Post Holdings, Inc. (POST, Financial) is a consumer goods company currently operating in the center-of-the-store, refrigerated, active nutrition and private label food categories. Post's Consumer Brands portfolio spans from center-of-the-store to active nutrition, offering a broad range of choices to meet the taste and nutritional needs of a variety of consumers and includes recognized brands such as Honey Bunches of Oats, Pebbles, Great Grains, Grape-Nuts, Honeycomb, PowerBar, Premier Protein, Supreme Protein and Dymatize.
First quarter 2015 results
Net Sales
During the first quarter of 2015, net sales were $1,073.9 million, an increase of $776.9 million, or 261.6%, compared to the prior year.
Gross Profit
Gross profit increased $134.6 million to $249.1 million for the first quarter compared to the prior year.
Selling, general and administrative (SG&A) expenses
Selling, general and administrative (SG&A) expenses during this quarter were $166.0 million (15.5% of net sales). These expenses included $5.0 million of acquisition related transaction expenses for announced transactions.
Adjusted EBITDA
Adjusted EBITDA during the quarter stood at $127.6 million f (which was an increase of $71.7 million compared to the previous year).
Income Tax and Interest Rates
During the first quarter of 2015, income tax expense was $23.5 million in the first quarter of fiscal 2015, (compared to a benefit of $1.4 million in the first quarter of fiscal 2014). The effective income tax rate was negative 31.8% for the first quarter of fiscal 2015. Net interest expense was $60.1 million for the first quarter compared to $29.0 million for the prior year quarter. The increase was driven by the issuance of $1,505.0 million in aggregate principal amount of senior notes in fiscal year 2014, as well as an increase in outstanding debt from the term loan and the amortizing note portion of the tangible equity units.
Miscellaneous
Other expense, net was $54.6 million for the first quarter and related to non-cash mark to market adjustments on interest rate swaps. For the first quarter, the net loss attributable to common shareholders was ($101.6) million, or ($2.04) per diluted common share. Adjusted net loss attributable to common shareholders was ($57.2) million, or ($1.15) per diluted common share. Weighted-average diluted common shares outstanding increased to 49.8 million shares for the first quarter 2015 compared to 32.7 million for the prior year quarter.
Segmentwise results
Consumer Brands: Segment profit was $31.3 million, compared to $47.4 million in the prior year. Segment Adjusted EBITDA was $54.5 million, compared to $62.2 million in the prior year. Net sales were $347.9 million for the first quarter, up $73.8 million, or 26.9% from the previous year.
Michael Foods Group: Net sales were $599.3 million for the first quarter, and on a comparable basis, were up 4.0%, or $22.9 million, over the same period in fiscal 2014, with volume up 0.9%. Egg sales soared by 0.8%. Pasta products sales increased by2.3%. Segment profit and segment Adjusted EBITDA for the first quarter was $42.1 million and $72.4 million, respectively.
Private Label: Net sales were $127.8 million for the first quarter, up $104.6 million from the year 2014 first quarter. Segment profit was $6.9 million, compared to $2.6 million in the prior year. Segment Adjusted EBITDA was $14.3 million, compared to $4.4 million in the prior year.
(Source: Company’s Website)
2015 expectations
- The company expects fiscal 2015 Adjusted EBITDA to be between $540.0 million and $580.0 million, (excluding any contribution from the pending acquisition of MOM Brands).
- POST expects progressive improvement in quarterly Adjusted EBITDA throughout fiscal 2015 on a consolidated basis.
- 2015 capital expenditures to be in the range of $115.0 million-$125.0 million, excluding any contribution from the pending acquisition of MOM Brands.
- Maintenance capital expenditures are expected to be between $75.0 million-$85.0 million.
Acquisition spree
POST announced to acquire MOM Brands Company, a leader in the RTE cereal value segment with over 95 years of experience. The transaction may get closed by the third quarter of this year.
Details of the Transaction: POST will shed out $1.15 billion for MOM brands on a cash-free, debt-free basis, subject to working capital and other customary closing adjustments. Various lenders agreed to provide assistance up to $700 million under a secured term loan facility.
To end
The company reported solid first-quarter results, and there was a marked improvement in all the segments. It is constantly raising the bar for its segment sales. It is a food manufacturing company that created a separate niche for itself and is favorably positioned in the industry. The company made an announcement to acquire MOM Brands. POST will benefit from this acquisition in the coming future. The company is well placed in the industry and is poised to grow. I personally wound recommend this company to the investors. It is going to create shareholder returns in the future. Investors may add this company to their portfolio.
