Q3 2020 Post Holdings Inc Earnings Call
Hosting the call today from post or Rob Vitale, Lee President and Chief Executive Officer, and just got Aucs Chief Financial Officer.
Today's call is being recorded and will be available for replay beginning at 12 PM Eastern time. The dial in number is 805 858367 and the passcode is 9687 370.
At this time, all participants happen place any listen only mode and it's now my pleasure to turn the floor over to Jennifer Meyer of post holdings for introduction you may begin.
Good morning, and thank you for joining us today proposed third quarter fiscal 2020 earnings call with me today, or Rob Vitale, our president CEO and Jeff Stein, our CFO Robin Jeff will begin with TRID remark and afterwards, we'll have a brief question answer session.
The press release that supports these remarks is posted on our website in both the Investor Relations and the FTC filings actions at post holdings Dotcom.
In addition, the releases are available on the Fccs website.
Before we continue I would like to remind you that this call will contain forward looking statement, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these things.
These forward looking statements our current as of the data this call management undertakes no obligation to update these statements.
As a reminder, this call is being recorded get an audio replay will be available on our website and finally, the call will discuss certain non-GAAP measure.
A reconciliation of these non-GAAP measures to the nearest GAAP measure see our press release issued yesterday posted on our website with that I will try to call overdraft.
Good morning, Thanks, Jennifer Thank you all for joining us.
The business executed well this quarter in a challenging environment.
Center store refrigerator retail businesses had terrific results.
Our foodservice business suffered rapid demand destruction with gradual rebuild.
Bill Wrang work through trade inventory reduction and recovering demand curve.
Throughout all our supply chains performed well in our business function at high level.
It is most appropriate though we recognize the ongoing dedication of our employees, especially in supply chain, who make this happen.
Our retail channel business is a post consumer brands Weetabix and refrigerated retail performed exceptionally well this quarter.
In contrast to Q2.
During which surge demand pull forward.
Onto pre established promotions.
Q3 was slightly promoted.
As a result, we saw attractive profit conversion in each business.
This profit level was despite incremental costs around employee safety and incentive compensation each manufacturing location.
Our retail channel business benefited from the increased demand for in constant consumption.
We expect us to continue to a lesser degree through the balance of the fiscal year.
Going into next.
Our challenge this quarter was to flex our supply chain to meet this demand.
To do so limited assortment, enabling higher manufacturing line productivity an increase output.
This was most pronounced in post consumer brands, which because of its value portfolio managers and relatively larger number of skews.
We are now close to essentially normal level of manufacturing.
And our reestablishing our merchandising programs.
As you all know they're ready to eat Sheryl categories have struggled in recent years.
We anticipate that the experience in the last several months, while the positives intermediate to long term benefit on the trajectory of the category.
Our Bob Evans Weetabix of Crystal farms, France, each performed exceptionally well.
Again, the financial results are despite incremental costs and safety NSS.
Bob Evans brand side dishes grew consumption dollars, 29% as we gain new households, and continued our high repeat rates.
In the UK Weetabix grew in both sales and share as consumers turned to this one on brand during the lock down.
In both cases and generally across the business. We expect this consumer trial experience have lingering benefit.
The builder in call will provide more detail, but I will have to seems about their business.
First last quarter, we previewed at trade inventory drawdown and a backloaded second half.
This is developing as anticipated with very strong July shipments confirming that thesis.
Second.
Our TV on the go consumption took longer than we expected to returned to pre pre called the growth, but it has done so.
Despite the on the go headwinds.
Remember shake grew consumption 11%.
The change in our expectation of the demand curve caused us to called on revenue.
Well, we reaffirmed EBITDA guidance for the year.
We have no concerns about the long term trajectory of the business, but we missed the magnitude of some near term coating applications on consumption recovery.
Like our branded retail channel businesses piece Avenue performance is benefiting from the Kobin related demand increases.
Earlier this year, we made a small acquisition and the integration as well on track.
We remain optimistic about the consolidation opportunities ahead.
Our nurse, our near term challenge remains foodservice.
We saw volume recovery inline with expectations on the business was profitable in June.
