Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today reported results for the first fiscal quarter ended
December 31, 2017.
Highlights:
- Net sales of $1.4 billion; operating profit of $164.5
million; net earnings of $294.9 million and Adjusted EBITDA of
$281.6 million
- Completed the acquisition of Bob Evans Farms on January
12, 2018; raised annual run-rate cost synergies to $35-$40 million
by fiscal year 2020
- Updated fiscal year 2018 Adjusted EBITDA (non-GAAP)
guidance range of $1.22-$1.25 billion
- US tax reform estimated to reduce fiscal year 2018 cash
taxes by approximately $30-$35 million
First Quarter Consolidated Operating
Results
Net sales were $1,433.1 million, an increase of 14.7%, or $183.3
million, compared to the prior year. Pro forma net sales (as
defined later in this release under “Pro Forma Information”)
increased 3.9%, or $53.7 million, when compared to the same period
in fiscal year 2017. Gross profit was $451.7 million or 31.5% of
net sales, an increase of $72.5 million compared to the prior year
gross profit of $379.2 million or 30.3% of net sales.
Selling, general and administrative (SG&A) expenses were
$245.7 million or 17.1% of net sales, a decrease of $18.4 million
compared to the prior year SG&A expenses of $264.1 million or
21.1% of net sales. SG&A expenses included a provision for $9.0
million and $74.5 million in legal settlements for first quarter
2018 and 2017, respectively. Excluding the impact of the legal
settlement provisions, current year SG&A expenses increased
$47.1 million driven by the inclusion of Weetabix and increased
transaction and integration expenses.
Operating profit was $164.5 million, an increase of 115.9%, or
$88.3 million, compared to the prior year. Net earnings were $294.9
million, an increase of 189.7%, or $193.1 million, compared to net
earnings of $101.8 million in the prior year. Net earnings
available to common shareholders were $291.5 million, or $3.82 per
diluted common share. Net earnings and net earnings available to
common shareholders included a $263.6 million one-time income tax
net benefit and $37.3 million loss related to early extinguishment
of debt, both of which are discussed later in this release.
Adjusted net earnings were $67.9 million, or $0.88 per diluted
common share.
Adjusted EBITDA was $281.6 million, an increase of 22.4%, or
$51.5 million, compared to the prior year.
Post Consumer Brands
North American ready-to-eat (“RTE”) cereal and granola.
Net sales were $456.0 million for the first quarter, an increase
of 1.9%, or $8.6 million, compared to the reported prior year first
quarter. Pro forma net sales (as defined later in this release
under “Pro Forma Information”) declined 4.2%, or $20.1 million,
over the same period in fiscal year 2017, with pro forma volumes
(as defined later in this release under “Pro Forma Information”)
declining 2.4%. Volume growth from licensed products, Malt-O-Meal
bag cereal and government bid business and private label was offset
by declines of branded products. Pro forma net sales were
negatively impacted by this unfavorable volume mix and timing of
promotional activity.
Segment profit was $72.9 million and $82.9 million for first
quarter 2018 and 2017, respectively. Segment Adjusted EBITDA was
$109.1 million and $111.8 million for first quarter 2018 and 2017,
respectively.
Weetabix
International (primarily United Kingdom) RTE cereal and
muesli.
Net sales were $99.7 million for the first quarter. Pro forma
net sales (as defined later in this release under “Pro Forma
Information”) decreased 1.2%, or $1.2 million, over the same period
in fiscal year 2017. Pro forma net sales benefitted from a
favorable foreign exchange translation rate compared to the prior
year which was offset by an unfavorable product mix. Segment profit
was $16.8 million and segment Adjusted EBITDA was $25.6
million.
Michael Foods Group
Egg, potato, cheese and pasta products.
Net sales were $577.1 million for the first quarter, an increase
of 6.9%, or $37.3 million, over the prior year first quarter. Egg
sales increased 9.3% driven by a 3.8% volume increase and increased
market-based pricing in the ingredient and retail shell egg
channels. Net sales and volume information for potato, cheese and
pasta products is disclosed in a table presented later in this
release.
Segment profit (loss) was $74.9 million and ($17.0) million for
first quarter 2018 and 2017, respectively. Segment profit for the
first quarter of 2017 was negatively impacted by a provision for
$74.5 million in legal settlements related to egg antitrust class
action claims. Segment Adjusted EBITDA was $113.4 million and $92.3
million for first quarter 2018 and 2017, respectively.
