Post Holdings, Inc. (POST) Q3 2026 Earnings Call Transcript

Welcome to the Post Holdings 3rd Quarter 2026 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 Matt Maynard, CFO of POST.

Thank you, and good morning. Thank you all for joining us today for POST's third quarter fiscal 2026 earnings question and answer session. I'm joined this morning by Nico Catozio, our COO. Rob is unable to join us today as he is feeling under the weather, and Daniel is actually with his wife who is going into labor. Before I turn this call to Nico, though, I want to remind you that this call is being recorded and an audio replay will be available on our website at postholdings.com. During today's call, we make 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 those statements the press release and written management remarks that support today's caller posted on our website in the investors section this call will discuss certain non-gap measures for reconciliation of these non-gap measures to the nearest gap measure see our press release issued yesterday and posted on our website. With that, I will turn the call over to Nico. Thank you, Matt.

Good morning and thanks, everyone, for joining us today. Our third quarter results were slightly ahead of expectations driven by stronger-than-anticipated performance of food service, and we are maintaining the midpoint of our fiscal 2026 adjusted EBITDA items while narrowing the range. From a capital allocation standpoint, we will purchase 4% of our outstanding shares, bringing our total fiscal year-to-day reaction to approximately 17%, while maintaining leverage within our target wage. Looking ahead, we believe it's important to provide early context for fiscal 2027. After adjusting our fiscal 2026 outlook for approximately $80 million of items affecting compatibility, we enter fiscal 2027 with a comparable adjusted EBITDA base of approximately $1.48 billion. While our fiscal 2027 budget remains under development, our preliminary outlook is for adjusted EBITDA that is relatively consistent with this level. Despite normalizing food service earnings, the absence of divested businesses, anticipated We currently expect targeted pricing actions, cost savings and food service man rate growth to support fiscal 2027 underlying EBITDA generally flat related to the comparable adjusted EBITDA base of approximately $1.48 billion that I mentioned before. With that operator, please open the line for Q&A.

Thank you. The floor is now open for your 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 questions to provide optimal sound quality. Thank you. Our first question is coming from Andrew Lazar with Barclays. Your line is now open. Morning, everybody.

Thanks for the question. I think to start off, Nico, you highlight a shift from what's been a very aggressive share of purchase activity to really more of a deleveraging posture. I was hoping you could delve into this decision a bit more. You know, is it concern about the direction of EBITDA in the near term and some of the volume pressure, you know, given your 27 outlook or something else?

And does this change your ability or desire to go after, you know, cash accretive deals that that may make sense sure i can take that one and really it's consistent with how we've always thought about capital allocation when it comes to m a versus debt reduction and that's less a function of a leverage number and really more a function of what we're seeing in interest rates and refinancing impacts so while we don't have a bond maturity for four years we factor in the cash flow impact of refinancing that debt now at higher rates and what would that do to free cash flow? And as we see rates continue to rise from a refinancing standpoint, that just weighs more heavily to say, hey, we've got to start allocating more capital to debt reduction to make sure we're bringing down debt. So as we get to refinancing, we're not seeing a deterioration of our free cash flow. Again, we'll still maintain the ability to buy back shares opportunistically, just in the current interest rate environment, it's certainly going to be a slower pace than the last couple of years. I think on the counter, if we see rates somehow return and we're back in a 5% refinancing rate, then our view would change. But that's certainly the big driver and the primary lens, how we look at it. Relative to the M&A points, I think another angle we view is, where's a comfortable leverage level? We could take leverage two and where's a comfortable starting point and that gets us to a similar spot hey mid fours is somewhere we're comfortable for but we wouldn't want to see that number rise because that would deteriorate some of the flexibility for cash m&a so i think that's where the preliminary outlook for next year is more of a consideration uh but again i'd say consistent with how we've always viewed it got it thanks for that and then um post has been obviously very proactive in optimizing you know, its capacity and its assets in categories like ready to eat cereal, you know, to sort of stay ahead, so to speak, of sort of the structural declining category and maintain solid margins and cash flow.

