Welcome to the Post Holdings 3rd Quarter 2025 Earnings Conference Call and Webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post.

Good morning. Thank you for joining us today for Post's third quarter fiscal 2025 earnings call. I'm joined this morning by Rob Vitale, our President and CEO, Jeff Zadix, our COO, and Matt Maynard, our CFO and Treasurer. Rob, Jeff, and Matt will make prepared remarks, and afterwards, we'll answer your questions. The press release that supports these remarks is posted on both the investors and the SEC filings portions of our website, and is also available on the SEC's website. As a reminder, this call is being recorded, and an audio replay will be available on our website at postholdings.com. Before we continue, I would like to remind you that this call will contain forward-looking statements which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward looking statements are current as of the date of this call and management undertakes no obligation to update these statements. This call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and post it on our website. With that, I will turn the call over to Rob.

Thank you, Daniel, and good morning, everyone. Before commenting on the quarter, I want to mention the leadership announcements from last evening. Jeff has decided to retire at the end of the year. Jeff and I started a post the same day, and he has been instrumental to our success. While I'm happy for him, he will be sorely missed. Nico is being named COO Effective at the same time. For the time being, he will also continue as CEO of PCB. Nico has done an outstanding job leading PCB, especially the integration of our pet business. I look forward to working with him in this role. Turning to the business, we had strong results in Q3 despite the challenging macro environment with adjusted EBITDA approaching $400 million. Diversification in our business segments continues to benefit us as we sequentially saw significant improvement in our cold chain businesses more than offsetting a pullback at PCB. While these dynamics were anticipated heading into the quarter, the magnitude of each was a bit bigger than expected. Rounding out the portfolio, WIDABIX maintained a steady improvement from the first half that was impacted by their ERP conversion. Another highlight of Q3 was our acquisition of 8th Avenue, which closed on July 1st. We are pleased to have the business full laid back in the post portfolio. And while we see very clear synergies to PCB within nut butter and granola, we are waiting until FY26 to start integrating to provide some normalcy and stabilization for the business. Meanwhile, the broader M&A environment remains challenged given market volatility. However, we view the recently announced Kellogg's transaction as an encouraging sign, highlighting the potential for larger, more transformative transactions. Beyond M&A, we continue to be aggressive in share buybacks, having bought back 8% of the company fiscal year to date. Subsequent to the closure of the 8th Avenue transaction, we remain in a great spot from both a leverage and liquidity position to remain opportunistic with our capital allocation. While tariffs and regulatory changes to food ingredients continue to increase costs and create uncertainty, the recent tax law changes are projected to result in substantial financial benefits to post. Specifically, bonus depreciation and interest deductibility changes will drive an estimated $300 million in reduction in cash taxes paid over the next five years. I am pleased with the overall state of our portfolio as we continue to perform well in a really tough environment. Food service has successfully navigated severe HPAI impacts this year and is executing a soft landing to normalcy, is working through a challenging but much-needed portfolio transition while continuing to sustain over 2x our acquisition underwriting case. Meanwhile, on the grocery side of PCB, we remain focused on executing cost optimization to offset, finally, both refrigerated retail and WIDABIX continue to pursue their pipelines for targeted volume growth and cost reduction. With that, I will turn the call over to Jeff.

