Earnings Call
Post Holdings, Inc. (POST)
Earnings Call Transcript - POST Q1 2022
Operator, Operator
Hello, and welcome to the Post Holdings First Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer, and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be available for replay starting at 12:00 p.m. Eastern Time. The dial-in phone number is 800-839-5324, and no passcode is required. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Post Holdings, for introductions. You may begin.
Jennifer Meyer, Investor Relations
Good morning, and thank you for joining us today for Post's First Quarter Fiscal 2022 Earnings Call. With me today are Rob Vitale, our President and CEO; and Jeff Zadoks, our CFO. Rob and Jeff will begin with prepared remarks, and afterwards, we'll have a brief question-and-answer session. The press release that supports today's remarks is posted on our website in both the Investor Relations and the SEC filings section at postholdings.com. In addition, the release is available on the SEC's website. 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. Additional information regarding these risks and uncertainties is discussed under the forward-looking statements section in the press release we issued yesterday and other press releases we have issued with respect to the proposed distribution of our interest in BellRing Brands which are posted on our website. We also urge you to read the registration statements, the proxy statement and prospectuses, the related amendments of these filings, and other documents related to the proposed distribution of our interest in BellRing Brands that have been and will be filed with the SEC because they contain important information. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. And finally, 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 posted on our website. With that, I will turn the call over to Rob.
Robert Vitale, CEO
Thank you, Jennifer, and thank you all for joining us. Despite a challenging environment, we delivered a quarter largely in line with expectations, and we continue to maintain our expectations for the full year. However, as you all know, the degree of uncertainty remains high, and we face variables to lend both risk and upside to our outlook. While our outlook continues to be presented on a basis consolidated with BellRing, our respective outlook remains largely unchanged. We will initiate Post RemainCo guidance no later than our next earnings call, by which time we expect the separation to have been completed. With respect to the separation execution, I have some updates. First, we've been cleared by the SEC to move forward with the transaction. Second, we expect to complete the transaction by the end of March. Third, we expect the amount of cash that will be distributed to BellRing stockholders, including Post, to be approximately $400 million. Finally, we will pro rata distribute approximately 78 million of BellRing shares rather than exchange any of them for Post shares. This transaction required and continues to require a considerable effort across both organizations, and I want to thank everyone involved. With respect to near-term business results, each segment had two overarching themes. First, cost inflation ran ahead of pricing actions. We have taken the pricing needed to offset our inflation in all segments, but with varying effective dates. Second, each segment had unmet customer demand resulting from shortages and labor inhibiting production and/or shortages in transportation, resulting in unshipped orders. In U.S. Cereal, consumption for our branded products continues to run ahead of pre-COVID levels by nearly 2%, and our related market share is just shy of 20%. Pebbles, in particular, continues to show strong growth. Last quarter, I mentioned we may have seen an inflection point in the value trade, and so far, that is holding. Our value segment sequentially improved throughout the quarter. A shift to value in the category is margin dilutive to Post, but it's profit-accretive. Foodservice performed as expected, meaning it had a weak profit quarter as this segment was the one most dramatically impacted by costs running ahead of pricing. This refers to non-pass-through prices as pass-through prices automatically reset. We have taken nearly $150 million in annualized pricing, with the majority beginning in Q2 but includes pricing occurring into the third quarter. Moreover, labor shortages persist in foodservice. However, no plant was worse, and several improved. We continue to expect sequential improvement towards recovery to pre-pandemic levels of profit in 2023. During the second quarter, we are experiencing some soft demand resulting from the Omicron COVID variant. Nevertheless, we now understand that the volumes bounce back quickly as the variant recedes, and we expect this softness to be limited to a month or two. Refrigerator Retail made great strides this quarter. Our staffing levels are much improved, and we saw far greater capacity utilization. Most products remain on allocation, so we remain below our potential, but I'm quite pleased with the progress. Weetabix continues to be a rock-solid performer; all the factors our U.S. businesses face are present in the key U.K. market. The pricing and mix are pacing favorably. BellRing will have its call shortly. Suffice to say that it continues to perform well in a great category, but the current year results are constrained by insufficient capacity. On balance, I would say we navigated the first quarter effectively. We feel good about how we are managing the controllables, and we're remaining nimble enough to adapt to curveballs as they come our way. In terms of capital allocation, we continue to be an active buyer of our shares; Jeff will provide the details. REIT and M&A are performing to plan with the exception of Almark, which has seen costs accelerate ahead of pricing. We expect pricing action to return to our underwriting case as the volumes are exactly in line with expectations. We continue to actively explore acquisition opportunities both large and small across the business. We will not undertake an acquisition that jeopardizes our execution in a challenging year, but we believe there are opportunities to find value that complements our efforts. I want to close with some comments about our outlook. We expect to see similar aggregate results in Q2 with considerable improvement in foodservice and the expected sequential decline at BellRing. We then expect significant second half acceleration stemming from price realization, improvements in supply chain execution, foodservice volume recovery, and BellRing capacity expansion. As I mentioned, assuming the spin proceeds to plan, we will provide separate stand-alone guidance for the remaining business no later than our May call. Thank you for your time this morning and your continued support. With that, I will turn the call over to Jeff.
