Post Holdings, Inc. (NYSE:POST) Q2 2024 Earnings Conference Call August 2, 2024 9:00 AM ET
Company Participants
Daniel O’Rourke – Investor Relations
Robert Vitale – President and Chief Executive Officer
Jeff Zadoks – Executive Vice President and Chief Operating Officer
Matt Mainer – Senior Vice President, Chief Financial Officer and Treasurer
Conference Call Participants
Andrew Lazar – Barclays
David Palmer – Evercore ISI
Kenneth Goldman – JPMorgan
Matthew Smith – Stifel
Michael Lavery – Piper Sandler
John Baumgartner – Mizuho Securities
Robert Dickerson – Jefferies
Marc Torrente – Wells Fargo Securities
Carla Casella – JP Morgan
Operator
Welcome to the Post Holdings Third Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] I would now like to turn the call over to Daniel O’Rourke, Investor Relations for Post.
Daniel O’Rourke
Good morning. Thank you for joining us today for Post’s third quarter fiscal 2024 earnings call. I’m joined this morning by Rob Vitale, our President and CEO; Jeff Zadoks, our COO; and Matt Mainer, our CFO and Treasurer. Rob, Jeff and Matt will make prepared remarks, and afterwards, we’ll answer your questions.
The press release that supports these remarks is posted on both the investors and the SEC filings section of our website and is also available on the SEC’s website. As a reminder, this call is being recorded. An audio replay will be available on our website at postholdings.com. Before we continue, I would like to remind you that this call will contain forward-looking statements, which are subject to written 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 under takes no obligation to update these statements. We’ll 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 Rob.
Robert Vitale
Thank you, Daniel. In Q3, we delivered another quite solid that enabled us to increase our full year guidance. While never fully satisfied, we are quite pleased with the business performance, including recent acquisitions. I’m certain you noticed we have been aggressive in purchasing our own shares.
This solid performance is against a challenging and transitioning consumer environment. Inflation is cooling but to our labor markets. Meanwhile, rapid costive change in pricing over the last couple of years has impacted consumer behavior across channels. We expect to work through this reference price phenomenon in both retail and foodservice channels over the next year.
Key highlights of the quarter include strong consumption of both our branded and big cereal products, ongoing outperformance in our pet business versus our underwriting case, significant mix improvement in value-added eggs. We expect these highlights to be sustained in FY ’25. On the other side of the ledger, our refrigerator retail segment underperformed as trade invest annualized base volume without sufficient incremental lift.
We are addressing the appropriate level of trade spending. Looking to ’25, we expect a more stable consumer environment, which, along with lapping ’24, will support more favorable volume trends. The capital markets and the M&A market support further strategic action. Our leverage is at historically low levels, and we will tend to be reactive with capital allocation.
Our business model and our diversification enable us to adapt to changing conditions. And we will remain clear eyed as we consider the allocation of your capital. Now Jeff will provide more context on the quarter.
Jeff Zadoks
Thanks, Rob, and good morning, everyone. Starting with PCB, both our grocery and pet food products contributed to another strong quarter of profit performance. Within grocery, cereal volumes were challenged, although we performed better than the category as we slightly increased branded share in both dollars and pounds.
Carryover pricing combined with excellent operating and supply chain performance continued to be the main profit drivers within grocery. Zero category volume finished the quarter down 4.1%, despite not seeing an immediate recovery as we lap Snap this quarter, we continue to expect category volumes will normalize to the historical CAGR of down approximately 1% to 2%.
For the pet food business, our category share remained fairly flat in total and across our brands. Recall, however, in the last half of the prior fiscal year, our pet food sales revenues and volumes benefited from a onetime replenishment of customer inventories as we improved customer fill rates from the low 70s to the low 90s.
Strong manufacturing performance continued to drive our results. The closure of our Lancaster, Ohio Cira plant and our pet integration continue to remain on track with a planned exit from the Smucker’s TSA in the first half fiscal year 2025.
Moving to Foodservice, we had a good quarter with very strong product mix. In addition, we benefited from the final runout of avian influenza pricing related to the November 2023 outbreak, as well as elevated customer promotions in the quarter. Overall egg volumes were flat despite slowing restaurant foot traffic. However, our mix continued to improve with 15% volume growth in our highest-margin precooked egg products.