Having already closed, I guess, three plants in cereal, given trends in the company's dog food business and maybe some of the potential elasticity impacts of some of the pricing actions that you're talking about here, I guess, are there some similar actions that you can or may need to take in sort of the pet food space around asset optimization sort of like you've done in cereal the past you know year or two thanks Andrew and it's a good question so let me start again up so we we are constantly accessing those opportunities across the every business and particular NPC so before I get to pet and I will answer that one

We also just made the decision to shut down two peanut butter plants. And that's, again, to your point, it's exactly the same playbook that we used in cereal. That's as we integrated the 8th Avenue business, and we streamlined that business and exited some business that we were literally losing money. We saw the opportunity to shut down two plants. So that's in the works. that's going to impact F28. And all the magnitude is similar to what you saw in CDL in the past. So that's on peanut butter. On PET, it's a good question. So let me tell you that beyond footprint, we haven't even scratched the surface in COF, in PET, not the way we did it in CDL. And that's because we wanted to wait until we had the confidence that we had a stable pet business and and we feel that we're getting to that point we are now at a 30 percent market share and what we are confident is if we if we can stay in that level and and we think we we we can because uh some of the initiatives that we we um proceed to turn around nutrition are starting to actually show encouraging results If we can stay in that, call it 3-3-2 market share range, then now we can actually go after costs aggressively. And it's more than just footprint. There are opportunities to simplify the portfolio, harmonize formulas, a lot of the things that we need in Cereal. When you do that, then that will allow us to actually optimize the footprint. So your question is, back to your question, yes, we are assessing those. We are very confident that we have a lot of opportunities in bed, and we're actually starting to now work on the pipeline of those opportunities. Great. Thanks so much.

Thank you. Our next question is coming from Matt Smith with Stifel. Your line is now open.

Hi. Good morning. The narrowed guidance range for this year implies fourth quarter more or less in line with the performance here in the third quarter. you called out food service continuing to move towards the normalized run rate suggesting it steps lower on a sequential basis so can you talk about where the offsets that food service moving lower where you see a stronger even dialogue as you as you look into the fourth quarter here thank you the offset to food service pulling back on the quarter yes as we think about kind of the shape of the pnl in the fourth quarter and look ahead into 27 yeah yeah so it's more of a we saw refrigerated retail pullback a bit more than anticipated out of the Easter benefit in Q2

in terms of results in Q3. We see some improvement in that business in Q4 and really for the rest of the portfolio pretty flat. So we're not talking about significant changes overall.

Thanks for that. And Matt, the CapEx range moved a little higher at the low end for this year. Can you talk about that incremental investment and as you look ahead to 27, give a view of if CapEx remains relatively stable or moves perhaps even higher as you look at some of the supply chain work you're undertaking?

Sure. I think just really a refinement of this year and the pacing we're seeing on the CapEx range just leans a little bit higher in the range from where we started. But, you know, it's definitely a bit of a moving target. And, again, a lot of these capital projects we're trying to work through as fast as we can because they're in the plan for a reason. When you think about next year, a bit too soon to say, I think just to add on to Nika's comments, as you think about potential network optimization, that's an area where if we see clear opportunities, there could be some additional capital spend to clear the way for those outside of that. would expect just, you know, continued investment in food service and pursuing growth as we get our plan together for next year and the following year, thoughts, and then really more of a maintenance level across the balance of the business.

Appreciate that. I'll pass it on.

Thank you. Our next question is coming from David Palmer with Evercore ISI. Please go ahead.

Great. First of all, best to Rob and congratulations to Daniel. Big, big day. I wanted to ask you just about the EBITDA guidance, just what's behind the $1.48 billion for PCB EBITDA down mid-single digits, assuming, you know, should we assume that PCB organic sales down at 3%, maybe mid-single digits down for PCB with that guidance? Is that reasonable?

