Post Holdings Inc Aktie

Welcome to the Post Holdings Second Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post.

Good morning. Thank you for joining us today for Post's second quarter fiscal 2026 earnings question-and-answer session.

I'm joined this morning by Rob Vitale, our Chairman and CEO; Nico Catoggio, our COO; and Matt Mainer, our CFO and Treasurer. This call is being recorded, and an audio replay will be available on our website at postholdings.com.

During today's call, we may 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 these statements. The press release and written management remarks that support today's call are posted on our website in the Investors section. 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 and posted on our website. We hope you had a chance to review our management remarks. The key highlights are that our diversified portfolio had strong performance in Q2 and delivered adjusted EBITDA above expectations. However, given new headwinds from the conflict in the Middle East, we maintained our previous adjusted EBITDA guidance.

Meanwhile, we continued aggressive share repurchases. And fiscal year-to-date, we have reduced our share count by 15%. Finally, our strong cash flow, liquidity and credit metrics continue to afford us significant flexibility for opportunistic capital allocation.

With that, I'll briefly turn the call over to Matt.

Thanks, Daniel. Setting aside the business performance, I'm sure you all saw our announcement yesterday on our CEO succession plans. First of all, on behalf of our whole team, congratulations to Nico. Really well deserved. You've done a fantastic job leading PCB, and we are confident that will translate to more of the same as you transition into leading Post. So Rob, we have all learned from the best and truly appreciate your leadership over the past 12 years. As much as Rob is respected by so many on this phone call, it is even more so within the walls of our company.

With that, I will turn the call over to the operator for Q&A.

[Operator Instructions] Our first question comes from Andrew Lazar with Barclays.

Rob, congratulations to you on a terrific run as CEO, and glad you're staying on as Chairman. And all I can say is I think many other packaged food names would benefit mightily from taking a page from your operating and capital allocation playbook. And Nico, congratulations to you on being named CEO. Maybe to start. Yes, sure. Just a question maybe on pricing for the industry and Post. I mean, I realize there is still quite a bit of uncertainty, but should the industry face another round of more significant inflation, do you think pricing could be one of the levers used this time around given consumers have been kind of already pushing back on price points where they are today and some are actually lowering prices with less than stellar results thus far. I'm just curious on your view on that and how does Post sort of think about that?

Thanks, Andrew. What I would say is it depends on where inflation falls. If it is in the low single digit, I think we'll see more of CPGs trying to absorb that within their P&L, and that could be in the form of maybe lower promotional intensity. If it is more than that, we will probably see more targeted pricing.

And then maybe just on pet food. I'm trying to get a sense of what our expectations should be going forward in pet because I think this quarter is -- the current quarter, I believe, is when the restage really happens in earnest in the marketplace. And how do you think about turning a brand around in a subcategory of dry dog food that's sort of struggling a bit right now relative to some other parts of pet?

Yes. So let me -- so on pet, I think about it in kind of 3 big buckets. One is a bit out of our control that is the category has been slower than what we anticipated and especially dry dog food. 60% of our portfolio is dry dog food. As we shared in our remarks, that was 4% down in pounds. So that's about 20% of our, call it, gap to the category. The rest, you can think about it half-on-half in 2 buckets.

One is what we shared on 9Lives. 9Lives is we raised prices on 1/3 of the brand that is more functional. As we raise prices, we saw higher elasticities than what we anticipated. And we lost inclusion in a couple of retailers. That, in our mind, is fairly straightforward. It's if you remember, less than a year ago, we were having the same conversation about Gravy Train. We raised prices. Remember that these brands have lower margins, and that's why we do what we do, and we focus on profit. We remember Gravy Train. We raised prices. We saw the same elasticities. We fixed that with [ rollbacks ] in the short-term. And now we fixed it with price pack architecture and that brand in one of our largest retailers is growing at 40% in pounds now.

So we see it as the same playbook, right? We tried price points elasticity was a bit higher. We can solve it in the short-term with rollbacks. And then longer-term, call it, a couple of quarters from now, we should fix it with price pack architecture. So it's fairly straightforward.

And then the third bucket is Nutrish. We are in early stages of the relaunch, and that will take probably the entire Q3 to actually fully hit the market. So it's happening. It's flowing in. But it's still especially in the food channel, taking a bit longer to be fully reflected on shelf. That one, if you remember, we commented on that one, it's a full relaunch. So new positioning, new packaging and new price points. What we feel encouraged about is where it's been fully relaunched, one of our largest retailers, we are already seeing sequential improvement week after week. And the last week of April, we already saw the brand flat to last year in a category that is again declining. So that's a positive. But it's still early on, and we probably need a couple more months. So by Q4, we should actually start seeing the category kind of showing at least flat to slight growth versus a year ago. That's how we think about that.

Our next question comes from Matt Smith with Stifel.

You had another strong EBITDA and cash flow performance in the quarter and the guidance reiteration referenced caution around new cost pressure and uncertainty. Are there specific areas of the business where you're seeing these higher costs? And are you seeing an impact from a more cautious consumer? Or is the uncertainty more focused on the cost side?

I think directly, we're seeing the cost impact, Matt, really around fuel charges and surcharges. We've got some coverage or hedges in place, but this is exposure beyond those coverages. And just given the dramatic increase in diesel, that flows through to -- across the company, especially in North America. So that's really the key driver.

Just a follow-up. The cash flow performance has been strong and supported the share repurchases today while holding leverage flat. You called out the strong liquidity position Post maintain. How would you characterize the M&A environment? Are you seeing an increase in asset availability? Do you think seller expectations are reasonable? And has there been an impact to deal flow from Middle East disruption and uncertainty.

Yes. I think it continues to be a bit of more of the same. You certainly have some assets, some private investments that are -- haven't come to market yet. And I think that's a nod to just where public multiples are and where our clearing price might be. So there's still some potential transactions sitting on the sidelines. That aside, we continue to see some of our larger competitors talk about maybe separating portions of their portfolio. We've seen it happen already in a couple of cases in the last year. I think those are larger, more transformational transactions. Again, we look at everything, but something we would evaluate.

And then I think it's a bit of a barbell then you have the smaller tuck-ins that are available that are for us more synergistic, obviously, easier to digest. But I think the backdrop for us is really where our share price is trading and implied multiple. And again, we laid that out in the prepared remarks, and that's really our benchmark or our comparison. It continues to be a high bar, but we continue to look at all that's out there.

Our next question comes from David Palmer with Evercore ISI.

Congratulations on your career so far, Rob, and all the value creation back to you, Nico. I want to ask a first question on Foodservice profitability. Clearly, there's been -- there was a moment of a lot of trade into higher-margin value eggs. Those eggs prices were higher and egg prices have come down, and it's been a darn good profitability run here. I'm wondering how you're thinking about profitability evolution going forward, maybe rising sort of a mid-cycle profitability rising from here as you see some of your accounts doing better lately? In other words, I'm trying to figure out if $125 million a quarter is really going to be the right run rate into fiscal '27 or if you see upside to that? And I have a follow-up.

So we still see that as the run rate. Again, in the quarter, there were so many puts and takes between lapping HPAI supply constraints and pricing and cost in excess of pricing last year. But our supply and demand remain in balance. So we -- while we don't provide guidance segment by segment, we see us going back to our run rate.

Got it. And then similar to the previous question on pet, I just want to get a sense on cereal of your confidence in getting what I think would be your goal of a low single-digit decline rate just to really have that pull its own weight. So cereal has been rough. What is the confidence in getting to that? And what's the outlook there?

Yes. So let me start with the category. The category, as we shared in the remarks, has been better compared to where we were a year ago. So for the quarter, the category was down 3% in pounds. And if you have a look at April, it's 2.5% down. So it is improving. It's still not kind of where it was pre-pandemic, but it's getting there. So that's the category. Our portfolio, you have seen some of the -- we are extremely pleased with where we are. So Q2 was another quarter where we were still working through the transition of assortment, especially in the food channel to actually better prepared or have a higher return on promotional spend. Because of that, our promotional spend was down a bit versus prior year and still we were the largest -- the only large player that actually held flat dollar market share year-over-year. So we feel really good about our portfolio, and we feel good about the improvement in the category.

Our next question comes from Thomas Palmer with JPMorgan.

I'd like to echo my congratulations to both of you, and I appreciate all the help, Rob, as I've ramped on Post. I wanted to maybe follow up on David's question on the Foodservice business, just some of the egg dynamics. Obviously, in the quarter, falling egg prices seem to be a tailwind for earnings, especially based on some of the disclosures about input costs. But I did want to ask one on kind of the prospect of either lowering prices in your view here or whether you are seeing any maybe shift by customers given how cheap whole eggs are to kind of shifting in the direction of the more labor-intensive side of starting with whole eggs instead of buying prepared eggs products. Just want to make sure that neither of those is something we should be looking out for.

Sure. So in terms of the switching, I think that's obviously a risk we evaluate. But honestly, given the value proposition and what we found, especially in the larger operators is once they switch to our value-added products, are able to take that labor out of their system and they see the benefits of the consistency, food safety, other things of the product, it's quite sticky. I'd say that maybe the risk is around some of the smaller independent operators, which is a much smaller component of our business, where they have a little more flexibility in the back of the house to make that switch. But again, I think, by and large, the majority of the portfolio sees that change is quite sticky.

Okay. And I wanted to ask on Weetabix -- just the commentary about the license and how maybe that reported sales were a bit worse than underlying consumption trends for the broader business. How big is kind of the license impact that we should be thinking about? And to what extent is 2Q reflective of the kind of the full magnitude we should be thinking about in the quarters that follow?

Sure. So in terms of what that was, that was related to Oreo O's licensing agreement that we have. And I believe we have another quarter before we fully lap that going away. But in terms of just when we think about from a volume standpoint, looking out the balance of the year, we would expect better year-over-year performance as we lap that in the second half. I mean I think as a reminder, we've seen the category come back to more flat, which is historically the right spot or what we've seen out of cereal in the U.K.

