Post Holdings - Q1 2026

Transcript

Operator (participant)

Welcome to the Post Holdings Q1 2026 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. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. So that others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I'd now like to turn the call over to Daniel O'Rourke, Investor Relations for Post. Please go ahead.

Daniel O'Rourke (Head of Investor Relations)

Good morning. Thank you for joining us today for Post's Q1 FY 2026 earnings question-and-answer session. 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 that supports today's call is posted on both the Quarterly Results and the SEC Filings section of our website under the Investors section and is available on the SEC's website. 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. I'm joined this morning by Rob Vitale, our President and CEO, Nico Catoggio, our COO, and Matt Mainer, our CFO and Treasurer. We're doing things a little differently this quarter, as we posted management remarks last night in the Investors section of our website. Our rationale for this change is to give you additional time to digest our commentary in advance of this call. In addition, given our M&A activity, our convertible debt structure, and the magnitude of recent share repurchases, we wanted to bridge our enterprise value calculation, which is furnished as an appendix to our posted remarks. I hope you've had a chance to review this document.

The key highlights are that fiscal 2026 is off to a great start as we delivered Q1 adjusted EBITDA well above expectations. This operating performance, coupled with an update to our Foodservice normalized run rate, allowed us to significantly increase our guidance. We have continued aggressive share repurchases so far this year, and our strong operating performance, along with our Q1 sale of the 8th Avenue pasta business, has allowed us to hold net leverage flat. And from this position, we continue to maintain significant flexibility for opportunistic capital allocation. With that, I'll turn the call back over to the operator to open up Q&A.

Operator (participant)

The floor is now open for your questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posting your question to provide optimal sound quality. Thank you. Our first question will come from Andrew Lazar with Barclays. Please go ahead.

Andrew Lazar (Analyst)

Howdy. Great, thanks so much. Good morning, everybody.

Rob Vitale (President and CEO)

Can I just, before we jump in, say welcome, Nico, he's new to the circus.

Andrew Lazar (Analyst)

Yep, and welcome, Nico, and congratulations on the COO role. And good morning, everybody, and thanks for putting out the prepared remarks last night. That's, that's really helpful. Maybe, Rob, to start off, obviously, Post has been aggressively buying back stock for some time now, as that's where obviously the company sees the, the best way to deploy free cash flow at the moment. But obviously, we've seen market valuations for, you know, a bunch of small-cap growth-oriented food companies drop pretty meaningfully over the past year. Yet there really still hasn't been much in the way of, of M&A activity, including for one that Post obviously has, has great familiarity with. I guess, are market valuations still not yet attractive enough for some of these maybe smaller public entities to warrant thinking a bit differently about capital allocation?

I guess it's my first question.

Rob Vitale (President and CEO)

Well, I think that that is certainly changing as the multiples change. Whether it's exactly where it needs to be yet or no, I think, is in the eye of the beholder. But I think as multiples come down, the M&A becomes a much more interesting measure.

Andrew Lazar (Analyst)

Great. Well, thank you for that. And then maybe just as a second one, I was curious to maybe explore the comments in the prepared remarks about the cereal category recently returning to, you know, its more historical, down, low single-digit pace from what had been more significant declines. Is it simply that it's, you know, a more affordable breakfast option at a time when we see more value-seeking behavior, or do you think there's maybe a little bit something more enduring to it?

Rob Vitale (President and CEO)

Nico?

Nico Catoggio (COO)

Well, now we see it as that. I mean, if you see, it is very recent, so there's a significant change in trajectory that happened in November, December, and that coincides with SNAP. So we see it as an outcome of changes in SNAP, and trade down from other categories to cereal. Not only cereal, remember, we now have a significant presence in peanut butter. Peanut butter also improved in the same period. So for now, we say that straight down, we need to see what happens in the next few months. We need a few more months to actually.

Andrew Lazar (Analyst)

Mm-hmm.

Nico Catoggio (COO)

Have the confidence that it's a change in the category.

