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Post Holdings Inc (NYSE:POST)
Q1 2020 Earnings Call
Feb 7, 2020, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Post Holdings First Quarter 2020 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer; and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12:00 PM Eastern Time. The dial-in number is (800) 585-8367. Again, the number is (800) 585-8367 and the passcode is 1371013. At this time, all participants have been placed in a listen-only mode.

It is now my pleasure to turn the floor over to Matt Mainer of Post Holdings for introductions. You may now begin.

Matt Mainer -- Vice President and Treasurer

Thank you. Good morning and thank you for joining us today. With me are Rob Vitale, our President and CEO, and Jeff Zadoks, our CFO. Rob, and Jeff will begin with prepared remarks and afterwards, we'll have a brief question-and-answer session. The press release that supports these remarks is posted on our website in both the Investor Relations and SEC Filings sections at postholdings.com. In addition, the release is available on the SEC's website. Before we continue, I would like to remind you that this call will contain 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 these statements. As a reminder, this call is being recorded and an audio replay will be available on our website.

And finally, 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.

With that I will turn the call over to Rob.

Robert V. Vitale -- President and Chief Executive Officer

Thanks, Matt. Thank you all for joining us. I wasn't sure I was going to do this, but I think before I go into my prepared remarks. I'm going to share with you that I have about 90% of the way back from a domestic virus I've been fighting this week. So, bear with me through tax and other things as we share with you our results for the quarter.

So with that, the first quarter came in largely in line with expectations. We communicated a 2020 plan with modest second half favorability and in total, our quarter is consistent with our cadence expectations. As always, there are some puts and takes across the business. This morning in my prepared remarks, I will provide some additional clarity around 2020 outlook, a brief business update and comment on capital allocation. To start, I want to give some additional detail around the quarterly cadence. While revenue is closer to evenly split between halves, our plan called for and continues to call for our first half adjusted EBITDA to represent approximately 46% to 47% of the year. This compares to a first, second half split in 2019 of 49%, 51%. We expect the acceleration into the second half for the following reasons. A serial promotional calendar that is weighted to the second half, navigating potato side dish production constraints that have resulted in customer allocations, the timing of pricing moves, cycling start-up costs for our Norwalk plan, back half cost reductions versus first half investment and cost reductions and the timing of key promotional events for BellRing customers coupled with heavy Premier Protein advertising spend in Q2.

Turning to the business. BellRing is off to a great start. Their call is coming up shortly. So I won't steal any of their thunder. From a POST perspective, the focus remains on how to best strategically manage the asset and allocated its capital. This will be a story in the making in one that looks quite promising. Our domestic cereal had an expected decline in consumption as we lapped aggressive promotional events in grocery and club. As I mentioned, our promotional calendar this year favors the second half. More structurally we were early in licensed wheat and we are seeing the impact of competitive reactions. We have a promising innovation pipeline and continue to be confident in the near and longer term trajectory of the business. The category itself was a relatively bright spot this quarter. Inclusive of non-measured channels, it grew approximately 0.5%. Weetabix continues to perform well and we would like to find a way to build around this team. Foodservice eggs and potatoes and Bob Evans side dishes had solid growth. However, we had weakness in retail eggs and cheese.

Across the integrated supply chain, we incurred costs tied to supporting potato demand and we are struggling with the labor shortage in some key rural markets. Both factors pressured profit growth in an otherwise solid quarter. Both issues will linger to a degree throughout the year. 8th Avenue made solid progress to recover from a weak 2019. It also executed a strategic purchase in acquiring peanut butter manufacturing assets from Conagra. We continue to expect adjusted EBITDA of $100 million to $105 million before consideration of the Conagra repurchase. Turning to capital allocation, our attempt to acquire the TreeHouse private label cereal assets met with opposition from the FTC. We believe it was the wrong conclusion, but we ultimately agreed with TreeHouse. The protracted litigation was in neither parties' best interest. We continue to search for M&A prospects, but we always do so against an array of capital allocation choices, including buying our own shares. This quarter, we acquired 2.2 million shares of Post. Despite the commitment to share repurchases, we ended the quarter at leverage levels that for Post are historically low.

With that I will now turn the call over to Jeff.