Lastly, we continue to encounter some delays in achieving our full RTD shake manufacturing right. The ramp-up has been slower than we anticipated, but we made significant progress during the quarter. Recognizing that it is hard to track the impact of avian influenza quarter-to-quarter, we will share that our expectation for Foodservice adjusted EBITDA in the fourth quarter is approximately $100 million.
Our refrigerated retail business had a significant pullback in profitability. While we were encouraged to see dinner and breakfast side volumes up 4% and 6%, respectively, this growth came with significantly higher than expected trade costs. We are recalibrating these investments and anticipate sequential segment profit improvement in the fourth quarter.
From a commodity standpoint, sale prices were a significant headwind versus prior year pressuring Q3 adjusted EBITDA for the segment. On the positive side, we continue to see strong manufacturing and cost management performance across the network.
Turning to Weetabix. U.K. category volumes moderated to a decline of 1%, and we saw flat volumes within our branded and private label biscuits. Continued improvement with supply chain and service levels, combined with incremental pricing on some private label products drove sequential margin improvement from Q2.
In addition, the business successfully completed Phase one of its ERP conversion and is on track for the second larger Phase two in the fall.
With that, I’ll turn the call over to Matt.
Matt Mainer
Thanks, Jeff, and good morning. Third quarter consolidated net sales were $1.9 billion and adjusted EBITDA was $350 million. Net sales increased 5% driven by recent acquisitions. Excluding acquisitions, sales declined 5% driven by lower overall volumes in our retail businesses and the impact of foodservice pricing of our foodservice pricing pass-through model.
Supply chain performance and fill rates remained strong, while commodity inflation on balance was neutral. Finally, SG&A increased as we continued targeted marketing investments in our retail businesses. Excluding the benefit of pet food acquisitions from both the current and prior year quarters, post-consumer brands net sales decreased 3% and volumes decreased 6%.
Average net pricing, excluding pet food, increased 3%. The Volumes declined primarily in nonretail and branded cereal. Segment adjusted EBITDA increased 28% versus prior year as we benefited from the strong contribution of pet food and improved grocery performance. Weetabix net sales increased 1% year-over-year.
Sales benefited from the DSI acquisition and a nominal foreign currency tailwind of 80 basis points from a stronger British pound. On a currency and acquisition neutral basis, net sales decreased 5% and volumes decreased 6%, driven by a decline in non-biscuit products.
Segment adjusted EBITDA increased 24% versus prior year led by the easing of commodity pressures and improved manufacturing leverage as we build inventory in the quarter ahead of our ERP go-live. Foodservice net sales decreased 5%, while volumes increased 2%, revenue reflects the pass-through of lower grain costs and a net reduction in pricing due to the wind down of avian influenza price setters from last year.
Volumes reflect increases in both Ag products and potato products. Adjusted EBITDA decreased 17% as we lap the benefit of Ag market imbalances and elevated avian influenza price setters in the prior year. These headwinds were partially offset by a favorable mix shift to higher margin pre-cooked cakes.
Refrigerated retail net sales decreased 7%, while volumes were flat. Average net prices declined as a result increased trade as a result of increased portfolio primarily for dinner sides. Favorable side disk volumes were offset by distribution losses in Ag products. Segment adjusted EBITDA decreased 37%, reflecting lower net pricing and a significantly higher sell costs compared to prior year.
Turning to cash flow. In the third quarter, we generated $272 million from operations driven by strong profit performance and sequential improvements to working capital. Capital expenditures in the quarter were approximately $110 million, driven by continued investments in pet food capacity and the expansion of our Norwalk, Iowa pre-cooked Ag facility.
For the last 12 months, cash flow from operations was $966 million, and capital expenditures were $391 million, net of $575 million of free cash flow. Given the strong cash flow, we maintained our net leverage at 4.3x quarter while purchase repurchasing two million shares at an average price of approximately $104 per share.
In the month of July, we repurchased an additional 300,000 shares at an average price of approximately $105 per share. In addition, our Board approved a new $500 million share repurchase authorization that begins next week.
Finally, given the strong performance in the quarter, we again raised our guidance to a new range of $13.70 to $13.90. With that, I will turn the call over to the operator for Q&A.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] And our first question will come from Andrew Lazar with Barclays. Please go ahead.
Andrew Lazar
Morning everybody. On Foodservice, I’m curious, you spoke to the ongoing run rate in EBITDA in that segment, I think last quarter of around $95 million. But sort of acknowledge that it has kind of been running above that but didn’t sort of really change it at that point. I’m curious where you see the ongoing run rate for Foodservice EBITDA now?
