Hello, and welcome to the Post Holdings first quarter 2022 earnings conference call and webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer, and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be made available for replay beginning at 12:00 P.M. Eastern Time. The dial-in phone number is eight hundred eight thrity nine five three two four. No passcode is required. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Post Holdings for introductions. You may begin. Good morning, and thank you for joining us today for Post first quarter fiscal 2022 earnings call. With me today are Rob Vitale, our President and CEO, and Jeff Zadoks, our CFO. Rob and Jeff will begin with prepared remarks, and afterwards, we'll have a brief question-and-answer session. The press release that supports these remarks is posted on our website in both the Investor Relations and the SEC filings sections at postholdings.com. In addition, the release is available on the SEC's website. Before we continue, I would like to remind you that this call will contain forward-looking statements, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. Additional information regarding these risks and uncertainties is discussed under the Forward-Looking Statements section in the press release we issued yesterday and other press releases we have issued with respect to the proposed distribution of our interest in BellRing Brands, which are posted on our website. We also urge you to read the registration statements, the proxy statement and prospectuses, the related amendments of these filings and other documents related to the proposed distribution of our interest in BellRing Brands that have been and will be filed with the SEC because they contain important information. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. Finally, this call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday, posted on our website. With that, I will turn the call over to Rob. Thank you, Jennifer, and thank you all for joining us. Despite a challenging environment, we delivered a quarter largely in line with expectations, and we continue to maintain our expectations for the full year. However, as you all know, the degree of uncertainty remains high, and we face variables that lend both risk and upside to our outlook. While our outlook continues to be presented on a basis consolidated with BellRing, respective outlook remains largely unchanged. We will initiate Post remaining co-guidance no later than our next earnings call, by which time we expect the separation to have been completed. With respect to the separation execution, I have some updates. First, we've been cleared by the SEC to move forward with the transaction. Second, we expect to complete the transaction by the end of March. Third, we expect the amount of cash that will be distributed to BellRing stockholders, including Post, to be approximately $400 million. Finally, we will pro rata distribute approximately 78 million BellRing shares rather than exchange any of them for Post shares. This transaction required and continues to require considerable effort across both organizations, and I want to thank everyone involved. With respect to near-term business results, each segment had two overarching themes. First, cost inflation ran ahead of pricing actions. We have taken the pricing needed to offset known inflation in all segments, but with varying effective dates. Second, each segment had unmet customer demand resulting from shortages in labor inhibiting production and/or shortages in transportation resulting in unshipped orders. In U.S. Cereal, consumption for our branded products continues to run ahead of pre-COVID levels by nearly 2%, and our related market share is just shy of 20%. Pebbles, in particular, continues to show strong growth. Last quarter, I mentioned we may have seen an inflection point in the value trade, and so far that is holding. Our value segment sequentially improved throughout the quarter. A shift to value in the category is margin dilutive to Post, but it's profit accretive. Foodservice performed as expected, meaning it had a weak profit quarter as this segment was the one most dramatically impacted by costs running ahead of pricing. This refers to non-pass-through prices, as pass-through prices automatically reset. We have taken nearly $150 million in annualized pricing with the majority beginning in Q2, but includes pricing occurring into the third quarter. Moreover, labor gaps persist in foodservice. However, no plant was worse and several improved. We continue to expect sequential improvement towards recovery to pre-pandemic levels of profit in 2023. During the second quarter, we are experiencing some soft demand resulting from the Omicron COVID variant. Nevertheless, we now understand that the volumes bounce back quickly as variants recede, and we expect the softness to be limited to a month or two. Refrigerated retail made great strides this quarter. Our staffing levels are much improved, and we saw far greater capacity utilization. Most products remain on allocation, so we remain below our potential, but I am quite pleased with the progress. Weetabix continues to be a rock-solid performer. All the factors our U.S. businesses face are present in the key U.K. market, but pricing and mix is pacing