POST Q2 Deep Dive: Cold Chain and Cost Control Offset Volume Challenges, 8th Avenue Acquisition in Focus

Packaged foods company Post (NYSE:POST) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 1.9% year on year to $1.98 billion. Its non-GAAP profit of $2.03 per share was 22.8% above analysts’ consensus estimates.

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StockStory’s Take

Post’s second quarter results were met with a positive market reaction, driven by improving performance in its cold chain businesses and disciplined cost management across segments. CEO Rob Vitale credited segment diversification for offsetting weakness in pet and cereal volumes, noting, “significant improvement in our cold chain businesses more than offset a pullback at PCB.” Management also highlighted progress in cost optimization, especially in maintaining cereal profitability despite ongoing volume declines and a challenging macroeconomic environment.

Looking forward, Post’s guidance is shaped by continued integration of the 8th Avenue acquisition, targeted investments to recover pet food and cereal volumes, and ongoing cost optimization efforts. CFO Matt Mainer stated, “We feel good about our prospects for next year off a normalized ‘25,” emphasizing expectations for foodservice normalization and contributions from new product initiatives. Management remains focused on navigating cost headwinds from tariffs and regulatory changes while leveraging bonus depreciation and interest deductibility benefits to support liquidity and capital priorities.

Key Insights from Management’s Remarks

Management pointed to stronger cold chain results and the recent 8th Avenue acquisition as key drivers of the quarter, while ongoing pet and cereal headwinds persisted.

• Cold chain recovery: Post’s cold chain businesses, particularly Foodservice and Refrigerated Retail, saw sequential improvement as avian influenza-driven pricing and better egg availability supported both revenue and profitability.
• Pet and cereal headwinds: The Post Consumer Brands segment experienced continued volume declines in cereal and pet food, with the Nutrish relaunch facing steeper challenges than anticipated and Gravy Train seeing price elasticity issues.
• 8th Avenue acquisition: The recently closed 8th Avenue transaction brought nut butter and granola brands back into Post’s portfolio. Management plans to begin integration in the next year, aiming for operational synergies while providing initial stabilization for the acquired business.
• Cost optimization initiatives: Across segments, cost control and asset optimization—including plant closures and workforce reductions—helped maintain margins despite category softness, particularly in cereal.
• Capital allocation flexibility: Post continued share buybacks, repurchasing 8% of shares year-to-date, and highlighted that improved cash flow and recent tax law changes will enhance financial flexibility for future M&A or shareholder returns.

Drivers of Future Performance

Management expects the next quarters to be shaped by foodservice normalization, integration of 8th Avenue, and ongoing cost pressures from commodity and regulatory changes.

• Foodservice margin normalization: As avian influenza-related pricing winds down, management expects the foodservice segment to stabilize near $115 million in quarterly adjusted EBITDA, with modest long-term growth supported by ongoing contract renegotiations and volume recovery.
• Portfolio recovery efforts: Post is extending efforts to recover pet and cereal volumes, including further investments in brand relaunches and targeted product innovation (such as protein-enhanced cereals). However, recovery timelines, particularly for Nutrish, have been pushed out due to greater-than-expected competitive and category dynamics.
• Cost and regulatory headwinds: Management flagged ongoing risks from tariffs, food ingredient regulation, and product reformulation costs, which could continue to impact input costs and require tactical product adjustments rather than sweeping portfolio changes in the coming year.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch (1) the pace and success of 8th Avenue’s integration and its synergies with existing brands, (2) stabilization or improvement in pet and cereal volumes following brand relaunches and product innovation, and (3) the normalization of foodservice margins as avian influenza-related pricing subsides. Progress on cost optimization and further capital deployment, including M&A or buybacks, will also be key indicators.

Post currently trades at $108.06, up from $102.89 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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