Q3 2026 Post Holdings Inc Earnings Call

August 7, 2026

Speaker #1: Please stand by your meeting is about to begin. Welcome to the Post Holdings, third quarter 2026 earnings conference call and webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation.

Operator: Welcome to the Post Holdings Third Quarter 2026 Earnings Conference Call and Webcast. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. Others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero.

Speaker #1: If you would like to ask a question at that time, please press star one on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star two.

Speaker #1: So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you require operator assistance, please press star zero.

Speaker #1: I would now like to turn the call over to Matt Mainer, CFO of Post.

Operator: I would now like to turn the call over to Matt Mainer, CFO of Post.

Speaker #2: Thank you, and good morning. Thank you all for joining us today for Post's third quarter fiscal 2026 earnings question and answer session. I'm joined this morning by Nico Katogio, our COO. Rob is unable to join us today as he is feeling under the weather, and Daniel is actually with his wife, who is going into labor.

Matt Mainer: Thank you. Good morning. Thank you all for joining us today for Post third quarter fiscal 2026 earnings question and answer session. I'm joined this morning by Nico Catoggio, our COO. Rob is unable to join us today as he is feeling under the weather, and Daniel is actually with his wife, who is going into labor. Before I turn this call to Nico, though, I want to remind you that this call is being recorded and an audio replay will be available on our website at postholdings.com. During today's call, we make forward-looking statements which are subject to risks and uncertainties that should be carefully considered by investors, as actual results could differ materially from these statements. These forward-looking statements are current as of the date of this call, and management undertakes no obligation to update those statements.

Speaker #2: Before I turn the call to Nico, though, I want to remind you that this call is being recorded and an audio replay will be available on our website at postholdings.com.

Speaker #2: During today's call, we make forward-looking statements which are subject to risks and uncertainties that should be carefully considered by investors, as actual results could differ materially from these statements.

Speaker #2: These forward-looking statements are current as of the date of this call and management undertakes no obligation to update those statements. The press release and written management remarks that support today's call are posted on our website in the investors section.

Matt Mainer: The press release and written management remarks that support today's call are posted on our website in the Investors section. This call will discuss certain non-GAAP measures. For a reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Nico.

Speaker #2: This call will discuss certain non-GAAP measures. For reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website.

Speaker #2: With that, I will turn the call over to Nico.

Speaker #3: Thank you, Matt. Good morning, and thanks, everyone, for joining us today.

Nico Catoggio: Thank you, Matt. Good morning, and thanks, everyone, for joining us today. Our Q3 results were slightly ahead of expectations, driven by stronger than anticipated performance in Foodservice. We are maintaining the midpoint of our fiscal 2026 adjusted EBITDA items while narrowing the range. From a capital allocation standpoint, we will purchase 4% of our outstanding shares, bringing our total fiscal year-to-date reduction to approximately 17%, while maintaining leverage within our target range. Looking ahead, we believe it's important to provide early context for fiscal 2027. After adjusting our fiscal 2026 outlook for approximately $80 million of items affecting comparability, we enter fiscal 2027 with a comparable adjusted EBITDA base of approximately $1.48 billion. While our fiscal 2027 budget remains under development, our preliminary outlook is for adjusted EBITDA that is relatively consistent with this level.

Speaker #1: Our third quarter results were slightly ahead of expectations, driven by stronger than anticipated performance in food service. And we are maintaining the midpoint of our fiscal 2026 adjusted EBITDA guidance while narrowing the range.

Speaker #1: From a capital allocation standpoint, we repurchased 4% of our outstanding shares, bringing our total fiscal year-to-date reduction to approximately 17%, while maintaining leverage within our target range.

Speaker #1: Looking ahead, we believe it's important to provide early context for fiscal 2027. After adjusting our fiscal 2026 outlook for approximately $80 million of items affecting compatibility, we enter fiscal 2027 with a comparable adjusted EBITDA base of approximately $1.48 billion.

Speaker #1: While our fiscal 2027 budget remains under development, our preliminary outlook is for adjusted EBITDA that is relatively consistent with this level. Despite normalizing food service earnings, the absence of divested businesses anticipated inflation and ongoing burning pressure, we currently expect targeted pricing actions, cost savings, and food service run rate growth to support fiscal 2027 underlying EBITDA generally flat relative to the comparable adjusted EBITDA base of approximately $1.48 billion that I mentioned before.

Nico Catoggio: Despite normalizing Foodservice earnings, the absence of divested businesses, anticipated inflation, and ongoing volume pressure, we currently expect targeted pricing actions, cost savings, and Foodservice run rate growth to support fiscal 2027 underlying EBITDA generally flat related to the comparable adjusted EBITDA base of approximately $1.48 billion that I mentioned before. With that, operator, please open the line for Q&A.

Speaker #1: With that, operator, please open the line for Q&A.

Speaker #3: Thank you. The floor is now open for your questions. At this time, if you have a question or comment, please press star one on your telephone keypad.

Operator: Thank you. The floor is now open for your questions. At this time, if you have a question or comment, please press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. Our first question is coming from Andrew Lazar with Barclays. Your line is now open.

Speaker #3: If at any point your question is answered, you may remove yourself from the queue by pressing star two. Again, we ask that you pick up your handset when posing your questions, to provide optimal sound quality.

Speaker #3: Thank you. Our first question is coming from Andrew Lazar. With Barclays, your line is now open.

Speaker #4: Good morning, everybody. Thanks for the question. I think to start off, Nico, you highlight a shift from what's been a very aggressive share purchase activity to really more of a deleveraging posture.

Andrew Lazar: Morning, everybody. Thanks for the question. I think to start off, Nico, you highlight a shift from what's been a very aggressive share repurchase activity to really more of a deleveraging posture. I was hoping you could delve into this decision a bit more. Is it concern about the direction of EBITDA in the near term and some of the volume pressure, given your 2027 outlook or something else? Does this change your ability or desire to go after cash accretive deals that may make sense?

Speaker #4: I was hoping you could delve into this decision a bit more. Is it concern about the direction of EBITDA on the near term and some of the volume outlook, or something else?

Speaker #4: And does this change your ability or desire to go after cash accretive deals that may make sense?

Speaker #2: Sure. I can take that one, Andrew, and really it's consistent with how we've always thought about capital allocation when it comes to M&A versus debt reduction, and that's less a function of a leverage number and really more a function of what we're seeing in interest rates and refinancing impacts.

Matt Mainer: Sure. I can take that one, Andrew.

Andrew Lazar: Okay, Matt.

