Post Holdings Reports Results for the Second Quarter of Fiscal Year
2019
Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today reported results for the second fiscal quarter ended
March 31, 2019.
Highlights:
- Net sales of $1.4 billion
- Operating profit of $186.3 million; net earnings of
$44.0 million and Adjusted EBITDA of $298.9 million
- Reaffirmed fiscal year 2019 Adjusted EBITDA (non-GAAP)
guidance range of $1.20-$1.24 billion
Basis of Presentation
Financial results reflect the separate capitalization of 8th
Avenue Food & Provisions, Inc. (“8th Avenue”), the holding
company for Post’s historical private brands business, with Post’s
retained interest in 8th Avenue’s common equity accounted for using
equity method accounting, effective October 1, 2018. Additionally,
financial results include results from Bob Evans Farms, Inc. (“Bob
Evans”) as of its acquisition date of January 12, 2018.
Second Quarter Consolidated Operating
Results
Net sales were $1,387.8 million, a decrease of 12.5%, or $198.3
million, compared to the prior year period. Pro forma net sales (as
defined later in this release under “Pro Forma Information”) were
flat when compared to the same period in fiscal year 2018. Gross
profit was $451.3 million, or 32.5% of net sales, a decrease of
$21.1 million compared to the prior year gross profit of $472.4
million, or 29.8% of net sales.
Selling, general and administrative (SG&A) expenses were
$225.8 million, or 16.3% of net sales, a decrease of $38.8 million
compared to the prior year SG&A expenses of $264.6 million, or
16.7% of net sales. SG&A expenses for the second quarter of
2018 included $20.8 million of transaction expenses, which
primarily related to success fees paid in conjunction with the
close of the acquisition of Bob Evans, and $13.2 million of
integration expenses, both of which were treated as adjustments for
non-GAAP measures.
Operating profit was $186.3 million, an increase of 15.9%, or
$25.6 million, compared to the prior year period operating profit
of $160.7 million, which included segment profit of $14.2 million
attributable to the historical private brands business.
Net earnings were $44.0 million, a decrease of 51.9%, or $47.5
million, compared to the prior year period net earnings of $91.5
million. Net earnings included a $63.0 million loss in the second
quarter of 2019 and a $50.5 million gain in the second quarter of
2018, both of which primarily related to non-cash mark-to-market
adjustments on interest rate swaps, which are discussed later in
this release and were treated as adjustments for non-GAAP measures.
Net earnings available to common shareholders were $43.0 million,
or $0.58 per diluted common share, compared to the prior year
period net earnings available to common shareholders of $88.9
million, or $1.20 per diluted common share. Adjusted net earnings
were $96.5 million, or $1.28 per diluted common share, compared to
the prior year period Adjusted net earnings of $80.6 million, or
$1.06 per diluted common share.
Adjusted EBITDA was $298.9 million, a decrease of 4.9%, or $15.4
million, compared to the prior year period Adjusted EBITDA of
$314.3 million, which included $26.1 million attributable to the
historical private brands business.
Six Month Consolidated Operating Results
Net sales were $2,799.1 million, a decrease of 7.3%, or $220.1
million, compared to the prior year period. Gross profit was $877.8
million, or 31.4% of net sales, a decrease of $43.1 million
compared to the prior year gross profit of $920.9 million, or 30.5%
of net sales.
SG&A expenses were $442.9 million, or 15.8% of net sales, a
decrease of $67.7 million compared to the prior year SG&A
expenses of $510.6 million, or 16.9% of net sales. SG&A
expenses for the six months ended March 31, 2019 included $14.6
million of transaction costs primarily related to the separate
capitalization of 8th Avenue, which were treated as an adjustment
for non-GAAP measures. SG&A expenses for the six months ended
March 31, 2018 included $23.8 million of transaction expenses,
which primarily related to success fees paid in conjunction with
the close of the acquisition of Bob Evans, $23.8 million of
integration expenses and a provision for $11.0 million in legal
settlements, all of which were treated as adjustments for non-GAAP
measures.
Operating profit was $480.2 million, an increase of 49.3%, or
$158.5 million, compared to the prior year period operating profit
of $321.7 million, which included segment profit of $31.1 million
attributable to the historical private brands business. Operating
profit for the six months ended March 31, 2019 included a $127.3
million gain related to the separate capitalization of 8th Avenue,
which was treated as an adjustment for non-GAAP measures.
Net earnings were $169.6 million, a decrease of 56.1%, or $216.8
million, compared to the prior year period net earnings of $386.4
million. Net earnings included a $114.7 million loss in the six
months ended March 31, 2019 and a $53.2 million gain in the six
months ended March 31, 2018, both of which primarily related to
non-cash mark-to-market adjustments on interest rate swaps, which
are discussed later in this release and were treated as adjustments
for non-GAAP measures. Net earnings for the six months ended March
31, 2018 included a $265.3 million one-time income tax net benefit
and a $37.6 million loss related to early extinguishment of debt,
both of which are discussed later in this release and were treated
as adjustments for non-GAAP measures. Net earnings available to
common shareholders were $166.6 million, or $2.26 per diluted
common share, compared to the prior year period net earnings
available to common shareholders of $380.4 million, or $5.04 per
diluted common share. Adjusted net earnings were $179.8 million, or
$2.39 per diluted common share, compared to the prior year period
Adjusted net earnings of $148.5 million, or $1.94 per diluted
common share.
Adjusted EBITDA was $591.4 million, a decrease of 0.8%, or $4.5
million, compared to the prior year period Adjusted EBITDA of
$595.9 million, which included $56.3 million attributable to the
historical private brands business.
Post Consumer Brands
North American ready-to-eat (“RTE”) cereal.
Net sales were $459.1 million, a decrease of 0.7%, or $3.2
million, compared to the prior year period. Volumes declined 3.6%
as growth in private label and certain licensed products was more
than offset by declines in Honey Bunches of Oats, Malt-O-Meal bag
cereal and Great Grains. Segment profit was $83.2 million, a
decrease of 8.7%, or $7.9 million, compared to the prior year
period. Segment Adjusted EBITDA was $113.1 million, a decrease of
8.6%, or $10.7 million, compared to the prior year period.
For the six months ended March 31, 2019, net sales were $914.4
million, an increase of 2.2%, or $20.1 million, compared to the
prior year period. Segment profit was $167.2 million, an increase
of 3.7%, or $5.9 million, compared to the prior year period.
Segment Adjusted EBITDA was $226.7 million, a decrease of 0.8%, or
$1.9 million, compared to the prior year period.
Weetabix
International (primarily United Kingdom) RTE cereal and
muesli.
Net sales were $104.1 million, a decrease of 4.5%, or $4.9
million, compared to the prior year period, reflecting 8% improved
average net pricing which was offset by a 5.8% volume decline and
an unfavorable foreign exchange rate. Segment profit was $23.6
million, an increase of 50.3%, or $7.9 million, compared to the
prior year period. Segment Adjusted EBITDA was $32.0 million, an
increase of 13.5%, or $3.8 million, compared to the prior year
period.
For the six months ended March 31, 2019, net sales were $205.0
million, a decrease of 1.8%, or $3.7 million, compared to the prior
year period. Segment profit was $42.5 million, an increase of
30.8%, or $10.0 million, compared to the prior year period. Segment
Adjusted EBITDA was $59.1 million, an increase of 9.9%, or $5.3
million, compared to the prior year period.
Foodservice
Primarily egg and potato products.
Net sales were $389.1 million, an increase of 2.3%, or $8.9
million, compared to the reported prior year period. Pro forma net
sales increased 1.6%, or $6.0 million, over the same period in
fiscal year 2018. Pro forma volumes increased 0.9%, driven by
increases of 1.4% in egg volumes and 1.5% in pro forma potato
volumes, which were partially offset by a decline in all other
products. The references to pro forma net sales and volumes are
defined later in this release under “Pro Forma Information.”
Segment profit was $47.4 million, an increase of 10.5%, or $4.5
million, compared to the reported prior year period. Segment
Adjusted EBITDA was $75.9 million, an increase of 10.5%, or $7.2
million, compared to the reported prior year period.
For the six months ended March 31, 2019, net sales were $797.2
million, an increase of 6.4%, or $48.1 million, compared to the
reported prior year period. Segment profit was $100.1 million, an
increase of 12.7%, or $11.3 million, compared to the reported prior
year period. Segment Adjusted EBITDA was $153.0 million, an
increase of 10.5%, or $14.5 million, compared to the reported prior
year period.
Refrigerated Retail
Side dishes, egg, cheese and sausage products.
Net sales were $219.5 million, a decrease of 0.1%, or $0.3
million, compared to the reported prior year period. Pro forma net
sales decreased 4.4%, or $10.1 million, over the same period in
fiscal year 2018. Pro forma volumes decreased 1.3% as a pro forma
5.5% increase in side dish volumes was more than offset by declines
in all other products (disclosed in a table presented later in this
release). The references to pro forma net sales and volumes are
defined later in this release under “Pro Forma Information.”
Segment profit was $26.5 million, an increase of 33.8%, or $6.7
million, compared to the reported prior year period. Segment profit
for the second quarter of 2018 was negatively impacted by
integration expenses of $8.6 million, an inventory adjustment of
$4.1 million resulting from purchase accounting and transaction
expenses of $2.4 million, each of which was treated as an
adjustment for non-GAAP measures. Segment Adjusted EBITDA was $47.3
million, a decrease of 5.8%, or $2.9 million, compared to the
reported prior year period.
For the six months ended March 31, 2019, net sales were $481.1
million, an increase of 33.1%, or $119.6 million, compared to the
reported prior year period. Segment profit was $57.0 million, an
increase of 32.6%, or $14.0 million, compared to the reported prior
year period. Segment profit for the six months ended March 31, 2018
was negatively impacted by integration expenses of $9.1 million, an
inventory adjustment of $4.1 million resulting from purchase
accounting and transaction expenses of $2.4 million, each of which
was treated as an adjustment for non-GAAP measures. Segment
Adjusted EBITDA was $95.3 million, an increase of 17.1%, or $13.9
million, compared to the reported prior year period.
Active Nutrition
Ready-to-drink (“RTD”) protein shakes, other RTD beverages,
powders and nutrition bars.
Net sales were $216.5 million, an increase of 5.5%, or $11.3
million, compared to the prior year period as growth in sales and
volumes for RTD protein shakes and powders was partially offset by
declines in nutrition bars. RTD protein shake net sales grew 13%,
with volumes up 4.8%. Segment profit was $44.0 million, an
increase of 68.6%, or $17.9 million, compared to the prior year
period. Segment Adjusted EBITDA was $50.4 million, an increase of
55.1%, or $17.9 million, compared to the prior year period.
For the six months ended March 31, 2019, net sales were $402.3
million, an increase of 2.8%, or $11.1 million, compared to the
prior year period. Segment profit was $79.2 million, an increase of
72.5%, or $33.3 million, compared to the prior year period. Segment
profit for the six months ended March 31, 2018 was negatively
impacted by a provision of $9.0 million for a legal settlement,
which was treated as an adjustment for non-GAAP measures. Segment
Adjusted EBITDA was $92.0 million, an increase of 35.7%, or $24.2
million, compared to the prior year period.
Interest, Loss on Extinguishment of Debt, Expense
(Income) on Swaps and Income Tax
Interest expense, net was $85.5 million for the second quarter
of 2019, compared to $98.8 million for the second quarter of 2018.
For the six months ended March 31, 2019, interest expense, net was
$144.9 million, compared to $189.3 million for the six months ended
March 31, 2018. Interest expense, net for the six months ended
March 31, 2019 included a gain of $30.5 million resulting from the
reclassification of gains previously recorded in accumulated other
comprehensive loss to interest expense. The remaining decrease for
both periods was primarily driven by reductions in the principal
balance of debt outstanding resulting from repayments and
repurchases of certain debt in fiscal years 2018 and 2019. Interest
expense, net included interest expense payable, under certain
circumstances, to former holders of shares of Bob Evans common
stock who demanded appraisal of their shares under Delaware law and
had not withdrawn their demands, of $0.4 million in the second
quarter of 2019, $4.7 million in the six months ended March 31,
2019 and $3.8 million in both the three and six months ended March
31, 2018.
Loss on extinguishment of debt, net of $6.1 million was recorded
in the six months ended March 31, 2019 in connection with (i)
Post’s repayment of $863.0 million in total principal value of its
term loan, (ii) the assignment of debt to 8th Avenue related to its
separate capitalization and (iii) Post’s open market purchases of
$60.0 million in total principal value of certain senior notes.
Loss on extinguishment of debt, net of $0.3 million was recorded in
the second quarter of 2018 in connection with (i) an opportunistic
repricing of Post’s term loan and (ii) Post’s open market purchases
of $112.0 million in total principal value of certain senior notes.
Loss on extinguishment of debt, net of $37.6 million was recorded
in the six months ended March 31, 2018 in connection with Post’s
redemption of its 6.00% senior notes and the items discussed above
in the second quarter of 2018.
Expense (income) on swaps, net relates to non-cash
mark-to-market adjustments and cash settlements on interest rate
swaps. Expense on swaps, net was $63.0 million for the second
quarter of 2019, compared to income of $50.5 million for the second
quarter of 2018. For the six months ended March 31, 2019, expense
on swaps, net was $114.7 million, compared to income of $53.2
million in the six months ended March 31, 2018.
Income tax benefit was $11.6 million in the second quarter of
2019, an effective income tax rate of negative 28.0%, compared to
an expense of $23.9 million in the second quarter of 2018, an
effective income tax rate of 20.7%. For the six months ended March
31, 2019, income tax expense was $32.2 million, an effective income
tax rate of 14.5%, compared to a benefit of $231.9 million in the
six months ended March 31, 2018. The effective income tax rate in
both of the fiscal year 2019 periods differed significantly from
the statutory rate as a result of discrete items occurring in the
second quarter of 2019, primarily relating to excess tax benefits
for share-based payments. In connection with the U.S. Tax Cuts and
Jobs Act, Post recorded a $265.3 million one-time income tax net
benefit in the six months ended March 31, 2018.
Share Repurchases
During the second quarter of 2019, Post repurchased 0.4 million
shares for $40.5 million at an average price of $97.66 per share.
During the six months ended March 31, 2019, Post repurchased 0.7
million shares for $65.8 million at an average price of $93.75 per
share. At the end of the second quarter of 2019, Post had $242.3
million remaining under its share repurchase authorization.
Recent Announcements
In a separate release issued earlier today, Post announced that
it has reached an agreement to acquire the private label
ready-to-eat (“RTE”) cereal business of TreeHouse Foods (the
“TreeHouse RTE cereal business”). The transaction is expected to be
completed in the third calendar quarter (Post’s fourth fiscal
quarter), subject to customary closing conditions including the
expiration of waiting periods under U.S. antitrust laws.
On April 8, 2019, Post announced that one of its subsidiaries
had confidentially submitted a draft registration statement on Form
S-1 to the Securities and Exchange Commission (the “SEC”) related
to its proposed initial public offering of its active nutrition
business (the “Active Nutrition business”). There can be no
assurance that the confidential submission of a draft registration
statement on Form S-1 will result in any transaction or other
action by Post.
Outlook
Post management has reaffirmed its fiscal year 2019 Adjusted
EBITDA range of $1.20-$1.24 billion, which excludes any losses from
Post’s investment in 8th Avenue and any contribution from the
acquisition of the TreeHouse RTE cereal business.
