Post Holdings, a consumer packaged goods holding company, has reported results for the second fiscal quarter that ended March 31, 2020. During this period, Post Holdings had net sales of $1.5 billion, an increase of 7.7%, or $106.4 million, compared with the prior-year period net sales of $1.4 billion. Gross profit was $438.8 million, or 29.4% of net sales, a decrease of $12.5 million compared with the prior-year period gross profit of $451.3 million, or 32.5% of net sales.

Operating profit was $153.5 million, a decrease of 17.6%, or $32.8 million, compared with the prior-year period operating profit of $186.3 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $291.7 million, a decrease of 2.4%, or $7.2 million, compared with the prior-year period.

The company experienced positive sales growth for its ready-to-eat (RTE) cereal business, its refrigerated retail business, and its active nutrition business BellRing Brands. At the same time, its foodservice business declined slightly.

RTE Cereal. Net sales for the second quarter were $507.9 million, an increase of 10.6%, or $48.8 million, compared with the prior-year period. Volumes increased 14.2% and benefitted from 1) increased purchases resulting from consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic; 2) the timing of promotional and merchandising support when compared with the prior year; 3) new product introductions; and 4) private label distribution gains. Segment profit was $92.4 million, an increase of 11.1%, or $9.2 million, compared with the prior-year period.

Refrigerated Retail. For the second quarter, net sales were $237.6 million, an increase of 8.2%, or $18.1 million, compared with the prior-year period, with volumes increasing 2.4%. Side dish net sales increased 23.3%, reflecting a meaningful improvement in average net pricing and a 13.1% volume increase (primarily driven by increased purchases resulting from consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic). Egg product net sales decreased by 18.7%, driven by losses in branded egg product volume and lower average net selling prices resulting from lower market-based egg prices. Segment profit was $30.2 million, an increase of 14%, or $3.7 million, compared with the prior-year period.

BellRing Brands. For the second quarter, net sales were $257.5 million, an increase of 18.9%, or $41 million, compared with the prior-year period. Net sales and volume growth were primarily driven by the Premier Protein brand as net sales increased 25.8%, with volumes increasing 27.1%. Premier Protein benefitted primarily from increased purchases resulting from consumer pantry loading in reaction to the COVID-19 pandemic, along with distribution gains for ready-to-drink (RTD) protein shakes and incremental promotional activity. Segment profit was $35.1 million, a decrease of 20.2% compared with the prior-year period, with the decrease driven by $9.9 million of higher marketing and consumer advertising expenses and $2.5 million of incremental public company costs. Segment profit for the second quarter of 2020 and 2019 included transaction costs of $300,000 and $100,000, respectively, to effect BellRing’s separation from Post and to support BellRing’s transition into a separate stand-alone publicly traded entity.

Foodservice. For the second quarter, net sales were $378.4 million, a decrease of 2.7% compared with the prior-year period. Volumes for the second quarter decreased by 4.2%, with egg volumes declining 4.5% and potato volumes declining 2%. Volume declines were driven by lower demand from foodservice customers resulting from the impact of the COVID-19 pandemic on various channels, including full-service restaurants, quick-service restaurants, and education/travel/lodging, which was partially offset by higher volume in the food ingredient channel. Segment profit was $23.8 million, a decrease of 49.8%, or $23.6 million, compared with the prior-year period.

As a result of uncertainty around the duration, scope, and ultimate financial impact of the COVID-19 pandemic, Post management is withdrawing its fiscal year 2020 adjusted EBITDA and capital expenditures outlook that was previously provided on Feb. 6, 2020.

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