favorably. BellRing will have its call shortly. Suffice to say that it continues to perform well in a great category, but that current year results are constrained by insufficient capacity. On balance, I would say we navigated the first quarter effectively. We feel good about how we are managing the controllables, and we are remaining nimble enough to adapt to curve balls as they come our way. In terms of capital allocation, we continue to be an active buyer of our shares. Jeff will provide the detail. Recent M&A is performing to plan with the exception of Almark, which has seen costs accelerate ahead of pricing. We expect pricing action return it to our underwriting case as the volumes are exactly in line with expectations. We continue to actively explore acquisition opportunities, both large and small, across the business. We will not undertake an acquisition that jeopardizes our execution in a challenging year, but we believe there are opportunities to find value that complements our efforts. I wanna close with some comments about our outlook. We expect to see similar aggregate results in Q2, with considerable improvement in food service and the expected sequential decline at BellRing. We then expect significant second half acceleration stemming from price realization, improvements in supply chain execution, food service volume recovery, and BellRing capacity expansion. As I mentioned, assuming the spin proceeds to plan, we will provide separate standalone guidance for the remaining business no later than our May call. Thank you for your time this morning and your continued support. With that, I will turn the call over to Jeff. Thanks, Rob, and good morning, everyone. First quarter consolidated net sales were $1.6 billion, and adjusted EBITDA was $263 million. Net sales increased 13% and benefited from approximately $98 million from recent acquisitions, volume demand recovery in the food service segment, and pricing actions across each segment. Higher manufacturing input and freight costs continued to pressure margins this quarter, and internal and external labor shortages disrupted supply chains. Similar to last quarter, throughput declined and per unit product costs increased. Additionally, our customer order fulfillment rates suffered. Turning to our segments and starting with Post Consumer Brands, net sales and volumes increased 14% and 8% respectively. Excluding the benefit from the private label cereal and Peter Pan acquisitions, net sales and volumes declined 1% and 9% respectively. This primarily resulted from year-over-year softness across value and private label cereal products and our exit of certain low margin business. Honey Bunches of Oats was also a driver of the decline as we lapped the prior year club promotional activity that did not repeat this year. Cereal average net pricing increased 9%, driven by favorable product mix and pricing actions. Adjusted EBITDA decreased 5% versus prior year, primarily driven by higher manufacturing costs resulting from supply chain disruptions across freight, supplier reliability, and warehousing. These disruptions drove declines in throughput and along with lower volumes, poor fixed cost absorption, causing higher manufacturing cost per pound of production. Our pricing actions mitigated the effect of raw material and freight inflation. Weetabix net sales increased 4.5%, benefiting from a stronger British pound to US.. Dollar exchange rate and higher average net selling prices reflecting lower trade spending and base price increases. Volumes declined 4% as growth in new products was not enough to offset declines in all other products. Specifically, prior year benefited from COVID-related increase at home consumption and customers increasing inventory ahead of Brexit. Supply chain disruptions, most notably in packaging and transportation availability, contributed to the volume declines and drove a 3% decline in adjusted EBITDA. Our food service business saw net sales and volume growth of 24% and 13% respectively and were lifted by higher away from home demand and distribution gains. Revenue growth continued to outpace volume growth as revenue reflects the impact of our commodity cost pass-through pricing model and other pricing actions. Although we saw year-over-year growth this quarter, total segment volumes remained below pre-pandemic levels. Adjusted EBITDA was relatively flat to prior year, benefiting from volume recovery and improved average net pricing, which was only able to partially offset increases in freight costs or fixed cost absorption and other costs to produce. We expect the price cost relationship to significantly improve in the second quarter as more of our pricing actions take effect. Refrigerated retail net sales increased 4% and volumes decreased 5%. Excluding the Egg Beaters and Almark acquisitions and Willamette Egg Farms, the business we divested on December 1, net sales and volumes declined 2% and 7% respectively. Pricing actions drove increases in average net pricing for side dish, sausage, and cheese products. Supply chain constraints, most notably around labor availability, suppressed side dish and sausage volumes. Recall our ability to build our side dish inventory ahead of the holiday demand spike was limited. Adjusted EBITDA decreased to approximately $36 million