Matt Mainer: Really, it's consistent with how we've always thought about capital allocation when it comes to M&A versus debt reduction, and that's less a function of a leverage number and really more a function of what we're seeing in interest rates and refinancing impacts. While we don't have a bond maturity for four years, we factor in the cash flow impact of refinancing that debt now at higher rates and what would that do to free cash flow. As we see rates continue to rise from a refinancing standpoint, that just weighs more heavily to say, Hey, we've got to start allocating more capital to debt reduction to make sure we're bringing down debt, so as we get to refinancing, we're not seeing a deterioration of our free cash flow. Again, we'll still maintain the ability to buy back shares opportunistically.

Speaker #2: So while we don't have a bond maturity for four years, we factor in the cash flow impact of refinancing that debt now at higher rates and what would that do to free cash flow.

Speaker #2: And as we see rates continue to rise from a refinancing standpoint, that just weighs more heavily to say, hey, we've got to start allocating more capital to debt reduction to make sure we're bringing down debt so as we get to refinancing, we're not seeing a deterioration of our free cash flow.

Speaker #2: Again, we'll still maintain the ability to buy back shares opportunistically, just in the current interest rate environment, certainly going to be a slower pace than the last couple of years.

Matt Mainer: Just in the current interest rate environment, certainly going to be at a slower pace than the last couple of years. I think on the counter, if we see rates somehow return and we're back in a 5% refinancing rate, then our view would change. That's certainly the big driver and the primary lens how we look at it. Relative to the M&A points, I think another angle we view is, where's a comfortable leverage level we could take leverage to, and where's a comfortable starting point? That gets us to a similar spot. Hey, mid-fours is somewhere we're comfortable for. We wouldn't want to see that number rise, because that would deteriorate some of the flexibility for cash M&A. I think that's where the preliminary outlook for next year is more of a consideration. Again, I'd say consistent with how we've always viewed it.

Speaker #2: I think, on the counter, if we see rates somehow return and we're back in a 5% refinancing rate, then our view would change. But that's certainly the big driver and the primary lens through which we look at it.

Speaker #2: Relative to the M&A point, I think another angle we view is, where's a comfortable leverage level we could take leverage to, and where's a comfortable starting point?

Speaker #2: And that gets us to a similar spot. Hey, mid-four is somewhere we're comfortable with, but we wouldn't want to see that number rise, because that would deteriorate some of the flexibility for cash M&A.

Speaker #2: So I think that's where the preliminary outlook for next year is more of a consideration. But again, I'd say consistent with how we've always viewed it.

Speaker #4: Got it. Thanks for that. And then post has been obviously very proactive in optimizing its capacity. And its assets, in categories like rated Eats cereal, to sort of stay ahead so to speak of sort of the structural declining category.

Andrew Lazar: Got it. Thanks for that. Post has been obviously very proactive in optimizing its capacity and its assets in categories like ready-to-eat cereal to sort of stay ahead, so to speak, of sort of the structural decline in category and maintain solid margins and cash flow. Having already closed, I guess, three plants in cereal, given trends in the company's dog food business, and maybe some of the potential elasticity impacts of some of the pricing actions that you're talking about here, I guess, are there some similar actions that you can or may need to take in sort of the pet food space around asset optimization, sort of like you've done in cereal the past year or two?

Speaker #4: And maintain solid margins and cash flow. Having already closed, I guess, three plants in cereal, given trends in the company's dog food business, and maybe some of the potential elasticity impacts of some of the pricing actions that you're talking about here, I guess, are there some similar actions that you can or may need to take in sort of the pet food space around asset optimization sort of like you've done in cereal the past year or two?

Speaker #1: Thanks, Andrew. And it's a good question. So let me start. Again, so we are constantly assessing those opportunities across the every business and in particular in PCB.

Nico Catoggio: Thanks, Andrew. It's a good question. Let me start again up. We are constantly assessing those opportunities across every business and in particular, NPCB. Before I get to pet, and I will answer that one, we also just made the decision to shut down two peanut butter plants. That's, again, to your point, is exactly the same playbook that we used in cereal. As we integrated the 8th Avenue business, we streamlined that business and exited some business that we were literally losing money, we saw the opportunity to shut down two plants. That's in the works. That's going to impact F28. Order of magnitude is similar to what you saw in cereal in the past. That's on peanut butter. On pet, it's a good question.

Speaker #1: So before I get to pet and I will answer that one, we also just made the decision to shut down two peanut butter plants.

Speaker #1: And that's, again, to your point, is exactly the same playbook that we used in cereal. That's as we integrated the AW business. And we streamlined that business and exited some businesses that we were literally losing money.

Speaker #1: We saw the opportunity to shut down two plants. So that's in the works. That's going to impact F28. And it's order of magnitude similar to what you saw in cereal in the past.

Speaker #1: So that's on peanut butter. On pet, it's a good question. So let me tell you that beyond footprint, we haven't even scratched the surface in cost in pet, not the way we did it in cereal.

Nico Catoggio: Let me tell you that beyond footprint, we haven't even scratched the surface in cost in pet, not the way we did it in cereal. That's because we wanted to wait until we had the confidence that we had a stable pet business. We feel that we're getting to that point. We are now at a 3% market share, what we are confident is if we can stay in that level, and we think we can because some of the initiatives that we pursued to turn around Nutrish are starting to actually show encouraging results. If we can stay at that, call it 3% to 3.2% market share range, then now we can actually go after costs aggressively. It's more than just footprint.

Speaker #1: And that's because we wanted to wait until we had the confidence that we had is stable pet business. And we feel that we're getting to that point.

Speaker #1: We are now at 3% market share and what we are confident is if we can stay in that level and we think we can because some of the initiatives that we pursured to turn around nutrition are starting to actually show encouraging results.

Speaker #1: If we can stay at that, call it 3, 3, 2 market share range, then now we can actually go after cost aggressively. And it's more than just footprint.

Nico Catoggio: There are opportunities to simplify the portfolio, harmonize formulas, a lot of the things that we did in cereal, that when you do that will allow us to actually optimize the footprint. To your question, yes, we are assessing those. We are very confident that we have a lot of opportunities in pet, and we actually starting to now work on the pipeline of those opportunities.

Speaker #1: There are opportunities to simplify the portfolio and harmonize formulas. A lot of the things that we did in cereal—when you do that, then that will allow us to actually optimize the footprint.

Speaker #1: So your question is, to your question, yes, we are assessing those. We are very confident that we have a lot of opportunities in pet.

Speaker #1: And we actually starting to now work on the pipeline of those opportunities.

Speaker #4: Great. All right. Thanks so much. Appreciate it.

Andrew Lazar: Great. All right. Thanks so much. Appreciate it.

Speaker #3: Thank you. Our next question is coming from Matt Smith with Stifel. Your line is now open.

Operator: Thank you. Our next question is coming from Matt Smith with Stifel. Your line is now open.