I think it's, again, I think we've got kind of a first look in ranges around our businesses, David, and just given the non-recurring things we were saying, we wanted to get some indication out there. I think we're a little cautious to get into details around each business segment until we have a more formalized plan. But certainly we continue to – we've commented in our release that we see growth in food service next year offsetting some of these pressures we're seeing in terms of inflation and volume pressure. So I think fair there's probably a bit of pullback in overall retail offset by food service, but don't really want to get into the buy segment comments yet.

Yeah, and what I would add, without actually too much point getting to the specific segments, but it's a comment that applies to all of retail, our retail businesses. We expect, as Matt said, inflation, and it's going to be a year where we'll probably chase inflation. Typically, to be able to price, we need to wait to see the inflation. That's how you have the discussion with the retailers. So that's what that kind of initial outlook actually reflects.

You know, sort of behind that is, you know, looking at the long-term here and volume trends for your all-in serial business, including private label, and volume has been down mid-single digits basically the last two years now. And I wonder if that's just kind of how you're thinking about that business going forward. uh you know as an underlying assumption going forward i.e it's not going to get better anytime soon or maybe the other you see some real tangible reasons why it could get better over the next fiscal year and i'll pass it on uh again we we still don't know we don't have the all the details of the plans and uh but what i can tell you is that i would expect the cdl volume to move closer to the carry next year the reason why we've been lagging the carry in the last year it's

a lot of decisions that we made so one is we talked about it in the last two quarters we adjusted the assortment to have better performance or efficiency in our promotions that is worth one percentage point of the gap versus the carry so it's significant it's 50 percent of the gap versus the carry um and the the rest as we mentioned is uh we'll have some distribution in our our multi-meal brand and it's it's kind of the details can use the lower velocities can use but uh but we'll have the distribution going forward um the rest of the portfolio is performing really well our premium portfolio we are gaining market chain our premium portfolio that is great news so i would anticipate moving closer to the carry where the carry is going to be, we don't know. The good news is it's actually slowly improving quarter after quarter. It's getting closer to what we see as the long-term sustainable trend in the category of minus one, minus two percent. We're not there yet, but we're getting closer.

Got it. Thank you.

Thank you. Our next question is coming from Tom Palmer with J.P. Morgan. Your line is now open.

Good morning, and thanks for the question. Maybe just follow up on something you touched on earlier in the call related to Andrew's question. The pet business, you made mention that you like the progress that you're starting to see. Could we maybe just get more of an update there on kind of the different brands and where we stand in terms of instituting changes and seeing those time, self-changes. Thank you.

Yeah, absolutely. So let me, if you take the year-over-year decline for that business, 60% of that is our value brands, and most of that is nine lives. And we mentioned last quarter, we relaunched a third of that brand that we were not making money on. We saw elasticity higher than what we anticipated, but at the same time, we like the margins, right? Or we like the margins more than what we used to like, I would say. So we had to do it. We are actually working as we speak, and we are seeing good progress on kind of resetting the value proposition for that. At the same time, the cut segment, because it's where the growth is in the category, has been very, very active in terms of promotion. So Nine life that stands essentially for value in the country um has seen a lot of promotions competitive promotions and we uh two of our main competitor runs actually uh hitting price points below our run we are not going to follow them we are very disciplined when we think about promotion so we don't see that as something that will um kind of remain like that over time but but in the short time that that's a lot of the pressure that nine lives is under um nutrients the uh so let me tell you the good news and the so the good news is where the brand is fully relaunched and we work actively work our assortment to what we call our core assortment beef chicken and salmon the brand is performing well so our larger retailer is a good example of that we very aggressively manage our assortment. We have what we call our must-haves. They are on shelf. And there, the brand went from losing market share year over year to now over the last 13 weeks, we are gaining market share. So in dry dock, that's where we measure us. So we feel good. And we are seeing in some other retailers where we are actually transitioning, we see a clear inflection point in the performance of the brand now the transition has taken a bit longer than anticipated it's been a bit more messy uh and the other thing is there's a clear difference in performance between again what we call our cop assortment and the flankers case so what we are working on is for the next research is doing a lot more of what we did in this um uh one of the larger retailers that is working the assortment to actually focus on that core set of skills that perform really well So, again, the good news is where would we launch those, where they are fully transitioned? We are actually seeing a clear inflection point, and those can use actually turn in the top third of the Caribbean. That's very encouraging.