Active Nutrition
Protein shakes, bars and powders and nutritional
supplements.
Net sales were $186.0 million for the first quarter, an increase
of 20.9%, or $32.1 million, over the prior year first quarter. Net
sales growth was primarily driven by strong growth for shake and
powder products which were partially offset by declines of bar
products. Segment profit was $19.8 million and $24.9 million for
first quarter 2018 and 2017, respectively. Segment profit for the
first quarter of 2018 was negatively impacted by a provision for
$9.0 million for a legal settlement. Segment Adjusted EBITDA was
$35.3 million and $31.1 million for first quarter 2018 and 2017,
respectively.
Private Brands
Peanut and other nut butters and dried fruit and nut
products.
Net sales were $114.3 million for the first quarter, an increase
of 5.2%, or $5.6 million, compared to the prior year first quarter,
with volumes declining 1.6%. Volume growth in tree nut butter and
organic peanut butter was offset by declines in certain lower
margin dried fruit and nut products. Segment profit was $8.4
million and $5.7 million for first quarter 2018 and 2017,
respectively. Segment Adjusted EBITDA was $13.5 million and $10.6
million for first quarter 2018 and 2017, respectively.
Interest, Loss on Extinguishment of Debt, Other Income
and Income Tax
Interest expense, net was $90.5 million for the first quarter
compared to $72.9 million for the prior year first quarter. The
increase primarily related to an increase in the outstanding amount
of debt principal, partially offset by a decrease in the
weighted-average interest rate.
Loss on extinguishment of debt of $37.3 million was recorded in
the first quarter of 2018 in connection with Post’s redemption of
its 6.00% senior notes due 2022.
Other income, net relates to non-cash mark-to-market adjustments
and cash settlements on interest rate swaps. Other income, net was
$2.7 million for the first quarter of 2018, compared to $144.5
million for the first quarter of 2017.
Income tax benefit was $255.8 million in the first quarter of
2018, compared to an expense of $46.0 million and an effective
income tax rate of 31.1% in the first quarter of 2017. In the
first quarter of 2018, as a result of the recently enacted U.S. Tax
Cuts and Jobs Act, Post recorded a $263.6 million one-time income
tax net benefit which included (i) a $270.7 million benefit related
to an estimate of the remeasurement of Post’s existing deferred tax
assets and liabilities considering both the expected fiscal year
2018 blended U.S. federal corporate tax rate of approximately 24.5%
and a 21% rate for subsequent fiscal years and (ii) a $7.1 million
expense related to an estimate of the transition tax on
unrepatriated foreign earnings.
Share Repurchases
During the first quarter of fiscal year 2018, Post repurchased
0.7 million shares for $56.0 million at an average price of $78.01
per share. At the end of the first quarter of 2018, Post had $176.3
million remaining under its share repurchase authorization.
Recent Announcements
On January 10, 2018, Post announced it gave notice for the
redemption of all outstanding shares of its 3.75% Series B
Cumulative Perpetual Convertible Preferred Stock with a redemption
date of February 15, 2018.
On January 11, 2018, Post announced it plans to combine its
private brands businesses, which produce nut butter, dried fruit
and nut, pasta and granola products, and explore a range of
structural alternatives for these businesses, including an initial
public offering, a placement of private equity, a sale of the
businesses or a strategic combination.
On January 12, 2018, Post completed the acquisition of Bob Evans
Farms, Inc. (“Bob Evans”), a leading producer and distributor of
refrigerated potato, pasta and vegetable-based side dishes, pork
sausage, and a variety of refrigerated and frozen convenience food
items. Upon close of the acquisition, Post formed a refrigerated
retail business unit and a foodservice business unit.
Outlook
Post management has updated its fiscal year 2018 Adjusted EBITDA
range to be between $1.22-$1.25 billion, inclusive of Bob
Evans.
Post management estimates U.S. income tax reform will reduce its
fiscal year 2018 cash taxes by approximately $30-$35 million.
Post today announced it now expects to realize $35-$40 million
in annual run-rate cost synergies related to the acquisition of Bob
Evans by fiscal year 2020, an increase from Post’s initial
expectation of $25 million.
In fiscal year 2018, Post management now expects to incur
integration costs (which are an adjustment to non-GAAP measures)
for the integration of Weetabix and Bob Evans of approximately $30
million comprised of severance, retention and third party
consulting expenses, an increase from Post’s initial expectation of
approximately $25 million.