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

Thanks, Rob and good morning everyone. Adjusted EBITDA for the first quarter was $303.1 million with consolidated net sales for the quarter growing 3.2% year-over-year. Post Consumer Brands net sales and volumes declined by 3.1% and 3.4% respectively. This volume decline is largely attributable to heavier promotional activity in the prior year period and lapping new product pipeline builds. Average net pricing improved 0.3% [Technical Issues] as we benefited from a full quarter's of last year's price increases, but they were largely offset by unfavorable mix skew to private label versus branded products.

We had a 230 basis point improvement in gross margins driven by $5.1 million of cost savings from implementing our new integrated business planning process. These savings are incremental to our other continuous improvement initiatives. However, we had offsetting higher SG&A cost this quarter for consulting fees and warehousing costs related to implementing these new processes, including optimization of our inventory footprint. Net of all of these factors, segment adjusted EBITDA declined 3.4% compared to the prior year.

Weetabix net sales increased 0.6% over the prior year. This reflects an 8.7% improvement in average net pricing, partially offset by a 7.6% volume decline. Average net pricing benefited from targeted base price increases, less volume sold on promotion and favorable mix, while solid volume growth in biscuits was offset by declines in non-biscuit products resulting primarily from capacity constraints on extruded products. The average US dollar to pound sterling exchange rate in the quarter was flat with the prior year and as a result, was not a significant variable in the year-over-year comparisons.

Overall, Weetabix segment adjusted EBITDA increased 17.7%. Net sales in foodservice increased 3.1% with volumes up 3% driven by strong growth in both egg and potato products. Despite this volume growth, adjusted EBITDA declined 2.3% from the prior year driven by higher integrated supply chain costs including start-up costs at our new precooked egg facility and unplanned downtime in our potato plants.

Refrigerated retail net sales and volumes declined 4.5% and 7% respectively. Overall side dish volumes declined 5.2% driven by capacity constraints, which led to customer allocations. However, Bob Evans branded side dishes grew 5.4% as we prioritized the allocations to this faster growing portion of our business.

Retail egg and cheese volumes declined approximately 10% and 9% respectively. Segment adjusted EBITDA declined 8.8% this quarter driven by overall volume declines, higher integrated supply chain cost as previously mentioned and lower contribution from our cheese business caused by lower sales volumes and higher commodity costs. These items were partially offset by an improved price cost relationship for our sausage products. BellRing net sales increased 31.3%, while adjusted EBITDA grew 40.9%. You can hear further detail about BellRing's results on their conference call later this morning.

Turning to our capital markets activities. During the quarter, we repurchased approximately 2.2 million shares at an average price of $102.97 per share. Our remaining share repurchase authorization is approximately $368 million. During the quarter we repaid our legacy term loan in full, primarily from the proceeds of the BellRing transaction and subsequent to the quarter, we retired our 8% notes, eliminating the one outlier to our bond ladder pricing. As a reminder, neither BellRing nor Post are obligors or guarantors of the other party's debt. Accordingly, we report leverage statistics for Post independent of BellRing debt and adjusted EBITDA. Post pro forma net leverage on this basis was approximately 5 times as of December 31.

During the quarter, we generated $108.4 million of cash flow from operations, which was down from a year ago, driven primarily by $49 million in higher net settlements of our interest rate swaps and timing of working capital across several of our business segments. Capital expenditures were approximately $77 million, which included the purchase of our previously leased side dish manufacturing plant in Sulphur Springs, Texas and completion of our growth capital projects in eggs.

With that I'd like to turn the call back to the operator for questions. Operator?

Questions and Answers:

Operator

[Operator Instructions]

Your first question comes from the line of Andrew Lazar with Barclays.

Andrew Lazar -- Barclays -- Analyst

Good morning everybody and glad you're on demand [Phonetic], Rob.

Robert V. Vitale -- President and Chief Executive Officer

Thank you.

Andrew Lazar -- Barclays -- Analyst

Two things if I could. I guess, first, you talked about volumes in cereal were lower year-over-year as I think you expected due to the timing of promotions and pricing moves in the period last year. I guess, would your expectation be that volume and sales begin to accelerate in this fiscal quarter even in what looks to and I think what you expect it to be a somewhat more competitive arena this year and a sort of slight growth in EBITDA in this segment for the full year still seem to make sense in terms of how you're thinking about it.

