Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today reported results for the second fiscal quarter ended
March 31, 2020.
Highlights for the second quarter of fiscal year
2020:
- Net sales of $1.5 billion
- Operating profit of $153.5 million; net loss of $191.4
million and Adjusted EBITDA of $291.7 million
- As a result of uncertainty around the duration, scope
and ultimate financial impact of the COVID-19 pandemic, Post
management is withdrawing its fiscal year 2020
outlook
Basis of Presentation
On October 21, 2019, the initial public offering (the “IPO”) of
a minority interest in the BellRing Brands business, Post’s
historical active nutrition business, was completed. Post fully
consolidates the results of BellRing Brands, Inc. (“BellRing”) and
its subsidiaries within Post’s financial statements and effective
October 21, 2019 allocates 28.8% of its consolidated net
earnings/loss and net assets to noncontrolling interest within
Post’s financial statements.
Second Quarter Consolidated Operating
Results
Net sales were $1,494.2 million, an increase of 7.7%, or $106.4
million, compared to the prior year period net sales of $1,387.8
million. Gross profit was $438.8 million, or 29.4% of net sales, a
decrease of $12.5 million compared to the prior year period gross
profit of $451.3 million, or 32.5% of net sales.
Selling, general and administrative (“SG&A”) expenses were
$245.0 million, or 16.4% of net sales, an increase of $19.2 million
compared to the prior year period SG&A expenses of $225.8
million, or 16.3% of net sales. Operating profit was $153.5
million, a decrease of 17.6%, or $32.8 million, compared to the
prior year period operating profit of $186.3 million.
Net loss was $191.4 million, a decrease of 535.0%, or $235.4
million, compared to the prior year period net earnings of $44.0
million. Net loss included loss on extinguishment of debt of $60.0
million in the second quarter of 2020. Net loss/earnings included
expense on swaps, net of $224.6 million and $63.0 million in the
second quarter of 2020 and 2019, respectively. Loss on
extinguishment of debt and expense on swaps, net are discussed
later in this release and were treated as adjustments for non-GAAP
measures. Net loss/earnings included equity method losses, net of
tax of $11.1 million and $8.8 million in the second quarter of 2020
and 2019, respectively. Net loss/earnings excluded net earnings
attributable to noncontrolling interest of $5.6 million and $0.3
million in the second quarter of 2020 and 2019, respectively.
Net loss attributable to common shareholders was $191.4 million,
or $2.76 per diluted common share, compared to the prior year
period net earnings available to common shareholders of $43.0
million, or $0.58 per diluted common share. Adjusted net earnings
were $45.5 million, or $0.65 per diluted common share, compared to
the prior year period Adjusted net earnings of $98.4 million, or
$1.31 per diluted common share.
Adjusted EBITDA was $291.7 million, a decrease of 2.4%, or $7.2
million, compared to the prior year period Adjusted EBITDA of
$298.9 million. Adjusted EBITDA in the second quarter of 2020
included an adjustment of $5.2 million primarily for the portion of
BellRing’s consolidated net earnings which was allocated to
noncontrolling interest, resulting in Adjusted EBITDA including
100% of the consolidated Adjusted EBITDA of BellRing.
Six Month Consolidated Operating Results
Net sales were $2,951.0 million, an increase of 5.4%, or $151.9
million, compared to the prior year period net sales of $2,799.1
million. Gross profit was $910.3 million, or 30.8% of net sales, an
increase of $32.5 million compared to the prior year period gross
profit of $877.8 million, or 31.4% of net sales.
SG&A expenses were $480.3 million, or 16.3% of net sales, an
increase of $37.4 million compared to the prior year period
SG&A expenses of $442.9 million, or 15.8% of net sales.
Operating profit was $349.5 million, a decrease of 27.2%, or $130.7
million, compared to the prior year period operating profit of
$480.2 million. Operating profit for the six months ended March 31,
2019 included a $127.3 million gain related to the separate
capitalization of 8th Avenue Food & Provisions, Inc. (“8th
Avenue”), which was treated as an adjustment for non-GAAP
measures.
Net loss was $92.2 million, a decrease of 154.4%, or $261.8
million, compared to the prior year period net earnings of $169.6
million. Net loss/earnings included loss on extinguishment of debt
of $72.9 million and $6.1 million in the six months ended March 31,
2020 and March 31, 2019, respectively. Net loss/earnings included
expense on swaps, net of $163.2 million and $114.7 million in the
six months ended March 31, 2020 and March 31, 2019, respectively.
Loss on extinguishment of debt and expense on swaps, net are
discussed later in this release and were treated as adjustments for
non-GAAP measures. Net loss/earnings included equity method losses,
net of tax of $18.4 million and $19.5 million in the six months
ended March 31, 2020 and March 31, 2019, respectively. Net
loss/earnings excluded net earnings attributable to noncontrolling
interest of $13.5 million and $0.6 million in the six months ended
March 31, 2020 and March 31, 2019, respectively.
Net loss attributable to common shareholders was $92.2 million,
or $1.32 per diluted common share, compared to the prior year
period net earnings available to common shareholders of $166.6
million, or $2.26 per diluted common share. Adjusted net earnings
were $98.4 million, or $1.38 per diluted common share, compared to
the prior year period Adjusted net earnings of $183.2 million, or
$2.44 per diluted common share.
Adjusted EBITDA was $594.8 million, an increase of 0.6%, or $3.4
million, compared to the prior year period Adjusted EBITDA of
$591.4 million. Adjusted EBITDA for the six months ended March 31,
2020 included an adjustment of $12.6 million primarily for the
portion of BellRing’s consolidated net earnings which was allocated
to noncontrolling interest, resulting in Adjusted EBITDA including
100% of the consolidated Adjusted EBITDA of BellRing.
Post Consumer Brands
North American ready-to-eat (“RTE”) cereal.
For the second quarter, net sales were $507.9 million, an
increase of 10.6%, or $48.8 million, compared to the prior year
period. Volumes increased 14.2% and benefitted from (i) increased
purchases resulting from consumer pantry loading and increased
at-home consumption in reaction to the COVID-19 pandemic, (ii) the
timing of promotional and merchandising support when compared to
the prior year, (iii) new product introductions and (iv) private
label distribution gains. Segment profit was $92.4 million, an
increase of 11.1%, or $9.2 million, compared to the prior year
period. Segment Adjusted EBITDA was $120.9 million, an increase of
6.9%, or $7.8 million, compared to the prior year period.
For the six months ended March 31, 2020, net sales were $949.1
million, an increase of 3.8%, or $34.7 million, compared to the
prior year period. Segment profit was $173.0 million, an increase
of 3.5%, or $5.8 million, compared to the prior year period.
Segment Adjusted EBITDA was $230.6 million, an increase of 1.7%, or
$3.9 million, compared to the prior year period.
Weetabix
Primarily United Kingdom RTE cereal and muesli.