Andrew Lazar (Analyst)

Great. Okay, I'll pass it on. Thank you.

Operator (participant)

We'll turn now to Matt Smith with Stifel. Please go ahead. Your line is open.

Matt Smith (Managing Director)

Hi, good morning, all.

Rob Vitale (President and CEO)

Hey, Matt.

Matt Smith (Managing Director)

Thanks for taking my question.

Rob Vitale (President and CEO)

Good morning.

Matt Smith (Managing Director)

The guidance phrase after this first strong Q1 includes the higher unique benefit and higher normalized earnings for foodservice business. But can you talk about your expectations for the rest of the business through the rest of the year relative to your initial expectations? Have you factored in some, you know, perhaps lower EBITDA contribution from PCB? Is that investment related, or are things pretty similar to your initial expectations?

Matt Mainer (CFO and Treasurer)

Yeah, Matt, I, I'd say the balance of the portfolio is pretty similar to our initial outlook. Obviously, we make adjustments and tweaks here and there when we think about the totality of the portfolio and our guidance, but there's nothing material I'd call out.

Matt Smith (Managing Director)

Thanks for that. As a follow-up, on the stronger normalized foodservice earnings base, you saw some nice volume growth, both in overall eggs and the highest value-added eggs. Can you talk about some of the timing benefits in the quarter and how you expect volumes to progress from here, especially in the higher value-added egg segment? Thank you.

Matt Mainer (CFO and Treasurer)

Sure. So, definitely, obviously, some favorability when you think about year-over-year relative to some impacts from avian influenza last FY and also in the current year. As we talked about, it started in Q4. We were getting customer inventories reloaded, got that completed this quarter, so a couple transitory benefits that fall away as we think about sequential movement into Q2. I think we see the balance of the year more in line with both from a mix standpoint and just overall egg growth, more in line with historical and how we think about the business, which is a 3%-4% growth rate with a mix benefit, you know, getting us to our algorithm.

Matt Smith (Managing Director)

That's great, Matt. Thank you. I'll pass it on.

Matt Mainer (CFO and Treasurer)

Hey, David?

Operator (participant)

We'll turn now to David Palmer with Evercore ISI. Please go ahead.

David Palmer (Analyst)

Hey, good morning, guys. Yeah, a question on the cereal category. I wonder, you know, how are you seeing the category today, you know, competitor behavior and strategies, and maybe reflect on your own spending. We obviously made a new hire with Greg, who will be coming on, and maybe he'll have some impressions and thoughts about this. But a major competitor of Post has been investing heavily, some combination of price, promotion, marketing, innovation, and those investments may be hurting. It seems like it's hurting private label more than anything lately. You guys have done a good job of protecting profitability, and you know, arguably, we'll just have to see if the other guy's spending is worth it, so to speak, in the long term.

You know, how, how, how do you reflect on this and what's going on, and how does that maybe shape your strategy going forward in cereal?

Nico Catoggio (COO)

I would say it doesn't change our strategy. I think what you saw in the quarter, in the Q1, was a reduction in our promotional spend, because we are adjusting our assortment in channels that are more promotional-driven to increase our efficiency. As we adjusted the assortment on shelf, we decided to promote less, just to avoid disruptions. Longer-term, we don't see a change in our strategy. I think we will continuously assess opportunities to invest and, if we see a return, we will go for it, but I don't see a material change in our strategy.

David Palmer (Analyst)

I mean, one follow-up here is, you know, that competitor, in addition to price, which may or may not make sense for the category, long term, if it seems like the premium brands are the ones that are winning, you know, that competitor is also doing some stuff in protein, granola. You know, does even that sort of angle, or is that an opportunity for you and even something that might shape your M&A aspirations in the category? And I'll pass it on.

Nico Catoggio (COO)

I think we are also investing in the same areas. I think we are all doing that. I mean, protein, fiber, granola, so you will see a lot more of that, from us, for sure. And some of that is actually coming to the market now, as we speak. But M&A, it's, I think it's always the same.