In fiscal year 2019, Post management expects to incur $19-$21
million of restructuring and plant closure costs associated with
the closure of certain cereal facilities, which are treated as
adjustments to non-GAAP measures and comprised of severance,
retention and related expenses, adjustments on assets held for sale
and accelerated depreciation.
Post management continues to expect fiscal year 2019 capital
expenditures to range between $300-$310 million, including the
following:
- approximately $80 million related to the previously announced
new precooked egg facility in Norwalk, Iowa;
- approximately $30 million related to the previously announced
cage-free housing conversion at the Bloomfield, Nebraska facility;
and
- approximately $25 million to upgrade certain manufacturing
product lines in Corby, U.K. into a single facility and to complete
the start-up and transfer of production to other facilities related
to the Clinton, Massachusetts cereal facility closure.
The Company provides Adjusted EBITDA guidance only on a non-GAAP
basis and does not provide a reconciliation of its forward-looking
Adjusted EBITDA non-GAAP guidance measure to the most directly
comparable GAAP measure due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliation, including adjustments that could be made for
gain on sale of business, non-cash mark-to-market adjustments and
cash settlements on interest rate swaps, provision for legal
settlement, transaction and integration costs, restructuring and
plant closure costs, mark-to-market adjustments on commodity and
foreign exchange hedges, assets held for sale and other charges
reflected in the Company’s reconciliation of historical numbers,
the amounts of which, based on historical experience, could be
significant. For additional information regarding Post’s non-GAAP
measures, see the related explanations presented under “Use of
Non-GAAP Measures.”
8th Avenue Standalone Financial Information and
Outlook
A business separately capitalized by Post and Thomas H. Lee
Partners, L.P. (“THL”), in which Post owns 60.5%, and THL and
members of the 8th Avenue management team collectively own 39.5%,
of the common equity of 8th Avenue, the holding company for Post’s
historical private brands business (nut butter, dried fruit and
nut, granola and pasta).
For the second quarter of 2019, net sales were $213.7 million,
net loss was $4.2 million and Adjusted EBITDA was $24.6 million.
For the six months ended March 31, 2019, net sales were $427.8
million, net loss was $8.7 million and Adjusted EBITDA was $47.5
million. As of March 31, 2019, 8th Avenue is capitalized with
$661.7 million of senior secured debt, $250 million in principal
amount of preferred equity and $14.1 million of accumulated, but
unpaid, preferred dividends. Summarized financial information
for 8th Avenue is disclosed later in this release.
For 8th Avenue, Post management has updated its fiscal year 2019
Adjusted EBITDA range to be between $100-$105 million.
Post provides Adjusted EBITDA guidance for 8th Avenue only on a
non-GAAP basis and does not provide a reconciliation of its
forward-looking Adjusted EBITDA non-GAAP guidance measure to the
most directly comparable GAAP measure due to the inherent
difficulty in forecasting and quantifying certain amounts that are
necessary for such reconciliation, including transaction and
integration costs, non-cash stock based compensation and other
charges reflected in 8th Avenue’s reconciliation of historical
numbers, the amounts of which, based on historical experience,
could be significant. For additional information regarding Post’s
non-GAAP measures, see the related explanations presented under
“Use of Non-GAAP Measures.”
Use of Non-GAAP Measures
The Company uses certain non-GAAP measures in this release to
supplement the financial measures prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”). These non-GAAP
measures include total segment profit, Adjusted net earnings,
Adjusted diluted earnings per common share, Adjusted EBITDA for the
Company and 8th Avenue, and segment Adjusted EBITDA. The
reconciliation of each of these non-GAAP measures to the most
directly comparable GAAP measure is provided later in this release
under “Explanation and Reconciliation of Non-GAAP Measures.”
Management uses certain of these non-GAAP measures, including
Adjusted EBITDA and segment Adjusted EBITDA, as key metrics in the
evaluation of underlying Company and segment performance, in making
financial, operating and planning decisions and, in part, in the
determination of cash bonuses for its executive officers and
employees. Additionally, the Company is required to comply with
certain covenants and limitations that are based on variations of
EBITDA in the Company’s financing documents. Management believes
the use of these non-GAAP measures provides increased transparency
and assists investors in understanding the underlying operating
performance of the Company and its segments and in the analysis of
ongoing operating trends. Non-GAAP measures are not prepared
in accordance with GAAP, as they exclude certain items as described
later in this release. These non-GAAP measures may not be
comparable to similarly titled measures of other companies. For
additional information regarding the Company’s non-GAAP measures,
see the related explanations provided under “Explanation and
Reconciliation of Non-GAAP Measures” later in this release.
Conference Call to Discuss Earnings Results and
Outlook
Post will host a conference call on Friday, May 3, 2019 at 9:00
a.m. EDT to discuss financial results for the second quarter of
fiscal year 2019 and fiscal year 2019 outlook and to respond to
questions. Robert V. Vitale, President and Chief Executive Officer,
and Jeff A. Zadoks, Executive Vice President and Chief Financial
Officer, will participate in the call.
Interested parties may join the conference call by dialing (877)
540-0891 in the United States and (678) 408-4007 from outside of
the United States. The conference identification number is 4016209.
Interested parties are invited to listen to the webcast of the
conference call, which can be accessed by visiting the Investor
Relations section of Post’s website at www.postholdings.com.
A replay of the conference call will be available through
Friday, May 17, 2019 by dialing (800) 585-8367 in the United States
and (404) 537-3406 from outside of the United States and using the
conference identification number 4016209. A webcast replay also
will be available for a limited period on Post’s website in the
Investor Relations section.
Prospective Financial Information
Prospective financial information is necessarily speculative in
nature, and it can be expected that some or all of the assumptions
underlying the prospective financial information described above
will not materialize or will vary significantly from actual
results. For further discussion of some of the factors that may
cause actual results to vary materially from the information
provided above, see “Forward-Looking Statements” below.
Accordingly, the prospective financial information provided above
is only an estimate of what the Company’s management believes is
realizable as of the date of this release. It also should be
recognized that the reliability of any forecasted financial data
diminishes the farther in the future that the data is forecast. In
light of the foregoing, the information should be viewed in context
and undue reliance should not be placed upon it.
Forward-Looking Statements
Certain matters discussed in this release and on the conference
call are forward-looking statements, including Post’s Adjusted
EBITDA outlook for fiscal year 2019, Post’s capital expenditures
expectations, including capital expenditures expectations related
to the new precooked egg facility, the cage-free housing
conversion, upgrading certain manufacturing product lines in Corby
and the start-up and transfer of production to other facilities
related to the Clinton cereal facility closure, Post’s
restructuring and plant closure expectations, Post management’s
Adjusted EBITDA outlook for 8th Avenue for fiscal year 2019,
statements regarding the initial public offering of Post’s Active
Nutrition business and the expected timing of the completion of the
acquisition of the TreeHouse RTE cereal business, including
regulatory approvals. These forward-looking statements are
sometimes identified from the use of forward-looking words such as
“believe,” “should,” “could,” “potential,” “continue,” “expect,”
“project,” “estimate,” “predict,” “anticipate,” “aim,” “intend,”
“plan,” “forecast,” “target,” “is likely,” “will,” “can,” “may,”
“would” or the negative of these terms or similar expressions, and
include all statements regarding future performance, earnings
projections, events or developments. There are a number of risks
and uncertainties that could cause actual results to differ
materially from the forward-looking statements made herein. These
risks and uncertainties include, but are not limited to, the
following:
- Post’s high leverage, Post’s ability to obtain additional
financing (including both secured and unsecured debt) and Post’s
ability to service its outstanding debt (including covenants that
restrict the operation of its business);
- Post’s ability to continue to compete in its product categories
and Post’s ability to retain its market position and favorable
perceptions of its brands;
- Post’s ability to anticipate and respond to changes in consumer
preferences and trends and introduce new products;
- the possibility that Post may not be able to consummate the
initial public offering of its Active Nutrition business on the
expected timeline or at all, that Post may not be able to create
value in its Active Nutrition business through such transaction or
that the pursuit of such transaction could be disruptive to Post
and its Active Nutrition business;
- the ability and timing to close the proposed acquisition of the
TreeHouse RTE cereal business, including obtaining the required
regulatory approvals and the satisfaction of other closing
conditions for the proposed acquisition;
- Post’s ability to identify, complete and integrate acquisitions
and manage its growth;
- Post’s ability to promptly and effectively realize the expected
synergies of its acquisition of Bob Evans within the expected
timeframe or at all;
- higher freight costs, significant volatility in the costs or
availability of certain raw materials, commodities or packaging
used to manufacture Post’s products or higher energy costs;
- impairment in the carrying value of goodwill or other
intangibles;
- Post’s ability to successfully implement business strategies to
reduce costs;
- allegations that Post’s products cause injury or illness,
product recalls and withdrawals and product liability claims and
other litigation;
- legal and regulatory factors, such as compliance with existing
laws and regulations and changes to and new laws and regulations
affecting Post’s business, including current and future laws and
regulations regarding food safety, advertising and labeling and
animal feeding and housing operations;
- the loss of, a significant reduction of purchases by or the
bankruptcy of a major customer;
- consolidations in the retail and foodservice distribution
channels;
- losses incurred in the appraisal proceedings brought in
connection with Post’s acquisition of Bob Evans by former Bob Evans
stockholders who demanded appraisal of their shares;
- the ultimate impact litigation or other regulatory matters may
have on Post;
- disruptions or inefficiencies in the supply chain, including as
a result of Post’s reliance on third party manufacturers for
certain of its products;
- changes in weather conditions, natural disasters, agricultural
diseases and pests and other events beyond Post’s control;
- Post’s ability to successfully collaborate with the private
equity firm THL, whose affiliates invested with Post in 8th
Avenue;
- costs associated with Bob Evans’s obligations in connection
with the sale and separation of its restaurant business in April
2017, which occurred prior to Post’s acquisition of Bob Evans,
including certain indemnification obligations under the restaurants
sale agreement and Bob Evans’s payment and performance obligations
as a guarantor for certain leases;
- the ability of Post’s and Post’s customers’ private brand
products to compete with nationally branded products;
- Post’s ability to successfully operate its international
operations in compliance with applicable laws and regulations;
- changes in economic conditions, disruptions in the United
States and global capital and credit markets, changes in interest
rates and fluctuations in foreign currency exchange rates;
- the impact of the United Kingdom’s exit from the European Union
(commonly known as “Brexit”) on Post and its operations;
- changes in estimates in critical accounting judgments;
- loss of key employees, labor strikes, work stoppages or
unionization efforts;
- losses or increased funding and expenses related to Post’s
qualified pension or other postretirement plans;
- costs, business disruptions and reputational damage associated
with information technology failures, cybersecurity incidents or
information security breaches;
- Post’s ability to protect its intellectual property and other
assets;
- significant differences in Post’s and 8th Avenue’s actual
operating results from Post’s guidance regarding its and 8th
Avenue’s future performance;
- Post’s ability to satisfy the requirements of Section 404 of
the Sarbanes-Oxley Act of 2002; and
- other risks and uncertainties described in Post’s filings with
the SEC.
These forward-looking statements represent Post’s judgment as of
the date of this release. Post disclaims, however, any intent or
obligation to update these forward-looking statements.
This release does not constitute an offer to sell or the
solicitation of an offer to buy any security and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offering, solicitation or sale would be unlawful.
About Post Holdings, Inc.
Post Holdings, Inc., headquartered in St. Louis, Missouri, is a
consumer packaged goods holding company operating in the
center-of-the-store, refrigerated, foodservice, food ingredient,
and active nutrition food categories. Through its Post Consumer
Brands business, Post is a leader in the North American
ready-to-eat cereal category offering a broad portfolio including
recognized brands such as Honey Bunches of Oats®, Pebbles™, Great
Grains® and Malt-O-Meal® bag cereal. Post also is a leader in the
United Kingdom ready-to-eat cereal category with the iconic
Weetabix® brand. As a leader in refrigerated foods, Post delivers
innovative, value-added egg and refrigerated potato products to the
foodservice channel and the retail refrigerated side dish category,
offering side dishes and egg, sausage and cheese products through
the Bob Evans®, Simply Potatoes®, All Whites®, Better’n Eggs® and
Crystal Farms® brands. Post’s Active Nutrition platform brings good
energy to a wide range of consumers looking to live healthy lives
through brands such as Premier Protein®, PowerBar® and Dymatize®.
Post participates in the private brand food category through its
investment with Thomas H. Lee Partners in 8th Avenue Food &
Provisions, a leading, private brand centric, consumer products
holding company. For more information, visit
www.postholdings.com.
