Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today reported results for the fourth quarter and fiscal
year ended September 30, 2019.
Highlights:
- Fourth quarter net sales of $1.4 billion; operating
profit of $102.6 million; net loss of $61.1 million and Adjusted
EBITDA of $303.6 million
- Fiscal year net sales of $5.7 billion; operating profit
of $781.0 million; net earnings of $124.7 million and Adjusted
EBITDA of $1,210.4 million
- Completed the initial public offering of a minority
interest in BellRing Brands (Post’s historical Active Nutrition
business) on October 21, 2019
- Fiscal year 2020 Adjusted EBITDA (non-GAAP) expected to
range between $1.22-$1.27 billion including the results of BellRing
Brands
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.
Fourth Quarter Consolidated Operating
Results
Net sales were $1,442.8 million, a decrease of 11.5%, or $187.1
million, compared to the prior year period. Pro forma net sales (as
defined later in this release under “Pro Forma Information”)
increased 2.4%, or $33.7 million, when compared to the same period
in fiscal year 2018. Gross profit was $452.2 million, or 31.3% of
net sales, a decrease of $22.7 million compared to the prior year
period gross profit of $474.9 million, or 29.1% of net sales.
Selling, general and administrative (“SG&A”) expenses were
$245.5 million, or 17.0% of net sales, an increase of $5.6 million
compared to the prior year period SG&A expenses of $239.9
million, or 14.7% of net sales.
Operating profit was $102.6 million, an increase of 52.0%, or
$35.1 million, compared to the prior year period operating profit
of $67.5 million, which included segment profit of $17.0 million
attributable to Post’s historical Private Brands business.
Operating profit included non-cash goodwill and other intangible
asset impairments of $63.3 million and $124.9 million in the fourth
quarter of 2019 and 2018, respectively, which are discussed later
in this release and were treated as adjustments for non-GAAP
measures.
Net loss was $61.1 million compared to the prior year period net
loss of $15.6 million. Net loss included expense on swaps, net of
$105.7 million in the fourth quarter of 2019 and income on swaps,
net of $25.2 million in the fourth quarter of 2018, both of which
are discussed later in this release and were treated as adjustments
for non-GAAP measures. Net loss attributable to common shareholders
was $61.1 million, or $0.84 per diluted common share, compared to
the prior year period net loss attributable to common shareholders
of $17.6 million, or $0.26 per diluted common share. Adjusted net
earnings were $103.8 million, or $1.39 per adjusted diluted common
share, compared to the prior year period Adjusted net earnings of
$90.8 million, or $1.21 per adjusted diluted common share.
Adjusted EBITDA was $303.6 million compared to the prior year
period Adjusted EBITDA of $320.6 million, which included $30.5
million attributable to Post’s historical Private Brands
business.
Fiscal Year 2019 Consolidated Operating
Results
Net sales were $5,681.1 million, a decrease of 9.2%, or $576.1
million, compared to the prior year. Gross profit was $1,792.1
million, or 31.5% of net sales, a decrease of $61.9 million
compared to the prior year gross profit of $1,854.0 million, or
29.6% of net sales.
SG&A expenses were $911.6 million, or 16.0% of net sales, a
decrease of $64.8 million compared to the prior year SG&A
expenses of $976.4 million, or 15.6% of net sales. SG&A
expenses for fiscal year 2019 included $25.5 million of transaction
costs, which primarily related to the separate capitalization of
8th Avenue and the initial public offering (the “IPO”) of BellRing
Brands, Inc. (“BellRing”), and $13.5 million of integration
expenses, both of which were treated as adjustments for non-GAAP
measures. SG&A expenses for fiscal year 2018 included $35.6
million of transaction expenses, which primarily related to success
fees paid in conjunction with the close of the acquisition of Bob
Evans, $28.8 million of integration expenses and a provision for
$17.3 million in legal settlements, all of which were treated as
adjustments for non-GAAP measures.
Operating profit was $781.0 million, an increase of 36.2%, or
$207.5 million, compared to the prior year operating profit of
$573.5 million, which included segment profit of $60.8 million
attributable to the historical Private Brands business. Operating
profit for fiscal year 2019 included a $126.6 million gain related
to the separate capitalization of 8th Avenue, which was treated as
an adjustment for non-GAAP measures. Operating profit included
non-cash goodwill and other intangible asset impairments of $63.3
million and $124.9 million for fiscal year 2019 and 2018,
respectively, which are discussed later in this release and were
treated as adjustments for non-GAAP measures.
Net earnings were $124.7 million, a decrease of 73.3%, or $342.6
million, compared to the prior year net earnings of $467.3 million.
Net earnings included expense on swaps, net of $306.6 million in
fiscal year 2019 and income on swaps, net of $95.6 million in
fiscal year 2018, both of which are discussed later in this release
and were treated as adjustments for non-GAAP measures. Net earnings
for fiscal year 2018 included a $270.9 million one-time income tax
net benefit and a $31.1 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 $121.7 million, or
$1.66 per diluted common share, compared to the prior year net
earnings available to common shareholders of $457.3 million, or
$6.16 per diluted common share. Adjusted net earnings were $368.8
million, or $4.91 per diluted common share, compared to the prior
year Adjusted net earnings of $318.9 million, or $4.20 per diluted
common share.
Adjusted EBITDA was $1,210.4 million, a decrease of 1.6%, or
$20.3 million, compared to the prior year Adjusted EBITDA of
$1,230.7 million, which included $111.5 million attributable to
Post’s historical Private Brands business.
Post Consumer Brands
North American ready-to-eat (“RTE”) cereal.
For the fourth quarter, net sales were $487.4 million, an
increase of 3.5%, or $16.4 million, compared to the prior year
period. Volumes increased 1.6% as growth in private label and
Pebbles was partially offset by declines in Canada, Honey Bunches
of Oats, certain licensed products and adult classic brands.
Segment profit was $87.2 million, an increase of 3.1%, or $2.6
million, compared to the prior year period. Segment Adjusted EBITDA
was $121.1 million, an increase of 6.2%, or $7.1 million, compared
to the prior year period.
For fiscal year 2019, net sales were $1,875.9 million, an
increase of 2.4%, or $44.2 million, compared to the prior year.
Segment profit was $337.1 million, an increase of 2.4%, or $7.9
million, compared to the prior year. Segment Adjusted EBITDA was
$463.1 million, an increase of 1.1%, or $4.9 million, compared to
the prior year.
Weetabix
International (primarily United Kingdom) RTE cereal and
muesli.
For the fourth quarter, net sales were $104.8 million, a
decrease of 2.6%, or $2.8 million, compared to the prior year
period, reflecting 12.5% improved average net pricing which was
partially offset by an 8.5% volume decline and an unfavorable
foreign exchange rate headwind of approximately 550 basis points.
Segment profit was $25.5 million, a decrease of 10.8%, or $3.1
million, compared to the prior year period. Segment Adjusted EBITDA
was $33.8 million, a decrease of 8.2%, or $3.0 million, compared to
the prior year period.
For fiscal year 2019, net sales were $418.2 million, a decrease
of 1.2%, or $5.2 million, compared to the prior year. Segment
profit was $94.8 million, an increase of 8.7%, or $7.6 million,
compared to the prior year. Segment Adjusted EBITDA was $128.5
million, an increase of 2.1%, or $2.6 million, compared to the
prior year.
Foodservice
Primarily egg and potato products.
For the fourth quarter, net sales were $417.6 million, an
increase of 4.5%, or $17.8 million, compared to the prior year
period. Volumes increased 3.7%, driven by increases of 4.2% in egg
volumes and 5.9% in potato volumes, which were partially offset by
declines in all other products. Segment profit was $39.8 million,
an increase of 4.7%, or $1.8 million, compared to the prior year
period. Segment Adjusted EBITDA was $77.5 million, an increase of
6.0%, or $4.4 million, compared to the prior year period.
For fiscal year 2019, net sales were $1,627.4 million, an
increase of 5.1%, or $79.2 million, compared to the prior year.