For the second quarter, net sales were $113.4 million, an
increase of 8.9%, or $9.3 million, compared to the prior year
period, reflecting 4.5% improved average net pricing and a 6.0%
volume increase (driven by increased purchases resulting from
consumer pantry loading in reaction to the COVID-19 pandemic),
which were partially offset by an unfavorable foreign exchange rate
headwind of approximately 180 basis points. Segment profit was
$28.0 million, an increase of 18.6%, or $4.4 million, compared to
the prior year period. Segment Adjusted EBITDA was $36.0 million,
an increase of 12.5%, or $4.0 million, compared to the prior year
period.
For the six months ended March 31, 2020, net sales were $214.9
million, an increase of 4.8%, or $9.9 million, compared to the
prior year period. Segment profit was $51.7 million, an increase of
21.6%, or $9.2 million, compared to the prior year period. Segment
Adjusted EBITDA was $67.9 million, an increase of 14.9%, or $8.8
million, compared to the prior year period.
Foodservice
Primarily egg and potato products.
For the second quarter, net sales were $378.4 million, a
decrease of 2.7%, or $10.7 million, compared to the prior year
period. Volumes for the second quarter decreased 4.2% with egg
volumes declining 4.5% and potato volumes declining 2.0%. Volume
declines were driven by lower demand from foodservice customers
resulting from the impact of the COVID-19 pandemic on various
channels, including full service restaurants, quick service
restaurants, education and travel and lodging, which was partially
offset by higher volume in the food ingredient channel. Prior to
the COVID-19 pandemic, volume growth for Post’s Foodservice segment
was strong as volumes in January and February increased 5.4%,
driven by increases of 3.7% in egg volumes and 13.9% in potato
volumes.
Segment profit was $23.8 million, a decrease of 49.8%, or $23.6
million, compared to the prior year period. Segment Adjusted EBITDA
was $55.1 million, a decrease of 27.4%, or $20.8 million, compared
to the prior year period. Second quarter 2020 segment profit and
segment Adjusted EBITDA were negatively impacted by (i) unfavorable
fixed cost absorption and $6.1 million of increased reserves for
obsolete inventory on short-dated products, both of which resulted
from the significant decline in foodservice product demand in
reaction to the COVID-19 pandemic, (ii) startup costs at the new
precooked egg facility in Norwalk, Iowa of approximately $4.2
million (excluding depreciation, an approximately $2.8 million
negative impact to segment Adjusted EBITDA) and (iii) approximately
$3.0 million of expenses, including a $2.5 million insurance
deductible, incurred in connection with a previously reported fire
at the Bloomfield, Nebraska laying facility.
For the six months ended March 31, 2020, net sales were $799.0
million, an increase of 0.2%, or $1.8 million, compared to the
prior year period. Segment profit was $70.8 million, a decrease of
29.3%, or $29.3 million, compared to the prior year period. Segment
Adjusted EBITDA was $130.4 million, a decrease of 14.8%, or $22.6
million, compared to the prior year period.
Refrigerated Retail
Side dishes and egg, cheese and sausage products.
For the second quarter, net sales were $237.6 million, an
increase of 8.2%, or $18.1 million, compared to the prior year
period, with volumes increasing 2.4%. Side dish net sales increased
23.3%, reflecting a meaningful improvement in average net pricing
and a 13.1% volume increase (primarily driven by increased
purchases resulting from consumer pantry loading and increased
at-home consumption in reaction to the COVID-19 pandemic). Egg
product net sales decreased 18.7% driven by losses in branded egg
product volume and lower average net selling prices resulting from
lower market-based egg prices. Volume information for additional
products is disclosed in a table presented later in this release.
Segment profit was $30.2 million, an increase of 14.0%, or $3.7
million, compared to the prior year period. Segment Adjusted EBITDA
was $48.1 million, an increase of 1.7%, or $0.8 million, compared
to the prior year period.
For the six months ended March 31, 2020, net sales were $487.5
million, an increase of 1.3%, or $6.4 million, compared to the
prior year period. Segment profit was $56.2 million, a decrease of
1.4%, or $0.8 million, compared to the prior year period. Segment
Adjusted EBITDA was $91.9 million, a decrease of 3.6%, or $3.4
million, compared to the prior year period.
BellRing Brands
Ready-to-drink (“RTD”) protein shakes, other RTD beverages,
powders and nutrition bars.
For the second quarter, net sales were $257.5 million, an
increase of 18.9%, or $41.0 million, compared to the prior year
period. Net sales and volume growth were primarily driven by the
Premier Protein brand as net sales increased 25.8%, with volumes
increasing 27.1%. Premier Protein benefitted primarily from
increased purchases resulting from consumer pantry loading in
reaction to the COVID-19 pandemic, along with distribution gains
for RTD protein shakes and incremental promotional activity .
Segment profit was $35.1 million, a decrease of 20.2%, or $8.9
million, compared to the prior year period, with the decrease
driven by $9.9 million of higher marketing and consumer advertising
expenses and $2.5 million of incremental public company costs.
Segment profit for the second quarter of 2020 and 2019 included
transaction costs of $0.3 million and $0.1 million, respectively,
to effect BellRing’s separation from Post and to support BellRing’s
transition into a separate stand-alone publicly-traded entity,
which were treated as adjustments for non-GAAP measures. Segment
Adjusted EBITDA was $43.4 million, a decrease of 13.9%, or $7.0
million, compared to the prior year period.
For the six months ended March 31, 2020, net sales were $501.5
million, an increase of 24.7%, or $99.2 million, compared to the
prior year period. Segment profit was $84.4 million, an increase of
6.6%, or $5.2 million, compared to the prior year period and
included $4.3 million of incremental public company costs. Segment
profit for the six months ended March 31, 2020 and March 31, 2019
included transaction costs of $1.8 million and $0.1 million,
respectively, to effect BellRing’s separation from Post and to
support BellRing’s transition into a separate stand-alone
publicly-traded entity, which were treated as adjustments for
non-GAAP measures. Segment Adjusted EBITDA was $102.0 million, an
increase of 10.9%, or $10.0 million, compared to the prior year
period.
As of March 31, 2020, BellRing had $811.3 million in total
principal value of debt and $76.7 million in cash and cash
equivalents.
For further information, please refer to the BellRing second
quarter 2020 earnings release and conference call (the details of
which are included later in this release).
Interest, Loss on Extinguishment of Debt, Expense on
Swaps and Income Tax
Interest expense, net was $94.0 million in the second quarter of
2020, compared to $85.5 million in the second quarter of 2019. For
the six months ended March 31, 2020, interest expense, net was
$196.9 million, compared to $144.9 million for the six months ended
March 31, 2019. Interest expense, net in the second quarter of 2020
included $14.3 million attributable to BellRing in connection with
the creation of BellRing’s capital structure in the first quarter
of 2020. Interest expense, net in the six months ended March 31,
2020 included (i) $25.9 million attributable to BellRing and (ii) a
loss of $7.2 million resulting from the reclassification of losses
previously recorded in accumulated other comprehensive loss to
interest expense. Interest expense, net in the six months ended
March 31, 2019 included a gain of $30.5 million resulting from the
reclassification of gains previously recorded in accumulated other
comprehensive loss to interest expense. The remaining decrease for
both periods was driven by repayment of Post’s term loan in the
first quarter of fiscal year 2020 which resulted in an interest
expense reduction of $15.3 million and $26.6 million in the three
and six months ended March 31, 2020, respectively.