We expect the fourth quarter to continue the June performance, but we certainly have the potential for pandemic related headline risk or benefit.
Last quarter I described are affected channels.
Quick service restaurants are coming back reasonably well.
Full service a bit behind.
Education is a mixed bag across the country, but certainly will not be fully reopened.
Travel and lodging continues to be week, all largely as expected.
Demand in this segment is directly tied to consumer mobility, therefore region by region government and consumer responses to the severity of the pandemic shaped the recovery.
We do not expect to revisit the quarter lows our channels have learned so much more about how to operate during the pandemic.
But because it is a challenge to predict the near term shape of the recovery, we've taken a cautious outlook.
Longer term, we remain highly confident in the strength of this business.
Separately.
Correlation between mobility and demand.
Further it gives us confidence in our decision to aboard structural cost reduction in favor of supporting the rebuilt.
Well each of our business is executing quite well I want to particularly commend our foodservice team.
They're magnificently navigating the most extraordinary business climate of our careers.
In terms of the fourth quarter.
We expect who's here is to materially improve over Q3, but not approach normal.
And retail channel businesses to perform well, but not at the volume level of the third quarter absent the second wave of surge buying.
For Bell ring, we anticipate delivery of the results implied and its guidance.
On balance we expect Q4 to be similar in the aggregate the third quarter with potentially significant changes in segment composition.
Our liquidity remains quite high.
You may recall that as a cautionary measure we drew down $500 million on our $750 million revolver in March.
We have repaid the full balance of the drawdown and now have approximately 870 million in cash on hand.
With respect to capital allocation, you can see that we resumed share repurchases [noise].
We're cautious as we were assessing potential requirements for liquidity, if one or more of our supply chains became interrupted.
Throughout the quarter, we operated with growing confidence in our ability to maintain continuity of supply.
As our confidence has grown so as our desire to be more offensive with our capital.
We temper that inclination with discipline and will not forced an opportunity merely to act.
It's hard to neatly wrap this quarter up into a singular description, but the best I come up with his resilience.
In some ways this quarter revealed the strength of the construction of our portfolio the businesses naturally hedged each other our results and our expense expectations give us further confidence and how we manage leverage and liquidity and the delivery of long term risk appropriate returns, we're admittedly taking a cautious outlook as is our nature and we will continue to do so.
But this too is true that while this is a challenging year. It is a year that I continued to be most proud of the business with that I will turn over to Jeff.
Thanks, Rob and good morning, everyone.
Adjusted EBITDA for the third quarter was $270.9 million.
Validated net sales of $1.3 billion declined 7.1% year over year.
Each of our businesses was significantly impacted by consumer and customer behaviors in reaction to the cobot 19 pandemic.
I will discuss those impacts as we go through the performance of each of our segments.
Starting with post consumer brands net sales and volumes grew 11.4% and 7.5% respectively benefiting from increased at home consumption in private label distribution gains.
Significantly reduced promotional activity and favorable mix, resulting from a temporary reduction in assortment together drove a 3.4% improvement in average net pricing.
Gross profit margins meaningfully improved over both the prior year and the second quarter.
This outcome resulted from the aforementioned net pricing improvement manufacturing efficiencies from streamline assortment better fixed cost leverage on increased production volumes and $6 million in cost savings from implementing our new integrated business planning process.
These improvements were only partially offset by increased compensation for manufacturing employees cost for health screening and personal protective equipment.
An increase product donations.
The growth in net sales volumes at gross profit drove a 35% increase in segment adjusted EBITDA compared to the prior year.
Weetabix net sales increased 3.1% over the prior year. This reflects a 4.1% and a 2.6% improvement in volume in average net pricing respectively.
Volume growth benefited from increased at home consumption, particularly for cereal biscuits, which was partially offset by declines and on the go breakfast drink and bar products.
Favorable mix and reduced promotional activity drove improved average net pricing.
A weaker British pound to U.S. dollar exchange rate caused an approximate 400 basis point headwind to the net sales and adjusted EBITDA growth rates.
Overall, we to big segment, adjusted EBITDA increased 14.6%.
