Post Holdings' Q3 2025 Earnings Call: Contradictions Emerge on Cereal & Private Label, Foodservice Pricing & Cost Recovery, and Pet Turnaround & Strategy

Date of Call: August 8, 2025

Financials Results

• Revenue: $2.0B net sales, up 2% YOY (adjusted EBITDA $397M)

Guidance:

• Adjusted EBITDA guidance raised to $1.50B–$1.52B for fiscal 2025 (midpoint implies Q4 roughly flat to Q3).
• Expect Q4: cold‑chain businesses to decline as AI pricing adders wind down; PCB to improve with back‑to‑school seasonality and no Q3 severance.
• Foodservice normalized quarterly adjusted EBITDA run‑rate ≈ $115M.
• CapEx being paced faster (accelerated spend on PCB and Foodservice); remain opportunistic on M&A, debt markets and share buybacks.

Business Commentary:

• Financial Performance and M&A:
• Post Holdings reported adjusted EBITDA of $397 million in Q3, approaching $400 million, despite a challenging macro environment.

• The growth was due to diversification in business segments, improved performance in cold chain businesses, and the acquisition of 8th Avenue.

• Foodservice Segment Performance:

• The Foodservice segment saw a 19% increase in net sales and a 32% increase in adjusted EBITDA in Q3.
• This was driven by Avian Influenza-driven pricing to recover elevated egg costs, volume increases in eggs and potatoes, and improved breakfast food traffic for end customers.

• Post Consumer Brands (PCB) Challenges:
• PCB's net sales decreased by 9%, driven by lower volumes in both Grocery and Pet.

• The decline was attributed to volume challenges in Cereal and Pet, tariffs, regulatory changes impacting food ingredients, and pricing elasticity in Nutrish and Gravy Train.

• 8th Avenue Acquisition Impact:

• The acquisition of 8th Avenue was completed on July 1, with synergies expected in nut butter and granola integration with PCB.
• The integration is delayed to FY '26 for business stabilization, while the transaction did not significantly impact Post's balance sheet.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management described "strong results in Q3 despite the challenging macro environment," reported adjusted EBITDA approaching $400M, noted repurchasing ~8% of the company YTD and cited an estimated $300M reduction in cash taxes over five years from recent tax changes.

Q&A:

• Question from Andrew Lazar (Barclays): Can you lay out the key puts and takes for fiscal '26 (foodservice normalization, cereal trends, pet turnaround, 8th Avenue contribution, cost saves) and do you still anticipate modest EBITDA growth in fiscal '26?
  Response: If Foodservice normalizes for AI and you include a full year of 8th Avenue plus cost saves/asset optimization, management feels good about prospects for modest EBITDA growth in fiscal '26 (planning still in process).

• Question from Andrew Lazar (Barclays): More detail on cereal category dynamics and why private label is underperforming branded?
  Response: Management views the private‑label underperformance as unclear but likely driven by aggressive promotions narrowing price gaps and weaker Walmart traffic where their private‑label exposure skews.

• Question from Matthew Edward Smith (Stifel): Was the Foodservice pricing in Q3 the full recovery of Q2 elevated costs (the $30–$35M) or was there additional/pricing beyond that?
  Response: Q3 largely recovered the Q2 impact and included ongoing pricing to cover continued elevated egg markets; normalized Foodservice run‑rate expected around $115M quarterly.

• Question from Matthew Edward Smith (Stifel): The higher CapEx in guidance—incremental scope or inflationary cost increases?
  Response: It's pacing—management is accelerating spend (faster timing), not reflecting higher project costs from inflation.

• Question from Michael Scott Lavery (Piper Sandler): How much appetite remains for M&A after 8th Avenue and what challenges do you see in the M&A market?
  Response: They remain open‑minded and opportunistic on M&A but are cautious given macro and tariff/regulatory uncertainties; share buybacks are also attractive given low multiples and a strong balance sheet.

• Question from Michael Scott Lavery (Piper Sandler): Is there upside to the Foodservice EBITDA run‑rate and how material is the shake co‑packing contribution?
  Response: Shake contribution is modest today and ramp is slow; Foodservice run‑rate view is deliberately conservative but expected to be a modest grower over time.

• Question from David Sterling Palmer (Evercore ISI): Market insights on Pet and Cereal and how you plan to pivot spending and get back to market share?
  Response: Pet: about half of the recent decline reflects lapsing prior profit decisions; Nutrish and Gravy Train need fixes and targeted investment—management expects volumes to largely stabilize by mid‑FY26. Cereal: remain rational and tactical with targeted spend and network/line optimization.

• Question from Scott Michael Marks (Jefferies): How will you address higher input costs from reformulations/regulatory changes and adjust the portfolio?
  Response: A pragmatic, tactical approach—incremental reformulations over time; not expecting major portfolio changes in fiscal '26.

• Question from Scott Michael Marks (Jefferies): Thoughts on the Kellogg transaction and potential new entrant impact on the cereal category?
  Response: The likely larger acquirer could enhance the category, but management will refrain from firm views until the transaction closes.

• Question from Marc J. Torrente (Wells Fargo): How has 8th Avenue been tracking, any change to expected contribution, and seasonality considerations?
  Response: No material change to FY25 contribution; recent underperformance reflected market uncertainty but management sees a path to improvement next year and no material seasonality.