And Weetabix continues to have -- when I say Weetabix, the yellow box product, in particular, has some very strong momentum behind it and continues to outperform. So I think as we lap the Oreo O's and that comes away as we get into Q3, we would expect you start to see better performance overall out of our portfolio with that.

Our next question comes from Scott Marks with Jefferies.

And again, congrats to Nico and Rob. I wanted to touch on Weetabix off the back of Tom's question there, just more so on the profitability side. Obviously, margins on that business are still significantly below what they had been. So just wondering if you can help us understand the path back towards that 30% level and how we should be thinking about opportunities within that business?

Sure. So Scott, I think, first of all, just a reminder, UFIT continues to grow nicely within the portfolio. It's a co-man business. But as it grows in sales, it's much larger -- I'm sorry, lower margin business given the co-man nature of it. So I think that's realistically taking the top off of reaching 30%, which is a good thing because we're still growing profit dollars. But in terms of just sequential improvement from where we're at now, we were able to execute some network optimization at the end of March and close a facility on the private label side, given our Deeside acquisition a couple of years ago. That was part of that plan. We were able to execute it, and that will lead to better profitability in the second half. So we would expect, as you look at EBITDA margins, sequential improvement that's noticeable in Q3 and Q4 relative to the first half.

Okay. Appreciate the thoughts there. And then just maybe shifting over to refrigerated retail. Obviously, very strong volume performance in the quarter. I know you called out a little bit of Easter timing benefit. Just wondering if you can help us understand kind of the magnitude of benefit there? And how we should be thinking about run rate for that business kind of in the back half?

Sure. So we saw the pretty significant lift in dinner sides or sides for the business, 12% growth. The biggest driver certainly was Easter, and we see that as you look historically when Easter falls, it's a big lift. So I'd say that's a majority of that year-over-year movement given Easter was in Q3 last year, it was in Q2 this year. But the other contributor was certainly the new private label products that we've rolled out at the beginning of the fiscal year. Those continue to do well. Arguably, they probably had a little Easter momentum behind them as well, but those are really the 2 drivers. So obviously, Easter will fall away, but we'll be left with continued lapping of private label introduction until we get through the end of the year.

Scott, I would add that there was some underlying volume growth for our branded portfolio. It's just, of course, it's the 12%. I mean if you have 2, it's call it 1/3, 1/3, 1/3 between underlying volume growth, private label and Easter, give or take.

Our next question comes from Marc Torrente with Wells Fargo Securities.

Rob and Nico, congratulations as well. I guess just first on the incremental cost impact from energy that you are expecting. Has that started to flow through the P&L yet? Is it more of a ramping dynamic through the back half? And when would you decide to take pricing action if needed? And how quickly could that provide some offset?

Sure. So we certainly are seeing the impacts as we got to the end of Q2 and into the beginning of Q3 here. So pretty consistent, I would say, depending on the level of hedges we had in place through the balance of the year, but I think you can think of it about as a pretty average run rate, assuming the war extends to the end of the fiscal year, which is what's in our base assumption. And then in terms of...

Pricing. So I -- so that one is business by business. But for the most part, right now, we are assuming that we'll absorb that through the P&L. If this extends beyond this fiscal year, we will probably then consider about pricing. But again, it really depends on where inflation falls. I mean, right now, we're seeing it in fuel and a little bit in packaging. If these things actually get worse, we will have to think about pricing, and it's probably going to be in the new fiscal year. But again, way too early to say.

Understood. And then maybe just an update on the performance of 8th Avenue since holding in the business. What was the contribution in the quarter since I guess this was the first quarter of just having the ongoing business? And then how is the integration and synergy capture progressing?

Yes. So the underlying business performance is in line with the deal model. So we are pleased with puts and takes and kind of some categories slightly better, some categories slightly worse, but for the most part, it's in line with the deal model. So we feel really good. And then the integration is going extremely well. Synergies are a bit ahead of the plan. So -- and we should be hitting run rate towards the end of this fiscal as we anticipated. But we feel really good about the combination of both, right? So the team stay focused, no distractions. And so it's -- the business is performing, and we are probably overdelivering on the synergies.

Our next question comes from John Baumgartner with Mizuho Securities.

Maybe first off, just to Rob, really fun ride for the past decade. And just many thanks for all your insights and interactions over the years. It was really a great learning experience. So thank you and all the best in your future endeavors. Yes, Nico, congrats on the opportunity as well. Thank you both so much.

First off, relating to the ready-to-drink protein shakes, you understand this category very well. You made the capital commitment to the manufacturing facility. So I'm curious, first, your perspective on the sustainability of category growth and your participation as a manufacturer, just given the influx of new brands coming in, how do you think about the competitive environment through a manufacturer's lens?

And second, given the derating of public equities in RTD and maybe that also goes for private assets as well, how do you think about reengaging in RTD as a brand owner again? I mean presumably, it's growth accretive, free cash accretive, you get synergies from repatriating volume as a vertical operator. How do you think about your position in that category right now going forward?

Yes. I mean I think that we have to be careful about questions that we answer from a perspective of BellRing. I think it's entirely appropriate to answer questions from a -- as a manage maker, but not as a brand opener. So I'll let you talk about the...

Yes. Again, I think in terms of the shake business, I think we continue to see opportunities there to grow with BellRing. We're a key supplier of theirs. We've gotten our house in better order in terms of just volume on the shake side. So I think we're feeling better about that business. We've talked about just some higher costs that we're trying to work through in terms of higher than anticipated around just the manufacturing process and some of the costs we're absorbing. But on the volume side, we're seeing better performance, and there's certainly demand for the volume that we are pulling through on the BellRing side.

And then my follow-up, we're seeing some pockets of the industry where foodservice brands are making some really nice inroads in terms of market share growth in retail grocery and making that channel crossover, soup, French fries, mashed potatoes, you have the presence to Bob Evans already. I'm curious, given how tough volume growth is for a lot of these traditional retail brands, how do you think about leveraging your manufacturing assets to maybe expand Bob Evans into new categories or license other foodservice brands to enter additional categories within your meals orientation. Just have you considered that as a means of growth potentially in leveraging your assets at all?

I think you said it right. It's -- that's a lot of what the Bob Evans business is, right? So -- and it does leverage a lot of the assets for Michael Foods. Kind of expanding to other categories, I think that's the Bob Evans team, like any of our teams assess that all the time and it depends on kind of what they see as their ability to win in the category and returns. But I would actually highlight that the Bob Evans team is essentially -- the Bob Evans business is essentially that business that leverages the Michael Foods assets.

And we'll go next to Carla Casella with JPMorgan.

You talked a bit about private brand today. And I'm just -- it's raising the question. How much of your business today is private brand? And sort of which category -- where are you the highest as a percentage of the segment? And is there more opportunity there? And I guess as a follow-on, is that a margin opportunity as well?

So Post consumer brands is where we have the -- probably the -- actually the largest private label brand and the highest in terms of percentage of the total business and it's around 20% of the business is private label. If I understood your question is like where is -- kind of what is our position? We have a very strong position in cereal, granola and Peanut butter. We are a smaller player in private label in pet, we are more of a premium private label player in pet. And in terms of opportunities, we see opportunities in all those categories. And in general, in all categories that we play in, we will always consider how to leverage the branded and private label portfolio, right? So...

Okay. But it sounds like you're growing more on the refrigerated side. And is there -- and I'm wondering if there's any private label in with Weetabix in Europe?

There is private label and Weetabix, yes, and that has been the case for years now. We are growing faster in refrigerated because essentially, we make the decision of actually reengaging with the private label business in that category. So it's going from essentially nothing. And so we see it as an opportunity -- ongoing opportunity. For now, it's targeted on fewer retailers, but it's an opportunity there as well.

Okay. Is the opportunity similar to where you are in consumer brands? Like do you see those categories get to 20% private brand?

It's difficult to say. I mean, we don't -- I think it is higher than 20%.

Yes. Weetabix is -- from a category standpoint, private label is much larger in the U.K. than the U.S., obviously, a much smaller market, but our share is in line with the category in terms of branded versus private label. So private label is north of 40% for us over there. But -- so I think in line -- I don't know if there's a lot of opportunities there. We feel really good about having the alternative price points just like we do in Post consumer brands. And we think that gives us a competitive advantage and inroads with retailers, both on the branded side and with that private label presence.

Okay. And can I just ask one quick finance question. You've done a lot of share buybacks. You've done a bunch of refinancing lately. How much cash should we model in that you need to keep on the books just to run the business?

Sure. We generally think about it, call it, $150 million of just cash on the balance sheet for working capital purposes. And just given our Weetabix office as well as international, that's about the right level of cash just needed for daily operations.

This does conclude today's question-and-answer session as well as Post Holdings Second Quarter 2026 Earnings Conference Call and Webcast. Please disconnect your line at this time, and have a wonderful day.

Welcome to the Post Holdings First Quarter 2026 Earnings Conference Call and Webcast. [Operator Instructions] . Please go ahead.

Good morning. Thank you for joining us today for Post's First Quarter Fiscal 2026 earnings question-and-answer session. This call is being recorded and an audio replay will be available on our website at postholdings.com.

During today's call, we may 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 these statements. The press release that supports today's call is posted on both the quarterly results and the SEC filings section of our website under the Investors section. And is available on the SEC's website. 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 and posted on our website.