Our foodservice business was significantly impacted this quarter with net sales of volumes declining, 41.3% and 41.8% respectively.
These declines reflect lower away from home demand in reaction to covert 19.
Particularly within the full service restaurants quick service restaurant education, and traveling lodging channels.
As government stay at home orders lifted and consumer mobility increased the rate of volumes across declines improved throughout the quarter.
We expect our foodservice volume recovery to highly correlate to the degree restrictions or imposed on mobility and gathering.
And coincide with the progress achieved and containing the spread of the virus improved therapeutics and ultimately an effective vaccine.
We continue to anticipate a full recovery will likely take through fiscal 2021.
Adjusted EBITDA declined to a loss of $10 million, primarily resulting from the loss contribution margin on reduced volumes and unfavorable fixed cost absorption, we significantly reduced production volumes.
Also weighing on foodservice results were cost for temporary line and plant shutdowns higher inventory obsolescence for short dated inventory.
Considerable levels of low margin food ingredient AG sales to move excess inventory.
Increased product donations and higher cost for health screenings personal protective equipment and compensation for manufacturing workers.
Moving to refrigerated retail net sales and volumes increased 20.9% and 5.1% respectively.
Pricing improved across all products because of reduced promotional activity and favorable mix.
In addition side dish net pricing improved as result of targeted price increases indicated early in calendar 2020.
She's sausage inside this products all his strong volume growth, while egg product volumes decline.
Growth in sales and volumes, along with improved price cost relationships and sausage and cheese.
To a nearly 65% year over year improvement in route in refrigerated retail segment adjusted EBITDA.
Bell ringing net sales decreased 14.1%, while adjusted EBITDA decreased 37.8%.
Premier protein sales declined 11.9% as RTD shake shipments lags strong consumption growth of 11%.
Dymatize and Powerbar net sales declined significantly driven by specialty retail store closures and changes in consumer behavior, including reduced on the go consumption.
You can hear further detail about bell rings results on their conference call later this morning.
Turning to cash flow, we had a very strong quarter generating $319 million from operations, including $32 million from Bel Ray.
Reduce working capital across our portfolio was a key contributor yeah.
Inventories were driven down by Cobot dynamics, we have discussed and collections have remained solid in line with terms.
As a reminder report we report leverage statistics for post independent of Bell ringing net debt and adjusted EBITDA.
Post pro forma net leverage on this basis was approximately 5.2 times as of June thirtyth down slightly from the prior quarter.
Turning to share repurchases, although intentionally more cautious in the early stages of Covance. Since April 1st we have purchased approximately 550000 shares at an average price of $87.57 per share.
In addition, yesterday, we announced a new board authorization for up to $400 million and share repurchases. This replaces our prior remaining open authorization.
In closing we have a significant we have significant liquidity and remain confident or our ability to continue to generate attractive cash flow. During this pandemic, which combined provides us flexibility success to successfully navigate this environment and still maintain optionality for strategic alternatives.
With that I'll turn it back the call back over to the operator for questions.
Thank you at this time I would like to inform everyone. If you'd like to asking questions. Please press Star then the number one on your telephone keypad. If your question has been answered and you wished removed yourself from Nick you press the pound key.
First question comes from the line of David Palmer of Evercore ISI.
Thanks, Good morning.
Question on cereal I appreciate your comments about it the category, perhaps getting some better footing coming out of co bid I'm wondering about your comments around market share.
In July it looks like post as lost some share to the big too.
And I'm wondering if you're if your foreseeing the things getting tougher from a competitive standpoint, given the fact that.
Those two competitors are talking about marketing reinvestment in the third quarter and I have a quick follow up.
No I don't necessarily see is getting more challenging going forward in fact that it's more or.
Leveling from March to May we essentially track the category.
And in June and July as you point out we've seen some share softness there's really three reasons first we over index to mass and food has recently gained share vis-a-vis mass. So some of its some channel shifting which we don't see as being a particularly persistent trend.
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Second and third are related to the comments I made about limited assortment of supply chain optimization. So we pulled back our assortment in order to drive productivity, which pulled down some of our flanker brands to point, where we kept pacing, but lost some of the.