Thanks, Rob, and good morning, everyone. Post-consumer brands continue to face volume challenges in both cereal and PET, which drove the segment's performance decline. Cereal category volumes were down 4.1% year-over-year, and our branded portfolio was slightly behind the category with a 4.9% decline. We remain on track with our previously announced cereal plant closures at the end of the calendar year to optimize our cost structure, and we will continue to pursue additional cost-out opportunities to mitigate the current serial category trajectory. In fact, cost optimization efforts already implemented, along with favorable product mix, enable us to maintain serial profitability relatively flat sequentially despite the volume challenges. Our pet volume consumption was down 3.7% year-over-year versus a flat category as we saw continued GravyTrain price elasticities and accelerating declines in Nutrish from its relaunch. As we learned from our mom cereal reset a few years ago, we expected short-term volume challenges as we overhauled the Nutrish brand, but the magnitude has been larger than anticipated. We're making some course corrections based on market feedback and therefore expect the brand recovery timeline to be extended. With regard to Gravy Train, we have some price pack architecture changes hitting the market over the next few quarters, which we believe will set the proper balance between profitability and volumes for that brand. Turning to food service, as expected, Q3 was a much stronger quarter sequentially, driven by temporary avian influenza pricing to recover Q2 costs ahead of pricing and to offset continued elevated egg costs. In addition, we saw volume growth in both eggs and potatoes driven by improved market egg availability and improved breakfast foot traffic for our end customers. We expect to wind down our temporary HPAI pricing and fully recover our egg supply by the end of Q4, setting us up to enter fiscal 26 at a normalized run rate. Although still early in our planning process, our early read of the normalized quarterly adjusted EBITDA run rate of our food service business is approximately $115 million. Similar to food service, refrigerated retail benefited in a quarter from temporary avian influenza-driven pricing adders and liquid eggs, along with the shifting of the Easter holiday into Q3. Volumes were higher in nearly all categories. We are progressing well on the integration of the recently acquired PPI business, seeing the benefits of optimized manufacturing mix, and elimination of tolling charges. We are also seeing further benefit from warehousing and freight efficiency. Turning to Weedabix, our flagship yellow box product grew its consumption volumes 2.4% year-over-year in a category that was down 1.8%. We attribute this to a return to marketing and promotion after limiting those activities in the first half of the fiscal year as we executed an IT systems conversion. In addition, UFIT had a strong quarter, growing volumes by 31% over the prior year. We are looking to expand the UFIT brand with new high-protein cereal and granola products that are now in stores. More broadly, we remain focused on executing our cost-out opportunities to drive our multi-year margin recovery. Despite the challenging macro backdrop, we are expecting a strong finish for fiscal 2025, as we remain focused on the things we can control, such as cost-out optimization and making targeted investments to drive volumes. With that, I'll turn the call over to Matt.

Thanks, Jeff, and good morning, everyone. Third quarter consolidated net sales were $2 billion, and adjusted EBITDA was $397 million. Sales increased 2% as avian influenza-driven pricing and volume growth in our cold chain businesses was partially offset by lower pet food and cereal volumes. Turning to our segments, post-consumer brands' net sales decreased 9%, driven by lower volumes in both grocery and pet. Civilized volumes decreased 6% due to category dynamics, with private labels seeing steeper than PET. Our volume declines accelerated to down 13%. As a reminder, we expected high single-digit declines for the second half of fiscal 25 until we lapped prior year profit-enhancing decisions and completed the relaunch of Nutrish. Bridging the additional decline this quarter is twofold. Consumption declines Jeff discussed for both Nutrish and Gravy Trading, and the second is the loss of some private label business for which we expect to replace by early FY26. Segment adjusted EBITDA decreased 8% versus prior year as improved cost performance for both grocery and pet was not enough to offset the impact of lower volumes. One call out is the better cost performance is net of a $5 million service charge taken this quarter as PCB optimized its SDNA workforce to better align with our smaller cereal footprint. Food service net sales increased 19% and volumes increased 7%. Excluding the impact of our PPI acquisitions, volumes increased 4%, driven by the inclusion of shake volumes in the quarter and higher customer foot traffic, benefiting both eggs and potatoes. Beyond volume, avian influenza-driven pricing drove the revenue increase. Citi Veda increased 32%, driven by increased pricing to recover elevated egg costs and continued volume growth in both our value-added egg and potato products. Retail net sales increased 9%, and volumes excluding the impact of BPI increased 1%. Volumes across all products benefited from the timing of Easter, which was in Q2 last year. Segment adjusted EVA dot increased 94% as we lapped a particularly weak quarter last year marked by trade overspends, while this year we benefited from avian influenza pricing adders and Easter-driven volume increases. Weedabix net sales increased 1% versus the prior year. Foreign currency represented a tailwind of 560 basis points. Volumes decreased 3% driven by non-core discontinuations. However, as Jeff mentioned, our Cori Elbeths product grew volumes 3% and UFIT grew volumes 31%. Segment adjusted EVA DAW decreased 4% versus prior year, led by lower volumes and increased inflation-driven costs. Cash flow, we generated $226 million from operations and approximately $95 million in free cash flow, net of accelerated capital spend on our key investments in both PCB and food. From a capital allocation standpoint, we have repurchased approximately 1.6 million shares since the beginning of our fiscal year total to approximately 5 million, or 8% of the company. Our Q3 results drove our net leverage down slightly to 4.3 times. However, adjusting for the July 1st closing of 8th Avenue, our earnings released last night, we increased our adjusted EBITDA guidance range from $1.5 billion to $1.52 billion. At the midpoint, this suggests Q4 will be approximately flat to Q3 with the inclusion of a full quarter of 8th Avenue results, offsetting some normalization within the balance of the balance. Sequentially, we expect our cold-chain businesses to decline as AI pricing adders wind down throughout the quarter. This will be partially offset by an increase of PCB due to back-to-school seasonality in cereal and the absence of Q3 service charges. Thank you for joining us today, and I will now turn the call back over to the operator.