I'm joined this morning by Rob Vitale, our President and CEO; Nico Tocio, our COO; and Matt Mainer, our CFO and Treasurer. We're doing things a little differently this quarter as we posted management remarks last night in the Investors section of our website. A rationale for these changes to give you additional time to digest our commentary in advance of this call. In addition, given our M&A activity, our convertible debt structure and the magnitude of recent share repurchases, we wanted to bridge our enterprise value calculation, which is furnished as an appendix to our posted remarks. I hope you've had a chance to review this document. The key highlights are that fiscal '26 is off to a great start as we delivered Q1 adjusted EBITDA well above expectations. This operating performance, coupled with an update to our Foodservice normalized run rate allowed us to significantly increase our guidance.

We have continued aggressive share repurchases so far this year and our strong operating performance, along with our Q1 sale of the eighth Avenue Pasta business has allowed us to hold net leverage flat. And from this position, we continue to maintain significant flexibility for opportunistic capital allocation.

With that, I'll turn the call back over to the operator to open up Q&A.

[Operator Instructions] Our first question will come from Andrew Lazar with Barclays.

Great. Thanks so much. Good morning, everybody.

Before we jump in, say, welcome, Niko?

Yes. And welcome, Nico, congratulations on the COO role. And good morning, everybody, and thanks for putting out the prepared remarks last night. That's really helpful. Maybe Rob to start off. obviously, Post has been aggressively buying back stock for some time now as that's where obviously the company sees the best way to deploy free cash flow at the moment. But obviously, we've seen market valuations for a bunch of small cap growth your food companies dropped pretty meaningfully over the past year, yet there really still hasn't been much in the way of M&A activity. including for 1 that Post obviously has great familiarity with. I guess, are market valuations still not yet attractive enough for some of these maybe smaller public entities to warrant thinking a bit differently about capital allocation? I guess as my first question.

Well, I think that, that is certainly changing as the multiples change. Whether it's exactly where it needs to be yet or no, I think is in the eye of the -- but I think as that multiples come down, M&A becomes a much more interesting measure..

Great. And then maybe just as a second one. I was curious to maybe explore the comments in the prepared remarks about the cereal category recently returning to -- it's more historical down low single-digit pace from what had been more significant declines. Is it simply that it's a more affordable breakfast option at a time when we see more value-seeking behavior or you think there's maybe a little bit something more in during.

Now we say it as that. I mean, if you see, it is very recent. So there's a significant change in trajectory that happened in November, December, and that coincides with Snap. So we see it as an outcome of changes in Snap and trade down from other caters to city, not only cereal. Remember, we now have a significant presence in peanut butter also improved. In the same period. So for now, I would say that's straight down. We need to see what happens in the next few months. A few more months, you actually have the confidence that it's a change in the...

We'll turn now to Matt Smith with Stifel.

The guidance raise after this first strong first quarter includes the higher unique benefit and higher normalized earnings from foodservice business. But can you talk about your expectations for the rest of the business through the rest of the year relative to your initial expectations? Have you factored in some perhaps lower EBITDA contribution from PCB? Is that investment related? Or are things pretty similar to your initial expectations?

Yes, Matt. I'd say the balance of the portfolio is pretty similar to our initial outlook. Obviously, we make adjustments in tweaks here and there when we think about the totality of the portfolio and our guidance, but there's nothing material I'd call out.

And as a follow-up, on the stronger normalized foodservice earnings base, you saw some nice volume growth both in overall eggs and the highest value-added eggs. Can you talk about some of the timing benefits in the quarter? And how you expect volumes to progress from here, especially in the higher value-added egg segment?

Sure. So definitely, obviously, some favorability when you think about year-over-year relative to some impacts from Avian influenza last fiscal year and also in the current year, as we talked about and started in Q4, we were getting customer inventories reloaded, got that completed this quarter. So a couple of transitory benefits that fall away as we think about sequential movement into Q2. I think we see the balance of the year more in line with both from a mix standpoint and just overall a growth more in line with historical and how we think about the business, which is a 3% to 4% growth rate with a mix benefit getting us to our algorithm.

We'll turn now to David Palmer with Evercore ISI.

Question on the cereal category. I wonder how are you seeing the category today, competitor behavior and strategies and maybe reflect on your own spending. We obviously made a new hire with Greg, who will be coming on and maybe he'll have some impressions and thoughts about this, but a major competitor of Post has been investing heavily some combination of price promotion, marketing, innovation and those investments may be hurting. It seems like it's hurting private label more than anything lately. You guys have done a good job of protecting profitability and arguably, we'll just have to see if the other guys spending is worth it, so to speak, in the long term. But how do you reflect on this and what's going on? And how does that maybe shape your strategy going forward in cereal.

I was try to see. I think what you saw in the quarter in the first quarter was reduction in our promotional spend because we are adjusting our assortment in channels that are more promotional driven to increase our efficiency. And as we adjusted the assortment on shelf, we decided to promote less. It's just too disruptions. -- number time, we don't see a change in our strategy. I think we will continuously assess opportunities to invest. And if we see the return, we will go for it, but I don't see a material change in our strategy.

Are you -- I mean 1 follow-up here is that competitor in addition to price, which may or may not make sense for the category long term if it seems like the premium brands are the ones that are winning, that competitor is also doing some stuff in protein granola does even that sort of angle or is that an opportunity for you and even something that might shape your M&A aspirations in the category? And I'll pass it on.

I think we are also investing in the same areas. I think we are all doing that. I mean protein fiber granola. So you will see pilletmore of that from us for sure. And some of that is actually coming to market now as we speak. On M&A, I think it's always the same.

I would say that it hasn't really changed our M&A strategy. We continue to be opportunistic when we have the opportunity to be so. So we are not looking at a particular category or map in a particular segment of our business.

Now we'll hear from Tom Palmer with JPMorgan.

I wanted to start off just asking on clarity on the cadence for the year over the EBITDA. It was mentioned kind of being more stable as we think about 2Q, 3Q and 4Q, but there also was a call out about some inventory timing benefits to think about in the second quarter for Foodservice. So is -- what's kind of the offset we should be thinking about in 2Q, maybe within other segments that might make it more balanced versus having that kind of 1 item providing a bit of strength.

Sure. I think -- so there's -- when you think about refrigerated retail, Q1 is by far the highest quarter given the amount of holiday benefit we have there. We still have Easter, which is in early April. So that full benefit will lie in Q2, but there's definitely a step down just from seasonality in that business. That's probably the biggest offset. And then we typically across the portfolio of food services an exception given how hard we are running our plants. We usually have some holiday shutdown that will put a little negative pressure on Q2 just across the portfolio as we have the deleveraging impact is realized. But I'd say those are the 2 things that really offset that benefit, and it's -- we're not expecting a massive benefit for foodservice. When you think about selling through that inventory, but it will be elevated relative to what we think in Q3 and Q4.

Okay. And then just on the RTD shakes, does your kind of key customers slower growth have any bearing on your plans to ramp it? And maybe an update on kind of how that ramp is going.

Yes. Starting with the ramp. We continue to make progress on the actual volume output. I think we still admittedly have challenges around the cost and the efficiency of the production. So still not at our run rate. So I think we continue to work on that. I think we're trying to be a $500 million business that's showing really nice strength in growth and don't want to overemphasize the shake business. So we're putting the right amount of attention there and trying to balance that, but we'll see how that plays out. I don't think there's really -- when we think about the category and the longer-term opportunity I don't see any concerns there is more trying to get where we want to be in terms of our run rate and profitability and then we'll think about expansion after that.

We'll turn now to Michael Lavery with Piper Daimler.

To foodservice and some of how to think about the normalized run rate. We've seen it drifting higher course and times that you could beat it quite easily. But maybe just help us understand some of what makes the increase sticky now? Is it primarily mix maybe how much conservatism would the 125 or so a quarter have? And what drove the upside in 1Q?

Yes. So again, I think it's -- I mean we're back to the value proposition of the business. So I think we feel good about that run rate and the stickiness of it. And as we think that's a run rate for this year, that's got some level of embedded growth in it. But as you think to next year, I think we feel good about our ability to grow off of that just because of the same dynamics of the business and what we're seeing in terms of our value proposition, helping operators take labor out of their system. Those are all in the right spot. And make economic sense for operators and there's still a nice runway when you think about converting folks from shell eggs over into value-added eggs. So really the same dynamics we've seen for quite a few years. We're just back to more normalized supply and demand dynamic.

That's helpful. And just on PCB, price/mix was down a little bit more than it has been -- can you just point to what some of the key drivers are there and how to think about what the consumer dynamics are related to that?

We mentioned in the remarks, in cereal, our volume was a bit behind the category, driven by lower promotional spend. And that's essentially that's the gap. And some adjustments in assortment that take a bit of pounds out of our business. As we mentioned in the remarks, what we see as very positive our dollar market share was flat year-over-year, and that's what we want. And then in Pet, we -- our volume was a bit behind the category, mostly driven by Nutrish. And then the difference between consumption measure and our shipments was also our private label business will have in some distribution losses in our private level Pet business.

So I may have said it wrong, I apologize. I thought a lot of volume color was pretty clear, but I was curious a little bit on the pricing piece because it looks like that was about a 2-point headwind -- was that pet driven primarily -- or where was the...

Yes. Okay. Thanks for the question. It is pet driven. It is -- we mentioned in the remarks, we tested price points mostly on Nutrition in select retailers. And those are the price points that we will target in the relaunch. So that is a headwind in terms of price mix. It is all pet.

Were you talking about total EBITDA margin, John?

This is Michael. No, I was talking about top line, the price mix and just trying to if that was a price test on Nutrish that pushed it down a little bit in first quarter and then that rolls out more broadly in the second half, should we expect a bigger -- should that price mix headwind likely grow over the rest of the back half especially?

We will -- as we relaunch the brand, we will hit those price points with a change in price pack architecture. So the price per pound should improve.

We'll turn now to John Baumgartner with Mizuho Securities.

I wanted to ask Rob about refrigerated retail. And specifically, what you're seeing thus far from the new private label business in the early days and maybe your expectations to expand that book of business going forward?