Post management expects fiscal year 2018 capital expenditures,
inclusive of Bob Evans, to range between $235-$245 million. This
includes approximately $50 million related to the previously
announced cage-free housing conversion at the Bloomfield, Nebraska
facility.
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
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,
assets held for sale, mark-to-market adjustments on commodity
hedges 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.”
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 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. 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
The Company will host a conference call on Friday, February 2,
2018 at 9:00 a.m. EST to discuss financial results for the first
quarter of fiscal year 2018 and fiscal year 2018 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 2992278.
Interested parties are invited to listen to the webcast of the
conference call, which can be accessed by visiting the Investor
Relations section of the Company’s website at
www.postholdings.com.
A replay of the conference call will be available through
Saturday, February 17, 2018 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 2992278. A webcast
replay also will be available for a limited period on the Company’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 our Adjusted EBITDA
outlook for fiscal year 2018, our capital expenditures
expectations, including capital expenditures expectations for the
cage-free housing conversion and growth initiatives and
productivity, expected synergies from the acquisition of Bob Evans,
our integration costs expectations, statements regarding the
exploration of strategic alternatives for Post’s private brands
businesses and the expected impact of U.S. tax reform. 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 the following:
- our high leverage, our ability to obtain additional financing
(including both secured and unsecured debt) and our ability to
service our outstanding debt (including covenants that restrict the
operation of our business);
- our ability to continue to compete in our product markets and
our ability to retain our market position;
- our ability to anticipate and respond to changes in consumer
preferences and trends and introduce new products;
- our ability to identify, complete and integrate acquisitions
and manage our growth;
- significant volatility in the costs of certain raw materials,
commodities, packaging or energy used to manufacture our
products;
- our ability to successfully implement business strategies to
reduce costs;
- allegations that our products cause injury or illness, product
recalls and product liability claims and other litigation;
- legal and regulatory factors, including advertising and
labeling laws, changes in food safety and laws and regulations
governing animal feeding and housing operations;
- the loss or bankruptcy of a significant customer;
- consolidations in the retail grocery and foodservice
industries;
- our ability to promptly and effectively integrate the Bob Evans
business, including the risk of our or Bob Evans’s respective
businesses experiencing disruptions from ongoing business
operations which may make it more difficult than expected to
maintain relationships with employees, business partners or
governmental entities, and our ability to obtain expected cost
savings and synergies of the acquisition within the expected
timeframe;
- losses incurred in any appraisal proceedings brought in
connection with our acquisition of Bob Evans by Bob Evans
stockholders who demanded appraisal of their shares;
- costs associated with Bob Evans’s sale and separation of its
restaurant business on April 28, 2017 (the “Bob Evans Restaurants
Transaction”), which occurred prior to our acquisition of Bob
Evans, including costs that may arise under Bob Evans’s capacity as
guarantor of payment and performance conditions for certain leases,
as well as costs associated with a transition services agreement
established as part of the Bob Evans Restaurants Transaction;
- our ability to promptly and effectively integrate the Weetabix
business and obtain expected cost savings and synergies of the
acquisition within the expected timeframe;
- the possibility that we may not be able to create value in our
private brands businesses through strategic alternatives;
- the potential for disruption to us or the private brands
businesses resulting from the exploration of strategic alternatives
for the private brands businesses;
- the possibility that we may not be able to consummate any
proposals for strategic alternatives for our private brands
businesses that may result from our exploration due to, among other
things, market, regulatory or other factors;
- the ability of our private label products to compete with
nationally branded products;
- disruptions or inefficiencies in supply chain, which may result
from our reliance on third party manufacturers for certain of our
products;
- the ultimate impact litigation may have on us;
- our ability to successfully operate our international
operations in compliance with applicable laws and regulations;
- changes in economic conditions, disruptions in the U.S. and
global capital and credit markets and fluctuations in foreign
currency exchange rates;
- the impact of the United Kingdom’s exit from the European Union
(commonly known as “Brexit”) on us and our operations;
- impairment in the carrying value of goodwill or other
intangibles;
- changes in estimates in critical accounting judgments and
changes to or new laws and regulations affecting our business,
including U.S. tax reform;
- changes in weather conditions, natural disasters, disease
outbreaks and other events beyond our control;
- loss of key employees, labor strikes, work stoppages or
unionization efforts;
- losses or increased funding and expenses related to our
qualified pension and other postretirement plans;
- costs, business disruptions and reputational damage associated
with information technology failures and/or information security
breaches;
- our ability to protect our intellectual property and other
assets;
- significant differences in our actual operating results from
our guidance regarding our future performance;
- our ability to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, including with respect to acquired
businesses; and
- other risks and uncertainties described in the Company’s
filings with the Securities and Exchange Commission.