The floor is now open for questions. At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we ask that you pick up your handset when posing your question to provide optimal sound quality. Thank you. And our first question is coming from Andrew Lazar with Barclays. Please go ahead.

Thanks so much. Good morning, everybody. All the best in your retirement, Jeff. And congratulations to Nico on the COO role. um rob i know it's early to provide specific guidance on fiscal 26 but maybe you can lay out some of the key puts and takes to consider i think uh as you've talked about food services has over delivered this year suggesting maybe some some give back next year uh serial category trends obviously have remained quite weak and the pet turnaround is taking more time i guess on the flip side you've got the contribution from eighth avenue Cost saves from asset optimization moves, and I think some contribution from the shake co-packing dynamic. So I guess, am I right on those? What others might I be missing? And then I guess when you knit all these out, would you still anticipate at least some modest EBITDA growth in fiscal 26?

You laid it out pretty well. And the way we are thinking, first of all, I should say we are still in the planning process for 26. but uh the way we are thinking about it is if we normalize uh food service for the ai uh impact it's essentially a on algorithm here again with the caveat that we're still in beyond that i think you laid out the different uh puts and takes pretty well are there any that you want to add to Matt?

No, I know. I think you captured everything, Andrew. And, you know, like you, you know, if you took fiscal 25 and put in a full year of 8th Avenue and then normalized our cold chain businesses for AI, Jeff laid out, you know, the runway we see food service at, and we think it can grow in accordance with algo from there, just given the value proposition and just where we sit in the marketplace. So I think we feel good about our prospects for next year, often normalized price 25.

Great. Okay. Thank you for that. And then I'm curious, Rob, maybe just a little more detail on what you're seeing, you know, in the serial category at this point. And I guess why would, why would, I'm just curious why private label would be underperforming branded in the category the way.

Yeah, it's a bit of a mystery to me as well. I think perhaps some of the degree promotion is bringing the price gaps down. I think that the pricing opportunity for us is not as compelling as it has been.

Yeah, I think the only thing I'd add, Andrew's obviously skews the Walmart and they're seeing, have seen quite a pullback in flip traffic. So we think there's some impact there as well, given our exposure there.

And our next question will come from Matt Smith with Stiefel. Please go ahead.

Hey, good morning. Thank you for taking my question. I wanted to come back to the food service performance in the quarter. There was a comment about the pricing reflecting the AI recovery. The pricing was up low double digits. Was that full amount, the pricing recovery of costs you incurred of 2Q, or was there some underlying pricing as well? I guess I'm just trying to get a sense relative to the $30 or $35 million that you expected to recover, how much was delivered above that.

Yeah, I think there was, I mean, a couple of factors. One is recovery of Q2, largely happened in Q3. And then also, you know, again, we continue to see elevated egg markets. So we have continued pricing to recover that as well. So it's kind of an ongoing, once we get our egg supply back, as we get through Q4 here, obviously we'll need that pricing. And we'll see, seeing that Jeff talked about, is how we'd like to recalibrate the business.

And then the only thing I would add is on a year-over-year basis, there's a normal pricing that we would take as we renegotiate contracts. So there's some of that phenomenon in place as well year-over-year.

Thank you. And as a follow-up, I wanted to ask about the CapEx moving higher and the guidance for both the PCB projects as well as food service investments. Is that incremental scope to these projects, or has the cost gone up due to inflation? Just any color there would be helpful, and I'll pass it on.

No, it's really a matter of pacing that more than cost growth. So it's just we're spending a little faster. We have an opportunity to do that, and we want to accelerate those projects where we can. So it's not a matter of higher cost. It's just faster spend.

Thank you. We'll take our next question from Michael Laverie with Piper Sandler. Please go ahead.

Thank you. Good morning, and congrats, Jeff and Nico both. Thank you. you want to come back to just thoughts on M&A. You've obviously just done the Eighth Avenue deal, but with fairly, you know, very modest impact on your balance sheet. Would it be fair, you know, could you give a sense of just how much appetite you still have for more? And what, if any, challenges you're seeing in the marketplace or, you know, how to think about just what's on your radar? And I know you've mentioned repurchases as an alternative as well. Obviously, We'll look for those in the absence of a deal. But just any thoughts on how the M&A landscape looks for you?

Yeah, I mean, I think if you look at some of the opportunities right now, they're impacted by the uncertainty of base earnings with tariffs and some of the impacts that could help ingredient changes that we called out. You know, I think it's an interest of the companies.