Segment profit was $198.4 million, an increase of 25.9%, or $40.8
million, compared to the prior year. Segment Adjusted EBITDA was
$310.0 million, an increase of 12.4%, or $34.2 million, compared to
the prior year.
Refrigerated Retail
Side dishes and egg, cheese and sausage products.
For the fourth quarter, net sales were $219.1 million, an
increase of 2.0%, or $4.2 million, compared to the prior year
period. Volumes increased 3.1%, led by a 9.4% increase in side dish
volumes. Volume information for additional products is disclosed in
a table presented later in this release. Segment profit was $22.3
million, an increase of 4.7%, or $1.0 million, compared to the
prior year period. Segment Adjusted EBITDA was $41.4 million, an
increase of 3.8%, or $1.5 million, compared to the prior year
period.
For fiscal year 2019, net sales were $907.3 million, an increase
of 14.7%, or $116.4 million, compared to the prior year. Segment
profit was $95.1 million, an increase of 5.7%, or $5.1 million,
compared to the prior year. Segment profit for fiscal year 2018 was
negatively impacted by integration expenses of $11.6 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 $174.6 million, an increase of 5.2%, or $8.6
million, compared to the prior year.
Active Nutrition
Post’s historical ready-to-drink (“RTD”) protein shakes, other
RTD beverages, powders and nutrition bars business, which became
the BellRing Brands business in conjunction with the completion of
the IPO in October 2019 (as discussed later in this release).
For the fourth quarter, net sales were $214.5 million, a
decrease of 2.5%, or $5.4 million, compared to the prior year
period, with volumes declining 4.3%. As expected, net sales in the
fourth quarter of 2019 were negatively impacted by the early
delivery of RTD shakes requested by a large customer in the third
quarter of 2019 to support promotional activity, resulting in a net
sales headwind of approximately $15 million. Segment profit was
$40.3 million, an increase of 5.2%, or $2.0 million, compared to
the prior year period. Segment Adjusted EBITDA was $46.9 million,
an increase of 4.7%, or $2.1 million, compared to the prior year
period.
For fiscal year 2019, net sales were $854.4 million, an increase
of 3.3%, or $26.9 million, compared to the prior year. Segment
profit was $175.1 million, an increase of 40.8%, or $50.7 million,
compared to the prior year. Segment profit for fiscal year 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 $200.8 million, an increase
of 26.1%, or $41.5 million, compared to the prior year.
For further information, please refer to the BellRing fourth
quarter 2019 earnings release and conference call (the details of
which are included later in this release).
Impairment of Goodwill and Other Intangible
Assets
Non-cash goodwill and other intangible asset impairments of
$63.3 million and $124.9 million were recorded in the fourth
quarter of 2019 and 2018, respectively, within the Refrigerated
Retail and Weetabix segments, respectively. The goodwill impairment
charge of $48.7 million in the fourth quarter of 2019 related to
the cheese business and primarily resulted from lost distribution
with customers and a shift in supplier and consumer preferences to
private label cheese products and away from branded cheese
products. The intangible asset impairment charge of $14.6 million
in the fourth quarter of 2019 related to the All Whites trademark
and resulted from a strategic decision to discontinue use of All
Whites as all products previously sold under All Whites are now
being marketed and sold under Bob Evans Egg Whites. The intangible
asset impairment charge of $124.9 million in the fourth quarter of
2018 related to the Weetabix trademark and resulted from reduced
branded cereal volumes related to Weetabix’s pricing reset and
shifting consumer preferences to private label products.
Interest, (Gain) Loss on Extinguishment of Debt, Expense
(Income) on Swaps and Income Tax
Interest expense, net was $91.9 million for the fourth quarter
of 2019, compared to $99.1 million for the fourth quarter of 2018.
For fiscal year 2019, interest expense, net was $322.4 million,
compared to $387.3 million for fiscal year 2018. Interest expense,
net for fiscal year 2019 included a gain of $31.0 million resulting
from the reclassification of gains previously recorded in
accumulated other comprehensive income 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
2019 and 2018. 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 of
Bob Evans common stock under Delaware law and had not withdrawn
their demands, of $1.2 million and $4.9 million in the fourth
quarter of 2019 and 2018, respectively, and $5.9 million and $13.4
million in fiscal year 2019 and 2018, respectively.
Gain on extinguishment of debt, net of $0.4 million was recorded
in the fourth quarter of 2018 in connection with Post’s open market
purchases of $6.5 million in total principal value of certain
senior notes. Loss on extinguishment of debt, net of $6.1 million
was recorded in fiscal year 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 $31.1 million was recorded
in fiscal year 2018 in connection with (i) Post’s redemption of its
6.00% senior notes, (ii) Post’s open market purchases of $267.8
million in total principal value of certain senior notes and (iii)
an opportunistic repricing of Post’s term loan.
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 $105.7 million in the fourth
quarter of 2019, compared to income of $25.2 million in the fourth
quarter of 2018. In fiscal year 2019, expense on swaps, net was
$306.6 million, compared to income of $95.6 million in fiscal year
2018.
Income tax benefit was $43.5 million in the fourth quarter of
2019, compared to an expense of $12.5 million in the fourth quarter
of 2018. For fiscal year 2019, income tax benefit was $3.9 million,
compared to a benefit of $204.0 million in fiscal year 2018. In
fiscal year 2019, the effective income tax rate differed
significantly from the statutory rate as a result of discrete tax
benefit items, primarily relating to excess tax benefits for
share-based payments and uncertain tax positions, which was
partially offset by the tax impact of non-deductible goodwill
impairment. In fiscal year 2018, Post recorded a $270.9 million
one-time net income tax benefit in connection with the U.S. Tax
Cuts and Jobs Act.
Share Repurchases
During the fourth quarter of 2019, Post repurchased 2.4 million
shares for $242.1 million at an average price of $99.75 per share.
During fiscal year 2019, Post repurchased 3.3 million shares for
$330.8 million at an average price of $98.76 per share.
On September 4, 2019, Post announced that its Board of Directors
had approved a new $400.0 million share repurchase authorization,
with repurchases occurring over a two year period beginning on
September 4, 2019. At the end of the fourth quarter of 2019, Post
had $338.5 million remaining under its new share repurchase
authorization.
BellRing
On October 21, 2019, the IPO of 39.4 million shares of BellRing
Class A common stock was completed. Upon completion of the IPO and
certain transactions completed in connection with the IPO, BellRing
became the holding company for BellRing Brands, LLC (which became
the holding company for Post’s historical Active Nutrition
business), and Post holds approximately 71% of the economic
ownership of BellRing Brands, LLC. BellRing’s Class A common stock
began trading on October 17, 2019 on the New York Stock Exchange
under the symbol “BRBR”. Post will continue to fully consolidate
BellRing’s results within Post’s financial statements. Effective
October 21, 2019, Post will allocate approximately 29% of
BellRing’s consolidated net earnings and net assets to
noncontrolling interest within Post’s consolidated income statement
and balance sheet.
Outlook
Post management expects fiscal year 2020 Adjusted EBITDA,
including 100% contribution from BellRing and excluding any
contribution from 8th Avenue and the acquisition of TreeHouse
Foods’ private label RTE cereal business, to range between
$1.22-$1.27 billion, with modest favorability to the second half of
fiscal 2020.
Post management expect Post’s fiscal year 2020 capital
expenditures to range between $240-$260 million,
including approximately $4 million attributable to
BellRing.
Post 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/loss on sale of business, income/expense on swaps, net,
transaction and integration costs, restructuring and facility
closure costs, provision for legal settlements, mark-to-market
adjustments on commodity and foreign exchange hedges and other
charges reflected in Post’s reconciliations 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.”
BellRing Outlook
BellRing management expects fiscal year 2020 net sales to range
between $1.0-$1.05 billion, Adjusted EBITDA to range between
$192-$202 million and capital expenditures of approximately $4
million.
