Post Holdings Reports Results for the First Quarter of Fiscal Year
2021
Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today reported results for the first fiscal quarter ended
December 31, 2020.
Highlights:
- First quarter net sales of $1.5 billion
- Operating profit of $166.3 million; net earnings of
$81.2 million; Adjusted EBITDA of $284.4 million
- Reaffirmed first half fiscal year 2021 Adjusted EBITDA
(non-GAAP) guidance of $520-$550 million
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 BellRing’s consolidated net
earnings/loss and net assets to noncontrolling interest within
Post’s financial statements. On July 1, 2020, Post completed the
acquisition of Henningsen Foods, Inc. (“Henningsen”), the results
of which are included in the Foodservice segment.
First Quarter Consolidated Operating
Results
Net sales were $1,458.0 million, an increase of 0.1%, or $1.2
million, compared to $1,456.8 million in the prior year period. Net
sales growth in BellRing Brands, Refrigerated Retail, Weetabix and
Post Consumer Brands was offset by declines in Foodservice. Gross
profit was $455.4 million, or 31.2% of net sales, a decrease of
$16.1 million compared to the prior year period gross profit of
$471.5 million, or 32.4% of net sales.
Selling, general and administrative (“SG&A”) expenses were
$251.1 million, or 17.2% of net sales, an increase of $15.8 million
compared to $235.3 million, or 16.2% of net sales, in the prior
year period. SG&A expenses for the first quarter of 2021
included a provision of $15.0 million for a legal settlement, which
was treated as an adjustment for non-GAAP measures. Operating
profit was $166.3 million, a decrease of 15.2%, or $29.7 million,
compared to $196.0 million in the prior year period.
Net earnings were $81.2 million, a decrease of 18.1%, or $18.0
million, compared to $99.2 million in the prior year period. Net
earnings included income on swaps, net of $41.6 million and $61.4
million in the first quarter of 2021 and 2020, respectively, which
is discussed later in this release and was treated as an adjustment
for non-GAAP measures. Net earnings included equity method losses,
net of tax of $7.9 million and $7.3 million in the first quarter of
2021 and 2020, respectively. Net earnings excluded net earnings
attributable to noncontrolling interest of $9.8 million and $7.9
million in the first quarter of 2021 and 2020, respectively.
Diluted earnings per common share were $1.21, compared to $1.38 in
the prior year period. Adjusted net earnings were $48.0 million, or
$0.72 per diluted common share, compared to $52.9 million, or $0.73
per diluted common share, in the prior year period.
Adjusted EBITDA was $284.4 million, a decrease of 6.2%, or $18.7
million, compared to $303.1 million in the prior year period, with
the decrease driven primarily by Foodservice. Adjusted EBITDA in
the first quarter of 2021 and 2020 included an adjustment of $9.5
million and $7.4 million, respectively, 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 first quarter, net sales were $445.0 million, an
increase of 0.9%, or $3.8 million, compared to the prior year
period, and benefited from a favorable mix. Volumes were flat as
growth in Post branded cereals was offset by declines in private
label and government bid business (primarily resulting from the
decision to exit certain low-margin business), licensed brand
cereal and Malt-O-Meal bag cereal. Segment profit was $70.5
million, a decrease of 12.5%, or $10.1 million, compared to the
prior year period. Segment profit for the first quarter of 2021 was
negatively impacted by a provision of $15.0 million for a legal
settlement, which was treated as an adjustment for non-GAAP
measures. Segment Adjusted EBITDA was $113.7 million, an increase
of 3.6%, or $4.0 million, compared to the prior year period.
Financial results for the first quarter of 2021 were negatively
impacted by an estimated $9.8 million and $5.6 million in lost
revenue and profit contribution, respectively, resulting from
COVID-19 related production shutdowns and employee leaves at the
Battle Creek, Michigan RTE cereal facility.
Weetabix
Primarily United Kingdom RTE cereal and muesli.
For the first quarter, net sales were $113.5 million, an
increase of 11.8%, or $12.0 million, compared to the prior year
period, and reflected a favorable foreign currency exchange rate
tailwind of approximately 280 basis points. Volume growth of 8.3%
was driven by biscuit products, extruded products (primarily
resulting from lapping capacity constraints in the prior year
period), private label products and exports, which were partially
offset by declines in bar and drink products (resulting from
reduced on-the-go consumption in reaction to the COVID-19
pandemic). Segment profit was $28.1 million, an increase of 18.6%,
or $4.4 million, compared to the prior year period. Segment
Adjusted EBITDA was $37.3 million, an increase of 16.9%, or $5.4
million, compared to the prior year period.
Foodservice
Primarily egg and potato products.