These forward-looking statements represent the Company’s
judgment as of the date of this release. The Company 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, foodservice, food ingredient, refrigerated,
active nutrition and private label 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. Through Michael Foods, Post supplies
innovative, value-added egg and refrigerated potato products to the
foodservice and food ingredient channels. Through its refrigerated
retail business, Post is a leader in the refrigerated side dish
category offering potato, egg, sausage and cheese products through
the Bob Evans®, All Whites®, Better’n Eggs®, Simply Potatoes® and
Crystal Farms® brands. Post’s Active Nutrition platform aids
consumers in adopting healthier lifestyles through brands such as
Premier Protein®, PowerBar® and Dymatize®. Post’s Private Brands
business manufactures private label peanut butter and other nut
butter, dried fruit and nut, pasta and granola products. For more
information, visit www.postholdings.com.
Contact:Investor RelationsBrad
Harperbrad.harper@postholdings.com(314) 644-7626
Media RelationsLisa Hanlylisa.hanly@postholdings.com(314)
665-3180
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) |
(in millions, except per share
data) |
|
|
|
Three Months Ended December 31, |
|
2017 |
|
2016 |
Net
Sales |
$ |
1,433.1 |
|
|
$ |
1,249.8 |
|
Cost of goods sold |
981.4 |
|
|
870.6 |
|
Gross
Profit |
451.7 |
|
|
379.2 |
|
|
|
|
|
Selling, general and
administrative expenses |
245.7 |
|
|
264.1 |
|
Amortization of
intangible assets |
41.5 |
|
|
38.9 |
|
Other operating
expenses, net |
— |
|
|
— |
|
Operating
Profit |
164.5 |
|
|
76.2 |
|
|
|
|
|
Interest expense,
net |
90.5 |
|
|
72.9 |
|
Loss on extinguishment
of debt |
37.3 |
|
|
— |
|
Other income, net |
(2.7 |
) |
|
(144.5 |
) |
Earnings before
Income Taxes |
39.4 |
|
|
147.8 |
|
Income tax (benefit)
expense |
(255.8 |
) |
|
46.0 |
|
Net Earnings
Including Noncontrolling Interest |
295.2 |
|
|
101.8 |
|
Less: Net earnings
attributable to noncontrolling interest |
0.3 |
|
|
— |
|
Net
Earnings |
294.9 |
|
|
101.8 |
|
Preferred stock
dividends |
(3.4 |
) |
|
(3.4 |
) |
Net Earnings
Available to Common Shareholders |
$ |
291.5 |
|
|
$ |
98.4 |
|
|
|
|
|
Earnings per
Common Share: |
|
|
|
Basic |
$ |
4.42 |
|
|
$ |
1.42 |
|
Diluted |
$ |
3.82 |
|
|
$ |
1.27 |
|
|
|
|
|
Weighted-Average Common Shares Outstanding: |
|
|
|
Basic |
66.0 |
|
|
69.2 |
|
Diluted |
77.3 |
|
|
80.3 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
(in millions) |
|
|
|
|
|
December 31, 2017 |
|
September 30, 2017 |
|
|
|
|
ASSETS |
Current
Assets |
|
|
|
Cash and
cash equivalents |
$ |
1,944.5 |
|
|
$ |
1,525.9 |
|
Restricted cash |
2.6 |
|
|
4.2 |
|
Receivables, net |
468.3 |
|
|
480.6 |
|
Inventories |
587.2 |
|
|
573.5 |
|
Prepaid
expenses and other current assets |
47.0 |
|
|
31.7 |
|
Total Current Assets |
3,049.6 |
|
|
2,615.9 |
|
|
|
|
|
Property, net |
1,678.4 |
|
|
1,690.7 |
|
Goodwill |
4,039.2 |
|
|
4,032.0 |
|
Other intangible
assets, net |
