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Vitale revealed his diagnosis during the company’s fourth quarter earnings call Friday, explaining his unexpected medical leave announced Nov. 6, which triggered the company’s established emergency succession protocol and anointed as interim CEO Zadoks, who is currently Post’s executive vice president and chief operating officer.
“Since I became CEO, I have attempted to be as candid with you as possible. I will not change that now,” Vitale told investors. He explained that while he currently feels “great” and has been participating in calls “all along,” he “will now require a regimen of radiation and chemotherapy” that “could wipe out my energy level for a period of time.”
To ensure the ongoing smooth operation of the company, Zadoks will continue as interim CEO, he added.
“I have total confidence in him. He has been my partner from day one and I mean that quite literally. We started on the same day in 2011. He has been instrumental in every decision we have made,” Vitale said.
Vitale also underscored his confidence in Post’s “holding company structure,” which includes individual management teams for each of the business’ five segments – allowing for uninterrupted continuity despite leadership changes at the top.
Vitale expressed his confidence in this structure and the management teams, noting, “Our business operations have outstanding leaders and we won’t miss a beat.”
Vitale added he intends to “participate as much as I am able,” but that is “more for my benefit than the company. I suspect I will just be a nuisance.”
Speaking for “everyone at Post and everyone else on the call,” Zadoks expressed his hope that Vitale’s treatment goes well, and noted he is eager for Vitale’s full-time return.
2023 was a ‘fantastic fiscal year’ despite headwinds
Vitale’s leave comes at the end of what Zadoks characterized as a “fantastic fiscal year” for the company in which it “achieved a step-change in adjusted EBITDA, increasing 28% over the prior period, driven in large part by foodservice gains and better than expected five months in the pet food segment after acquiring from JM Smucker Co Rachael Ray Nutrish, Nature’s Recipe, 9Lives, Kibbles ‘n Bits and Gravy Train.
The newly acquired pet food business helped drive up overall sales 23% to $1.9bn in the fourth quarter, offsetting retail volume declines in the company’s branded products due to persistent pricing elasticities and a shift in volume to private label offerings, CFO Matt Mainer said.
He explained that an average net pricing increase of 10%, excluding pet food, took a toll on Post consumer brands’ volume, which slipped 6% in the quarter. Refrigerated retail sales and volumes also fell 6% and 8% respectively as did side dish volume, which dropped 9%.
The US Cereal business also remained under pressure with volumes down 6% in the quarter, pushing the company to expect the category to return to pre-pandemic volume trends in the coming months “as we lap the pull-back of SNAP benefits in March,” Zadoks said.
Consumers continue to pull back on spending
The declines reflect increased financial pressure on consumers from inflation, higher interest rates, reduced SNAP benefits, the restart of student loan payments and lower savings, all of which have caused consumers to pull back on shopping trips, he explained.
“Consumers are being more selective with their spend, often trading down within a category or shifting into more value categories,” he explained.
Against this grim backdrop, Zadoks remains optimistic for Post, noting, “at the same time, we are seeing consumers prioritize convenience and on-the-go, especially in breakfast.”
He added, “our diversification serves us well as we have meaningful exposure to value products in domestic and international cereal and US pet food, convenience through our side dish business and out-of-home through foodservice.”
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