Speaker #5: Hi. Good morning. The narrow guidance range for this year implies fourth quarter more or less in line with the performance here in the third quarter.

Matt Smith: Hi, good morning. The narrowed guidance range for this year implies Q4 more or less in line with the performance here in Q3. You called out Foodservice continuing to move towards the normalized run rate, suggesting it steps lower on a sequential basis. Can you talk about where the offsets to that Foodservice moving lower, where you see a stronger EBITDA outlook as you look into Q4 here? Thank you.

Speaker #5: You called out food service continuing to move toward the normalized run rate, suggesting it steps lower on a sequential basis. So, can you talk about where the offsets to that food service moving lower are, and where you see a stronger EBITDA outlook as you look into the fourth quarter here?

Speaker #5: Thank you.

Matt Mainer: The offset to Foodservice pulling back in the quarter?

Speaker #2: The offset to food service pulling back in the quarter?

Speaker #5: Yes, as we think about kind of the shape of the P&L in the fourth quarter and look ahead into '27.

Matt Smith: Yes, as we think about kind of the shape of the P&L in Q4 and look ahead into 2027.

Speaker #1: Yeah.

Matt Mainer: Yeah. It's more of a, we saw Refrigerated Retail pull back a bit more than anticipated out of the Easter benefit in Q2. In terms of results in Q3, we see some improvement in that business in Q4, really for the rest of the portfolio, pretty flat. We're not talking about significant changes overall.

Speaker #2: Yeah. So it's more of a we saw refrigerated retail pull back a bit more than anticipated out of the Easter benefit in Q2 in terms of results in Q3.

Speaker #2: We see some improvement in that business in Q4 and really for the rest of the portfolio pretty flat. So we're not talking about significant changes overall.

Speaker #5: Thanks for that. And Matt, the CapEx range moved a little higher at the low end for this year. Can you talk about that incremental investment?

Matt Smith: Thanks for that. Matt, the CapEx range moved a little higher at the low end for this year. Can you talk about that incremental investment and as you look ahead to 2027, give a view of if CapEx remains relatively stable or moves perhaps even higher as you look at some of the supply chain work you're undertaking. Thank you.

Speaker #5: And as you look ahead to '27, give a view of if CapEx remains relatively stable or moves perhaps even higher as you look at some of the supply chain work you're undertaking.

Speaker #5: Thank you.

Speaker #2: Sure. I think just really a refinement of this year and the pacing we're seeing on the CapEx range just leans a little bit higher in the range from where we started.

Matt Mainer: Sure. I think just really a refinement of this year and the pacing we're seeing on the CapEx range just leads us a little bit higher in the range from where we started, but That's definitely a bit of a moving target. Again, a lot of these capital projects we're trying to work through as fast as we can because they're in the plan for a reason. When you think about next year, a bit too soon to say. I think just to add on to Nico's comments, as you think about potential network optimization, that's an area where if we see clear opportunities, there could be some additional capital spend to clear the way for those. Outside of that, would expect just continued investment in Foodservice and pursuing growth as we get our plan together for next year and the following year.

Speaker #2: But it's definitely a bit of a moving target. And again, a lot of these capital projects we're trying to work through as fast as we can, because they're in the plan for a reason.

Speaker #2: When you think about next year, it's a bit too soon to say. I think, just to add on to Anika's comments, as you think about potential network optimization, that's an area where, if we see clear opportunities, there could be some additional capital spend to clear the way for those.

Speaker #2: Outside of that, we would expect just continued investment in food service and pursuing growth as we get our plan together for next year and the following year.

Speaker #2: And then, really, more of a maintenance level across the balance of the business.

Matt Mainer: Then really more of a maintenance level across the balance of the business.

Speaker #5: I appreciate that. I'll pass it on.

Matt Smith: Appreciate that. I'll pass it on.

Speaker #3: Thank you. Our next question is coming from David Palmer with Evercore ISI. Please go ahead.

Operator: Thank you. Our next question is coming from David Palmer with Evercore ISI. Please go ahead.

Speaker #6: Great. First of all, best to Rob and congratulations to Daniel. Big day. I want to ask you just about yeah. I want to ask you about the EBITDA guidance just what's behind the 1.48 billion for PCB.

David Palmer: Great. First of all, best to Rob, and congratulations to Daniel on a big day. Wanted to ask you just about.

Matt Mainer: It's the beginning.

David Palmer: Yeah. I want to ask you about the EBITDA guidance, just what's behind the $1.48 billion for PCB, EBITDA down mid-single digits. Should we assume that PCB organic sales down at 3%, maybe mid-single digits down for PCB with that guidance? Is that reasonable?

Speaker #6: EBITDA down, mid-single digits assuming. Should we assume that PCB organic sales down 3%, maybe mid-single digits down for PCB with that guidance? Is that reasonable?

Matt Mainer: Again, I think we've got kind of a first look and ranges around our businesses, David, and just given the.

Speaker #2: I think it's, again, I think we've got kind of a first look and ranges around our businesses, David, and just given the non-recurring things we were saying we wanted to get some indication out there.

Matt Mainer: non-recurring things we were saying, we wanted to get some indication out there. I think we're a little cautious to get into details around each business segment until we have a more formalized plan. Certainly, we've commented in our release that we see growth in Foodservice next year offsetting some of these pressures we're seeing in terms of inflation and volume pressures. I think fair, there's probably a bit of pullback in overall retail offset by Foodservice. Don't really want to get into the by segment comments yet.

Speaker #2: I think we're a little cautious to get into details around each business segment until we have a more formalized plan. But certainly, we continue to we've commented in our release that we see growth in food service next year, offsetting some of these pressures we're seeing in terms of inflation and volume pressures.

David Palmer: Yeah.

Matt Mainer: Certainly, we've commented in our release that we see growth in Foodservice next year offsetting some of these pressures we're seeing in terms of inflation and volume pressures. I think fair, there's probably a bit of pullback in overall retail offset by Foodservice. Don't really want to get into the by segment comments yet.

Speaker #2: So I think fair, there's probably a bit of pullback and overall retail offset by food service. But don't really want to get into the by-segment comments yet.

Speaker #1: Yeah. And what I would add, without actually—to Matt's point—getting to the specific segments, is a comment that you could apply to all of our retail businesses.

Nico Catoggio: Yeah, what I would add, without actually too much point getting to the specific segments, it's a comment that applies to all of our retail businesses. We expect, as Matt said, inflation, and it's going to be a year where we'll probably chase inflation. Typically, to be able to price, we need to wait to see the inflation. That's how you have the discussion with the retailers. That's what that kind of initial outlook actually reflects.

Speaker #1: We expect as Matt said, inflation and it's going to be a year where we'll probably chase inflation. Typically, to be able to price, we need to wait to see the inflation.