Loss on extinguishment of debt, net of $60.0 million was
recorded in the second quarter of 2020 in connection with (i)
Post’s repayment of $1,000.0 million in total principal value of
its 5.50% senior notes due in March 2025 and $122.2 million in
total principal value of its 8.00% senior notes due in July 2025
and (ii) the amendment and restatement of Post’s credit agreement
in March 2020. Loss on extinguishment of debt, net of $72.9 million
was recorded in the six months ended March 31, 2020 in connection
with (i) Post’s repayment of its 5.50% senior notes due in March
2025 and 8.00% senior notes due in July 2025, (ii) Post’s repayment
of the entire principal balance of its term loan in the first
quarter of fiscal year 2020, (iii) the assignment of debt to
BellRing Brands, LLC related to the creation of BellRing’s capital
structure in the first quarter of 2020 and (iv) the amendment and
restatement of Post’s credit agreement in March 2020. Loss on
extinguishment of debt, net of $6.1 million was recorded in the six
months ended March 31, 2019 in connection with (i) Post’s repayment
of $863.0 million in total principal value of its term loan, (ii)
the assignment of debt to 8th Avenue related to its separate
capitalization and (iii) Post’s open market purchases of $60.0
million in total principal value of certain senior notes.
Expense on swaps, net relates to non-cash mark-to-market
adjustments and cash settlements on interest rate swaps and was
$224.6 million in the second quarter of 2020, compared to $63.0
million in the second quarter of 2019. For the six months ended
March 31, 2020, expense on swaps, net was $163.2 million, compared
to $114.7 million in the six months ended March 31, 2019.
Income tax benefit was $47.1 million in the second quarter of
2020, an effective income tax rate of 21.2%, compared to $11.6
million in the second quarter of 2019, an effective income tax rate
of negative 28.0%. For the six months ended March 31, 2020, income
tax benefit was $16.7 million, an effective income tax rate of
21.7%, compared to an expense of $32.2 million in the six months
ended March 31, 2019, an effective income tax rate of 14.5%. The
effective income tax rate in both of the fiscal year 2019 periods
differed significantly from the statutory rate as a result of
discrete items occurring in the second quarter of 2019, primarily
relating to excess tax benefits for share-based payments.
Share Repurchases
During the second quarter of 2020, Post repurchased 2.0 million
shares for $206.0 million at an average price of $101.75 per share.
During the six months ended March 31, 2020, Post repurchased 4.2
million shares for $429.1 million at an average price of $102.38
per share. At the end of the second quarter of 2020, Post had
$161.9 million remaining under its share repurchase
authorization.
COVID-19 Commentary
Post is closely monitoring the impact of the COVID-19 pandemic
and is taking actions to ensure its ability to safeguard the health
of its employees, maintain the continuity of its supply chain to
serve customers and manage its financial performance and liquidity.
On March 23, 2020, Post borrowed $500.0 million under its $750.0
million revolving credit facility. As of April 30, 2020, Post had
approximately $1.35 billion in cash and cash equivalents on hand.
On May 5, 2020, Post repaid $150.0 million of the outstanding
principal value on its revolving credit facility.
Post products sold through food, drug, mass, club and online
have generally experienced an uplift in sales driven by consumer
pantry loading and increased at-home consumption in reaction to the
COVID-19 pandemic. Post expects some of the benefit of consumer
trial (as consumers try products they may not have been previously
purchasing) to convert into an intermediate term improvement in
category trends across its retail businesses as household
penetration accelerates across many brands. However, there is no
guarantee that such increase in sales and/or intermediate term
improvement in category trends will continue. Post’s foodservice
business has been negatively impacted by lower demand resulting
from the impact of the COVID-19 pandemic on various channels,
including full service restaurants, quick service restaurants,
education and travel and lodging.
Outlook
As a result of uncertainty around the duration, scope and
ultimate financial impact of the COVID-19 pandemic, Post management
is withdrawing its fiscal year 2020 Adjusted EBITDA and capital
expenditures outlook that was previously provided on February 6,
2020.
BellRing Outlook
BellRing management continues to expect its fiscal year 2020 net
sales to range between $1.00-$1.05 billion, Adjusted EBITDA to
range between $192-$202 million and capital expenditures to be
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
noncontrolling interest adjustment, separation costs 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 second
quarter 2020 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
Post owns a 60.5% common equity interest in 8th Avenue, which is
an unconsolidated affiliate that sells private label nut butter,
dried fruit and nuts, granola and pasta.
For the second quarter, net sales were $233.1 million, an
increase of 9.1%, or $19.4 million, compared to the prior year
period. Net loss was $7.2 million, a decrease of 71.4%, or $3.0
million, compared to the prior year period. Adjusted EBITDA was
$22.3 million, a decrease of 9.3%, or $2.3 million, compared to the
prior year period.
For the six months ended March 31, 2020, net sales were $451.5
million, an increase of 5.5%, or $23.7 million, compared to the
prior year period. Net loss was $8.1 million, an improvement of
6.9%, or $0.6 million, compared to the prior year period. Adjusted
EBITDA was $46.0 million, a decrease of 3.2%, or $1.5 million,
compared to the prior year period.
As of March 31, 2020, 8th Avenue is capitalized with $63.9
million of unrestricted cash and cash equivalents, $618.4 million
of senior secured debt, $50.0 million under its revolving credit
facility, $60.1 million related to a sale leaseback transaction,
$250.0 million in principal amount of preferred equity and $44.9
million of accumulated, but unpaid, preferred dividends. Summarized
financial information for 8th Avenue is disclosed later in this
release.
Post’s 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, May 8, 2020 at 9:00
a.m. EDT to discuss financial results for the second quarter of
fiscal year 2020 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 7265844.
Interested parties are invited to listen to the webcast of the
conference call, which can be accessed by visiting the Investor
Relations section of Post’s website at www.postholdings.com.
A replay of the conference call will be available through
Friday, May 22, 2020 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 7265844. 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, May 8, 2020 at
10:30 a.m. EDT to discuss financial results for the second quarter
of fiscal year 2020 and fiscal year 2020 outlook and to respond to
questions. Darcy H. 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 7392288.