and was pressured by lower volumes, significantly higher soy oil, cheese and egg input costs, increased freight, and higher manufacturing costs. BellRing net sales increased 8% from pricing actions across both Premier Protein and Dymatize. Premier Protein net sales increased 4.5%, a slower rate than recent quarters, resulting from shake capacity constraints. Dymatize net sales grew 41%, benefiting from price increases, strong velocities, and distribution gains. Higher raw material and freight costs You can hear further detail about BellRing's results on our conference call later this morning. Moving to cash flow, we generated $106 million from operations and increased slightly, reflecting a decrease in payables and increased inventories for U.S. cereal and powders at BellRing. During the quarter, we purchased 1.5 million of our shares at an average price of $103.37 per share. Our remaining share repurchase authorization is approximately $330 million. Our net leverage at the end of the first quarter is measured by our credit lines. On this basis, we expect to deleverage between three-quarters and a full turn once we have permission of BellRing. We anticipate completion of all steps will reduce Post's gross debt to $6 billion. During the quarter, we issued $500 million in principal value of senior notes as a tack-on to our 5.5% senior notes due in December 2029. Our debt ladder remains low-cost, insulated from rising interest rates. When combined with flow, we maintain significant financial flexibility. With that, I'd like to turn the call back over to the Operator for questions. At this time, if you would like to ask a question, please press star one on your touch-tone phone. You may withdraw your question at any time by pressing the pound key. Once again, that is star and one. We will take our first question from Andrew Lazar with Barclays. Please go ahead. Great. Good morning, everybody. Good morning. Rob, I think when Post provided its initial fiscal 2022 EBITDA guidance, I think it was predicated on, you know, and labor markets have sort of normalized. Obviously you reaffirm. I'm trying to get a better understanding, I guess, of if in your view, inflation has peaked and labor expectations have played out as you initially built into guidance, or maybe it's more of a matter of having guidance to deal with what still feels like a very unsettled environment, at least in listening to, you know, some things so far. Maybe you could or I'm trying to get a feel for how that played out and what that means for your expectations on those metrics right as we go into the latter part of the year. Yeah. First, I would say that it certainly remains an unsettled environment, so we're not trying to with that comment. What I would characterize the year is shaping up to reflect is a pretty strong ability to get pricing where needed so that the P&L pricing net of cost, while negative this quarter, is moving in the right direction. We feel good about that vis-à-vis inflation. Now obviously, if inflation accelerates from here, that could have a different potential outcome. I would say that the labor situation and supply chain is not worse, and it is marginally better. We are significantly better in some segments, and we are no worse than others. I feel that, you know, specifically to Post, we're making progress. I would by no means wanna say that it's smooth sailing ahead. We still have some choppy waters. You know, sitting here a quarter in, you know, we still have a, I think, good shot at delivering on our expectations for the year barring dramatic changes in the macro environment. I think you mentioned it might have been specific to Post Consumer Brands, but I wanna make sure I understood it, that your comments from last quarter about having just really started to see a bit of an inflection in sort of the value brands, you know, sort of private label side of things, it has been holding. That's correct. Yeah. Is that specific to Post Consumer Brands or does that go for sort of 8th Avenue as well? The reason I ask is interest across the space in terms of either trade down or private label trends still just not really seeing it in the broader industry data. Maybe that's not exactly how your specific businesses are behaving. I'm trying to get a little bit more clarity on that and what you're seeing. Yeah. The comment was specifically related to Post Consumer Brands, where we saw a flattening of our value segment, which includes the Post private label. It was a fairly dramatic flattening after some double-digit calendar year approach. There are some exogenous factors. Of course, there was a competitor with some strike issue creating some strange factors in the demand attributing. But we've also seen some improved volumes in our private label businesses and 8th Avenue volumes, although margins are under pressure. You know, by no means is this data that you could extrapolate very far, but it reinforces what we thought. Okay. Then just lastly would be, I think we'll get into a lot more detail on this on the BellRing call, but I may have heard you say that expect a deceleration at BellRing driving that. Thanks so much. From a promotional cadence and a new year, new you, shipping timing to have a sequential dip into Q2. Nothing more than the normal and was already