Speaker #1: That's how you have the discussion with the retailers. So, that's what that kind of initial outlook actually reflects.

Speaker #6: Sort of behind that is, I'm looking at the long term here and volume trends for your all-in cereal business, including private label and volume has been down mid-single digits basically the last two years now.

David Palmer: Sort of behind that is I'm looking at the long term here and volume trends for your all in cereal business, including private label. Volume has been down mid-single digits, basically, the last two years now. I wonder if that's just kind of how you're thinking about that business going forward, as an underlying assumption going forward, i.e., it's not going to get better anytime soon. Maybe the other, you see some real tangible reasons why it could get better over the next fiscal year. I'll pass it on.

Speaker #6: And I wonder if that's just kind of how you're thinking about that business going forward as an underlying assumption going forward, i.e., it's not going to get better anytime soon or maybe the other.

Nico Catoggio: Yeah

David Palmer: if that's just kind of how you're thinking about that business going forward, as an underlying assumption going forward, i.e., it's not going to get better anytime soon. Maybe the other, you see some real tangible reasons why it could get better over the next fiscal year. I'll pass it on.

Speaker #6: You see some real tangible reasons why it could get better over the next fiscal year and I'll pass it on.

Nico Catoggio: Again, we still don't know. We don't have all the details of the plans. What I can tell you is that I would expect the cereal volume to move closer to the category next year. The reason why we've been lagging the category a bit in the last year, it's a lot of decisions that we made. One is, we talk about it in the last two quarters, we adjusted the assortment to have better performance or efficiency in our promotions. That is worth 1 percentage point of the gap versus the category. It's significant. It's 50% of the gap versus the category. The rest, as we mentioned, we lost some distribution in our Malt-O-Meal brand, and it's kind of the tail SKUs, the lower velocity SKUs, but we lost distribution. Going forward, the rest of the portfolio is performing really well.

Speaker #1: Again, we still don't know. We don't have the all the details of the plans and but what I can tell you is that I would expect the serial volume to move closer to the category.

Speaker #1: Next year, the reason why we've been lagging the category a bit in the last year, it's a lot of decisions that we made. So one is we talk about it in the last two quarters we adjusted the assortment to have better performance or efficiency in our promotions.

Speaker #1: That is worth 1 percentage point of the gap versus the category. So it's significant. It's 50% of the gap versus the category. And the rest, as we mentioned, it's we lost some distribution in our multimill brand and it's kind of the tailscale use, the lower velocity scale use.

Speaker #1: But we lost distribution going forward. The rest of the portfolio is performing really well. Our premium portfolio, we are gaining market share in our premium portfolio.

Nico Catoggio: Our premium portfolio, we are gaining market share in our premium portfolio. That is great news. I would anticipate moving closer to the category. Where the category is going to be, we don't know. The good news is it's actually slowly improving quarter after quarter. It's getting closer to what we see as the long-term sustainable trend in the category of, call it, minus 1%, minus 2%. We're not there yet, but we're getting closer.

Speaker #1: That is great news. So I would anticipate moving closer to the category. Where the category is going to be, we don't know. The good news is, actually, slowly improving quarter after quarter is getting closer to what we see as the long-term sustainable trend in the category of, call it, minus 1%, minus 2%.

Speaker #1: We're not there yet, but we're getting closer.

Speaker #6: Got it. Thank you.

David Palmer: Got it. Thank you.

Speaker #3: Thank you. Our next question is coming from Tom Palmer with J.P. Morgan. Your line is now open.

Operator: Thank you. Our next question is coming from Thomas Palmer with JPMorgan. Your line is now open.

Speaker #7: Good morning and thanks for the question. Maybe just follow up on something you touched on earlier in the call related to Andrew's question. The pet business, you made mention that you like the progress that you're starting to see.

Thomas Palmer: Good morning, and thanks for the question. Maybe just follow up on something you touched on earlier in the call, related to Andrew's question. The pet business, you made mention that you like the progress that you are starting to see. Could we maybe just get more of an update there on the different brands and where we stand,

Speaker #7: Could we maybe just get more of an update there on kind of the different brands and where we stand in terms of instituting changes and seeing those on-shelf changes?

Nico Catoggio: Yeah

Thomas Palmer: in terms of instituting changes and seeing those on-shelf changes? Thank you.

Speaker #7: Thank you.

Speaker #1: Yeah, absolutely. So let me start with if you take the year-over-year decline for that business, 60% of that is our value brands and most of that is nine lives.

Nico Catoggio: Yeah, absolutely. Let me start with, if you take the year-over-year decline for that business, 60% of that is our value brands, and most of that is 9Lives. We mentioned last quarter, we relaunched a third of that brand that we were not making money on. We saw elasticities higher than what we anticipated, but at the same time, we like the margins, right? We like the margins more than what we used to like them, I would say. We had to do it. We are actually working as we speak, and we are seeing good progress on resetting the value proposition for that. At the same time, the cat segment, because it's where the growth is in the category, has been very active in terms of promotion.

Speaker #1: And we mentioned last quarter, we relaunched a third of that brand that we were not making money on. We saw elasticities higher than what we anticipated, but at the same time, we like the margins, right?

Speaker #1: Oh, we like the margins more than what we used to like them. I would say. So we had to do it. We are actually working as we speak and we are seeing good progress on kind of resetting the value proposition for that.

Speaker #1: At the same time, the cat segment, because it's where the growth is in the category, has been very, very active in terms of promotion.

Speaker #1: So Nine Lives—that stands essentially for value in the category—has seen a lot of promotions, competitive promotions, and with two of our main competitive brands actually hitting price points below our brand.

Nico Catoggio: 9Lives, that stands essentially for value in the category, has seen a lot of promotions, competitive promotions, and with two of our main competitor brands actually hitting price points below our brand. We are not going to follow them. We are very disciplined when we think about promotions, we don't see that as something that will remain like that over time. In the short term, that's a lot of the pressure that 9Lives is under. Nutrish, let me tell you the good news and the good news is where the brand is fully relaunched and then we actively work our assortment to what we call our core assortment, beef, chicken, and salmon, the brand is performing well. Our larger retailer is a good example of that. We very aggressively manage our assortment. We have what we call our must-haves SKUs there on shelf.

Speaker #1: We are not going to follow them. We are very disciplined when we think about promotion, so we don't see that as something that will kind of remain like that over time.

Speaker #1: But in the short term, that's a lot of the pressure that nine lives is under. Nutris, the so let me tell you the good news and the so the good news is where the brand is fully relaunched and we work actively work our assortment to what we call our core assortment, beef, chicken, and salmon.

Speaker #1: The brand is performing well. So our largest retailer is a good example of that. We very aggressively manage our assortment. We have what we call our must-haves can use there on shelf.