BellRing 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
separation costs, provision for legal settlement and other charges
reflected in BellRing’s reconciliation of historical numbers, the
amounts of which, based on historical experience, could be
significant. For additional information regarding BellRing’s
non-GAAP measures, see the related explanations presented under
“Use of Non-GAAP Measures” in BellRing’s fourth quarter 2019
earnings release. BellRing, as a separate publicly traded company,
releases guidance regarding its future performance. These
statements are prepared by BellRing’s management, and Post does not
accept any responsibility for any such statements.
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 affiliates of
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 fourth quarter of 2019, net sales were $208.0 million,
net loss was $8.9 million and Adjusted EBITDA was $20.6 million.
For fiscal year 2019, net sales were $838.5 million, net loss was
$17.6 million and Adjusted EBITDA was $90.5 million. Fiscal year
2019 results were impacted by weak manufacturing performance and
volume softness in the pasta business. As of September 30, 2019,
8th Avenue is capitalized with $659.1 million of senior secured
debt, $250.0 million in principal amount of preferred equity and
$29.1 million of accumulated, but unpaid, preferred dividends.
Summarized financial information for 8th Avenue is disclosed later
in this release.
For 8th Avenue, Post management expects fiscal year 2020
Adjusted EBITDA to range 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
Post 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
Post 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, Post is required to comply with certain
covenants and limitations that are based on variations of EBITDA in
its financing documents. Management believes the use of these
non-GAAP measures provides increased transparency and assists
investors in understanding the underlying operating performance of
Post 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 Post’s non-GAAP measures, see the related explanations
provided under “Explanation and Reconciliation of Non-GAAP
Measures” later in this release.
Post Conference Call to Discuss Earnings Results and
Outlook
Post will host a conference call on Friday, November 22, 2019 at
9:00 a.m. EST to discuss financial results for the fourth quarter
and fiscal year 2019 and fiscal year 2020 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 9777955.
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, December 6, 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 9777955. A webcast
replay also will be available for a limited period on Post’s
website in the Investor Relations section.
BellRing Conference Call to Discuss Earnings Results and
Outlook
BellRing will host a conference call on Friday, November 22,
2019 at 10:30 a.m. EST to discuss financial results for the fourth
quarter and fiscal year 2019 and fiscal year 2020 outlook and to
respond to questions. Darcy Horn Davenport, President and Chief
Executive Officer, and Paul A. Rode, Chief Financial Officer, will
participate in the call.
Interested parties may join the conference call by dialing (833)
954-1568 in the United States and (409) 216-6583 from outside of
the United States. The conference identification number is 4878954.
Interested parties are invited to listen to the webcast of the
conference call, which can be accessed by visiting the Investor
Relations section of BellRing’s website at www.bellring.com.
A replay of the conference call will be available through
Friday, December 6, 2019 by dialing (855) 859-2056 in the United
States and (404) 537-3406 from outside of the United States and
using the conference identification number 4878954. A webcast
replay also will be available for a limited period on BellRing’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 Post’s and BellRing’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 Post’s
conference call are forward-looking statements, including Post’s
Adjusted EBITDA outlook for fiscal year 2020, BellRing’s net sales,
Adjusted EBITDA and capital expenditures outlook for fiscal year
2020, Post’s capital expenditures expectations, including capital
expenditures expectations attributable to BellRing, Post
management’s Adjusted EBITDA outlook for 8th Avenue for fiscal year
2020 and statements regarding the completion of the proposed
acquisition of TreeHouse Foods’ private label RTE cereal
business. 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
and customer preferences and trends and introduce new
products;
- Post’s ability to identify, complete and integrate acquisitions
and manage its growth;
- Post’s ability to promptly and effectively realize the
strategic and financial benefits expected as a result of the IPO of
a minority interest in its BellRing Brands business, which consists
of its historical Active Nutrition business, and certain other
transactions completed in connection with the IPO;
- Post’s ability to promptly and effectively realize the expected
synergies of its acquisition of Bob Evans within the expected
timeframe or at all;
- Post’s ability and timing to close the proposed acquisition of
the private label RTE cereal business of TreeHouse Foods,
Inc.;
- higher freight costs, significant volatility in the costs or
availability of certain commodities (including raw materials and
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;
- 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 suppliers or
manufacturers for the manufacturing of many 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 restaurants 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;
- risks associated with Post’s international business;
- 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;
- costs, business disruptions and reputational damage associated
with information technology failures, cybersecurity incidents or
information security breaches;
- changes in estimates in critical accounting judgments;
- Post’s ability to protect its intellectual property and other
assets;
- 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;
- significant differences in Post’s, 8th Avenue’s and BellRing’s
actual operating results from Post’s guidance regarding its and 8th
Avenue’s future performance and BellRing’s guidance regarding its
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 except with respect to BellRing’s guidance
regarding its future performance, which represents BellRing’s
judgment as of the date of this release. Post disclaims, however,
any intent or obligation to update these forward-looking
statements.
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
convenient 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®, Better’n Eggs® and Crystal Farms®
brands. Post’s publicly-traded subsidiary BellRing Brands, Inc. is
a holding company operating in the global convenient nutrition
category through its primary brands of Premier Protein®, Dymatize®
and PowerBar®. Post participates in the private brand food category