Jeff Zadoks, CFO
Thanks, Rob, and good morning, everyone. First-quarter consolidated net sales were $1.6 billion, and adjusted EBITDA was $263 million. Net sales increased 13% and benefited from approximately $98 million from recent acquisitions, volume demand recovery in the Foodservice segment, and pricing actions across each segment. Higher manufacturing input and freight costs continue to pressure margins this quarter, and internal and external labor shortages disrupted the supply chain. Similar to last quarter, throughput declined and per unit product costs increased. Additionally, our customer order fulfillment rates suffered. Turning to our segments and starting with Post Consumer Brands, net sales and volumes increased 14% and 8%, respectively. Excluding the benefit from the private label cereal and Peter Pan acquisitions, net sales and volumes declined 1% and 9%, respectively. This primarily resulted from year-over-year softness across value and private label cereal products and our exit of certain low-margin business. Honey Bunches of Oats was also a driver of the decline as we lap the prior year club promotional activity that did not repeat this year. Cereal average net pricing increased 9%, driven by favorable product mix and pricing actions. Adjusted EBITDA decreased 5% versus the prior year, primarily driven by higher manufacturing costs resulting from supply chain disruptions across freight, supplier reliability, and warehousing. These disruptions drove declines in throughput and, along with lower volumes, poor fixed cost absorption, causing higher manufacturing costs per pound of production. Our pricing actions mitigated the effect of raw material and freight inflation. Weetabix net sales increased 4.5%, benefiting from a stronger British pound to U.S. dollar exchange rate and higher average net selling prices, reflecting lower trade spending and base price increases. Volumes declined 4% as growth in new products was not enough to offset declines in all other products. Specifically, prior year benefited from COVID-related increased at-home consumption and customers increasing inventory ahead of Brexit. Supply chain disruptions, most notably in packaging and transportation availability, contributed to the volume declines and drove a 3% decline in adjusted EBITDA. Our Foodservice business saw net sales and volume growth of 24% and 13%, respectively, and were lifted by higher away-from-home demand and distribution gains. Revenue growth continued to outpace volume growth as revenue reflects the impact of our commodity cost pass-through pricing model and other pricing actions. Although we saw year-over-year growth this quarter, total segment volumes remained below pre-pandemic levels. Adjusted EBITDA was relatively flat to the prior year, benefiting from volume recovery and improved average net pricing, which was only able to partially offset increases in freight costs, poor fixed cost absorption, and other costs to produce. We expect the price-cost relationship to significantly improve in the second quarter as more of our pricing actions take effect. Refrigerator Retail net sales increased 4%, and volumes decreased 5%. Excluding the Egg Beaters and Almark acquisitions and Willamette Egg Farms, the business we divested on December 1, net sales and volumes declined 2% and 7%, respectively. Pricing actions drove increases in average net pricing for side dish, sausage, and cheese products. Supply chain constraints, most notably around labor availability, suppressed side dish and sausage volumes. Recall our ability to build our side dish inventory ahead of the holiday demand spike was limited. Adjusted EBITDA decreased to approximately $36 million and was pressured by lower volumes, significantly higher sale, cheese, and egg input costs, increased freight, and higher manufacturing costs. BellRing net sales increased 8.5% and benefited from pricing actions across both Premier Protein and Dymatize. Premier Protein net sales increased 4.5%, a slower rate than recent quarters resulting from shape capacity constraints. Dymatize net sales grew 41%, benefiting from price increases, strong velocities, and distribution gains. Higher raw material and freight costs drove a decline in segment gross margins. You can hear further detail about BellRing's results on their conference call later this morning. Moving to cash flow, we generated $106 million from operations in the quarter. Our working capital increased slightly, reflecting a decrease in payables and increased inventories for U.S. cereal and powders at BellRing. Regarding capital markets activities, during the quarter, we purchased $1.5 million of our shares at an average price of $103.37 per share. Our remaining share repurchase authorization was approximately $330 million. Our net leverage at the end of the first quarter, as measured by our credit facility, was approximately 6.4 times. On this basis, we expect to deleverage between three quarters at a full term once we have completed all steps in our separation of BellRing. We anticipate completion of all steps will reduce post gross debt by $1.3 billion to $1.6 billion. During the quarter, we issued $500 million in principal value of senior notes as a tack-on to our 5.5% senior notes due in December 2029. Our debt ladder remains low cost, insulated from rising interest rates, and has no near-term maturities. When combined with our undrawn revolver and strong cash flow, we maintain significant financial flexibility. With that, I'd like to turn the call back over to the operator for questions.