Thank you for all that detail. I did have one other question on PCP, just looking back over the past four quarters, a pretty meaningful pullback in marketing agency activity. as you look forward, since you're going to start lapping that pullback, is there more to do? Or given some of these on-shelf changes, you know, especially in pet, does it make sense to maybe invest back a bit? Just kind of curious your views there. Yeah.

So I would actually say there are two things behind that. One is we constantly work to improve the return on spend and the effectiveness of spend. So almost 100% of our spend now it's digital and no linear TV. So we improve our returns. So that's across the portfolio, but mostly on the CDL side. So we haven't pulled support out of the CDL brands. We just got more effective spend. In PED, some of the ANC pullback is essentially, it's not necessarily ANC that we're pulling out. We are actually deploying dollars differently. So there's more spend on in-store activation or select rollbacks and support, retail support. That is, again, dollars that move from ANC to call it trade spend. And to reset some value equations that we talk about, do we anticipate some support back in some brands? It's brand by brand. We feel really good about the returns in our serial brands, really, really good. And we're going to be selecting in our support in our pet brands.

Understood. Thank you. Thank you. We'll move on now to Scott Marks with Jeffries. Your line is open.

Hey, good morning, all. Thanks very much for taking your questions. First thing I wanted to ask about is the food service business, and specifically on the profit side. I think despite the lapping the HPAI pricing adders and price realization being decidedly negative this quarter, you still put up a pretty strong profit number, actually, in line with what you did in Q2. So, just wondering if you can help us understand the moving pieces there why was it so strong and maybe why why shouldn't we believe that the the actual annualized run rate is higher than than the 500 million dollars thanks sure uh very fair question um i think just to to think about the 500 million dollar run rates really an estimate of what we see the current business earning power is under normalized circumstances.

And I think you've got to define the view of normalized circumstances as really, I'd say three things. It's our balance, I'm sorry, our business being back in balance from a supply and demand standpoint. Really our inventory is back to normal. And then also underlying market versus grain-based egg pricing. Our internal supply and demand and our inventories, which we continue to build this past quarter, are back to where we'd like to see them in imbalance. So we're really left with that third piece, which is a bit of imbalance between market and grain-based egg pricing. And that's really a function, all three were a function of HPAI last year and throwing the industry and our own supply out of whack. again I think the third piece we believe will correct itself just you know when you have a situation of oversupply is where we believe we are from an industry standpoint that is actually you know not going to survive long when you've got chickens the cost to feed them is greater than what you can command on the open market we expect people will take some actions to to bring that in line so i think that collectively is how we really view the underlying run rate and how we view the business heading into 27. again we feel we can fully grow off of that number in 27 off the 500 million dollar run rate but that's our attempt to try and carve those pieces out and get to a what we see in underlying volumes and balance of the business where it's running today And Scott, one thing that I would add is in Q3, we probably took a bit more advantage of the market conditions than what we anticipated, so we exited the quarter with really high inventories.

That's part of what is reflected in that number.

Understood. Appreciate the color there. And then maybe just as a follow-up, since you guys gave kind of preliminary fiscal 27 guidance. You kind of gave some, you know, some tailwinds helping you, some of the headwinds that are offsetting. Just wondering if you can share any assumptions in terms of, you know, rate of inflation, where that's coming from, just any other building blocks you're willing to share at this point. Thanks.