through its investment with Thomas H. Lee Partners in 8th Avenue
Food & Provisions, Inc., 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(in millions, except per share
data)
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
$ |
1,442.8 |
|
|
$ |
1,629.9 |
|
|
$ |
5,681.1 |
|
|
$ |
6,257.2 |
|
Cost of goods sold |
990.6 |
|
|
1,155.0 |
|
|
3,889.0 |
|
|
4,403.2 |
|
Gross
Profit |
452.2 |
|
|
474.9 |
|
|
1,792.1 |
|
|
1,854.0 |
|
Selling, general and
administrative expenses |
245.5 |
|
|
239.9 |
|
|
911.6 |
|
|
976.4 |
|
Amortization of intangible
assets |
40.3 |
|
|
42.3 |
|
|
161.3 |
|
|
177.4 |
|
Loss (gain) on sale of
business |
0.7 |
|
|
— |
|
|
(126.6 |
) |
|
— |
|
Impairment of goodwill and
other intangible assets |
63.3 |
|
|
124.9 |
|
|
63.3 |
|
|
124.9 |
|
Other operating (income)
expenses, net |
(0.2 |
) |
|
0.3 |
|
|
1.5 |
|
|
1.8 |
|
Operating
Profit |
102.6 |
|
|
67.5 |
|
|
781.0 |
|
|
573.5 |
|
Interest expense, net |
91.9 |
|
|
99.1 |
|
|
322.4 |
|
|
387.3 |
|
(Gain) loss on extinguishment
of debt, net |
— |
|
|
(0.4 |
) |
|
6.1 |
|
|
31.1 |
|
Expense (income) on swaps,
net |
105.7 |
|
|
(25.2 |
) |
|
306.6 |
|
|
(95.6 |
) |
Other income, net |
(2.1 |
) |
|
(3.4 |
) |
|
(13.2 |
) |
|
(14.0 |
) |
(Loss) Earnings before
Income Taxes and Equity Method Loss |
(92.9 |
) |
|
(2.6 |
) |
|
159.1 |
|
|
264.7 |
|
Income tax (benefit)
expense |
(43.5 |
) |
|
12.5 |
|
|
(3.9 |
) |
|
(204.0 |
) |
Equity method loss, net of
tax |
11.3 |
|
|
0.3 |
|
|
37.0 |
|
|
0.3 |
|
Net (Loss) Earnings
Including Noncontrolling Interest |
(60.7 |
) |
|
(15.4 |
) |
|
126.0 |
|
|
468.4 |
|
Less: Net earnings
attributable to noncontrolling interest |
0.4 |
|
|
0.2 |
|
|
1.3 |
|
|
1.1 |
|
Net (Loss)
Earnings |
(61.1 |
) |
|
(15.6 |
) |
|
124.7 |
|
|
467.3 |
|
Less: Preferred stock
dividends |
— |
|
|
2.0 |
|
|
3.0 |
|
|
10.0 |
|
Net (Loss) Earnings
Available to Common Shareholders |
$ |
(61.1 |
) |
|
$ |
(17.6 |
) |
|
$ |
121.7 |
|
|
$ |
457.3 |
|
|
|
|
|
|
|
|
|
(Loss) Earnings per
Common Share: |
|
|
|
|
|
|
|
Basic |
$ |
(0.84 |
) |
|
$ |
(0.26 |
) |
|
$ |
1.72 |
|
|
$ |
6.87 |
|
Diluted |
$ |
(0.84 |
) |
|
$ |
(0.26 |
) |
|
$ |
1.66 |
|
|
$ |
6.16 |
|
|
|
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
Basic |
72.9 |
|
|
66.6 |
|
|
70.8 |
|
|
66.6 |
|
Diluted |
72.9 |
|
|
66.6 |
|
|
75.1 |
|
|
75.9 |
|
CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions)
|
September 30, 2019 |
|
September 30, 2018 |
ASSETS |
Current
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,050.7 |
|
|
$ |
989.7 |
|
Restricted cash |
3.8 |
|
|
4.8 |
|
Receivables, net |
445.1 |
|
|
462.3 |
|
Inventories |
579.8 |
|
|
484.2 |
|
Current assets held for sale |
9.9 |
|
|
195.0 |
|
Prepaid expenses and other current assets |
37.0 |
|
|
64.3 |
|
Total Current Assets |
2,126.3 |
|
|
2,200.3 |
|
|
|
|
|
Property, net |
1,736.0 |
|
|
1,709.7 |
|
Goodwill |
4,399.8 |
|
|
4,499.6 |
|
Other intangible assets,
net |
3,338.5 |
|
|
3,539.3 |
|
Equity method investments |
145.5 |
|
|
5.2 |
|
Other assets held for
sale |
— |
|
|
856.6 |
|
Other assets |
205.5 |
|
|
246.8 |
|
Total Assets |
$ |
11,951.6 |
|
|
$ |
13,057.5 |
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Current
Liabilities |
|
|
|
Current portion of long-term debt |
$ |
13.5 |
|
|
$ |
22.1 |
|
Accounts payable |
395.6 |
|
|
365.1 |
|
Current liabilities held for sale |
— |
|
|
65.6 |
|
Other current liabilities |
393.8 |
|
|
339.3 |
|
Total Current Liabilities |
802.9 |
|
|
792.1 |
|
|
|
|
|
Long-term debt |
7,066.0 |
|
|
7,232.1 |
|
Deferred income taxes |
688.5 |
|
|
778.4 |
|
Other liabilities held for
sale |
— |
|
|
695.1 |
|
Other liabilities |
456.9 |
|
|
499.3 |
|
Total Liabilities |
9,014.3 |
|
|
9,997.0 |
|
|
|
|
|
Shareholders’
Equity |
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
0.8 |
|
|
0.8 |
|
Additional paid-in capital |
3,734.8 |
|
|
3,590.9 |
|
Retained earnings |
207.8 |
|
|
88.0 |
|
Accumulated other comprehensive loss |
(96.8 |
) |
|
(39.4 |
) |
Treasury stock, at cost |
(920.7 |
) |
|
(589.9 |
) |
Total Shareholders’ Equity excluding Noncontrolling
Interest |
2,925.9 |
|
|
3,050.4 |
|
Noncontrolling interest |
11.4 |
|
|
10.1 |
|
Total Shareholders’ Equity |
2,937.3 |
|
|
3,060.5 |
|
Total Liabilities and Shareholders’ Equity |
$ |
11,951.6 |
|
|
$ |
13,057.5 |
|
SELECTED CONDENSED CONSOLIDATED CASH FLOW
INFORMATION (Unaudited)(in millions)
|
Year Ended September 30, |
|
2019 |
|
2018 |
Cash provided by (used in): |
|
|
|
Operating activities |
$ |
688.0 |
|
|
$ |
718.6 |
|
Investing activities, including capital expenditures of $273.9 and
$225.0 |
26.7 |
|
|
(1,675.6 |
) |
Financing activities |
(652.4 |
) |
|
423.4 |
|
Effect of
exchange rate changes on cash, cash equivalents and restricted
cash |
(2.3 |
) |
|
(2.0 |
) |
Net increase (decrease) in cash, cash equivalents and
restricted cash |
$ |
60.0 |
|
|
$ |
(535.6 |
) |
SEGMENT INFORMATION
(Unaudited)(in millions)
|
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
Sales |
|
|
|
|
|
|
|
|
Post Consumer
Brands |
$ |
487.4 |
|
|
$ |
471.0 |
|
|
$ |
1,875.9 |
|
|
$ |
1,831.7 |
|
|
Weetabix |
104.8 |
|
|
107.6 |
|
|
418.2 |
|
|
423.4 |
|
|
Foodservice |
417.6 |
|
|
399.8 |
|
|
1,627.4 |
|
|
1,548.2 |
|
|
Refrigerated
Retail |
219.1 |
|
|
214.9 |
|
|
907.3 |
|
|
790.9 |
|
|
Active
Nutrition |
214.5 |
|
|
219.9 |
|
|
854.4 |
|
|
827.5 |
|
|
Private
Brands |
— |
|
|
220.8 |
|
|
— |
|
|
848.9 |
|
|
Eliminations |
(0.6 |
) |
|
(4.1 |
) |
|
(2.1 |
) |
|
(13.4 |
) |
|
Total |
$ |
1,442.8 |
|
|
$ |
1,629.9 |
|
|
$ |
5,681.1 |
|
|
$ |
6,257.2 |
|
Segment
Profit |
|
|
|
|
|
|
|
|
Post Consumer
Brands |
$ |
87.2 |
|
|
$ |
84.6 |
|
|
$ |
337.1 |
|
|
$ |
329.2 |
|
|
Weetabix |
25.5 |
|
|
28.6 |
|
|
94.8 |
|
|
87.2 |
|
|
Foodservice |
39.8 |
|
|
38.0 |
|
|
198.4 |
|
|
157.6 |
|
|
Refrigerated
Retail |
22.3 |
|
|
21.3 |
|
|
95.1 |
|
|
90.0 |
|
|
Active
Nutrition |
40.3 |
|
|
38.3 |
|
|
175.1 |
|
|
124.4 |
|
|
Private
Brands |
— |
|
|
17.0 |
|
|
— |
|
|
60.8 |
|
|
Total segment profit |
215.1 |
|
|
227.8 |
|
|
900.5 |
|
|
849.2 |
|
General corporate
expenses and other |
46.4 |
|
|
32.0 |
|
|
169.6 |
|
|
136.8 |
|
Loss (gain) on
sale of business |
0.7 |
|
|
— |
|
|
(126.6 |
) |
|
— |
|
Impairment of
goodwill and other intangible assets |
63.3 |
|
|
124.9 |
|
|
63.3 |
|
|
124.9 |
|
Interest expense,
net |
91.9 |
|
|
99.1 |
|
|
322.4 |
|
|
387.3 |
|
(Gain) loss on
extinguishment of debt, net |
— |
|
|
(0.4 |
) |
|
6.1 |
|
|
31.1 |
|
Expense (income)
on swaps, net |
105.7 |
|
|
(25.2 |
) |
|
306.6 |
|
|
(95.6 |
) |
(Loss)
Earnings before Income Taxes and Equity Method Loss |
$ |
(92.9 |
) |
|
$ |
(2.6 |
) |
|
$ |
159.1 |
|
|
$ |
264.7 |
|
PRO FORMA INFORMATION
Pro forma net sales, as used in the text of this release, is
defined as the comparison of the GAAP results for the three-month
period ended September 30, 2019 to the same three-month period in
fiscal year 2018, adjusted to exclude results of the divested
business for the period presented in the table below. Pro forma net
sales have not been prepared in accordance with the requirements of
Article 11 of Regulation S-X.
