ST. LOUIS — Post Holdings, Inc.’s recent expansion into the pet food space seems to be paying off for the company, which on Feb. 1 shared its first quarter fiscal 2024 financial results from the three-month period ended Dec. 31, 2023.
Just days before sharing its first quarter financial performance, Post Holdings announced the return of President and Chief Executive Officer Robert V. Vitale, who departed the company unexpectedly on medical leave in November 2023. Interim CEO Jeff Zadoks will return to his position as executive vice president and chief operating officer of the company.
“I am grateful to my family, my excellent medical team, my colleagues at Post, and all who have supported me,” Vitale commented. “I am excited and energized about what we will accomplish in 2024 and beyond.”
Net sales for Post Consumer Brands, a segment that includes the company’s cereal, pet food and peanut butter products, was $988.6 million over the quarter, up a whopping 78.2% year-over-year. This included $426.6 million in sales directly attributed to recent acquisitions by Post Holdings, including the purchase of several pet food brands formerly owned by The J.M. Smucker Co. in April 2023, as well as its acquisition of Perfection Pet Foods in December 2023.
“Pet food exceeded our expectations as strong manufacturing performance, supported growth in our value brands, and we saw encouraging signs of stabilization in our premium brands,” Zadoks said. “We began making the investments in this business that we spoke about last quarter. However, some costs ramped up slower than we expected.”
First-quarter volumes were down for Post Consumer Brands when excluding the acquisitions benefit. Segment profit totaled $132.7 million, up 67.3% year-over-year, and segment adjusted EBITDA was reported at $189.8 million, up 68.1% year-over-year.
“Our business continues to benefit from diversification in product, channel and price point. As a result, our volume story is a bit more of a mixed bag,” Vitale said. “We saw volume decreases across our branded retail businesses, but foodservice remain resilient, our value offering benefited from consumer trade down, and we saw encouraging stabilization of our refrigerated retail site business. Both the grocery and pet division of our Consumer Brands platform performed well.
“We continue to be extremely pleased with our investment in the pet category,” he added.
Overall, the company posted net sales of roughly $1.97 billion in the first quarter of fiscal 2024, up 25.5% from the first quarter of fiscal 2023. These revenue gains included $428.9 million from acquisitions. Quarterly gross profit for the company totaled $572.6 million or 29.1% of sales, up 38% year-over year but down slightly as a percentage of year-ago net sales.
The company saw heightened SG&A expenses totaling $322.9 million over the quarter, up 41.2% year-over-year, primarily due to the company’s new pet food division. The company incurred $6.5 million in integration costs from the assimilation of its recently established pet food division.
For the full year fiscal 2024, Post Holdings has increased its adjusted EBITDA expectations to between $1.22 billion and $1.28 billion. Annual capital expenditures are projected to cost the company between $420 million and $445 million, of which up to $100 million will be dedicated to enhancing quality, safety, capacity and distribution for its pet food segment, as well as investing in a pilot plant for the business.
“From a network and supply chain perspective, we are focused on optimizing our cereal manufacturing network,” Zadoks added. “Similarly, for pet, we are working on optimization as we prepare to come off the contract manufacturing agreement with Smucker’s and integrate Perfection Pet into our network.”
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