3,316.6 |
|
|
3,353.9 |
|
Other assets |
196.0 |
|
|
184.3 |
|
Total Assets |
$ |
12,279.8 |
|
|
$ |
11,876.8 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’
EQUITY |
Current
Liabilities |
|
|
|
Current
portion of long-term debt |
$ |
22.1 |
|
|
$ |
22.1 |
|
Accounts
payable |
351.2 |
|
|
336.0 |
|
Other
current liabilities |
378.9 |
|
|
346.3 |
|
Total Current Liabilities |
752.2 |
|
|
704.4 |
|
|
|
|
|
Long-term debt |
7,512.6 |
|
|
7,149.1 |
|
Deferred income
taxes |
643.6 |
|
|
905.8 |
|
Other liabilities |
331.0 |
|
|
327.8 |
|
Total Liabilities |
9,239.4 |
|
|
9,087.1 |
|
|
|
|
|
Shareholders’
Equity |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Common
stock |
0.7 |
|
|
0.7 |
|
Additional paid-in capital |
3,565.6 |
|
|
3,566.5 |
|
Accumulated deficit |
(81.1 |
) |
|
(376.0 |
) |
Accumulated other comprehensive loss |
(27.6 |
) |
|
(40.0 |
) |
Treasury
stock, at cost |
(427.2 |
) |
|
(371.2 |
) |
Total Shareholders’ Equity excluding Noncontrolling
Interest |
3,030.4 |
|
|
2,780.0 |
|
Noncontrolling Interest |
10.0 |
|
|
9.7 |
|
Total Shareholders’ Equity |
3,040.4 |
|
|
2,789.7 |
|
Total Liabilities and Shareholders’ Equity |
$ |
12,279.8 |
|
|
$ |
11,876.8 |
|
|
|
|
|
|
|
|
|
|
SELECTED CONDENSED CONSOLIDATED CASH FLOW
INFORMATION (Unaudited) |
(in millions) |
|
|
|
Three Months Ended December 31, |
|
2017 |
|
2016 |
Cash provided
by (used in): |
|
|
|
Operating
activities |
$ |
204.5 |
|
|
$ |
(19.4 |
) |
Investing
activities, including capital expenditures of $46.7 and $31.8 |
(46.2 |
) |
|
(121.8 |
) |
Financing
activities |
259.6 |
|
|
(132.6 |
) |
Effect of exchange rate changes on cash and cash equivalents |
0.7 |
|
|
(0.7 |
) |
Net increase (decrease) in cash and cash
equivalents |
$ |
418.6 |
|
|
$ |
(274.5 |
) |
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION (Unaudited) |
(in millions) |
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
2017 |
|
2016 |
Net
Sales |
|
|
|
|
Post
Consumer Brands |
$ |
456.0 |
|
|
$ |
447.4 |
|
|
Weetabix |
99.7 |
|
|
— |
|
|
Michael
Foods Group |
577.1 |
|
|
539.8 |
|
|
Active
Nutrition |
186.0 |
|
|
153.9 |
|
|
Private
Brands |
114.3 |
|
|
108.7 |
|
|
Total |
$ |
1,433.1 |
|
|
$ |
1,249.8 |
|
Segment Profit (Loss) |
|
|
|
|
Post
Consumer Brands |
$ |
72.9 |
|
|
$ |
82.9 |
|
|
Weetabix |
16.8 |
|
|
— |
|
|
Michael
Foods Group |
74.9 |
|
|
(17.0 |
) |
|
Active
Nutrition |
19.8 |
|
|
24.9 |
|
|
Private
Brands |
8.4 |
|
|
5.7 |
|
|
Total segment
profit |
192.8 |
|
|
96.5 |
|
|
General
corporate expenses and other |
28.3 |
|
|
20.3 |
|
|
Interest
expense, net |
90.5 |
|
|
72.9 |
|
|
Loss on
extinguishment of debt |
37.3 |
|
|
— |
|
|
Other
income, net |
(2.7 |
) |
|
(144.5 |
) |
|
|
Earnings before
Income Taxes |
$ |
39.4 |
|
|
$ |
147.8 |
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL MICHAEL FOODS GROUP SEGMENT
INFORMATION (Unaudited)
The below table presents net sales and volume percentage changes
for the current quarter compared to the prior year quarter for
additional products within the Michael Foods Group segment.