So I think the – And just a follow-up on the food service quarterly EBITDA run rate, it feels like it's got upside and some headroom there, especially as Mix keeps driving tailwinds and you've got both, you know, kind of sticky pricing on top of some of the temporary, you know, the pull, the catch-up from second quarter. Or is it just a bit of conservative posture to not push that higher yet, or are there any kind of incremental headwinds we should keep in mind? And can you give a sense of maybe what some of your assumptions are for shakes in that in terms of, you know, the latest on how it's progressing or, you know, what maybe utilization assumptions you may have there?

So I'll start with the last part first. The shake contribution in that number is pretty modest. While we're continuing to make progress, and I know we've said that probably three, four quarters in a row, and it's accurate, it's just a slow slog. So we're still climbing up to where we think normalized profitability would be. So over time, depending on your time horizon, over time, that is certainly a tailwind that we would expect to provide incremental profit as we progress through 2026 and beyond. In terms of the first part of the question, I think that's a reflection of what we currently see as the run rate of the business, but recall that we view food service as a modest grower on a year-over-year basis, which has been the case throughout our ownership period and prior to our ownership period. So that's a point in time, and we would expect that over time it would grow from there.

Okay, that's helpful.

And our next question comes from David Palmer with Evercore ISI. Please go ahead.

Thank you. I was just maybe hoping that we could do a little bit of, you know, market insights on the big two categories within PCB. And, first of all, Jeff, all the best in retirement. Congratulations on your career, and all the best to you too, Rico. But with regard to pet and cereal, you know, the category is up in pet, a couple percent. The sales seem to be moving quickly to the premium and private label sides of the category. You know, value brands, big brands, you know, basically across the border, losing share there. And I wonder maybe what the insight is there other than, you know, perhaps, you know, dry versus wet and some of those dynamics in terms of fresh. And then in cereal, the category is down a couple percent. It's incredible that private label is not really benefiting. It seems maybe to be going to the tidy and low carb type, smaller brands seem to be flourishing. And so I'm not really sure how all of this is really informing what you're going to be doing and maybe even spending heading into fiscal 26. Do you feel like you have a plan for each to pivot and adjust to these to sort of get back to market share? And just really curious about the plan and the spending levels in particular. Thanks so much.

I think starting with PET, again, we've got some, as we talked about at the beginning of the fiscal year, some profit-enhancing items and some decisions we made that got to the end of this fiscal year, and I think what you saw in the quarter was down 13%. I'd say those are about half of that, so as we lapped the year, those would fall away, and you're left with the consumption trends, challenges we've seen mainly around nutrition and then also Gravy Train that Jeff talked about. Again, we've got plans in place to address both those. Obviously, the Nutrish launched, and we're making some course corrections as we move through that as well. It's going to take a little more time than I think we initially anticipated, but we feel good about consumption as we get into fiscal. The piece was around just some private label business that we lost, I feel, by the middle of next fiscal season today. From the spend standpoint, obviously, we're putting some dollars behind Gravy Train and Nutrish in particular to support the relaunch. On the cereal side, rational around spans. We do that on a traditional network optimization we can do. It's not plants, but maybe more lines. But again, I think we're a tough year, and thinking as we lap next year, I expect to see some year-over-year comps improving in terms of just the rate of decline we've seen in cereal. But we'll keep an eye on that as we think about additional optimization.

So it sounds, just a summary, is that you don't expect to have a very significant increase in the spending levels, promotion and otherwise, rather just tactical changes with regard to the brand.

Yes, I think tactical is a great way to describe it.

Thank you.

Our next question comes from Scott Marks with Jeffries. Please go ahead.

Hey, good morning. Thanks so much for taking our questions. First thing I wanted to ask about, you made a comment in the prepared remarks about some higher input costs because of product reformulations and some regulatory changes. So maybe just wondering if you can kind of walk us through how you're thinking about the shape of the portfolio and how you intend maybe to adjust the portfolio a little bit to meet some of these new, you know, trends and policy updates.

Well, I think we're going to certainly have some innovation. So to David's question before, you know, one of the things that we're going to do is attempt some innovation in cereal that's more targeted at the types of products that are performing well, protein-enhanced cereals, that sort of thing. More broadly, with regard to ingredients, I think we're going to take a pragmatic approach. which you've seen some commitments from some of our peers to eliminate some of the ingredients. We're certainly going to look at reformulation of our products over time, but are going to take a pragmatic view as to how quickly we do that and whether we do that across the board or within certain products. So I think the short answer is to say we're going to take a tactical view. we're going to make tweaks along the edges, but we're not anticipating any major changes in particular in fiscal 26 with regard to those items.

