Post Holdings, Inc. (NYSE:POST) Q4 2019 Earnings Conference Call - Final Transcript

Nov 22, 2019 • 09:00 am ET

Previous

Post Holdings, Inc. (NYSE:POST) Q4 2019 Earnings Conference Call - Final Transcript

Share
Close

Loading Event

Loading Transcript

Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from the line of Chris Growe of Stifel.

Analyst
Chris Growe

Hi, good morning.

Executive
Jeff A. Zadoks

Hey, Chris.

Analyst
Chris Growe

Hi. I just wanted to ask if I could first, Rob, in relation to the guidance you gave for the year for Post, I guess first of all, you talked about a 3% long-term rate. Is that a reasonable rate for the company going forward? And then just understand kind of the factors that could push it to the upper end or the lower end. Are there some areas that whether be costs or maybe some of the capacity constraints that may limit your EBITDA growth in 2020?

Executive
Robert V. Vitale

Yes, we've long talked about the 3% being the long-term algorithm when you break the portfolio into roughly half cash generation, half growth, and those aren't pure definitions because both sides of the business do both aspects of growing and generating cash flow. But the, in terms of what would make the guidance higher or lower, it's a $50 million range on at the midpoint, just shy of 1.25. So relatively small changes could impact that range, you know cereal category being zero instead of down 1 is a meaningful contribution to that, slight changes in the demand equation on any of our -- where rapidly growing businesses could change that and then certainly there are cost implications throughout the portfolio. It's a six business unit portfolio. So there are lot of moving pieces that could impact that guidance range.

Analyst
Chris Growe

Okay. And just one follow-on question that I, and you have six different businesses as you noted, but just from like an input cost inflation and maybe in relation to, whether it be pricing or opportunity that offset that inflation, how would you look at that balance? We're not going through each business but in general for fiscal '20?

Executive
Robert V. Vitale

So I think it's important to note that I precisely mentioned inflation in the context of the retail business because of the Foodservice business while it has inflation, has a different pricing mechanism that we've talked about. So we tend to think about inflation different in that sector. So it really impacts our more traditionally priced retail businesses. And I think that when you look at the commodity infrastructure around sugar, grains, corn, we are seeing -- oats, we're seeing what I would characterize as modest but persistent inflation across the categories and that through mix pricing, promotional activities, and cost reduction, we expect to be able to offset enough of it to maintain the 3% growth that we have predicted.

Analyst
Chris Growe

And just, sorry, one quick follow-on, are there any businesses where you've announced price increase already for this year for any of your divisions?

Executive
Robert V. Vitale

Carryover but not new.

Analyst
Chris Growe

Okay, thanks so much.

Executive
Robert V. Vitale

Thank you.

Operator
Operator

Our next question comes from the line of Andrew Lazar of Barclays.

Analyst
Andrew Lazar

Good morning, everybody.

Executive
Robert V. Vitale

Good morning, Andrew.

Analyst
Andrew Lazar

So first off, I think there seems to be some building concern over the fact that Post has been a