Traditional placements of some of the flavor variance.
And then in order to shape demand we of course pulled back merchandising. Unlike some of the other competitor we kept that merchandising off really until August. So August is the first month in which we have full assortment and full merchandising engaged so I think it's merely a timing shift.
And thank you for that that's helpful with regard to foodservice for those of US that are tracking Starbucks in Dunkin' trends I know you have more than just some of the big chains in breakfast, but it feels like some of the.
The the decline rate is becoming more stable, we're going to have that tapering off as the morning deep work part kind of rebuilds, but in other words you. Perhaps you you should be less surprised by what you get from that business over the next year. How are you thinking about the profit de leverage go.
Going forward.
Obviously, you're going to have less decline rate, but you also have less surprise can you can you moderate your cost in a way that we should see.
Less de leverage per volume point of decline, thanks, well, absolutely less than the blended average over the quarter and what I called out on my comments was that we were looking to.
Forecast off of the last part of the quarter, where we had worked through some of the initial.
I'll use the word shock of that demand period, when it was down.
Three quarters level, or so and I think you're quite right that we see pretty decent predictability out of the QSR segment.
As I commented the visibility gets less clear as you get into the full service and other channels that we also sir but we feel very good about how the QSR channel seems to be shaping up.
Thank you.
Thanks.
Your next question comes from the line of Andrew Lazaro of Barclays.
Good morning, everybody.
Yeah.
I guess first off Rob Im thinking about fiscal Fourq Q.
We kind of have a sense now of the sort of the bell ringing sort of guidance piece of it you mentioned foodservice was back to profitability in June.
Hopefully that some of the less less severe de leveraged moving forward.
So I guess in thinking about your fourth quarter guidance, it's sort of implies if im not mistaken a lot of flowing in the retail businesses.
And I'm trying to get a sense of.
What's driving that Theres something discrete there.
Perhaps maybe there's some conservatism just in all of us not knowing how quickly or not.
Elevated consumption levels kind of slow depending on second wave and all those sorts of things just trying to get a sense for what this means for <unk>.
The retail side really specifically PCB in Fourq, because it seems like.
That would suggest a pretty significant flowing I've just got to follow yes and to be fair I think it's an acceleration from last year, but a sequential slowdown because the second quarter excuse me the third quarter contains.
A fairly significant.
Portion of the surge buying that lapped over in April so the only difference between the quarters isn't assumption that the truly elevated level in the early stages of the crisis will not repeat it will certainly be elevated vis-a-vis pre covert levels.
So I'm not in any way, suggesting a slowdown of the business.
Vis-a-vis prior years or.
Anything other than the fact that we had surge buying in Q3 that may not be repeated.
Got it and profitability, obviously, we seem to think about that in terms of reinstating some of the merchandising in such that you talked about versus let's say fiscal threeq correct.
Okay and then.
Follow up are observing that that's as equally big appointment is that the volume at the end the re establishing promotions.
Got it Okay, and then it's a king Rob if we think out a little bit a bunch of staples companies reporting in the in the last few weeks have touched on like the potential for crisis management during the pandemic to really maybe have lasting positive pinedale implications.
Number of companies have talked about it I think the CEO of one of the largest coke bottlers yesterday said there'll be no return to the pre pandemic cost structure and I know, it's probably did early can be overly focused on this as you're just kind of keeping operations going and whatnot, but if we think post crisis do you think there's an element of this that could maybe benefit posted a more meaningful way.
Longer term and if so sort of what buckets maybe of cost could be impacted thank you.
Well I certainly think the way you think about organizing workflow and productivity is going to be affected we have we have now been remarkably effective at a distributed work model for five and a half month or whatever it is.
I have really three concerns one is how do you maintain culture to is how do you onboard people effectively in three is hurting you develop young talent, but if we can solve for those problems I think it starts to up and the way, we think about organizing work and people and as important as anything else it starts to.
To relieve the geographic the geographic constraints of attracting talent. So instead of thinking about our talent pool as those who are willing to relocate to whatever is the appropriate metropolitan area.
