ST. LOUIS — Foodservice results for Post Holdings, Inc. in the second quarter ended March 31 provided evidence the food industry is moving toward pre-pandemic conditions. Net sales in foodservice increased 40% to $633 million when compared to the previous year’s second quarter. Volume rose 12%, driven by away-from-home demand for eggs and potatoes.
“Revenue growth continued to outpace volume growth as revenue reflects the effect of commodity cost, pass-through pricing model and other pricing actions to offset higher product costs,” Matthew J. Mainer, chief financial officer, said of the foodservice segment in a May 5 earnings call. “Segment adjusted EBITDA increased 100% from prior year, benefiting from improved average net pricing and volume growth, which mitigated the impact of higher cost to produce. As a reminder, prior-year Q2 was still being significantly impacted by the COVID omicron variant making for an abnormally low comp.”
Robert V. Vitale, president and chief executive officer of Post, was asked how industry was transitioning back to normalcy after the COVID-19 pandemic.
“I think what we’re beginning to see is a future that looks fairly close to the pre-pandemic past, and what I would expect to see is mean reversions on volume with likely retention of the pricing that has been taken in the last handful of quarters, if not years,” he said.
He pointed to the growing foodservice business.
“I think that one of the underappreciated aspects of our foodservice business right now is how strong volumes are,” Mr. Vitale said. “So I think you’re seeing, if you go back to pre-pandemic, we just hit an inflection point where half of consumption was away from home.”
St. Louis-based Post had net earnings of $54.1 million, or 98¢ per share on the common stock, in the quarter, which were down from $526 million, or $8.51 per share, in the previous year’s second quarter. Earnings in the current year’s second quarter included a loss of $448 million related to an investment in BellRing, which was treated as an adjustment for non-GAAP measures. Expense on swaps was $9 million, which compared to income on swaps of $128 million in the previous year’s second quarter. Adjusted EBITDA was $276 million, up 20% from $230 million in the previous year’s second quarter. Net sales were $1.62 billion, up 15% from $1.41 billion.
The forecast for adjusted EBITDA in the fiscal year was raised to $1.09 billion to $1.13 billion from $1.03 billion to $1.07 billion.
In Post Consumer Brands, net sales rose 4.5% to $599 million. Volume fell 6%, primarily driven by declines in Malt-O-Meal bag cereal and Honey Bunches of Oats. Volume increases in Peter Pan peanut butter and private label cereal partially offset the decline.
“The US ready-to-eat cereal category declined 4% this quarter as we lapped prior year omicron lift,” Mr. Vitale said. “Post's branded market share has been quite stable at 19.5%. Meanwhile, our private label business grew volumes nearly 3%.”
In Refrigerated Retail, net sales fell 1.8% to $263 million. Volume dropped 11% primarily due to elasticity from price increases driven by inflation.
“Refrigerated Retail is a bit of a mixed bag,” Mr. Vitale said. “Despite substantial pricing, sales were down for two reasons. First, we abandoned low-margin business and have not yet lapped its exclusion. Second, our refrigerated side dish business is lapping an inventory build and has seen trade down to private label. We are countering this with a step-up in advertising. The team has executed very effectively, and supply chains are markedly improved over last year.”
In Weetabix, net sales increased 7% to $125 million. Volumes increased 7%, but excluding the acquisition of Lacka Foods Ltd., volume declined 2.3%.Over the first six months of the fiscal year, net earnings of $146 million, or $2.64 per share on the common stock, were down from $503 million, or $7.81 per share, in the same time of the previous year. Net sales jumped 16% to $3.19 billion from $2.75 billion.