Contact:Investor RelationsJennifer
Meyerjennifer.meyer@postholdings.com(314) 644-7665
Media RelationsLisa Hanlylisa.hanly@postholdings.com(314)
665-3180
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)(in millions, except per
share data)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
|
$ |
2,799.1 |
|
|
$ |
3,019.2 |
|
Cost of goods sold |
936.5 |
|
|
1,113.7 |
|
|
1,921.3 |
|
|
2,098.3 |
|
Gross
Profit |
451.3 |
|
|
472.4 |
|
|
877.8 |
|
|
920.9 |
|
Selling, general and
administrative expenses |
225.8 |
|
|
264.6 |
|
|
442.9 |
|
|
510.6 |
|
Amortization of intangible
assets |
40.4 |
|
|
46.4 |
|
|
80.7 |
|
|
87.9 |
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Other operating expenses,
net |
1.4 |
|
|
0.7 |
|
|
1.3 |
|
|
0.7 |
|
Operating
Profit |
186.3 |
|
|
160.7 |
|
|
480.2 |
|
|
321.7 |
|
Interest expense, net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Loss on extinguishment of
debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Expense (income) on swaps,
net |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Other income, net |
(3.7 |
) |
|
(3.6 |
) |
|
(7.4 |
) |
|
(7.1 |
) |
Earnings before Income
Taxes and Equity Method Loss |
41.5 |
|
|
115.7 |
|
|
221.9 |
|
|
155.1 |
|
Income tax (benefit)
expense |
(11.6 |
) |
|
23.9 |
|
|
32.2 |
|
|
(231.9 |
) |
Equity method loss, net of
tax |
8.8 |
|
|
— |
|
|
19.5 |
|
|
— |
|
Net Earnings Including
Noncontrolling Interest |
44.3 |
|
|
91.8 |
|
|
170.2 |
|
|
387.0 |
|
Less: Net earnings
attributable to noncontrolling interest |
0.3 |
|
|
0.3 |
|
|
0.6 |
|
|
0.6 |
|
Net
Earnings |
44.0 |
|
|
91.5 |
|
|
169.6 |
|
|
386.4 |
|
Less: Preferred stock
dividends |
1.0 |
|
|
2.6 |
|
|
3.0 |
|
|
6.0 |
|
Net Earnings Available
to Common Shareholders |
$ |
43.0 |
|
|
$ |
88.9 |
|
|
$ |
166.6 |
|
|
$ |
380.4 |
|
|
|
|
|
|
|
|
|
Earnings per Common
Share: |
|
|
|
|
|
|
|
Basic |
$ |
0.61 |
|
|
$ |
1.33 |
|
|
$ |
2.43 |
|
|
$ |
5.73 |
|
Diluted |
$ |
0.58 |
|
|
$ |
1.20 |
|
|
$ |
2.26 |
|
|
$ |
5.04 |
|
|
|
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
70.6 |
|
|
66.8 |
|
|
68.6 |
|
|
66.4 |
|
Diluted |
75.3 |
|
|
76.0 |
|
|
75.2 |
|
|
76.6 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions)
|
March 31, 2019 |
|
September 30, 2018 |
ASSETS |
Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
149.7 |
|
|
$ |
989.7 |
|
Restricted cash |
2.2 |
|
|
4.8 |
|
Receivables, net |
500.4 |
|
|
462.3 |
|
Inventories |
555.1 |
|
|
484.2 |
|
Current assets held for sale |
— |
|
|
195.0 |
|
Prepaid expenses and other current assets |
46.4 |
|
|
64.3 |
|
Total Current Assets |
1,253.8 |
|
|
2,200.3 |
|
|
|
|
|
Property, net |
1,718.7 |
|
|
1,709.7 |
|
Goodwill |
4,498.9 |
|
|
4,499.6 |
|
Other intangible
assets, net |
3,458.6 |
|
|
3,539.3 |
|
Equity method
investments |
163.1 |
|
|
5.2 |
|
Other assets held
for sale |
— |
|
|
856.6 |
|
Other assets |
189.7 |
|
|
246.8 |
|
Total Assets |
$ |
11,282.8 |
|
|
$ |
13,057.5 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Current
Liabilities |
|
|
|
Current portion of long-term debt |
$ |
6.7 |
|
|
$ |
22.1 |
|
Accounts payable |
325.5 |
|
|
365.1 |
|
Current liabilities held for sale |
— |
|
|
65.6 |
|
Other current liabilities |
317.2 |
|
|
339.3 |
|
Total Current Liabilities |
649.4 |
|
|
792.1 |
|
|
|
|
|
Long-term
debt |
6,326.2 |
|
|
7,232.1 |
|
Deferred income
taxes |
751.6 |
|
|
778.4 |
|
Other liabilities
held for sale |
— |
|
|
695.1 |
|
Other
liabilities |
310.7 |
|
|
499.3 |
|
Total Liabilities |
8,037.9 |
|
|
9,997.0 |
|
|
|
|
|
Shareholders’ Equity |
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
0.8 |
|
|
0.8 |
|
Additional paid-in capital |
3,643.1 |
|
|
3,590.9 |
|
Retained earnings |
252.7 |
|
|
88.0 |
|
Accumulated other comprehensive loss |
(7.0 |
) |
|
(39.4 |
) |
Treasury stock, at cost |
(655.7 |
) |
|
(589.9 |
) |
Total Shareholders’ Equity excluding Noncontrolling
Interest |
3,233.9 |
|
|
3,050.4 |
|
Noncontrolling Interest |
11.0 |
|
|
10.1 |
|
Total Shareholders’ Equity |
3,244.9 |
|
|
3,060.5 |
|
Total Liabilities and Shareholders’ Equity |
$ |
11,282.8 |
|
|
$ |
13,057.5 |
|
SELECTED CONDENSED CONSOLIDATED CASH FLOW
INFORMATION (Unaudited)(in millions)
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
Cash provided by (used in): |
|
|
|
Operating activities |
$ |
204.8 |
|
|
$ |
263.6 |
|
Investing activities, including capital expenditures of $135.5 and
$86.1 |
162.9 |
|
|
(1,541.1 |
) |
Financing activities |
(1,209.4 |
) |
|
56.9 |
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash |
(0.9 |
) |
|
2.0 |
|
Net decrease in cash, cash equivalents and
restricted cash |
$ |
(842.6 |
) |
|
$ |
(1,218.6 |
) |
SEGMENT INFORMATION
(Unaudited)(in millions)
|
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
|
|
|
|
|
|
|
|
Post Consumer
Brands |
$ |
459.1 |
|
|
$ |
462.3 |
|
|
$ |
914.4 |
|
|
$ |
894.3 |
|
|
Weetabix |
104.1 |
|
|
109.0 |
|
|
205.0 |
|
|
208.7 |
|
|
Foodservice |
389.1 |
|
|
380.2 |
|
|
797.2 |
|
|
749.1 |
|
|
Refrigerated
Retail |
219.5 |
|
|
219.8 |
|
|
481.1 |
|
|
361.5 |
|
|
Active
Nutrition |
216.5 |
|
|
205.2 |
|
|
402.3 |
|
|
391.2 |
|
|
Private
Brands |
— |
|
|
212.6 |
|
|
— |
|
|
419.0 |
|
|
Eliminations |
(0.5 |
) |
|
(3.0 |
) |
|
(0.9 |
) |
|
(4.6 |
) |
|
Total |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
|
$ |
2,799.1 |
|
|
$ |
3,019.2 |
|
Segment
Profit |
|
|
|
|
|
|
|
|
Post Consumer
Brands |
$ |
83.2 |
|
|
$ |
91.1 |
|
|
$ |
167.2 |
|
|
$ |
161.3 |
|
|
Weetabix |
23.6 |
|
|
15.7 |
|
|
42.5 |
|
|
32.5 |
|
|
Foodservice |
47.4 |
|
|
42.9 |
|
|
100.1 |
|
|
88.8 |
|
|
Refrigerated
Retail |
26.5 |
|
|
19.8 |
|
|
57.0 |
|
|
43.0 |
|
|
Active
Nutrition |
44.0 |
|
|
26.1 |
|
|
79.2 |
|
|
45.9 |
|
|
Private
Brands |
— |
|
|
14.2 |
|
|
— |
|
|
31.1 |
|
|
Total segment profit |
224.7 |
|
|
209.8 |
|
|
446.0 |
|
|
402.6 |
|
General corporate
expenses and other |
37.3 |
|
|
45.5 |
|
|
85.7 |
|
|
73.8 |
|
Gain on sale of
business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Interest expense,
net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Loss on
extinguishment of debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Expense (income)
on swaps, net |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Earnings
before Income Taxes and Equity Method Loss |
$ |
41.5 |
|
|
$ |
115.7 |
|
|
$ |
221.9 |
|
|
$ |
155.1 |
|
PRO FORMA INFORMATION
Pro forma net sales and pro forma volumes, as used in the text
of this release, are defined as the comparison of the GAAP results
for the three-month period ended March 31, 2019 to the same
three-month period in fiscal year 2018, adjusted to include results
of the acquired business and exclude results of the divested
business for the periods presented in the table below. Pro forma
net sales and pro forma volumes have not been prepared in
accordance with the requirements of Article 11 of Regulation
S-X.
Business |
|
Type |
|
Segment |
|
Pro Forma Periods |
Bob Evans |
|
Acquisition |
|
Foodservice and Refrigerated Retail |
|
January 1, 2018 - January 11, 2018 |
8th Avenue |
|
Divestiture |
|
Private Brands |
|
January 1, 2018 - March 31,
2018 |
RECONCILIATION OF NET SALES TO PRO FORMA
NET SALES (Unaudited)(in millions)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Net Sales |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
12.7 |
|
Pre-divestiture net sales from the historical private brands
business |
— |
|
|
(212.6 |
) |
Pro Forma Net Sales |
$ |
1,387.8 |
|
|
$ |
1,386.2 |
|
|
|
|
|
Foodservice Net Sales |
$ |
389.1 |
|
|
$ |
380.2 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
2.9 |
|
Pro Forma Foodservice Net
Sales |
$ |
389.1 |
|
|
$ |
383.1 |
|
|
|
|
|
Refrigerated Retail Net
Sales |
$ |
219.5 |
|
|
$ |
219.8 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
9.8 |
|
Pro Forma Refrigerated Retail
Net Sales |
$ |
219.5 |
|
|
$ |
229.6 |
|
SUPPLEMENTAL REFRIGERATED RETAIL SEGMENT
INFORMATION (Unaudited)
The below table presents volume percentage changes for the
current quarter compared to the prior year quarter for products
within the Refrigerated Retail segment, some of which are presented
on a pro forma basis.
Product |
|
Volume Percentage Change |
All (pro forma) |
|
(1.3 |
%) |
Side dishes (pro forma) |
|
5.5 |
% |
Egg |
|
(2.9 |
%) |
Cheese |
|
(8.4 |
%) |
Sausage (pro forma) |
|
(9.4 |
%) |
EXPLANATION AND RECONCILIATION OF
NON-GAAP MEASURES
The Company uses certain non-GAAP measures in this release to
supplement the financial measures prepared in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
measures include total segment profit, Adjusted net earnings,
Adjusted diluted earnings per common share, Adjusted EBITDA and
segment Adjusted EBITDA. The reconciliation of each of these
non-GAAP measures to the most directly comparable GAAP measure is
provided in the tables following this section. Non-GAAP measures
are not prepared in accordance with GAAP, as they exclude certain
items as described below. These non-GAAP measures may not be
comparable to similarly titled measures of other companies.
Total segment profitTotal segment profit represents the
aggregation of the segment profit for each of the Company’s
reportable segments, which is each of the Company’s reportable
segment’s earnings before income taxes and equity method
earnings/loss before impairment of property, goodwill and
intangible assets, facility closure related costs, restructuring
expenses, gain/loss on assets held for sale, gain/loss on sale of
businesses and facilities, interest expense, net and other
unallocated corporate income and expenses. The Company believes
total segment profit is useful to investors in evaluating the
Company’s operating performance because it facilitates
period-to-period comparison of results of segment operations.
Adjusted net earnings and Adjusted diluted earnings per common
shareThe Company believes Adjusted net earnings and Adjusted
diluted earnings per common share are useful to investors in
evaluating the Company’s operating performance because they exclude
items that affect the comparability of the Company’s financial
results and could potentially distort an understanding of the
trends in business performance.
Adjusted net earnings and Adjusted diluted earnings per common
share are adjusted for the following items:
- Gain on sale of business: The Company has excluded gains
recorded on divestitures as the amount and frequency of such
adjustments are not consistent. Additionally, the Company believes
that these gains do not reflect expected ongoing future operating
income and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Payments of debt extinguishment costs, net: The Company has
excluded payments and other expenses for premiums on debt
extinguishment, net of gains realized on debt repurchased at a
discount, as such payments are inconsistent in amount and
frequency. Additionally, the Company believes that these costs do
not reflect expected ongoing future operating expenses and do not
contribute to a meaningful evaluation of the Company’s current
operating performance or comparisons of the Company’s operating
performance to other periods.
- Non-cash mark-to-market adjustments and cash settlements on
interest rate swaps: The Company has excluded the impact of
non-cash mark-to-market adjustments and cash settlements on
interest rate swaps due to the inherent uncertainty and volatility
associated with such amounts based on changes in assumptions with
respect to estimates of fair value and economic conditions and as
the amount and frequency of such adjustments and settlements are
not consistent.
- Provision for legal settlement: The Company has excluded gains
and losses recorded to recognize the anticipated or actual
resolution of certain litigation as the Company believes such gains
and losses do not reflect expected ongoing future operating income
and expenses and do not contribute to a meaningful evaluation of
the Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Transaction costs and integration costs: The Company has
excluded transaction costs related to professional service fees and
other related costs associated with signed and closed business
combinations and divestitures and integration costs incurred to
integrate acquired or to-be-acquired businesses as the Company
believes that these exclusions allow for more meaningful evaluation
of the Company’s current operating performance and comparisons of
the Company’s operating performance to other periods. The Company
believes such costs are generally not relevant to assessing or
estimating the long-term performance of acquired assets as part of
the Company or the performance of the divested assets, and such
costs are not factored into management’s evaluation of potential
acquisitions or its performance after completion of an acquisition
or the evaluation to divest an asset. In addition, the frequency
and amount of such charges varies significantly based on the size
and timing of the acquisitions and divestitures and the maturity of
the businesses being acquired or divested. Also, the size,
complexity and/or volume of past acquisitions and divestitures,
which often drive the magnitude of such expenses, may not be
indicative of the size, complexity and/or volume of future
acquisitions or divestitures. By excluding these expenses,
management is better able to evaluate the Company’s ability to
utilize its existing assets and estimate the long-term value that
acquired assets will generate for the Company. Furthermore, the
Company believes that the adjustments of these items more closely
correlate with the sustainability of the Company’s operating
performance.
- Restructuring and plant closure costs, including accelerated
depreciation: The Company has excluded certain costs associated
with facility closures as the amount and frequency of such
adjustments are not consistent. Additionally, the Company believes
that these costs do not reflect expected ongoing future operating
expenses and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Inventory valuation adjustments on acquired businesses: The
Company has excluded the impact of fair value step-up adjustments
to inventory in connection with business combinations as such
adjustments represent non-cash items, are not consistent in amount
and frequency and are significantly impacted by the timing and size
of the Company’s acquisitions.
- Mark-to-market adjustments on commodity and foreign exchange
hedges: The Company has excluded the impact of mark-to-market
adjustments on commodity and foreign exchange hedges due to the
inherent uncertainty and volatility associated with such amounts
based on changes in assumptions with respect to fair value
estimates. Additionally, these adjustments are primarily non-cash
items and the amount and frequency of such adjustments are not
consistent.
- Debt consent solicitation costs: The Company has excluded
professional service fees and other related costs in connection
with its debt consent solicitation as the Company believes that
these costs do not reflect expected ongoing future operating
expenses and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Assets held for sale: The Company has excluded adjustments
recorded to adjust the carrying value of facilities and other
assets classified as held for sale as such adjustments represent
non-cash items and the amount and frequency of such adjustments are
not consistent. Additionally, the Company believes that these
adjustments do not reflect expected ongoing future operating
expenses or income and do not contribute to a meaningful evaluation
of the Company’s current operating performance or comparisons of
the Company’s operating performance to other periods.
- Foreign currency gains and losses on intercompany loans: The
Company has excluded the impact of foreign currency fluctuations
related to intercompany loans denominated in currencies other than
the functional currency of the respective legal entity in
evaluating Company performance to allow for more meaningful
comparisons of performance to other periods.
- Advisory income: The Company has excluded advisory income
received from 8th Avenue as the Company believes such income does
not contribute to a meaningful evaluation of its current operating
performance or comparisons of its operating performance to other
periods.
- Income tax: The Company has included the income tax impact of
the non-GAAP adjustments using a rate described in the footnote of
the reconciliation tables, as the Company believes that the
Company’s GAAP effective income tax rate as reported is not
representative of the income tax expense impact of the
adjustments.
- U.S. tax reform net benefit: The Company has excluded the
impact of the one-time income tax net benefit recorded throughout
fiscal year 2018 which reflected (i) the benefit related to an
estimate of the remeasurement of the Company’s existing deferred
tax assets and liabilities considering both the Company’s fiscal
year 2018 blended U.S. federal corporate income tax rate of 24.5%
and a 21% rate for subsequent fiscal years and (ii) the expense
related to an estimate of a transition tax on unrepatriated foreign
earnings. The Company believes that the net benefit as reported is
not representative of the Company’s current income tax position and
exclusion of the benefit allows for more meaningful comparisons of
performance to other periods.
Adjusted EBITDA and segment Adjusted EBITDAThe Company believes
that Adjusted EBITDA is useful to investors in evaluating the
Company’s operating performance and liquidity because (i) we
believe it is widely used to measure a company’s operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and
the book value of assets, (ii) it presents a measure of corporate
performance exclusive of the Company’s capital structure and the
method by which the assets were acquired and (iii) it is a
financial indicator of a company’s ability to service its debt, as
the Company is required to comply with certain covenants and
limitations that are based on variations of EBITDA in the Company’s
financing documents. The Company believes that segment Adjusted
EBITDA is useful to investors in evaluating the Company’s operating
performance because it allows for assessment of the operating
performance of each reportable segment. Management uses Adjusted
EBITDA to provide forward-looking guidance and uses Adjusted EBITDA
and segment Adjusted EBITDA to forecast future results.