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, May 22, 2020 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 7392288. 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
statements regarding the effect of the COVID-19 pandemic on Post’s
business and Post’s continuing response to the COVID-19
pandemic, and BellRing’s net sales, Adjusted EBITDA and
capital expenditures outlook for fiscal year 2020. 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” or “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:
- the impact of the COVID-19 pandemic,
including negative impacts on the global economy and capital
markets, Post’s ability to manufacture and deliver its products,
operating costs, demand for its foodservice products and its
operations generally;
- 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, pandemics, changes in weather conditions, natural
disasters, agricultural diseases and pests and other events beyond
Post’s control;
- significant volatility in the costs or
availability of certain commodities (including raw materials and
packaging used to manufacture our products), higher freight costs
or higher energy costs;
- 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;
- loss of key employees, employee
absenteeism, labor strikes, work stoppages or unionization
efforts;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 Farms, Inc. (“Bob Evans”) within the expected timeframe
or at all;
- 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;
- Post’s ability to successfully
collaborate with third parties that have 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 its
customers’, and 8th Avenue’s and its customers’, private brand
products to compete with nationally branded products;
- risks associated with Post’s
international business;
- 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;
- 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 any Post
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 and BellRing’s filings with the Securities and
Exchange Commission.
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 third parties 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
| |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)(in millions, except per share
data) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net Sales |
$ |
1,494.2 |
|
|
$ |
1,387.8 |
|
|
$ |
2,951.0 |
|
|
$ |
2,799.1 |
|
| Cost of goods sold |
1,055.4 |
|
|
936.5 |
|
|
2,040.7 |
|
|
1,921.3 |
|
| Gross
Profit |
438.8 |
|
|
451.3 |
|
|
910.3 |
|
|
877.8 |
|
| Selling, general and
administrative expenses |
245.0 |
|
|
225.8 |
|
|
480.3 |
|
|
442.9 |
|
| Amortization of intangible
assets |
40.0 |
|
|
40.4 |
|
|
80.1 |
|
|
80.7 |
|
| Gain on sale of business |
— |
|
|
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
| Other operating expenses,
net |
0.3 |
|
|
1.4 |
|
|
0.4 |
|
|
1.3 |
|
| Operating
Profit |
153.5 |
|
|
186.3 |
|
|
349.5 |
|
|
480.2 |
|
| Interest expense, net |
94.0 |
|
|
85.5 |
|
|
196.9 |
|
|
144.9 |
|
| Loss on extinguishment of
debt, net |
60.0 |
|
|
— |
|
|
72.9 |
|
|
6.1 |
|
| Expense on swaps, net |
224.6 |
|
|
63.0 |
|
|
163.2 |
|
|
114.7 |
|
| Other income, net |
(3.3 |
) |
|
(3.7 |
) |
|
(6.5 |
) |
|
(7.4 |
) |
| (Loss) Earnings before
Income Taxes and Equity Method Loss |
(221.8 |
) |
|
41.5 |
|
|
(77.0 |
) |
|
221.9 |
|
| Income tax (benefit)
expense |
(47.1 |
) |
|
(11.6 |
) |
|
(16.7 |
) |
|
32.2 |
|
| Equity method loss, net of
tax |
11.1 |
|
|
8.8 |
|
|
18.4 |
|
|
19.5 |
|
| Net (Loss) Earnings
Including Noncontrolling Interest |
(185.8 |
) |
|
44.3 |
|
|
(78.7 |
) |
|
170.2 |
|
| Less: Net earnings
attributable to noncontrolling interest |
5.6 |
|
|
0.3 |
|
|
13.5 |
|
|
0.6 |
|
| Net (Loss)
Earnings |
(191.4 |
) |
|
44.0 |
|
|
(92.2 |
) |
|
169.6 |
|
| Less: Preferred stock
dividends |
— |
|
|
1.0 |
|
|
— |
|
|
3.0 |
|
| Net (Loss) Earnings
Available to Common Shareholders |
$ |
(191.4 |
) |
|
$ |
43.0 |
|
|
$ |
(92.2 |
) |
|
$ |
166.6 |
|
| |
|
|
|
|
|
|
|
| (Loss) Earnings per
Common Share: |
|
|
|
|
|
|
|
| Basic |
$ |
(2.76 |
) |
|
$ |
0.61 |
|
|
$ |
(1.32 |
) |
|
$ |
2.43 |
|
| Diluted |
$ |
(2.76 |
) |
|
$ |
0.58 |
|
|
$ |
(1.32 |
) |
|
$ |
2.26 |
|
| |
|
|
|
|
|
|
|
| Weighted-Average
Common Shares Outstanding: |
|
|
|
|
|
|
|
| Basic |
69.3 |
|
|
70.6 |
|
|
70.0 |
|
|
68.6 |
|
| Diluted |
69.3 |
|
|
75.3 |
|
|
70.0 |
|
|
75.2 |
|
| |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions) |
| |
| |
March 31, 2020 |
|
September 30, 2019 |
|
ASSETS |
| Current
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
1,179.4 |
|
|
$ |
1,050.7 |
|
|
Restricted cash |
17.2 |
|
|
3.8 |
|
|
Receivables, net |
551.2 |
|
|
445.1 |
|
|
Inventories |
569.0 |
|
|
579.8 |
|
|
Prepaid expenses and other current assets |
66.9 |
|
|
46.9 |
|
|
Total Current Assets |
2,383.7 |
|
|
2,126.3 |
|
| |
|
|
|
| Property, net |
1,729.2 |
|
|
1,736.0 |
|
| Goodwill |
4,404.6 |
|
|
4,399.8 |
|
| Other intangible assets,
net |
3,261.1 |
|
|
3,338.5 |
|
| Equity method investments |
126.4 |
|
|
145.5 |
|
| Other assets |
332.6 |
|
|
205.5 |
|
|
Total Assets |
$ |
12,237.6 |
|
|
$ |
11,951.6 |
|
| |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Current
Liabilities |
|
|
|
|
Current portion of long-term debt |
$ |
36.1 |
|
|
$ |
13.5 |
|
|
Accounts payable |
317.1 |
|
|
395.6 |
|
|
Other current liabilities |
383.7 |
|
|
393.8 |
|
|
Total Current Liabilities |
736.9 |
|
|
802.9 |
|
| |
|
|
|
| Long-term debt |
7,171.3 |
|
|
7,066.0 |
|
| Deferred income taxes |
771.0 |
|
|
688.5 |
|
| Other liabilities |
693.2 |
|
|
456.9 |
|
|
Total Liabilities |
9,372.4 |
|
|
9,014.3 |
|
| |
|
|
|
| Shareholders’
Equity |
|
|
|
|
Preferred stock |
— |
|
|
— |
|
|
Common stock |
0.8 |
|
|
0.8 |
|
|
Additional paid-in capital |
4,207.0 |
|
|
3,734.8 |
|
|
Retained earnings |
115.6 |
|
|
207.8 |
|
|
Accumulated other comprehensive loss |
(66.5 |