factored into the prior guidance and prior expectations. Great. Thank you. Chris Growe with Stifel. Please go ahead. Hi, Chris. Hi, good morning. I just had a question if I could ask you first in terms of the proposed spin-off of the BellRing shares, just to get your perspective on that and for the part of the distribution on why just a spin-off. Or is that BellRing valuation, Post valuation? Just want to get some thoughts on why you settle on a spin-off of the shares. to when we announced it, we tried to announce the whole smorgasbord of opportunities to execute because these things have, I mean, a long execution timeline, so you're trying to hit them early as we approach execution point. It strikes us that there's significant opportunity in both shares, and it doesn't make sense to trade one for the other when overvalued. You know, we would rather let our shareholders have the value in each share, not incur the frictional cost of the premium related to exchange. Shareholders can prefer without us having incurred the cost of a premium from a Post side and a discount from a BellRing side. Yeah. I guess I'm just curious, a split-off would be a way for Post to retire a large chunk of its shares, depending on how much it, you know, it would split off. That aside now, assuming that does not occur, would you expect to be more aggressive with this improved balance sheet once you get the distribution completed? Well, let me go back to the premise of the question. I think, yes, we would have had an opportunity to shrink a lot of BellRing shares, but at a cost of using. Yeah. What we think are very attractively priced, meaning low-priced BellRing shares. A way to shrink a lot of Post shares at what we think would have been a very expensive cost in terms of giving away a lot of upside for BellRing. Going back to the second part of the question, we certainly are aggressive in share buybacks once the transaction is complete. But as we always do, we give opportunities to invest externally as well. We wouldn't necessarily commit to a course. We view that as one possible course. One quick one, if I could. Some missed sales or lost sales opportunities throughout the business. I guess I'm curious, do you have any frame of reference for how much that is? Or I'm sure it depends by business, no doubt. Just, is that just less of a factor in Q2 and Q3? Does it just get based on your expectations, I guess, for labor and your availability of product? Our supply chains are certainly getting better. The larger driver is that we are continuing to see that we are unable to get trucks to move product, and we have inventory sitting in the wrong place. You know, it's worse, perhaps slowly getting better, but the load-to-truck factor is still very high, historically high. We're not through the woods yet on transportation, both cost and availability for months. Okay. Thanks so much for your time. We'll take our next. Michael Lavery, please go ahead with Piper Sandler. Your line is open. Good morning. Excuse me. Yeah, good morning. Thank you. I just was curious if you could give a little bit. I know in the past you've given that standalone financial information. Unless I may have missed it somehow, I don't think I saw that this time. What's the update on how that's doing? Business has underperformed. We've been on the wrong side of the pricing versus cost inflation, and we are attempting in fiscal 2022 to have that. We expect to underperform our longer term expectations through 2022 and see recovery in 2023 as the pricing annualizes. Previously discussed execution issues around expanding. We continue to very much like the category. The pricing will come through, but it's taken longer than we expected. From an overall Post perspective, we don't talk about it much because from a contribution to our overall value, we took out investment a couple of years ago, and we have what amounts to an option value position. Simply from a matter of relative value, we don't talk about a lot, but we still think that there is long-term value to the company that is set back a couple of years by some external and some internal factors. Okay. That's really helpful. Thank you. Weetabix, you know, partly from different COVID restriction dynamics, the entire grocery store in the U.K. is seeing declines. Even excluding currency, it looks like, honestly, it sounds like driven by pricing. But is that a timing shift? Can you help us understand a little bit of what's giving you such a lift there? Partly with that in mind just how to think about modeling the rest of the year. Yeah, about a share point in driver as well as pricing. You know, between the two, that has given us the lift that you're reflecting on. Currency would a similar kind of modest, you know, flat to slightly up be probably appropriate for the balance of the year? British pound. In currency, if you go back a couple of years, Jeff, you wanna... Yeah. This quarter was slightly favorable. On a year-over-year basis, it's slightly unfavorable. Okay, great. Thanks a lot. We'll take our next question from Bill Chappell with Truist Securities. Please go ahead. Hey, Bill. Thanks. Good morning. Morning. Hey, Rob, can you just give us kind of as we're going into 2022 what's your thoughts on the state of the cereal market both U.S. and U.K.? I mean, I