Executive Summary / Key Takeaways

• Post Holdings leverages a diversified portfolio across four distinct segments (Post Consumer Brands, Weetabix, Foodservice, Refrigerated Retail) and a strategy of strategic acquisitions and operational optimization to drive profitability and cash flow.
• Recent performance reflects resilience against challenging macro conditions, including consumer weakness, inflation, and Avian Influenza impacts, with strong cost management and supply chain execution offsetting volume pressures in key retail segments.
• The company is actively optimizing its manufacturing footprint through significant plant closures in the Post Consumer Brands segment, aiming to enhance capacity utilization and drive cost savings to counter ongoing cereal category volume declines.
• Strategic investments in operational technology and infrastructure, such as the Norwalk egg facility expansion and integration of acquired assets like PPI, are aimed at increasing capacity, improving efficiency, and enabling growth in higher-margin, value-added product lines despite initial ramp-up challenges in some areas.
• Management has raised its fiscal year 2025 Adjusted EBITDA guidance to $1.43 billion - $1.47 billion, reflecting confidence in operational execution and the recovery of temporary segment-specific headwinds, while maintaining a disciplined approach to capital allocation focused on share repurchases and synergistic M&A.

A Diversified Foundation in a Shifting Landscape

Post Holdings, Inc. operates as a consumer packaged goods holding company with a portfolio intentionally built through strategic transactions over time. This structure provides exposure to diverse end markets and consumer behaviors across its four reportable segments: Post Consumer Brands (primarily North American RTE cereal, pet food, and peanut butter), Weetabix (primarily U.K. RTE cereal, muesli, and protein-based shakes), Foodservice (primarily egg and potato products), and Refrigerated Retail (primarily side dish, egg, cheese, and sausage products). This diversification is a foundational element of Post's strategy, allowing it to adapt to varying market conditions and consumer trends across different categories and channels, including grocery, foodservice, and e-commerce.

In the competitive landscape, Post faces established players like General Mills (GIS) and Kellanova (K) in cereals, Tyson Foods (TSN) in protein and foodservice, and Conagra Brands (CAG) in packaged and refrigerated foods. While competitors like GIS and K often boast larger scale and potentially higher gross margins (GIS TTM Gross Margin: 35.0%, K TTM Gross Margin: 36.0% vs POST TTM Gross Margin: 29.09%), Post differentiates itself through its significant presence in private label and value-oriented segments, particularly within Post Consumer Brands cereals, where its market share at the lower end of the value chain is notably higher than in pet food. In Foodservice, Post's value proposition centers on providing value-added egg and potato products that reduce labor for customers, a competitive advantage that remains relevant regardless of restaurant foot traffic trends. The company's strategic acquisitions, such as Perfection Pet Foods and Potato Products of Idaho (PPI), have been aimed at enhancing its competitive position by adding scale, expanding geographic reach (e.g., Western manufacturing for pet), and increasing capacity in strategically important categories like refrigerated potatoes.

Operational Technology and Efficiency as a Competitive Edge

Post's ability to compete effectively and drive profitability is heavily reliant on its operational technology and manufacturing infrastructure. The company has strategically invested in and optimized its production network, viewing operational efficiency and cost control as critical levers, especially in a challenging volume environment.

Recent initiatives highlight this focus:

• Manufacturing Footprint Optimization: Citing declining demand for ready-to-eat cereal, Post has undertaken significant network rationalization. The Lancaster, Ohio facility closure was completed in Q1 fiscal 2025, expected to contribute an annualized benefit of $25 million. Plans to close the Sparks, Nevada and Cobourg, Ontario cereal facilities by Q1 fiscal 2026 are underway, targeting an additional annualized benefit of $20 million. These actions are designed to reduce excess capacity and improve utilization across the remaining network.
• Capacity Expansion in Growth Areas: Investments are being made to expand capacity in higher-growth, value-added segments. The Norwalk, Iowa facility expansion for precooked and cage-free eggs is a multi-year project expected to come online in fiscal 2026, with a ramp-up period potentially extending up to 12 months. The acquisition of PPI in March 2025 for $120 million specifically added manufacturing and packaging capacity for refrigerated and frozen potato products, enabling Post to "play more offense" in driving volumes and exploring opportunities in private label and across the value chain in this category.
• ERP System Modernization: Recognizing the importance of integrated systems for operational efficiency, Post successfully executed major ERP conversions across its Post Consumer Brands, Pet, and Weetabix segments during Q1 fiscal 2025. Management noted these were completed with relatively limited disruption, mitigating a key operational risk and providing a foundation for improved data flow and process management.
• RTD Shake Manufacturing Ramp-up: A key operational initiative is the ramp-up of ready-to-drink shake manufacturing, a co-packing agreement with a BellRing Brands (BRBR) subsidiary. While this ramp-up has been slower than anticipated due to challenges with equipment, lead times for parts, and labor, management expects to reach the expected run rate closer to the second half of fiscal 2025, with full capacity targeted for fiscal 2026. This represents an investment in a growing product area leveraging internal manufacturing capabilities.

These operational and technological investments, while sometimes facing initial delays or integration challenges (as seen with the RTD shake ramp and initial PPI employee upset), are fundamental to Post's strategy of driving cost leadership and enhancing supply chain reliability. They provide a quantifiable edge in production efficiency and capacity, supporting margin expansion and enabling the pursuit of growth opportunities in targeted segments.

Performance Against a Challenging Backdrop

Post's recent financial performance reflects the impact of macro pressures and strategic operational adjustments. For the three months ended March 31, 2025, net sales decreased 2% to $1,952.1 million compared to the prior year period, primarily due to lower volumes in Post Consumer Brands, Refrigerated Retail, and Weetabix, partially offset by a 10% increase in Foodservice net sales. Operating profit saw a modest decrease of 4% to $182.2 million.