For the first quarter, net sales were $354.5 million, a decrease
of 15.7%, or $66.1 million, compared to the prior year period, and
included a 210 basis point benefit from Henningsen. Volumes for the
first quarter decreased 20.0%, driven by lower away-from-home
demand in reaction to the COVID-19 pandemic in various channels,
including full service restaurants, quick service restaurants,
education and travel and lodging. Volumes included an approximately
370 basis point benefit from the participation in a
government-backed food initiative and 90 basis point benefit from
Henningsen. Egg volumes declined 15.5% and included an
approximately 480 basis point benefit from the participation in a
government-backed food initiative and a 60 basis point benefit from
Henningsen. Potato volumes declined 38.3%.
Segment profit was $10.8 million, a decrease of 77.0%, or $36.2
million, compared to the prior year period. Segment Adjusted EBITDA
was $40.4 million, a decrease of 46.3%, or $34.9 million, compared
to the prior year period. First quarter 2021 segment profit and
segment Adjusted EBITDA were negatively impacted by (i) lost
contribution margin on reduced volumes and unfavorable customer,
product and channel mix, (ii) an unfavorable egg price/cost
relationship associated with the timing of changes in input prices,
(iii) unfavorable fixed cost absorption driven by a reduction in
volumes produced and (iv) lower net pricing (resulting from an
unfavorable mix and temporary price reductions to move excess
inventory).
Refrigerated Retail
Primarily side dish, egg, cheese and sausage products.
For the first quarter, net sales were $263.1 million, an
increase of 5.3%, or $13.2 million, compared to the prior year
period and benefited from improved average net pricing in side dish
and cheese products. Volumes increased 1.1%, led by a 13.3%
increase in side dish volumes. Egg volumes declined 11.9% resulting
from the decision to exit certain low-margin business. Volume
information for additional products is disclosed in a table
presented later in this release. Segment profit was $33.7 million,
an increase of 29.6%, or $7.7 million, compared to the prior year
period. Segment Adjusted EBITDA was $51.8 million, an increase of
18.3%, or $8.0 million, compared to the prior year period.
BellRing Brands
Ready-to-drink (“RTD”) protein shakes, other RTD beverages,
powders and nutrition bars.
For the first quarter, net sales were $282.4 million, an
increase of 15.7%, or $38.4 million, compared to the prior year
period. Premier Protein net sales increased 17.4%, with volumes up
21.9%. Net sales benefited from RTD shake distribution gains for
both existing and new products, incremental promotional activity
and a modest increase in customer trade inventory levels to support
certain promotional events that occurred early in January 2021. Net
sales for Dymatize increased 16.2% and for all other products
decreased 11.2%.
Segment profit was $47.8 million, a decrease of 3.0%, or $1.5
million, compared to the prior year period and included $4.6
million of restructuring and facility closure costs, which were
partially offset by $1.5 million of lower transaction costs related
to BellRing’s separation from Post. Restructuring and facility
closure costs and transaction costs were treated as adjustments for
non-GAAP measures. Segment Adjusted EBITDA was $60.7 million, an
increase of 3.6%, or $2.1 million, compared to the prior year
period.
As of December 31, 2020, BellRing had $686.2 million in total
principal value of debt and $50.8 million in cash and cash
equivalents.
For further information, please refer to the BellRing first
quarter 2021 earnings release and conference call (the details of
which are included later in this release).
Interest, Loss on Extinguishment of Debt, Income on
Swaps and Income Tax
Interest expense, net was $96.6 million in the first quarter of
2021, compared to $102.9 million in the first quarter of 2020.
Interest expense, net in the first quarter of 2021 included (i)
$12.8 million attributable to BellRing and (ii) a reduction in
interest of approximately $3.6 million resulting from the repayment
of the entire principal balance of Post’s term loan in the first
quarter of 2020. Interest expense, net in the first quarter of 2020
included (i) $11.6 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.
Loss on extinguishment of debt, net of $12.9 million was
recorded in the first quarter of 2020 in connection with (i) Post’s
repayment of the entire principal balance of its term loan and (ii)
the assignment of debt to BellRing Brands, LLC related to the
creation of BellRing’s capital structure in the first quarter of
2020.
Income on swaps, net relates to non-cash mark-to-market
adjustments and cash settlements on interest rate swaps. Income on
swaps, net was $41.6 million in the first quarter of 2021, compared
to $61.4 million in the first quarter of 2020.
Income tax expense was $23.2 million in the first quarter of
2021, an effective income tax rate of 19.0%, compared to $30.4
million in the first quarter of 2020, an effective income tax rate
of 21.0%.
Share Repurchases & New Share Repurchase
Authorization
During the first quarter of 2021, Post repurchased 1.7 million
shares of its common stock for $159.9 million at an average price
of $93.43 per share. Subsequent to the end of the first quarter of
2021 and as of February 3, 2021, Post repurchased 0.8 million
shares of its common stock for $80.6 million at an average price of
$97.48 per share. On February 2, 2021, Post’s Board of Directors
approved a new $400 million share repurchase authorization. Share
repurchases under the new authorization may begin on February 6,
2021. As of February 3, 2021, Post had repurchased $351.0 million
under its previous $400 million share repurchase authorization,
which became effective on August 8, 2020 and will be cancelled
effective February 5, 2021.
