SG&A expenses, as a percentage of sales, came in at 14.3%, down from 16.3% reported in the year-ago quarter.
Operating profit of $137.8 million fell 23% year over year. Adjusted EBITDA inched down 0.8% to $272.5 million from $ 274.8 million in the prior-year quarter.
Segment Details
Post Consumer Brands: Sales in the segment increased 10.6% year over year to $521.7 million in the quarter under review. Segment sales included $66 million generated from the PL RTE Cereal Business and Peter Pan.
Volumes rose 7.4%, including 1,270 basis points (bps) benefits from the aforementioned acquisitions. Excluding the gains from buyouts, volumes fell on persistent softness in value and private label cereal products as well as losses from the decision to exit specific low-margin private label business and licensed brands. Segmental profit was $66.5 million, down 28.4% from the prior-year quarter’s levels.
Weetabix: Segmental sales rose 11.9% year over year to $127.2 million. Gains from favorable foreign currency movements of nearly 710 bps aided sales.
Volumes were in line with the year-ago quarter’s levels, as gains from new product launches, private label as well as drink products were offset by softness in all other products. The downside in other products was caused by the lapping of higher purchases in the year-ago quarter amid increased at-home consumption. Segmental profit of $32.8 million increased 17.1% year over year.
Foodservice: Sales increased 42.5% to $456.8 million in the quarter under review, including benefits of $13.1 million from the Almark acquisitions.
Volumes rose 23.1%, which includes a 180-bps benefit from the Almark buyout. The upside in volumes can be attributed to higher away-from-home demand. Egg volumes rose 21.1% (including a 230 bps benefit from Almark) and potato volumes rallied 34.3%. Segmental profit was $14.2 million, up from the year-ago quarter’s levels.
Refrigerated Retail: Sales in the segment were $251.1 million, up 12.4% from the year-ago quarter’s figures. Segment sales included $20.6 million generated from Egg Beaters and the Almark acquisition.
Volumes moved up 9.7%, which includes 810 bps benefits from Egg Beaters and the Almark buyout. The uptick in volumes was driven by growth in side dish and egg products. This was offset by softness in sausage and cheese products. Segmental profit declined 86.3% year over year to $3.7 million.
BellRing Brands: Sales amounted to $340 million, up20.3% year over year. Sales in the Premier Protein brand gained from the RTD (ready-to-drink) shake distribution in existing and new products, strong velocities as well as higher average net selling prices. Sales in the Dymatize brand increased 41.3% year on year and the same for all other products increased 7.6%. Segmental profit of $53.1 million increased 8.4% in the quarter under review.
Financial Details
Post Holdings ended the fiscal fourth quarter with cash and cash equivalents of $817.1 million, long-term debt of $6,922.8 million and total shareholders’ equity of $2,754.2 million.
Cash provided by operating activities was $588.2 million for the yearended Sep 30, 2021. During the fiscal fourth quarter, Post Holdings repurchased 0.7 million shares for $78.3 million. In fiscal 2021, management repurchased 4 million shares for $393.6 million.
Business Development
The company entered into an agreement with BellRing. Per the terms, Post Holdings will buy and develop land to build an aseptic manufacturing unit to produce RTD shakes for BellRing.
Post Holdings and BellRing Brands also signed a transaction agreement. The deal is related to Post Holding’s earlier-announced plan to distribute a major portion of its interest in BellRing to shareholders. The deal is aimed at providing BellRing an improved market position to undertake strategic growth, enhance trading liquidity and manage its capital structure. The distribution is likely to be completed during first-quarter 2022.
Pandemic Impacts
The company continues to monitor the impact of the COVID-19 pandemic on its operations. During the first half of fiscal 2021, products sold through retail channels witnessed an uptick in sales, courtesy of increased at-home consumption amid the pandemic. During the back half of fiscal 2021, most of the company’s retail channel product categories shifted toward growth rates and were in line with pre-pandemic levels.
Post Holdings highlighted that volumes in certain channels and product categories in the foodservice business have almost fully recovered to pre-pandemic levels. In aggregate, overall foodservice volumes are still below pre-pandemic levels. Management expects foodservice business to return to pre-pandemic profitability during fiscal 2023. Volume growth in the refrigerated retail business is likely to be constrained till supply chain performance has not returned to normalcy.
The company is facing challenges related to labor shortages, input and freight inflation as well as other supply chain disruptions, like input availability. These factors are exerting pressure on the company’s supply chains across all segments. These headwinds are leading to lower sales and increased manufacturing costs, primarily in foodservice and refrigerated retail.
Outlook
Post Holdings anticipates fiscal 2022 adjusted EBITDA between $1.16 and $1.20 billion, including BellRing. Management highlighted that it expects fiscal 2022 to be more weighted toward the second half of the year, as the company battles price inflation and navigates through lingering supply chain disruptions. The company expects the fiscal first quarter to be particularly impacted, while performance is expected to improve sequentially in the next quarters. The company expects fiscal 2022 capital expenditures in the range of $250-$300 million.
For BellRing Brands, the company expects fiscal 2022 net sales in the range of $1.36-$1.41 billion. The projection suggests an increase of up 9-13% year over year. Fiscal 2022 adjusted EBITDA for the segment is expected to be $255-$265 million, calling for 9-13% increase year over year.
Shares of the Zacks Rank #4 (Sell) company have fallen 7.5% in the past three months compared with the industry’s decline of 0.7%.
Upcoming Earning Releases in the Consumer Staples Sector
Hormel Foods Corporation (HRL - Free Report) is slated to report earnings on Dec 9, 2021. The company is likely to register a bottom-line increase when it reports fourth-quarter fiscal 2021 results. The Zacks Consensus Estimate for quarterly earnings per share (EPS) has remained unchanged in the past 30 days at 50 cents. The figure suggests an increase of 16.3% from the year-ago quarter’s reported number.
Hormel Foods’ top line is also expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3,216 million, which suggests an increase of 32.9% from the figure reported in the prior-year quarter. HRL presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The J. M. Smucker Company (SJM - Free Report) is slated to report earnings on Nov 23, 2021. The company is likely to register a decline in the bottom line when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly EPS has remained unchanged in the past 30 days at $2.04. The figure suggests a slump of 14.6% from the year-ago quarter’s reported number.
The J. M. Smucker’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,966 million, suggesting a decline of 3.1% from the figure reported in the prior-year quarter. SJM carries a Zacks Rank #4.
Campbell Soup Company (CPB - Free Report) is slated to report earnings on Dec 8, 2021. The company is likely to register a bottom-line decline when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly EPS has moved down a penny in the past 30 days to 80 cents, suggesting a fall of 21.6% from the year-ago quarter’s number.
Campbell Soup’s top line is expected to fall year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2,278 million, suggesting a drop of 2.7% from the figure reported in the prior-year quarter. CPB carries a Zacks Rank #4.