So good early start for private label. I'd say playing out as we expected. We've got that in 2 customers, really 2 offerings, mashed potatoes and mac and cheese. We continue to see a nice pipeline of opportunities to expand that business. But for this year, it's providing definitely some growth on our dinner sides and I'd say, adding to price points similar to what we've seen in PCB, -- having that alternative, especially in that category, we think will be really beneficial long term and use some of the excess capacity we have across the network. So there's a leverage benefit as well.

And then related to that, some of the past innovation for the side dishes product line has included vegetables and such. And given that we're now seeing some frozen entrees entering the market specifically for the GLP-1 crowd, I'm wondering how you think about any differently about how the side this portfolio can compete. I mean, are there potentially new lines that can appeal to different demographics or incorporate more protein sausage eggs, other parts of your portfolio, are you thinking any differently about how that line competes going forward given changes in the consumer environment?

Certainly, we're focused on protein and options to add protein to our sides and then also -- we've done some testing with Wonder list, which is a different product for us a couple of years ago. We're starting to see some success there, albeit small within the club channel. But again, I think we are giving you some thought to adding some protein as well to those -- some of those dinner side dishes.

We'll turn next to Scott Marks with Jefferies.

First, I wanted to ask about in the prepared remarks, you noted that in food service, the EV and influenza driven pricing adders have ended. But given, I think, the magnitude of deflation we've seen in the egg market, how should we be thinking about pass-through of that within your Foodservice segment or potentially the Refrigerated Retail segment as well?

Yes. So now that we've got inventory levels rebalanced, I would say, going forward, our supply is matched up with demand. So we become agnostic to egg prices and that it's, to your point, back to a path their model. So there is a pass-through that's basically on a 90-day lag. So there can be a little bit of timing, but we don't see over the course of the year, any significant volatility from that model historically.

Appreciate it. And then second question, almost related to what John asked about in terms of the GLP-1 friendly options -- earlier this year, we saw the U.S. refresh its dietary guidelines recommendations for what consumers should be eating. Wondering if that at all changes how you're thinking about the portfolio or any adjustments you think need to be made because of that.

I think our portfolio is pretty well balanced with the guidelines. So we are obviously going to consider the nutrient but also the price from an M&A perspective. So I would say, once we get closer to where the values are, we have -- we'll have a position on how the pyramid implicates us.

We'll turn now to Marc Torrente with Wells Fargo Securities.

Going back to PET, the category itself, particularly dog has been softer -- what do you think in terms of trends there? And what are your expectations for the category near term? And then your own pet volumes were a bit better sequentially, some puts, takes in terms of private label losses versus integration labs. But underlying is starting to stabilize a little more. How are you thinking about recovery there through the year in terms of volumes?

On the pet we will probably -- we don't see any major changes in the recent trends. The recent trends, as you said, is to has been softer compared to at the cat segment. And that is driven by some changes, whether it's urbanization and all those trends that are driving the CAD segment. So we don't see material changes. In terms of our business, as you rightly said, it's sequentially getting better. A lot of that is, as we mentioned, Nutrish and Gravy Train, improvements driven by price points that we tested and our expectation is as we relaunched those runs and it should help the brands -- that's our expectation. But as you said, it is -- it would give us confidence is that the business is sequentially getting better volume is sequentially getting back.

Okay. And then you called out the successful closure of 2 of your cereal facilities in the quarter. How should we think about the cost savings benefit flow through from those actions? And then given some of the normalization of the consumption trends, are there still other actions that you're considering for the segment?

The -- I think we mentioned in prior quarters, the benefits from the plants that we shut down should mostly hit our P&L. Starting in Q3. So Q3 and Q4 will see the benefit. And then -- after that, we will have to be very selective in what we do. I mean with the streamlined our portfolio could be aligned here and there, but no plans.

Thank you. With no further questions in queue, this will conclude today's Post Holdings First Quarter 2026 Earnings Conference Call and Webcast. Please disconnect your lines at this time, and have a wonderful day.

Welcome to the Post Holdings Fourth Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions] I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post.

Good morning. Thank you for joining us today for Post's Fourth Quarter Fiscal 2025 Earnings Call. I'm joined this morning by Rob Vitale, our President and CEO; Jeff Zadoks, our COO; and Matt Mainer, our CFO and Treasurer. Rob, Jeff and Matt will make prepared remarks, and afterwards, we'll answer your questions.

The press release that supports these remarks is posted on both the investors and the SEC filings portions of our website and is also available on the SEC's website. As a reminder, this call is being recorded, and an audio replay will be available on our website at postholdings.com.

Before we continue, I would like to remind you that this call will contain certain 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 these statements. 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 and posted on our website.

With that, I will turn the call over to Rob.

Thanks, Daniel, and good morning, everyone. We had a good FY '25, and we ended with a strong quarter. It was an interesting year as we navigated regulatory changes, tariffs, Avian Flu and uncertain consumer sentiment. Despite this challenging environment, our portfolio of businesses displayed resilient and delivered strong results. We expect that the benefits of our diversification will allow us to navigate an environment of continued uncertainty. We expect to continued volume growth in our Foodservice business, especially in our highest value products. In Retail, we remain disciplined in the face of a very challenging volume landscape, keeping our focus on cost reduction and profitable brand investments.

Jeff and Matt will provide detail on our FY '26 outlook, but we will focus on what we can control. And from that perspective, I like our positioning. I expect Foodservice to provide volume growth and our Retail businesses to generate considerable cash flow to fund both organic and inorganic opportunities. In that vein, the highlight of FY '25 was our strong operating cash flow, which allowed us to maintain flat net leverage, while making key capital investments completing 2 tactical acquisitions and buying back over 11% of the company. With a step down in capital spending and the benefits from the new tax law, we expect a meaningful increase in FY '26 free cash flow. Coupled with our long-dated debt maturity ladder, we can be opportunistic with our capital allocation decisions. We continue to review M&A opportunities, and benchmark them against buying back our own shares.

I would like to thank all of our employees for another successful year. The strength and diversification of our operating model combines with dedicated employees give me a great deal of confidence in continuing our track record of value creation. Before I turn the call over to Jeff, I want to make a personal comment. Bill has been a mentor, business partner and friend for nearly 30 years, and I expect that to continue regardless of titles. Jeff?

Thanks, Rob, and good morning, everyone. We delivered strong consolidated results in Q4. Our cold chain businesses did a fantastic job in navigating HPAI. In addition, across the entire portfolio, cost reductions and manufacturing execution combined to more than offset the impact of lower retail volumes.

At Post Consumer Brands, our branded and private label cereal businesses experienced consumption declines resulting from challenging category dynamics. [indiscernible] volume consumption was down versus a flat category driven primarily by Nutrish. As a reminder, we are adjusting the value proposition and messaging for this brand with changes to be in market by the end of fiscal Q2, a bright spot in Pet was Kibbles 'n Bits, which had a strong consumption volume versus the prior year.

In spite of the volume challenges, we were successful in growing our Consumer Brands EBITDA margin, excluding 8th Avenue by 100 basis points, driven by improved mix in Cereal and strong cost management across the segment. Our upcoming cereal plant closures will further help to alleviate the impact of cereal category declines.

Setting aside HPAI, Foodservice had strong underlying performance, driven by growth in both egg and potato volumes. While a portion of Q4 egg volume growth was related to timing from improved egg availability and customer inventory replenishment, we continue to see strong demand, in particular for our higher value-added products. Volumes for these higher-margin egg products grew nearly 9% in the quarter and approximately 6% for the full year. Our HPAI impacted egg supply came back online as expected in Q4, allowing us to continue gradually winding down pricing matters. As we enter fiscal '26 we are well positioned to continue the normalized growth trend in this business.

In Refrigerated Retail, dinner sides grew volumes in the quarter driven by targeted promotions and new private label offerings that began shipping toward the end of the quarter, Private label offerings are expected to contribute low single-digit volume growth in FY '26. Segment profitability had some continued tailwinds from HPAI pricing matters again this quarter.

At Weetabix, our flagship yellow box product consumption performed in line with the improving cereal category, which was down less than 1%. The noticeable improvement in the U.K. cereal category over recent quarters is an encouraging trend. Meanwhile, we continue to execute against our identified cost-out opportunities as we consolidate our private label production, resulting in a plant closure in mid-fiscal year.

Turning to FY '26. We have planned for a more normalized environment in our cold chain businesses as we begin the year with egg supply back in balance, allowing us to focus on driving volume growth in both Foodservice and Refrigerated Retail. For the balance of our portfolio, we are projecting some improvement in the cereal category as we lap certain FY '25 pressures. However, we do not expect a full return to historical trends. To support volumes across the entire company, we will make targeted investments, including innovation, where we see profitable opportunities. However, as Rob mentioned, we remain focused on protecting margins and our strong cash flow.

With that, I'll turn the call over to Matt.

Thanks, Jeff, and good morning, everyone. Fourth quarter consolidated net sales were $2.2 billion and adjusted EBITDA was $425 million. Sales increased 12% driven by our acquisition of 8th Avenue. Excluding the acquisition, net sales declined driven by lower pet food and cereal volumes, partially offset by Avian Influenza driven pricing and egg volume growth.

Turning to our segments. Post Consumer Brands net sales, excluding the contribution from 8th Avenue, decreased 13%, driven by lower volumes in both grocery and pet. Cereal volumes decreased 8% due to category and competitive dynamics. At Pet, our volumes declined 13%, driven by lost private label business we mentioned in the last quarter, and we are continuing to experience consumption declines as we reset our Nutrish brand. Segment adjusted EBITDA increased 2%, which includes a $20 million contribution from 8th Avenue. Excluding 8th Avenue, adjusted EBITDA decreased 8% versus prior year as the impact of lower volumes were partially offset by improved cost management, especially in SG&A.