Yeah, I think we're hesitant to get into any broad-based assumptions. We really just wanted to rebase 26 to make sure we're very clear on food service run rate where we're seeing that and then also the impact of the two divestitures we made i think beyond that like i said we're in in the middle stages here and have some first looks and ranges but really don't want to get into underlying assumptions i think broad brush we see those all balancing out and that's why we're saying a stable flat year to a rebalanced 26, but really not in a position to get into a lot of details around those assumptions. Certainly as we get to November, we'll be able to walk through much more specifically some of those assumptions.

Okay, understood. We'll leave it there. Thanks very much.

Thank you. Our next question is coming from Mark Torrente with Wells Fargo. Your line is open.

Hey, good morning, and thank you for the questions. Maybe just asking the last one a bit differently, the slattish outlook into next year, are the inflation pressures and volume trends you're seeing consistent with your prior expectations that you sort of walked through on the last call? And where is that mostly flowing through?

I can touch on at least. So, again, we're still working on the budget. So, we don't have all the details. But I would actually say volumes are consistent with what we're seeing. inflation I mentioned in the last call that we wanted to see we needed to wait to have a bit more visibility and I think what we're saying is coming in probably at the higher end of what we were expecting so it's within the range that we were expecting but at the higher end of that range and again that's part of what is reflected in that initial outlook.

Okay I appreciate that And then on refrigerated retail, could you maybe help us understand some of the weakness in the quarter? The underlying was down. I think that was mostly due to the pricing lap and holiday timing. But maybe just what does that business look like near term? And maybe quantify some of the impact from the Crystal Farm sale.

Sure. So, yes, to your point, year over year, the Easter timing was a big factor. And then also, as a reminder, in Q3 and Q4 of last year, we had pricing adders around AI that were beneficial for the business. And those, just like our food service business, that were taken off as we got into fiscal 27. So, Easter and those pricing adders are the big year-over-year drivers. And then, in addition to that, which is more of the current run rate of the business, certainly, as we've seen across the portfolio, but on a relative size basis just more impactful for refrigerated retail has been the impact of higher fuel costs and then the other impact is around eggs you know the dynamic there is we're selling on the market we're a grain-based buyer of eggs and you've got a dynamic where market prices have plummeted so it's a tough situation to try and take pricing in to equalize those when you the ordinary markets they're suggesting price of eggs from a market standpoint is much lower than

what we're procuring at so that's certainly been the dynamic we've seen here in q3 and that's really maybe the gap to expectations both internal and external for q3 thank you we'll take our next question from rob dickerson with us bank corp btig your line is open uh hey great thanks a lot um So, you know, you put in a release last night and some commentary this morning and just kind of, you know, the ongoing volume weakness, but then offsets and part of the offsets would be pricing. But you're also saying, you know, be kind of chasing the pricing a little bit because it has to come through first. So I guess just to clarify simplistically, it would seem like, you know, if there's a little bit of pricing contribution next year, that'd probably be, you know, later in the year. maybe more back half in the year and then secondly if you could just touch on you know broadly speaking at least um kind of you know where you you think you might still see some ongoing volume softness and then where you also might think you might have a higher probability of some of that pricing just kind of going through the different segments at least for purposes of modeling thanks so i think you're spot on so um our assumption right now is that pricing will be more toward the the end of the year.

Right now, what we see more of that happening is in PCD. But again, early on in the process, but that's where we see most of the inflation and what we expect some pricing. Volumes, I think it's going to be similar to what we're seeing. So if you think about the cut is, again, we don't know exactly where the cut is going to be, but still expecting to decline probably 2.5%, but again, we don't know. I mean, and then in that, as a reminder, most of, so two-thirds of our portfolio, 60% of our portfolio is dry dog. That segment is underperforming the carry so if you think about dog is underperforming cat so dog is declining cat segment is growing and within dog dries underperforming so that's going to be a headwind so we that that's uh where we see um some volume softness but but again it's more driven by the carry than our rounds we we feel that we we are going to be moving toward that carry average But again, considering the mix of our portfolio.