Matt Mainer (CFO and Treasurer)

I would say that it hasn't really changed our M&A strategy. We continue to be opportunistic when we have the opportunity to be so. So, you know, we are not particularly looking at a particular category or, you know, a map in a particular segment of our business.

David Palmer (Analyst)

Thank you.

Operator (participant)

Now we'll hear from Tom Palmer with JPMorgan. Please go ahead.

Tom Palmer (Analyst)

Good morning, and thanks for the question. I wanted to start off just asking on clarity on the cadence for the year with EBITDA. It was mentioned kind of being more stable as we think about Q3 or Q2, Q3, and Q4. But there also was a call-out about some, I think, inventory timing benefits to think about in the Q2 for food service. So what's kind of the offset we should be thinking about in Q2, maybe within other segments that might make it more balanced versus having that kind of one item providing a bit of strength?

Matt Mainer (CFO and Treasurer)

Sure. I think, so there's, when you think about Refrigerated Retail, Q1 is by far their highest quarter, given the amount of holiday benefit we have there. We still have Easter, which is in early April, so that full benefit will lie in Q2, but there's definitely a step down just from seasonality in that business. That's probably the biggest offset. And then we typically, across the portfolio, food service is an exception, given how hard we are running our plants. We usually have some holiday shutdown that'll put a little negative pressure on Q2, just across the portfolio, as we have the deleveraging impact is realized.

But I'd say those are the two things that really offset that benefit, and it's, we're not expecting a massive benefit for Foodservice, when you think about selling through that inventory, but it will be elevated relative to what we think in Q3 and Q4.

Tom Palmer (Analyst)

Okay, thank you for that. And then just on the RTD shakes plan, does your kind of key customers' slower growth have any bearing on your plans to ramp it? And maybe an update on kind of how that ramp is going. Thank you.

Matt Mainer (CFO and Treasurer)

Yeah. So starting with the ramp, we continue to make progress on the actual volume output. I think we still admittedly have challenges around the cost and the efficiency of that production, so still not at our run rate. So I think continue to work on that. I think we're trying to balance, obviously, as we talk about food service, it's a $500 million business that's showing really nice strength and growth, and don't wanna overemphasize the shake business, so we're putting the right amount of attention there and trying to balance that, but we'll see how that plays out. I don't think there's really, when we think about the category and the longer-term opportunity, I don't see any concerns there.

It's more trying to get where we wanna be in terms of a run rate and profitability, and then we'll think about expansion after that.

Tom Palmer (Analyst)

Great. Thank you.

Operator (participant)

We'll turn now to Michael Lavery with Piper Sandler. Please go ahead.

Michael Lavery (Analyst)

Thank you. Good morning.

Matt Mainer (CFO and Treasurer)

Morning.

Michael Lavery (Analyst)

Back to Foodservice and some of how to think about the normalized run rate. We'd seen it drifting higher, of course, and times that you could beat it quite easily, but maybe just help us understand some of what makes the increase sticky now. Is it primarily mix? Maybe how much conservatism would the 125 or so a quarter have, and what drove the upside in 1Q?

Matt Mainer (CFO and Treasurer)

Yeah. So, again, I think it's—I mean, we're back to the value proposition of the business. So I think we feel good about that run rate and the stickiness of it. And as we think, you know, that's a run rate for this year, that's got some level of embedded growth in it, but as you think to next year, I think we feel good about our ability to grow off of that, just because of the same dynamics of the business and what we're seeing in terms of our value proposition, helping operators take labor out of their system. Those are all, you know, in the right spot and make economic sense for operators. And there's still a nice runway when you think about converting folks from shell eggs over into value-added eggs.

So really, the same dynamics we've seen for quite a few years, we're just back to a more normalized supply and demand dynamic.

Michael Lavery (Analyst)

That's helpful. Just on PCB, price mix was down a little bit more than it has been. Can you just point to what some of the key drivers are there and how to think about what the consumer dynamics are related to that?