And partly, I ask that because as we think ahead to fiscal ’25, trying to get a sense of whether that could be a year-over-year headwind, right, lapping what was a strong year in Foodservice next year? Or if you think the ongoing run rate is somewhat higher or more consistent with what we’ve seen this year?
Matt Mainer
Sure. Andrew, we think the run rate is around $105 million. And again, the difference between that and the $100 million is pressure we’re going to see in Q4 related to avian influenza costs we’re going to incur ahead of pricing kicking in.
Andrew Lazar
Yes. Got it. And then in measured channel data for PET, which certainly does not tell the whole story, it looked like consumption decelerated pretty meaningfully on a sequential basis in the quarter. And I guess I’m trying to get a sense of whether something sort of changed in terms of maybe not seeing as much trade down to mainstream in pet as you had been seeing. And if the planned reinvestment has sort of started to take in yet or if that’s still to come?
Matt Mainer
Andrew, really two drivers there. One, there’s actually seasonality in the pet food category. So, you do see a pullback between Q2 and Q3 over-year. The other piece for us, though, specifically was we had new distribution gains in Q2.
So, there was a pipeline fill in particular for NineLives. So those are the two components of the sequential decline. Other than that, we’re kind of in line with where we’d expect to be.
Andrew Lazar
Got it. And lastly, just last quarter, I think, Rob, you mentioned having seen a meaningful increase in sort of the M&A pipeline. You mentioned private equity-owned assets have sort of aged and such. And trying to get a sense, obviously, your leverage is now lower than it’s been in a while and you’ve been taking advantage of that around share repo. But any change to sort of that M&A landscape one way or the other that you’ve seen since last quarter?
Robert Vitale
If anything, it’s accelerated in terms of the amount of opportunities we’ve been considering. Obviously, we take our time in considering those and the pipeline may take a long time to mature to a deal, but the market feels very active right now.
Andrew Lazar
Thanks so much.
Operator
Our next question will come from David Palmer with Evercore ISI, please go ahead.
David Palmer
Thanks, and good morning. I’m just only going to continue on that line of questioning about how you’re feeling heading into fiscal ’25. I’m wondering how you’re feeling about pet synergies, productivity, visibility? Anything that kind of gives you dry powder for what seems to be a starting point where you’re going to want to stabilize volume — type post-consumer brand volume is down 6%.
I would imagine that you’ll want to dial up promotion spending to address that — so I’m just thinking about things that could be met — any thoughts about how the gives and takes for ’25 would be helpful. Thanks.
Matt Mainer
Yes. So, on the cereal side, obviously, we’ve got the Lancaster closing that’s on track to be a contribution to the positive. Obviously, that’s rightsizing some capacity or overcapacity we have now — and then, I would say, beyond that, in post-consumer brands, just your comment about down 6%.
There were a couple of factors in the quarter around cereal volumes, we were really in line with the category. Beyond that, we saw a discontinuation on our side with some SKU rational decent in Canada and then also we’ve seen just a general pullback in KCCO or government volume in terms of bid business across the board, but those are really the two outliers relative to category performance and our own.
But I would say Lancaster — the positive to offset some of what you talked about in potential volume pressures.
David Palmer
Any — do you want to give us an estimate of what that could mean to EBITDA and the timing of that in fiscal ’25?
Matt Mainer
We talked about Lancaster as being a $25 million contribution for the full year, and we’re on track to be there. So again, to your point, there’s volume pressures as could be promotional, although we’re pretty rational in terms of our promotional outlook.
David Palmer
Great. Thank you.
Operator
Our next question will come from Ken Goldman with JPMorgan. Please go ahead.
Kenneth Goldman
Hi, two quick ones to start, if I may. One, I didn’t quite hear you on the TSA timing. Is that shifting the exit into 2025 now? I think it was previously scheduled for the fourth quarter of this year. Please correct me if that’s not right.
And then I also was hoping for an update on the timing of the Michael plant. I wasn’t sure if we had heard that.
Jeff Zadoks
So the TSA with Smucker, there’s no change in the timing. There’s a part of the co-pack arrangement that lingers into the first part of fiscal ’25. But we’re on target to exit the back-office TSA at the end of our fiscal year. And then the question about foodservice, could you say that again?
Kenneth Goldman
I just didn’t understand if there was any change in the guidance on the timing of the Michael plant opening?
Jeff Zadoks
No, we didn’t — our prepared remarks didn’t comment about that, but the timing of Norwalk, if that’s what you’re talking about, the expansion of market protein shakes.