We we recruit from the country or the world and we manage differently and I think thats a fairly profound change in the way we think about.
Talent development, so thats, a big one I think the way we think about.
Manufacturing and the relationship between.
Manufacturing and non manufacturing.
Is one that is constantly going to be reevaluated because of how.
Essential we realize that function is when we when we actually put definition to the term essential worker and there will be I think a series of profound implications to come out of it I frankly think beyond.
Some themes, it's premature to start talking about what that does to margins and what it does the cost because I'm sure we're not through the learnings on this experience.
But I would certainly not argue that there will be some profound learnings coming from it.
Thanks, so much Rob.
Thank you.
Your next question comes from the line of Chris Growe of Stifel.
Hi, Good morning, Chris Hi.
It had a question for you first on and I'm sorry, if I missed this if you set of if you quantified the total koby cost in the quarter and I was just curious if you think about that in relation to the fourth quarter are they more burdensome because of.
Less fixed cost leverage should see will you have more costs weighing down on.
On the consumer brands for example, and Weetabix others.
We did not quantify it.
And we have not publicly disclose that.
Yes, I'll jump in.
Your stance as you might imagine, it's hard to pinpoint what scope and what's not especially when you talk about the.
Benefits of leveraging or de lever or the negatives of de leveraging.
Yeah.
The approximate amount of what we could.
You put a fence around to say debt was covis specific incremental costs like.
Incentives to manufacturing workers or.
The personal protective equipment those sorts of things was an order of magnitude about $15 million on the quarter.
How much of that is going to continue I don't think it will be at that level because in that number was some of our inventory donations and things of that which wont be at the same level, but you know maybe half that amount might be an ongoing cost until we.
Until we get back to more normal I would also tell you that.
As I just commented with Andrew we learn through this.
Process. So the cost that we incurred in Q4 were crisis costs. So we weren't in a position to fit out provider or in a position to study the cost of action, we simply needed to act. So thats, a very high cost cost way to operate.
As this experience drags on and we start to learn how to operate better and the experience we will drive that costs down.
Okay. Thank you and then just one other question would be.
There's a difference or by business, but just as a general question.
You are under shipping demand in many cases, so I'm curious if there's sort of an inventory rebuild that's either happening or has happened yet our may happen and then just understand what condition. Your production capacity. It isn't as we exited the quarter can you meet demand and your businesses today.
Yes, so I think the one year, probably most talking about is.
The refrigerant retail and I think that there might be little confusion and that the the Bob Evans growth rate was very high but some of the other brands in the portfolio drag that down so the actual Bob Evans consumption to replenishment was much closer to the consumption growth rate much more close.
Two one to one replenishment so that might be a piece of what you're picking up going through each of the answers. So the reason that we held back on.
Promotion in PCB was precisely to be able to answer yes to that question, we want to be able to make sure that our supply chain is operating at a best in class level and that whereas we have customer fill rates, where they need to be and they are so we feel very good about that.
Same is true in Weetabix same is true in our integrated supply chain with.
Bob Evans, and refrigerant retail and Michael Foods with the nuance that of course, its de leverage on the food side and add.
Pushing full leverage on the retail side I think the big question that we have is will this be a normal holiday season with respect to more holiday oriented products or will have the in home consumption change for that demand curve as we approach to holiday season.
And sorry, just one follow up on that Rob. Thank you for that would be just inventories at retail are those rebuilding or have the rebuilt good especially detail.
In cereal their rebuilding now.
As I mentioned August is the first month with full assortment.
So by the end of August they should be fully rebuilt.
And the others were largely imbalance.
Okay. Thanks, So what's your time.
And I'm, excluding fell right from that.
All right.
Inventory adjustment that we can talk about in greater detail on their call.
Thank you.
Your next question comes from the line of Jason English of Goldman Sachs.
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Hey, good morning folks Hey, Thanks, let me start for the delay there.
Two questions first higher order strategic Optionality the turmoil in the food service vertical curious if its shaken loose any potentially strategically compelling assets.
That you could potentially target.
Yes is the answer I think theres, some interesting opportunities in foodservice, but.