) |
|
(96.8 |
) |
|
Treasury stock, at cost |
(1,349.8 |
) |
|
(920.7 |
) |
|
Total Shareholders’ Equity excluding Noncontrolling
Interest |
2,907.1 |
|
|
2,925.9 |
|
|
Noncontrolling interest |
(41.9 |
) |
|
11.4 |
|
|
Total Shareholders’ Equity |
2,865.2 |
|
|
2,937.3 |
|
|
Total Liabilities and Shareholders’ Equity |
$ |
12,237.6 |
|
|
$ |
11,951.6 |
|
| |
|
SELECTED CONDENSED CONSOLIDATED CASH FLOWS INFORMATION
(Unaudited)(in millions) |
| |
| |
Six Months Ended March 31, |
| |
2020 |
|
2019 |
| Cash provided by (used in): |
|
|
|
|
Operating activities |
$ |
89.0 |
|
|
$ |
204.8 |
|
|
Investing activities, including capital expenditures of $117.5 and
$135.5 |
(62.4 |
) |
|
162.9 |
|
|
Financing activities |
115.9 |
|
|
(1,209.4 |
) |
| Effect of
exchange rate changes on cash, cash equivalents and restricted
cash |
(0.4 |
) |
|
(0.9 |
) |
| Net increase (decrease) in cash, cash equivalents and
restricted cash |
$ |
142.1 |
|
|
$ |
(842.6 |
) |
| |
|
SEGMENT INFORMATION (Unaudited)(in
millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
| Net
Sales |
|
|
|
|
|
|
|
|
Post Consumer Brands |
$ |
507.9 |
|
|
$ |
459.1 |
|
|
$ |
949.1 |
|
|
$ |
914.4 |
|
|
Weetabix |
113.4 |
|
|
104.1 |
|
|
214.9 |
|
|
205.0 |
|
|
Foodservice |
378.4 |
|
|
389.1 |
|
|
799.0 |
|
|
797.2 |
|
|
Refrigerated Retail |
237.6 |
|
|
219.5 |
|
|
487.5 |
|
|
481.1 |
|
|
BellRing Brands |
257.5 |
|
|
216.5 |
|
|
501.5 |
|
|
402.3 |
|
|
Eliminations |
(0.6 |
) |
|
(0.5 |
) |
|
(1.0 |
) |
|
(0.9 |
) |
|
Total |
$ |
1,494.2 |
|
|
$ |
1,387.8 |
|
|
$ |
2,951.0 |
|
|
$ |
2,799.1 |
|
| Segment
Profit |
|
|
|
|
|
|
|
|
Post Consumer Brands |
$ |
92.4 |
|
|
$ |
83.2 |
|
|
$ |
173.0 |
|
|
$ |
167.2 |
|
|
Weetabix |
28.0 |
|
|
23.6 |
|
|
51.7 |
|
|
42.5 |
|
|
Foodservice |
23.8 |
|
|
47.4 |
|
|
70.8 |
|
|
100.1 |
|
|
Refrigerated Retail |
30.2 |
|
|
26.5 |
|
|
56.2 |
|
|
57.0 |
|
|
BellRing Brands |
35.1 |
|
|
44.0 |
|
|
84.4 |
|
|
79.2 |
|
|
Total segment profit |
209.5 |
|
|
224.7 |
|
|
436.1 |
|
|
446.0 |
|
| General corporate
expenses and other |
52.7 |
|
|
37.3 |
|
|
80.1 |
|
|
85.7 |
|
| Gain on sale of
business |
— |
|
|
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
| Interest expense,
net |
94.0 |
|
|
85.5 |
|
|
196.9 |
|
|
144.9 |
|
| Loss on
extinguishment of debt, net |
60.0 |
|
|
— |
|
|
72.9 |
|
|
6.1 |
|
| Expense on swaps,
net |
224.6 |
|
|
63.0 |
|
|
163.2 |
|
|
114.7 |
|
| (Loss)
Earnings before Income Taxes and Equity Method Loss |
$ |
(221.8 |
) |
|
$ |
41.5 |
|
|
$ |
(77.0 |
) |
|
$ |
221.9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
| |
| 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 PercentageChange |
| All |
|
2.4% |
| Side dishes |
|
13.1% |
| Egg |
|
(13.1)% |
| Cheese |
|
(3.6)% |
| Sausage |
|
8.7% |
| |
|
|
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: |
|
a. |
|
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. |
|
b. |
|
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. |
|
c. |
|
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. |
|
d. |
|
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 Post’s
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. Post also has excluded certain expenses incurred to
effect BellRing’s separation from Post and to support BellRing’s
transition into a separate stand-alone entity as the amount and
frequency of such adjustments are not consistent. Additionally,
Post believes that these separation costs do not reflect expected
ongoing future operating expenses and do not contribute to a
meaningful evaluation of Post’s or the BellRing Brands segment’s
current operating performances or comparisons of Post’s or the
BellRing Brands segment’s operating performances to other
periods. |
|
e. |
|
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. |
|
f. |
|
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. |
|
g. |
|
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. |
|
h. |
|
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. |
|
i. |
|
Advisory income: Post has
excluded advisory income received from 8th Avenue as Post believes
such income does not contribute to a meaningful evaluation of
Post’s current operating performance or comparisons of Post’s
operating performance to other periods. |
|
j. |
|
Noncontrolling interest
adjustment: Post has included an adjustment to reflect the removal
of the portion of the non-GAAP adjustments related to BellRing
which are attributable to noncontrolling interest in the
calculation of Adjusted net earnings. |
|
k. |
|
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. |
| |
|
|
| Adjusted EBITDA and
segment Adjusted EBITDA |
| Post 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 and BellRing’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 and
BellRing Brands, LLC are required to comply with certain covenants
and limitations that are based on variations of EBITDA in their
respective 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 has historically
used Adjusted EBITDA to provide forward-looking guidance and used
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 and depreciation and
amortization including accelerated depreciation, and the following
adjustments discussed above: gain/loss on sale of business,
income/expense on swaps, net, transaction costs and integration
costs, restructuring and facility closure costs excluding
accelerated depreciation, mark-to-market adjustments on commodity
and foreign exchange hedges, debt consent solicitation costs,
assets held for sale and advisory income. Additionally, Adjusted
EBITDA and segment Adjusted EBITDA reflect adjustments for the
following items: |
|
l. |
|
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. |
|
m. |
|
Non-cash stock-based
compensation: Post’s and BellRing’s compensation strategies include
the use of stock-based compensation to attract and retain