Repurchases may be made from time to time in the open market, in
private purchases, through forward, derivative, accelerated
repurchase or automatic purchase transactions, or otherwise. The
shares would be repurchased with cash on hand and cash from
operations. Any shares repurchased would be held as treasury stock.
The authorization does not, however, obligate Post to acquire any
particular amount of shares, and repurchases may be suspended or
terminated at any time at Post’s discretion.
Recent Announcements
On January 25, 2021, Post completed the acquisition of the Peter
Pan peanut butter brand from Conagra Brands, Inc.
On February 1, 2021, Post completed the acquisition of Almark
Foods, a leading provider of hard-cooked and deviled egg
products.
COVID-19 Commentary
Post is closely monitoring the impact of the COVID-19 pandemic
on its business and remains focused on ensuring its ability to
safeguard the health of its employees, including their economic
health, maintaining the continuity of its supply chain to serve
customers and consumers and preserving financial liquidity to
mitigate the uncertainty caused by the pandemic.
Post products sold through food, drug, mass, club and eCommerce
generally have continued to experience an uplift in sales in the
first quarter of 2021, driven by increased at-home consumption in
reaction to the COVID-19 pandemic.
Post’s foodservice business continues to be negatively impacted
by lower away-from-home 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. In the first quarter of 2021, Post’s foodservice volumes
continued to track with changes in the degree of restrictions on
mobility and gathering, and this correlation is expected to
continue to affect the trajectory of the volume recovery.
BellRing’s primary categories, liquids and powders, have
returned to growth relatively in line with their pre-pandemic
growth rates. The bar category continues to experience
year-over-year declines and BellRing’s international sales continue
to be soft when compared to the prior year.
As of December 31, 2020, Post had approximately $1.1 billion in
cash and cash equivalents on hand and the available borrowing
capacity under its revolving credit facility was $730.6 million
(reflecting $19.4 million of outstanding letters of credit, a
reduction in the borrowing capacity).
Outlook
Post management reaffirmed its expectation of Adjusted EBITDA
for the first half of fiscal year 2021 to be between $520-$550
million, with the expectation of material improvement in the second
half of fiscal year 2021.
Post management continues to expect fiscal year 2021 capital
expenditures to range between $225-$250 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
income/expense on swaps, net, noncontrolling interest adjustment,
equity method investment adjustment, mark-to-market adjustments on
commodity and foreign exchange hedges, adjustment to bargain
purchase, provision for legal settlement, transaction and
integration costs 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 “Post’s Use of Non-GAAP Measures.”
BellRing Outlook
For fiscal year 2021, BellRing management continues to expect
net sales and Adjusted EBITDA to grow 8%-13% and 5%-10%,
respectively, over fiscal year 2020 (resulting in a net sales range
of $1.07-$1.12 billion and an Adjusted EBITDA range of $207-$217
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
noncontrolling interest adjustment, restructuring and facility
closures costs, 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 first quarter of fiscal year 2021 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 Food
& Provisions, Inc. (“8th Avenue”), which is an unconsolidated
affiliate that manufactures and distributes private label peanut
and other nut butters, dried fruit and nut products, granola and
pasta.
For the first quarter, net sales were $229.0 million, an
increase of 4.9%, or $10.6 million, compared to the prior year
period. Net loss was $1.4 million, a decrease of 55.6%, or $0.5
million, compared to the prior year period. Adjusted EBITDA was
$21.6 million, a decrease of 8.9%, or $2.1 million, compared to the
prior year period.
As of December 31, 2020, 8th Avenue was capitalized with $12.6
million of unrestricted cash and cash equivalents, $614.5 million
of senior secured debt, $60.1 million related to a sale-leaseback
transaction, $250.0 million in principal amount of preferred equity
and $70.4 million of accumulated, but unpaid, preferred dividends.
Summarized financial information for 8th Avenue is disclosed later
in this release.
For 8th Avenue, Post management continues to expect fiscal year
2021 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,
integration and sale-leaseback 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 “Post’s Use of Non-GAAP Measures.”
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, February 5, 2021 at
9:00 a.m. EST to discuss financial results for the first quarter of
fiscal year 2021 and fiscal year 2021 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 1539554.
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, February 19, 2021 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 1539554. 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, February 5, 2021
at 10:30 a.m. EST to discuss financial results for the first
quarter of fiscal year 2021 and fiscal year 2021 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 1876009.
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
slide presentation containing supplemental material will also be
available at the same location on BellRing’s website.