Moving to Foodservice. Net sales increased 20% on both pricing and an 11% volume increase. Excluding the impact of our PPI acquisitions, volumes increased 9% on higher egg, potato and shake volumes. The increased volumes and Avian Influenza driven pricing drove the revenue increase. Adjusted EBITDA increased 50% driven by Avian Influenza driven pricing and the previously mentioned volume growth in our value-added egg and potato products.

Refrigerated Retail net sales were flat and volumes, excluding the impact of PPI, fell 4%. The volume decline was driven by sauces and eggs, which experienced elasticities due to pricing to offset input costs. Segment adjusted EBITDA increased 44%, benefiting from Avian Influenza pricing adders and lapping some elevated SG&A costs in the prior year.

Weetabix net sales increased 4% versus the prior year. Foreign currency represented a tailwind of 360 basis points. Overall volumes decreased 3% as our core yellow box product volumes declined by 6%, offset by volume growth in UFIT, which was up 41% versus the prior year. Segment adjusted EBITDA increased 1% versus prior year due to currency tailwinds, partially offset by lower volumes and increased inflation-driven costs.

Turning to cash flow. In the quarter, we generated $301 million from operations. Our free cash flow for the quarter was approximately $150 million as we invested in key projects in both PCB and Foodservice businesses. Free cash flow for the full year was nearly $500 million, driven by strong operating cash flow, net of elevated CapEx. In the quarter, we repurchased 2.6 million shares bringing our fiscal '25 total repurchases to 6.4 million shares. We are active in share repurchase following the end of the quarter, buying back approximately 1 million shares. Net leverage in accordance with our credit agreement ended the fiscal year at 4.4x, relatively flat to how we began the year.

Before we get to Q&A, I have a few comments on our fiscal '26 guidance. As stated in our earnings release last night, including 2 months of pasta contribution, we expect our FY '26 adjusted EBITDA to be in the range of $1.50 billion to $1.54 billion. This range reflects approximately a 1% to 4% growth rate to a normalized FY '25. Relative to FY '25 Q4, we expect Q1 adjusted EBITDA to decrease meaningfully and driven by HPAI normalization and seasonality declines in U.S. and U.K. cereal partially offset by seasonality benefits in Refrigerated Retail. For the full year, we expect second half favorability to the first half.

Finally, our CapEx guidance of $350 million to $390 million is down notably from FY '25 as we completed key investments within PCB and Foodservice. FY '26 will continue to see elevated spending in Foodservice as we invest behind growth for both pre-cooked and cage free.

Thank you for joining us today, and I'll now turn the call over to the operator.

[Operator Instructions] Our first question comes from Andrew Lazar with Barclays.

Maybe, Rob, to start off. We've certainly seen industry volume remain sort of challenged. We can see some of that reflected in your PCB segment in Cereal and Pet. You've been aggressively buying back your own shares in lieu of, I guess, more interesting portfolio opportunities. The last time valuations in the group were really under this much pressure was sort of the late '90s and the group got out of it through larger-scale M&A perhaps this time is different. I think some investors maybe see the current weaknesses maybe more structural rather than cyclical.

And I guess I'm curious how this dynamic sort of informs your capital allocation decisions and is M&A still the right approach given how cheap assets are or is buying back stock at these levels more sensible, if one believes the terminal growth rate of potential acquisition candidates is simply lower going forward? I guess what I'm asking is whether this represents another buying opportunity in the space like the late '90s? Or is it somewhat different?

Well, if the ultimate question is it structural or cyclical, I think you have to tell us how long the cycle will last. I think it's different in the following manner. I think the big difference is the cost of capital has changed dramatically. We've been in a long-term decline. And now we're in what could be an inflection point where we see more increased pressure than decrease. And I think that starts to develop the strategy. And I think in lieu of a reflexive position of we're just going to use M&A to get bigger. It needs to be a little more thoughtful and perhaps a little bit more focused around focus so that we can look at opportunities to be better rather than just bigger.

And that sounds a little bit cliche, but I think it's true. Where we have opportunities to be more focused in some area that I think we should take them and where there are opportunities to be more efficient in other areas we should take them.

From our perspective, we don't necessarily differentiate between M&A and buybacks. So what we try to do is compare them from a potential return perspective and a risk perspective and then compare them. So we really don't look at it and say, if we buy back shares, we're going to shrink or look at our multiple different. We look at that and say, what is the best risk return adjusted way to use our capital.

Great. I know on the last earnings call, I think you talked about all the asset optimization efforts, right, that you're undertaking in [indiscernible] Cereal and that those could kind of get plant utilization maybe back up to around the mid-80s that the cereal category continued to be weak or below its historic rate of decline maybe further actions on the cost side sort of would be need to be considered. And I guess I'm curious what sort of actions could we be talking about? And maybe are you considering any additional ones, given I think your comments in the prepared remarks that we're -- don't see the category in fiscal '26 necessarily getting back to its -- what's been its longer or historical rate of decline.

Certainly, there are additional opportunities we can take on cost reduction. But I think the magnitude start to get smaller as the bigger things like plant closure have occurred. So we are looking at things like line optimization rather than plant optimization. So they continue to be good opportunities, but we've obviously taken the larger ones first.

And we'll move next to Tom Palmer with JPMorgan.

Thanks for the question. You have normalized growth outlook that you've given for your segments? And I guess, maybe thinking through those segments for fiscal '26, which ones do you kind of see as being more consistent with that normalized outlook after we adjust for M&A and Avian Influenza? And maybe which ones are light. I mean I know there was the PCB commentary, but kind of curious, I guess, in the other areas.

Sure. So I think from when you look at the PCB legacy business, we see that as more flat so not growing the 2% we have in our algorithm this year given what we've got going on in cereal, but also the Nutrish reset that won't take place until midyear. And in the balance of the portfolio, honestly, we see in line with those algos.

Okay. And I guess a follow-up on the [indiscernible]. A quarter ago, you talked about in Foodservice around $115 million EBITDA being like a normalized run rate. We have seen real volume strength in that segment. And I appreciate the past year had some Avian Flu, but why is 115 still the right number? Or should we be thinking about something maybe a bit higher to start out the year?

No. I mean, we think 115 is the right number, and that was really a benchmark we put last quarter, and that's how we think about fiscal '25, I think fair to assume that grows in line with algo for fiscal '26. So by the end of the year would be obviously something more like $120 million. But again, I think we talked about it last quarter as well. We would like to have a quarter or 2 of some normalcy so we can get a better read on that. As you pointed out, there's a lot of noise with Avian Influenza. We definitely had some catch-up this past quarter with customer inventory levels, given some of the challenges with AI, but really do see the base business continue to perform quite well.

So I think we'll revisit in another quarter, but how we benchmark normal a normalized run rate was against that $115 million and then growing 5% in fiscal '26.

We'll go next to Matt Smith with Stifel.

I wanted to ask about the performance in Refrigerated Retail you had a nice 20% EBITDA margin in the quarter, but you called out some AI pricing benefits there. As we look forward, is this business that's on solid footing to maintain kind of a high teens EBITDA margin in a normal environment?

Sure. So we definitely similar to Foodservice, but on a much smaller scale. We had some pricing benefits that fell away at the end of the quarter. So that was a little bit inflated because of that, but we are seeing better performance and better volume performance around private label, which is improving capacity utilization I think with that said, in the holiday season for them, we've always had significant seasonality. I think high teens is reasonable. When you talk about those periods in our slower part of the year, you're going to return to more call it, 16% or so of margins. It's not going to be high teens.

And Rob, as a follow-up to some of the commentary about the industry we are seeing private label trends vary across post categories, gaining some share in Pet categories, while having a softer performance in the Cereal category currently. Is there anything to read through in terms of category by category, how consumers are trading down into private label any observation you have, whether it's price gap depending or really category dependent?

You took the words right out of the month. It's really priced GAAP dependent. We're starting to see consumers be a little bit more gone to promotional activity, and it moves inversely to that.

Our next question comes from Scott Marks with Jefferies.

First thing I wanted to ask about in the prepared comments, you mentioned making targeted investments in 2026 with some innovation potential. Just wondering if you can kind of share some details about how you're thinking about some of those investments and maybe what categories you would like to invest in? And anything else you can comment on that.

It's the typical type of investment for brand innovation that you have seen historically. We took a pause on some of those during the pandemic, and it's been something that we haven't been quick to renew in the last couple of years. But it's going to be line extensions in really every retail category.

So in Cereal, as an example, we're going to be bringing some protein products. We're going to be bringing some granola products, which are areas of the category that are more -- that are growing better than the rest of the category. But you're going to see that sort of thing in our Refrigerated Retail business as well. And in Pet, a lot of that is directed towards the Nutrish relaunch although we'll see some smaller innovations in some of the other brands as well.

Got it. Next question for me. Just as we look at the Foodservice business and some of the demand for some of the value-add products, it sounds like you're expecting some of that momentum to sustain as we get into next fiscal year. Maybe what gives you confidence that some of your operator partners will continue to demand these products at these high levels and just any comments you can share about the overall backdrop for your operators right now.

So there's a couple of things we would point to. One is really a long history of that business, moving customers up the value chain. So starting from lower value-added products, moving them up to higher value-added products and the value proposition that they see when doing so, it's a function of the labor dynamic in their operations. when they move up the value chain. So that's been a multiyear, almost decade long, maybe multi-decade long trajectory of the category, which we don't see any slowdown in that happening.

The one more perhaps unique situation with Avian Influenza and the pricing that has -- the pricing dynamic that has been caused by that in shell eggs has caused some customers to convert to liquid eggs, the ones that are able to convert because over this period of time, liquid eggs have been less expensive than shell eggs. What we have seen in the past probably on a smaller scale than what we've seen this last cycle is that there's some stickiness to people who have converted to liquid eggs initially just for the pure price play because they find that the efficiency in their operations is such that even if the prices are more competitive with one another between liquid and shell eggs that they find efficiencies in remaining with liquid eggs.