Robert V. Vitale -- President and Chief Executive Officer

Yes to both. I would say, to give you a little more color, we expect that beginning of the acceleration in this fiscal quarter, but to be more material next quarter. These were two relatively discrete large events last year, one of which is being repeated in the second half, one of which was a margin decision. So as we lapped that event or as we execute that event in the second half, we should see some of that acceleration. And in terms of the projection on adjusted EBITDA, we fully expect to be able to maintain or grow from 2019.

Andrew Lazar -- Barclays -- Analyst

Great. And then second would be fiscal 1Q as you mentioned was the second quarter in a row in which Post bought back about sort of 3% of its share base or so. I guess can you talk a little bit about what this says or maybe it doesn't say about the attractiveness right now of the various sort of core avenues that Post typically looks at around its capital allocation model? And I assume, I think the 46%, 47% EBITDA split is similar to what you had thought last quarter, I don't think there is a change to that but just making sure. Thank you.

Robert V. Vitale -- President and Chief Executive Officer

Yes. In reverse order, it's the same as we thought last quarter with respect to share buybacks versus other uses of capital, everything's a relative comparison. So if the market for M&A is 12 times or 13 times and the multiple for Post [Phonetic] simply a comparison of would we rather invest in Post or something different and it may not always just be a simple mathematical calculus, there may be capabilities that we're trying to buy or a market that has a different growth rate. But it starts with a relative analysis of our business versus competitive alternatives.

Andrew Lazar -- Barclays -- Analyst

Great, thank you very much.

Robert V. Vitale -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Chris Growe with Stifel.

Chris Growe -- Stifel -- Analyst

Hi, good morning.

Robert V. Vitale -- President and Chief Executive Officer

Good morning, Chris.

Chris Growe -- Stifel -- Analyst

Hi, Rob. Hope you feel better there. I was curious about, just a follow-up question on the Post Consumer Brands business. The -- I think, Jeff, you mentioned some cost savings coming through, some integrated business planning type savings coming through. I assume those are sustainable and should continue, like it's a lot of activity that occurred last year. Does that then kick up in Q2, Q3 and Q4? Are we hitting a run rate for those savings? Just curious how that influences EBITDA in that division.

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

Yeah, it's a progression throughout the year. So we would expect to build upon the savings that were achieved in Q1 with incremental savings throughout the [Indecipherable]. And of course, some of that is necessary to offset inflation that we're seeing in the business, but definitely a progression. And that's one of the reasons that Rob called out for some of the second half loading of our overall plan.

Chris Growe -- Stifel -- Analyst

Okay and then just an idea if I could on the foodservice division on those costs for Norwalk. Did you quantify those in the quarter? If you could, it'd be great and then just to understand that something does continue a bit into Q2, is there a number you are maybe giving for the year in terms of the effect on that division's profitability?

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

There is two different buckets, one is just direct costs which is roughly $3 million, but there's also a ramp-up costs, which effectively are inefficiencies that we have not tracked and separately isolated, so that the difference between the factory running as fully operational versus the learning curve process to get there is a -- I would estimate in the low handful of millions of dollars.

Chris Growe -- Stifel -- Analyst

Okay. Thank you for the time.

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Your next question comes from the line of John Baumgartner with Wells Fargo.

John Baumgartner -- Wells Fargo -- Analyst

Good morning, thanks for the question.

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

Hey, John.

John Baumgartner -- Wells Fargo -- Analyst

Rob, if we go to PCB and we look at your niche [Phonetic] cereal category and value segment, and that's obviously been very stable, outperformed over time. And I'm curious given this run we've had of stronger wage growth at low-end consumer, are you seeing any changes in terms of the dynamic? Are folks trading up? Are they trading out of the category or is loyalty generally pretty stable as it's ever been.

Robert V. Vitale -- President and Chief Executive Officer

We are seeing good loyalty within the entire bag segment. So we haven't seen any changes of consumer trading up and out of it.

John Baumgartner -- Wells Fargo -- Analyst

Okay. And then just follow up on foodservice. Wondering if you could speak high level in terms of any activity or just level you're seeing from few stores doubling down or QSR doubling down on breakfast or see stores coming on prepared foods. How is the opportunity set emerging for you pre and post-body in terms of cross selling or how do you gain that new volume growth going forward.