A replay of the conference call will be available through
Friday, February 19, 2021 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 1876009. 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 forecasted. 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 the first half of fiscal year 2021,
Post’s capital expenditure outlook for fiscal year 2021, statements
regarding the effect of the COVID-19 pandemic on Post’s business,
Post’s continuing response to the COVID-19 pandemic, BellRing’s net
sales, Adjusted EBITDA and capital expenditures outlook for fiscal
year 2021 and Post management’s Adjusted EBITDA outlook for 8th
Avenue for fiscal year 2021. 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, the health of Post’s
employees, Post’s ability to manufacture and deliver its products,
operating costs, demand for its foodservice and on-the-go products
and Post’s operations generally;
- Post’s high leverage, Post’s ability to obtain additional
financing (including both secured and unsecured debt), Post’s
ability to service its outstanding debt (including covenants that
restrict the operation of Post’s business) and a downgrade or
potential downgrade in Post’s credit ratings;
- 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 behaviors and introduce new
products;
- changes in economic conditions, disruptions in the U.S. and
global capital and credit markets, changes in interest rates,
volatility in the market value of derivatives and fluctuations in
foreign currency exchange rates;
- disruptions or inefficiencies in Post’s supply chain, including
as a result of Post’s reliance on third party suppliers or
manufacturers for the manufacturing of many of Post’s products,
pandemics (including the COVID-19 pandemic) and other outbreaks of
contagious diseases, fires and evacuations related thereto, changes
in weather conditions, natural disasters, agricultural diseases and
pests and other events beyond Post’s control;
- significant volatility in the cost or availability of inputs to
Post’s business (including freight, raw materials, energy and other
supplies);
- Post’s ability to hire and retain talented personnel, the
ability of Post’s employees to safely perform their jobs, including
the potential for physical injuries or illness (such as COVID-19),
employee absenteeism, labor strikes, work stoppages and
unionization efforts;
- allegations that Post’s products cause injury or illness,
product recalls and withdrawals and product liability claims and
other related litigation;
- Post’s ability to identify, complete and integrate or otherwise
effectively execute acquisitions or other strategic transactions
and effectively 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 Post’s historical active nutrition business;
- impairment in the carrying value of goodwill or other
intangibles;
- Post’s ability to successfully implement business strategies to
reduce costs;
- legal and regulatory factors, such as compliance with existing
laws and regulations, as well as new laws and regulations and
changes to existing laws and regulations and interpretations
thereof, 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;
- the failure or weakening of the RTE cereal category and
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 and to effectively
realize the strategic and financial benefits expected as a result
of the separate capitalization of 8th Avenue;
- costs associated with Bob Evans Farms, Inc.’s (“Bob Evans”)
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;
- Post’s ability to protect its intellectual property and other
assets and to continue to use third party intellectual property
subject to intellectual property licenses;
- the ability of Post 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 businesses;
- 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;
- 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 Post’s and
8th Avenue’s future performance and BellRing’s guidance regarding
its future performance;
- Post’s ability and BellRing’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. Its businesses include Post
Consumer Brands, Weetabix, Michael Foods, Bob Evans Farms and
BellRing Brands. Post Consumer Brands is a leader in the North
American ready-to-eat cereal category and also markets Peter Pan®
peanut butter. Weetabix is home to the United Kingdom’s number one
selling ready-to-eat cereal brand, Weetabix®. Michael Foods and Bob
Evans Farms are leaders in refrigerated foods, delivering
innovative, value-added egg and refrigerated potato side dish
products to the foodservice and retail channels. 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® and Dymatize®. 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 EndedDecember
31, |
| |
2020 |
|
2019 |
|
Net Sales |
$ |
1,458.0 |
|
|
$ |
1,456.8 |
|
| Cost of goods sold |
1,002.6 |
|
|
985.3 |
|
| Gross
Profit |
455.4 |
|
|
471.5 |
|
| Selling, general and
administrative expenses |
251.1 |
|
|
235.3 |
|
| Amortization of intangible
assets |
40.6 |
|
|
40.1 |
|
| Other operating (income)
expenses, net |
(2.6 |
) |
|
0.1 |
|
| Operating
Profit |
166.3 |
|
|
196.0 |
|
| Interest expense, net |
96.6 |
|
|
102.9 |
|
| Loss on extinguishment of
debt, net |
— |
|
|
12.9 |
|
| Income on swaps, net |
(41.6 |
) |
|
(61.4 |
) |
| Other income, net |