So we have some belief that given what we've seen over the last 12 to 18 months that the stickiness of those customers that have converted will continue.

We'll go next to Michael Lavery with Piper Sandler.

Just one, can you maybe unpack some of the key moving parts there? And maybe just remind us the cadence of some of the private label cuts and distribution losses or the command cuts and when you've lapped those and just how to think about the puts and takes through the year?

Sure. So a year ago, we were working our way through fiscal '25 through some profit enhancing decisions we had made and we've fully lapped those as we exited '25. So in '26, what we've yet to lap that as we developed during '25 as we lost some private label business. We continue to pursue opportunities there, but we won't lap that until we get to the midpoint of the fiscal year. So I think as we think about the business and the volume trajectory, the first half of the year see really more down mid- to high single digits. And then as we get to the midpoint of the year and Nutrish's on shelf, and we lap that private label loss, we'd be back to more flat to maybe some slight growth year-over-year.

Okay. Great. That's helpful. And then you touched on some of the price gaps. Maybe just specifically for Cereal, can you help us understand what you're seeing there? How radial does pricing seem? And any sense of why you're not seeing a little bit more benefit from trading down?

We've had some pretty competitive pressure and promotional activities over the last several months. They seem to be changing. And I think it's no more complicated than that as some our competitors have been more promotional. The private label offering has been less competitive.

We'll go next to Marc Torrente with Wells Fargo Securities.

I guess, first on the EBITDA bridge into '26. Any changes to your underlying assumptions for the go-forward 8th Avenue business. I think you previously called out $45 million to $50 million EBITDA annualized plus the $15 million synergies exiting the year. And then any color on contribution baked in for the [ POS ] business for the first quarter top line in EBITDA?

Sure. So no change to the outlook. The $45 million to $50 million is how we think about the contribution in fiscal '26 and then you have confidence in getting to a run rate and synergies by the end of the year. It's going to take some time given all that's going on there.

And then in terms of the pasta business in Q4, we called out about $20 million contribution from 8th Avenue. So a little under the run rate, obviously, about half of that was Pasta. So again, we're expecting just 2 months of Pasta contribution this fiscal year. So 2/3 of $10 million before we close on the transaction in December.

Okay. And then just a little more on the volume trends in core grocery. Any color on progress through the quarter and how things have trended into the first quarter. Have you seen any incremental pressure that's from SNAP? And then just what's factored into your outlook for this year?

Yes. So I think what we factored in is fairly conservative. Again, I think we believe there's -- we'll see some category improvement as we lap some challenges in the back half of next year, given some of our fiscal '26, I should say, given that some of the challenges we saw with [ Maha ] and some other things that happens in the spring, we're not calling for a category getting back to normal in the back half of the year. So some marginal improvement year-over-year is really what we have. And I think Q1 and Q2, looking a lot like what we saw in Q3 and Q4 and then seeing some improvement in Q3 and Q4 is what's baked in our guidance.

[Operator Instructions] We'll go next to John Baumgartner with Mizuho Securities.

I wanted to go back, Rob, to your -- some of your comments around strategy and cyclical versus structural. Over the years, Post has built this portfolio that's tilted more to value, whether it's Cereal, Pet, Food, 8th Avenue business here again. And I mean values held up well against the macro over time. So it's been prudent. But I'm curious, given the headwinds now for lower middle-income consumers, higher debt, SNAP reductions and you're seeing the consistency from the premium eggs. So does it maybe warrant more initiatives in terms of addressing premium products, hiring some households. Just how do you think about that in terms of future M&A or organic innovation and the capacity to tilt the portfolio differently going forward?

I think I would disagree that the portfolio is built around value. I think the portfolio is built around choice because if you look at each line of we are in, we have an array of price points. And that is true of eggs, cereal, potatoes. So that what we really like to do is appeal to the an array of consumers. And I think that the trends that you're -- you're raising rather than dictating the construct of the portfolio in total, really dictate the direction of innovation. And I think in that context, it does suggest if we have the opportunity to do so to innovate more towards higher or middle-income consumers.

Okay. And then maybe just building on that in the Refrigerated Retail business, thinking about some of the side dishes, I think that's been an area where private label has been a little bit of a challenge the last year or 2. As we look forward now, supply chain issues have been cleared away, how do you think about investing in that business in terms of a vehicle for innovation, taking the convenience angle for consumers, expanding distribution growth. Where are your plans sort of sit for that side dishes business going forward now?

So John, you you've got a long history with us. So we went through a period of time when we first acquired the business that it was in private label and branded. So to Rob's comment, we were participating up and down the value of that segment. different price points. Then we went through a period of time when we did not have enough capacity to meet our branded demand. So we exited private label so that we could focus on the brand. In the meantime, some competitive private brand products got some traction. And we have now gotten to the point where we have our capacity better aligned to the point where we have capacity that can meet both private label and branded demand.

And because of that, we're choosing to pick and choose where we go, but to go after attractive private label opportunities in that category while also maintaining the brand and continuing to invest in the brand. So the longer-term or medium-term goal in that category would be to do exactly what Rob said play at the multiple price points not to be the omnipresent party in private label, but to be the party that wins where private label is most relevant at those retailers.

Our last question comes from Carla Casella with JPMorgan.

You talked about a lot about the M&A as part of the strategy over the past. I'm just wondering how that environment looks today and if there are a lot of opportunities. And then also, if you're focused more on opportunities within any of your key segments? Or would you add another leg to the stool?

We tend to be entirely optimistic on the last part of your question. I think in order to have a successful transaction, we obviously need a counterparty. And I think with the multiples where they are today, we've seen some reluctance to transact. And again, we don't necessarily look at M&A as an objective in and of itself. We look at it as something -- an allocation of capital choice that we can use compared to buying our shares back or paying down debt?

Okay. And given the 8th Avenue behind you, any thoughts on coming to market to refinance some of the draw on the revolver that you use for 8th Avenue?

Yes. So we continue to monitor, Carla. Obviously, we keep a close eye on that in the bond market, but we'll continue to look for the right pocket to do that.

Thank you. This concludes today's question-and-answer session as well as Post Holdings' Fourth Quarter 2025 Earnings Conference Call and Webcast.

Please disconnect your line at this time, and have a wonderful day. Thank you.

Welcome to the Post Holdings Third Quarter 2025 Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the call over to Daniel O'Rourke, Investor Relations for Post.

Good morning. Thank you for joining us today for Post's Third Quarter fiscal 2025 Earnings Call. I'm joined this morning by Rob Vitale, our President and CEO. Jeff Zadoks, our COO; and Matt Mainer, our CFO and Treasurer. Rob, Jeff and Matt will make prepared remarks, and afterwards, we'll answer your questions.

The press release that supports these remarks is posted on both the investors and the SEC filings portions of our website and is also available on the SEC's website. As a reminder, this call is being recorded, and an audio replay will be available on our website at postholdings.com.

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. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. 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 and posted on our website.

With that, I will turn the call over to Rob.

Thank you, Daniel, and good morning, everyone. Before commenting on the quarter, I want to mention the leadership announcements from last evening. Jeff has decided to retire at the end of the year. Jeff and I started to post the same day, and he has been instrumental to our success. While I'm happy for him, he will be sorely missed. Nico is being named COO, effective at the same time. For the time being, he will also continue as CEO of PCB. Nico has done an outstanding job leading PCB, especially the integration of our pet business. I look forward to working -- working with him in this role.

Turning to the business. We had strong results in Q3 despite the challenging macro environment with adjusted EBITDA approaching $400 million. Diversification in our business segments continues to benefit us as we sequentially saw significant improvement in our cold chain businesses more than offsetting a pullback at PCB. While these dynamics were anticipated heading into the quarter, the magnitude of each was a bit bigger than expected.

Rounding out the portfolio, Weetabix maintained a steady improvement from the first half that was impacted by their ERP conversion. Another highlight of Q3 was our acquisition of 8th Avenue, which closed on July 1. We are pleased to have the business full lead back in the Post portfolio. And while we see very clear synergies to PCB within nut butter and granola, we are waiting until FY '26 to start integrating to provide some normal stabilization for the business.

Meanwhile, the broader M&A environment remains challenged given market volatility. However, we view the recently announced Kellogg's transaction as an encouraging sign, highlighting the potential for larger, more transformative transactions. Beyond M&A, we continue to be aggressive in share buybacks. Having bought back 8% of the company fiscal year-to-date.

Subsequent to the closure of the eighth Avenue transaction, we remain in a great spot from both a leverage and liquidity position to remain opportunistic with our capital allocation. While tariffs and regulatory changes to food ingredients continue to increase costs and create uncertainty. The recent tax law changes are projected to result in substantial financial benefits to post. Specifically, bonus depreciation and interest deductibility changes will drive an estimated $300 million a reduction in cash taxes paid over the next 5 years.

I am pleased with the overall state of our portfolio as we continue to perform well in a really tough environment. Food service has successfully navigated severe HPAI impacts this year and is executing a soft landing to normalcy.

Pet is working through a challenging but much-needed portfolio transition while continuing to sustain over 2x our acquisition underwriting case. Meanwhile, on the grocery side of PCB, we remain focused on executing cost optimization to offset pressure cereal volumes.

Finally, both refrigerated retail and Weetabix continue to pursue their pipelines for targeted volume growth and cost reduction.

With that, I will turn the call over to Jeff.

Thanks, Rob, and good morning, everyone. Post Consumer Brands continue to face volume challenges in both cereal and pet, which drove the segment's performance decline. Cereal category volumes were down 4.1% year-over-year in our branded portfolio was slightly behind the category with a 4.9% decline.