executives and employees by aligning their long-term compensation
interests with shareholders’ and stockholders’ investment
interests, respectively. After its IPO, BellRing continues to be
charged for Post stock-based compensation through the master
services agreement with Post. 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 and BellRing’s operating performances to other
periods. |
|
n. |
|
Noncontrolling interest
adjustment: Post has included adjustments for (i) the portion of
BellRing’s consolidated net earnings/loss which was allocated to
noncontrolling interest, resulting in Adjusted EBITDA including
100% of the consolidated Adjusted EBITDA of the BellRing Brands
business as Post believes this basis contributes to a more
meaningful evaluation of the consolidated operating company
performance and (ii) income tax expense/benefit, interest expense,
net and depreciation and amortization for Post’s consolidated
Weetabix investment which is attributable to the noncontrolling
owners of the consolidated Weetabix investment. |
|
o. |
|
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. |
| |
|
|
| |
|
RECONCILIATION OF NET (LOSS) EARNINGS AVAILABLE TO COMMON
SHAREHOLDERSTO ADJUSTED NET EARNINGS
(Unaudited)(in millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net (Loss) Earnings Available to Common
Shareholders |
$ |
(191.4 |
) |
|
$ |
43.0 |
|
|
$ |
(92.2 |
) |
|
$ |
166.6 |
|
| Dilutive preferred
stock dividends |
— |
|
|
1.0 |
|
|
— |
|
|
3.0 |
|
| Net (Loss)
Earnings for Diluted Earnings per Share |
(191.4 |
) |
|
44.0 |
|
|
(92.2 |
) |
|
169.6 |
|
| |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
— |
|
|
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
|
Expense on swaps, net |
224.6 |
|
|
63.0 |
|
|
163.2 |
|
|
114.7 |
|
|
Payments of debt extinguishment costs, net |
49.8 |
|
|
— |
|
|
49.8 |
|
|
(4.0 |
) |
|
Transaction costs |
0.1 |
|
|
3.9 |
|
|
5.0 |
|
|
14.6 |
|
|
Integration costs |
0.7 |
|
|
1.2 |
|
|
2.3 |
|
|
0.9 |
|
|
Restructuring and facility closure costs, including accelerated
depreciation |
0.5 |
|
|
7.1 |
|
|
1.0 |
|
|
11.8 |
|
|
Mark-to-market adjustments on commodity and foreign exchange
hedges |
29.4 |
|
|
(4.4 |
) |
|
25.2 |
|
|
2.3 |
|
|
Debt consent solicitation costs |
— |
|
|
1.3 |
|
|
— |
|
|
1.3 |
|
|
Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
Advisory income |
(0.1 |
) |
|
— |
|
|
(0.3 |
) |
|
(0.2 |
) |
|
Noncontrolling interest adjustment |
(0.1 |
) |
|
— |
|
|
(0.2 |
) |
|
— |
|
|
Total Net Adjustments |
304.9 |
|
|
69.5 |
|
|
246.0 |
|
|
13.5 |
|
| Income tax effect
on adjustments (1) |
(68.0 |
) |
|
(15.1 |
) |
|
(55.4 |
) |
|
0.1 |
|
| Adjusted
Net Earnings |
$ |
45.5 |
|
|
$ |
98.4 |
|
|
$ |
98.4 |
|
|
$ |
183.2 |
|
| |
|
|
|
|
|
|
|
| (1) For all
periods, income tax effect on adjustments was calculated on all
items, except expense on swaps, net, using a rate of 24.5%, the sum
of Post’s U.S. federal corporate income tax rate plus Post’s
blended state income tax rate, net of federal income tax benefit.
Income tax effect on adjustments for expense on swaps, net was
calculated using a rate of 21.5%. |
| |
|
RECONCILIATION OF WEIGHTED-AVERAGE DILUTED SHARES
OUTSTANDINGTO ADJUSTED WEIGHTED-AVERAGE DILUTED
SHARES OUTSTANDING (Unaudited)(in
millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Weighted-average shares for diluted (loss) earnings per share |
69.3 |
|
|
75.3 |
|
|
70.0 |
|
|
75.2 |
|
| Effect of
securities that were anti-dilutive for diluted (loss) earnings per
share: |
|
|
|
|
|
|
|
|
Stock options |
0.6 |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
Stock appreciation rights |
0.1 |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
Restricted stock unit awards |
0.4 |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
Performance restricted stock unit awards |
0.1 |
|
|
— |
|
|
0.1 |
|
|
— |
|
| Adjusted
weighted-average shares for adjusted diluted earnings per
share |
70.5 |
|
|
75.3 |
|
|
71.3 |
|
|
75.2 |
|
| |
|
RECONCILIATION OF DILUTED (LOSS) EARNINGS PER COMMON
SHARETO ADJUSTED DILUTED EARNINGS PER COMMON SHARE
(Unaudited) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Diluted (Loss) Earnings per Common Share |
$ |
(2.76 |
) |
|
$ |
0.58 |
|
|
$ |
(1.32 |
) |
|
$ |
2.26 |
|
| Adjustment
to Diluted (Loss) Earnings per Common Share (1) |
0.05 |
|
|
— |
|
|
0.03 |
|
|
— |
|
| Adjusted
Diluted (Loss) Earnings per Common Share, as calculated using
adjusted weighted-average diluted shares (2) |
(2.71 |
) |
|
0.58 |
|
|
(1.29 |
) |
|
2.26 |
|
| |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Gain on sale of business |
— |
|
|
(0.03 |
) |
|
— |
|
|
(1.69 |
) |
|
Expense on swaps, net |
3.18 |
|
|
0.84 |
|
|
2.29 |
|
|
1.52 |
|
|
Payments of debt extinguishment costs, net |
0.71 |
|
|
— |
|
|
0.70 |
|
|
(0.05 |
) |
|
Transaction costs |
— |
|
|
0.05 |
|
|
0.07 |
|
|
0.19 |
|
|
Integration costs |
0.01 |
|
|
0.02 |
|
|
0.03 |
|
|
0.01 |
|
|
Restructuring and facility closure costs, including accelerated
depreciation |
— |
|
|
0.09 |
|
|
0.01 |
|
|
0.16 |
|
|
Mark-to-market adjustments on commodity and foreign exchange
hedges |
0.42 |
|
|
(0.06 |
) |
|
0.35 |
|
|
0.03 |
|
|
Debt consent solicitation costs |
— |
|
|
0.02 |
|
|
— |
|
|
0.02 |
|
|
Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
(0.01 |
) |
|
Total Net Adjustments |
4.32 |
|
|
0.93 |
|
|
3.45 |
|
|
0.18 |
|
| Income tax effect
on adjustments (3) |
(0.96 |
) |
|
(0.20 |
) |
|
(0.78 |
) |
|
— |
|
| Adjusted
Diluted Earnings per Common Share |
$ |
0.65 |
|
|
$ |
1.31 |
|
|
$ |
1.38 |
|
|
$ |
2.44 |
|
| |
|
|
|
|
|
|
|
| (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 all
periods, income tax effect on adjustments was calculated on all
items, except expense on swaps, net, using a rate of 24.5%, the sum
of Post’s U.S. federal corporate income tax rate plus Post’s
blended state income tax rate, net of federal income tax benefit.
