Post Holdings: Reports Fiscal Q3-2020 Results

St. Louis / MO. (pfh) Post Holdings Inc., a consumer packaged goods holding company, reported results for the third fiscal quarter ended June 30, 2020. Highlights:

  • Net sales of USD 1.3 billion
  • Operating profit of USD 172.1 million; net earnings of USD 36.0 million and Adjusted Ebitda of USD 270.9 million
  • Announced a new USD 400 million share repurchase authorization
  • Generated USD 319.4 million in cash from operations

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 percent of BellRing’s consolidated net earnings/loss and net assets to noncontrolling interest within Post’s financial statements.

Third Quarter Consolidated Operating Results

Net sales were USD 1,336.4 million, a decrease of 7.1 percent, or USD 102.8 million, compared to the prior year period net sales of USD 1,439.2 million. Net sales growth in Post Consumer Brands, Refrigerated Retail and Weetabix (driven by increased at-home consumption) was offset by anticipated declines in Foodservice (driven by reduced away-from-home demand) and BellRing Brands (driven by reductions in higher than normal customer trade inventory levels). Gross profit was USD 436.8 million, or 32.7 percent of net sales, a decrease of USD 25.3 million compared to the prior year period gross profit of USD 462.1 million, or 32.1 percent of net sales.

Selling, general and administrative («SG+A») expenses were USD 224.2 million, or 16.8 percent of net sales, an increase of USD 1.0 million compared to the prior year period SG+A expenses of USD 223.2 million, or 15.5 percent of net sales. Operating profit was USD 172.1 million, a decrease of 13.2 percent, or USD 26.1 million, compared to the prior year period operating profit of USD 198.2 million, with the decrease primarily driven by a loss in Foodservice.

Net earnings were USD 36.0 million, an increase of 122.2 percent, or USD 19.8 million, compared to the prior year period net earnings of USD 16.2 million. Net earnings included expense on swaps, net of USD 29.2 million and USD 86.2 million in the third quarter of 2020 and 2019, 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 USD 4.2 million and USD 6.2 million in the third quarter of 2020 and 2019, respectively. Net earnings excluded net earnings attributable to noncontrolling interest of USD 4.4 million and USD 0.3 million in the third quarter of 2020 and 2019, respectively.

Net earnings available to common shareholders were USD 36.0 million, or USD 0.52 per diluted common share, compared to the prior year period net earnings available to common shareholders of USD 16.2 million, or USD 0.21 per diluted common share. Adjusted net earnings were USD 51.9 million, or USD 0.75 per diluted common share, compared to the prior year period Adjusted net earnings of USD 92.6 million, or USD 1.23 per diluted common share.

Adjusted Ebitda was USD 270.9 million, a decrease of 14.1 percent, or USD 44.5 million, compared to the prior year period Adjusted Ebitda of USD 315.4 million, with the decrease primarily driven by a loss in Foodservice. Adjusted Ebitda in the third quarter of 2020 included an adjustment of USD 4.0 million primarily for the portion of BellRing’s consolidated net earnings which was allocated to noncontrolling interest, resulting in Adjusted Ebitda including 100 percent of the consolidated Adjusted Ebitda of BellRing.

Nine Month Consolidated Operating Results

Net sales were USD 4,287.4 million, an increase of 1.2 percent, or USD 49.1 million, compared to the prior year period net sales of USD 4,238.3 million. Gross profit was USD 1,347.1 million, or 31.4 percent of net sales, an increase of USD 7.2 million compared to the prior year period gross profit of USD 1,339.9 million, or 31.6 percent of net sales.

SG+A expenses were USD 704.5 million, or 16.4 percent of net sales, an increase of USD 38.4 million compared to the prior year period SG+A expenses of USD 666.1 million, or 15.7 percent of net sales. Operating profit was USD 521.6 million, a decrease of 23.1 percent, or USD 156.8 million, compared to the prior year period operating profit of USD 678.4 million. Operating profit for the nine months ended June 30, 2019 included a USD 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 USD 56.2 million, a decrease of 130.2 percent, or USD 242.0 million, compared to the prior year period net earnings of USD 185.8 million. Net loss/earnings included loss on extinguishment of debt of USD 72.9 million and USD 6.1 million in the nine months ended June 30, 2020 and June 30, 2019, respectively. Net loss/earnings included expense on swaps, net of USD 192.4 million and USD 200.9 million in the nine months ended June 30, 2020 and June 30, 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 USD 22.6 million and USD 25.7 million in the nine months ended June 30, 2020 and June 30, 2019, respectively. Net loss/earnings excluded net earnings attributable to noncontrolling interest of USD 17.9 million and USD 0.9 million in the nine months ended June 30, 2020 and June 30, 2019, respectively.

Net loss attributable to common shareholders was USD 56.2 million, or USD 0.81 per diluted common share, compared to the prior year period net earnings available to common shareholders of USD 182.8 million, or USD 2.47 per diluted common share. Adjusted net earnings were USD 150.3 million, or USD 2.13 per diluted common share, compared to the prior year period Adjusted net earnings of USD 275.8 million, or USD 3.66 per diluted common share.

Adjusted Ebitda was USD 865.7 million, a decrease of 4.5 percent, or USD 41.1 million, compared to the prior year period Adjusted Ebitda of USD 906.8 million. Adjusted Ebitda for the nine months ended June 30, 2020 included an adjustment of USD 16.6 million primarily for the portion of BellRing’s consolidated net earnings which was allocated to noncontrolling interest, resulting in Adjusted Ebitda including 100 percent of the consolidated Adjusted Ebitda of BellRing.

For additional information please read the company’s PDF file below (188 KB).

20200807-POST-HOLDINGS-Q3-2020.