Okay, great. And then just quickly go back to the leverage versus buyback perspective right now. I think you said kind of comfortable in that mid-four range around there also said don't really have any big maturities coming due, but clearly want to be cognizant of the rate environment and how that impacts interest and cash flow, etc. So, kind of all that said, though, is that what you're saying basically is kind of the cash allocated to buybacks, let's say over the next 18 months, just making it up, would be lower, and then the cash to incremental debt pay down would be higher despite having kind of no maturity coming bill. Like you're going to pay down debt if it's not buy back as much stock. That's basically it.

MR. Yes. I think you summarized it well. I mean, that's given our current view and we'll continue to look at where rates are going and refinance rates. But, you know, just in the last quarter as an example, our 10-year refinance rate, which is our benchmark, what we look at, has risen 50 basis points. So that certainly goes into the model and the factor. So assuming rates stay elevated over the next year, that's the right way to think about how we're thinking about capital allocation favoring debt reduction over share repurchases. Again, we still have a pool of cash flow that we can deploy against share repurchases. It's going to be more on the debt side in this interest rate environment.

Yeah. Okay, great. All right. Thanks a lot.

I'll pass it on.

Thank you. Our next question is coming from Carla Casella with JP Morgan.

Please go ahead hi thanks for taking the question um you mentioned in the repair to marks about getting some share and and private label in pet and i'm just wondering how you think about private label in that business is that a bigger opportunity or is that something you're just using to fill in space and kind of hiking about private label in general uh in general in pet you mean yeah Yeah.

Yeah. So if you remember, we lost some business 18 months ago. We were confident that we were going to recover some of that, and that's essentially what's happening. We have a fairly unique position in the category. We are a premium private label player, so we produce mostly premium products. And that's a segment that is growing in the category. So we are well positioned. So we see more opportunities of that. And then the other opportunity is as we continue integrating the footprint, we see more opportunities of actually expanding private level as we leverage the full footprint that we have. So we feel good about that. That business is actually performing really well.

That's great. And I'm just wondering if you have any comments in terms of, like, In pet, where you're seeing the pockets of strength, is it mass, club, pet specialty, any kind of divergence and trends by type of retailer?

Yes, it's a good question. So the obvious one is e-commerce is growing, outgrowing every other channel. and it's both the two pure plays so that you know and also the retailer.com businesses so all those are outgrowing brick and mortar within brick and mortar especially still as a channel underperforming relative to mass. So, mass is doing probably slightly better than the average of the calories, but especially it's underperforming and e-commerce is clearly overperforming.

Okay, great. And then can you comment on snap impact either on the quarter and how you're thinking about it for the year or if there's like a timing issue of when you expect the greatest snap impact versus when it may normalize?

I WISH I KNEW EXACTLY THE ANSWER FOR THAT. SO MOST PEOPLE SEE IT AS A HEADWIND. I PERSONALLY HAVE HAD THIS THEORY, AND I THINK IT'S WHAT WE'RE SEEING IN THE CARDY. IT'S PROBABLY CONSIDENT WITH THAT, THAT IT COULD BE A TAILWIND FOR CARDYS LIKE CERIAL BECAUSE OF AFFORDABILITY. Cereal is still one of the cheapest calories for breakfast, and it's definitely the cheapest way to actually have the right nutrients in your breakfast. So we, longer time, I still see it as an opportunity, but the reality is there's a lot of noise. And I would add, it's not only SNAP, there are changes in the WIC program, the women, infant, and children program that also impacted the category because there were changes to the dairy allocation that impacts the category. So there's so much noise. So I don't have the perfect answer for SNAP. I see it as potentially an opportunity for serial. And the reality is if you think about when SNAP changed, that is in our Q1, that's when we started seeing the CARE is starting to perform a bit better.

Okay, great. Thanks for all the answers.

Thank you. This concludes today's Post Holdings Third Quarter 2026 Earnings Conference Call and Webcast. Please disconnect your line at this time and have a wonderful day.