Adjusted EBITDA and segment Adjusted EBITDA reflect adjustments
for income tax (benefit) expense, interest expense, net,
depreciation and amortization including accelerated depreciation,
and the following adjustments discussed above: gain on sale of
business, non-cash mark-to-market adjustments and cash settlements
on interest rate swaps, provision for legal settlement, transaction
costs and integration costs, restructuring and plant closure costs
excluding accelerated depreciation, inventory valuation adjustments
on acquired businesses, mark-to-market adjustments on commodity and
foreign exchange hedges, debt consent solicitation costs, assets
held for sale, foreign currency gains and losses on intercompany
loans and advisory income. Additionally, Adjusted EBITDA and
segment Adjusted EBITDA reflect adjustments for the following
items:o. Loss (gain) on extinguishment of
debt, net: The Company has excluded gains and losses recorded on
extinguishment of debt, inclusive of payments for premiums, the
write-off of debt issuance costs and the write-off of net
unamortized debt premiums and discounts, net of gains realized on
debt repurchased at a discount, as such losses are inconsistent in
amount and frequency. Additionally, the Company believes that these
gains and losses do not reflect expected ongoing future operating
income and expenses and do not contribute to a meaningful
evaluation of the Company’s current operating performance or
comparisons of the Company’s operating performance to other
periods.p. Non-cash stock-based compensation:
The Company’s compensation strategy includes the use of stock-based
compensation to attract and retain executives and employees by
aligning their long-term compensation interests with shareholders’
investment interests. The Company has excluded non-cash stock-based
compensation as non-cash stock-based compensation can vary
significantly based on reasons such as the timing, size and nature
of the awards granted and subjective assumptions which are
unrelated to operational decisions and performance in any
particular period and do not contribute to meaningful comparisons
of the Company’s operating performance to other periods.q. The
Company has included adjustments for the 8th Avenue equity
investment loss and the Company’s portion of income tax (benefit)
expense, interest expense, net and depreciation and amortization
for its unconsolidated Weetabix investment accounted for using
equity method accounting.r: The Company has included adjustments
for income tax (benefit) expense, interest expense, net and
depreciation and amortization for consolidated investments which
are attributable to the noncontrolling owners of the consolidated
investments.
The historical Adjusted EBITDA and segment Adjusted EBITDA
presented later in this release reflect further additional
adjustments for the following item:
- The Company has excluded expenses for impairments of other
intangible assets as such non-cash amounts are inconsistent in
amount and frequency and the Company believes that these costs do
not reflect expected ongoing future operating expenses and do not
contribute to a meaningful evaluation of the Company’s current
operating performance or comparisons of the Company’s operating
performance to other periods.
RECONCILIATION OF NET EARNINGS AVAILABLE
TO COMMON SHAREHOLDERSTO ADJUSTED NET EARNINGS
(Unaudited)(in millions)
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Earnings Available to Common Shareholders |
$ |
43.0 |
|
|
$ |
88.9 |
|
|
$ |
166.6 |
|
|
$ |
380.4 |
|
Dilutive
preferred stock dividends |
1.0 |
|
|
2.6 |
|
|
3.0 |
|
|
6.0 |
|
Net
Earnings for Diluted Earnings per Share |
44.0 |
|
|
91.5 |
|
|
169.6 |
|
|
386.4 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
1.4 |
|
|
(4.0 |
) |
|
32.2 |
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
|
Provision for legal
settlement |
— |
|
|
2.0 |
|
|
— |
|
|
11.0 |
|
|
Transaction costs |
3.9 |
|
|
20.8 |
|
|
14.6 |
|
|
23.8 |
|
|
Integration costs |
1.2 |
|
|
13.2 |
|
|
0.9 |
|
|
23.8 |
|
|
Restructuring and plant
closure costs, including accelerated depreciation |
7.1 |
|
|
1.9 |
|
|
11.8 |
|
|
1.9 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
4.2 |
|
|
— |
|
|
4.2 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(4.4 |
) |
|
(6.1 |
) |
|
2.3 |
|
|
(8.3 |
) |
|
Debt consent solicitation
costs |
1.3 |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.9 |
|
|
— |
|
|
0.9 |
|
|
Advisory income |
— |
|
|
— |
|
|
(0.2 |
) |
|
— |
|
|
Total Net
Adjustments |
69.5 |
|
|
(12.2 |
) |
|
13.5 |
|
|
36.3 |
|
Income tax effect
on adjustments (1) |
(17.0 |
) |
|
3.0 |
|
|
(3.3 |
) |
|
(8.9 |
) |
U.S. tax reform
net benefit |
— |
|
|
(1.7 |
) |
|
— |
|
|
(265.3 |
) |
Adjusted
Net Earnings |
$ |
96.5 |
|
|
$ |
80.6 |
|
|
$ |
179.8 |
|
|
$ |
148.5 |
|
|
|
|
|
|
|
|
|
|
(1) For the three and six months ended
March 31, 2019, income tax effect on adjustments was calculated
using 24.5%, the sum of Post’s fiscal year 2019 U.S. federal
corporate income tax rate plus Post’s blended state income tax rate
net of federal deductions. For the three and six months ended March
31, 2018, income tax effect on adjustments was calculated using
24.5%, the sum of Post’s fiscal year 2018 blended U.S. federal
corporate income tax rate plus Post’s blended state income tax rate
less the estimated benefit of the Domestic Production Activities
Deduction. |
RECONCILIATION OF DILUTED EARNINGS PER
COMMON SHARETO ADJUSTED DILUTED EARNINGS PER
COMMON SHARE (Unaudited)
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Diluted
Earnings per Common Share |
$ |
0.58 |
|
|
$ |
1.20 |
|
|
$ |
2.26 |
|
|
$ |
5.04 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
(0.03 |
) |
|
— |
|
|
(1.69 |
) |
|
— |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
0.02 |
|
|
(0.05 |
) |
|
0.42 |
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
0.84 |
|
|
(0.66 |
) |
|
1.52 |
|
|
(0.68 |
) |
|
Provision for legal
settlement |
— |
|
|
0.03 |
|
|
— |
|
|
0.14 |
|
|
Transaction costs |
0.05 |
|
|
0.27 |
|
|
0.19 |
|
|
0.31 |
|
|
Integration costs |
0.02 |
|
|
0.17 |
|
|
0.01 |
|
|
0.31 |
|
|
Restructuring and plant
closure costs, including accelerated depreciation |
0.09 |
|
|
0.02 |
|
|
0.15 |
|
|
0.02 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
0.06 |
|
|
— |
|
|
0.05 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(0.06 |
) |
|
(0.08 |
) |
|
0.03 |
|
|
(0.11 |
) |
|
Debt consent solicitation
costs |
0.02 |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.01 |
|
|
— |
|
|
0.01 |
|
|
Total Net
Adjustments |
0.93 |
|
|
(0.16 |
) |
|
0.17 |
|
|
0.47 |
|
Income tax effect
on adjustments (1) |
(0.23 |
) |
|
0.04 |
|
|
(0.04 |
) |
|
(0.11 |
) |
U.S. tax reform
net benefit |
— |
|
|
(0.02 |
) |
|
— |
|
|
(3.46 |
) |
Adjusted
Diluted Earnings per Common Share |
$ |
1.28 |
|
|
$ |
1.06 |
|
|
$ |
2.39 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
(1) For the three
and six months ended March 31, 2019, income tax effect on
adjustments was calculated using 24.5%, the sum of Post’s fiscal
year 2019 U.S. federal corporate income tax rate plus Post’s
blended state income tax rate net of federal deductions. For the
three and six months ended March 31, 2018, income tax effect on
adjustments was calculated using 24.5%, the sum of Post’s fiscal
year 2018 blended U.S. federal corporate income tax rate plus
Post’s blended state income tax rate less the estimated benefit of
the Domestic Production Activities Deduction. |
RECONCILIATION OF NET EARNINGS TO
ADJUSTED EBITDA (Unaudited)(in
millions)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Earnings |
$ |
44.0 |
|
|
$ |
91.5 |
|
|
$ |
169.6 |
|
|
$ |
386.4 |
|
Income tax (benefit)
expense |
(11.6 |
) |
|
23.9 |
|
|
32.2 |
|
|
(231.9 |
) |
Interest expense, net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Depreciation and amortization,
including accelerated depreciation |
97.8 |
|
|
104.6 |
|
|
191.4 |
|
|
195.1 |
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Loss on extinguishment of
debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Provision for legal
settlement |
— |
|
|
2.0 |
|
|
— |
|
|
11.0 |
|
Non-cash stock-based
compensation |
9.4 |
|
|
9.0 |
|
|
18.1 |
|
|
15.8 |
|
Transaction costs |
3.9 |
|
|
20.8 |
|
|
14.6 |
|
|
23.8 |
|
Integration costs |
1.2 |
|
|
13.2 |
|
|
0.9 |
|
|
23.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
2.7 |
|
|
1.6 |
|
|
4.2 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
4.2 |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(4.4 |
) |
|
(6.1 |
) |
|
2.3 |
|
|
(8.3 |
) |
Equity method investment
adjustment |
8.8 |
|
|
0.2 |
|
|
19.5 |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
(0.1 |
) |
|
(0.1 |
) |
|
(0.3 |
) |
|
(0.3 |
) |
Debt consent solicitation
costs |
1.3 |
|
|
— |
|
|
1.3 |
|
|
— |
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.9 |
|
|
— |
|
|
0.9 |
|
Advisory income |
— |
|
|
— |
|
|
(0.2 |
) |
|
— |
|
Adjusted
EBITDA |
$ |
298.9 |
|
|
$ |
314.3 |
|
|
$ |
591.4 |
|
|
$ |
595.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
21.5 |
% |
|
19.8 |
% |
|
21.1 |
% |
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
MARCH 31, 2019(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
83.2 |
|
|
$ |
23.6 |
|
|
$ |
47.4 |
|
|
$ |
26.5 |
|
|
$ |
44.0 |
|
|
$ |
— |
|
|
$ |
224.7 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(37.3 |
) |
|
(37.3 |
) |
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.6 |
|
|
2.6 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.7 |
) |
|
(3.7 |
) |
Operating
Profit |
83.2 |
|
|
23.6 |
|
|
47.4 |
|
|
26.5 |
|
|
44.0 |
|
|
(38.4 |
) |
|
186.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
3.7 |
|
Depreciation and amortization,
including accelerated depreciation |
29.9 |
|
|
8.8 |
|
|
27.7 |
|
|
19.7 |
|
|
6.3 |
|
|
5.4 |
|
|
97.8 |
|
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.6 |
) |
|
(2.6 |
) |
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.4 |
|
|
9.4 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
3.8 |
|
|
3.9 |
|
Integration costs |
— |
|
|
— |
|
|
0.1 |
|
|
1.1 |
|
|
— |
|
|
— |
|
|
1.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.7 |
|
|
2.7 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
(5.1 |
) |
|
(4.4 |
) |
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
Adjusted
EBITDA |
$ |
113.1 |
|
|
$ |
32.0 |
|
|
$ |
75.9 |
|
|
$ |
47.3 |
|
|
$ |
50.4 |
|
|
$ |
(19.8 |
) |
|
$ |
298.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.6 |
% |
|
30.7 |
% |
|
19.5 |
% |
|
21.5 |
% |
|
23.3 |
% |
|
— |
|
|
21.5 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
MARCH 31, 2018(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
91.1 |
|
|
$ |
15.7 |
|
|
$ |
42.9 |
|
|
$ |
19.8 |
|
|
$ |
26.1 |
|
|
$ |
14.2 |
|
|
$ |
— |
|
|
$ |
209.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(45.5 |
) |
|
(45.5 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.6 |
) |
|
(3.6 |
) |
Operating
Profit |
91.1 |
|
|
15.7 |
|
|
42.9 |
|
|
19.8 |
|
|
26.1 |
|
|
14.2 |
|
|
(49.1 |
) |
|
160.7 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.6 |
|
|
3.6 |
|
Depreciation and amortization,
including accelerated depreciation |
30.9 |
|
|
12.7 |
|
|
26.0 |
|
|
15.3 |
|
|
6.4 |
|
|
11.7 |
|
|
1.6 |
|
|
104.6 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
2.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.0 |
|
|
9.0 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
— |
|
|
18.4 |
|
|
20.8 |
|
Integration costs |
2.4 |
|
|
— |
|
|
0.8 |
|
|
8.6 |
|
|
— |
|
|
0.2 |
|
|
1.2 |
|
|
13.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
(0.6 |
) |
|
— |
|
|
0.7 |
|
|
4.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(3.7 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2.4 |
) |
|
(6.1 |
) |
Equity method investment
adjustment |
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Foreign currency loss on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Adjusted
EBITDA |
$ |
123.8 |
|
|
$ |
28.2 |
|
|
$ |
68.7 |
|
|
$ |
50.2 |
|
|
$ |
32.5 |
|
|
$ |
26.1 |
|
|
$ |
(15.2 |
) |
|
$ |
314.3 |
|
Adjusted EBITDA as a
percentage of Net Sales |
26.8 |
% |
|
25.9 |
% |
|
18.1 |
% |
|
22.8 |
% |
|
15.8 |
% |
|
12.3 |
% |
|
— |
|
|
19.8 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)SIX MONTHS ENDED MARCH
31, 2019(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
167.2 |
|
|
$ |
42.5 |
|
|
$ |
100.1 |
|
|
$ |
57.0 |
|
|
$ |
79.2 |
|
|
$ |
— |
|
|
$ |
446.0 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(85.7 |
) |
|
(85.7 |
) |
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
127.3 |
|
|
127.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.4 |
) |
|
(7.4 |
) |
Operating
Profit |
167.2 |
|
|
42.5 |
|
|
100.1 |
|
|
57.0 |
|
|
79.2 |
|
|
34.2 |
|
|
480.2 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
7.4 |
|
Depreciation and amortization,
including accelerated depreciation |
59.4 |
|
|
17.5 |
|
|
54.7 |
|
|
37.7 |
|
|
12.7 |
|
|
9.4 |
|
|
191.4 |
|
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(127.3 |
) |
|
(127.3 |
) |
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18.1 |
|
|
18.1 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
14.5 |
|
|
14.6 |
|
Integration costs |
0.1 |
|
|
— |
|
|
0.2 |
|
|
0.6 |
|
|
— |
|
|
— |
|
|
0.9 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(2.0 |
) |
|
— |
|
|
— |
|
|
4.3 |
|
|
2.3 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
Adjusted
EBITDA |
$ |
226.7 |
|
|
$ |
59.1 |
|
|
$ |
153.0 |
|
|
$ |
95.3 |
|
|
$ |
92.0 |
|
|
$ |
(34.7 |
) |
|
$ |
591.4 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
28.8 |
% |
|
19.2 |
% |
|
19.8 |
% |
|
22.9 |
% |
|
— |
|
|
21.1 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)SIX MONTHS ENDED MARCH
31, 2018(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
161.3 |
|
|
$ |
32.5 |
|
|
$ |
88.8 |
|
|
$ |
43.0 |
|
|
$ |
45.9 |
|
|
$ |
31.1 |
|
|
$ |
— |
|
|
$ |
402.6 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(73.8 |
) |
|
(73.8 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.1 |
) |
|
(7.1 |
) |
Operating
Profit |
161.3 |
|
|
32.5 |
|
|
88.8 |
|
|
43.0 |
|
|
45.9 |
|
|
31.1 |
|
|
(80.9 |
) |
|
321.7 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.1 |
|
|
7.1 |
|
Depreciation and amortization,
including accelerated depreciation |
61.8 |
|
|
19.8 |
|
|
49.9 |
|
|
22.8 |
|
|
12.9 |
|
|
25.1 |
|
|
2.8 |
|
|
195.1 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
2.0 |
|
|
— |
|
|
9.0 |
|
|
— |
|
|
— |
|
|
11.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15.8 |
|
|
15.8 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
— |
|
|
21.4 |
|
|
23.8 |
|
Integration costs |
5.9 |
|
|
2.3 |
|
|
0.8 |
|
|
9.1 |
|
|
— |
|
|
0.1 |
|
|
5.6 |
|
|
23.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
(0.6 |
) |
|
— |
|
|
0.7 |
|
|
4.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
0.2 |
|
|
— |
|
|
(3.7 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(4.8 |
) |
|
(8.3 |
) |
Equity method investment
adjustment |
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
Foreign currency loss on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Adjusted
EBITDA |
$ |
228.6 |
|
|
$ |
53.8 |
|
|
$ |
138.5 |
|
|
$ |
81.4 |
|
|
$ |
67.8 |
|
|
$ |
56.3 |
|
|
$ |
(30.5 |
) |
|
$ |
595.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
25.6 |
% |
|
25.8 |
% |
|
18.5 |
% |
|
22.5 |
% |
|
17.3 |
% |
|
13.4 |
% |
|
— |
|
|
19.7 |
% |
HISTORICAL SEGMENT INFORMATION
(Unaudited)(in millions)
During the first quarter of fiscal year 2019, Post reorganized
its reportable segments. The following tables present adjusted
historical segment information aligned with the reorganized segment
reporting structure for the historical periods of the three months
ended June 30, 2018 and September 30, 2018.
