Post Holdings, Inc., announced fourth-quarter net sales of nearly $1.45 billion, a 14.9% jump from $1.27 billion for the same period in 2016.
Gross profit for the quarter was $437.1 million, an increase of $59.7 million compared to the final quarter of last year. Operating profit rose 7.2% to $116.1 million, while adjusted earnings before interest, taxes, depreciation, and amortization increased 30.5% to $286.4 million.
The St. Louis-based company said it expects its fiscal 2018 adjusted EBITDA to range between $1.14-$1.18 billion. This does not include the pending acquisition of Bob Evans Farms. Post noted it also expects to incur about $25 million in integration costs for both Bob Evans and its recent acquisition of U.K. cereal company Weetabix.
The fourth quarter seems to have been the charm for Post Holdings, which saw sales and profits increase for all four segments of the company.
Its Active Nutrition segment — including PowerBar, Premier Nutrition brands and Dymatize — led the pack with sales up 21.6%. This makes sense as the protein market continues to heat up. According to Zion Market Research, the global sports nutrition market was worth $28.3 billion in 2016 and is expected to reach $45.27 billion by 2022. Since acquiring PowerBar from Nestle in 2014, Post has been working to revamp the iconic brand with clean label ingredients and whey protein. The repositioning and the segment popularity both seem to be paying dividends.
Other segments also saw increases, though not quite as dramatic. Private Brands — which includes Golden Boy private label peanut and other nut butters, plus dried fruit and nuts — saw a 6.9% sales increase. The earnings report states this mostly came from more demand for peanut and other nut butters. Michael Foods Group — including egg, potato, dairy and pasta brands — saw a 2.8% boost in sales, most of which came from an almost 10% increase in net potato sales. Weetabix, the U.K. cereal brand Post bought earlier this year from Bright Food of China for $1.7 billion, racked up $112.4 million in sales during the fourth quarter.
But the brands Post is best known for — its cereals and granola bars — also showed a sales increase of 4%. The company had not seen growth in this area for some time, with sales ticking down 2% in the last quarter. The boost came from sales of newly licensed products, as well as Malt-O-Meal bagged cereals. In the past year, Post has worked to boost popularity of Malt-O-Meal cereals — which it acquired in 2015 — through new packaging and supermarket displays that other manufacturers have been quick to copy.
More growth could be on the way, with investments and deals in the pipeline. According to the report, the company plans about $50 million in capital expenditures next year for a cage-free housing conversion at the Michael Foods' egg farm in Bloomfield, Nebraska. While the earnings report showed relatively flat egg sales this past quarter, demand for cage-free eggs is skyrocketing. According to an Australian study, consumers think these eggs taste better and are willing to pay more for them. While many producers are scrambling to convert their facilities, only 10% of the egg supply was cage-free in March.
The breakfast foods segment will also get a boost when Post's acquisition of Bob Evans Farms is complete. The deal, announced in September, is valued at $1.53 billion, or $77 per share. Bob Evans is a leading producer and distributor of refrigerated potato, pasta and vegetable-based side dishes, pork sausage, and a variety of refrigerated and frozen convenience food items. The transaction is expected to be completed in the first quarter of 2018.
If the company can keep on a steady course, quickly and seamlessly integrate its current and future acquisitions and maintain sales and profit growth in all sectors, the next earnings report may be even more encouraging than this one.