Over the six months ended March 31, 2025, net sales decreased 1% to $3,926.8 million, while operating profit decreased 1% to $396.3 million. This relatively stable operating profit, despite top-line pressure, underscores the company's focus on cost management and operational execution.

Segment performance highlights the varied dynamics:

• Post Consumer Brands: Net sales decreased 7% in Q2 FY25, driven by a 6% decline in cereal volumes (reflecting accelerating category declines) and a 6% decline in pet food volumes (due to distribution losses and pricing elasticities). Despite this, segment profit increased 2% in Q2, demonstrating the benefit of lower raw material costs and reduced advertising/consumer spending, alongside improved manufacturing and supply chain performance.
• Weetabix: Net sales decreased 5% in Q2 FY25, primarily due to lower volumes from strategic product exits, reduced promotions (related to ERP conversion timing), and category declines. However, segment profit increased 9% in Q2, benefiting from higher average net selling prices and lower freight costs, partially offsetting increased raw material costs.
• Foodservice: Net sales increased 10% in Q2 FY25, driven by elevated Avian Influenza (HPAI)-related pricing for eggs and higher ready-to-drink shake sales. Volumes increased 3% overall, although egg volumes excluding shakes were down 1% due to HPAI and lower foot traffic. Segment profit decreased 6% in Q2, primarily impacted by costs ahead of pricing related to HPAI, partially mitigated by manufacturing and supply chain improvements.
• Refrigerated Retail: Net sales decreased 7% in Q2 FY25, largely due to lower volumes influenced by Easter timing shifts and reduced egg availability from HPAI. Segment profit decreased 14% in Q2, driven by lower volumes and costs ahead of pricing for eggs and sauce.

Consolidated profitability metrics reflect these dynamics. The TTM Gross Profit Margin stands at 29.09%, Operating Profit Margin at 10.02%, and EBITDA Margin at 16.18%. While these margins are influenced by segment mix and commodity volatility, management's focus on cost control and operational efficiency is evident in the ability to largely maintain operating profit levels despite top-line headwinds.

Liquidity remains robust. Cash provided by operating activities for the six months ended March 31, 2025, increased by $47.1 million to $471.1 million, benefiting from working capital timing and lower tax payments, despite higher interest payments. Capital expenditures remain elevated at $229.5 million for the six months, reflecting ongoing strategic investments. The company's debt structure has been actively managed, with refinancings extending maturities and increasing liquidity. As of March 31, 2025, total long-term debt was $6,944.6 million. The company was in compliance with its secured net leverage ratio covenant (not to exceed 4.25:1.00) and believes it has sufficient liquidity and cash flow to meet its obligations and pursue strategic opportunities.

Outlook and Key Considerations

Management has demonstrated confidence in the company's ability to execute its strategy and navigate the current environment by raising its fiscal year 2025 Adjusted EBITDA guidance range to $1.43 billion - $1.47 billion. This outlook incorporates the expectation that the Avian Influenza costs incurred ahead of pricing in the Foodservice segment during Q2 will be recovered in the second half of the fiscal year, assuming flock repopulation stays on track and no further outbreaks occur within controlled farms. However, this recovery is expected to be largely offset by anticipated lower performance in the Post Consumer Brands segment, driven by continued elevated volume declines in the cereal category and potential disruption from the full ramp-up of the Nutrish brand relaunch.

The guidance implies a balanced quarterly Adjusted EBITDA cadence across the year, with offsetting variations between segments. Elevated capital expenditures ($380 million - $420 million) are expected to continue through FY25 as strategic projects near completion, with some tailwind into FY26.

Key factors influencing the outlook include:

• Consumer Sentiment: Weak consumer sentiment and shifting preferences towards value products continue to pressure volumes in retail segments. Management is focused on demand drivers and flawless supply chain execution to mitigate this.
• Avian Influenza: Continued HPAI outbreaks pose a risk of volatility in egg supply and costs, potentially impacting the timing and magnitude of pricing recovery in Foodservice and Refrigerated Retail.
• Operational Execution: Successful execution of the RTD shake manufacturing ramp-up and the integration of the PPI acquisition are critical for realizing expected growth and efficiency benefits.
• Competitive Dynamics: The competitive intensity in key categories, including the increasing quality and penetration of private label products in Refrigerated Retail and the battle for share in the evolving pet food market, will impact volume and pricing power.
• Trade Policy: Potential tariffs and changes in global trade policies could introduce commodity cost volatility and supply chain challenges.

Post's capital allocation strategy remains disciplined, focusing on share repurchases (with a new $500 million authorization effective February 2025) and opportunistic M&A, favoring smaller, tactical transactions or those with clear synergy potential in the current uncertain capital market environment. The recent agreement to acquire 8th Avenue Food & Provisions, expected to close in fiscal 2025, aligns with this approach, aiming to expand strategically important categories and deepen portfolio diversification.

Conclusion

Post Holdings presents an investment thesis centered on a diversified CPG portfolio managed with operational discipline and a strategic focus on cost control and targeted growth investments. While facing persistent macro and category-specific headwinds, the company has demonstrated resilience, leveraging its operational capabilities and strategic acquisitions to maintain profitability and generate strong cash flow. The outlook for fiscal year 2025 reflects a period of navigating these challenges while positioning for future growth through manufacturing optimization, capacity expansion, and brand investment. Key to the investment story is the successful execution of ongoing operational initiatives, the ability to effectively manage commodity volatility and consumer demand shifts, and disciplined capital allocation. Investors should monitor volume trends across segments, the realization of planned cost savings from plant closures, the ramp-up of new capacity in Foodservice and Pet, and the impact of competitive dynamics on pricing and market share.