Post Holdings Reports Avian Influenza at Third-Party Contracted Facilities and Affirms Fiscal Year 2024 Adjusted EBITDA Outlook

Rhea-AI Summary

Post Holdings (NYSE:POST) has reported avian influenza cases at two third-party contracted egg-laying facilities. These farms, located in Minnesota and Iowa, house about 5.7 million hens, constituting roughly 14% of Post's egg supply. Despite this, the company has reaffirmed its fiscal year 2024 Adjusted EBITDA guidance, projecting between $1,335 million and $1,375 million. The financial impact of the avian influenza cases is considered manageable within this range. Notably, this guidance does not account for a significant outbreak, the effects of which are unpredictable. Further updates will only be provided if additional cases impact more than 5% of the controlled supply.

Positive

• Post Holdings reaffirmed its fiscal year 2024 Adjusted EBITDA guidance of $1,335-$1,375 million.
• The financial impact of the avian influenza cases is expected to be manageable within the projected EBITDA range.
• Post management maintains confidence in their financial outlook despite the incidents.

Negative

• Avian influenza detected at two third-party contracted facilities in Minnesota and Iowa.
• These facilities account for approximately 14% of Post's controlled egg supply.
• Further significant outbreaks of avian influenza are not factored into the current financial guidance and pose unknown risks.

Insights

Financial Analyst

Post Holdings, known for its consumer packaged goods, faces a significant challenge due to avian influenza incidents at third-party contracted egg-laying facilities. These facilities account for approximately 14% of Post's controlled egg supply, which includes both owned and third-party farms. Despite the disruptions, the management has reaffirmed its non-GAAP Adjusted EBITDA guidance for fiscal year 2024 at $1,335-$1,375 million. This demonstrates confidence that the financial impact is manageable within their expected range.

For a retail investor, it's important to note that the affirmation of the EBITDA guidance suggests that the company has buffers in place to handle such operational disruptions without severely affecting financial performance. However, one should consider the caveat that the guidance does not account for a significant expansion of avian influenza outbreaks, which adds an element of uncertainty.

The absence of reconciliation for non-GAAP measures might obscure some underlying issues. Retail investors should be cautious and consider the potential risk of further outbreaks, even though management's current outlook appears stable.

Market Research Analyst

The avian influenza at Michael Foods' facilities could have broader market implications for Post Holdings. Given that approximately 14% of their controlled egg supply is affected, we might see a ripple effect in terms of supply chain disruptions and potential cost increases. This could lead to higher prices for egg-based products, directly impacting Post's pricing strategy and potentially affecting consumer demand dynamics.

It's significant that Post is maintaining its current EBITDA guidance. This suggests they have either hedged against such risks or have contingency plans in place. However, the market should remain vigilant for further updates, particularly if the outbreak spreads beyond the current facilities. If additional disruptions occur, this could strain Post's ability to maintain supply and manage costs.

For retail investors, understanding the market's reaction to such incidents is crucial. While Post's immediate financial outlook remains stable, any further outbreaks could shift market sentiment quickly.

Agricultural Expert

From an agricultural perspective, the avian influenza incident highlights vulnerabilities in the supply chain. The virulence of avian influenza can lead to significant losses in poultry populations, impacting egg production and supply stability. The affected facilities in Minnesota and Iowa, housing about 14% of Post's controlled supply, underscore the potential for this issue to escalate if not managed properly.

The company's reliance on a mix of owned and third-party contracted farms might diversify the risk but also complicates containment and control measures. The USDA's APHIS division tracks these incidents, but the non-inclusion of potential widespread outbreaks in the current fiscal guidance means there is a level of risk that investors need to monitor closely.

For retail investors, understanding the agricultural risks and their potential impact on supply chains can provide deeper insights into how such incidents might affect not just Post Holdings but the broader food industry as well.

ST. LOUIS, May 29, 2024 (GLOBE NEWSWIRE) -- Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding company, today provided information regarding avian influenza incidents at two of Michael Foods’ third-party contracted egg-laying facilities. Post also affirmed its non-GAAP Adjusted EBITDA guidance for fiscal year 2024.

Avian Influenza Discussion

Michael Foods’ third-party contracted egg-laying flocks in Minnesota and Iowa tested positive for avian influenza. The facilities house approximately 5.7 million egg-laying hens, or approximately 14% of Post’s controlled supply, inclusive of owned and third-party contracted farms.

Fiscal Year 2024 Outlook

Post management affirmed its outlook for fiscal year 2024 Adjusted EBITDA of $1,335-$1,375 million, as Post management believes the related financial impact is within the tolerances of the range. The guidance range does not incorporate a significant expansion of avian influenza within Post’s network, the impact of which is uncertain.

The APHIS division of the USDA and individual states track and report individual incidents of avian influenza. Post does not expect to provide additional updates on specific incidents unless the cumulative effect of subsequent incidents exceeds an additional 5% of Post’s controlled supply.