(10.8 |
) |
|
(3.2 |
) |
| Earnings before Income
Taxes and Equity Method Loss |
122.1 |
|
|
144.8 |
|
| Income tax expense |
23.2 |
|
|
30.4 |
|
| Equity method loss, net of
tax |
7.9 |
|
|
7.3 |
|
| Net Earnings Including
Noncontrolling Interest |
91.0 |
|
|
107.1 |
|
| Less: Net earnings
attributable to noncontrolling interest |
9.8 |
|
|
7.9 |
|
| Net
Earnings |
$ |
81.2 |
|
|
$ |
99.2 |
|
| |
|
|
|
| Earnings per Common
Share: |
|
|
|
| Basic |
$ |
1.24 |
|
|
$ |
1.40 |
|
| Diluted |
$ |
1.21 |
|
|
$ |
1.38 |
|
| |
|
|
|
| Weighted-Average
Common Shares Outstanding: |
|
|
|
| Basic |
65.7 |
|
|
70.7 |
|
| Diluted |
66.9 |
|
|
72.1 |
|
| |
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions)
| |
December 31, 2020 |
|
September 30, 2020 |
| |
|
|
|
|
ASSETS |
| Current
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
1,118.0 |
|
|
$ |
1,187.9 |
|
|
Restricted cash |
0.5 |
|
|
5.5 |
|
|
Receivables, net |
452.7 |
|
|
441.6 |
|
|
Inventories |
584.4 |
|
|
599.4 |
|
|
Prepaid expenses and other current assets |
100.9 |
|
|
53.4 |
|
|
Total Current Assets |
2,256.5 |
|
|
2,287.8 |
|
| |
|
|
|
| Property, net |
1,776.0 |
|
|
1,779.7 |
|
| Goodwill |
4,492.0 |
|
|
4,438.6 |
|
| Other intangible assets,
net |
3,182.5 |
|
|
3,197.5 |
|
| Equity method investments |
106.8 |
|
|
114.1 |
|
| Other assets |
326.5 |
|
|
329.0 |
|
|
Total Assets |
$ |
12,140.3 |
|
|
$ |
12,146.7 |
|
| |
|
|
|
| |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Current
Liabilities |
|
|
|
|
Current portion of long-term debt |
$ |
36.1 |
|
|
$ |
64.9 |
|
|
Accounts payable |
374.0 |
|
|
367.9 |
|
|
Other current liabilities |
480.0 |
|
|
541.6 |
|
|
Total Current Liabilities |
890.1 |
|
|
974.4 |
|
| |
|
|
|
| Long-term debt |
6,972.1 |
|
|
6,959.0 |
|
| Deferred income taxes |
808.5 |
|
|
784.5 |
|
| Other liabilities |
565.1 |
|
|
599.8 |
|
|
Total Liabilities |
9,235.8 |
|
|
9,317.7 |
|
| |
|
|
|
| Shareholders’
Equity |
|
|
|
|
Common stock |
0.8 |
|
|
0.8 |
|
|
Additional paid-in capital |
4,226.2 |
|
|
4,182.9 |
|
|
Retained earnings |
289.8 |
|
|
208.6 |
|
|
Accumulated other comprehensive income (loss) |
72.3 |
|
|
(29.3 |
) |
|
Treasury stock, at cost |
(1,668.4 |
) |
|
(1,508.5 |
) |
|
Total Shareholders’ Equity excluding Noncontrolling
Interest |
2,920.7 |
|
|
2,854.5 |
|
|
Noncontrolling interest |
(16.2 |
) |
|
(25.5 |
) |
|
Total Shareholders’ Equity |
2,904.5 |
|
|
2,829.0 |
|
|
Total Liabilities and Shareholders’ Equity |
$ |
12,140.3 |
|
|
$ |
12,146.7 |
|
| |
|
|
|
|
|
|
|
SELECTED CONDENSED CONSOLIDATED CASH
FLOWS INFORMATION (Unaudited)(in
millions)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
| Cash provided by (used
in): |
|
|
|
|
Operating activities |
$ |
114.5 |
|
|
$ |
108.4 |
|
|
Investing activities, including capital expenditures of $53.9 and
$77.3 |
(41.5 |
) |
|
(75.8 |
) |
|
Financing activities |
(154.5 |
) |
|
(274.9 |
) |
|
Effect of exchange rate changes on cash, cash equivalents and
restricted cash |
6.6 |
|
|
2.9 |
|
| Net decrease in cash,
cash equivalents and restricted cash |
$ |
(74.9 |
) |
|
$ |
(239.4 |
) |
| |
|
|
|
|
|
|
|
SEGMENT INFORMATION
(Unaudited)(in millions)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
| Net
Sales |
|
|
|
|
Post Consumer Brands |
$ |
445.0 |
|
|
$ |
441.2 |
|
|
Weetabix |
113.5 |
|
|
101.5 |
|
|
Foodservice |
354.5 |
|
|
420.6 |
|
|
Refrigerated Retail |
263.1 |
|
|
249.9 |
|
|
BellRing Brands |
282.4 |
|
|
244.0 |
|
|
Eliminations |
(0.5 |
) |
|
(0.4 |
) |
|
Total |
$ |
1,458.0 |
|
|
$ |
1,456.8 |
|
| Segment
Profit |
|
|
|
|
Post Consumer Brands |
$ |
70.5 |
|
|
$ |
80.6 |
|
|
Weetabix |
28.1 |
|
|
23.7 |
|
|
Foodservice |
10.8 |
|
|
47.0 |
|
|
Refrigerated Retail |
33.7 |
|
|
26.0 |
|
|
BellRing Brands |
47.8 |
|
|
49.3 |
|
|
Total segment profit |
190.9 |
|
|
226.6 |
|
| General corporate
expenses and other |
13.8 |
|
|
27.4 |
|
| Interest expense,
net |
96.6 |
|
|
102.9 |
|
| Loss on
extinguishment of debt, net |
— |
|
|
12.9 |
|
| Income on swaps,
net |
(41.6 |
) |
|
(61.4 |
) |
| Earnings
before Income Taxes and Equity Method Loss |
$ |
122.1 |
|
|
$ |
144.8 |
|
| |
|
|
|
|
|
|
|
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 |
|
1.1% |
| Side dishes |
|
13.3% |
| Egg |
|
(11.9)% |
| Cheese |
|
(8.6)% |
| Sausage |
|
(1.0)% |
| |
|
|
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 for all segments excluding BellRing Brands is each
segment’s earnings/loss 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, adjustment to
bargain purchase, interest expense and other unallocated corporate
income and expenses. Segment profit for BellRing Brands, as it is a
publicly-traded company, is its operating profit. 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. |
|
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. |
|
b. |
|
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. |
|
c. |
|
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. |
|
d. |
|
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. |
|
e. |
|
Mark-to-market adjustments on equity securities: Post has excluded
the impact of mark-to-market adjustments on investments in equity
securities due to the inherent volatility associated with such
amounts based on changes in market pricing variations and as the
amount and frequency of such adjustments are not consistent.
