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Post Holdings (POST) Stock Up More Than 5% Since Q2 Earnings
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Shares of Post Holdings, Inc. (POST - Free Report) have rallied nearly 7% since the company reported second-quarter fiscal 2022 results on May 5. We note that on Mar 10, 2022, the company concluded the distribution of 80.1% of its interest in BellRing Brands, Inc. (“BellRing”) to its shareholders. The historical results of the BellRing business now form part of the company’s discontinued operations.
Coming to second-quarter results, the top and bottom lines improved year over year and came ahead of the Zacks Consensus Estimate.
Quarter in Detail
Adjusted earnings from continuing operations of 24 cents per share increased significantly from the 11 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 21 cents.
Post Holdings, Inc. Price, Consensus and EPS Surprise
POST registered sales of $1,409.7 million, up 17.3% year over year, with all segments witnessing growth. Further, the figure exceeded the consensus mark of 1,381 million. The top line included $102.1 million in net sales from acquisitions. These acquisitions include the Private label ready-to-eat (PL RTE) cereal business, the Egg Beaters liquid egg brand, the Almark Foods business and related assets and the Peter Pan nut butter brand.
Apart from this, Post Holdings acquired Lacka Foods Limited on Apr 5, 2022 and divested the Willamette Egg Farms business on Dec 1, 2021.
The gross profit amounted to $378.5 million, up 4% from the $364 million reported in the year-ago quarter. The gross margin contracted from 30.3% to 26.8% in the quarter under review due to higher raw material, freight and manufacturing costs. Though labor shortages and supply-chain hurdles improved from the preceding quarter, these continued to create manufacturing inefficiencies and capacity limitations, leading to missed sales, lower throughput and elevated per unit costs. This was partly made up by pricing actions and the continued demand revival in the Foodservice segment.
The company’s SG&A expenses increased 17% year over year to $235.4 million. Meanwhile, SG&A expenses as a percentage of sales came in at 16.7%, in line with the year-ago quarter.
The operating profit of $100 million fell 22.8% year over year. Adjusted EBITDA rose 3.7% to $229.7 million.
Segment Details
Post Consumer Brands: Sales in the segment increased 19.4% year over year to $573.1 million in the quarter under review. Segment sales included $69.9 million generated from the buyouts of PL RTE Cereal Business and Peter Pan. Volumes rose 19.8%. Excluding gains from buyouts, volumes rose 3.4% due to strength in Pebbles and Honey Bunches of Oats, somewhat offset by weakness in value and private label cereal products. The segment’s adjusted EBITDA fell 5.4% to $115.3 million.
Weetabix: Segmental sales rose 3.2% year over year to $117 million, including the currency headwinds of nearly 280 basis points. Volumes fell 2% as improvements in private label products and new product introductions were more than offset by weakness in all other products, which, in turn, was a result of lapping the year-ago period’s elevated pandemic-led at-home consumption. Segmental adjusted EBITDA of $36.4 million advanced 4.3% year over year.
Foodservice: Sales increased 22.4% to $451.9 million in the quarter under review. Volumes rose 10.9% due to the increased away-from-home egg and potato demand and potato distribution gains. Egg volumes rose 7.8% and potato volumes rallied 31.5%. Segmental adjusted EBITDA was $55 million, up 33.5% year over year.
Refrigerated Retail: Sales in the segment were $267.6 million, up 1.7% from the year-ago quarter’s figure. Segment sales included $20.8 million generated from the Egg Beaters and the Almark acquisition. Net sales in the year-ago period included contributions from Willamette. Volumes moved down 0.7% year over year. Excluding any benefits from Egg Beaters, Almark and Willamette in all periods, volumes rose 1.9% due to side dish volumes. Segmental adjusted EBITDA declined by 13.4% year over year to $36.8 million.
Image Source: Zacks Investment Research
Financial Details
As of Mar 31, 2022, cash and cash equivalents came in at $489.8 million, with long-term debt of $6,105.9 million and total shareholders’ equity of $3,488.3 million.