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
September 30, 2018 |
Net
Sales |
|
|
|
|
Post Consumer
Brands |
$ |
466.4 |
|
|
$ |
471.0 |
|
|
Weetabix |
107.1 |
|
|
107.6 |
|
|
Foodservice |
401.9 |
|
|
397.0 |
|
|
Refrigerated
Retail |
211.9 |
|
|
217.6 |
|
|
Active
Nutrition |
216.4 |
|
|
219.9 |
|
|
Private
Brands |
209.1 |
|
|
220.8 |
|
|
Eliminations |
(4.7 |
) |
|
(4.0 |
) |
|
Total |
$ |
1,608.1 |
|
|
$ |
1,629.9 |
|
Segment
Profit |
|
|
|
|
Post Consumer
Brands |
$ |
83.3 |
|
|
$ |
84.6 |
|
|
Weetabix |
26.1 |
|
|
28.6 |
|
|
Foodservice |
30.8 |
|
|
37.9 |
|
|
Refrigerated
Retail |
25.7 |
|
|
21.4 |
|
|
Active
Nutrition |
40.2 |
|
|
38.3 |
|
|
Private
Brands |
12.7 |
|
|
17.0 |
|
|
Total segment profit |
218.8 |
|
|
227.8 |
|
General corporate
expenses and other |
31.0 |
|
|
32.0 |
|
Impairment of
other intangible assets |
— |
|
|
124.9 |
|
Interest expense,
net |
98.9 |
|
|
99.1 |
|
Gain on
extinguishment of debt, net |
(6.1 |
) |
|
(0.4 |
) |
Income on swaps,
net |
(17.2 |
) |
|
(25.2 |
) |
Earnings
(Loss) before Income Taxes and Equity Method Earnings
(Loss) |
$ |
112.2 |
|
|
$ |
(2.6 |
) |
HISTORICAL RECONCILIATION OF NET EARNINGS
(LOSS) TO ADJUSTED EBITDA (unaudited)(in
millions)
|
Three Months Ended |
|
June 30, 2018 |
|
September 30, 2018 |
Net Earnings
(Loss) |
$ |
96.5 |
|
|
$ |
(15.6 |
) |
Income tax expense |
15.4 |
|
|
12.5 |
|
Interest expense, net |
98.9 |
|
|
99.1 |
|
Depreciation and amortization,
including accelerated depreciation |
105.7 |
|
|
97.6 |
|
Impairment of other intangible
assets |
— |
|
|
124.9 |
|
Gain on extinguishment of
debt, net |
(6.1 |
) |
|
(0.4 |
) |
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(17.2 |
) |
|
(25.2 |
) |
Provision for legal
settlement |
0.3 |
|
|
6.0 |
|
Non-cash stock-based
compensation |
7.4 |
|
|
7.7 |
|
Transaction costs |
2.5 |
|
|
9.3 |
|
Integration costs |
3.2 |
|
|
1.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
0.9 |
|
|
1.4 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
6.8 |
|
|
2.2 |
|
Equity method investment
adjustment |
0.2 |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
(0.2 |
) |
|
(0.2 |
) |
Foreign currency gain on
intercompany loans |
(0.1 |
) |
|
(0.6 |
) |
Adjusted
EBITDA |
$ |
314.2 |
|
|
$ |
320.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
19.5 |
% |
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED JUNE
30, 2018(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
83.3 |
|
|
$ |
26.1 |
|
|
$ |
30.8 |
|
|
$ |
25.7 |
|
|
$ |
40.2 |
|
|
$ |
12.7 |
|
|
$ |
— |
|
|
$ |
218.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(31.0 |
) |
|
(31.0 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.5 |
) |
|
(3.5 |
) |
Operating
Profit |
83.3 |
|
|
26.1 |
|
|
30.8 |
|
|
25.7 |
|
|
40.2 |
|
|
12.7 |
|
|
(34.5 |
) |
|
184.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.5 |
|
|
3.5 |
|
Depreciation and amortization,
including accelerated depreciation |
31.3 |
|
|
9.5 |
|
|
27.0 |
|
|
17.5 |
|
|
6.5 |
|
|
11.8 |
|
|
2.1 |
|
|
105.7 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
7.4 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
2.5 |
|
Integration costs |
1.0 |
|
|
— |
|
|
0.1 |
|
|
1.4 |
|
|
— |
|
|
0.2 |
|
|
0.5 |
|
|
3.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.8 |
|
|
6.8 |
|
Equity method investment
adjustment |
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
Foreign currency gain on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
Adjusted
EBITDA |
$ |
115.6 |
|
|
$ |
35.3 |
|
|
$ |
64.2 |
|
|
$ |
44.7 |
|
|
$ |
46.7 |
|
|
$ |
24.7 |
|
|
$ |
(17.0 |
) |
|
$ |
314.2 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
33.0 |
% |
|
16.0 |
% |
|
21.1 |
% |
|
21.6 |
% |
|
11.8 |
% |
|
— |
|
|
19.5 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
SEPTEMBER 30, 2018(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
84.6 |
|
|
$ |
28.6 |
|
|
$ |
37.9 |
|
|
$ |
21.4 |
|
|
$ |
38.3 |
|
|
$ |
17.0 |
|
|
$ |
— |
|
|
$ |
227.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(32.0 |
) |
|
(32.0 |
) |
Impairment of other intangible
assets |
— |
|
|
(124.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(124.9 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.4 |
) |
|
(3.4 |
) |
Operating Profit
(Loss) |
84.6 |
|
|
(96.3 |
) |
|
37.9 |
|
|
21.4 |
|
|
38.3 |
|
|
17.0 |
|
|
(35.4 |
) |
|
67.5 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.4 |
|
|
3.4 |
|
Depreciation and amortization,
including accelerated depreciation |
28.9 |
|
|
8.8 |
|
|
28.5 |
|
|
17.6 |
|
|
6.5 |
|
|
4.0 |
|
|
3.3 |
|
|
97.6 |
|
Impairment of other intangible
assets |
— |
|
|
124.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
124.9 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.7 |
|
|
7.7 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
— |
|
|
9.5 |
|
|
(0.1 |
) |
|
9.3 |
|
Integration costs |
0.5 |
|
|
— |
|
|
0.2 |
|
|
1.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.4 |
|
|
1.4 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
1.8 |
|
|
2.2 |
|
Equity method investment
adjustment |
— |
|
|
(0.2 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Foreign currency gain on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Adjusted
EBITDA |
$ |
114.0 |
|
|
$ |
36.8 |
|
|
$ |
73.0 |
|
|
$ |
40.0 |
|
|
$ |
44.8 |
|
|
$ |
30.5 |
|
|
$ |
(18.5 |
) |
|
$ |
320.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.2 |
% |
|
34.2 |
% |
|
18.4 |
% |
|
18.4 |
% |
|
20.4 |
% |
|
13.8 |
% |
|
— |
|
|
19.7 |
% |
SELECTED FINANCIAL INFORMATION FOR 8TH
AVENUE (Unaudited)(in millions)
|
Three Months Ended March 31, 2019 |
|
Six Months Ended March 31, 2019 |
Net Sales |
$ |
213.7 |
|
|
$ |
427.8 |
|
Gross Profit |
$ |
35.5 |
|
|
$ |
69.2 |
|
|
|
|
|
Net Loss |
$ |
(4.2 |
) |
|
$ |
(8.7 |
) |
Less: Preferred Stock
Dividend |
7.1 |
|
|
14.1 |
|
Net Loss Available to
8th Avenue Common Shareholders |
$ |
(11.3 |
) |
|
$ |
(22.8 |
) |
EXPLANATION AND RECONCILIATION OF 8TH
AVENUE’S NON-GAAP MEASURE
The Company believes that Adjusted EBITDA is useful to investors
in evaluating 8th Avenue’s operating performance and liquidity
because (i) we believe it is widely used to measure a company’s
operating performance without regard to items such as depreciation
and amortization, which can vary depending upon accounting methods
and the book value of assets, (ii) it presents a measure of
corporate performance exclusive of 8th Avenue’s capital structure
and the method by which the assets were acquired and (iii) it is a
financial indicator of a company’s ability to service its debt.
Management uses 8th Avenue’s Adjusted EBITDA to provide
forward-looking guidance and to forecast future results.
8th Avenue’s Adjusted EBITDA reflects adjustments for interest
expense, net, income tax expense, depreciation and amortization,
and the following adjustments:
- Transaction costs and integration costs: Post has excluded
transaction costs related to professional service fees and other
related costs associated with signed and closed business
combinations and divestitures and integration costs incurred to
integrate acquired or to-be-acquired businesses as Post believes
that these exclusions allow for more meaningful evaluation of 8th
Avenue’s current operating performance and comparisons of 8th
Avenue’s operating performance to other periods. Post believes such
costs are generally not relevant to assessing or estimating the
long-term performance of acquired assets as part of 8th Avenue or
the performance of the divested assets, and such costs are not
factored into 8th Avenue management’s evaluation of potential
acquisitions or its performance after completion of an acquisition
or the evaluation to divest an asset. In addition, the frequency
and amount of such charges varies significantly based on the size
and timing of the acquisitions and divestitures and the maturity of
the businesses being acquired or divested. Also, the size,
complexity and/or volume of past acquisitions and divestitures,
which often drive the magnitude of such expenses, may not be
indicative of the size, complexity and/or volume of future
acquisitions or divestitures. By excluding these expenses, 8th
Avenue management is better able to evaluate 8th Avenue’s ability
to utilize its existing assets and estimate the long-term value
that acquired assets will generate for 8th Avenue. Furthermore,
Post believes that the adjustments of these items more closely
correlate with the sustainability of 8th Avenue’s operating
performance.
- Non-cash stock-based compensation: 8th Avenue’s compensation
strategy includes the use of stock-based compensation to attract
and retain executives and employees by aligning their long-term
compensation interests with shareholders’ investment interests.
Post has excluded non-cash stock-based compensation as non-cash
stock-based compensation can vary significantly based on reasons
such as the timing, size and nature of the awards granted and
subjective assumptions which are unrelated to operational decisions
and performance in any particular period and do not contribute to
meaningful comparisons of 8th Avenue’s operating performance to
other periods.
- Advisory costs: Post has excluded advisory costs payable by 8th
Avenue to Post and an affiliate of THL as Post believes such costs
do not contribute to a meaningful evaluation of 8th Avenue’s
current operating performance or comparisons of 8th Avenue’s
operating performance to other periods.