Income tax effect on adjustments for expense on swaps, net was
calculated using a rate of 21.5%. |
| |
|
RECONCILIATION OF NET (LOSS) EARNINGS TO ADJUSTED EBITDA
(Unaudited)(in millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net (Loss) Earnings |
$ |
(191.4 |
) |
|
$ |
44.0 |
|
|
$ |
(92.2 |
) |
|
$ |
169.6 |
|
| Income tax (benefit)
expense |
(47.1 |
) |
|
(11.6 |
) |
|
(16.7 |
) |
|
32.2 |
|
| Interest expense, net |
94.0 |
|
|
85.5 |
|
|
196.9 |
|
|
144.9 |
|
| Depreciation and amortization,
including accelerated depreciation |
91.5 |
|
|
97.8 |
|
|
181.8 |
|
|
191.4 |
|
| Expense on swaps, net |
224.6 |
|
|
63.0 |
|
|
163.2 |
|
|
114.7 |
|
| Loss on extinguishment of
debt, net |
60.0 |
|
|
— |
|
|
72.9 |
|
|
6.1 |
|
| Gain on sale of business |
— |
|
|
(2.6 |
) |
|
— |
|
|
(127.3 |
) |
| Non-cash stock-based
compensation |
13.3 |
|
|
9.4 |
|
|
24.7 |
|
|
18.1 |
|
| Noncontrolling interest
adjustment |
5.2 |
|
|
(0.1 |
) |
|
12.6 |
|
|
(0.3 |
) |
| Equity method investment
adjustment |
11.0 |
|
|
8.8 |
|
|
18.3 |
|
|
19.5 |
|
| Transaction costs |
0.1 |
|
|
3.9 |
|
|
5.0 |
|
|
14.6 |
|
| Integration costs |
0.7 |
|
|
1.2 |
|
|
2.3 |
|
|
0.9 |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation |
0.5 |
|
|
2.7 |
|
|
1.1 |
|
|
4.2 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
29.4 |
|
|
(4.4 |
) |
|
25.2 |
|
|
2.3 |
|
| Debt consent solicitation
costs |
— |
|
|
1.3 |
|
|
— |
|
|
1.3 |
|
| Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
| Advisory income |
(0.1 |
) |
|
— |
|
|
(0.3 |
) |
|
(0.2 |
) |
| Adjusted
EBITDA |
$ |
291.7 |
|
|
$ |
298.9 |
|
|
$ |
594.8 |
|
|
$ |
591.4 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
19.5 |
% |
|
21.5 |
% |
|
20.2 |
% |
|
21.1 |
% |
| |
|
RECONCILIATION OF SEGMENT PROFIT TO ADJUSTED EBITDA
(Unaudited)THREE MONTHS ENDED MARCH 31,
2020(in millions) |
| |
| |
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
92.4 |
|
|
$ |
28.0 |
|
|
$ |
23.8 |
|
|
$ |
30.2 |
|
|
$ |
35.1 |
|
|
$ |
— |
|
|
$ |
209.5 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(52.7 |
) |
|
(52.7 |
) |
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.3 |
) |
|
(3.3 |
) |
| Operating
Profit |
92.4 |
|
|
28.0 |
|
|
23.8 |
|
|
30.2 |
|
|
35.1 |
|
|
(56.0 |
) |
|
153.5 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.3 |
|
|
3.3 |
|
| Depreciation and
amortization |
28.1 |
|
|
8.6 |
|
|
29.7 |
|
|
17.6 |
|
|
6.4 |
|
|
1.1 |
|
|
91.5 |
|
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.6 |
|
|
11.7 |
|
|
13.3 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
| Equity method investment
adjustment |
— |
|
|
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
(0.2 |
) |
|
0.1 |
|
| Integration costs |
0.4 |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
— |
|
|
— |
|
|
0.7 |
|
| Restructuring and facility
closure costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.5 |
|
|
0.5 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
(0.1 |
) |
|
1.6 |
|
|
— |
|
|
— |
|
|
27.9 |
|
|
29.4 |
|
| Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
| Adjusted
EBITDA |
$ |
120.9 |
|
|
$ |
36.0 |
|
|
$ |
55.1 |
|
|
$ |
48.1 |
|
|
$ |
43.4 |
|
|
$ |
(11.8 |
) |
|
$ |
291.7 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
23.8 |
% |
|
31.7 |
% |
|
14.6 |
% |
|
20.2 |
% |
|
16.9 |
% |
|
— |
|
|
19.5 |
% |
| |
|
RECONCILIATION OF SEGMENT PROFIT TO ADJUSTED EBITDA
(Unaudited)THREE MONTHS ENDED MARCH 31,
2019(in millions) |
| |
| |
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
83.2 |
|
|
$ |
23.6 |
|
|
$ |
47.4 |
|
|
$ |
26.5 |
|
|
$ |
44.0 |
|
|
$ |
— |
|
|
$ |
224.7 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(37.3 |
) |
|
(37.3 |
) |
| Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.6 |
|
|
2.6 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.7 |
) |
|
(3.7 |
) |
| Operating
Profit |
83.2 |
|
|
23.6 |
|
|
47.4 |
|
|
26.5 |
|
|
44.0 |
|
|
(38.4 |
) |
|
186.3 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.7 |
|
|
3.7 |
|
| Depreciation and amortization,
including accelerated depreciation |
29.9 |
|
|
8.8 |
|
|
27.7 |
|
|
19.7 |
|
|
6.3 |
|
|
5.4 |
|
|
97.8 |
|
| Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.6 |
) |
|
(2.6 |
) |
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.4 |
|
|
9.4 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.4 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
3.8 |
|
|
3.9 |
|
| Integration costs |
— |
|
|
— |
|
|
0.1 |
|
|
1.1 |
|
|
— |
|
|
— |
|
|
1.2 |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.7 |
|
|
2.7 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
(5.1 |
) |
|
(4.4 |
) |
| Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
| Adjusted
EBITDA |
$ |
113.1 |
|
|
$ |
32.0 |
|
|
$ |
75.9 |
|
|
$ |
47.3 |
|
|
$ |
50.4 |
|
|
$ |
(19.8 |
) |
|
$ |
298.9 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
24.6 |
% |
|
30.7 |
% |
|
19.5 |
% |
|
21.5 |
% |
|
23.3 |
% |
|
— |
|
|
21.5 |
% |
| |
|
RECONCILIATION OF SEGMENT PROFIT TO ADJUSTED EBITDA
(Unaudited)SIX MONTHS ENDED MARCH 31,
2020(in millions) |
| |
| |
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
173.0 |
|
|
$ |
51.7 |
|
|
$ |
70.8 |
|
|
$ |
56.2 |
|
|
$ |
84.4 |
|
|
$ |
— |
|
|
$ |
436.1 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(80.1 |
) |
|
(80.1 |
) |
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(6.5 |
) |
|
(6.5 |
) |
| Operating
Profit |
173.0 |
|
|
51.7 |
|
|
70.8 |
|
|
56.2 |
|
|
84.4 |
|
|
(86.6 |
) |
|
349.5 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.5 |
|
|
6.5 |
|
| Depreciation and amortization,
including accelerated depreciation |
56.0 |
|
|
17.3 |
|
|
58.7 |
|
|
35.0 |
|
|
12.8 |
|
|
2.0 |
|
|
181.8 |
|
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
|
21.7 |
|
|
24.7 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
| Equity method investment
adjustment |
— |
|
|
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.8 |