guess the thought is there were certainly more consumers that came into the category with the start of the pandemic. They probably extended as the pandemic has extended. The concern is or the question is you know how many of those consumers do we retain as one day the pandemic ends or people go back to kind of their normal lives? How much of that drop off have we already seen or and how much do we see kind of in the future? Just, you know, any that much better than it was two, three years ago in terms of health or are we gonna go back to kind of where it was two, three years ago? You're asking somewhat of a crystal ball question, of course. You know, I'll treat it with that level of specificity. I won't hold you to it. I think that you know, first of all, it's been a difficult analytic process because we've had external factors. You know, I think that some consumers left just this past quarter because of unavailability of product. You know, if my intuition, and that's what it is, tells me that we're in a 0%-1%, maybe 1.5% growth, once you get through the noise of, you know, a key strike, the different variants, the premiumization. Once you factor all that out and get into a normal run rate, you're somewhere between 0% and, you know, 1%, 1.5%, which is, you know, 100 basis points-200 basis points better than it was pre-pandemic. Then, of course, there's whatever the new pricing dynamic is going forward from today. Got it. You think we're at the normal level, not necessarily have a drop to on a volume basis to come? I think that's right. I think we actually could see some volume pick up. You certainly saw some consumers, you know, with the Kellogg's strike. You probably saw some consumers make different choices that I expect will come back to the category as those brands are more completely distributed. You've seen a couple of different- Got it. exogenous events. Just as a follow-up on that, if you look or follow up to kind of Andrew's question, as you look across your categories, do you see any one being more or less elastic than the others, as you pass on these pricing? You know, not yet. It's very low across the landscape. Okay, great. Thank you. Thank you. We'll take our next question from Jason. Jason English with Goldman Sachs. Please go ahead. Jason. Hey. Good morning, folks. Can you hear me? Yes. Sorry. I wasn't sure if I was on mute or not. Food service, your annualized is somewhere around $160. Rob, I think I heard you say you expect to be back to pre-COVID levels in fiscal 2023, which suggests around $310. We've got to walk from a $160 run rate to $310, $150 gap, get us there. I think I heard you talk about a lot more pricing. Like, is that over and above the commodity pass through? I'm sure you're gonna get hit with some other offsets. They're gonna eat into some of that. I'm sure you also have a lot of operational improvements you're trying to attack. Just help me get the building blocks so that I and the investors get comfortable. Let's keep it real simple and just say you take the current quarter times four and add $150 million of pricing. That gets you to $310. Um, There are puts and takes on that. You know, there's gonna be some improvement. I mean, there's gonna be some operational improvement, there's gonna be some additional cost. I'm trying to keep that as a very simplistic, but net versus the cost we've already incurred, you get, it's a pretty clear runway. Let's say that $150 annualized run rate in 2Q, probably not all but flowing through by 2Q, but it should be in 3Q. Are we back to that sort of run rate as fast- No, no. It'll be phased in throughout Q2 and Q3, so it's much more of a run rate build. It could- Okay. We can at least look for it. With confidence for Q4 in 2023 than trying to reflect on 2022. Understood. I guess I'll just pass it on. I've got more questions, but I'll leave some for the others. Thanks. Thanks, Jason Next question from Rob Dickerson with Jefferies. Please go ahead. Great. Thanks so much. Two quick questions. Just given all the commentary on, you know, pricing P&OC, margin getting progressively better as we get through the year, obviously, gross margin was down, you know, substantially in Q1. Then, you know, to get to kind of the guide on the EBITDA side, I mean, it seems as if, you know, kind of the sequential progression in Q2 should get better relative to year-over-year in Q1, but then as pricing is kind of fully implemented throughout the year, you know, should we be assuming that you should be able to recover essentially, you know, at least the majority, if not all and more of that gross margin pressure you saw in Q4? Basically gross margin up kinda as we exit the year. Well, let me make the way you sequenced it because in my comments, I made the reference that Q2 will look a lot like Q1. The real step-up is Q2 to Q3, not Q1 to Q2. While there, you know, there could be slight marginal improvement, we really have a first half, second half story because of the timing of the pricing. Yep. If the rest, vis-à-vis prior year, I would say the answer is yes, we can see getting back to prior levels, but prior levels too had some noise in them. I don't particularly wanna comment on long-term gross margins right now because I think there are too many variables yet to play out. We certainly feel