Speaker #1: And there, the brand went from losing market share year over year to now over the last 13 weeks, we are gaining market share. So in dried up, that's what we measure as.

Nico Catoggio: There, the brand went from losing market share year over year to now, over the last 13 weeks, we are gaining market share. In dry dog, that's what we measure as. We feel good. We are seeing in some other retailers where we are actually transitioning, we see a clear inflection point in the performance of the brand. Now, the transition has taken a bit longer than anticipated. It's been a bit more messy. The other thing is, there's a clear difference in performance between, again, what we call our core assortment and the flanker SKUs. What we are working on is for the next reset, is doing a lot more of what we did in one of the larger retailers, that is working the assortment to actually focus on that core set of SKUs that perform really well.

Speaker #1: So we feel good and we are seeing in some other retailers where we are actually transitioning we see a clear inflection point in the performance of the brand.

Speaker #1: Now, the transition has taken a bit longer than anticipated. It's been a bit more messy. And the other thing is, there's a clear difference in performance between, again, what we call our core assortment and the flanker SKUs.

Speaker #1: So, what we are working on for the next reset is doing a lot more of what we did in this one, with one of the larger retailers that is working the assortment to actually focus on that core set of scale SKUs that performed really well.

Speaker #1: Again, the good news is where we relaunch those, where they are fully transitioned, we are actually seeing a clear inflection point. And those scale use actually turning the top third of the category.

Nico Catoggio: Again, the good news is where we launch those, where they are fully transitioned, we are actually seeing a clear inflection point, and those SKUs actually turn in the top third of the category, and that's very encouraging.

Speaker #1: And that's very encouraging.

Speaker #7: Great, thank you for all that detail. I did have one other question on PCB. Just looking back over the past four quarters, there's been a pretty meaningful pullback in marketing.

Thomas Palmer: Great. Thank you for all that detail. I did have one other question on PCP. Just looking back over the past four quarters, a pretty meaningful pullback in marketing A&C activity. As you look forward, since you're going to start lapping that pullback, is there more to do? Given some of these on-shelf changes, especially in pet, does it make sense to maybe invest back a bit? Just kind of curious your views there.

Speaker #7: ANC activity, as you look forward since you're going to start lapping that pullback, is there more to do or given some of these on-shelf changes, especially in pet, does it make sense to maybe invest back a bit?

Speaker #7: Just kind of curious your views there.

Speaker #1: Yeah, so I would actually say there are two things behind that. One is, we constantly work to improve the return on spend and the effectiveness of spend.

Nico Catoggio: Yeah. I would actually say there are two things behind that. One is we constantly work to improve the return on spend and the effectiveness of spend. Almost 100% of our spend now, it's digital and no linear TV. We improve our returns. That's across the portfolio, but mostly on the cereal side. We haven't pulled support out of the cereal brands. We just got more effective spend. In pet, some of the A&C pullback, it's not necessarily A&C that we're pulling out. We are actually deploying dollars differently. There's more spend on in-store activation or select rollbacks and retailer support. That is, again, dollars that move from A&C to call it trade spend, to reset some value equations that we talk about. Do we anticipate some support back in some brands? It's brand by brand.

Speaker #1: So almost 100% of our spend now, it's digital and no linear TV. So we improve our returns. So that's on the across the portfolio, but mostly on the serial side.

Speaker #1: So we haven't pulled support out of the serial brands. We just got more effective spend. In pet, some of the NC pullback is essentially it's not necessarily ANC that we're pulling out.

Speaker #1: We are actually deploying dollars differently. So there's more spend on in-store activations or select rollbacks and retailer support. That is, again, dollars that move from A&C to, call it, trade spend.

Speaker #1: To reset somebody equations that we talk about. Do we anticipate some support back in some brands? It's brand by brand. We feel really good about the returns in our serial brands.

Nico Catoggio: We feel really good about the returns in our cereal brands. Really good. We're going to be selective in our support in our pet brands.

Speaker #1: Really, really good. And we're going to be select selective in our support in our pet brands.

Speaker #7: Understood. Thank you.

Thomas Palmer: Understood. Thank you.

Speaker #3: Thank you. We'll move on now to Scott Marks with Jefferies, your line is open.

Operator: Thank you. We'll move on now to Scott Marks with Jefferies. Your line is open.

Speaker #8: Hey, good morning, all. Thanks very much for taking my questions. The first thing I wanted to ask about is the foodservice business, and specifically on the profit side.

Scott Marks: Hey, good morning, all. Thanks very much for taking our questions. First thing I wanted to ask about is the Foodservice business, and specifically on the profit side. I think despite the lapping the HPAI pricing adders and price realization being decidedly negative this quarter, you've still put up a pretty strong profit number, actually in line with what you did in Q2. Just wondering if you can help us understand the moving pieces there. Why was it so strong? Maybe why shouldn't we believe that the actual annualized run rate is higher than the $500 million? Thanks.

Speaker #8: I think despite the lapping the HPAI pricing adders and price realization being decidedly negative this quarter, you still put up a pretty strong profit number actually in line with what you did in Q2.

Speaker #8: So just wondering if you can help us understand the moving pieces there? Why was it so strong? And maybe, why shouldn't we believe that the actual annualized run rate is higher than the $500 million?

Speaker #8: Thanks.

Speaker #1: Sure. Very fair question. I think just to think about the 500 million dollar run rates, really an estimate of what we see the current business earning power is under normalized circumstances.

Matt Mainer: Sure. Very fair question. I think just to think about the $500 million run rate, it's really an estimate of what we see the current business earning power is under normalized circumstances. I think you got to define the view of normalized circumstances as really, I'd say, three things. It's our business being back in balance from a supply and demand standpoint. Really, our inventory is back to normal, underlying market versus grain-based egg pricing. Happy to say the first two, so our internal supply and demand and our inventories, which we continued to build this past quarter, are back to where we'd like to see them and in balance. We're really left with that third piece, which is a bit of imbalance between market and grain-based egg pricing. All three were a function of HPAI last year.

Speaker #1: And I think you got to define that view of normalized circumstances is really I'd say three things. It's our balance. I'm sorry, our business being back in balance from a supply and demand standpoint.

Speaker #1: Really our inventory is back to normal. And then also underlying market versus grain-based egg pricing. Happy to say the first two so our internal supply and demand and our inventories, which we continue to build this past quarter, are back to where we'd like to see them and in balance.

Speaker #1: So we're really left with that third piece, which is a bit of imbalance between market and grain-based egg pricing. And that's really a function all three were a function of HPAI last year and throwing the industry in our own supply out of whack.