Kenneth Goldman
I’m not saying clearly, but yes. Thank you.
Jeff Zadoks
Yes. No, the plant is open. It’s just our ramp-up has been slower than we expected. So, I guess the way to put it is, yes, the profitability from that or expected profitability from that has been delayed beyond what we had previously communicated.
Kenneth Goldman
Thank you. And then one more, if I can, just on SG&A. Broadly, over the last 12 months, your SG&A has grown much more rapidly than your sales. And I know you’ve talked about increasing marketing. But it brings now your SG&A as a percentage of sales over the last 12 months, back up to kind of the range it was for many years around that kind of mid-18% until it did the last couple of years.
I’m just curious, is it fair to kind of think about this percentage is a good number to model ahead, understanding will never stay exactly there? Are there reasons to kind of think that SG&A dollars will continue to rise at a meaningfully faster pace than revenue.
Matt Mainer
Yes. I think a couple of things. You mentioned A&C. We definitely have some targeted additional investments there. that we may recalibrate. Also, given the overperformance in the portfolio, there’s some definitely some elevated stip or bonus within some of our segments as well that would reset next year.
Kenneth Goldman
Okay thank you.
Operator
Our next question will come from Matt Smith with Stifel. Please go ahead.
Matthew Smith
Hi, good morning. I wanted to go back to the Foodservice business. You have the expanded capacity coming online at Norwalk. Could you remind us when opacity comes online and your visibility in the pipeline of filling that capacity and what it could mean for further distribution opportunities.
Matt Mainer
Yes. We still have another year of construction or so on Norwalk. So that would really be fiscal ’26 when that would come online and then there’ll be a ramp period that’s typically could be as long as 12 months in terms of filling that plant.
Matthew Smith
Thank you for that. And if we could move to the Refrigerated Retail business, you invested in some promotional activity to bring consumers back into — or to induce trial and get consumers to trade back up into your brands.
Can you talk about the — why the lift wasn’t as strong as you had anticipated? And where you go from here to improve your volume trajectory?
Matt Mainer
Sure. So again, as we mentioned, we’re recalibrating that. Honestly, we just — we over — there’s a bit of a look back on that as well. It’s kind of a six-month tail. So some of those is Q2 made it as well. But we get the full tally of the spend there. We just didn’t see the lift in Q2 and Q3 to support the amount we spent in terms of promo.
Again, we’re recalibrating that. But what happened essentially is this quarter as an example, was a 4% increase in sides. I think to support that level of spend, we would have expected something north of 10. And instead, we subsidized some base sales that were on promotion, which deteriorated profitability.
Matthew Smith
And you mentioned a longer look back period for those promotional events. Are you able to recalibrate that fairly quickly? Or does that take a couple of quarters to pull planned promotions out of the market?
Matt Mainer
Yes, we are. I mean I think with the knowledge of that. Again, I think as a reminder, just as a comparison to cereal, I think, is a good analogy as cereal is a very mature category with a lot of behind promotions. As a reminder, we haven’t been able to promote in refrigerated retail a much different category than cereal.
We just don’t have that history. So definitely underestimated the level of promotional activity that happened. But we have recalibrated the accrual and our expectations in the quarter. So, we feel like we have a ring-fenced and adjusting that going forward. So, we feel like we’ve got a good handle on it.
Matthew Smith
Thank you, Matt. I’ll pass it on.
Operator
Our next question will come from Michael Lavery with Piper Sandler. Please go ahead.
Michael Lavery
Thank you. Good morning. You mentioned how branded cereal is outperforming private label, but we keep you also hearing so much about how the consumer is stretched. How do you maybe just reconcile the cereal dynamics?
And I think you also said you expect a little bit more stable. The consumer to be in maybe stable at least or a little bit better place in fiscal ’25 is little bit of read-through from cereal or — how do we think about where the consumer is there?
Robert Vitale
Let me start with the initial comment. Private label outperformed branded in the quarter. So.
Michael Lavery
Sorry. Okay. I misheard that.
Robert Vitale
And I think the comment around the consumer behavior going forward is more about the acceptance of the pricing environment that has moved so rapidly and it’s taken some time to grow accustomed to — so it feels like we intentionally use the word that the consumer is in a transitional mode in that we are now going from a super-hot labor market to a cooling labor market, cooling inflation.