Cash provided by operating activities was $143.6 million for the six months ended Mar 31, 2022. During the fiscal second quarter, Post Holdings repurchased 0.4 million shares for $38.2 million. In the first half of 2022, the company bought back 1.9 million shares for $193.2 million, bringing the remaining share repurchase availability to $228.6 million as of Apr 30.
Pandemic & War Impacts
The company continues to monitor the impact of the pandemic on its operations. Volumes in certain channels and product categories in the foodservice business have almost fully recovered to pre-pandemic levels. In the aggregate, overall foodservice volumes are still below pre-pandemic levels. Management expects the foodservice business to return to pre-pandemic profitability in fiscal 2023.
However, this Zacks Rank #5 (Strong Sell) company is battling supply-chain challenges in all segments due to labor shortages, input and freight inflation and other supply-chain hurdles, such as input availability. Per unit product costs have been rising, while service and fill rates remain under normal levels. Also, inventories are low. While these factors are improving, they are likely to linger throughout fiscal 2022. The company has been focused on undertaking pricing actions to counter inflation.
We note that the Ukraine war has elevated inflationary headwinds. Management expects certain energy and raw material expenses to remain high due to the conflict.
Guidance
Post Holdings anticipates fiscal 2022 adjusted EBITDA between $910 million and 940 million, including the impacts of the known avian influenza incidents across the company’s controlled network as of May 5, 2022. The company anticipates capital expenditures in the range of $250-$300 million in fiscal 2022.
Shares of Post Holdings have rallied 13% in the past three months compared with the industry’s growth of 2.6%.
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 1.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings per share (EPS) suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have dipped 4.3% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 19.6% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.
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Post Holdings (POST) Stock Up More Than 5% Since Q2 Earnings
Shares of Post Holdings, Inc. (POST - Free Report) have rallied nearly 7% since the company reported second-quarter fiscal 2022 results on May 5. We note that on Mar 10, 2022, the company concluded the distribution of 80.1% of its interest in BellRing Brands, Inc. (“BellRing”) to its shareholders. The historical results of the BellRing business now form part of the company’s discontinued operations.
Coming to second-quarter results, the top and bottom lines improved year over year and came ahead of the Zacks Consensus Estimate.
Quarter in Detail
Adjusted earnings from continuing operations of 24 cents per share increased significantly from the 11 cents reported in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 21 cents.
Post Holdings, Inc. Price, Consensus and EPS Surprise
Post Holdings, Inc. price-consensus-eps-surprise-chart | Post Holdings, Inc. Quote
POST registered sales of $1,409.7 million, up 17.3% year over year, with all segments witnessing growth. Further, the figure exceeded the consensus mark of 1,381 million. The top line included $102.1 million in net sales from acquisitions. These acquisitions include the Private label ready-to-eat (PL RTE) cereal business, the Egg Beaters liquid egg brand, the Almark Foods business and related assets and the Peter Pan nut butter brand.
Apart from this, Post Holdings acquired Lacka Foods Limited on Apr 5, 2022 and divested the Willamette Egg Farms business on Dec 1, 2021.
The gross profit amounted to $378.5 million, up 4% from the $364 million reported in the year-ago quarter. The gross margin contracted from 30.3% to 26.8% in the quarter under review due to higher raw material, freight and manufacturing costs. Though labor shortages and supply-chain hurdles improved from the preceding quarter, these continued to create manufacturing inefficiencies and capacity limitations, leading to missed sales, lower throughput and elevated per unit costs. This was partly made up by pricing actions and the continued demand revival in the Foodservice segment.
The company’s SG&A expenses increased 17% year over year to $235.4 million. Meanwhile, SG&A expenses as a percentage of sales came in at 16.7%, in line with the year-ago quarter.
The operating profit of $100 million fell 22.8% year over year. Adjusted EBITDA rose 3.7% to $229.7 million.
Segment Details
Post Consumer Brands: Sales in the segment increased 19.4% year over year to $573.1 million in the quarter under review. Segment sales included $69.9 million generated from the buyouts of PL RTE Cereal Business and Peter Pan. Volumes rose 19.8%. Excluding gains from buyouts, volumes rose 3.4% due to strength in Pebbles and Honey Bunches of Oats, somewhat offset by weakness in value and private label cereal products. The segment’s adjusted EBITDA fell 5.4% to $115.3 million.