Got it. Thanks for that. And then maybe it's a follow-up. Earlier in the call, you also mentioned, obviously, the buyout of W.K. Kellogg. Maybe if you can share your thoughts around, you know, a possible new entrant into the category with deeper pockets for innovation and investment and how you think about that, maybe changing the dynamics within the serial category from here?

I think you have a situation of one very large and very respected company acquiring a smaller but also very well-respected company with the likely outcome being the category will be enhanced by the size of the acquirer, but I think until we actually see the transaction close, we would be hesitant to make further comment.

Got it. Pass it on. Thanks.

Our next question comes from Mark Turinty with Wells Fargo Security. Please go ahead.

Hi, good morning. Thank you for the questions. Jeff, congratulations on the retirement. I guess first on 8th Avenue, kind of two parts. How has that business in its categories been tracking over the last couple quarters, top line and profitability? And you previously increased your outlook to account for the deal closing, the deal closed on time. Any change to your expected contribution for this year? And then going forward, any seasonality considerations for that business? Should that track more or less in line with PCB. Thanks.

No material changes to this fiscal year contribution and then as the outlook for next year remains similar. I'd say what we found and not surprised was under over the last six or nine months and uncertainty about where the business was going to land. I definitely saw a pullback in performance of the business here as of the last couple of quarters. We see a path to improvement in line with what we call down next year, but no seasonality I would really call out. It's material within the business. Anything else you'd add, Jeff? No, I think that covers it.

Okay, great. And then maybe just an update on some of the timing of the plan optimization savings. It sounds as though the step up in CapEx could pull some of that forward. And then just given how the serial category has trended, Where do you think this takes you for your utilization, and how does that compare versus your optimal outlook?

So, again, it doesn't really pull forward what the actions we're taking on the plan optimization. They're still on track for the end of the calendar year. And in terms of utilization, and then I think it's really a matter of, like I said, how does a serial category this year, we'd have to move quicker on additional steps. If it levels out and becomes more normalized from what we've seen historically, then I feel like we're in a good spot for next fiscal year.

Great. Thank you.

Our next question comes from John Bumgarner with Mizuho. Please go ahead.

Good morning. Thanks for the question. And Jeff, congrats on retirement. Really appreciated all of your insights over the years. I guess, first off, for me and Pat, I'd like to follow up there, given the portfolio adjustments. It seems as though you had a fast start out of the gate, rebuilding with existing customers in the old Smucker business. But as that's normalized, how do you think about portfolio balance at this point? Are there opportunities to maybe participate more heavily in different channels, e-commerce, specialty? Are there opportunities to have a presence in some of the specialized formulas? Just how do you envision the portfolio from where it sits today with steady-state brands and distribution and where it could maybe evolve from here?

Well, I think there are many opportunities to change the composition of the portfolio, whether it's channel or price point or even brief. So I think there are many opportunities there. However, I think the most important thing to realize is that, you know, we want to make sure that what we bought sticks, and part of what we bought was a brand in Nutrish, so we will continue to make sure that Nutrish is where it needs to be before we do too much portfolio.

Okay, great. And then as a follow-up on refrigerated retail and the side dishes business, it looks like the volumes have been performing pretty well, at least in the scanner data, and you've done it with, I guess, reasonably stable pricing. Can you dig in a bit more into the drivers there? What's behind the performance and how to think about maybe next 12 months in terms of growth through distribution, innovation, next steps for that business?

We feel good. Yes, to your point, last year we had some challenges with trade where we went into the base performance of the business, and we, of course, corrected that in a much better spot this year. I think we are seeing additional opportunities and gains within distribution and also price points. We've targeted opportunities there as well in terms of alternative products that we can offer and diversify similar to what we see in PCB. So I think as we look to next year, I think we feel really good about some top-line opportunities for that piece of the business.

Good. Thanks, Matt. Thanks for your time.

And our next question comes from Carla Casella with J.P. Morgan. Please go ahead.

Just a quick question. On the 8th Avenue acquisition, you're funding it with revolver and cash, but any thoughts about coming in and issuing bonds to eventually, or term loan to eventually put in longer-term financing for that?

Yeah, it's something that we definitely, obviously, keep an eye on the markets really closely. I think right now, just more in a monitoring mode, But, you know, I think at some point that certainly could be an option for us. But right now we're in a really good spot from a cash flow liquidity standpoint, so in no rush, and I think we'll remain opportunistic.

Okay, great. That's all I had.

Thank you. We've reached the end of the Q&A session. Thanks for joining us. You may now disconnect.