|
|
3.2 |
|
|
5.0 |
|
| Integration costs |
1.6 |
|
|
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
2.3 |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.1 |
|
|
1.1 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
(0.1 |
) |
|
0.9 |
|
|
— |
|
|
— |
|
|
24.4 |
|
|
25.2 |
|
| Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
|
(0.3 |
) |
| Adjusted
EBITDA |
$ |
230.6 |
|
|
$ |
67.9 |
|
|
$ |
130.4 |
|
|
$ |
91.9 |
|
|
$ |
102.0 |
|
|
$ |
(28.0 |
) |
|
$ |
594.8 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
24.3 |
% |
|
31.6 |
% |
|
16.3 |
% |
|
18.9 |
% |
|
20.3 |
% |
|
— |
|
|
20.2 |
% |
| |
|
RECONCILIATION OF SEGMENT PROFIT TO ADJUSTED EBITDA
(Unaudited)SIX MONTHS ENDED MARCH 31,
2019(in millions) |
| |
| |
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
167.2 |
|
|
$ |
42.5 |
|
|
$ |
100.1 |
|
|
$ |
57.0 |
|
|
$ |
79.2 |
|
|
$ |
— |
|
|
$ |
446.0 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(85.7 |
) |
|
(85.7 |
) |
| Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
127.3 |
|
|
127.3 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.4 |
) |
|
(7.4 |
) |
| Operating
Profit |
167.2 |
|
|
42.5 |
|
|
100.1 |
|
|
57.0 |
|
|
79.2 |
|
|
34.2 |
|
|
480.2 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
7.4 |
|
| Depreciation and amortization,
including accelerated depreciation |
59.4 |
|
|
17.5 |
|
|
54.7 |
|
|
37.7 |
|
|
12.7 |
|
|
9.4 |
|
|
191.4 |
|
| Gain on sale of business |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(127.3 |
) |
|
(127.3 |
) |
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18.1 |
|
|
18.1 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.9 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.9 |
) |
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
14.5 |
|
|
14.6 |
|
| Integration costs |
0.1 |
|
|
— |
|
|
0.2 |
|
|
0.6 |
|
|
— |
|
|
— |
|
|
0.9 |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4.2 |
|
|
4.2 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(2.0 |
) |
|
— |
|
|
— |
|
|
4.3 |
|
|
2.3 |
|
| Debt consent solicitation
costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.3 |
|
|
1.3 |
|
| Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
| Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
| Adjusted
EBITDA |
$ |
226.7 |
|
|
$ |
59.1 |
|
|
$ |
153.0 |
|
|
$ |
95.3 |
|
|
$ |
92.0 |
|
|
$ |
(34.7 |
) |
|
$ |
591.4 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
24.8 |
% |
|
28.8 |
% |
|
19.2 |
% |
|
19.8 |
% |
|
22.9 |
% |
|
— |
|
|
21.1 |
% |
| |
|
SELECTED FINANCIAL INFORMATION FOR 8TH AVENUE
(Unaudited)(in millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net Sales |
$ |
233.1 |
|
|
$ |
213.7 |
|
|
$ |
451.5 |
|
|
$ |
427.8 |
|
| Gross Profit |
$ |
41.2 |
|
|
$ |
35.5 |
|
|
$ |
79.6 |
|
|
$ |
69.2 |
|
| |
|
|
|
|
|
|
|
| Net Loss |
$ |
(7.2 |
) |
|
$ |
(4.2 |
) |
|
$ |
(8.1 |
) |
|
$ |
(8.7 |
) |
| Less: Preferred Stock
Dividend |
8.0 |
|
|
7.1 |
|
|
15.8 |
|
|
14.1 |
|
|
Net Loss Available to 8th Avenue Common Shareholders |
$ |
(15.2 |
) |
|
$ |
(11.3 |
) |
|
$ |
(23.9 |
) |
|
$ |
(22.8 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 has historically used 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 and depreciation and
amortization, and the following adjustments:
|
a. |
|
Transaction, integration and sale-leaseback costs:: Post has
excluded transaction costs related to professional service fees and
other related costs associated with (i) signed and closed business
combinations, (ii) a sale-leaseback transaction, (iii) the separate
capitalization of 8th Avenue and (iv) integration costs incurred to
integrate the component business units that comprise the combined
8th Avenue organization. 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 or acquired assets as part of 8th Avenue, and
such costs are not factored into 8th Avenue management’s evaluation
of its performance, its evaluation of potential acquisitions or its
performance after completion of an acquisition. In addition, the
frequency and amount of such charges varies significantly based on
the size and timing of the acquisitions and the maturity of the
businesses being acquired. Also, the size, complexity and/or volume
of past acquisitions, which often drive the magnitude of such
expenses, may not be indicative of the size, complexity and/or
volume of future acquisitions. 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. |
|
b. |
|
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. |
|
c. |
|
Advisory costs: Post has
excluded advisory costs payable by 8th Avenue to Post and a third
party as Post believes such costs do not contribute to a meaningful
evaluation of 8th Avenue’s current operating performance or
comparisons of 8th Avenue’s operating performance to other
periods. |
|
|
|
RECONCILIATION OF 8TH AVENUE’S NET LOSS TO 8TH AVENUE’S
ADJUSTED EBITDA (Unaudited)(in
millions) |
| |
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
| |
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net Loss |
$ |
(7.2 |
) |
|
$ |
(4.2 |
) |
|
$ |
(8.1 |
) |
|
$ |
(8.7 |
) |
| Interest expense, net |
17.5 |
|
|
13.9 |
|
|
28.2 |
|
|
25.7 |
|
| Income tax (benefit)
expense |
(1.8 |
) |
|
2.5 |
|
|
(2.0 |
) |
|
3.7 |
|
| Depreciation and
amortization |
12.5 |
|
|
12.1 |
|
|
25.0 |
|
|
24.2 |
|
| Integration costs |
0.5 |
|
|
0.3 |
|
|
0.7 |
|
|
0.5 |
|
| Non-cash stock-based
compensation |
0.2 |
|
|
0.5 |
|
|
0.3 |
|
|
0.5 |
|
| Transaction costs |
0.1 |
|
|
(0.8 |
) |
|
0.4 |
|
|
1.0 |
|
| Sale-leaseback costs |
— |
|
|
— |
|
|
0.7 |
|
|
— |
|
| Advisory costs |
0.5 |
|
|
0.3 |
|
|
0.8 |
|
|
0.6 |
|
| Adjusted
EBITDA |
$ |
22.3 |
|
|
$ |
24.6 |
|
|
$ |
46.0 |
|
|
$ |
47.5 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
9.6 |
% |
|
11.5 |
% |
|
10.2 |
% |
|
11.1 |
% |
Post (NYSE:POST)
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