ST. LOUIS — As part of its 2024 capital expenditure plans, Post Holdings will invest between $90 million and $100 million to enhance the quality, safety and capacity of its pet food manufacturing operations, including establishing a pilot plant and expanding its distribution network. The company shared this and other insights into its recent financial performance on May 3 for the three months ended March 31.
“Strong manufacturing performance, disciplined pricing and solid cost management continued to drive results,” said Robert Vitale, president, chief executive officer and director of Post, in the company’s May 3 earnings call. “With isolated exceptions, volumes generally declined.”
Overall, Post reported net sales growth of 23.4% to $1.99 billion in the second quarter, of which $467.9 million was attributed to recent acquisitions. The company acquired several pet food brands from The J.M. Smucker Company in April 2023, followed by all assets of Perfection Pet Foods in December 2023. Both have since been integrated into the Post Consumer Brands operating segment, which also includes the company’s non-retail cereal and peanut butter brands.
“While we have incremental investments to make, our confidence continues to grow regarding the sustainable contribution run rate from our pet acquisition,” Vitale said.
Gross profit was $579.6 million, up 40.1% year-over-year, and operating profit was $190.1 million, up 38.1% year-over-year. Net earnings totaled $97.2 million, up 79.7% from $54.1 million year-over-year.
Quarterly growth was driven by Post Consumer Brands and Weetabix segments and offset by losses in Foodservice and Refrigerated Retail segments, according to Post.
“For our pet food brands, category share grew in both dollars and pounds,” said Jeff Zadoks, executive vice president and chief operating officer for Post. “This growth, combined with strong manufacturing performance, drove our results.
“…We are implementing an optimized warehouse and distribution network, combined with grocery, and lining up all the necessary internal and third-party capacity to fully exit the Smucker’s COPAC agreement in the first half of 2025,” he added.
Net sales for the Post Consumer Brands segment totaled $1.07 billion in the second quarter, up 77.9% year-over-year. Roughly $460.7 million of those sales were attributed to the company’s recent pet food acquisitions. Segment profit came to $139.7 million, up 85% year-year-over-year, and adjusted EBITDA was $199.0 million, up 74% year-over-year.
Following these second-quarter results, Post updated its full-year guidance to reflect higher expectations for adjusted EBITDA. The company now anticipates adjusted EBITDA between $1.34 billion and $1.38 billion.
During the Q&A section of Post’s earnings call on May 3, Vitale highlighted the company’s pet segment strategy in light of continued investments and long-term goals.
“When we bought the business [from The J.M. Smucker Company]… we viewed it as two segments — we had a premium segment with Nutrish and Nature’s Recipe, and then we had a value segment with the balance of the brands, and the key to the value segment was stabilizing capacity and making sure we were meeting unmet demand as it migrated from more premium to less premium,” he explained.
“Within Rachael Ray Nutrish, we see that as more of a marketing issue and positioning the brand to make sure the consumers are clear on the value proposition,” Vitale added. “That’s being done, but that’s a longer process than fixing the plants and making sure we’re meeting the unmet demand. We are focused on it, of course. We are being patient to make sure we have the right creative and the right brand positioning.
“But this investment opportunity was not predicated upon being able to grow those brands, it was predicated upon maintaining. So growth, specifically in those brands, is the additional upside to our investment case,” he concluded.
He added the company’s acquisition of Perfection Pet Foods in late 2023 was “more of a rebalancing of our manufacturing, as we now have a Western plant.”
Read more about corporate strategy, financial performance, mergers and acquisitions on our Business page.