RECONCILIATION OF 8TH AVENUE’S NET LOSS
TO 8TH AVENUE’S ADJUSTED EBITDA (Unaudited)(in
millions)
|
Three Months Ended March 31, 2019 |
|
Six Months Ended March 31, 2019 |
Net Loss |
$ |
(4.2 |
) |
|
$ |
(8.7 |
) |
Interest expense, net |
13.9 |
|
|
25.7 |
|
Income tax expense |
2.5 |
|
|
3.7 |
|
Depreciation and
amortization |
12.1 |
|
|
24.2 |
|
Transaction costs |
(0.8 |
) |
|
1.0 |
|
Integration costs |
0.3 |
|
|
0.5 |
|
Non-cash stock-based
compensation |
0.5 |
|
|
0.5 |
|
Advisory costs |
0.3 |
|
|
0.6 |
|
Adjusted
EBITDA |
$ |
24.6 |
|
|
$ |
47.5 |
|
Adjusted EBITDA as a
percentage of Net Sales |
11.5 |
% |
|
11.1 |
% |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)(in millions, except per
share data)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
|
$ |
2,799.1 |
|
|
$ |
3,019.2 |
|
Cost of goods sold |
936.5 |
|
|
1,113.7 |
|
|
1,921.3 |
|
|
2,098.3 |
|
Gross
Profit |
451.3 |
|
|
472.4 |
|
|
877.8 |
|
|
920.9 |
|
Selling, general and
administrative expenses |
225.8 |
|
|
264.6 |
|
|
442.9 |
|
|
510.6 |
|
Amortization of intangible
assets |
40.4 |
|
|
46.4 |
|
|
80.7 |
|
|
87.9 |
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Other operating expenses,
net |
1.4 |
|
|
0.7 |
|
|
1.3 |
|
|
0.7 |
|
Operating
Profit |
186.3 |
|
|
160.7 |
|
|
480.2 |
|
|
321.7 |
|
Interest expense, net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Loss on extinguishment of
debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Expense (income) on swaps,
net |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Other income, net |
(3.7 |
) |
|
(3.6 |
) |
|
(7.4 |
) |
|
(7.1 |
) |
Earnings before Income
Taxes and Equity Method Loss |
41.5 |
|
|
115.7 |
|
|
221.9 |
|
|
155.1 |
|
Income tax (benefit)
expense |
(11.6 |
) |
|
23.9 |
|
|
32.2 |
|
|
(231.9 |
) |
Equity method loss, net of
tax |
8.8 |
|
|
— |
|
|
19.5 |
|
|
— |
|
Net Earnings Including
Noncontrolling Interest |
44.3 |
|
|
91.8 |
|
|
170.2 |
|
|
387.0 |
|
Less: Net earnings
attributable to noncontrolling interest |
0.3 |
|
|
0.3 |
|
|
0.6 |
|
|
0.6 |
|
Net
Earnings |
44.0 |
|
|
91.5 |
|
|
169.6 |
|
|
386.4 |
|
Less: Preferred stock
dividends |
1.0 |
|
|
2.6 |
|
|
3.0 |
|
|
6.0 |
|
Net Earnings Available
to Common Shareholders |
$ |
43.0 |
|
|
$ |
88.9 |
|
|
$ |
166.6 |
|
|
$ |
380.4 |
|
|
|
|
|
|
|
|
|
Earnings per Common
Share: |
|
|
|
|
|
|
|
Basic |
$ |
0.61 |
|
|
$ |
1.33 |
|
|
$ |
2.43 |
|
|
$ |
5.73 |
|
Diluted |
$ |
0.58 |
|
|
$ |
1.20 |
|
|
$ |
2.26 |
|
|
$ |
5.04 |
|
|
|
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
70.6 |
|
|
66.8 |
|
|
68.6 |
|
|
66.4 |
|
Diluted |
75.3 |
|
|
76.0 |
|
|
75.2 |
|
|
76.6 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions)
|
March 31, 2019 |
|
September 30, 2018 |
ASSETS |
Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
149.7 |
|
|
$ |
989.7 |
|
Restricted cash |
2.2 |
|
|
4.8 |
|
Receivables, net |
500.4 |
|
|
462.3 |
|
Inventories |
555.1 |
|
|
484.2 |
|
Current assets held for sale |
— |
|
|
195.0 |
|
Prepaid expenses and other current assets |
46.4 |
|
|
64.3 |
|
Total Current Assets |
1,253.8 |
|
|
2,200.3 |
|
|
|
|
|
Property, net |
1,718.7 |
|
|
1,709.7 |
|
Goodwill |
4,498.9 |
|
|
4,499.6 |
|
Other intangible assets,
net |
3,458.6 |
|
|
3,539.3 |
|
Equity method investments |
163.1 |
|
|
5.2 |
|
Other assets held for
sale |
— |
|
|
856.6 |
|
Other assets |
189.7 |
|
|
246.8 |
|
Total Assets |
$ |
11,282.8 |
|
|
$ |
13,057.5 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Current
Liabilities |
|
|
|
Current portion of long-term debt |
$ |
6.7 |
|
|
$ |
22.1 |
|
Accounts payable |
325.5 |
|
|
365.1 |
|
Current liabilities held for sale |
— |
|
|
65.6 |
|
Other current liabilities |
317.2 |
|
|
339.3 |
|
Total Current Liabilities |
649.4 |
|
|
792.1 |
|
|
|
|
|
Long-term debt |
6,326.2 |
|
|
7,232.1 |
|
Deferred income taxes |
751.6 |
|
|
778.4 |
|
Other liabilities held for
sale |
— |
|
|
695.1 |
|
Other liabilities |
310.7 |
|
|
499.3 |
|
Total Liabilities |
8,037.9 |
|
|
9,997.0 |
|
|
|
|
|
Shareholders’
Equity |
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
0.8 |
|
|
0.8 |
|
Additional paid-in capital |
3,643.1 |
|
|
3,590.9 |
|
Retained earnings |
252.7 |
|
|
88.0 |
|
Accumulated other comprehensive loss |
(7.0 |
) |
|
(39.4 |
) |
Treasury stock, at cost |
(655.7 |
) |
|
(589.9 |
) |
Total Shareholders’ Equity excluding Noncontrolling
Interest |
3,233.9 |
|
|
3,050.4 |
|
Noncontrolling Interest |
11.0 |
|
|
10.1 |
|
Total Shareholders’ Equity |
3,244.9 |
|
|
3,060.5 |
|
Total Liabilities and Shareholders’ Equity |
$ |
11,282.8 |
|
|
$ |
13,057.5 |
|
SELECTED CONDENSED CONSOLIDATED CASH FLOW
INFORMATION (Unaudited)(in millions)
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
Cash provided by (used in): |
|
|
|
Operating activities |
$ |
204.8 |
|
|
$ |
263.6 |
|
Investing activities, including capital expenditures of $135.5 and
$86.1 |
162.9 |
|
|
(1,541.1 |
) |
Financing activities |
(1,209.4 |
) |
|
56.9 |
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash |
(0.9 |
) |
|
2.0 |
|
Net decrease in cash, cash equivalents and
restricted cash |
$ |
(842.6 |
) |
|
$ |
(1,218.6 |
) |
SEGMENT INFORMATION
(Unaudited)(in millions)
|
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
|
|
|
|
|
|
|
|
Post Consumer Brands |
$ |
459.1 |
|
|
$ |
462.3 |
|
|
$ |
914.4 |
|
|
$ |
894.3 |
|
|
Weetabix |
104.1 |
|
|
109.0 |
|
|
205.0 |
|
|
208.7 |
|
|
Foodservice |
389.1 |
|
|
380.2 |
|
|
797.2 |
|
|
749.1 |
|
|
Refrigerated
Retail |
219.5 |
|
|
219.8 |
|
|
481.1 |
|
|
361.5 |
|
|
Active
Nutrition |
216.5 |
|
|
205.2 |
|
|
402.3 |
|
|
391.2 |
|
|
Private
Brands |
— |
|
|
212.6 |
|
|
— |
|
|
419.0 |
|
|
Eliminations |
(0.5 |
) |
|
(3.0 |
) |
|
(0.9 |
) |
|
(4.6 |
) |
|
Total |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
|
$ |
2,799.1 |
|
|
$ |
3,019.2 |
|
Segment
Profit |
|
|
|
|
|
|
|
|
Post Consumer
Brands |
$ |
83.2 |
|
|
$ |
91.1 |
|
|
$ |
167.2 |
|
|
$ |
161.3 |
|
|
Weetabix |
23.6 |
|
|
15.7 |
|
|
42.5 |
|
|
32.5 |
|
|
Foodservice |
47.4 |
|
|
42.9 |
|
|
100.1 |
|
|
88.8 |
|
|
Refrigerated
Retail |
26.5 |
|
|
19.8 |
|
|
57.0 |
|
|
43.0 |
|
|
Active
Nutrition |
44.0 |
|
|
26.1 |
|
|
79.2 |
|
|
45.9 |
|
|
Private
Brands |
— |
|
|
14.2 |
|
|
— |
|
|
31.1 |
|
|
Total segment profit |
224.7 |
|
|
209.8 |
|
|
446.0 |
|
|
402.6 |
|
General corporate
expenses and other |
37.3 |
|
|
45.5 |
|
|
85.7 |
|
|
73.8 |
|
Gain on sale of
business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Interest expense,
net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Loss on
extinguishment of debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Expense (income)
on swaps, net |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Earnings
before Income Taxes and Equity Method Loss |
$ |
41.5 |
|
|
$ |
115.7 |
|
|
$ |
221.9 |
|
|
$ |
155.1 |
|
PRO FORMA INFORMATION
Pro forma net sales and pro forma volumes, as used in the text
of this release, are defined as the comparison of the GAAP results
for the three-month period ended March 31, 2019 to the same
three-month period in fiscal year 2018, adjusted to include results
of the acquired business and exclude results of the divested
business for the periods presented in the table below. Pro forma
net sales and pro forma volumes have not been prepared in
accordance with the requirements of Article 11 of Regulation
S-X.
Business |
|
Type |
|
Segment |
|
Pro Forma Periods |
Bob Evans |
|
Acquisition |
|
Foodservice and Refrigerated Retail |
|
January 1, 2018 - January 11, 2018 |
8th Avenue |
|
Divestiture |
|
Private Brands |
|
January 1, 2018 - March 31,
2018 |
RECONCILIATION OF NET SALES TO PRO FORMA
NET SALES (Unaudited)(in millions)
|
Three Months Ended March 31, |
|
2019 |
|
2018 |
Net Sales |
$ |
1,387.8 |
|
|
$ |
1,586.1 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
12.7 |
|
Pre-divestiture net sales from the historical private brands
business |
— |
|
|
(212.6 |
) |
Pro Forma Net Sales |
$ |
1,387.8 |
|
|
$ |
1,386.2 |
|
|
|
|
|
Foodservice Net Sales |
$ |
389.1 |
|
|
$ |
380.2 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
2.9 |
|
Pro Forma Foodservice Net
Sales |
$ |
389.1 |
|
|
$ |
383.1 |
|
|
|
|
|
Refrigerated Retail Net
Sales |
$ |
219.5 |
|
|
$ |
219.8 |
|
Pre-acquisition pro forma net sales from Bob Evans |
— |
|
|
9.8 |
|
Pro Forma Refrigerated Retail
Net Sales |
$ |
219.5 |
|
|
$ |
229.6 |
|
SUPPLEMENTAL REFRIGERATED RETAIL SEGMENT
INFORMATION (Unaudited)
The below table presents volume percentage changes for the
current quarter compared to the prior year quarter for products
within the Refrigerated Retail segment, some of which are presented
on a pro forma basis.
Product |
|
Volume Percentage Change |
All (pro forma) |
|
(1.3%) |
Side dishes (pro forma) |
|
5.5% |
Egg |
|
(2.9%) |
Cheese |
|
(8.4%) |
Sausage (pro forma) |
|
(9.4%) |
EXPLANATION AND RECONCILIATION OF
NON-GAAP MEASURES
The Company uses certain non-GAAP measures in this release to
supplement the financial measures prepared in accordance with U.S.
generally accepted accounting principles (GAAP). These non-GAAP
measures include total segment profit, Adjusted net earnings,
Adjusted diluted earnings per common share, Adjusted EBITDA and
segment Adjusted EBITDA. The reconciliation of each of these
non-GAAP measures to the most directly comparable GAAP measure is
provided in the tables following this section. Non-GAAP measures
are not prepared in accordance with GAAP, as they exclude certain
items as described below. These non-GAAP measures may not be
comparable to similarly titled measures of other companies.
Total segment profitTotal segment profit represents the
aggregation of the segment profit for each of the Company’s
reportable segments, which is each of the Company’s reportable
segment’s earnings before income taxes and equity method
earnings/loss before impairment of property, goodwill and
intangible assets, facility closure related costs, restructuring
expenses, gain/loss on assets held for sale, gain/loss on sale of
businesses and facilities, interest expense, net and other
unallocated corporate income and expenses. The Company believes
total segment profit is useful to investors in evaluating the
Company’s operating performance because it facilitates
period-to-period comparison of results of segment operations.
Adjusted net earnings and Adjusted diluted earnings per common
shareThe Company believes Adjusted net earnings and Adjusted
diluted earnings per common share are useful to investors in
evaluating the Company’s operating performance because they exclude
items that affect the comparability of the Company’s financial
results and could potentially distort an understanding of the
trends in business performance.
Adjusted net earnings and Adjusted diluted earnings per common
share are adjusted for the following items:
- Gain on sale of business: The Company has excluded gains
recorded on divestitures as the amount and frequency of such
adjustments are not consistent. Additionally, the Company believes
that these gains do not reflect expected ongoing future operating
income and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Payments of debt extinguishment costs, net: The Company has
excluded payments and other expenses for premiums on debt
extinguishment, net of gains realized on debt repurchased at a
discount, as such payments are inconsistent in amount and
frequency. Additionally, the Company believes that these costs do
not reflect expected ongoing future operating expenses and do not
contribute to a meaningful evaluation of the Company’s current
operating performance or comparisons of the Company’s operating
performance to other periods.
- Non-cash mark-to-market adjustments and cash settlements on
interest rate swaps: The Company has excluded the impact of
non-cash mark-to-market adjustments and cash settlements on
interest rate swaps due to the inherent uncertainty and volatility
associated with such amounts based on changes in assumptions with
respect to estimates of fair value and economic conditions and as
the amount and frequency of such adjustments and settlements are
not consistent.
- Provision for legal settlement: The Company has excluded gains
and losses recorded to recognize the anticipated or actual
resolution of certain litigation as the Company believes such gains
and losses do not reflect expected ongoing future operating income
and expenses and do not contribute to a meaningful evaluation of
the Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Transaction costs and integration costs: The Company has
excluded transaction costs related to professional service fees and
other related costs associated with signed and closed business
combinations and divestitures and integration costs incurred to
integrate acquired or to-be-acquired businesses as the Company
believes that these exclusions allow for more meaningful evaluation
of the Company’s current operating performance and comparisons of
the Company’s operating performance to other periods. The Company
believes such costs are generally not relevant to assessing or
estimating the long-term performance of acquired assets as part of
the Company or the performance of the divested assets, and such
costs are not factored into management’s evaluation of potential
acquisitions or its performance after completion of an acquisition
or the evaluation to divest an asset. In addition, the frequency
and amount of such charges varies significantly based on the size
and timing of the acquisitions and divestitures and the maturity of
the businesses being acquired or divested. Also, the size,
complexity and/or volume of past acquisitions and divestitures,
which often drive the magnitude of such expenses, may not be
indicative of the size, complexity and/or volume of future
acquisitions or divestitures. By excluding these expenses,
management is better able to evaluate the Company’s ability to
utilize its existing assets and estimate the long-term value that
acquired assets will generate for the Company. Furthermore, the
Company believes that the adjustments of these items more closely
correlate with the sustainability of the Company’s operating
performance.
- Restructuring and plant closure costs, including accelerated
depreciation: The Company has excluded certain costs associated
with facility closures as the amount and frequency of such
adjustments are not consistent. Additionally, the Company believes
that these costs do not reflect expected ongoing future operating
expenses and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Inventory valuation adjustments on acquired businesses: The
Company has excluded the impact of fair value step-up adjustments
to inventory in connection with business combinations as such
adjustments represent non-cash items, are not consistent in amount
and frequency and are significantly impacted by the timing and size
of the Company’s acquisitions.
- Mark-to-market adjustments on commodity and foreign exchange
hedges: The Company has excluded the impact of mark-to-market
adjustments on commodity and foreign exchange hedges due to the
inherent uncertainty and volatility associated with such amounts
based on changes in assumptions with respect to fair value
estimates. Additionally, these adjustments are primarily non-cash
items and the amount and frequency of such adjustments are not
consistent.
- Debt consent solicitation costs: The Company has excluded
professional service fees and other related costs in connection
with its debt consent solicitation as the Company believes that
these costs do not reflect expected ongoing future operating
expenses and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods.
- Assets held for sale: The Company has excluded adjustments
recorded to adjust the carrying value of facilities and other
assets classified as held for sale as such adjustments represent
non-cash items and the amount and frequency of such adjustments are
not consistent. Additionally, the Company believes that these
adjustments do not reflect expected ongoing future operating
expenses or income and do not contribute to a meaningful evaluation
of the Company’s current operating performance or comparisons of
the Company’s operating performance to other periods.
- Foreign currency gains and losses on intercompany loans: The
Company has excluded the impact of foreign currency fluctuations
related to intercompany loans denominated in currencies other than
the functional currency of the respective legal entity in
evaluating Company performance to allow for more meaningful
comparisons of performance to other periods.
- Advisory income: The Company has excluded advisory income
received from 8th Avenue as the Company believes such income does
not contribute to a meaningful evaluation of its current operating
performance or comparisons of its operating performance to other
periods.
- Income tax: The Company has included the income tax impact of
the non-GAAP adjustments using a rate described in the footnote of
the reconciliation tables, as the Company believes that the
Company’s GAAP effective income tax rate as reported is not
representative of the income tax expense impact of the
adjustments.
- U.S. tax reform net benefit: The Company has excluded the
impact of the one-time income tax net benefit recorded throughout
fiscal year 2018 which reflected (i) the benefit related to an
estimate of the remeasurement of the Company’s existing deferred
tax assets and liabilities considering both the Company’s fiscal
year 2018 blended U.S. federal corporate income tax rate of 24.5%
and a 21% rate for subsequent fiscal years and (ii) the expense
related to an estimate of a transition tax on unrepatriated foreign
earnings. The Company believes that the net benefit as reported is
not representative of the Company’s current income tax position and
exclusion of the benefit allows for more meaningful comparisons of
performance to other periods.