Matt Mainer: Throwing the industry and our own supply out of whack. Again, I think the third piece we believe will correct itself. Just when you have a situation of oversupply is where we believe we are from an industry standpoint, that is actually not going to survive long when you've got chickens, the cost to feed them is greater than what you can command on the open market. We expect people will take some actions to bring that in line. I think that collectively is how we really view the underlying run rate and how we view the business heading into 2027. Again, we feel we can fully grow off of that number in 2027, off the $500 million run rate.

Speaker #1: Again, I think the third piece we believe will correct itself just when you have a situation of oversupply, which is where we believe we are from an industry standpoint.

Speaker #1: That is actually not going to survive long when you've got chickens. The cost to feed them is greater than what you can command on the open market.

Speaker #1: We expect people will take some actions to bring that in line. So I think that collectively is how we really view the underlying run rate and how we view the business heading into '27.

Speaker #1: Again, we feel we can fully grow off of that number in '27 off the 500 million dollar run rate. But that's our attempt to try and carve those pieces out and get to, hey, what we see on underlying volumes and balance of the business where it's running today.

Matt Mainer: That's our attempt to try and carve those pieces out and get to what we see on underlying volumes and balance of the business where it's running today.

Speaker #4: And, Scott, one thing that I would add is, in Q3, we probably took a bit more advantage of the market conditions than what we anticipated.

Nico Catoggio: Scott, one thing that I would add is in Q3, we probably took a bit more advantage of the market conditions than what we anticipated. We exited the quarter with really high inventories. That's part of what is reflected in that number.

Speaker #4: So we exited the quarter with really high inventories. That's part of what it's reflected in that number.

Speaker #8: Understood. Appreciate the color there. And then maybe just as a follow-up, since you guys gave kind of preliminary fiscal '27 guidance, you kind of gave some tailwinds helping you, some of the headwinds that are offsetting.

Scott Marks: Understood. Appreciate the color there. Maybe, just as a follow-up, since you guys gave a kind of preliminary fiscal 2027 guidance, you kind of gave some tailwinds helping you, some of the headwinds that are offsetting. Just wondering if you can share any assumptions in terms of rate of inflation, where that's coming from, just any other building blocks you're willing to share at this point. Thanks.

Speaker #8: Just wondering if you can share any assumptions in terms of rate of inflation, where that's coming from, just any other building blocks you're willing to share at this point.

Speaker #8: Thanks.

Speaker #1: Yeah, I think we're hesitant to get into any broad-based assumptions. We really just wanted to rebase '26 to make sure we're very clear on good service run rate, where we're seeing that, and then also the impact of the two divestitures we made.

Matt Mainer: I think we're hesitant to get into any broad-based assumptions. We really just wanted to rebase 2026 to make sure we're very clear on Foodservice run rate, where we're seeing that, and then also the impact of the two divestitures we made. Beyond that, like I said, we're in the middle stages here and have some first looks and ranges, but really don't want to get into underlying assumptions. Broad brush, we see those all balancing out, and that's why we're saying a stable flat year to a rebalance 2026, but really not in a position to get into a lot of details around those assumptions. Certainly, as we get to November, we'll be able to walk through much more specifically some of those assumptions.

Speaker #1: I think beyond that, like I said, we're in the middle stages here and have some first looks and ranges, but really don't want to get into underlying assumptions.

Speaker #1: I think broad brush, we see those all balancing out. And that's why we're saying a stable flat year to a rebalanced '26. But really not in a position to get into a lot of details around those assumptions.

Speaker #1: Certainly as we get to November, we'll be able to walk through much more specifically some of those assumptions.

Speaker #8: Okay, understood. We'll leave it there. Thanks very much.

Scott Marks: Okay, understood. We'll leave it there. Thanks very much.

Speaker #3: Thank you. Our next question is coming from Mark Torrente. With Wells Fargo, your line is open.

Operator: Thank you. Our next question is coming from Marc Torrente with Wells Fargo. Your line is open.

Speaker #9: Hey, good morning. And thank you for the questions. Maybe just asking the last one. A bit differently, the slattish outlook into next year, are the inflation pressures and volume trends you're seeing consistent with your prior expectations that you sort of walked through on the last call?

Marc Torrente: Hey, good morning, thank you for the questions. Maybe just asking the last one a bit differently. The flattish outlook into next year. Are the inflation pressures and volume trends you're seeing consistent with your prior expectations that you sort of walked through on the last call? Where is that mostly flowing through?

Speaker #9: And where is that mostly flowing through?

Nico Catoggio: I can touch on at least. Again, we're still working on the budget, so we don't have all the details. I would actually say volumes are consistent with what we're seeing. Inflation, I mentioned in the last call that we needed to wait to have a bit more visibility. I think what we're seeing is coming in probably at the higher end of what we were expecting. It's within the range that we were expecting, but at the higher end of that range. Again, that's part of what is reflected in that initial outlook.

Speaker #1: I can touch on at least. So again, we're still working on the budget. So we don't have all the details. But I would actually say volumes are consistent with what we're seeing.

Speaker #1: Inflation, I mentioned in the last call that we wanted to see we needed to wait to have a bit more visibility. And I think what we're seeing is coming in probably at the higher end of what we were expecting.

Speaker #1: So, it's within the range that we were expecting, but at the higher end of that range. And again, that's part of what is reflected in that initial outlook.

Speaker #9: Okay. I appreciate that. And then on refrigerated retail, could you maybe help us understand some of the weakness in the quarter, the underlying was down.

Marc Torrente: Okay. Appreciate that. On Refrigerated Retail, could you maybe help us understand some of the weakness in the quarter? The underlying was down. I think that was mostly due to the pricing lap and holiday timing. Maybe just what does that business look like near term? Maybe quantify some of the impact from the Crystal Farms sale. Thank you.

Speaker #9: I think that was mostly due to the pricing lap and holiday timing. But maybe just what does that business look like near term? And maybe quantify some of the impact from the Crystal Farm sale.

Speaker #9: Thank you.

Speaker #1: Sure. So yeah, to your point year over year, the Easter timing was a big factor. And then also as a reminder in Q3 and Q4 of last year, we had pricing adders around AI that were beneficial for the business.

Matt Mainer: Yes, to your point, year over year, the Easter timing was a big factor, and also as a reminder, in Q3 and Q4 of last year, we had pricing adders around HPAI that were beneficial for the business. Those, just like our Foodservice business, were taken off as we got into fiscal 2027. Easter and those pricing adders are the big year over year drivers. In addition to that, which is more of the current run rate of the business, certainly as we've seen across the portfolio, but on a relative size basis, just more impactful for Refrigerated Retail, has been the impact of higher fuel costs and freight costs that we've seen, and we talked about on our prior call. The other impact is around eggs. The dynamic there is we're selling on the market.