Additionally, these adjustments are non-cash items 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. |
|
Restructuring and facility closure costs, including accelerated
depreciation and amortization: Post has excluded certain costs
associated with facility closures and discontinuance of brands 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. |
|
g. |
|
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, publicly-traded 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. |
|
h. |
|
Adjustment to bargain purchase: Post has excluded adjustments to
gains recorded for acquisitions in which the fair value of the
assets acquired exceeded the purchase price as such amounts are
inconsistent in amount and frequency. Post believes such
adjustments 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 their completion. |
|
i. |
|
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. |
|
j. |
|
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. |
|
k. |
|
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. |
|
l. |
|
Income tax effect on adjustments: 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 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 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 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 and
depreciation and amortization including accelerated depreciation
and amortization, and the following adjustments discussed above:
income/expense on swaps, net, mark-to-market adjustments on
commodity and foreign exchange hedges, provision for legal
settlements, mark-to-market adjustments on equity securities,
restructuring and facility closure costs excluding accelerated
depreciation and amortization, transaction costs and integration
costs, adjustment to bargain purchase, 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:
|
m. |
|
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. |
|
n. |
|
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. BellRing’s
director compensation strategy includes an election by any director
who earns retainers in which the director may elect to defer
compensation granted as a director to BellRing Class A common
stock, earning a match on the deferral, both of which are
stock-settled upon the director’s retirement from the BellRing
board of directors. 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. |
|
o. |
|
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. |
|
p. |
|
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 EARNINGS AVAILABLE
TO COMMON SHAREHOLDERSTO ADJUSTED NET EARNINGS
(Unaudited)(in millions)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
|
Net Earnings Available to Common Shareholders |
$ |
81.2 |
|
|
$ |
99.2 |
|
| |
|
|
|
|
Adjustments: |
|
|
|
|
Income on swaps, net |
(41.6 |
) |
|
(61.4 |
) |
|
Noncontrolling interest adjustment |
(1.4 |
) |
|
(0.1 |
) |
|
Mark-to-market adjustments on commodity and foreign exchange
hedges |
(14.9 |
) |
|
(4.2 |
) |
|
Provision for legal settlements |
15.0 |
|
|
— |
|
|
Mark-to-market adjustments on equity securities |
(7.9 |
) |
|
— |
|
|
Restructuring and facility closure costs, including accelerated
depreciation and amortization |
5.4 |
|
|
0.5 |
|
|
Transaction costs |
1.1 |
|
|
4.9 |
|
|
Integration costs |
— |
|
|
1.6 |
|
|
Adjustment to bargain purchase |
2.3 |
|
|
— |
|
|
Assets held for sale |
(0.6 |
) |
|
— |
|
|
Foreign currency gain on intercompany loans |
(0.3 |
) |
|
— |
|
|
Advisory income |
(0.1 |
) |
|
(0.2 |
) |
|
Total Net Adjustments |
(43.0 |
) |
|
(58.9 |
) |
| Income tax effect
on adjustments (1) |
9.8 |
|
|
12.6 |
|
| Adjusted
Net Earnings |
$ |
48.0 |
|
|
$ |
52.9 |
|
| |
|
|
|
| (1) For all
periods, income tax effect on adjustments was calculated on all
items, except income on swaps, net and adjustment to bargain
purchase, 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 for
income on swaps, net was calculated using a rate of 21.5%. Income
tax effect for adjustment to bargain purchase was calculated using
a rate of 0.0%. |
| |
RECONCILIATION OF DILUTED EARNINGS PER
