Post Holdings to inject up to $100 million into pet food operations in 2024

ST. LOUIS — Post Holdings, Inc. is already realizing benefits from its recent entrance into the pet food category earlier this year, but there is still work to be done to fully integrate and optimize the new division. The company reported on Nov. 16 its fourth-quarter and full-year earnings for the three- and twelve-month periods ended Sept. 30.

Post Consumer Brands — a segment that includes the company’s pet food, cereal and peanut butter divisions — reported net sales of $1.01 billion in the fourth quarter, up 71.5% year-over-year, of which $404.5 million (roughly 40% of quarterly revenue) was attributed to pet food sales. Without the benefit from recent pet food acquisitions, Post Consumer Brands’ volume was down 6.2%.

Fourth-quarter segment profit was $141 million, up 72% year-over-year, and segment adjusted EBITDA was $199.7 million, up 73.1% year-over-year.

Full-year 2023 net sales for Post Consumer Brands came to $3.03 billion, up 35.2% year-over-year, including $679.8 million in sales (roughly 22.4% of annual revenue) attributed directly to pet food. Segment profit for 2023 was $378.8 million, up 20.4% year-over-year, and segment adjusted EBITDA was $578.4 million, up 26.7% year-over-year.

Post Holdings acquired several pet food brands from The J.M. Smucker Co. in February for $1.2 billion, and is in the process of acquiring Perfection Pet Foods for $235 million. The latter acquisition deal is expected to close in the fourth calendar quarter of 2023, subject to closing conditions.

Overall, fourth-quarter net sales for the company reached $1.95 billion, up 23.2% year-over-year, and operating profit was $153.0 million, up 16% year-over-year. Net earnings from operations over the quarter totaled $65.7 million, a decline of 21.7% year-over-year, and adjusted EBITDA was reported at $349.0 million, up 24.8% year-over-year.

Full-year net sales came to $6.99 billion, up 19.5% year-over-year, with operating profit of $598.9 million, up 44.1% year-over-year; net earnings from operations of $301.3 million, down 59% year-over-year; and adjusted EBITDA of $1.23 billion, up 28% year-over-year.

Selling, general and administrative (SG&A) expenses for fiscal 2023 came to $1.08 billion or 15.4% of net sales, up 19.2% year-over-year and primarily attributed to transaction and integration costs related to its pet food acquisition in February. In the fourth quarter alone, a 38.3% increase in SG&A expenses to $309.5 million (15.9% of net sales) was also primarily attributed to the new pet food division, which incurred up to $10.9 million in integration costs.

The company’s full-year 2024 guidance includes capital expenditures between $400 million and $425 million, including between $90 million and $100 million to enhance quality, safety, capacity and distribution, as well as fund the establishment of a pilot plant, for its new pet food segment.

Post expects adjusted EBITDA for the full fiscal year of between $1.20 billion and $1.26 billion, a projection that would exclude any benefit from its pending acquisition of Perfection Pet Foods.

Read more about Post Holdings’ emerging pet food strategy.