Not at the crisis level that you would have expected I think because of some of the government activities.
There has been more liquidity to provide support for some companies that otherwise might be in more dire Straits.
But I think theres some attractive value.
That we are obviously, taking a look at as we.
Serving that landscape.
And then on core business.
Like many I was surprised at how robust the profit was.
Retail business.
I missed some of your prepared comments, but one thing I picked up consumer brands I think you mentioned.
You had about 3.4% contribution to sales growth related to some do trade activity and reduced assortment.
The good translations around $16 million should benefit.
It is eight two I did they capture that right B is it fully gone quite how we get to the first quarter 21, because it sounds like you sort of suggested in August 1st back full on March full assortment. My interpretation is that is fully that benefits fully dissipated by that.
And is there any other quantum across the other segments of the assembly can give us to help us size. The the potentially transitory benefits that may have hit Weetabix and may have hit the refrigerated retail side.
I think you're you're.
Sizing of PCB is roughly in line and I think your comment about the timing lapping into the fourth quarter was sub continue.
Margin benefit is also true.
In terms of Weetabix the magnitude as much smaller because we didnt see the same level of.
Volume search we saw the same level volume surge in March but it didnt continue into the quarter at the same levels of did in the U.S. So there was much more stability in terms of its supply chain continuity and its ability to.
Maintain more promotional strategies there.
We're not supply chain driven so we don't see the same impact and Weetabix and it Bob Evans, there really wasn't any of the same issues because the they don't have the same degree of assortment variability that post consumer brands doesn't it.
And its manufacturing lines.
Got it thank you very much I'll pass up.
Thanks.
Your next question comes from the line of Michael Lavery of Piper Sandler.
Good morning, Thank you.
Pretty much.
Two quick ones on own refrigerated refill.
Wondering if you could give us a sense within the price mix lift.
How much is stickier list pricing versus mix or promo reductions that could reverse in the fourth quarter.
And then just second you called out on.
In your commentary there little bit of the hit on eggs from.
Deli closures and lower away from home demand.
Can you just give us a sense of how to think about.
How that looks in the fourth quarter and if there's a watch out in terms of how to think about the volume momentum there.
So to the first question the vast majority of the pricing is list pricing.
Jeff called out it that it was taken pre covert towards the.
Middle of our first fiscal quarter.
In terms of the Deli business.
As you can imagine thats, largely driven by retailers demand to manage foot traffic.
So it's highly sensitive to what's going on in the local markets and I mean, specifically with respect to.
Cobot outbreaks.
So we expect that recovery curve to follow some of the other institutional channels, but is highly dependent on the character of the local community.
And you mentioned on the the list price increase being earlier in the year as we look at your fiscal second quarter.
Would it have been early in that quarter and that that's a decent sort of proxy for the run rate or was it sort of mid quarter. Obviously, it's it stepped up quite a bit in the third.
You are going to stretch my memory.
I'm going to say that the effective date was around December one yes.
Okay.
Thank you very much.
Thank you Mike.
Your next question comes from the lineup ROP Dickerson from Jefferies.
Great. Thanks, so much two questions I guess first Rob I know will go into a lot more detail around go round with all recall, but thought.
Obviously, given kind of where the stock is open for pressure and the concerned with everybody is kind of thinking about on the business overall it may be you kind of the.
32nd discussion.
Before that call on the inventory piece.
Kind of maybe what you saw in July to get market.
Yes, I think that.
You know we turns out that we were more opaque than we thought we were in trying to communicate that there was a substantial inventory load.
As we exited the third they.
Second quarter.
And that there was some promotional timing that would push back some volume into the fourth quarter.
Specifically did call out in our guidance that the second half plan was back loaded up but clearly not precisely enough. So we went into the quarter and you're going to hear more details around what we expected to be roughly 45 55, Matt.
And that is largely shaping up intact as evidenced by exceptionally strong July that you'll hear more about so we don't we're not at all surprised by the cadence of the quarter, where we made a judgment there.
Was the assumption that the on the go consumption that has been reduced by Cove It would come back.
Faster than it did.