COMMON SHARETO ADJUSTED DILUTED EARNINGS PER
COMMON SHARE (Unaudited)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
|
Diluted Earnings per Common Share |
$ |
1.21 |
|
|
$ |
1.38 |
|
| |
|
|
|
|
Adjustments: |
|
|
|
|
Income on swaps, net |
(0.62 |
) |
|
(0.85 |
) |
|
Noncontrolling interest adjustment |
(0.02 |
) |
|
— |
|
|
Mark-to-market adjustments on commodity and foreign exchange
hedges |
(0.22 |
) |
|
(0.06 |
) |
|
Provision for legal settlements |
0.22 |
|
|
— |
|
|
Mark-to-market adjustments on equity securities |
(0.12 |
) |
|
— |
|
|
Restructuring and facility closure costs, including accelerated
depreciation and amortization |
0.08 |
|
|
— |
|
|
Transaction costs |
0.02 |
|
|
0.07 |
|
|
Integration costs |
— |
|
|
0.02 |
|
|
Adjustment to bargain purchase |
0.03 |
|
|
— |
|
|
Assets held for sale |
(0.01 |
) |
|
— |
|
|
Total Net Adjustments |
(0.64 |
) |
|
(0.82 |
) |
| Income tax effect
on adjustments (1) |
0.15 |
|
|
0.17 |
|
| Adjusted
Diluted Earnings per Common Share |
$ |
0.72 |
|
|
$ |
0.73 |
|
| |
|
|
|
| (1) For all
periods, income tax effect on adjustments was calculated on all
items, except income on swaps, net and adjustment to bargain
purchase, 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 for
income on swaps, net was calculated using a rate of 21.5%. Income
tax effect for adjustment to bargain purchase was calculated using
a rate of 0.0%. |
| |
RECONCILIATION OF NET EARNINGS TO
ADJUSTED EBITDA (Unaudited)(in
millions)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
|
Net Earnings |
$ |
81.2 |
|
|
$ |
99.2 |
|
| Income tax expense |
23.2 |
|
|
30.4 |
|
| Interest expense, net |
96.6 |
|
|
102.9 |
|
| Depreciation and amortization,
including accelerated depreciation and amortization |
94.1 |
|
|
90.3 |
|
| Income on swaps, net |
(41.6 |
) |
|
(61.4 |
) |
| Loss on extinguishment of
debt, net |
— |
|
|
12.9 |
|
| Non-cash stock-based
compensation |
13.9 |
|
|
11.4 |
|
| Noncontrolling interest
adjustment |
9.5 |
|
|
7.4 |
|
| Equity method investment
adjustment |
8.0 |
|
|
7.3 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
(14.9 |
) |
|
(4.2 |
) |
| Provision for legal
settlements |
15.0 |
|
|
— |
|
| Mark-to-market adjustments on
equity securities |
(7.9 |
) |
|
— |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation and
amortization |
4.9 |
|
|
0.6 |
|
| Transaction costs |
1.1 |
|
|
4.9 |
|
| Integration costs |
— |
|
|
1.6 |
|
| Adjustment to bargain
purchase |
2.3 |
|
|
— |
|
| Assets held for sale |
(0.6 |
) |
|
— |
|
| Foreign currency gain on
intercompany loans |
(0.3 |
) |
|
— |
|
| Advisory income |
(0.1 |
) |
|
(0.2 |
) |
| Adjusted
EBITDA |
$ |
284.4 |
|
|
$ |
303.1 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
19.5 |
% |
|
20.8 |
% |
| |
|
|
|
|
|
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
DECEMBER 31, 2020(in millions)
|
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
70.5 |
|
|
$ |
28.1 |
|
|
$ |
10.8 |
|
|
$ |
33.7 |
|
|
$ |
47.8 |
|
|
$ |
— |
|
|
$ |
190.9 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13.8 |
) |
|
(13.8 |
) |
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(10.8 |
) |
|
(10.8 |
) |
| Operating
Profit |
70.5 |
|
|
28.1 |
|
|
10.8 |
|
|
33.7 |
|
|
47.8 |
|
|
(24.6 |
) |
|
166.3 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10.8 |
|
|
10.8 |
|
| Depreciation and amortization,
including accelerated depreciation and amortization |
28.2 |
|
|
9.4 |
|
|
30.7 |
|
|
18.1 |
|
|
6.7 |
|
|
1.0 |
|
|
94.1 |
|
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
12.0 |
|
|
13.9 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.3 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
| Equity method investment
adjustment |
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(1.1 |
) |
|
— |
|
|
— |
|
|
(13.8 |
) |
|
(14.9 |
) |
| Provision for legal
settlements |
15.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15.0 |
|
| Mark-to-market adjustments on
equity securities |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7.9 |
) |
|
(7.9 |