Business |
|
Type |
|
Segment |
|
Pro Forma Periods |
8th Avenue |
|
Divestiture |
|
Private Brands |
|
July 1, 2018 - September 30,
2018 |
RECONCILIATION OF NET SALES TO PRO FORMA
NET SALES (Unaudited)(in millions)
|
Three Months Ended September 30, |
|
2019 |
|
2018 |
Net Sales |
$ |
1,442.8 |
|
|
$ |
1,629.9 |
|
Pre-divestiture net sales from the historical Private Brands
business |
— |
|
|
(220.8 |
) |
Pro Forma Net Sales |
$ |
1,442.8 |
|
|
$ |
1,409.1 |
|
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.
Product |
|
Volume Percentage Change |
All |
|
3.1% |
Side dishes |
|
9.4% |
Egg |
|
0.3% |
Cheese |
|
(2.8%) |
Sausage |
|
(0.5%) |
EXPLANATION AND RECONCILIATION OF
NON-GAAP MEASURES
Post 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 Post’s reportable
segments, which is each of Post’s reportable segment’s earnings
before income taxes and equity method earnings/loss before
impairment of property, goodwill and other intangible assets,
facility closure related costs, restructuring expenses, gain/loss
on assets and liabilities held for sale, gain/loss on sale of
businesses and facilities, interest expense and other unallocated
corporate income and expenses. Post believes total segment profit
is useful to investors in evaluating Post’s operating performance
because it facilitates period-to-period comparison of results of
segment operations.
Adjusted net earnings and Adjusted diluted earnings per common
sharePost believes Adjusted net earnings and Adjusted diluted
earnings per common share are useful to investors in evaluating
Post’s operating performance because they exclude items that affect
the comparability of Post’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:
- Income/expense on swaps, net: Post 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.
- Gain/loss on sale of business: Post has excluded gains and
losses recorded on divestitures as the amount and frequency of such
adjustments are not consistent. Additionally, Post 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 Post’s current operating performance or comparisons
of Post’s operating performance to other periods.
- Impairment of goodwill and other intangible assets: Post has
excluded expenses for impairments of goodwill and other intangible
assets as such non-cash amounts are inconsistent in amount and
frequency and Post believes that these costs do not reflect
expected ongoing future operating expenses and do not contribute to
a meaningful evaluation of Post’s current operating performance or
comparisons of Post’s operating performance to other periods.
- Payments of debt extinguishment costs, net: Post 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,
Post believes that these costs do not reflect expected ongoing
future operating expenses and do not contribute to a meaningful
evaluation of Post’s current operating performance or comparisons
of Post’s operating performance to other periods.
- 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
Post’s current operating performance and comparisons of Post’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 Post 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
Post’s ability to utilize its existing assets and estimate the
long-term value that acquired assets will generate for Post.
Furthermore, Post believes that the adjustments of these items more
closely correlate with the sustainability of Post’s operating
performance.
- Restructuring and facility closure costs, including accelerated
depreciation: Post has excluded certain costs associated with
facility closures as the amount and frequency of such adjustments
are not consistent. Additionally, Post believes that these costs do
not reflect expected ongoing future operating expenses and do not
contribute to a meaningful evaluation of Post’s current operating
performance or comparisons of Post’s operating performance to other
periods.
- Provision for legal settlements: Post has excluded gains and
losses recorded to recognize the anticipated or actual resolution
of certain litigation as Post believes such gains and losses do not
reflect expected ongoing future operating income and expenses and
do not contribute to a meaningful evaluation of Post’s current
operating performance or comparisons of Post’s operating
performance to other periods.
- Inventory valuation adjustments on acquired businesses: Post
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 Post’s acquisitions.
- Mark-to-market adjustments on commodity and foreign exchange
hedges: Post 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.
- Purchase price adjustment on acquisition: Post has excluded
adjustments to the purchase price of an acquisition in excess of
one year beyond the acquisition date as such amounts are
inconsistent in amount and frequency. Post believes such costs are
generally not relevant to assessing or estimating the long-term
performance of acquired assets as part of Post, and such amounts
are not factored into the performance of acquisitions after
completion of acquisitions.
- Debt consent solicitation costs: Post has excluded professional
service fees and other related costs in connection with its debt
consent solicitation as Post believes that these costs do not
reflect expected ongoing future operating expenses and do not
contribute to a meaningful evaluation of Post’s current operating
performance or comparisons of Post’s operating performance to other
periods.
- Assets held for sale: Post 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, Post believes that these adjustments do not reflect
expected ongoing future operating expenses or income and do not
contribute to a meaningful evaluation of Post’s current operating
performance or comparisons of Post’s operating performance to other
periods.
- Foreign currency gain/loss on intercompany loans: Post 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
Post’s performance to allow for more meaningful comparisons of
performance to other periods.
- Advisory income: Post has excluded advisory income received
from 8th Avenue as Post 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: Post has included the income tax impact of the
non-GAAP adjustments using a rate described in the applicable
footnote of the reconciliation tables, as Post believes that its
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/expense: Post has excluded the
impact of the one-time net income tax benefit recorded throughout
fiscal year 2018 which reflected (i) the benefit related to an
estimate of the re-measurement of Post’s existing deferred tax
assets and liabilities considering both Post’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.
Additionally, Post has excluded the impact of an income tax benefit
recorded in the third quarter of fiscal year 2019 in connection
with preparing its fiscal year 2018 corporate income tax returns
which related to the (i) re-measurement of its existing deferred
tax assets and liabilities and (ii) adjustment to the one-time
transition tax. Post believes that these net benefits as reported
are not representative of Post’s current income tax position and
exclusion of the benefits allows for more meaningful comparisons of
performance to other periods.
- Preferred stock: Post 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.
Adjusted EBITDA and segment Adjusted EBITDAPost believes that
Adjusted EBITDA is useful to investors in evaluating Post’s
operating performance and liquidity because (i) Post believes 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 Post’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 Post is required to
comply with certain covenants and limitations that are based on
variations of EBITDA in Post’s financing documents. Post believes
that segment Adjusted EBITDA is useful to investors in evaluating
Post’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 expense/benefit, interest expense, net, depreciation
and amortization including accelerated depreciation, and the
following adjustments discussed above: income/expense on swaps,
net, gain/loss on sale of business, impairment of goodwill and
other intangible assets, transaction costs and integration costs,
restructuring and facility closure costs excluding accelerated
depreciation, provision for legal settlements, inventory valuation
adjustments on acquired businesses, mark-to-market adjustments on
commodity and foreign exchange hedges, purchase price adjustment on
acquisition, debt consent solicitation costs, assets held for sale,
foreign currency gain/loss on intercompany loans and advisory
income. Additionally, Adjusted EBITDA and segment Adjusted EBITDA
reflect adjustments for the following items:
r. Gain/loss on extinguishment
of debt, net: Post 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, Post 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
Post’s current operating performance or comparisons of Post’s
operating performance to other periods.s. Non-cash stock-based
compensation: Post’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 Post’s operating performance to other periods.t. Equity method
investment adjustment: Post has included adjustments for the 8th
Avenue equity investment loss and Post’s portion of income tax
expense/benefit, interest expense, net and depreciation and
amortization for its unconsolidated Weetabix investment accounted
for using equity method accounting.u: Noncontrolling interest
adjustment: Post has included adjustments for income tax
expense/benefit, interest expense, net and depreciation and
amortization for consolidated investments which are attributable to
the noncontrolling owners of the consolidated investments.