It is now come back, but we were off by roughly a month.
Theres been some a little bit more deterioration in international markets than we expected and the aggregate of those to act as those two issues. The on the go consumption decline as the international put some pressure on our revenue assumptions for the balance of the year. We were in very good position from an EBITDA perspective, so were.
Well to protect our EBITDA.
I think I think that point is getting a little bit loss that.
We are likely to hit an EBITDA number from October in a period of time in which the world change pretty damn dramatically. So I actually feel very confident on bell rings long term trajectory and recognize that we did a less than ideal job of communicating the cadence and frankly.
Missed an assumption on.
Recovery rate on the consumption piece.
But.
That will prove out in time.
Okay Fair enough and then just quickly in terms of.
Capital allocation and the buyback it looks like you would have bought stock back at around $38.
Right now your stocks at 90 $192.
So just maybe just kind of quick commentary color on appetite.
Further.
Increase that activity ongoing activity and.
And then also potentially just kind of general perspective feel it out from from you Rob.
On just the valuation of your business given kind of what you've gone through the path.
That's it thanks much.
Yes, I hate to do this but I'm only going to Dodge that question.
The I don't I don't like to be the judge evaluation of our stock or at least to speak about it we'd rather just.
Actions speak on that one.
And I think that you can infer from.
The action, we took where share buyback authorizations that we continue to have some appetite for it but I don't want to go into how we actually see value.
All right I get it alright. Thank you so much.
Thank you Rob.
Your next question comes from the line of Ken Zaslow with bank of Montreal.
Hey, good morning, everyone cash.
Just a couple questions.
Last quarter, you kind of discuss the cash flow.
And with that can you update us on your view on the cash flow.
Your initiatives on working capital as well as you know again, how you how you think it's going to play out.
I think last quarter, you said that there was no real change the cast though relative to your initial outlook.
Yeah, I think you need to put a little bit more fine point on it that there was a modest change in the aggregate, but the composition was different because of what you just mentioned, it's less EBITDA from food service more working capital recovery.
Which will then translate into working capital investment in the future as we have to EBITDA recovery. So, yes, we were able to.
Maintain cash flow, we actually had an extraordinary cash flow quarter.
But a portion of that was working capital recovery.
Let me so there's no change, though in how you're thinking about it goes though.
Not at all.
Okay.
The second question I have.
In the.
What do you said was intermediate and long term.
Benefit.
On the retail business and then last quarter. You said look we think that the food service will be back to 2020 of be back to 2018 levels by 2022. So if I put it all together do you think your structural long term growth rate is actually enhanced overtime given the situation is not to say that you want to.
Capitalize on a pandemic, but that is that the theory implication of that and how do I kind of frame that for more of a longer term investor.
Yeah, I think that I think thats exactly the right question that investors should be asking and.
I'm going to give I'm going to give an answer that is intentionally somewhat bay.
We have seen a experience that has driven.
Extraordinary levels of trial.
On essentially all of our retail business.
And our intuition is that that will have some lingering benefit that that is not going to go from a massive trial to zero stickiness.
And back to where we were pre covert that there will be some benefit to that putting a number to that I think is a bit premature.
On the other side of the business.
I think there.
Is.
The most likely outcome is that the business materially revert to norm.
For 2022, but the puts and takes our that.
There will be some percentage of the population the chooses to work from home.
And when you lose that person's departing.
From home in the morning, and going to work there will be some transactions that get lost along the way now what will happen will it shipped to eight still mid morning breakfast day part or will it be lost we don't know.
But we are we're planning to adapt to a modestly different mix of people working from home than working in office.
So there is there's puts and takes that we have to work through and I think what we don't want to do is over commit to a trend until we really understand that it is a trend and we're trying to be as adaptable as we can so we can pivot.
The rapidly as these things clarify themselves.
Hopefully that's helpful. It's.
I recognize sake, but.
Big is where we are.
I totally understand thank you very much.
Excellent.
We have reached the allotted time for questions and answers.
Does conclude the post holdings third quarter 2020 earnings conference call and webcast. You may now disconnect your lines and have a wonderful day.
Thank you all.
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