) |
| Restructuring and facility
closure costs, excluding accelerated depreciation and
amortization |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4.6 |
|
|
0.3 |
|
|
4.9 |
|
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.1 |
|
|
1.1 |
|
| Adjustment to bargain
purchase |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.3 |
|
|
2.3 |
|
| Assets held for sale |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.6 |
) |
|
(0.6 |
) |
| Foreign currency gain on
intercompany loans |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
|
— |
|
|
(0.3 |
) |
| Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
| Adjusted
EBITDA |
$ |
113.7 |
|
|
$ |
37.3 |
|
|
$ |
40.4 |
|
|
$ |
51.8 |
|
|
$ |
60.7 |
|
|
$ |
(19.5 |
) |
|
$ |
284.4 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
25.6 |
% |
|
32.9 |
% |
|
11.4 |
% |
|
19.7 |
% |
|
21.5 |
% |
|
— |
|
|
19.5 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF SEGMENT PROFIT TO
ADJUSTED EBITDA (Unaudited)THREE MONTHS ENDED
DECEMBER 31, 2019(in millions)
|
|
PostConsumerBrands |
|
Weetabix |
|
Foodservice |
|
RefrigeratedRetail |
|
BellRingBrands |
|
Corporate/Other |
|
Total |
|
Segment Profit |
$ |
80.6 |
|
|
$ |
23.7 |
|
|
$ |
47.0 |
|
|
$ |
26.0 |
|
|
$ |
49.3 |
|
|
$ |
— |
|
|
$ |
226.6 |
|
| General corporate expenses and
other |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(27.4 |
) |
|
(27.4 |
) |
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.2 |
) |
|
(3.2 |
) |
| Operating
Profit |
80.6 |
|
|
23.7 |
|
|
47.0 |
|
|
26.0 |
|
|
49.3 |
|
|
(30.6 |
) |
|
196.0 |
|
| Other income, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3.2 |
|
|
3.2 |
|
| Depreciation and amortization,
including accelerated depreciation |
27.9 |
|
|
8.7 |
|
|
29.0 |
|
|
17.4 |
|
|
6.4 |
|
|
0.9 |
|
|
90.3 |
|
| Non-cash stock-based
compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.4 |
|
|
10.0 |
|
|
11.4 |
|
| Noncontrolling interest
adjustment |
— |
|
|
(0.5 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
| Mark-to-market adjustments on
commodity and foreign exchange hedges |
— |
|
|
— |
|
|
(0.7 |
) |
|
— |
|
|
— |
|
|
(3.5 |
) |
|
(4.2 |
) |
| Restructuring and facility
closure costs, excluding accelerated depreciation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.6 |
|
|
0.6 |
|
| Transaction costs |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1.5 |
|
|
3.4 |
|
|
4.9 |
|
| Integration costs |
1.2 |
|
|
— |
|
|
— |
|
|
0.4 |
|
|
— |
|
|
— |
|
|
1.6 |
|
| Advisory income |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.2 |
) |
|
(0.2 |
) |
| Adjusted
EBITDA |
$ |
109.7 |
|
|
$ |
31.9 |
|
|
$ |
75.3 |
|
|
$ |
43.8 |
|
|
$ |
58.6 |
|
|
$ |
(16.2 |
) |
|
$ |
303.1 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
24.9 |
% |
|
31.4 |
% |
|
17.9 |
% |
|
17.5 |
% |
|
24.0 |
% |
|
— |
|
|
20.8 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED FINANCIAL INFORMATION FOR 8TH
AVENUE (Unaudited)(in millions)
| |
Three Months EndedDecember
31, |
| |
2020 |
|
2019 |
|
Net Sales |
$ |
229.0 |
|
|
$ |
218.4 |
|
| Gross Profit |
$ |
35.4 |
|
|
$ |
38.4 |
|
| |
|
|
|
| Net Loss |
$ |
(1.4 |
) |
|
$ |
(0.9 |
) |
| Less: Preferred Stock
Dividend |
8.8 |
|
|
7.8 |
|
|
Net Loss Available to 8th Avenue Common Shareholders |
$ |
(10.2 |
) |
|
$ |
(8.7 |
) |
| |
|
|
|
|
|
|
|
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 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 EndedDecember
31, |
| |
2020 |
|
2019 |
|
Net Loss |
$ |
(1.4 |
) |
|
$ |
(0.9 |
) |
| Interest expense, net |
9.0 |
|
|
10.7 |
|
| Income tax benefit |
(0.2 |
) |
|
(0.2 |
) |
| Depreciation and
amortization |
13.2 |
|
|
12.5 |
|
| Integration costs |
0.3 |
|
|
0.2 |
|
| Non-cash stock-based
compensation |
0.3 |
|
|
0.1 |
|
| Transaction costs |
— |
|
|
0.3 |
|
| Sale-leaseback costs |
— |
|
|
0.7 |
|
| Advisory costs |
0.4 |
|
|
0.3 |
|
| Adjusted
EBITDA |
$ |
21.6 |
|
|
$ |
23.7 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
9.4 |
% |
|
10.9 |
% |
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