|
|
|
|
|
Product |
|
Net Sales Percentage Change |
|
Volume Percentage Change |
Potato |
|
11.8 |
% |
|
11.6 |
% |
Cheese |
|
(6.1 |
%) |
|
(6.4 |
%) |
Pasta |
|
5.0 |
% |
|
5.8 |
% |
|
|
|
|
|
|
|
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 December 31, 2017 to the same
three-month period in fiscal 2017, adjusted to include results of
the acquired business for the period 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 Period |
Weetabix |
|
Acquisition |
|
Post Consumer
Brands |
|
October 2,
2016 - December 31, 2016 |
|
|
and Weetabix |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET SALES TO PRO FORMA NET
SALES (Unaudited) |
(in millions) |
|
|
|
Three Months Ended December 31, |
|
2017 |
|
2016 |
Net Sales |
$ |
1,433.1 |
|
|
$ |
1,249.8 |
|
Pre-acquisition net sales from Weetabix |
— |
|
|
129.6 |
|
Pro Forma Net
Sales |
$ |
1,433.1 |
|
|
$ |
1,379.4 |
|
|
|
|
|
Post Consumer Brands
Net Sales |
$ |
456.0 |
|
|
$ |
447.4 |
|
Pre-acquisition net sales from Weetabix |
— |
|
|
28.7 |
|
Pro Forma Net
Sales |
$ |
456.0 |
|
|
$ |
476.1 |
|
|
|
|
|
Weetabix Net Sales |
$ |
99.7 |
|
|
$ |
— |
|
Pre-acquisition net sales from Weetabix |
— |
|
|
100.9 |
|
Pro Forma Net
Sales |
$ |
99.7 |
|
|
$ |
100.9 |
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF POST CONSUMER BRANDS VOLUMES
PERCENTAGE CHANGE |
TO PRO FORMA POST CONSUMER BRANDS VOLUMES
PERCENTAGE CHANGE (Unaudited) |
|
|
|
Three Months Ended December 31,
2017 |
Volumes Percentage
Change |
3.0 |
% |
Impact of
inclusion of pre-acquisition volumes of Weetabix |
(5.4 |
%) |
Pro Forma Volumes
Percentage Change |
(2.4 |
%) |
|
|
|
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. 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:
a. 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 the amount and frequency of such adjustments and
settlements are not consistent.b. Premium on debt
extinguishment: The Company has excluded payments for premiums on
debt extinguishment 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.c. 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.d. 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 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.e. Restructuring and plant
closure costs: 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.f. 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 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.g. 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.h. 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.i. Income Tax: The Company has included the income
tax impact of the non-GAAP adjustments using its estimated blended
annual income tax rate or its effective income tax rate, as noted
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.j. Preferred stock: The Company has included
dividend and weighted-average diluted share adjustments related to
its convertible preferred stock using the “if-converted” method
when the convertible preferred stock is dilutive on an adjusted
basis.k. U.S. tax reform net benefit: The Company has
excluded the impact of the one-time income tax net benefit recorded
in the first quarter of 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 expected fiscal year 2018 blended U.S. federal corporate
tax rate of approximately 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 interest expense, net, income tax (benefit) expense,
depreciation and amortization, and the following adjustments
discussed above: 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, assets held for sale, mark-to-market adjustments on
commodity and foreign exchange hedges, and foreign currency gains
and losses on intercompany loans. Additionally, Adjusted EBITDA and
segment Adjusted EBITDA reflect adjustments for the following
items:
l. Loss on extinguishment of debt: The Company has
excluded losses recorded on extinguishment of debt, inclusive of
payments for premiums and the write-off of debt issuance costs, as
such losses 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.m. 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.n.
Noncontrolling interest adjustment: The Company has included
adjustments for interest expense, income tax expense, and
depreciation and amortization for consolidated joint ventures which
are attributable to the noncontrolling owners of the consolidated
joint ventures.o. Equity method investment adjustment: The
Company has included adjustments for its portion of interest
expense, income tax expense, and depreciation and amortization for
unconsolidated joint ventures.