Robert V. Vitale -- President and Chief Executive Officer

Well, you've probably seen Wendy's has gone to breakfast and -- not QSRs but C stores have become a significant source of convenient breakfast. So we're continuing to see it as a material trend across the country and where we have best seen the results of the Bob Evans acquisition and cross-selling is in our potato business where we're seeing really quite extraordinary growth rates. We have seen some in sausage, but it's a more competitive, a bit more commoditized business. Where we're really unique is in that sausage, excuse me, in that potato and egg category.

John Baumgartner -- Wells Fargo -- Analyst

So you're ramping up the cross-selling pretty well already in that space?

Robert V. Vitale -- President and Chief Executive Officer

Particularly in potatoes.

John Baumgartner -- Wells Fargo -- Analyst

Great, thanks Rob. Thank you.

Operator

Your next question comes from the line of Bill Chappell with SunTrust.

Bill Chappell -- SunTrust -- Analyst

Thanks, good morning.

Robert V. Vitale -- President and Chief Executive Officer

Good morning, Bill.

Bill Chappell -- SunTrust -- Analyst

Hey, I'm sorry, could you just give me a little more color on the unplanned downtime at the plant on the refrigerated side? I'm just -- what actual impact it had in the quarter and going forward?

Robert V. Vitale -- President and Chief Executive Officer

The unplanned downtime, we talked a little bit about that last quarter. It was some unforeseen mechanical failures at0020one of our plants in particular that required us to take down the plant in order to replace the -- I'm going to misspeak here, but it was a coil on a refrigerator of some kind. So we ended up sacrificing some downtime, of couple of days, so that we get that replacement in the production. And then there were some other one-off events weather related events that also kind of hit us this quarter.

Bill Chappell -- SunTrust -- Analyst

Anyway to quantify like what the impact was just for comparability?

Robert V. Vitale -- President and Chief Executive Officer

I mean it's really, it's really difficult to do that. It was, it was a couple of, two, three days of production, but translating that into what it might have been in terms of profit is really difficult, we know that it led to lost sales. But to further clarify, it's pretty hard to do.

Bill Chappell -- SunTrust -- Analyst

Got it. And then just switching to 8th Avenue. It seemed like one of the better quarters 8th Avenues had in quite some time. Is that kind of on the uptick as a business and with the acquisition, does that help the margins meaningfully?

Robert V. Vitale -- President and Chief Executive Officer

I would say right now, it is in stabilization. So we've kind of bottomed and are making sure that we've got a stable foundation upon which to build. In terms of the second part of your question, it will certainly expand dollar profit. This is largely come in [Phonetic] business, so it will come at a average margin that's a bit lower. But a very high return on capex than what we paid for it.

Bill Chappell -- SunTrust -- Analyst

Great, thank you.

Robert V. Vitale -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Michael Lavery with Piper Sandler.

Michael Lavery -- Piper Sandler -- Analyst

Thank you. Good morning. With the FTC's objections on TreeHouse, how much visibility do you have on that, and specifically what I'm trying to just make sure I cut my hands around is how much of that is private label specific or do you imagine this could sort of foreshadow any potential issues with any other cereal deals?

Robert V. Vitale -- President and Chief Executive Officer

No, we believe it is a 100% private label specific that they felt that the combination of Post and TreeHouse would effectively eliminate competition in the private label sub segment. And what we felt was novel and in our opinion appropriate was having such a narrow definition of the market that 7% of the market and drive competition in that bigger category we found counter intuitive. And we argued that it was actually consumer friendly but to no avail.

Michael Lavery -- Piper Sandler -- Analyst

Yes, thank you. That's really helpful. And then just on potatoes, that it's -- they've turned much more inflationary. Can you just give us some color on how that -- how you pass that through and how manageable you see that being?

Robert V. Vitale -- President and Chief Executive Officer

We have been able to pass through the ingredient inflation quite effectively. Where we are struggling a bit is some of the labor inflation unrelated to the potato crop but related to the potato factories.

Michael Lavery -- Piper Sandler -- Analyst

And is that something you think might persist through the year?

Robert V. Vitale -- President and Chief Executive Officer

We eventually should be able to price it, but it will persist for at least through the quarter.

Michael Lavery -- Piper Sandler -- Analyst

Okay, thank you very much.