Operator, Operator
And we will take our first question from Andrew Lazar with Barclays.
Andrew Lazar, Analyst
Rob, when Post initially provided its fiscal '22 EBITDA guidance, it was based on the assumption that inflation would have peaked and labor markets would have normalized. You reaffirmed the full-year guidance today, so I'm looking to gain a clearer understanding of whether you believe inflation has indeed peaked and if labor expectations have unfolded as you initially anticipated. Alternatively, perhaps you've incorporated enough flexibility in your guidance to navigate what seems to be a still uncertain environment, based on many other companies' reports so far. Could you elaborate on that a bit more? I'm trying to understand how that has developed and what it indicates for your expectations regarding those metrics as we move into the latter part of the year.
Robert Vitale, CEO
Yes. So first, I would say that it certainly remains an unsettled environment. So we're not trying to take any exception with that comment. What I would characterize the year is shaping up to reflect is a pretty strong ability to get pricing where needed, so that the peanut pricing net of cost, while negative this quarter, is moving in the right direction, and we feel good about that vis-a-vis inflation. Now, obviously, inflation accelerates from here, that could have a different potential outcome. And I would say that the labor situation and supply chain is not worse and it is marginally better. We are significantly better in some segments, and we are no worse than others. So I feel that specifically to Post, we're making progress. I would by no means want to say that it's smooth sailing ahead. We still have some choppy waters. But sitting here at quarter end, we still have, I think, a good shot at delivering on our expectations for the year, barring dramatic changes in the macro environment.
Andrew Lazar, Analyst
And then I think you mentioned, it might have been specific to Post consumer brands, but I want to make sure I understood it that your comments from last quarter about having just really started to see a bit of an inflection in sort of the value brands, sort of private label side of things, it has been holding. And is that specific to Post consumer brands or does that go for sort of 8th Avenue as well? And the reason I ask is in trying to track all of these various categories across the space in terms of either trade down or private label trends, still just not really seeing it in the broader industry data. And maybe that's not exactly how your specific businesses are behaving. So I'm trying to get a little bit more clarity on that and what you're seeing.
Robert Vitale, CEO
Yes. The comment related specifically to Post Consumer Brands, where we noticed a stabilization in our value segment, which includes the Monbag portfolio and private label. This stabilization followed significant declines earlier in the year. There are external factors at play, including a competitor facing strike issues, which may have affected demand dynamics in the category. However, we have also observed improved volumes in our private label businesses and 8th Avenue, although margins are facing pressure. Therefore, this data shouldn't be generalized widely, but it does reaffirm our insights from three months ago.
Andrew Lazar, Analyst
Okay. And then just lastly would be, I think you move into a lot more detail on this on the BellRing call, but I may have heard you say that you expect a deceleration at BellRing in Q2. And I just want to make sure I understood what was driving that?
Robert Vitale, CEO
Normal seasonality. We tend from a promotional cadence and a new year to shipping timing to have a sequential dip into Q2, so nothing more than the normal. It was already factored into the prior guidance and prior expectations.
Operator, Operator
Now we'll take our next question from Chris Growe with Stifel.
Chris Growe, Analyst
I just had a question if I can ask you first on in terms of the proposed spinoff of the BellRing shares, just to get your perspective on that. And obviously, there are varying scenarios that you explored as part of the distribution. I just thought it'd be good to hear your perspective on why it's just a spin-off? Or is that BellRing valuation, Post valuation? Just wanted to get some thoughts on why you sell on the spin-off of the shares?