|
RECONCILIATION OF NET EARNINGS AVAILABLE TO
COMMON SHAREHOLDERS |
TO ADJUSTED NET EARNINGS
(Unaudited) |
(in millions) |
|
|
|
|
|
Three Months Ended December 31, |
|
|
2017 |
|
2016 |
Net
Earnings Available to Common Shareholders |
$ |
291.5 |
|
|
$ |
98.4 |
|
Dilutive
preferred stock dividends |
3.4 |
|
|
3.4 |
|
Net
Earnings for Diluted Earnings per Share |
294.9 |
|
|
101.8 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(2.7 |
) |
|
(144.5 |
) |
|
Premium on debt
extinguishment |
30.8 |
|
|
— |
|
|
Provision for legal
settlement |
9.0 |
|
|
74.5 |
|
|
Transaction costs |
3.0 |
|
|
0.1 |
|
|
Integration costs |
10.6 |
|
|
0.5 |
|
|
Restructuring and plant
closure costs |
— |
|
|
0.2 |
|
|
Assets held for
sale |
— |
|
|
(0.2 |
) |
|
Mark-to-market
adjustments on commodity and foreign exchange hedges |
(2.2 |
) |
|
(3.4 |
) |
|
Foreign currency loss
on intercompany loans |
— |
|
|
0.2 |
|
|
Total Net
Adjustments |
48.5 |
|
|
(72.6 |
) |
Income tax
effect on adjustments (1) |
(11.9 |
) |
|
22.6 |
|
U.S. tax
reform net benefit |
(263.6 |
) |
|
— |
|
Adjusted Net Earnings |
$ |
67.9 |
|
|
$ |
51.8 |
|
|
|
|
|
|
(1) Income
tax effect on adjustments is calculated using Post’s expected
fiscal year 2018 blended U.S. federal corporate income tax rate of
approximately 24.5% for the three months ended December 31, 2017
and Post’s effective income tax rate of 31.1% for the three months
ended December 31, 2016. |
|
|
RECONCILIATION OF DILUTED EARNINGS PER COMMON
SHARE |
TO ADJUSTED DILUTED EARNINGS PER COMMON SHARE
(Unaudited) |
|
|
|
|
|
Three Months Ended December 31, |
|
|
2017 |
|
2016 |
Diluted Earnings per Common Share |
$ |
3.82 |
|
|
$ |
1.27 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(0.03 |
) |
|
(1.80 |
) |
|
Premium on debt
extinguishment |
0.40 |
|
|
— |
|
|
Provision for legal
settlement |
0.11 |
|
|
0.93 |
|
|
Transaction costs |
0.04 |
|
|
— |
|
|
Integration costs |
0.13 |
|
|
0.01 |
|
|
Mark-to-market
adjustments on commodity and foreign exchange hedges |
(0.03 |
) |
|
(0.04 |
) |
|
Total Net
Adjustments |
0.62 |
|
|
(0.90 |
) |
Income tax
effect on adjustments (1) |
(0.15 |
) |
|
0.28 |
|
U.S. tax
reform net benefit |
(3.41 |
) |
|
— |
|
Adjusted Diluted Earnings per Common Share |
$ |
0.88 |
|
|
$ |
0.65 |
|
|
|
|
|
|
(1) Income
tax effect on adjustments is calculated using Post’s expected
fiscal year 2018 blended U.S. federal corporate income tax rate of
approximately 24.5% for the three months ended December 31, 2017
and Post’s effective income tax rate of 31.1% for the three months
ended December 31, 2016. |
|
|
RECONCILIATION OF NET EARNINGS TO ADJUSTED
EBITDA (Unaudited) |
(in millions) |
|
|
|
Three Months Ended December 31, |
|
2017 |
|
2016 |
Net
Earnings |
$ |
294.9 |
|
|
$ |
101.8 |
|
Income tax (benefit)
expense |
(255.8 |
) |
|
46.0 |
|
Interest expense,
net |
90.5 |
|
|
72.9 |
|
Loss on extinguishment
of debt |
37.3 |
|
|
— |
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(2.7 |
) |
|
(144.5 |
) |
Depreciation and
amortization |
90.5 |
|
|
77.1 |
|
Provision for legal
settlement |
9.0 |
|
|
74.5 |
|
Non-cash stock-based
compensation |
6.8 |
|
|
4.9 |
|
Transaction costs |
3.0 |
|
|
0.1 |
|
Integration costs |
10.6 |
|
|
0.5 |
|
Restructuring and plant
closure costs |
— |
|
|
0.2 |
|
Assets held for
sale |
— |
|
|
(0.2 |
) |
Mark-to-market
adjustments on commodity and foreign exchange hedges |
(2.2 |
) |
|
(3.4 |
) |
Noncontrolling interest
adjustment |
(0.2 |
) |
|
— |
|
Equity method
investment adjustment |
(0.1 |
) |
|
— |
|
Foreign currency loss
on intercompany loans |