So, I think that it should be generally constructive for volumes to get past the reference price adjustment, and it should be constructive for more value products as we see a bit of a cooling in the labor markets. So, we tend to think that the consumer environment will be more constructive next year on balance, but there’s certainly some puts and takes.
Michael Lavery
And would you characterize that as likely across categories? Or do you have some where you would call out maybe more likely to see extended pressure?
Robert Vitale
Certainly, in cereal, given its maturity, we continue to believe within the Bob Evans brand. There are opportunities to do considerably better. Again, as Matt mentioned, we let our trade skills get a bit rusty having been through a period of which we didn’t really try to create demand.
Value-added eggs continues to outperform the overall volume trends broadly across food, both away from home and in home. So, I think the comments would be most applicable to cereal with varying degrees of application to the other categories.
Michael Lavery
That’s helpful. And just on pet, can you give an update on kind of the spending trajectory and how to think about just timing and where that’s directed in terms of kind of which brands and how that’s playing out?
Robert Vitale
And when you say spending trajectory, you mean of incremental investment in things like advertising?
Michael Lavery
Exactly, yes.
Robert Vitale
It’s mostly around our more premium brands that are larger. So, I don’t want to get into details around particular cadence and spend. But I mean, you can look at the portfolio and into it where we would choose to invest.
Michael Lavery
Okay. Thanks so much.
Operator
Our next question comes from John Baumgartner with Mizuho Securities. Please go ahead.
John Baumgartner
Good morning. Thanks for the questions. Maybe first off, coming back to refrigerated retail and the trade promo, just to clarify on that, if I remember correctly last quarter, I think there were some customer funded promotions that I think seem promising in terms of the consumer response.
And you mentioned the dust is still settling here on Q3, but were there any material changes in terms of type of outlet type of program or an even geography? Relative to the customer-funded approach in Q2?
Matt Mainer
No. I mean the comment on customer was really around Q1, and that was during the holiday season. So that would be maybe the different dynamic is that’s the peak season where we’re seeing really good volumes and then a little bit of seasonality in Q2, and then there is no seasonality benefit in Q3.
But I would say that’s really the difference, which is Q1 is a very, very strong quarter.
John Baumgartner
Okay, thanks for that. And then — okay. And then, Rob, why don’t I come back to foodservice and the volume growth there. Are there certain segments within Away — from Home where your distribution growth is skewing in particular.
And then for your existing business, the exposure to breakfast, are you seeing any sort of shift within that daypart where pre-cook eggs are particularly resilient or there’s more trading down to less expensive items.
You mentioned eggs are outperforming, but I’m not sure if that’s just due to a smaller base effect relative to other offerings that are out there. Maybe it’s too granular, but just curious if you have any observations on sell-through more broadly at retail. Thank you.
Robert Vitale
Yes. The precooked business, which is the highest value add and highest-margin businesses continuing to perform very well, in fact, grew 50% volumetrically over the quarter. we are seeing changes in some of the foot traffic patterns across restaurants and QSRs, which I’m sure you’ve seen reported by some of the larger ones that have been within the last couple of weeks.
So, there is some offset in terms of where that business could be going. But the value proposition of that particular product is such that it’s a great way to take labor out of back-of-house operations, and we think it will continue a long-term trend irrespective of the short-term vagaries of some of the foot traffic issues.
John Baumgartner
Thanks, Rob. Thanks, Matt.
Operator
Our next question comes from Rob Dickerson with Jefferies. Please go ahead.
Robert Dickerson
Great. Thanks so much, Rob, just around the commodity complex as you kind of think through next year, are there any potential kind of offsetting benefits maybe in some of the grain — the more grain-based categories in which you play that could help support profitability kind of despite some less volume pressure that work to correct immediately on top of, let’s say, from the rightsizing of capacity?
Jeff Zadoks
As we look at it right now, there’s a fairly balanced of benefits, as you mentioned, from grains, then there’s some offsetting inflationary items such as packaging and sugar as a couple of examples. So, I don’t think we see it as a huge benefit.
At the same time, we’re not currently expecting it to be a huge detriment either. So fairly balanced as we head into the next fiscal year.
Robert Dickerson
All right, cool. And then just quickly on Weetabix. You called out in the release and comments just a margin uptick off of some, I guess, pricing, it sounds like maybe part of that portfolio, the margin uptick was impressive, right, on a sequential, but then also on a year-over-year basis.