RECONCILIATION OF NET (LOSS) EARNINGS
AVAILABLE TO COMMON SHAREHOLDERSTO ADJUSTED NET
EARNINGS (Unaudited)(in millions)
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net (Loss)
Earnings Available to Common Shareholders |
$ |
(61.1 |
) |
|
$ |
(17.6 |
) |
|
$ |
121.7 |
|
|
$ |
457.3 |
|
Dilutive preferred
stock dividends |
— |
|
|
— |
|
|
3.0 |
|
|
10.0 |
|
Net (Loss)
Earnings for Diluted Earnings per Share |
(61.1 |
) |
|
(17.6 |
) |
|
124.7 |
|
|
467.3 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Expense (income) on swaps,
net |
105.7 |
|
|
(25.2 |
) |
|
306.6 |
|
|
(95.6 |
) |
|
Loss (gain) on sale of
business |
0.7 |
|
|
— |
|
|
(126.6 |
) |
|
— |
|
|
Impairment of goodwill and
other intangible assets |
63.3 |
|
|
124.9 |
|
|
63.3 |
|
|
124.9 |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
(0.4 |
) |
|
(4.0 |
) |
|
26.0 |
|
|
Transaction costs |
7.2 |
|
|
9.3 |
|
|
25.5 |
|
|
35.6 |
|
|
Integration costs |
6.1 |
|
|
1.8 |
|
|
13.5 |
|
|
28.8 |
|
|
Restructuring and facility
closure costs, including accelerated depreciation |
1.6 |
|
|
3.8 |
|
|
20.5 |
|
|
7.8 |
|
|
Provision for legal
settlements |
5.0 |
|
|
6.0 |
|
|
2.4 |
|
|
17.3 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
9.4 |
|
|
2.2 |
|
|
8.7 |
|
|
0.7 |
|
|
Purchase price adjustment on
acquisition |
3.8 |
|
|
— |
|
|
3.8 |
|
|
— |
|
|
Debt consent solicitation
costs |
— |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
|
Foreign currency (gain) loss
on intercompany loans |
— |
|
|
(0.6 |
) |
|
— |
|
|
0.2 |
|
|
Advisory income |
(0.2 |
) |
|
— |
|
|
(0.6 |
) |
|
— |
|
|
Total Net
Adjustments |
202.6 |
|
|
121.8 |
|
|
313.8 |
|
|
149.9 |
|
Income tax effect
on adjustments (1) |
(37.7 |
) |
|
(20.5 |
) |
|
(64.9 |
) |
|
(27.4 |
) |
U.S. tax reform
net expense (benefit) |
— |
|
|
5.1 |
|
|
(4.8 |
) |
|
(270.9 |
) |
Non-GAAP dilutive
preferred stock dividends adjustment (2) |
— |
|
|
2.0 |
|
|
— |
|
|
— |
|
Adjusted
Net Earnings |
$ |
103.8 |
|
|
$ |
90.8 |
|
|
$ |
368.8 |
|
|
$ |
318.9 |
|
|
|
|
|
|
|
|
|
|
(1) For the three
months and year ended September 30, 2019, income tax effect on
adjustments was calculated on all items, except for impairment of
non-deductible goodwill, using a rate of 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 income tax benefit.
The tax effect for impairment of non-deductible goodwill was
calculated using a rate of 0.0%. For the three months and year
ended September 30, 2018, income tax effect on adjustments was
calculated on all items, except for impairment of other intangible
assets, using a rate of 24.5%, the sum of Post’s fiscal year 2018
U.S. federal corporate income tax rate, net of the Domestic
Production Activities Deduction benefit, plus Post’s blended state
income tax rate, net of federal income tax benefit. The tax effect
for impairment of other intangible assets was calculated using the
applicable United Kingdom statutory rate of 17.0%. |
(2) Potentially
dilutive convertible preferred stock was calculated using the
“if-converted” method. On a GAAP basis, the convertible preferred
stock was anti-dilutive for the three months ended September 30,
2018. On an adjusted basis, the convertible preferred stock was
dilutive for all periods. The adjustment in the table above
reflects the add back of dividends related to the convertible
preferred stock that was dilutive on an adjusted basis. |
RECONCILIATION OF WEIGHTED-AVERAGE
DILUTED SHARES OUTSTANDINGTO ADJUSTED
WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING
(Unaudited)(in millions)
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Weighted-average
shares for diluted (loss) earnings per share |
72.9 |
|
|
66.6 |
|
|
75.1 |
|
|
75.9 |
|
Effect of
securities that were anti-dilutive for diluted (loss) earnings per
share: |
|
|
|
|
|
|
|
|
Stock options |
1.0 |
|
|
2.1 |
|
|
— |
|
|
— |
|
|
Stock appreciation rights |
0.1 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
Restricted stock unit
awards |
0.5 |
|
|
0.5 |
|
|
— |
|
|
— |
|
|
Performance restricted stock
unit awards |
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
Preferred shares conversion to
common (1) |
— |
|
|
5.9 |
|
|
— |
|
|
— |
|
Adjusted
weighted-average shares for adjusted diluted earnings per
share |
74.6 |
|
|
75.2 |
|
|
75.1 |
|
|
75.9 |
|
|
|
|
|
|
|
|
|
|
(1) Potentially
dilutive convertible preferred stock was calculated using the
“if-converted” method. On a GAAP basis, the convertible preferred
stock was anti-dilutive for the three months ended September 30,
2018. On an adjusted basis, the convertible preferred stock was
dilutive for all periods. The adjustment in the table above
reflects the weighted-average shares of the convertible preferred
stock that were dilutive on an adjusted basis. |
RECONCILIATION OF DILUTED (LOSS) EARNINGS
PER COMMON SHARETO ADJUSTED DILUTED EARNINGS PER
COMMON SHARE (Unaudited)
|
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Diluted
(Loss) Earnings per Common Share |
$ |
(0.84 |
) |
|
$ |
(0.26 |
) |
|
$ |
1.66 |
|
|
$ |
6.16 |
|
Adjustment
to Diluted (Loss) Earnings per Common Share (1) |
0.02 |
|
|
0.03 |
|
|
— |
|
|
— |
|
Adjusted
Diluted (Loss) Earnings per Common Share, as calculated using
adjusted weighted-average diluted shares (2) |
(0.82 |
) |
|
(0.23 |
) |
|
1.66 |
|
|
6.16 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Expense (income) on swaps,
net |
1.42 |
|
|
(0.33 |
) |
|
4.08 |
|
|
(1.26 |
) |
|
Loss (gain) on sale of
business |
0.01 |
|
|
— |
|
|
(1.69 |
) |
|
— |
|
|
Impairment of goodwill and
other intangible assets |
0.85 |
|
|
1.66 |
|
|
0.84 |
|
|
1.65 |
|
|
Payments of debt
extinguishment costs, net |
— |
|
|
(0.01 |
) |
|
(0.05 |
) |
|
0.34 |
|
|
Transaction costs |
0.10 |
|
|
0.12 |
|
|
0.34 |
|
|
0.47 |
|
|
Integration costs |
0.08 |
|
|
0.02 |
|
|
0.18 |
|
|
0.38 |
|
|
Restructuring and facility
closure costs, including accelerated depreciation |
0.02 |
|
|
0.05 |
|
|
0.27 |
|
|
0.10 |
|
|
Provision for legal
settlements |
0.07 |
|
|
0.08 |
|
|
0.03 |
|
|
0.23 |
|
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
— |
|
|
— |
|
|
0.05 |
|
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
0.13 |
|
|
0.03 |
|
|
0.12 |
|
|
0.01 |
|
|
Purchase price adjustment on
acquisition |
0.05 |
|
|
— |
|
|
0.05 |
|
|
— |
|
|
Debt consent solicitation
costs |
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
Assets held for sale |
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
Foreign currency gain on
intercompany loans |
— |
|
|
(0.01 |
) |
|
— |
|
|
— |
|
|
Advisory income |
— |
|
|
— |
|
|
(0.01 |
) |
|
— |
|
|
Total Net
Adjustments |
2.73 |
|
|
1.61 |
|
|
4.17 |
|
|
1.97 |
|
Income tax effect
on adjustments (3) |
(0.52 |
) |
|
(0.27 |
) |
|
(0.86 |
) |
|
(0.36 |
) |
U.S. tax reform
net expense (benefit) |
— |
|
|
0.07 |
|
|
(0.06 |
) |
|
(3.57 |
) |
Non-GAAP dilutive
preferred stock dividends adjustment (4) |
— |
|
|
0.03 |
|
|
— |
|
|
— |
|
Adjusted
Diluted Earnings per Common Share |
$ |
1.39 |
|
|
$ |
1.21 |
|
|
$ |
4.91 |
|
|
$ |
4.20 |
|
|
|
|
|
|
|
|
|
|
(1) Represents
the effect of the change in adjusted weighted-average diluted
shares (as reconciled in the prior table), after consideration of
the adjustments (which are presented in this table). |
(2) Per share
adjustments are based on adjusted weighted-average diluted shares
(as reconciled in the prior table). |
(3) For the three
months and year ended September 30, 2019, income tax effect on
adjustments was calculated on all items, except for impairment of
non-deductible goodwill, using a rate of 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 income tax benefit.
