St. Louis / MO. (pfh) Post Holdings Inc., a consumer packaged goods holding company in the United States, reported results for the fiscal quarter ended December 31, 2015. Highlights:
- Net sales of 1.2 billion USD and Adjusted Ebitda of 235.6 million USD
- Completed the acquisition of Willamette Egg Farms, effective October 3, 2015
- Raises fiscal 2016 Adjusted Ebitda guidance to be between 810 million USD and 840 million USD
First Quarter Consolidated Operating Results
First quarter net sales were 1’248.8 million USD, an increase of 174.9 million USD, or 16.3 percent, compared to the prior year. The sales increase was driven by the acquisition of MOM Brands, which was completed in fiscal 2015. On a comparable basis, net sales declined 4.2 percent when compared to the same period in fiscal 2015 resulting from anticipated declines within the Michael Foods Group and Active Nutrition segments.
Gross profit for the first quarter was 362.5 million USD or 29.0 percent of net sales, an increase of 113.4 million USD compared to the prior year gross profit of 249.1 million USD or 23.2 percent of net sales. Selling, general and administrative (SG+A) expenses for the first quarter were 187.0 million USD or 15.0 percent of net sales, an increase of 19.8 million USD compared to the prior year SG+A of 167.2 million USD or 15.6 percent of net sales.
Adjusted Ebitda was 235.6 million USD for the first quarter, up 108.0 million USD compared to the prior year. The increase was driven primarily by organic Adjusted Ebitda growth in each of Post’s segments as well as the acquisition of MOM Brands.
Net earnings available to common shareholders were 10.5 million USD, or 0.15 USD per diluted common share, for the first quarter. Weighted-average diluted common shares outstanding was 68.8 million shares which includes the fiscal 2015 common stock issuances of 16.7 million shares. Adjusted net earnings available to common shareholders were 40.3 million USD, or 0.52 USD per diluted common share.
Post Consumer Brands
Post Consumer Brands includes the ready-to-eat (RTE) cereal businesses.
Net sales were 411.6 million USD for the first quarter, up 194.1 million USD over the reported prior year first quarter. On a comparable basis, net sales declined 0.9 percent, or 3.8 million USD, over the same period in fiscal 2015 with volumes flat. Growth in net sales and volume for Pebbles, Honey Bunches of Oats and co-manufacturers was offset by declines for MOM branded products, which cycled a heavily promoted period in the prior year.
Segment profit was 62.9 million USD and 37.6 million USD for first quarter 2016 and 2015, respectively. First quarter 2016 segment profit was negatively impacted by integration expenses of 7.9 million USD. Segment Adjusted Ebitda was 97.2 million USD and 49.8 million USD for first quarter 2016 and 2015, respectively.
Post management now expects to achieve 50 million USD in run-rate annualized cost synergies within the Post Consumer Brands segment by the end of fiscal year 2016.
Michael Foods Group
Michael Foods Group includes the predominantly foodservice and food ingredient egg, potato and pasta businesses and the retail cheese business.
Net sales were 586.4 million USD for the first quarter, a decline of 2.2 percent, or 12.9 million USD, over the reported prior year first quarter. On a comparable basis, net sales declined 6.2 percent, or 38.5 million USD, over the same period in fiscal 2015. Egg sales declined 7.5 percent, on a comparable basis, with volume declining 24.4 percent, as a result of the impact of avian influenza which reduced Post’s egg supply available for sale. Refrigerated potato products sales declined 1.7 percent, with volume declining 9.0 percent. Pasta products sales were up 5.7 percent, with volume up 6.1 percent. Cheese and other dairy case products sales declined 10.6 percent, with volume declining 6.7 percent, as a result of the impact of reduced pricing related to lower cheese and dairy input costs.
Segment profit was 80.8 million USD and 42.1 million USD for first quarter 2016 and 2015, respectively. Segment profit for the first quarter of 2016 included 8.4 million USD from the acquisition of Willamette Egg Farms. Segment Adjusted Ebitda was 118.0 million USD and 72.4 million USD for first quarter 2016 and 2015, respectively, with egg, pasta, potato and cheese products all achieving organic Adjusted Ebitda growth.
Active Nutrition
Active Nutrition includes the protein shakes, bars and powders and nutritional supplement products of the PowerBar, Premier Protein and Dymatize brands.
Net sales were 115.8 million USD for the first quarter, a decline of 11.2 percent, or 14.6 million USD, over the reported prior year first quarter. On a comparable basis, net sales declined 6.6 percent, or 8.2 million USD, over the same period in fiscal 2015, with strong growth for Premier Protein shakes offset by anticipated declines at Dymatize and PowerBar. Segment profit (loss) was 10.5 million USD and (6.3) million USD for first quarter 2016 and 2015, respectively. Segment Adjusted Ebitda was 16.7 million USD and 4.7 million USD for first quarter 2016 and 2015, respectively.
Private Brands
Private Brands primarily includes nut butters, dried fruit and nuts, and granola.
Net sales were 135.6 million USD for the first quarter, an increase of 6.1 percent, or 7.8 million USD, over the reported prior year first quarter. On a comparable basis, net sales declined 3.3 percent, or 4.7 million USD, over the same period in fiscal 2015. Nut butters and dried fruit and nuts sales declined 2.5 percent, on a comparable basis, with volume up 3.2 percent. Granola and cereal sales declined 7.1 percent, with volume declining 8.4 percent. Segment profit was 12.9 million USD and 6.9 million USD for first quarter 2016 and 2015, respectively. Segment Adjusted Ebitda was 19.1 million USD and 14.3 million USD for first quarter 2016 and 2015, respectively.
Interest, Other Expense and Income Tax
Interest expense, net was 77.8 million USD for the first quarter compared to 60.1 million USD for the prior year quarter. The increase was driven by a rise in Post’s debt principal balance outstanding primarily resulting from the May 2015 term loan issuance in connection with financing the MOM Brands acquisition.
Other expense relates to non-cash mark-to-market adjustments on interest rate swaps and was 15.9 million USD for the first quarter of fiscal 2016, compared to 54.6 million USD for the first quarter of fiscal 2015.
Income tax expense was 13.7 million USD, or an effective income tax rate of 34.9 percent, in the first quarter of fiscal 2016.
Update on Acquisition
On October 5, 2015, Post announced the completion of the acquisition of Willamette Egg Farms, a producer, processor and wholesale distributor of eggs and egg products, effective October 3, 2015.
Share Repurchase Authorization
On February 2, 2016, the Board of Directors approved a share repurchase authorization of up to 300 million USD over the next two years. Repurchases may be made from time to time in the open market, private purchases, through forward, derivative, accelerated repurchase or automatic purchase transactions, or otherwise. The shares would be purchased with cash on hand and cash from operations. Any shares repurchased would be held as treasury stock.
Executive Chairman Transition
Effective February 2, 2016, William P. Stiritz, who previously served as Executive Chairman, transitioned to non-executive Chairman of the Board of Directors.
Outlook
Post management has raised its fiscal 2016 Adjusted Ebitda guidance range to be between 810 million USD and 840 million USD, from between 780 million USD and 820 million USD, which includes an anticipated increase in expenses aimed at brand building and driving incremental synergies.
Post management continues to expect capital expenditures for fiscal 2016 to be between 145 million USD and 155 million USD, including approximately 20 million USD related to growth activities and approximately 20 million USD related to integration activities. Maintenance capital expenditures for fiscal 2016 are expected to be between 105 million USD and 115 million USD.