Adjusted EBITDA and segment Adjusted EBITDAThe Company believes
that Adjusted EBITDA is useful to investors in evaluating the
Company’s operating performance and liquidity because (i) we
believe it is widely used to measure a company’s operating
performance without regard to items such as depreciation and
amortization, which can vary depending upon accounting methods and
the book value of assets, (ii) it presents a measure of corporate
performance exclusive of the Company’s capital structure and the
method by which the assets were acquired and (iii) it is a
financial indicator of a company’s ability to service its debt, as
the Company is required to comply with certain covenants and
limitations that are based on variations of EBITDA in the Company’s
financing documents. The Company believes that segment Adjusted
EBITDA is useful to investors in evaluating the Company’s operating
performance because it allows for assessment of the operating
performance of each reportable segment. Management uses Adjusted
EBITDA to provide forward-looking guidance and uses Adjusted EBITDA
and segment Adjusted EBITDA to forecast future results.
Adjusted EBITDA and segment Adjusted EBITDA reflect adjustments
for income tax (benefit) expense, interest expense, net,
depreciation and amortization including accelerated depreciation,
and the following adjustments discussed above: gain on sale of
business, non-cash mark-to-market adjustments and cash settlements
on interest rate swaps, provision for legal settlement, transaction
costs and integration costs, restructuring and plant closure costs
excluding accelerated depreciation, inventory valuation adjustments
on acquired businesses, mark-to-market adjustments on commodity and
foreign exchange hedges, debt consent solicitation costs, assets
held for sale, foreign currency gains and losses on intercompany
loans and advisory income. Additionally, Adjusted EBITDA and
segment Adjusted EBITDA reflect adjustments for the following
items:
o. |
|
Loss (gain)
on extinguishment of debt, net: The Company has excluded gains and
losses recorded on extinguishment of debt, inclusive of payments
for premiums, the write-off of debt issuance costs and the
write-off of net unamortized debt premiums and discounts, net of
gains realized on debt repurchased at a discount, as such losses
are inconsistent in amount and frequency. Additionally, the Company
believes that these gains and losses do not reflect expected
ongoing future operating income and expenses and do not contribute
to a meaningful evaluation of the Company’s current operating
performance or comparisons of the Company’s operating performance
to other periods. |
p. |
|
Non-cash stock-based compensation: The Company’s
compensation strategy includes the use of stock-based compensation
to attract and retain executives and employees by aligning their
long-term compensation interests with shareholders’ investment
interests. The Company has excluded non-cash stock-based
compensation as non-cash stock-based compensation can vary
significantly based on reasons such as the timing, size and nature
of the awards granted and subjective assumptions which are
unrelated to operational decisions and performance in any
particular period and do not contribute to meaningful comparisons
of the Company’s operating performance to other periods. |
q. |
|
Equity method investment adjustment: The Company has
included adjustments for the 8th Avenue equity investment loss and
the Company’s portion of income tax (benefit) expense, interest
expense, net and depreciation and amortization for its
unconsolidated Weetabix investment accounted for using equity
method accounting. |
r. |
|
Noncontrolling interest adjustment: The Company has
included adjustments for income tax (benefit) expense, interest
expense, net and depreciation and amortization for consolidated
investments which are attributable to the noncontrolling owners of
the consolidated investments. |
The historical Adjusted EBITDA and segment Adjusted EBITDA
presented later in this release reflect further additional
adjustments for the following item:
s. |
|
Impairment of
other intangible assets: The Company has excluded expenses for
impairments of other intangible assets as such non-cash amounts are
inconsistent in amount and frequency and the Company believes that
these costs do not reflect expected ongoing future operating
expenses and do not contribute to a meaningful evaluation of the
Company’s current operating performance or comparisons of the
Company’s operating performance to other periods. |
RECONCILIATION OF NET EARNINGS AVAILABLE
TO COMMON SHAREHOLDERSTO ADJUSTED NET EARNINGS
(Unaudited)(in millions)
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net Earnings Available to Common Shareholders |
$ |
43.0 |
|
|
$ |
88.9 |
|
|
$ |
166.6 |
|
|
$ |
380.4 |
|
Dilutive preferred
stock dividends |
1.0 |
|
|
2.6 |
|
|
3.0 |
|
|
6.0 |
|
Net
Earnings for Diluted Earnings per Share |
44.0 |
|
|
91.5 |
|
|
169.6 |
|
|
386.4 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
1.4 |
|
|
(4.0 |
) |
|
32.2 |
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
|
Provision for legal
settlement |
— |
|
|
2.0 |
|
|
— |
|
|
11.0 |
|
|
Transaction costs |
3.9 |
|
|
20.8 |
|
|
14.6 |
|
|
23.8 |
|
|
Integration costs |
1.2 |
|
|
13.2 |
|
|
0.9 |
|
|
23.8 |
|
|
Restructuring and plant
closure costs, including accelerated depreciation |
7.1 |
|
|
1.9 |
|
|
11.8 |
|
|
1.9 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
4.2 |
|
|
— |
|
|
4.2 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(4.4 |
) |
|
(6.1 |
) |
|
2.3 |
|
|
(8.3 |
) |
|
Debt consent solicitation
costs |
1.3 |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.9 |
|
|
— |
|
|
0.9 |
|
|
Advisory income |
— |
|
|
— |
|
|
(0.2 |
) |
|
— |
|
|
Total Net
Adjustments |
69.5 |
|
|
(12.2 |
) |
|
13.5 |
|
|
36.3 |
|
Income tax effect
on adjustments (1) |
(17.0 |
) |
|
3.0 |
|
|
(3.3 |
) |
|
(8.9 |
) |
U.S. tax reform
net benefit |
— |
|
|
(1.7 |
) |
|
— |
|
|
(265.3 |
) |
Adjusted
Net Earnings |
$ |
96.5 |
|
|
$ |
80.6 |
|
|
$ |
179.8 |
|
|
$ |
148.5 |
|
|
|
|
|
|
|
|
|
|
(1) For the three and six months ended
March 31, 2019, income tax effect on adjustments was calculated
using 24.5%, the sum of Post’s fiscal year 2019 U.S. federal
corporate income tax rate plus Post’s blended state income tax rate
net of federal deductions. For the three and six months ended March
31, 2018, income tax effect on adjustments was calculated using
24.5%, the sum of Post’s fiscal year 2018 blended U.S. federal
corporate income tax rate plus Post’s blended state income tax rate
less the estimated benefit of the Domestic Production Activities
Deduction. |
RECONCILIATION OF DILUTED EARNINGS PER
COMMON SHARETO ADJUSTED DILUTED EARNINGS PER
COMMON SHARE (Unaudited)
|
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Diluted Earnings per Common Share |
$ |
0.58 |
|
|
$ |
1.20 |
|
|
$ |
2.26 |
|
|
$ |
5.04 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
(0.03 |
) |
|
— |
|
|
(1.69 |
) |
|
— |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
0.02 |
|
|
(0.05 |
) |
|
0.42 |
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
0.84 |
|
|
(0.66 |
) |
|
1.52 |
|
|
(0.68 |
) |
|
Provision for legal
settlement |
— |
|
|
0.03 |
|
|
— |
|
|
0.14 |
|
|
Transaction costs |
0.05 |
|
|
0.27 |
|
|
0.19 |
|
|
0.31 |
|
|
Integration costs |
0.02 |
|
|
0.17 |
|
|
0.01 |
|
|
0.31 |
|
|
Restructuring and plant
closure costs, including accelerated depreciation |
0.09 |
|
|
0.02 |
|
|
0.15 |
|
|
0.02 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
0.06 |
|
|
— |
|
|
0.05 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(0.06 |
) |
|
(0.08 |
) |
|
0.03 |
|
|
(0.11 |
) |
|
Debt consent solicitation
costs |
0.02 |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.01 |
|
|
— |
|
|
0.01 |
|
|
Total Net
Adjustments |
0.93 |
|
|
(0.16 |
) |
|
0.17 |
|
|
0.47 |
|
Income tax effect
on adjustments (1) |
(0.23 |
) |
|
0.04 |
|
|
(0.04 |
) |
|
(0.11 |
) |
U.S. tax reform
net benefit |
— |
|
|
(0.02 |
) |
|
— |
|
|
(3.46 |
) |
Adjusted
Diluted Earnings per Common Share |
$ |
1.28 |
|
|
$ |
1.06 |
|
|
$ |
2.39 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
(1) For the three
and six months ended March 31, 2019, income tax effect on
adjustments was calculated using 24.5%, the sum of Post’s fiscal
year 2019 U.S. federal corporate income tax rate plus Post’s
blended state income tax rate net of federal deductions. For the
three and six months ended March 31, 2018, income tax effect on
adjustments was calculated using 24.5%, the sum of Post’s fiscal
year 2018 blended U.S. federal corporate income tax rate plus
Post’s blended state income tax rate less the estimated benefit of
the Domestic Production Activities Deduction. |
RECONCILIATION OF NET EARNINGS TO
ADJUSTED EBITDA (Unaudited)(in
millions)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net Earnings |
$ |
44.0 |
|
|
$ |
91.5 |
|
|
$ |
169.6 |
|
|
$ |
386.4 |
|
Income tax (benefit)
expense |
(11.6 |
) |
|
23.9 |
|
|
32.2 |
|
|
(231.9 |
) |
Interest expense, net |
85.5 |
|
|
98.8 |
|
|
144.9 |
|
|
189.3 |
|
Depreciation and amortization,
including accelerated depreciation |
97.8 |
|
|
104.6 |
|
|
191.4 |
|
|
195.1 |
|
Gain on sale of business |
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
— |
|
Loss on extinguishment of
debt, net |
— |
|
|
0.3 |
|
|
6.1 |
|
|
37.6 |
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
63.0 |
|
|
(50.5 |
) |
|
114.7 |
|
|
(53.2 |
) |
Provision for legal
settlement |
— |
|
|
2.0 |
|
|
— |
|
|
11.0 |
|
Non-cash stock-based
compensation |
9.4 |
|
|
9.0 |
|
|
18.1 |
|
|
15.8 |
|
Transaction costs |
3.9 |
|
|
20.8 |
|
|
14.6 |
|
|
23.8 |
|
Integration costs |
1.2 |
|
|
13.2 |
|
|
0.9 |
|
|
23.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
2.7 |
|
|
1.6 |
|
|
4.2 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
4.2 |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
(4.4 |
) |
|
(6.1 |
) |
|
2.3 |
|
|
(8.3 |
) |
Equity method investment
adjustment |
8.8 |
|
|
0.2 |
|
|
19.5 |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
(0.1 |
) |
|
(0.1 |
) |
|
(0.3 |
) |
|
(0.3 |
) |
Debt consent solicitation
costs |
1.3 |
|
|
— |
|
|
1.3 |
|
|
— |
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
Foreign currency loss on
intercompany loans |
— |
|
|
0.9 |
|
|
— |
|
|
0.9 |
|
Advisory income |
— |
|
|
— |
|
|
(0.2 |
) |
|
— |
|
Adjusted
EBITDA |
$ |
298.9 |
|
|
$ |
314.3 |
|
|
$ |
591.4 |
|
|
$ |
595.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
21.5 |
% |
|
19.8 |
% |
|
21.1 |
% |
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
MARCH 31, 2019(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
83.2 |
|
|
$ |
23.6 |
|
|
$ |
47.4 |
|
|
$ |
26.5 |
|
|
$ |
44.0 |
|
|
$ |
— |
|
|
$ |
224.7 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(37.3 |
) |
|
(37.3 |
) |
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.6 |
|
|
2.6 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.7 |
) |
|
(3.7 |
) |
Operating
Profit |
83.2 |
|
|
23.6 |
|
|
47.4 |
|
|
26.5 |
|
|
44.0 |
|
|
(38.4 |
) |
|
186.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
3.7 |
|
Depreciation and amortization,
including accelerated depreciation |
29.9 |
|
|
8.8 |
|
|
27.7 |
|
|
19.7 |
|
|
6.3 |
|
|
5.4 |
|
|
97.8 |
|
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.6 |
) |
|
(2.6 |
) |
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.4 |
|
|
9.4 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
3.8 |
|
|
3.9 |
|
Integration costs |
— |
|
|
— |
|
|
0.1 |
|
|
1.1 |
|
|
— |
|
|
— |
|
|
1.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.7 |
|
|
2.7 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
(5.1 |
) |
|
(4.4 |
) |
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
Adjusted
EBITDA |
$ |
113.1 |
|
|
$ |
32.0 |
|
|
$ |
75.9 |
|
|
$ |
47.3 |
|
|
$ |
50.4 |
|
|
$ |
(19.8 |
) |
|
$ |
298.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.6 |
% |
|
30.7 |
% |
|
19.5 |
% |
|
21.5 |
% |
|
23.3 |
% |
|
— |
|
|
21.5 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
MARCH 31, 2018(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
PrivateBrands |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
91.1 |
|
|
$ |
15.7 |
|
|
$ |
42.9 |
|
|
$ |
19.8 |
|
|
$ |
26.1 |
|
|
$ |
14.2 |
|
|
$ |
— |
|
|
$ |
209.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(45.5 |
) |
|
(45.5 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.6 |
) |
|
(3.6 |
) |
Operating
Profit |
91.1 |
|
|
15.7 |
|
|
42.9 |
|
|
19.8 |
|
|
26.1 |
|
|
14.2 |
|
|
(49.1 |
) |
|
160.7 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.6 |
|
|
3.6 |
|
Depreciation and amortization,
including accelerated depreciation |
30.9 |
|
|
12.7 |
|
|
26.0 |
|
|
15.3 |
|
|
6.4 |
|
|
11.7 |
|
|
1.6 |
|
|
104.6 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
2.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.0 |
|
|
9.0 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
— |
|
|
18.4 |
|
|
20.8 |
|
Integration costs |
2.4 |
|
|
— |
|
|
0.8 |
|
|
8.6 |
|
|
— |
|
|
0.2 |
|
|
1.2 |
|
|
13.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
(0.6 |
) |
|
— |
|
|
0.7 |
|
|
4.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(3.7 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(2.4 |
) |
|
(6.1 |
) |
Equity method investment
adjustment |
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Foreign currency loss on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Adjusted
EBITDA |
$ |
123.8 |
|
|
$ |
28.2 |
|
|
$ |
68.7 |
|
|
$ |
50.2 |
|
|
$ |
32.5 |
|
|
$ |
26.1 |
|
|
$ |
(15.2 |
) |
|
$ |
314.3 |
|
Adjusted EBITDA as a
percentage of Net Sales |
26.8 |
% |
|
25.9 |
% |
|
18.1 |
% |
|
22.8 |
% |
|
15.8 |
% |
|
12.3 |
% |
|
— |
|
|
19.8 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)SIX MONTHS ENDED MARCH
31, 2019(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
167.2 |
|
|
$ |
42.5 |
|
|
$ |
100.1 |
|
|
$ |
57.0 |
|
|
$ |
79.2 |
|
|
$ |
— |
|
|
$ |
446.0 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(85.7 |
) |
|
(85.7 |
) |
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
127.3 |
|
|
127.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.4 |
) |
|
(7.4 |
) |
Operating
Profit |
167.2 |
|
|
42.5 |
|
|
100.1 |
|
|
57.0 |
|
|
79.2 |
|
|
34.2 |
|
|
480.2 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
7.4 |
|
Depreciation and amortization,
including accelerated depreciation |
59.4 |
|
|
17.5 |
|
|
54.7 |
|
|
37.7 |
|
|
12.7 |
|
|
9.4 |
|
|
191.4 |
|
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(127.3 |
) |
|
(127.3 |
) |
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18.1 |
|
|
18.1 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
14.5 |
|
|
14.6 |
|
Integration costs |
0.1 |
|
|
— |
|
|
0.2 |
|
|
0.6 |
|
|
— |
|
|
— |
|
|
0.9 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(2.0 |
) |
|
— |
|
|
— |
|
|
4.3 |
|
|
2.3 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
Adjusted
EBITDA |
$ |
226.7 |
|
|
$ |
59.1 |
|
|
$ |
153.0 |
|
|
$ |
95.3 |
|
|
$ |
92.0 |
|
|
$ |
(34.7 |
) |
|
$ |
591.4 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
28.8 |
% |
|
19.2 |
% |
|
19.8 |
% |
|
22.9 |
% |
|
— |
|
|
21.1 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)SIX MONTHS ENDED MARCH
31, 2018(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
PrivateBrands |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
161.3 |
|
|
$ |
32.5 |
|
|
$ |
88.8 |
|
|
$ |
43.0 |
|
|
$ |
45.9 |
|
|
$ |
31.1 |
|
|
$ |
— |
|
|
$ |
402.6 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(73.8 |
) |
|
(73.8 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.1 |
) |
|
(7.1 |
) |
Operating
Profit |
161.3 |
|
|
32.5 |
|
|
88.8 |
|
|
43.0 |
|
|
45.9 |
|
|
31.1 |
|
|
(80.9 |
) |
|
321.7 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.1 |
|
|
7.1 |
|
Depreciation and amortization,
including accelerated depreciation |
61.8 |
|
|
19.8 |
|
|
49.9 |
|
|
22.8 |
|
|
12.9 |
|
|
25.1 |
|
|
2.8 |
|
|
195.1 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
2.0 |
|
|
— |
|
|
9.0 |
|
|
— |
|
|
— |
|
|
11.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15.8 |
|
|
15.8 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
— |
|
|
21.4 |
|
|
23.8 |
|
Integration costs |
5.9 |
|
|
2.3 |
|
|
0.8 |
|
|
9.1 |
|
|
— |
|
|
0.1 |
|
|
5.6 |
|
|
23.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
1.6 |
|
Inventory valuation
adjustments on acquired businesses |
(0.6 |
) |
|
— |
|
|
0.7 |
|
|
4.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
0.2 |
|
|
— |
|
|
(3.7 |
) |
|
— |
|
|
— |
|
|
— |
|
|
(4.8 |
) |
|
(8.3 |
) |
Equity method investment
adjustment |
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
Foreign currency loss on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Adjusted
EBITDA |
$ |
228.6 |
|
|
$ |
53.8 |
|
|
$ |
138.5 |
|
|
$ |
81.4 |
|
|
$ |
67.8 |
|
|
$ |
56.3 |
|
|
$ |
(30.5 |
) |
|
$ |
595.9 |
|
Adjusted EBITDA as a
percentage of Net Sales |
25.6 |
% |
|
25.8 |
% |
|
18.5 |
% |
|
22.5 |
% |
|
17.3 |
% |
|
13.4 |
% |
|
— |
|
|
19.7 |
% |
HISTORICAL SEGMENT INFORMATION
(Unaudited)(in millions)
During the first quarter of fiscal year 2019, Post reorganized
its reportable segments. The following tables present adjusted
historical segment information aligned with the reorganized segment
reporting structure for the historical periods of the three months
ended June 30, 2018 and September 30, 2018.