Robert Vitale, CEO
Well, if you go back to when we announced it, we tried to announce the whole mortgage board of opportunities to execute because these things have a long execution timeline. So you're trying to hit a fairly good target. And as we approach execution point, it strikes us that there is significant opportunity in both shares, and it doesn't make sense to trade one for the other. Neither is particularly, in our opinion, overvalued. We would rather let our shareholders have the value in each share, not incur the frictional cost of the premium related to exchange, and then shareholders can move to whatever mix of securities they prefer without us having incurred the cost of premium from a Post side at a discount from a BellRing side.
Chris Growe, Analyst
Okay, that makes sense. I'm curious if a split-off would have been a way for Post to retire a large amount of its shares, depending on how much it would split off. Assuming that does not happen, would you expect to be more aggressive in purchasing Post shares with this improved balance sheet after completing the distribution?
Robert Vitale, CEO
Well, before I answer that, let me go back to the premise of the question. I think, yes, we would have had an opportunity to shrink a lot of BellRing shares. But at a cost of using what we think are very attractively priced, meaning low-priced bearing shares. So that would have been a way to shrink a lot of Post shares at what we think would have been a very expensive cost in terms of giving away a lot of upside to BellRing. So going back to the second part of the question, we certainly have the option to be more aggressive in share buybacks once the transaction is complete. But as we always do, we would look across the landscape and compare that to opportunities to invest externally as well. So we wouldn't necessarily commit to a course right now. We would certainly view that as one possible course.
Chris Growe, Analyst
Okay. Just a quick question. You mentioned that each business had some missed or lost sales opportunities due to capacity constraints. I'm wondering if you have any insight into how significant that was. It likely varies by business. Additionally, is this a lesser issue in Q2 and Q3? Are you expecting improvements sequentially each quarter regarding labor and product availability?
Robert Vitale, CEO
Our supply chains are certainly getting better, worse case staying the same. The larger driver of our having unmet demand was transportation. We are continuing to see situations in which we are unable to get trucks to move product, and we have inventory sitting in the wrong place. So I would say that it's also not getting worse, perhaps slowly getting better, but the load-to-truck factor is still very high, historically high. So I don't think that we're through the woods yet on transportation, both costs and availability; that could be another couple of months.
Operator, Operator
We'll take our next question from Michael Lavery with Piper Sandler.
Michael Lavery, Analyst
Just was curious if you could give a little bit more color on 8th Avenue. I know in the past, you've given that stand-alone financial information unless I may have missed this somehow; I don't think I saw that this time. What's the update on how that's going?
Robert Vitale, CEO
The business has underperformed. We've been on the wrong side of the pricing versus cost inflation, and we are attempting in fiscal '22 to have a fairly significant catch-up on that. We expect to underperform our longer-term expectations through '22 and see recovery in '23 as that pricing annualizes. We've had some previously discussed execution issues around expanding our capacity in peanut butter. We continue to very much like the categories we're in. We think the pricing will come through, but it's taken longer than we expected. From an overall Post perspective, we won’t talk about it much because from a contribution to our overall value, we took out the entirety of our capital investment a couple of years ago, and we have what amounts to an option value position in the company. So simply from a matter of relative value, we don't talk about a lot, but we still think that there is long-term value to the company that is surpassed a couple of years by some external and some internal factors.
Michael Lavery, Analyst
That's very helpful. Regarding Weetabix, due to varying COVID restrictions, the grocery market in the U.K. is experiencing declines. Even without considering currency effects, your sales seem to have increased slightly, likely driven by pricing. Is this due to a timing shift or share gains? Can you clarify what has contributed to your success and how we should approach modeling for the remainder of the year?
Robert Vitale, CEO
Yes. Over the course of the pandemic, we picked up about a share point in Weetabix. So that's a key driver, as well as pricing. So between the two, that has given us the lift you're reflecting on.
Michael Lavery, Analyst
Ex-currency would have a similar kind of modest increase, likely remaining flat to slightly up for the remainder of the year.
Robert Vitale, CEO
I was commenting up in British pound. So in currency, if you go back a couple of years. Jeff, do you want to?
