St. Louis / MO. (pfh) Post Holdings Inc., a consumer packaged goods holding company in the United States, announced it will close its Dymatize manufacturing facility in Farmers Branch, Texas and permanently transfer production to third party facilities under co-manufacturing agreements. The decision will impact approximately 115 employees. Post has committed to providing severance and transition assistance to all affected employees.
«We have determined that the cost and effort to bring this facility to an acceptable reliability and margin level is better deployed in brand building and sales infrastructure», said Rob Vitale, Post’s President and CEO. «This decision enables us to focus on rapidly changing consumer trends, developing innovative products and building upon the strong Dymatize brand».
As a result of plant operational and quality issues, the manufacturing facility has ceased production, resulting in a write-off of approximately 9.2 million USD of unsalable inventory. Final closure of the facility is expected to be completed by December 01, 2015, and through Dymatize’s strong relationships with certain co-manufacturers, production of the Dymatize products by third parties has begun.
In connection with the closure, Post expects to incur pre-tax charges of approximately eleven million USD to 16 million USD, which will be treated as adjustments for purposes of calculating Adjusted Ebitda and other non-GAAP measures. These charges include approximately four million USD to six million USD for severance, retention and other plant closure costs and a reserve of approximately seven million USD to ten million USD for usable inventory rendered less than fully recoverable by the decision to close the manufacturing facility. These charges are expected to be incurred primarily in Post’s fourth quarter of fiscal 2015, of which approximately 2.5 million USD to 3.5 million USD will be incurred in fiscal 2016.
The estimates discussed above exclude any non-cash impairment charges, which cannot be determined at this time. Post will be evaluating the need for non-cash impairment charges on the carrying value of goodwill, intangibles and property, plant and equipment associated with Dymatize in connection with the preparation of Post’s fiscal fourth quarter financial statements.
Confirmation of Fiscal 2015 Adjusted Ebitda Guidance
Post management also affirmed its fiscal 2015 Adjusted Ebitda guidance to be between 635 million USD and 650 million USD, which includes the impact of the write-off of approximately 9.2 million USD of unsalable inventory described above, which will not be treated as an adjustment for the purpose of calculating Adjusted Ebitda and other non-GAAP measures.