Speaker #1: And those just like our food service business that were taken off as we got into fiscal '27. So Easter and those pricing adders are the big year-over-year drivers.

Speaker #1: And then in addition to that, which is more of the current run rate of the business, certainly as we've seen across the portfolio, but on a relative size basis, just more impactful for refrigerated retail has been the impact of higher fuel costs and freight costs that we've seen.

Speaker #1: And we talked about that on our prior call. And then the other impact is around eggs. The dynamic there is we're selling on the market.

Speaker #1: We're a grain-based buyer of eggs. And you've got a dynamic where market prices have plummeted. So it's a tough situation to try and take pricing into equalize those when the Ernie Berry markets are suggesting price of eggs from a market standpoint is much lower than what we're procuring at.

Matt Mainer: We're a grain-based buyer of eggs, and you've got a dynamic where market prices have plummeted. It's a tough situation to try and take pricing in to equalize those when the ordinary markets are suggesting price of eggs from a market standpoint is much lower than what we're procuring at. That's certainly been the dynamic we've seen here in Q3, and that's really maybe the gap to expectations, both internal and external, for Q3.

Speaker #1: So that's certainly been the dynamic we've seen here in Q3. And that's really maybe the gap to expectations both internal and external for Q3.

Speaker #3: Thank you. We'll take our next question from Rob Dickerson. With US Bank Corp BTIG, your line is open.

Operator: Thank you. We'll take our next question from Rob Dickerson with U.S. Bancorp BTIG. Your line is open.

Speaker #8: Hey, great, thanks a lot. So, you put in the release last night and some commentary this morning on the ongoing volume weakness, but then offsets— and part of the offsets were from pricing. But you’re also saying you’re kind of chasing the pricing a little bit because it has to come through first.

Rob Dickerson: Hey, great. Thanks a lot. You put in a release last night and some commentary this morning on just kind of the ongoing volume weakness, but then offsets, and part of the offsets would be pricing. You're also saying, be kind of chasing the pricing a little bit because that has to come through first. I guess just to clarify, simplistically, it would seem like If there's a little bit of pricing contribution next year, that'd probably be later in the year, maybe more back half in the year. Secondly, if you could just touch on, broadly speaking at least, where you think you might still see some ongoing volume softness and then where you also might think you might have a higher probability of some of that pricing. Just going through the different segments, at least for purposes of modeling. Thanks.

Speaker #8: So I guess just to clarify simplistically, it would seem like if there's a little bit of pricing contribution next year, that'd probably be later in the year, maybe more back half in the year.

Speaker #8: And then secondly, if you could just touch on broadly speaking at least, kind of where you think you might still see some ongoing volume softness and then where you also might think you might have a higher probability of some of that pricing.

Speaker #8: Just kind of going through the different segments at least for purposes of modeling. Thanks.

Speaker #1: Do you want to I think you're spot on. So our assumption right now is that pricing will be more toward the end of the year.

Nico Catoggio: I think you are spot on. Our assumption by now is that pricing will be more toward the end of the year. Right now, where we see more of that happening is in PCD. Again, early on in the process. That is where we see most of the inflation and where we expect some pricing. Volumes, I think it is going to be similar to what we are seeing. If you think about the categories, again, we do not know exactly where the category is going to be. CBL, expecting to decline probably 2.5%. Again, we do not know. In pet, as a reminder, two-thirds of our portfolio, 60% of our portfolio, is dry dog. That segment is underperforming the category. If you think about dog is underperforming cat, so dog is declining, cat segment is growing, and within dog, dry is underperforming.

Speaker #1: Right now, what we see more of that happening is in PCB. But again, early on in the process, that's where we see most of the inflation and where we expect some pricing.

Speaker #1: Volumes—I think it's going to be similar to what we're seeing. So, if you think about the categories again, we don't know exactly where the categories are going to be, but cereal is expected to decline, probably 2.5%. But again, we don't know.

Speaker #1: I mean, and then in pets, as a reminder, most of so two-thirds of our portfolio, 60% of our portfolio is dry dog. That segment is underperforming.

Speaker #1: The caddie. So if you think about dog is underperforming cat. So dog is declining. Cat segment is growing. And within dog, dry is underperforming.

Speaker #1: So, that's going to be a headwind. So, that's where we see some volume softness. But again, it's more driven by the caddie than our runs. We felt that we are going to be moving toward that caddie average.

Nico Catoggio: That is going to be a headwind. That is where we see some volume softness. Again, it is more driven by the category than our brands. We feel that we are going to be moving toward that category average. Again, considering the mix of our portfolio.

Speaker #1: But again, considering the mix of our portfolio.

Speaker #8: Okay. Great. Very helpful. And then just quickly, back to the kind of leverage versus buyback perspective right now. I think you said kind of comfortable in that mid-four range around there.

Rob Dickerson: Okay, great. Very helpful. Just quickly, back to the leverage versus buyback perspective right now. I think you said you are kind of comfortable in that mid four range, around there. Also said, do not really have any big maturities coming due. Clearly want to be cognizant of the rate environment and how that impacts interest and cash flow, et cetera. All that said, though, is that what you are saying basically is the cash allocated to buybacks, let us say over the next 18 months, just making it up, will be lower, and the cash to incremental debt paydown would be higher despite having no maturity coming due? Like you are going to pay down debt, just not buy back as much stock. That is basically it.

Speaker #8: Also said we don't really have any big maturities coming due, but clearly want to be cognizant of the rate environment and how that impacts interest and cash flow, etc.

Speaker #8: So kind of all that said though, is that what you're saying basically is kind of the cash allocated to buybacks let's say over the next 18 months, just making it up.

Speaker #8: Would be lower and then the cash to incremental debt paydown would be higher. Despite having kind of no maturity coming due, like you're going to pay down debt, just not buyback as much stock.

Speaker #8: Is that that's basically it?

Speaker #1: Yeah, yes, I think you summarized it well. I mean, that's given our current view, and we'll continue to look at where rates are going and refinance rates.

Matt Mainer: Yes. I think you summarized it well. That is given our current view, and we will continue to look at where rates are going and refinance rates. Just in the last quarter as an example, our 10-year refinance rate, which is our benchmark, what we look at, has risen 50 basis points. That certainly goes into the model and the factor. Assuming rates stay elevated over the next year, that is the right way to think about how we are thinking about capital allocation favoring debt reduction over share repurchases. Again, we still have a pool of cash flow that we can deploy against share repurchases. It is just in the balance is going to be more on the debt side in this interest rate environment.

Speaker #1: But just in the last quarter, as an example, our 10-year refinance rate—which is our benchmark, what we look at—has risen 50 basis points.