Jeff Zadoks, CFO
Yes. Currency this quarter was slightly favorable. But on a year-over-year basis, it's slightly unfavorable.
Operator, Operator
We will take our next question from Bill Chappell with Truist Securities.
Bill Chappell, Analyst
Rob, as we move into 2022, could you share your thoughts on the current state of the cereal market in both the U.S. and the U.K.? There seems to be an increase in consumers entering this category since the pandemic began, and it seems this trend might have continued as the pandemic progressed. The main concern is how many of these consumers will continue to buy cereal once the pandemic is behind us or if life returns to normal. How much decline have we already noticed, and what do you anticipate for the future? Do you believe the cereal category is in a better position now compared to two or three years ago in terms of health, or are we likely to revert to previous levels?
Robert Vitale, CEO
You're asking a challenging question, and I'll respond with that in mind. First, it's been a tough analytic process due to external factors. Some consumers may have left just this past quarter because of product unavailability. However, my intuition suggests that we're in a growth category of zero to one, maybe 1.5. After considering the various disruptions, changing consumer behaviors, and premiumization effects, I believe that once we stabilize, we might see a normal run rate between zero and 1.5, which is 100 to 200 basis points better than the pre-pandemic levels. Additionally, we will need to consider the new pricing dynamics moving forward.
Bill Chappell, Analyst
Got it. So we're at the normal level, not necessarily have a drop on a volume basis to come.
Robert Vitale, CEO
That's right. I think we actually could see some volume pickup because as the supply chains normalize. And you certainly saw some consumers with the Kellogg strike, you probably saw some consumers make different choices. I expect we'll come back to the category as those brands are more completely distributed. So you've seen a couple of different exogenous events.
Bill Chappell, Analyst
As a follow-up to Andrew's question, when you look across your categories, do you see any that are more or less elastic than the others in terms of passing on net pricing?
Robert Vitale, CEO
Not yet. Right now, elasticity feels very low across the landscape.
Operator, Operator
We will take our next question from Jason English with Goldman Sachs.
Jason English, Analyst
So foodservice. Your annualized EBITDA of this quarter has tracked somewhere around 160. And Rob, I think I heard you say you expect to be back to pre-COVID levels in fiscal '23, which is just around 3 times. So we've got a walk from 160 run rate to 310, 150 gap. Give me the building blocks that get us there? I think I heard you talk about a lot more pricing, is that over and above the commodity pass-through? I'm sure you're going to be hit with some other offsets, they're going to eat into some of that, and I’m sure you also have a lot of operational improvements you're trying to attack. Just help me get the building blocks, so that I and the investors can be comfortable with that walk.
Robert Vitale, CEO
Let's keep it straightforward and say that if we take the current quarter’s performance and multiply it by four, then add $150 million from pricing, that gets us closer to our goal. Clearly, there will be some ups and downs along the way; we expect some improvements as well as additional costs. I want to keep this simplified, but when you consider the size of the pricing adjustments alongside the costs we have already incurred, it's evident that we have a clear path forward.
Jason English, Analyst
So let's keep it simple then. You said you're implementing that $150 annualized run rate in Q2, probably not all the following year by Q2, but it should be in Q3. So are we back to that sort of run rate as fast as the back half of this year?
Robert Vitale, CEO
No. No. It will be phased in throughout Q2 and Q3. So it's much more of a run rate.
Jason English, Analyst
But we can at least look forward?
Robert Vitale, CEO
It's much more in terms of confidence for Q4 and 2023 rather than trying to reflect on a number for Q2 or Q3 of 2022.
Operator, Operator
We'll take our next question from Rob Dickerson with Jefferies.
Rob Dickerson, Analyst
Great. I have two quick questions. Given the comments on pricing, it seems the peanut margin is improving as the year progresses. However, gross margin dropped significantly in Q1. Looking ahead to EBITDA guidance, it appears that Q2 should show better performance compared to Q1 on a sequential basis. Once pricing is fully implemented throughout the year, can we expect to recover most, if not all, of the gross margin pressure experienced in Q4? Essentially, as we move through the year, will we likely see gross margin improve as we approach the end of the year?