And I’m just curious, again, as we think through, let’s say, Q4 next year, is that step up like somewhat sustained? Like is that kind of more of a kind of a new margin kind of base for that business? Or could there be some other flow-through impacts that would kind of bring that back down? Thanks.
Jeff Zadoks
Yes. A couple of things. As Matt said in his prepared remarks, there is a benefit this quarter because of inventory build. So, we have an ERP conversion that is going to hit at the beginning of next fiscal year. And in preparation for that, we’re building inventory to manage through any bumps in the road that might occur.
And because of that, we had an absorption benefit in the third quarter that you wouldn’t expect on an ongoing basis. With that said, we certainly expect that Q2 and Q1 of this year were more of the trough and that our expectation is that we’ll begin migrating towards the more historical margin profile of that business.
But to be fair, Q3 was a step up. That’s more step than we would expect on the trajectory that we eventually get to. So maybe a clear way to say expect a little bit of a step down, but still the trend line will be better than where it was at the beginning of this fiscal year.
Robert Dickerson
Okay. Very helpful. Thank you.
Operator
Our next question comes from Marc Torrente with Wells Fargo Securities. Please go ahead.
Marc Torrente
Hey, good morning. Thank you for the questions. First on pet, you talked through some of the drivers of the sequential slowdown in sales from Q2. Just doing some simple math implies some further expansion on margins even as you’re stepping up advertising around the premium brands.
So maybe just a little more color on the margin progress there.
Matt Mainer
Yes. So, I mean, I think a lot of our margin progress has been more around the flow-through of the manufacturing efficiencies that we’ve had and the stabilization there is the bigger driver. We’ve taken some of those dollars and reinvested behind the brands and ramped A&C, but manufacturing performance and costs are really the keys for the margin improvement.
Marc Torrente
Okay, thanks. And then CapEx stepped up this year with a pet investments as well as the Shake remain base ramp. How much of these projects carry into next year? You spoke to the Ag facility timing. Just any context there and how we should think about CapEx levels for ’25, I guess thinking through free cash flow conversion ahead.
Matt Mainer
Yes. These are definitely multiyear projects, certainly Norwalk and Bloomfield. And I think the way we’ve talked about it is we expect ’25 to be very similar to ’24 in terms of the capital range we have and spend.
Operator
And. Mr. Torrente, did this answer your questions?
Marc Torrente
Yes. Thank you.
Operator
Thank you. And we will take our final question from Carla Casella with JP Morgan. Please go ahead.
Carla Casella
Great. Thank you. A couple of follow-ups. Just you talked about the environment, both in foodservice and retail, but is your expectation that we should see trade spending pick up as we go into the back half of this year, and is it consistent across category, are you seeing more need for trade spend in one versus another?
And then I have one question on M&A.
Robert Vitale
I think we will likely see a little bit of an uptick in trade spend, but it will be targeted and not nature reactive. I think the best example being the way we spent in our Bob Evans brand, we need to make sure we get the lift that is intended with the trade spend.
And I’m sorry, what was your other question?
Carla Casella
Well, I wonder, is it more targeted in one category versus one category more exposed?
Robert Vitale
No, we’ll — where we are pricing opportunities to benefit from Tracepoint across the portfolio will execute there. As we go in the primary focus is on potatoes, side dishes.
Carla Casella
Okay. And then the other question was on the M&A environment. If you could just talk to the deal flow and if there needs — if the opportunities are getting more interesting or levels coming into more fair in the past, you just talked about irrational type levels of — for the sellers.
Robert Vitale
Yes. I’m sorry, Carla, you’re a bit echoing, so I’m not sure I got all of the question, but I’ll do my best. I think we’ve seen a period of time in which there have been lower than average PE exits. So, we’re seeing more opportunities from PE owners of consumer assets always are of the opinion that corporate owners should do portfolio prune.
So, there are some opportunities in that area. So, I would say as I said in my prior comments that the quantum of opportunities has increased significantly year-over-year and even sequentially. That doesn’t mean anything will happen because we want to be very disciplined with respect to how we allocate capital.
And as long as we’re trading beneath the average of the multiples at which we can acquire on a post-synergy basis, we will just stay the course and allocate capital into our shares. So good environment — well, a plentiful environment from an opportunity perspective, whether that converts to anything or not too early to say.
Carla Casella
Okay, great. Thank you.
Operator
And we have now reached the conclusion of the question-and-answer session. This will conclude today’s Post Holdings third quarter 2024 earnings conference call and webcast. Please disconnect your line at this time, and have a wonderful day.
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