• Question from Marc J. Torrente (Wells Fargo): Timing of plant optimization savings and expected cereal utilization post‑actions?
  Response: Plant optimization remains on track for end of calendar year; utilization expected to rise into the mid‑80s, with further steps if category deterioration continues.

• Question from John Joseph Baumgartner (Mizuho): Given pet portfolio adjustments, how might the portfolio evolve (channels, e‑commerce, specialty, formulas)?
  Response: There are many channel and product opportunities, but priority is fixing Nutrish before making broader portfolio or channel shifts.

• Question from John Joseph Baumgartner (Mizuho): Drivers behind refrigerated retail performance and next‑12‑month growth levers?
  Response: Performance benefited from Easter timing and corrected prior trade overspend; management sees distribution gains, price‑point and product diversification as top‑line growth levers for next year.

• Question from Carla Marie Casella Hodulik (JPMorgan): Will you issue bonds or term loans to refinance the revolver used for 8th Avenue?
  Response: They are monitoring markets and may pursue longer‑term financing opportunistically, but currently are comfortable with cash and revolver liquidity and are in no rush.

Contradiction Point 1

Cereal Category Performance and Private Label

It involves differing perspectives on the performance of the cereal category and the role of private label, which are critical for understanding pricing strategy and market positioning.

What are the current trends in the cereal category and why is private label underperforming branded? - Andrew Lazar(Barclays)

2025Q3: The mystery persists, but pricing promotions appear to be bringing price gaps down more than anticipated, affecting private label's performance. - Robert V. Vitale(CEO)

What are your latest thoughts on private label volume trends in your categories? - Andrew Lazar(Barclays)

2024Q4: We have not seen any erosion in our categories in terms of private label penetration. We've seen some growth in private label on cereal and Eighth Avenue. - Robert Vitale(CEO)

Contradiction Point 2

Foodservice Pricing and Market Dynamics

It involves differing explanations for the pricing strategy and market conditions in the Foodservice segment, which directly impacts revenue and profitability expectations.

Did Foodservice pricing fully recover AI-related costs and reflect the impact of shake co-packing? - Matthew Edward Smith (Stifel)

2025Q3: We expect year-over-year pricing to increase by a low single-digit percentage in the second half of our fiscal year as we continue to recover the artificial intelligence-related costs. - Matthew J. Mainer(CFO)

Will the Foodservice EBITDA drag from avian flu be recovered in fiscal 2025, and could it impact fiscal 2026? - David Palmer (Evercore ISI)

2025Q1: Overall, we anticipate that the pricing environment in Foodservice will remain volatile throughout fiscal 2025. Our goal is to maintain our current year-over-year pricing levels, which is a low single-digit decline on a full year basis. - Jeff A. Zadoks(COO)

Contradiction Point 3

Pet Category Turnaround and Strategic Focus

It reveals differing views on the timeline and strategic approach to the Pet category's turnaround, which impacts expectations for future growth and profitability.

What are the two main PCB categories (Pet and Cereal), and what planned spending adjustments are being made to address market trends? - David Sterling Palmer (Evercore ISI)

2025Q3: For Pet, we are addressing Nutrish relaunch challenges and expect to level off consumption issues by mid-next fiscal year. Gravy Train adjustments are also planned. - Matthew J. Mainer(CFO)

How much flexibility remains for Post to optimize its pet supply chain, and what opportunities still exist? - Andrew Lazar (Barclays)

2025Q1: We're working on some of the operational issues and tighten up the dog food side, which is more of the core Nutrish franchise. We'll insource everything currently manufactured by Smucker still. - Jeff A. Zadoks(COO)

Contradiction Point 4

Foodservice Pricing and Cost Recovery

It involves differing explanations for the recovery of costs in the Foodservice segment, which impacts financial projections and strategic decision-making.

Clarify whether Foodservice pricing fully recovered AI costs and accounted for shake co-packing impact? - Matthew Edward Smith (Stifel)

2025Q3: Recovery of Q2 costs and ongoing elevated egg market prices drove the pricing increase. - Matthew J. Mainer(CFO)

Has the Foodservice unit's long-term structural run rate increased beyond previous expectations, or were there other factors contributing to this quarter's performance exceeding market forecasts? - Andrew Lazar (Barclays)

2025Q2: Clearly higher than $105 million. We expect to balance our egg sourcing and demand by Q4 and recover the unfavorable cost ahead of pricing impact we saw in Q2 during the remainder of fiscal '25. - Unknown Executive

Contradiction Point 5

Pet Business Recovery and Strategy

It involves differing views on the pet business turnaround and strategy, which are crucial for assessing investment potential and long-term growth prospects.

What are the key risks and opportunities for fiscal 2026 considering Foodservice overperformance, cereal category weakness, and delayed pet turnaround? And what's the potential for modest EBITDA growth in fiscal 2026? - Andrew Lazar(Barclays)

2025Q3: The pet business certainly has come in below our expectations and we have amended our outlook accordingly. - Robert V. Vitale(CEO)

What are the chances of returning to organic growth in fiscal 2025 for cereal, pet, and refrigerated? - David Palmer(Evercore ISI)

2024Q4: We expect our pet turnaround initiatives to gain momentum in FY '25. - Robert Vitale(CEO)