— |
|
|
0.2 |
|
Adjusted
EBITDA |
$ |
281.6 |
|
|
$ |
230.1 |
|
Adjusted EBITDA
as a percentage of Net Sales |
19.6 |
% |
|
18.4 |
% |
|
|
|
|
|
|
|
RECONCILIATION OF SEGMENT PROFIT TO ADJUSTED
EBITDA (Unaudited) |
THREE MONTHS ENDED DECEMBER 31,
2017 |
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands |
|
Weetabix |
|
Michael Foods Group |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
72.9 |
|
|
$ |
16.8 |
|
|
$ |
74.9 |
|
|
$ |
19.8 |
|
|
$ |
8.4 |
|
|
$ |
— |
|
|
$ |
192.8 |
|
General corporate
expenses and other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(28.3 |
) |
|
(28.3 |
) |
Operating
Profit |
72.9 |
|
|
16.8 |
|
|
74.9 |
|
|
19.8 |
|
|
8.4 |
|
|
(28.3 |
) |
|
164.5 |
|
Depreciation and
amortization |
32.6 |
|
|
7.1 |
|
|
38.0 |
|
|
6.5 |
|
|
5.1 |
|
|
1.2 |
|
|
90.5 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
— |
|
|
9.0 |
|
|
— |
|
|
— |
|
|
9.0 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.8 |
|
|
6.8 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
|
3.0 |
|
Integration costs |
3.4 |
|
|
2.3 |
|
|
0.5 |
|
|
— |
|
|
— |
|
|
4.4 |
|
|
10.6 |
|
Mark-to-market
adjustments on commodity and foreign exchange hedges |
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.4 |
) |
|
(2.2 |
) |
Noncontrolling interest
adjustment |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
Equity method
investment adjustment |
— |
|
|
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
Adjusted
EBITDA |
$ |
109.1 |
|
|
$ |
25.6 |
|
|
$ |
113.4 |
|
|
$ |
35.3 |
|
|
$ |
13.5 |
|
|
$ |
(15.3 |
) |
|
$ |
281.6 |
|
Adjusted EBITDA
as a percentage of Net Sales |
23.9 |
% |
|
25.7 |
% |
|
19.6 |
% |
|
19.0 |
% |
|
11.8 |
% |
|
— |
|
|
19.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF SEGMENT PROFIT (LOSS) TO
ADJUSTED EBITDA (Unaudited) |
THREE MONTHS ENDED DECEMBER 31,
2016 |
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post Consumer Brands |
|
Weetabix |
|
Michael Foods Group |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment Profit
(Loss) |
$ |
82.9 |
|
|
$ |
— |
|
|
$ |
(17.0 |
) |
|
$ |
24.9 |
|
|
$ |
5.7 |
|
|
$ |
— |
|
|
$ |
96.5 |
|
General corporate
expenses and other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(20.3 |
) |
|
(20.3 |
) |
Operating
Profit (Loss) |
82.9 |
|
|
— |
|
|
(17.0 |
) |
|
24.9 |
|
|
5.7 |
|
|
(20.3 |
) |
|
76.2 |
|
Depreciation and
amortization |
28.4 |
|
|
— |
|
|
36.7 |
|
|
6.2 |
|
|
4.9 |
|
|
0.9 |
|
|
77.1 |
|
Provision for legal
settlement |
— |
|
|
— |
|
|
74.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
74.5 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4.9 |
|
|
4.9 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.1 |
|
Integration costs |
0.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.5 |
|
Restructuring and plant
closure costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
0.2 |
|
Assets held for
sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
Mark-to-market
adjustments on commodity hedges |
— |
|
|
— |
|
|
(1.9 |
) |
|
— |
|
|
— |
|
|
(1.5 |
) |
|
(3.4 |
) |
Foreign currency loss
on intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
0.2 |
|
Adjusted
EBITDA |
$ |
111.8 |
|
|
$ |
— |
|
|
$ |
92.3 |
|
|
$ |
31.1 |
|
|
$ |
10.6 |
|
|
$ |
(15.7 |
) |
|
$ |
230.1 |
|
Adjusted EBITDA
as a percentage of Net Sales |
25.0 |
% |
|
— |
|
|
17.1 |
% |
|
20.2 |
% |
|
9.8 |
% |
|
— |
|
|
18.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Post (NYSE:POST)
Historical Stock Chart
From Mar 2024 to Apr 2024
Post (NYSE:POST)
Historical Stock Chart
From Apr 2023 to Apr 2024