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Post Holdings' (POST) Q1 Earnings & Revenues Lag Estimates

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Post Holdings, Inc. POST reported first-quarter fiscal 2020 results, wherein both top and bottom lines missed the Zacks Consensus Estimate. Also, the bottom line declined year over year, while sales grew.

Adjusted earnings came in at 76 cents per share, missing the Zacks Consensus Estimate of $1.14 in the first quarter. Also, the figure decreased 31.5% from the year-ago quarter.

The company registered sales of $1,456.8 million, reflecting a rise of 3.2% from $1,411.3 million in the prior-year quarter. However, the figure lagged the consensus mark of 1,463 million.

Further, gross profit of $471.5 million grew 10.6% from $426.5 million in the year-ago quarter. Meanwhile, gross margin expanded 220 basis points (bps) to 32.4% in the quarter under review.

Moreover, the company witnessed SG&A expenses of $235.3 million, up 8.4% from $217.1 in the year-ago quarter. SG&A expenses, as a percentage of sales, expanded 80 bps to 16.2% in the reported quarter.

Post Holdings generated operating profit of $196 million in the reported quarter. This depicts a decline of 33.3% from $293.9 million in the year-ago quarter.

Adjusted EBITDA grew 3.6% to $303.1 million from $292.5 million in the prior-year quarter. 

Post Holdings, Inc. Price, Consensus and EPS Surprise

Segment Details

Post Consumer Brands: Sales in the segment fell 3.1% year over year to $441.2 million in the quarter. Volumes declined 3.4% due to increased promotional activity in the year-ago quarter coupled with customers’ shopping patterns.

Weetabix: Segment sales inched up 0.6% to $101.5 million in the reported quarter. Volumes decline to the tune of 7.6%.

Foodservice: Sales grew 3.1% to $420.6 million in the quarter under review. Moreover, volumes grew 3% on increased egg and potato volumes.

Refrigerated Retail: Sales in the segment were $249.9 million, down 4.5% from the year-ago quarter. Further, volumes fell 7% due to side dish volume growth.

Active Nutrition: Sales of $244 million rose 31.3%, with volume growth of 38.4% in the reported quarter. This upside can be attributable to distribution gains for RTD protein shakes and solid average net selling prices.

Business Development

On Jan 13, Post Holdings announced the termination of its deal with TreeHouse Foods THS, per which the former was about to acquire the latter’s private label RTE cereal business.

Financial Details

Cash provided by operating activities was $108.4 million in the first quarter of fiscal 2020. Further, the company approved a new share repurchase program of $400 million on Dec 6, 2019, for two years. During the quarter under review, Post Holdings bought back 2.2 million shares worth $223.1 million. Following this, it had $367.9 million remaining under its new share-repurchase plan at the end of the first quarter. 

Outlook

Management reiterated its fiscal 2020 view, which includes a 100% contribution from BellRing but excludes contributions from 8th Avenue. Adjusted EBITDA for the fiscal year is still anticipated to be $1.22-$1.27 billion, expecting the second half of fiscal 2020 to be more favorable. Further, the company continues to expect capital expenditure of $240-$260 million. 

Price Performance

Notably, shares of this Zacks Rank #4 (Sell) company have declined 1.2% in the past three months against the industry’s growth 2.4%.

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