Speaker #1: So that certainly goes into the model and the factor. So assuming rates stay elevated over the next year, that's the right way to think about how we're thinking about capital allocation favoring debt reduction over share repurchases.

Speaker #1: Again, we still have a pool of cash flow that we can deploy against share repurchases. It's just that the balance is going to be more on the debt side.

Speaker #1: In this interest rate environment.

Speaker #8: Yeah. Okay. Great. All right. Thanks a lot. I'll pass it on.

Rob Dickerson: Yeah. Okay, great. All right. Thanks a lot. I'll pass it on.

Speaker #3: Thank you. Our next question is coming from Carla Casella with JP Morgan. Please go ahead.

Operator: Thank you. Our next question is coming from Carla Casella with JP Morgan. Please go ahead.

Speaker #7: Hi. Thanks for taking the question. You mentioned in the prepared market about getting some share in private label in pet. And I'm just wondering how you think about private label in that business.

Carla Casella: Hi, thanks for taking the question. You mentioned in the prepared remarks about gaining some share in private label in pet, and I'm just wondering how you think about private label in that business. Is that a bigger opportunity or is that something you're just using to fill in space and how you think about private label in general?

Speaker #7: Is that a bigger opportunity or is that something you're just using to fill in space and kind of high thing about private label in general?

Speaker #1: In general, in pet, you mean?

Nico Catoggio: In general, in pet, you mean?

Nico Catoggio: In general, in pet, you mean? Yes. If you remember, we lost some business 18 months ago. We were confident that we were going to recover some of that, and that's essentially what's happening. We have a fairly unique position in that category. We are a premium private label player. We produce mostly premium products. That's a segment that is growing in the category. We are well-positioned. We see more opportunities of that. The other opportunity is as we continue integrating the footprint, we see more opportunities of actually expanding private label as we leverage the full footprint that we have. We feel good about that. That business is actually performing really well.

Speaker #7: Yeah.

Carla Casella: Yeah.

Speaker #1: Yeah. So if you remember, we lost some business 18 months ago. We were confident that we were going to recover some of that and that's essentially what's happening.

Nico Catoggio: Yes. If you remember, we lost some business 18 months ago. We were confident that we were going to recover some of that, and that's essentially what's happening. We have a fairly unique position in that category. We are a premium private label player. We produce mostly premium products. That's a segment that is growing in the category. We are well-positioned. We see more opportunities of that. The other opportunity is as we continue integrating the footprint, we see more opportunities of actually expanding private label as we leverage the full footprint that we have. We feel good about that. That business is actually performing really well.

Speaker #1: We have a fairly unique position in the category. We are a premium private label player, so we produce mostly premium products, and that's a segment that is growing in the category.

Speaker #1: So we are well positioned. So we see more opportunities of that. And then the other opportunity is as we continue integrating the footprint, we see more opportunities of actually expanding private label as we leverage the full footprint that we have.

Speaker #1: So we feel good about that. That business is actually performing really well.

Speaker #7: That's great. And I'm just wondering if you have any comments in terms of in pet, where you're seeing the pockets of strength, is it mass, club, pet specialty, any kind of divergence and trends by type of retailer?

Carla Casella: That's great. I'm just wondering if you have any comments in terms of in pet, where you're seeing the pockets of strength. Is it mass, club, pet specialty? Any kind of divergence in trends by type of retailer?

Speaker #1: Yeah. It's a good question. So the obvious one is e-commerce is growing outgrowing every other channel. And it's both the two pure plays. So that you know and also the retailer dot com businesses.

Nico Catoggio: Yes. It's a good question. The obvious one is e-commerce is growing, outgrowing every other channel. It's both the two pure plays, you know, and also the retailer.com businesses. All those are outgrowing brick-and-mortar. Within brick-and-mortar, pet specialty is still, as a channel, underperforming relative to mass. Mass is doing probably slightly better than the average of the categories, but specialty is underperforming, and e-commerce is clearly over-performing.

Speaker #1: So all those are outgrowing brick and mortar. Within brick and mortar, a pet specialty is still as a channel underperforming relative to mass. So there are mass is doing probably slightly better than the average of the caddie specialty is underperforming and e-commerce is clearly overperforming.

Speaker #7: Okay, great. And then, can you just comment on SNAP impact, either on the quarter and how you're thinking about it for the year, or if there's a timing issue—when you expect the greatest SNAP impact versus when it may normalize?

Carla Casella: Okay, great. Can you just comment on SNAP impact, either on the quarter and how you're thinking about it for the year, or if there's a timing issue of when you expect the greatest SNAP impact versus when it may normalize?

Speaker #1: Well, SNAP, we've been I wish I knew exactly the answer for that. To be honest. So most people see it as a headwind. I personally have had this theory and I think it's what we're seeing in the caddie.

Nico Catoggio: SNAP, I wish I knew exactly the answer for that. Most people see it as a headwind. I personally have had this theory, and I think it's what we're seeing in the category. It's probably consistent with that it could be a tailwind for categories like cereal because of affordability. Cereal is still one of the cheapest categories for breakfast, and it's definitely the cheapest way to actually have the right nutrients in your breakfast. Longer term, I still see it as an opportunity, but the reality is there's a lot of noise. I would add, it's not only SNAP. There are changes in the WIC program, the Women, Infants, and Children program, that also impact the category because there were changes to their reallocation that impacts the category. There's so much noise. I don't have the perfect answer for SNAP.

Speaker #1: It's probably consistent with that—that it could be a tailwind for categories like cereal because of affordability. Cereal is still one of the cheapest categories for breakfast, and it's definitely the cheapest way to actually have the right nutrients in your breakfast.

Speaker #1: So we, longer term, I still see it as an opportunity. But the reality is there's a lot of noise. And I would add, it's not only SNAP; there are changes in the WIC program—the Women, Infants, and Children program—that also impact the category, because there were changes to the dairy allocation that impact the category.

Speaker #1: So, there's so much noise. I don't have the perfect answer for SNAP. I see it as potentially an opportunity for cereal, and the reality is, if you think about when SNAP changed—that is in our Q1—that's when we started seeing the category starting to perform a bit better.

Nico Catoggio: I see it as potentially an opportunity for cereal, and the reality is, if you think about when SNAP changed, that is in our Q1, that's when we started seeing the category starting to perform a bit better.

Speaker #7: Okay. Great. Thanks, for all the answers.

Carla Casella: Okay, great. Thanks for all the answers.

Speaker #3: Thank you. This concludes today's post holdings third quarter, 2026 earnings conference call and webcast. Please disconnect your line at this time. And have a wonderful day.

Operator: Thank you. This concludes today's Post Holdings third quarter 2026 earnings conference call and webcast. Please disconnect your line at this time, and have a wonderful day.

Q3 2026 Post Holdings Inc Earnings Call

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