Post provides Adjusted EBITDA guidance only on a non-GAAP basis and does not provide a reconciliation of its forward-looking Adjusted EBITDA non-GAAP guidance measure to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for income/expense on swaps, net, gain/loss of extinguishment of debt, net, integration and transaction costs, mark-to-market adjustments on commodity and foreign exchange hedges and equity securities, equity method investment adjustment and other charges reflected in Post’s reconciliations of historical numbers, the amounts of which, based on historical experience, could be significant. For additional information regarding Post’s non-GAAP measure, see the related explanation presented under “Post’s Use of Non-GAAP Measure.”

Post’s Use of Non-GAAP Measure

Post uses Adjusted EBITDA, a non-GAAP measure, to supplement the financial measures prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Adjusted EBITDA is not prepared in accordance with U.S. GAAP, as it excludes certain items, and may not be comparable to similarly-titled measures of other companies. Management uses Adjusted EBITDA as a key metric in the evaluation of underlying company and segment performance, in making financial, operating and planning decisions and, in part, in the determination of bonuses for its executive officers and employees. Additionally, Post is required to comply with certain covenants and limitations that are based on variations of EBITDA in its financing documents. Management believes the use of this non-GAAP measure provides increased transparency and assists investors in understanding the underlying operating performance of Post and its segments and in the analysis of ongoing operating trends. 

Prospective Financial Information

Prospective financial information is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the prospective financial information described above will not materialize or will vary significantly from actual results. For further discussion of some of the factors that may cause actual results to vary materially from the information provided above, see “Forward-Looking Statements” below. Accordingly, the prospective financial information provided above is only an estimate of what Post’s management believes is realizable as of the date of this release. It also should be recognized that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecasted. In light of the foregoing, the information should be viewed in context and undue reliance should not be placed upon it.

Reliance on Third-Party Information

With respect to the references to APHIS and state tracking systems of avian influenza, Post acknowledges that such third parties make no representation or warranty concerning the content, accuracy, completeness, availability or timeliness of any information contained therein. Post makes no representation or warranty regarding the accuracy, completeness or reliability of any schedule, report or other information provided by such third parties. Post has not independently verified any of the data from third-party sources nor has it ascertained the underlying facts on which such data is based.

Forward-Looking Statements

Certain matters discussed in this press release are forward-looking statements. These forward-looking statements are made based on known events and circumstances at the time of release, and as such, are subject to uncertainty and changes in circumstances. These forward-looking statements include Post’s Adjusted EBITDA outlook for fiscal year 2024. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include the recent avian influenza outbreak in the U.S. and the impact of the avian influenza incidents described above on Post’s financial results and other risks and uncertainties described in Post’s filings with the Securities and Exchange Commission. These forward-looking statements represent Post’s judgment as of the date of this release. Post disclaims, however, any intent or obligation to update these forward-looking statements. All forward-looking statements in this release are qualified in their entirety by this cautionary statement.

About Post Holdings, Inc.

Post Holdings, Inc., headquartered in St. Louis, Missouri, is a consumer packaged goods holding company with businesses operating in the center-of-the-store, refrigerated, foodservice and food ingredient categories. Its businesses include Post Consumer Brands, Weetabix, Michael Foods and Bob Evans Farms. Post Consumer Brands is a leader in the North American ready-to-eat cereal and pet food categories and also markets Peter Pan^® peanut butter. Weetabix is home to the United Kingdom’s number one selling ready-to-eat cereal brand, Weetabix^®. Michael Foods and Bob Evans Farms are leaders in refrigerated foods, delivering innovative, value-added egg and refrigerated potato side dish products to the foodservice and retail channels. Post participates in the private brand food category through its ownership interest in 8th Avenue Food & Provisions, Inc. For more information, visit www.postholdings.com.

Contact:
Investor Relations
Daniel O’Rourke
daniel.orourke@postholdings.com
(314) 806-3959

Media Relations
Tara Gray
tara.gray@postholdings.com
(314) 644-7648

FAQ

What is the fiscal year 2024 Adjusted EBITDA guidance for Post Holdings (NYSE:POST)?

Post Holdings has provided an Adjusted EBITDA guidance range of $1,335-$1,375 million for the fiscal year 2024.

How many egg-laying hens are affected by the avian influenza at Post Holdings' contracted facilities?

Approximately 5.7 million egg-laying hens are affected, which represents about 14% of Post's controlled supply.

Where are the avian influenza incidents reported in Post Holdings' supply chain?

The avian influenza incidents were reported at third-party contracted egg-laying facilities in Minnesota and Iowa.

Will Post Holdings provide updates on avian influenza incidents?

Post Holdings will only provide additional updates if the cumulative effect of avian influenza incidents impacts more than an additional 5% of the controlled supply.