The tax effect for impairment of non-deductible goodwill was
calculated using a rate of 0.0%. For the three months and year
ended September 30, 2018, income tax effect on adjustments was
calculated on all items, except for impairment of other intangible
assets, using a rate of 24.5%, the sum of Post’s fiscal year 2018
U.S. federal corporate income tax rate, net of the Domestic
Production Activities Deduction benefit, plus Post’s blended state
income tax rate, net of federal income tax benefit. The tax effect
for impairment of other intangible assets was calculated using the
applicable United Kingdom statutory rate of 17.0%. |
(4) Potentially
dilutive convertible preferred stock was calculated using the
“if-converted” method. On a GAAP basis, the convertible preferred
stock was anti-dilutive for the three months ended September 30,
2018. On an adjusted basis, the convertible preferred stock was
dilutive for all periods. The adjustment in the table above
reflects the add back of dividends related to the convertible
preferred stock that was dilutive on an adjusted basis. |
RECONCILIATION OF NET (LOSS) EARNINGS TO
ADJUSTED EBITDA (Unaudited)(in
millions)
|
Three Months Ended September 30, |
|
Year Ended September 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net (Loss)
Earnings |
$ |
(61.1 |
) |
|
$ |
(15.6 |
) |
|
$ |
124.7 |
|
|
$ |
467.3 |
|
Income tax (benefit)
expense |
(43.5 |
) |
|
12.5 |
|
|
(3.9 |
) |
|
(204.0 |
) |
Interest expense, net |
91.9 |
|
|
99.1 |
|
|
322.4 |
|
|
387.3 |
|
Depreciation and amortization,
including accelerated depreciation |
91.5 |
|
|
97.6 |
|
|
379.6 |
|
|
398.4 |
|
Expense (income) on swaps,
net |
105.7 |
|
|
(25.2 |
) |
|
306.6 |
|
|
(95.6 |
) |
Loss (gain) on sale of
business |
0.7 |
|
|
— |
|
|
(126.6 |
) |
|
— |
|
Impairment of goodwill and
other intangible assets |
63.3 |
|
|
124.9 |
|
|
63.3 |
|
|
124.9 |
|
(Gain) loss on extinguishment
of debt, net |
— |
|
|
(0.4 |
) |
|
6.1 |
|
|
31.1 |
|
Non-cash stock-based
compensation |
10.5 |
|
|
7.7 |
|
|
38.9 |
|
|
30.9 |
|
Transaction costs |
7.2 |
|
|
9.3 |
|
|
25.5 |
|
|
35.6 |
|
Integration costs |
6.1 |
|
|
1.8 |
|
|
13.5 |
|
|
28.8 |
|
Restructuring and facility
closure costs, excluding accelerated depreciation |
1.6 |
|
|
1.4 |
|
|
8.3 |
|
|
3.9 |
|
Provision for legal
settlements |
5.0 |
|
|
6.0 |
|
|
2.4 |
|
|
17.3 |
|
Inventory valuation
adjustments on acquired businesses |
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
9.4 |
|
|
2.2 |
|
|
8.7 |
|
|
0.7 |
|
Equity method investment
adjustment |
11.9 |
|
|
0.1 |
|
|
37.7 |
|
|
0.4 |
|
Noncontrolling interest
adjustment |
(0.2 |
) |
|
(0.2 |
) |
|
(0.7 |
) |
|
(0.7 |
) |
Purchase price adjustment on
acquisition |
3.8 |
|
|
— |
|
|
3.8 |
|
|
— |
|
Debt consent solicitation
costs |
— |
|
|
— |
|
|
1.3 |
|
|
— |
|
Assets held for sale |
— |
|
|
— |
|
|
(0.6 |
) |
|
— |
|
Foreign currency (gain) loss
on intercompany loans |
— |
|
|
(0.6 |
) |
|
— |
|
|
0.2 |
|
Advisory income |
(0.2 |
) |
|
— |
|
|
(0.6 |
) |
|
— |
|
Adjusted
EBITDA |
$ |
303.6 |
|
|
$ |
320.6 |
|
|
$ |
1,210.4 |
|
|
$ |
1,230.7 |
|
Adjusted EBITDA as a
percentage of Net Sales |
21.0 |
% |
|
19.7 |
% |
|
21.3 |
% |
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
SEPTEMBER 30, 2019(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
87.2 |
|
|
$ |
25.5 |
|
|
$ |
39.8 |
|
|
$ |
22.3 |
|
|
$ |
40.3 |
|
|
$ |
— |
|
|
$ |
215.1 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(46.4 |
) |
|
(46.4 |
) |
Loss on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.7 |
) |
|
(0.7 |
) |
Impairment of goodwill and
other intangible assets |
— |
|
|
— |
|
|
— |
|
|
(63.3 |
) |
|
— |
|
|
— |
|
|
(63.3 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.1 |
) |
|
(2.1 |
) |
Operating Profit
(Loss) |
87.2 |
|
|
25.5 |
|
|
39.8 |
|
|
(41.0 |
) |
|
40.3 |
|
|
(49.2 |
) |
|
102.6 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.1 |
|
|
2.1 |
|
Depreciation and amortization,
including accelerated depreciation |
28.3 |
|
|
8.3 |
|
|
28.8 |
|
|
18.7 |
|
|
6.3 |
|
|
1.1 |
|
|
91.5 |
|
Impairment of goodwill and
other intangible assets |
— |
|
|
— |
|
|
— |
|
|
63.3 |
|
|
— |
|
|
— |
|
|
63.3 |
|
Loss on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.7 |
|
|
0.7 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10.5 |
|
|
10.5 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
6.9 |
|
|
7.2 |
|
Integration costs |
5.6 |
|
|
— |
|
|
0.1 |
|
|
0.4 |
|
|
— |
|
|
— |
|
|
6.1 |
|
Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
1.6 |
|
Provision for legal
settlements |
— |
|
|
— |
|
|
5.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
5.0 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
3.8 |
|
|
— |
|
|
— |
|
|
5.6 |
|
|
9.4 |
|
Equity method investment
adjustment |
— |
|
|
0.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.6 |
|
Noncontrolling interest
adjustment |
— |
|
|
(0.6 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
Purchase price adjustment on
acquisition |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.8 |
|
|
3.8 |
|
Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
Adjusted
EBITDA |
$ |
121.1 |
|
|
$ |
33.8 |
|
|
$ |
77.5 |
|
|
$ |
41.4 |
|
|
$ |
46.9 |
|
|
$ |
(17.1 |
) |
|
$ |
303.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
32.3 |
% |
|
18.6 |
% |
|
18.9 |
% |
|
21.9 |
% |
|
— |
|
|
21.0 |
% |
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 |
|
|
$ |
38.0 |
|
|
$ |
21.3 |
|
|
$ |
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 |
) |
|
38.0 |
|
|
21.3 |
|
|
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 |
|
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 facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.4 |
|
|
1.4 |
|
Provision for legal
settlements |
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
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 |
|
|
$ |
73.1 |
|
|
$ |
39.9 |
|
|
$ |
44.8 |
|
|
$ |
30.5 |
|
|
$ |
(18.5 |
) |
|
$ |
320.6 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.2 |
% |
|
34.2 |
% |
|
18.3 |
% |
|
18.6 |
% |
|
20.4 |
% |
|
13.8 |
% |
|
— |
|
|
19.7 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)YEAR ENDED SEPTEMBER