We remain on track with our previously announced cereal plant closures at the end of the calendar year to optimize our cost structure and we will continue to pursue additional cost out opportunities to mitigate the current Cereal category trajectory. In fact, cost optimization efforts already implemented, along with favorable product mix enabled us to maintain 0 profitability relatively flat sequentially despite the volume challenges.

Our pet volume consumption was down 3.7% year-over-year versus the flat category, as we saw continued gravy train price elasticities and accelerating declines in Nutrish from its relaunch. As we learned from our mom cereal reset a few years ago, we expected short-term volume challenges as we overhauled the Nutrish brand, but the magnitude has been larger than anticipated. We are making some course corrections based on market feedback and therefore, expect the brand recovery time line to be extended.

With regard to Gravy Train, we have some price pack architecture changes hitting the market over the next few quarters, which we believe will set the proper balance between profitability and volumes for that brand.

Turning to Foodservice. As expected, Q3 was a much stronger quarter sequentially driven by temporary avian influenza pricing to recover Q2 costs ahead of pricing and to offset continued elevated ad costs. In addition, we saw volume growth in both eggs and potatoes, driven by improved market availability and improved breakfast foot traffic for our end customers.

We expect to wind down our temporary HPAI pricing and fully recover our egg supply by the end of Q4, setting us up to enter fiscal '26 at a normalized run rate. Although still early in our planning process, our early read of the normalized quarterly adjusted EBITDA run rate of our foodservice business is approximately $115 million.

Similar to Foodservice, Refrigerated Retail benefited in the quarter from temporary Avian influenza driven pricing adders in liquid ag, along with the shifting of the Easter holiday into Q3. Volumes were higher in nearly all categories. We are progressing well on the integration of the recently acquired PPI business, seeing the benefits of optimized manufacturing mix and elimination of totaling charges. We are also seeing further benefit from warehousing and freight efficiencies.

Turning to Weetabix. Our flagship yellow box product grew consumption volumes 2.4% year-over-year in a category that was down 1.8%. We attribute this to a return to marketing and promotion after limiting those activities in the first half of the fiscal year as we executed an IT systems conversion. In addition, -- had a strong quarter, growing volumes by 31% over the prior year. We are looking to expand the Fit brand with new high protein cereal and renewal products that are now in stores.

More broadly, we remain focused on executing our cost-out opportunities to drive our multiyear margin recovery. Despite the challenging macro backdrop, we are expecting a strong finish for fiscal 2025 as we remain focused on the things we can control, such as cost out optimization and making targeted investments to drive volumes.

With that, I'll turn the call over to Matt.

Thanks, Jeff, and good morning, everyone. Third quarter consolidated net sales were $2 billion, and adjusted EBITDA was $397 million, sales increased 2% as avian influenza driven pricing and volume growth in our cold chain businesses was partially offset by lower pet food and cereal volumes.

Turning to our segments. Post Consumer Brands, net sales decreased 9%, driven by lower volumes in both grocery and pet. Cereal volumes decreased 6% due to category dynamics with private label seeing steeper declines than branded. In Pet, our volume declines accelerated to down 13%. As a reminder, we expected high single-digit declines for the second half of fiscal '25 until we lapped prior year profit-enhancing decisions and completed the relaunch of Nutrish.

Bridging the additional decline this quarter is twofold. First, are the incremental consumption declines just discussed for both Nutrition and --. And the second is the loss of some private label business for which we expect to replace by early FY '26.

Segment adjusted EBITDA decreased 8% versus prior year as improved cost performance for both grocery and pet was not enough to offset the impact of lower volumes, particularly in pet One call-out is the better cost performance is net of a $5 million severance charge taken this quarter as PCB optimized its SG&A workforce to better align with our smaller serial footprint.

Moving to Foodservice. Net sales increased 19% and volumes increased 7%. Excluding the impact of our PPI acquisitions, volumes increased 4% driven by the inclusion of shake volumes in the quarter and higher customer foot traffic benefiting both eggs and potatoes. Beyond volume, avian influenza driven pricing drove the revenue increase.

Adjusted EBITDA increased 32%, driven by increased pricing to recover elevated costs and continued volume growth in both our value-added egg and potato products. Refrigerated retail net sales increased 9% and volumes, excluding the impact of PPI increased 1%. Volumes across all products benefited from the timing of Easter, which was in Q2 last year.

Segment adjusted EBITDA increased 94% as we lapped a particularly weak quarter last year, marked by trade over spend, while this year, we benefited from Avian influenza pricing adders and Easter-driven volume increases. Weetabix net sales increased 1% versus the prior year. Foreign currency represented a tailwind of 560 basis points. Volumes decreased 3% driven by noncore discontinuations. However, as Jeff mentioned, our core elves product grew volumes 3% and UFlit grew volumes 31%.

Segment adjusted EBITDA decreased 4% versus prior year led by lower volumes and increased inflation-driven costs. Turning to cash flow. We generated $226 million from operations and approximately $95 million in free cash flow, net of accelerated capital spend on our key investments in both PCB and Foodservice. From a capital allocation standpoint, -- we have repurchased approximately 1.6 million shares since the beginning of Q3, bringing our fiscal year total to approximately $5 million or 8% of the company.

Our Q3 results drove our net leverage down slightly to 4.3x and however, adjusting for the July 1 closing of 8th Avenue, our leverage is 4.5x. With our earnings release last night, we increased our adjusted EBITDA guidance range from $1.5 billion to $1.52 billion. At the midpoint, this suggests Q4 will be approximately flat to Q3, with the inclusion of a full quarter of 8th Avenue results, offsetting some normalization within the balance of the portfolio.

Sequel expect our cold chain businesses to decline as AI pricing adders wind down throughout the quarter. This will be partially offset by an increase of PCB due to back-to-school seasonality in cereal and the absence of Q3 severance charges. Thank you for joining us today, and I will now turn the call back over to the operator.

The floor is now open for questions.

[Operator Instructions]

And our first question is coming from Andrew Lazar with Barclays.

All the best in your term Jeff and congratulations to Nico on the COO role. Rob, I know it's early to provide specific guidance on fiscal '26, but maybe you can lay out some of the key puts and takes to consider. I think as you've talked about, foodservice has overdelivered this year, suggesting maybe some give back next year.

Cereal category trends, obviously, have remained quite weak and the pet turnaround is taking more time. I guess on the flip side, you've got the contribution from Athene cost saves from asset optimization moves and I think some contribution from the Shake co-packing dynamic. So I guess, am I right on those? What others might I be missing? And then I guess when you net all these out would you still anticipate at least some modest EBITDA growth in fiscal '26?

I think you laid it out pretty well. And the way we are thinking, first of all, I should say we are still in the planning process for '26. But the way we are thinking about it is, if we normalize food service for the AI impact is essentially an on-algorithm year. So again, with the caveat that we're still in the middle of planning. Beyond that, I think you laid out the different puts and takes pretty well. Are there any that you want to to Matt?

No. No. I think you captured everything, Andrew. And like you took fiscal '25 and put in a full year of eighth Avenue and then normalize our cold chain businesses for AI Jeff laid out the run rate we see food service at and we think it can grow in accordance with out from there just given the value proposition and just where we sit in the marketplace. So I think we feel good about our prospects for next year off a normalized 25%.

Great. Okay. And then I'm curious, Rob, maybe just a little more detail on what you're seeing in the cereal category at this point? And I guess why would -- I'm just curious why private label would be underperforming branded in the category, the way that it is?

Yes, it's a bit of a mystery to me as well. I think perhaps some of the degree of promotion is bringing the price gaps down a little more than it should. I think that the pricing opportunity for us there is still compelling, but it just is not as compelling as it has been compared to branded.

Yes. I think the only thing I'd add, Andrew, is our private label in cereal obviously skews the Walmart, and they're have seen quite a pullback in foot traffic. So we think there's some impacts there as well given our exposure there.

Our next question will come from Matt Smith with Stifel.

I wanted to come back to the foodservice performance in the quarter, there was a comment about the pricing reflecting the AI recovery. Should we -- pricing was up low double digits. Was that full amount the pricing recovery of costs you incurred in 2Q? Or was there some underlying pricing as well? I guess, I'm just trying to get a sense relative to the $30 million or $35 million that you expected to recover how much was delivered above that?

Yes. I think there was -- I mean, there are a couple of factors. One is recovery of Q2 that largely happened in Q3. And then also, again, we continue to see elevated egg markets. So we have continued pricing to recover that as well. So it's kind of an ongoing process. And once we get our egg supply back as we get through Q4 here, obviously, we'll need that pricing, and we'll see a normalized view, and that's kind of back to the $115 million that Jeff talked about is how we'd like to recalibrate the business.

And then the only thing I would add is on a year-over-year basis, there's the normal pricing that we would take as we renegotiate contracts. So there's some of that phenomenon in place as well year-over-year.

And as a follow-up, I wanted to ask about the CapEx moving higher in the guidance for both the PCB projects as well as food service investments. Is that incremental scope to these projects? Or has the cost gone up due to inflation? Just any color there would be helpful. And I'll pass it on.

It's really a matter of pacing that more than cost growth. So as we're spending a little faster. We have an opportunity to do that, and we want to accelerate those projects where we can. So it's not a matter of higher cost, it's just faster spend.

We'll take our next question from Michael Lavery with Piper Sandler.

Congrats Jeff and Nico both. You want to come back to just thoughts on M&A. You've obviously just done the eighth Avenue deal, but with fairly very modest impact on your balance sheet. Would it be fair? Could you give a sense of just how much appetite you still have for more? And what, if any, challenges you're seeing in the marketplace? Or how to think about just what's on your radar. And I know you've mentioned repurchases as an alternative as well. Obviously, we'll look for those in the absence of a deal. But just any thoughts on how the M&A landscape escape looks for you would be great.