like we can expand margins back to where they started or at least ended the last year. Okay. Fair enough. Helpful. Then just secondly, as we kind of all go through the different segments, you know, volumes, you know, down a bit, not down in all categories, some commentary, you know, just around some capacity constraints. You know, but, you know, as we look at, you know, Q3, and in the back half just overall. I'm just curious, you know, is there a kind of expectation that maybe the capacity environment, you know, for you specifically, you know, just in side dishes, let's say, can get a little bit better as whereas, you know, elasticity holds and consumer demands there that there could be an expectation for that business to gradually improve as well as we get through the year. That's it. Thanks. Yeah, very much so. I think that one of the things that I think is important to keep in mind is that the particular timing of the capacity pinch point in refrigerated retail was a challenge for 2022 because it's the one business that we have that has a considerable amount of holiday seasonality. We were not able to build the inventory that we normally would have built to support Thanksgiving and the Christmas holidays. Absent that volume, you know, we will track below prior year. If you look quarter- to- quarter, we're gonna accelerate through the year because capacity is expanding pretty dramatically as we get the staffing levels back to where they need to be. We feel, you know, despite the fact that year-over-year was a challenging quarter, I'm very optimistic about the refrigerated retail segment because recognizing that, you know, come the next holiday season, we're gonna be in a much better position. All right. Super. Thanks, Rob. Thank you. We'll take our final question from Ken Zaslow. Hey, good morning, guys. Hey, Ken. Just two questions. What actions can you take and have you been taking to ease the labor and transportation? Are there things within your control that you've been doing to change the direction of how that is, how that's happening? Well, labor is easier and more controllable for us than transportation because by and large, we're a buyer of transportation. On labor, of course, there's cost of labor, but there's also things like work rules, trying to facilitate transportation of workers in this case. We're looking at all things around culture, retention, the way we pay, the frequency that we pay, how we get people to and from work, how we recruit to different communities, all the things that you know, companies like ours are doing. It's a pretty broad array of tools we're trying to. You know, we're a price taker in a commoditized market right now, so that one's a bit tougher. We have some businesses that have longer contracts and some that have shorter contracts. The key variable is where you are in contract cycles right now. Okay. Just longer term, you know, you do it every now and then, and you kinda give, like, hey, how you think of the longer term businesses of where you are. Can you give a quick view on that? It's been a little bit just because there's been some obviously COVID and there's been, you know, some issues going on. Can you just frame a little bit of where you think the growth of each of the businesses are? Again, you know, 15 seconds, 20 seconds per one. Just wanted to make sure that we're aligned with how you're thinking about it longer term, not just this year. Yeah, on this forum I'll do that qualitatively versus quantitatively vis-à-vis how we thought about it pre-pandemic. If you think about both in the U.S. and the U.K., we view it as a you know steady maybe a slightly faster growing or slower shrinking business than it was previously at the volume line with better pricing and steady cash generation really similar to the way it performed previously. With refrigerated retail you know specifically around the Bob Evans side dish business, we have you know equal if not more confidence in the in the quality of that character and our position in it. That one is very difficult to prove out through the numbers right now because there's been so much disruption around supply chain and staffing. You know, we clearly see as the staffing and availability of product comes back, so too does the demand. If you look at our food service business and BellRing, I think you know what we think about BellRing. We continue to believe it's got very substantial growth ahead of it. As I've already talked about in terms of the decision to spin versus split, we are acting in alignment with that expectation of further growth. Food service is the one that obviously gets the most attention, and you know, we would have to argue that once we get through the rebase of the crisis or the pandemic, and we see where volumes settle, that our growth trajectory is really consistent with where we entered the pandemic. What we don't know, still two years in is, you know, where does travel ultimately land? Where do offices ultimately land? You know, there may be a couple of points of exposure to the baseline, but we think the growth is intact. As always, I appreciate it. Thank you guys very much. Thank you. This does conclude today's Q&A session, as well as our conference call for today. You may now disconnect your lines and have a great day. Thank you.