Weetabix: Segmental sales rose 3.2% year over year to $117 million, including the currency headwinds of nearly 280 basis points. Volumes fell 2% as improvements in private label products and new product introductions were more than offset by weakness in all other products, which, in turn, was a result of lapping the year-ago period’s elevated pandemic-led at-home consumption. Segmental adjusted EBITDA of $36.4 million advanced 4.3% year over year.
Foodservice: Sales increased 22.4% to $451.9 million in the quarter under review. Volumes rose 10.9% due to the increased away-from-home egg and potato demand and potato distribution gains. Egg volumes rose 7.8% and potato volumes rallied 31.5%. Segmental adjusted EBITDA was $55 million, up 33.5% year over year.
Refrigerated Retail: Sales in the segment were $267.6 million, up 1.7% from the year-ago quarter’s figure. Segment sales included $20.8 million generated from the Egg Beaters and the Almark acquisition. Net sales in the year-ago period included contributions from Willamette. Volumes moved down 0.7% year over year. Excluding any benefits from Egg Beaters, Almark and Willamette in all periods, volumes rose 1.9% due to side dish volumes. Segmental adjusted EBITDA declined by 13.4% year over year to $36.8 million.
Image Source: Zacks Investment Research
Financial Details
As of Mar 31, 2022, cash and cash equivalents came in at $489.8 million, with long-term debt of $6,105.9 million and total shareholders’ equity of $3,488.3 million.
Cash provided by operating activities was $143.6 million for the six months ended Mar 31, 2022. During the fiscal second quarter, Post Holdings repurchased 0.4 million shares for $38.2 million. In the first half of 2022, the company bought back 1.9 million shares for $193.2 million, bringing the remaining share repurchase availability to $228.6 million as of Apr 30.
Pandemic & War Impacts
The company continues to monitor the impact of the pandemic on its operations. Volumes in certain channels and product categories in the foodservice business have almost fully recovered to pre-pandemic levels. In the aggregate, overall foodservice volumes are still below pre-pandemic levels. Management expects the foodservice business to return to pre-pandemic profitability in fiscal 2023.
However, this Zacks Rank #5 (Strong Sell) company is battling supply-chain challenges in all segments due to labor shortages, input and freight inflation and other supply-chain hurdles, such as input availability. Per unit product costs have been rising, while service and fill rates remain under normal levels. Also, inventories are low. While these factors are improving, they are likely to linger throughout fiscal 2022. The company has been focused on undertaking pricing actions to counter inflation.
We note that the Ukraine war has elevated inflationary headwinds. Management expects certain energy and raw material expenses to remain high due to the conflict.
Guidance
Post Holdings anticipates fiscal 2022 adjusted EBITDA between $910 million and 940 million, including the impacts of the known avian influenza incidents across the company’s controlled network as of May 5, 2022. The company anticipates capital expenditures in the range of $250-$300 million in fiscal 2022.
Shares of Post Holdings have rallied 13% in the past three months compared with the industry’s growth of 2.6%.
Looking for Consumer Staple Stocks? Check These
Some better-ranked stocks are Sysco Corporation (SYY - Free Report) , McCormick & Company (MKC - Free Report) and Inter Parfums (IPAR - Free Report) .
Sysco, which engages in the marketing and distribution of various food and related products, carries a Zacks Rank #2 (Buy) at present. Shares of Sysco have jumped 1.9% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Sysco’s current financial-year sales and earnings per share (EPS) suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.
McCormick, the manufacturer, marketer and distributor of spices, seasoning mixes and condiments, currently carries a Zacks Rank #2. Shares of McCormick have dipped 4.3% in the past three months.
The Zacks Consensus Estimate for McCormick’s current financial-year sales and EPS suggests growth of nearly 5% and 3.9%, respectively, from the year-ago reported figure. MKC has a trailing four-quarter earnings surprise of around 1.3%, on average.
Inter Parfums, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently carries a Zacks Rank #2. Shares of Inter Parfums have dropped 19.6% in the past three months.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales and EPS suggests growth of 12.5% and 10.3%, respectively, from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 46.7%, on average.