Robert V. Vitale -- President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of David Palmer with Evercore ISI.

David Palmer -- Evercore ISI -- Analyst

Hi, good morning.

Robert V. Vitale -- President and Chief Executive Officer

Hey David.

David Palmer -- Evercore ISI -- Analyst

Good morning. Just a. quick observation. It feels like there is breakfast wars going on inside supermarkets, but also in the restaurant channel and you might have different feelings about either one. But you certainly are a participant in both. You're seeing Kelloggs trying to perhaps get in the game with the taste and fun cereals and perhaps teeing up more promotional activity this first half of the calendar year. And I suppose you are bracing for impact a little bit there, but also on the breakfast side away from home, not just Wendy's but McDonald's is getting in the game there and obviously Dunkin has a very successful new breakfast sandwich as well. So I would imagine you're looking at a very good demand year, perhaps a really special year on the foodservice side from a demand perspective, but the way that this is shaping up competitively in supermarkets might be tough for the next six months at least. What are your thoughts there?

Robert V. Vitale -- President and Chief Executive Officer

Well, I think you said it fairly well. I think in my prepared remarks, I commented on that we were early in licensed suites with our Oreo product and had very good growth, let's say 2018 early 2019. And there was a competitive reaction to that as we would expect. And there was an onslaught of innovation based around licensed wheat from both Kelloggs and General Mills and we've seen just greater competitive intensity as that demand state gets potentially over saturated. And what we need to effectively compete at the retail level is better bolder innovation and that's nothing new. We probably said that as long as this category has been around, but we feel pretty good about our innovation pipeline right now and I think what we're seeing in our immediate quarter is a conscious decision to cede some territory rather than fight for share in that environment, in a category that is a bit overheated. So we're trying to pick our battles carefully, fight for the right share, not just all share and be selective in retail. In foodservice, I don't have much to add to what you said. We're seeing very strong unit volume growth across most of our categories in support of the trend that you mentioned.

David Palmer -- Evercore ISI -- Analyst

On that foodservice side on the value-added egg side in particular, it seems like this next 12 months, we will get past some of these friction costs, should be a very good one for the incrementality of the new manufacturing and value-added eggs, I mean you spent $60 million, $70 million on the capacity there. I would imagine you're thinking that that could be a double-digit EBITDA millions boost at some point during this fiscal year. How should we think about that kicking up and benefiting you in terms of EBITDA?

Robert V. Vitale -- President and Chief Executive Officer

I think it's all and reasonable to think about it exactly as you just characterized it as a exiting the year run rate.

David Palmer -- Evercore ISI -- Analyst

Okay, thank you.

Robert V. Vitale -- President and Chief Executive Officer

Thank you, David.

Operator

Your next question comes from the line of Ken Zaslow with the Bank of Montreal.

Ken Zaslow -- Bank of Montreal -- Analyst

Hey, good morning everyone.

Robert V. Vitale -- President and Chief Executive Officer

Hey, Ken.

Ken Zaslow -- Bank of Montreal -- Analyst

Can you talk about the dynamics, the cereal dynamics in the UK, how is it progressing and I believe you were trying to take out some capacity there, have you tightened it up and just give a little thought on the Weetabix business?

Robert V. Vitale -- President and Chief Executive Officer

Yes, the general demand is flat to slightly down. We have had a bit more decline in volume than the market because of our aggressive moves on price we saw to restore the traditional pricing dynamic and margin structure. We have taken out capacity, we may have overshot a little bit in taking out capacity, because we're now putting a little capital back in to make sure that we keep our service levels where they need to be, but that has gone well and we expect there to be some significant cost savings again, like my last answer, as we approach the end of FY '20 and having fully annualized in '21.

Ken Zaslow -- Bank of Montreal -- Analyst

Greatly appreciated. Thank you.

Robert V. Vitale -- President and Chief Executive Officer

Thank you, Ken.

Operator

Your next question comes from the line of Rob Dickerson with Jefferies.

Rob Dickerson -- Jefferies -- Analyst

[Technical Issues] year-over-year in Q1.

Robert V. Vitale -- President and Chief Executive Officer

I'm sorry. We didn't hear the first part of your question Rob.