Robert Vitale, CEO
Let me make sure I understood the way you sequenced it because in my comments, I made the reference that Q2 will look a lot like Q1. So the real step-up is Q2 to Q3, not Q1 to Q2. So while there could be slight marginal improvement, we really have a first half, second half story because of the timing and pricing. So if the rest of the question is related to gross margin vis-a-vis prior year, I would say the answer is yes, we can see getting back to prior levels. But prior year levels had some noise in them. I don't particularly want to comment on long-term gross margins right now because I think there are too many variables yet to play out. But we certainly feel like we can expand margins back to where they started or at least ended the last year.
Rob Dickerson, Analyst
Okay. Fair enough. Helpful. And then just secondly, as we kind of all go through the different segments, Refrigerated Retail volumes down a bit, not down in all categories, some commentary or just around some capacity constraints. As we look at Q3 compares, obviously, a little bit easier, and in the back half just overall. So I'm just curious, is there kind of an expectation that maybe the capacity environment for you specifically just in side dishes, let's say, can get a little bit better as we get through the year? And as long as elasticity holds and consumer demand there that there could be an expectation for that business to gradually improve as well as we get through the year.
Robert Vitale, CEO
Yes, very much so. And I think that one of the things that I think is important to keep in mind is that the particular timing of the capacity pinch point in Refrigerated Retail was a challenge for '22 because it's the one business that we have that has a considerable amount of holiday seasonality. So we were not able to build the inventory that we normally would have built to support Thanksgiving and the Christmas holidays. So absent that volume, we will track below the prior year. But if you look quarter-to-quarter, we're going to accelerate through the year because capacity is expanding pretty dramatically as we get the staffing levels back to where they need to be. So we feel despite the fact that year-over-year was a challenging quarter, I'm very optimistic about the Refrigerated Retail segment because of the sequential progression we're making and just recognizing that come the next holiday season, we're going to be in a much better position.
Operator, Operator
And we'll take our final question from Ken Zaslow with Bank of Montreal.
Ken Zaslow, Analyst
What actions have you been taking to alleviate the labor and transportation issues? Are there specific measures within your control that you have implemented to alter the current situation?
Robert Vitale, CEO
Well, labor is easier and more controllable for us than transportation because, by and large, we're a buyer of transportation for our third parties. But on labor, of course, there's cost of labor, but there's also things like work rules trying to facilitate transportation of workers in this case. So we're looking at all the things around culture retention, the way we pay, the frequency that we pay, how we get people to and from work, how we recruit to different communities, all the things that companies like ours are doing. So it's a pretty broad array of tools we're trying to throw against the problem. Transportation, we're a price taker in a commoditized market right now. So that one is a bit tougher. We have some businesses that have longer contracts and some that have shorter contracts, so the key variable is where you are on contract cycles right now.
Ken Zaslow, Analyst
Okay. And then just longer term, you do it every now and then, and you kind of give like, hey, how do you think of the longer-term businesses of where you are? Can you give a quick view on that? It's been a little bit just because there's been some, obviously, COVID, and there's been some issues going on. Can you just frame a little bit of where you think the growth of each of the businesses are, again, 15 to 20 seconds per one, just wanted to make sure that we're aligned with how you're thinking about it longer term, not just this year.
Robert Vitale, CEO
Yes. In this forum, I'll do that qualitatively versus quantitatively vis-a-vis how we thought about it pre-pandemic. So if you think about cereal, both in the U.S. and the U.K., we view it as a steady, maybe a slightly faster growing or slower shrinking business than it was previously at the volume line with better pricing and steady cash generation, really similar to the way it performed previously. With Refrigerated Retail, specifically around the Bob Evans side dish business, we have equal, if not more confidence in the quality of that character and our position in it. That one is very difficult to prove out through the numbers right now because there's been so much disruption around supply chain and staffing. But we clearly see as the staffing and availability of product comes back, so does the demand. If you look at our Foodservice business and BellRing, I think you know what we think about BellRing; we continue to believe it's got a very substantial growth ahead of it. And as I’ve already talked about in terms of the decision to spend versus split, we are acting in alignment with that expectation of further growth. Foodservice is the one that obviously gets the most attention. And we would have to argue that once we get through the rebate of the crisis amidst the pandemic and we see where volumes settle, that our growth trajectory is really consistent with where we entered the pandemic. What we don't know still two years in is where does travel ultimately land, where do offices ultimately land. There may be a couple of points of exposure to the baseline, but we think the growth is intact.
Operator, Operator
And this does conclude today's Q&A session as well as our conference call for today. You may now disconnect your lines, and have a great day.
Robert Vitale, CEO
Thank you.