30, 2019(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
337.1 |
|
|
$ |
94.8 |
|
|
$ |
198.4 |
|
|
$ |
95.1 |
|
|
$ |
175.1 |
|
|
$ |
— |
|
|
$ |
900.5 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(169.6 |
) |
|
(169.6 |
) |
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
126.6 |
|
|
126.6 |
|
Impairment of goodwill and
other intangible assets |
— |
|
|
— |
|
|
— |
|
|
(63.3 |
) |
|
— |
|
|
— |
|
|
(63.3 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13.2 |
) |
|
(13.2 |
) |
Operating
Profit |
337.1 |
|
|
94.8 |
|
|
198.4 |
|
|
31.8 |
|
|
175.1 |
|
|
(56.2 |
) |
|
781.0 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13.2 |
|
|
13.2 |
|
Depreciation and amortization,
including accelerated depreciation |
117.4 |
|
|
35.0 |
|
|
111.8 |
|
|
74.1 |
|
|
25.3 |
|
|
16.0 |
|
|
379.6 |
|
Impairment of goodwill and
other intangible assets |
— |
|
|
— |
|
|
— |
|
|
63.3 |
|
|
— |
|
|
— |
|
|
63.3 |
|
Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(126.6 |
) |
|
(126.6 |
) |
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
38.9 |
|
|
38.9 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.4 |
|
|
25.1 |
|
|
25.5 |
|
Integration costs |
8.6 |
|
|
— |
|
|
0.3 |
|
|
4.6 |
|
|
— |
|
|
— |
|
|
13.5 |
|
Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
8.3 |
|
|
8.3 |
|
Provision for legal
settlements |
— |
|
|
— |
|
|
1.6 |
|
|
0.8 |
|
|
— |
|
|
— |
|
|
2.4 |
|
Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(2.1 |
) |
|
— |
|
|
— |
|
|
10.8 |
|
|
8.7 |
|
Equity method investment
adjustment |
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.7 |
|
Noncontrolling interest
adjustment |
— |
|
|
(2.0 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.0 |
) |
Purchase price adjustment on
acquisition |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.8 |
|
|
3.8 |
|
Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
Adjusted
EBITDA |
$ |
463.1 |
|
|
$ |
128.5 |
|
|
$ |
310.0 |
|
|
$ |
174.6 |
|
|
$ |
200.8 |
|
|
$ |
(66.6 |
) |
|
$ |
1,210.4 |
|
Adjusted EBITDA as a
percentage of Net Sales |
24.7 |
% |
|
30.7 |
% |
|
19.0 |
% |
|
19.2 |
% |
|
23.5 |
% |
|
— |
|
|
21.3 |
% |
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)YEAR ENDED SEPTEMBER
30, 2018(in millions)
|
Post Consumer Brands |
|
Weetabix |
|
Foodservice |
|
Refrigerated Retail |
|
Active Nutrition |
|
Private Brands |
|
Corporate/ Other |
|
Total |
Segment
Profit |
$ |
329.2 |
|
|
$ |
87.2 |
|
|
$ |
157.6 |
|
|
$ |
90.0 |
|
|
$ |
124.4 |
|
|
$ |
60.8 |
|
|
$ |
— |
|
|
$ |
849.2 |
|
General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(136.8 |
) |
|
(136.8 |
) |
Impairment of other intangible
assets |
— |
|
|
(124.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(124.9 |
) |
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(14.0 |
) |
|
(14.0 |
) |
Operating Profit
(Loss) |
329.2 |
|
|
(37.7 |
) |
|
157.6 |
|
|
90.0 |
|
|
124.4 |
|
|
60.8 |
|
|
(150.8 |
) |
|
573.5 |
|
Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
14.0 |
|
|
14.0 |
|
Depreciation and amortization,
including accelerated depreciation |
122.0 |
|
|
38.1 |
|
|
105.4 |
|
|
57.9 |
|
|
25.9 |
|
|
40.9 |
|
|
8.2 |
|
|
398.4 |
|
Impairment of other intangible
assets |
— |
|
|
124.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
124.9 |
|
Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
30.9 |
|
|
30.9 |
|
Transaction costs |
— |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
9.5 |
|
|
23.7 |
|
|
35.6 |
|
Integration costs |
7.4 |
|
|
2.3 |
|
|
1.1 |
|
|
11.6 |
|
|
— |
|
|
0.3 |
|
|
6.1 |
|
|
28.8 |
|
Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.9 |
|
|
3.9 |
|
Provision for legal
settlements |
— |
|
|
— |
|
|
8.3 |
|
|
— |
|
|
9.0 |
|
|
— |
|
|
— |
|
|
17.3 |
|
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 |
|
|
— |
|
|
2.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.2 |
) |
|
0.7 |
|
Equity method investment
adjustment |
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
Noncontrolling interest
adjustment |
— |
|
|
(1.8 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1.8 |
) |
Foreign currency loss on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
0.2 |
|
Adjusted
EBITDA |
$ |
458.2 |
|
|
$ |
125.9 |
|
|
$ |
275.8 |
|
|
$ |
166.0 |
|
|
$ |
159.3 |
|
|
$ |
111.5 |
|
|
$ |
(66.0 |
) |
|
$ |
1,230.7 |
|
Adjusted EBITDA as a
percentage of Net Sales |
25.0 |
% |
|
29.7 |
% |
|
17.8 |
% |
|
21.0 |
% |
|
19.3 |
% |
|
13.1 |
% |
|
— |
|
|
19.7 |
% |
SELECTED FINANCIAL INFORMATION FOR 8TH
AVENUE (Unaudited)(in millions)
|
Three Months Ended September 30, 2019 |
|
Year Ended September 30, 2019 |
Net Sales |
$ |
208.0 |
|
|
$ |
838.5 |
|
Gross Profit |
$ |
35.2 |
|
|
$ |
139.6 |
|
|
|
|
|
Net Loss |
$ |
(8.9 |
) |
|
$ |
(17.6 |
) |
Less: Preferred Stock
Dividend |
7.7 |
|
|
29.1 |
|
Net Loss Available to
8th Avenue Common Shareholders |
$ |
(16.6 |
) |
|
$ |
(46.7 |
) |
EXPLANATION AND RECONCILIATION OF 8TH
AVENUE’S NON-GAAP MEASURE
Post believes that Adjusted EBITDA is useful to investors in
evaluating 8th Avenue’s operating performance and liquidity because
(i) Post believes 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/benefit, 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 the separate capitalization of 8th
Avenue and integration costs incurred to integrate the component
business units that comprise the combined 8th Avenue organization
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 8th Avenue’s assets, and
such costs are not factored into 8th Avenue management’s evaluation
of its performance. 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
its 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 September 30, 2019 |
|
Year Ended September 30, 2019 |
Net Loss |
$ |
(8.9 |
) |
|
$ |
(17.6 |
) |
Interest expense, net |
13.3 |
|
|
54.8 |
|
Income tax expense
(benefit) |
2.3 |
|
|
(1.4 |
) |
Depreciation and
amortization |
12.3 |
|
|
48.7 |
|
Integration costs |
0.7 |
|
|
2.1 |
|
Non-cash stock-based
compensation |
0.7 |
|
|
1.8 |
|
Transaction costs |
— |
|
|
1.0 |
|
Advisory costs |
0.2 |
|
|
1.1 |
|
Adjusted
EBITDA |
$ |
20.6 |
|
|
$ |
90.5 |
|
Adjusted EBITDA as a
percentage of Net Sales |
9.9 |
% |
|
10.8 |
% |
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