Nico Catoggio (COO)

I think we mentioned in the remarks, in CDL, our volume was a bit behind the category, driven by lower promotional spend. And that's essentially the gap. And some adjustments in assortment that take a bit of pounds out of our business. As we mentioned in the remarks, what we see as very positive, our dollar market share was flat year-over-year, and that's what we want. And then in pet, our volume was a bit behind the category, mostly driven by Nutrish. And then the difference between consumption measured and our shipments was also our private label business, overlapping some distribution losses in private label, in our private label pet business.

Michael Lavery (Analyst)

And so I may have said it wrong, I apologize. I thought a lot of the volume color was pretty clear, but I'm—I was curious a little bit on the pricing piece, because it looks like that was about a 2-point headwind. Was that pet-driven primarily, or where, where was the-

Nico Catoggio (COO)

It is. Yes. Yes.

Michael Lavery (Analyst)

Yeah.

Nico Catoggio (COO)

Yeah. So, yeah.

Michael Lavery (Analyst)

Okay.

Nico Catoggio (COO)

Thanks for the question. It is pet-driven. It is, we mentioned in the remarks, we tested price points, mostly on Nutrish in select retailers. And those are the price points that we will target in the relaunch. So that is a headwind in terms of price mix. It is all pets.

Michael Lavery (Analyst)

And if that was a more narrow-

Matt Mainer (CFO and Treasurer)

John, can you-

Michael Lavery (Analyst)

If that was a more narrow-

Matt Mainer (CFO and Treasurer)

Were you asking?

Michael Lavery (Analyst)

Sorry, go ahead.

Matt Mainer (CFO and Treasurer)

Were you talking about total EBITDA margin, John?

Michael Lavery (Analyst)

This is Michael.

No, I was talking about top line, the price mix.

John Baumgartner (Managing Director)

Gotcha. Okay.

Michael Lavery (Analyst)

Just kind of—if that was a price test on Nutrish that pushed it down a little bit in Q1, and then that rolls out more broadly in the H2, should we expect a bigger—should that price mix headwind likely grow over the rest of the back half, especially?

Nico Catoggio (COO)

We will, as we relaunch the brand, we will hit those price points with a change in Price Pack Architecture, so the price per pound should improve.

Michael Lavery (Analyst)

Okay. All right. Thanks a lot.

Nico Catoggio (COO)

Thank you.

Operator (participant)

We'll turn now to John Baumgartner with Mizuho Securities. Please go ahead.

John Baumgartner (Managing Director)

Hey, good morning. Thanks for the question.

Nico Catoggio (COO)

Hey, John.

John Baumgartner (Managing Director)

Good morning. I wanted to ask Rob about Refrigerated Retail and specifically what you're seeing thus far from the new private label business, how that's evolving relative to plan here in the early days, and maybe your expectations to expand that book of business going forward.

Matt Mainer (CFO and Treasurer)

Sure. So, good early start for private label. I'd say playing out as we expected. We've got that in two customers, really, two offerings, mashed potatoes and mac and cheese. We continue to see a nice pipeline of opportunities to expand that business, but for this year, it's providing, you know, definitely some growth on our dinner sides and, and I'd say adding two price points, similar to what we've seen at PCB. Having that alternative, especially in that category, we think will be really beneficial long term and uses some of the excess capacity we have across the network, so there's a leverage benefit as well.

John Baumgartner (Managing Director)

Thanks, Matt. And then, related to that, you know, some of the past innovation for the side dishes product line has included vegetables and such. And, you know, given that we're now seeing some frozen entrees entering the market, specifically for that GLP-1 crowd, I'm wondering how you think about any differently, about how the side dishes portfolio can compete. I mean, you know, are there potentially new lines that can appeal to different demographics or incorporate more protein with sausage, eggs, other parts of your portfolio? Are you thinking any differently about how that line competes going forward, given changes in the consumer environment?