Yes. I mean I think if you look at some of the opportunities right now, they're impacted by the uncertainty of base earnings with tariffs and some of the impacts that could come from food ingredient changes that we called out in the prepared remarks. I think it's an interesting commentary, the 2 large opportunity -- or transactions that have happened in the last couple of months or probably longer than that, are both private companies buying public companies.

So I think the transactions of public are impacted by the uncertainty I just mentioned. At the same time, multiples across the segment, including powers are quite low and the opportunity to use our stronger balance sheet to buy back shares is pretty attractive. So as we've talked about, I think, in the past, we look at it as a balancing process of what are the opportunities externally, i.e. M&A? What are the opportunities internally, meaning share buybacks and what do we need to due from managing our leverage perspective. So with all of that thing, we continue to be open-minded to transactions, small and large, and we just wait for the time to be right.

Okay. That's helpful. And just a follow-up on the Foodservice quarterly EBITDA run rate. It feels like it's got upside and some headroom there, especially as mix keeps driving tailwinds and you've got both kind of sticky pricing on top of some of the temporary -- the pull -- the catch-up from second quarter. Is it just a bit of conservative posture to not push that higher yet? Or are there any kind of incremental headwinds we should keep in mind? And can you give a sense of maybe what some of your assumptions are for shakes in that in terms of the latest on how it's progressing or what maybe utilization assumptions you may have there?

So I'll start with the last part first. The Shake contribution in that number is pretty modest, while we're continuing to make progress, and I know we've said that probably 3, 4 quarters in a row, and it's accurate. It's just -- it's a slow slog. So we're still climbing up to where we think normalized profitability would be. So over time, depending on your time horizon over time, that is certainly a tailwind that we would expect to provide incremental profit as we progress through 2026 and beyond.

In terms of the first part of the question, I think that's -- it's a reflection of what we currently see as the run rate of the business. But recall that we view food service as a modest grower on a year-over-year basis, which has been the case throughout our ownership period and prior to our ownership period. So that's a point in time, and we would expect that over time, it would grow from there.

Our next question comes from David Palmer with Evercore ISI.

I was just maybe hoping that we could do a little bit of market insights on the big 2 categories within PCB. And first of all, Jeff, all the best in retirement, congratulations on your career and all the best to you to Rico. But with regard to pet and cereal, the category is up in PET, a couple percent. The sales seem to be moving quickly to the premium and private label side of the category. Value brands, big brands, basically across the board are losing share there? And I wonder maybe what the insight is there other than perhaps dry versus wet and some of those dynamics in terms of fresh. But -- and then in cereal, the category is down a couple of percent.

It's incredible that private label is not really benefiting. It seems maybe to be going to the tide and low-carb type smaller brands seem to be flourishing. And so I'm not really sure how all of this is really informing what you're going to be doing and maybe even spending heading into fiscal 2016. Do you feel like you have a plan for each to pivot and adjust to these to sort of get back to market share? And just really curious about the plan and the spending levels in particular.

I think starting with Pet. Again, we've got some as we talked about beginning of the fiscal year, some profit-enhancing items and some decisions we made that we would lap until we got through the end of this fiscal year. And I think what we saw in the quarter was down 13%. And I'd say those are about half of that.

So as we lap the year, those would fall away, and you're left with the consumption trends, challenges we've seen mainly around nutrition and then also grating that Jeff talked about. Again, we've got plans in place to address both of those. Obviously, the Nutrish launch, and we're making some course corrections as we move through that as well. It's going to take a little more time than I think we initially anticipated.

But we feel good about both of those leveling out or improving that consumption as we get into fiscal '26. And then the other piece was around just some private label business that we lost. We've got clear line of sight to replace some of that over the next couple of quarters. So I think from a volume standpoint, we feel by the middle of next fiscal year, we will largely be closing it on flat relative to what we're seeing today. And then in terms of -- from a spend standpoint, obviously, we're putting some dollars behind Gravy Train and Nutrition, in particular, to support the relaunch on the cereal side. from a spend standpoint, I think we continue to be really rational around spending.

And in terms of supporting the brands, we do that on a targeted basis. We still think there's additional network optimization we can do. It's not plants, but maybe more lines. But again, I think we're also keeping an eye on the category. It's been a tough year and thinking as we lap next year, expect to see some year-over-year comps improving in terms of just the rate of decline we've seen in cereal, but we'll keep an eye on that as we think about additional optimization.

So it sounds just a summary is that you don't expect to have a very significant increase in the spending levels, promotion and otherwise rather just tactical changes with regard to the brands.

Well, yes. I think tactical is a great way to describe it.

Our next question comes from Scott Marks with Jefferies.

First thing I wanted to ask about, you made a comment in the prepared remarks about some higher input costs because of product reformulations and some regulatory changes -- so maybe just wondering if you can kind of walk us through how you're thinking about the shape of the portfolio and how you intend maybe to adjust the portfolio a little bit to meet some of these new trends and policy updates?

So I think we're going to certainly have some innovation. So to David's question before, one of the things that we're going to do is attempt some innovation in Cereal that's more targeted at the types of products that are performing well from TD Enhanced cereals, that sort of thing. More broadly with regard to ingredients, I think we're going to take a pragmatic approach. You've seen some commitments from some of our peers to eliminate some of the ingredients. We're certainly going to look at or reformulation of our products over time, but are going to take a pragmatic view as to how quickly we do that. And whether we do that across the Board or within certain products.

So I think the short answer is to say we're going to take a tactical view we're going to make tweaks along the edges, but we're not anticipating any major changes in particular in fiscal '26 with regard to those items.

Got it. And then maybe as a follow-up. Earlier in the call, you also mentioned, obviously, the buyout of W.K. Kellogg. Maybe if you can share your thoughts around a possible new entrant into the category with deeper pockets for innovation and investment and how you think about that maybe changing the dynamics within the cereal category from here?

I think you have a situation of one very large and very respected company being acquiring a smaller but also very well respected company with the likely outcome being the category will be enhanced by the size of the acquirer. But I think until we actually see the transaction closed, we would be hesitant to make further comment.

Our next question comes from Marc Torrente with Wells Fargo Securities.

Jeff, congratulations on the retirement. I guess first on Eighth Avenue, kind of 2 parts. How has that business in its category has been tracking over the last couple of quarters, top line and profitability and you previously increased your outlook to account for the deal closing. The deal closed on time. Any change to your expected contribution for this year? And then going forward, any seasonality considerations for that business, should that track more or less in line with PCB.

No material changes to this fiscal year contribution. And then as the outlook for next year remains similar. I'd say we found and not surprising as we watch the businesses with the backdrop that was under over the last 6 or 9 months of uncertainty about where the business is going to land definitely saw a pullback in performance of the business here as of the last couple of quarters, we see a path to improvement in line with what we called out when we acquired the business for next year.

But no seasonality, I would really call out is material within the business. And I don't know if there's anything else you'd add, Jeff, but I think I think that covers it.

Okay. Great. And then maybe just an update on some of the timing of the planned optimization savings. It sounds as though the step-up in CapEx could pull some of that forward -- and then just given how the cereal category has trended, where do you think this takes you for your utilization? And how does that compare versus your optimal outlook?

Yes. So again, it doesn't really pull forward what the actions we're taking on the plant optimization, they're still on track for the end of the calendar year. And in terms of the utilization we would expect that would get us back up into the mid-80s. And then I think it's really a matter of, like I said, how does the Cereal category perform. If it's more like this year, we have to move quicker on additional steps if it's levels out and becomes more normalized than what we've seen historically than we feel like we're in a good spot for next fiscal year.

Next question comes from John Baumgartner with Mizuho.

And Jeff, congrats on retirement. I really appreciated all of your insights over the years. I guess, first of all, for me in pet, I'd like to follow up there given the portfolio adjustments -- it seems as though you had a fast start out of the gate, rebuilding with existing customers in the old Smucker business. But as that's normalized, how do you think about portfolio balance at this point? Are there opportunities to maybe participate more heavily in different channels, e-commerce, specialty?

Are there opportunities that a presence in some of the specialized formulas. Just how do you envision the portfolio from where it sits today with steady state brands and distribution and where it could maybe evolve from here?

Well, I think there are many opportunities to change the composition of the portfolio, whether it's channel or price point or even breed. So I think there are many opportunities there. However, I think the most important thing to realize is that we want to make sure that what we bought sticks and part of what we bought was a brand in Nutrition, we knew needed work. So we will continue to make sure that Nutrition or it needs to be before we do too much portfolio management.

Okay. Great. And then as a follow-up on refrigerated retail and the side dishes business, it looks like the volumes have been performing pretty well, at least in the scanner data, and you've done it with I guess, reasonably stable pricing. Can you dig in a bit more into the drivers there? What's behind the performance? And how to think about maybe the next 12 months in terms of growth through distribution, innovation, next steps for that business?

Sure. I think we feel good at yes, to your point, obviously, we had a lift with Easter, and then we've had good performance this quarter. Last year, we had some challenges with trade where we overshot on trade into the base performance of the business. And we, of course, corrected that in in a much better spot this year.

I think we are seeing additional opportunities and gains within distribution and also price points. We've targeted opportunities there as well in terms of alternative products within our that we can offer and diversify similar to what we see in PCB.

So I think as we look to next year, I think we feel really good about some top line opportunities for that piece of the business.

Our next question comes from Carla Casella with JPMorgan.

Just a quick question on the eighth Avenue acquisition, you're funding it with revolver and cash, but any thoughts about coming in issuing bonds to eventually or term loan to eventually put in longer-term financing for that?

Yes, something that we definitely obviously keep an eye on the markets really closely. I think right now, just more in a monitoring mode but I think at some point, that certainly could be an option for us. But right now, in a really good spot from a cash flow liquidity standpoint. So in no rush, and I think we'll remain opportunistic.

We've reached the end of the Q&A session. Thanks for joining us. You may now disconnect.