ST. LOUIS — Pet food contributed to another strong quarter for Post Holdings, as detailed in the company’s third quarter financial performance. Though category share for the pet food business remained fairly flat, Post continues to enhance its manufacturing performance and improve customer full rates to drive the business forward.
The company shared this and provided other updates on its performance on Aug. 1 for the three months ended June 30.
Overall, third quarter net sales for Post were $1.95 billion, an increase of 4.7% from $1.86 billion in the prior year period. Excluding the benefit from its acquisition of The J.M. Smucker Company’s pet food brands and acquisition of Perfection Pet Foods, among others, net sales declined across all segments of Post’s business.
Gross profit was $577.3 million, an increase of 15.1% compared to $501.6 million in the prior year period. Selling, general and administrative (SG&A) expenses were $324.5 million, an increase of 7.8% compared to $300.9 million in the prior year period. Post attributed this increase primarily to the inclusion of its pet food business.
Operating profit was $203.2 million, a 28.4% increase from $158.3 million in the prior year period. Net earnings were $99.8 million, an 11.4% increase compared to $89.6 million. And adjusted EBITDA was $350.2 million, a 3.5% increase from $338.2 million in the prior year.
“Both our grocery and pet food products contributed to another strong quarter of profit performance,” said Jeff Zadoks, executive vice president and chief operating officer of Post. “…Despite not seeing an immediate recovery as we snap this quarter, we continue to expect category volumes will normalize to the historical CAGR of down approximately 1% to 2%.”
Excluding the benefit of its acquired pet food brands, consumer brand nets sales for the company dropped 3% and volumes decreased 6%.
“For the pet food business, our category share remains fairly flat in total and across our brands,” he added. “Recall, however, in the last half of the prior fiscal year, our pet food sales revenues and volumes benefited from a one-time replenishment of customer inventories as we improved customer full rates from the low 70s to the low 90s. Strong manufacturing performance continued to drive our results. The closure of our Lancaster, Ohio, sewer plant and our pet integration continue to remain on track with the planned exit from the Smucker’s TSA in the first half of fiscal year 2025.”
For its Post Consumer Brands segment, which includes the new pet food business, third quarter net sales were $1.01 billion, an increase of 15.7% compared to the prior year period. Segment profit was $128.6 million, an increase of 54.9% compared to the prior year period. Segment-adjusted EBITDA was $193.5 million, an increase of 27.8% compared to the prior year, which Post attributed to pet food’s strong contribution and improved grocery performance.
According to Post, its supply chain performance and fill rates remained strong over the quarter and commodity inflation was neutral. The company continues to invest in its pet food capacity, as capital expenditure for the quarter rose to $110 million.
For the nine months ended June 30, overall net sales were $5.91 billion, a 17.2% increase compared to the prior year period. Gross profit was $1.73 billion, a 30% increase. Operating profit was $602.6 million, a 35.1% increase compared to the prior year period.
SG&A expenses rose 28.6% to $988.7 million — this included $26.5 million of integration costs that were primarily related to Post’s pet food acquisition.
Net earnings for the nine months were $285.1 million, a 21% increase compared to the prior year.
Looking at the nine-month performance of Post Consumer Brands, net sales were $3.06 billion, a 51.2% increase compared to the prior year period. Segment profit was $401 million, a 68.6% increase, and segment adjusted EBITDA was $582.3 million, a 53.8% increase compared to the prior year period.
Following these financial results, Post updated its financial outlook for the fiscal year 2024. The company now expects adjusted EBITDA to be between $1.37 billion and $1.39 billion, an increase from previous projections between $1.34 billion and $1.38 billion.
Capital expenditures are expected to range between $420 million to $445 million, this includes Post’s plans to invest between $90 million and $100 million in its pet food business. The investment will focus on pet food quality, safety and capacity, as well as a pilot plant and distribution network investments.
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