Rob Dickerson -- Jefferies -- Analyst

No, I'm sorry. Yes, just a question on SG&A, right, just in kind of trend cadence for the year, it was up a decent amount in Q1 despite or let's say offset decent impressive gross profit growth. Is there any way you could just kind of simplistically bucket what's driving that increase in net SG&A and then why or why not that might be as we go through the year? And then I have a quick follow-up.

Robert V. Vitale -- President and Chief Executive Officer

Sure. There is no single significant driver. So it's several smaller items that tend to add up. As far as the segment that's driving most of it is the BellRing segment and it's a handful of activities there ranging from some increased warehousing costs of their inventories have gotten more stabilized, some cost for some consulting not in BellRing but some costs and consulting activities around the company as we mentioned in the PCB business. So it's really a handful of couple of million dollars items and I neglected to mentioned earlier on BellRing there is some incremental public company costs as we did the IPO during the quarter. And that's the sort of thing that will be ongoing. The consulting fees, we would expect to diminish as the year goes on.

Rob Dickerson -- Jefferies -- Analyst

Okay, great. And then -- sorry, go ahead.

Robert V. Vitale -- President and Chief Executive Officer

No, we were done. Go ahead.

Rob Dickerson -- Jefferies -- Analyst

Okay, great. Sorry. And then just in terms of capital structure, I know you finished the year decent cash balance kind of as you have in the past, like you said, leverage is low relative to history for you and then obviously don't pay dividend. So you bought back some stock, in Q1 you went through that rationale. Just kind of thinking forward though, if your stock, let's say, or even less expensive or kind of where it is today, and the cash balance is still strong. Is it rational to think that repurchase activity overall for the year could be up relative to history or do you just say, hey, we're obviously we're always opportunistic, we're always looking at the trade-off, and our pipeline is very strong as of now, on the M&A front?

Robert V. Vitale -- President and Chief Executive Officer

Well, I would say, the latter. The pipeline is strong, but we always look at it in the context of all of our choices for allocating capital. I wouldn't want to get into predicting what we're going to do next. I would rather just give you the conceptual framework and let you work from there.

Rob Dickerson -- Jefferies -- Analyst

Okay, fair. Thank you so much.

Robert V. Vitale -- President and Chief Executive Officer

Thanks, Rob.

Operator

Your next question comes from the line of Brian Holland with D.A. Davidson.

Brian Holland -- D.A. Davidson -- Analyst

Thanks, good morning gentlemen. Most of my questions have been answered. So, Rob, I think you alluded to this in your prepared remarks. I'm curious about your thoughts in the M&A landscape right now in the UK, Weetabix appears a solid beachhead for you. I presume valuations perhaps more palatable there than here, but obviously a challenging market with perhaps lower visibility right now. So I guess just looking for a refresh on your thoughts about the landscape on that side of the pond.

Robert V. Vitale -- President and Chief Executive Officer

Well, we are very pleased with the execution that the team has performed in the last two years and it's a team that we think can do more. So we would like to give them the opportunity to do more. But at the same time, as you've just rightly highlighted, it's a choppy environment. It's incrementally less choppy now that we at least have clarity that Brexit is going to occur. We have another milestone in terms of understanding exactly how it occurs. So we're not likely to rush in with both feet but we wouldn't mind finding something small to tuck-in under them and get them expanded dominion there.

Brian Holland -- D.A. Davidson -- Analyst

Appreciate the color. Thank you.

Robert V. Vitale -- President and Chief Executive Officer

Thank you. I think that's our last question. And I just want to again apologize for some of the coughing and hacking in the background here. So thank you and we'll talk to you all next quarter.

Operator

[Operator Closing Remarks]

Duration: 31 minutes

Call participants:

Matt Mainer -- Vice President and Treasurer

Robert V. Vitale -- President and Chief Executive Officer

Jeff A. Zadoks -- Executive Vice President and Chief Financial Officer

Andrew Lazar -- Barclays -- Analyst

Chris Growe -- Stifel -- Analyst

John Baumgartner -- Wells Fargo -- Analyst

Bill Chappell -- SunTrust -- Analyst

Michael Lavery -- Piper Sandler -- Analyst

David Palmer -- Evercore ISI -- Analyst

Ken Zaslow -- Bank of Montreal -- Analyst

Rob Dickerson -- Jefferies -- Analyst

Brian Holland -- D.A. Davidson -- Analyst

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