USA- Post Holdings, Inc. is set to inject up to US$100 million into its pet food operations in 2024, as the company looks to further capitalize on the success of its recent foray into the pet food category earlier this year.
The announcement comes as part of the company’s report on its fourth-quarter and full-year fiscal 2023 earnings, released on Nov. 16.
Post Consumer Brands, which encompasses the company’s pet food, cereal, and peanut butter divisions, reported a significant boost in net sales for the fourth quarter, reaching US$1.01 billion, marking a substantial 71.5% year-over-year increase.
Pet food sales played a pivotal role, contributing approximately 40% of the quarterly revenue with a total of US$404.5 million.
The fourth-quarter segment profit for Post Consumer Brands soared to US$141 million, reflecting a remarkable 72% increase compared to the previous year. The segment’s adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) rose to US$199.7 million, marking a substantial 73.1% increase year-over-year.
For the full year of 2023, Post Consumer Brands reported net sales of US$3.03 billion, showcasing a significant 35.2% year-over-year growth. Pet food sales contributed US$679.8 million, accounting for approximately 22.4% of the annual revenue.
The segment profit for the year reached US$378.8 million, up by 20.4% compared to the previous year, and the segment-adjusted EBITDA reached US$578.4 million, representing a 26.7% increase year-over-year.
Post Holdings made strategic moves to strengthen its position in the pet food market, acquiring several brands from The J.M. Smucker Co. for US$1.2 billion in February.
The company is also finalizing the acquisition of Perfection Pet Foods for US$235 million, with expectations that the deal will be completed in the fourth calendar quarter of 2023, subject to closing conditions.
Despite the overall positive performance, the company did experience a decline in net earnings from operations in the fourth quarter, totaling US$65.7 million, reflecting a 21.7% year-over-year decrease. Adjusted EBITDA for the quarter, however, reached US$349.0 million, a substantial 24.8% increase year-over-year.
Looking ahead, Post Holdings outlined its full-year 2024 guidance, which includes capital expenditures ranging between US$400 million and US$425 million. Of this, US$90 million to US$100 million will be allocated to enhance quality, safety, capacity, and distribution for its pet food segment. The company also plans to establish a pilot plant further to support its expansion into the pet food market.
Post Holdings expects adjusted EBITDA for the full fiscal year of 2024 to fall between US$1.20 billion and US$1.26 billion, excluding any potential benefits from the pending acquisition of Perfection Pet Foods. The guidance reflects the company’s commitment to sustained growth and optimization in its diversified portfolio.
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