Matt Mainer (CFO and Treasurer)

Certainly, we're focused on protein and options to add protein to our sides. And then also, you know, we've done some testing with Wunderlich, which is a different product for us a couple of years ago. We're starting to see some success there, albeit small, within the club channel. But again, I think we are giving some thought to adding some protein as well to those, some of those dinner side dishes.

John Baumgartner (Managing Director)

Great. Thank you. Thanks for your time.

Operator (participant)

We'll turn next to Scott Marks with Jefferies. Please go ahead.

Scott Marks (Analyst)

Hey, good morning. Thanks for taking our questions. First thing I wanted to ask about, in the prepared remarks, you noted that in food service, the avian influenza-driven pricing adders have ended. But given, I think, the magnitude of deflation we've seen in the egg market, how should we be thinking about pass-through of that within your food service segment, or potentially the Refrigerated Retail segment as well? Thanks.

Matt Mainer (CFO and Treasurer)

Yep. So now that we've got inventory levels rebalanced, I would say going forward, our supply is matched up with demand, so we become agnostic to egg prices, and then it's, to your point, back to a pass-through model. So there is a pass-through that's basically on a 90-day lag. So there can be a little bit of timing, but we don't see over the course of a year any significant volatility from that model historically.

Scott Marks (Analyst)

Appreciate it. Then second question, almost related to what John asked about in terms of the, you know, GLP-1 friendly options. Earlier this year, we saw the U.S. refresh its dietary guidelines recommendations for what consumers should be eating. Wondering if that at all changes how you're thinking about the portfolio or any adjustments you think need to be made because of that? Thanks.

Nico Catoggio (COO)

I think our portfolio is pretty well balanced with the guidelines. So, you know, we are obviously going to consider the nutrient, but also the price from an M&A perspective. So I would say once we get closer to where the values are, we'll have a position on how the pyramid implicates us.

Scott Marks (Analyst)

Thanks. I'll pass it on.

Operator (participant)

We'll turn now to Marc Torrente with Wells Fargo Securities. Please go ahead.

Marc Torrente (Analyst)

Hi, good morning, and thank you for the questions. Going back to pet, the category itself, particularly dog, has been softer. What are you seeing in terms of trends there, and what are your expectations for the category near term? And then your own pet volumes were a bit better sequentially, some puts and takes in terms of private label losses versus integration lapses. But underlying is starting to stabilize a little more. How are you thinking about recovery there through the year in terms of volumes?

Nico Catoggio (COO)

On the category, we probably wouldn't see any major changes in the recent trends. The recent trends, as you said, is dog has been softer compared to cat, the cat segment, and that is driven by some changes, whether it's urbanization and all those trends that are driving the cat segment. So we don't see material changes. In terms of our business, as you rightly said, it's sequentially getting better. A lot of that is, as we mentioned, Nutrish and Gravy Train improvements driven by price points that we tested. And our expectation is as we relaunch those brands, and it should help the brands. That's our expectation.

But as you said, it will give us confidence in that the business is sequentially getting better, volume is sequentially getting better.

Marc Torrente (Analyst)

Okay, thank you. And then you called out the successful closure of two of your cereal facilities in the quarter. How should we think about the cost savings benefit flow through from those actions? And then, given some of the normalization in consumption trends, are there still other actions that you're considering for the segment?

Nico Catoggio (COO)

I think we mentioned in prior quarters, the benefits from the plants that we shut down should mostly hit our P&L starting in Q3. So Q3 and Q4, we'll see the benefits. And then, after that, we will have to be very selective in what we do. I mean, they are not obvious opportunities to streamline our portfolio. It could be a line here and there, but no plans.

Marc Torrente (Analyst)

Okay, thank you very much.

Operator (participant)

Thank you. With no further questions in queue, this will conclude today's Post Holdings Q1 2026 earnings conference call and webcast. Please disconnect your line at this time, and have a wonderful day.