|
|
|
Three Months Ended |
|
|
June 30, 2018 |
|
September 30, 2018 |
Net
Sales |
|
|
|
|
Post Consumer Brands |
$ |
466.4 |
|
|
$ |
471.0 |
|
|
Weetabix |
107.1 |
|
|
107.6 |
|
|
Foodservice |
401.9 |
|
|
397.0 |
|
|
Refrigerated
Retail |
211.9 |
|
|
217.6 |
|
|
Active
Nutrition |
216.4 |
|
|
219.9 |
|
|
Private
Brands |
209.1 |
|
|
220.8 |
|
|
Eliminations |
(4.7 |
) |
|
(4.0 |
) |
|
Total |
$ |
1,608.1 |
|
|
$ |
1,629.9 |
|
Segment
Profit |
|
|
|
|
Post Consumer
Brands |
$ |
83.3 |
|
|
$ |
84.6 |
|
|
Weetabix |
26.1 |
|
|
28.6 |
|
|
Foodservice |
30.8 |
|
|
37.9 |
|
|
Refrigerated
Retail |
25.7 |
|
|
21.4 |
|
|
Active
Nutrition |
40.2 |
|
|
38.3 |
|
|
Private
Brands |
12.7 |
|
|
17.0 |
|
|
Total segment profit |
218.8 |
|
|
227.8 |
|
General corporate
expenses and other |
31.0 |
|
|
32.0 |
|
Impairment of
other intangible assets |
— |
|
|
124.9 |
|
Interest expense,
net |
98.9 |
|
|
99.1 |
|
Gain on
extinguishment of debt, net |
(6.1 |
) |
|
(0.4 |
) |
Income on swaps,
net |
(17.2 |
) |
|
(25.2 |
) |
Earnings
(Loss) before Income Taxes and Equity Method Earnings
(Loss) |
$ |
112.2 |
|
|
$ |
(2.6 |
) |
HISTORICAL RECONCILIATION OF NET EARNINGS
(LOSS) TO ADJUSTED EBITDA (unaudited)(in
millions)
|
Three Months Ended |
|
June 30, 2018 |
|
September 30, 2018 |
Net Earnings (Loss) |
$ |
96.5 |
|
|
$ |
(15.6 |
) |
Income tax expense |
15.4 |
|
|
12.5 |
|
Interest expense, net |
98.9 |
|
|
99.1 |
|
Depreciation and amortization,
including accelerated depreciation |
105.7 |
|
|
97.6 |
|
Impairment of other intangible
assets |
— |
|
|
124.9 |
|
Gain on extinguishment of
debt, net |
(6.1 |
) |
|
(0.4 |
) |
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(17.2 |
) |
|
(25.2 |
) |
Provision for legal
settlement |
0.3 |
|
|
6.0 |
|
Non-cash stock-based
compensation |
7.4 |
|
|
7.7 |
|
Transaction costs |
2.5 |
|
|
9.3 |
|
Integration costs |
3.2 |
|
|
1.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
0.9 |
|
|
1.4 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
6.8 |
|
|
2.2 |
|
Equity method investment
adjustment |
0.2 |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
(0.2 |
) |
|
(0.2 |
) |
Foreign currency gain on
intercompany loans |
(0.1 |
) |
|
(0.6 |
) |
Adjusted
EBITDA |
$ |
314.2 |
|
|
$ |
320.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
19.5 |
% |
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED JUNE
30, 2018(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
PrivateBrands |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
83.3 |
|
|
$ |
26.1 |
|
|
$ |
30.8 |
|
|
$ |
25.7 |
|
|
$ |
40.2 |
|
|
$ |
12.7 |
|
|
$ |
— |
|
|
$ |
218.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(31.0 |
) |
|
(31.0 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.5 |
) |
|
(3.5 |
) |
Operating
Profit |
83.3 |
|
|
26.1 |
|
|
30.8 |
|
|
25.7 |
|
|
40.2 |
|
|
12.7 |
|
|
(34.5 |
) |
|
184.3 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.5 |
|
|
3.5 |
|
Depreciation and amortization,
including accelerated depreciation |
31.3 |
|
|
9.5 |
|
|
27.0 |
|
|
17.5 |
|
|
6.5 |
|
|
11.8 |
|
|
2.1 |
|
|
105.7 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
7.4 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
2.5 |
|
Integration costs |
1.0 |
|
|
— |
|
|
0.1 |
|
|
1.4 |
|
|
— |
|
|
0.2 |
|
|
0.5 |
|
|
3.2 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.9 |
|
|
0.9 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.8 |
|
|
6.8 |
|
Equity method investment
adjustment |
— |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
Foreign currency gain on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
Adjusted
EBITDA |
$ |
115.6 |
|
|
$ |
35.3 |
|
|
$ |
64.2 |
|
|
$ |
44.7 |
|
|
$ |
46.7 |
|
|
$ |
24.7 |
|
|
$ |
(17.0 |
) |
|
$ |
314.2 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
33.0 |
% |
|
16.0 |
% |
|
21.1 |
% |
|
21.6 |
% |
|
11.8 |
% |
|
— |
|
|
19.5 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
SEPTEMBER 30, 2018(in millions)
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
ActiveNutrition |
|
PrivateBrands |
|
Corporate/Other |
|
Total |
Segment Profit |
$ |
84.6 |
|
|
$ |
28.6 |
|
|
$ |
37.9 |
|
|
$ |
21.4 |
|
|
$ |
38.3 |
|
|
$ |
17.0 |
|
|
$ |
— |
|
|
$ |
227.8 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(32.0 |
) |
|
(32.0 |
) |
Impairment of other intangible
assets |
— |
|
|
(124.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(124.9 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.4 |
) |
|
(3.4 |
) |
Operating Profit
(Loss) |
84.6 |
|
|
(96.3 |
) |
|
37.9 |
|
|
21.4 |
|
|
38.3 |
|
|
17.0 |
|
|
(35.4 |
) |
|
67.5 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.4 |
|
|
3.4 |
|
Depreciation and amortization,
including accelerated depreciation |
28.9 |
|
|
8.8 |
|
|
28.5 |
|
|
17.6 |
|
|
6.5 |
|
|
4.0 |
|
|
3.3 |
|
|
97.6 |
|
Impairment of other intangible
assets |
— |
|
|
124.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
124.9 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.7 |
|
|
7.7 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
— |
|
|
9.5 |
|
|
(0.1 |
) |
|
9.3 |
|
Integration costs |
0.5 |
|
|
— |
|
|
0.2 |
|
|
1.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
1.8 |
|
Restructuring and plant
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.4 |
|
|
1.4 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
1.8 |
|
|
2.2 |
|
Equity method investment
adjustment |
— |
|
|
(0.2 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Foreign currency gain on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Adjusted
EBITDA |
$ |
114.0 |
|
|
$ |
36.8 |
|
|
$ |
73.0 |
|
|
$ |
40.0 |
|
|
$ |
44.8 |
|
|
$ |
30.5 |
|
|
$ |
(18.5 |
) |
|
$ |
320.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.2 |
% |
|
34.2 |
% |
|
18.4 |
% |
|
18.4 |
% |
|
20.4 |
% |
|
13.8 |
% |
|
— |
|
|
19.7 |
% |
SELECTED FINANCIAL INFORMATION FOR 8TH
AVENUE (Unaudited)(in millions)
|
Three Months EndedMarch 31, 2019 |
|
Six Months EndedMarch 31, 2019 |
Net Sales |
$ |
213.7 |
|
|
$ |
427.8 |
|
Gross Profit |
$ |
35.5 |
|
|
$ |
69.2 |
|
|
|
|
|
Net Loss |
$ |
(4.2 |
) |
|
$ |
(8.7 |
) |
Less: Preferred Stock
Dividend |
7.1 |
|
|
14.1 |
|
Net Loss Available to
8th Avenue Common Shareholders |
$ |
(11.3 |
) |
|
$ |
(22.8 |
) |
EXPLANATION AND RECONCILIATION OF 8TH
AVENUE’S NON-GAAP MEASURE
The Company believes that Adjusted EBITDA is useful to investors
in evaluating 8th Avenue’s operating performance and liquidity
because (i) we believe it is widely used to measure a company’s
operating performance without regard to items such as depreciation
and amortization, which can vary depending upon accounting methods
and the book value of assets, (ii) it presents a measure of
corporate performance exclusive of 8th Avenue’s capital structure
and the method by which the assets were acquired and (iii) it is a
financial indicator of a company’s ability to service its debt.
Management uses 8th Avenue’s Adjusted EBITDA to provide
forward-looking guidance and to forecast future results.
8th Avenue’s Adjusted EBITDA reflects adjustments for interest
expense, net, income tax expense, depreciation and amortization,
and the following adjustments:
- Transaction costs and integration costs: Post has excluded
transaction costs related to professional service fees and other
related costs associated with signed and closed business
combinations and divestitures and integration costs incurred to
integrate acquired or to-be-acquired businesses as Post believes
that these exclusions allow for more meaningful evaluation of 8th
Avenue’s current operating performance and comparisons of 8th
Avenue’s operating performance to other periods. Post believes such
costs are generally not relevant to assessing or estimating the
long-term performance of acquired assets as part of 8th Avenue or
the performance of the divested assets, and such costs are not
factored into 8th Avenue management’s evaluation of potential
acquisitions or its performance after completion of an acquisition
or the evaluation to divest an asset. In addition, the frequency
and amount of such charges varies significantly based on the size
and timing of the acquisitions and divestitures and the maturity of
the businesses being acquired or divested. Also, the size,
complexity and/or volume of past acquisitions and divestitures,
which often drive the magnitude of such expenses, may not be
indicative of the size, complexity and/or volume of future
acquisitions or divestitures. By excluding these expenses, 8th
Avenue management is better able to evaluate 8th Avenue’s ability
to utilize its existing assets and estimate the long-term value
that acquired assets will generate for 8th Avenue. Furthermore,
Post believes that the adjustments of these items more closely
correlate with the sustainability of 8th Avenue’s operating
performance.
- Non-cash stock-based compensation: 8th Avenue’s compensation
strategy includes the use of stock-based compensation to attract
and retain executives and employees by aligning their long-term
compensation interests with shareholders’ investment interests.
Post has excluded non-cash stock-based compensation as non-cash
stock-based compensation can vary significantly based on reasons
such as the timing, size and nature of the awards granted and
subjective assumptions which are unrelated to operational decisions
and performance in any particular period and do not contribute to
meaningful comparisons of 8th Avenue’s operating performance to
other periods.
- Advisory costs: Post has excluded advisory costs payable by 8th
Avenue to Post and an affiliate of THL as Post believes such costs
do not contribute to a meaningful evaluation of 8th Avenue’s
current operating performance or comparisons of 8th Avenue’s
operating performance to other periods.
RECONCILIATION OF 8TH AVENUE’S NET LOSS
TO 8TH AVENUE’S ADJUSTED EBITDA (Unaudited)(in
millions)
|
Three Months EndedMarch 31, 2019 |
|
Six Months EndedMarch 31, 2019 |
Net Loss |
$ |
(4.2 |
) |
|
$ |
(8.7 |
) |
Interest expense, net |
13.9 |
|
|
25.7 |
|
Income tax expense |
2.5 |
|
|
3.7 |
|
Depreciation and
amortization |
12.1 |
|
|
24.2 |
|
Transaction costs |
(0.8 |
) |
|
1.0 |
|
Integration costs |
0.3 |
|
|
0.5 |
|
Non-cash stock-based
compensation |
0.5 |
|
|
0.5 |
|
Advisory costs |
0.3 |
|
|
0.6 |
|
Adjusted
EBITDA |
$ |
24.6 |
|
|
$ |
47.5 |
|
Adjusted EBITDA as a
percentage of Net Sales |
11.5 |
% |
|
11.1 |
% |
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