St. Louis / MO. (pfh) Post Holdings Inc., a consumer packaged goods holding company in the United States, reported results for the fourth quarter and fiscal year ended September 30, 2015. Highlights:
- Fourth Quarter net sales of 1.3 billion USD and Adjusted Ebitda of 193.1 million USD
- Fiscal Year net sales of 4.6 billion USD and Adjusted Ebitda of 657.4 million USD
- Fiscal 2016 Adjusted Ebitda guidance of between 780 million USD and 820 million USD
Fourth Quarter Consolidated Operating Results
Fourth quarter net sales were 1’309.8 million USD, an increase of 266.7 million USD, or 25.6 percent, compared to the prior year. The sales increase was driven primarily by three acquisitions completed in fiscal 2015. On a comparable basis, net sales were flat when compared to the same period in fiscal 2014.
Gross profit increased 104.6 million USD to 333.3 million USD for the fourth quarter compared to the prior year. Selling, general and administrative (SG+A) expenses for the fourth quarter were 197.2 million USD or 15.1 percent of net sales.
Adjusted Ebitda was 193.1 million USD for the fourth quarter, up 55.8 million USD compared to the prior year, primarily driven by the acquisition of MOM Brands, as well as organic Adjusted Ebitda growth in each of Post’s businesses, except Dymatize.
The net loss attributable to common shareholders was (76.8) million USD, or (1.21) USD per diluted common share, for the fourth quarter. Adjusted net earnings available to common shareholders were 4.1 million USD, or 0.06 USD per diluted common share. Weighted-average diluted common shares outstanding was 63.6 million shares which includes the fiscal 2015 common stock issuances of 16.7 million shares presented on a weighted-average basis.
Fiscal Year 2015 Consolidated Operating Results
Net sales for fiscal year 2015 were 4’648.2 million USD, an increase of 2’237.1 million USD, or 92.8 percent, compared to the prior year. Gross profit increased 553.2 million USD to 1’174.4 million USD compared to the prior year. SG+A expenses for fiscal year 2015 were 734.1 million USD or 15.8 percent of net sales and included 14.1 million USD of transaction expenses.
Other operating expenses, net were 25.1 million USD for fiscal year 2015 and primarily related to adjustments to the carrying value of facilities and other assets which were classified as held for sale. Operating profit of 273.5 million USD was negatively impacted by 25.6 million USD of expenses primarily associated with the announced closures of the Parsippany, New Jersey office and the Boise, Idaho and Farmers Branch, Texas manufacturing facilities.
Adjusted Ebitda was 657.4 million USD for fiscal year 2015, up 312.9 million USD compared to the prior year.
For the fiscal year ended September 30, 2015, the net loss attributable to common shareholders was (132.3) million USD, or (2.33) USD per diluted common share. Adjusted net earnings available to common shareholders were 35.7 million USD, or 0.62 USD per diluted common share.
Post Consumer Brands
Post Consumer Brands includes the Post Foods and MOM Brands ready-to-eat (RTE) cereal businesses.
Net sales were 442.5 million USD for the fourth quarter, up 194.0 million USD over the reported prior year fourth quarter. On a comparable basis, net sales were up 0.2 percent, or 1.1 million USD, over the same period in fiscal 2014. Segment profit was 65.5 million USD and 47.0 million USD for fourth quarter 2015 and 2014, respectively. Fourth quarter 2015 segment profit was negatively impacted by integration expenses of 5.6 million USD. Segment Adjusted Ebitda was 99.9 million USD and 59.7 million USD for fourth quarter 2015 and 2014, respectively.
For fiscal year 2015, net sales were 1’260.8 million USD, up 297.7 million USD over the reported prior year. Segment profit was 205.5 million USD, compared to 173.4 million USD in the prior year. Segment profit for fiscal year 2015 was negatively impacted by an inventory adjustment of 17.0 million USD resulting from acquisition accounting and by integration expenses of 8.6 million USD. Segment Adjusted Ebitda was 302.6 million USD, compared to 225.0 million USD in the prior year.
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 591.4 million USD for the fourth quarter, a decline of 0.7 percent, or 4.0 million USD, over the reported prior year fourth quarter. Egg products sales were up 1.1 percent, with volume down 25.0 percent as a result of the impact of avian influenza which reduced Post’s egg supply available for sale. Refrigerated potato products sales were down 3.9 percent, with volume down 13.2 percent. Pasta products sales were up 17.2 percent, with volume up 13.5 percent. Cheese and other dairy case products sales were down 17.5 percent, with volume down 11.3 percent.
Segment profit was 57.9 million USD and 32.4 million USD for fourth quarter 2015 and 2014, respectively. Segment Adjusted Ebitda was 90.0 million USD and 72.6 million USD for fourth quarter 2015 and 2014, respectively.
For fiscal year 2015, net sales were 2’305.7 million USD, up 1’430.9 million USD over the reported prior year. Segment profit was 188.2 million USD, compared to 21.6 million USD in the prior year. Segment Adjusted Ebitda was 321.3 million USD, compared to 103.3 million USD in the prior year. Increases in net sales, segment profit and segment Adjusted Ebitda for fiscal year 2015 primarily resulted from the inclusion of eight additional months of Michael Foods results compared to fiscal year 2014 based on the timing of the acquisition of that business.
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 136.2 million USD for the fourth quarter, up 37.4 million USD over the reported prior year fourth quarter. On a comparable basis, net sales increased 0.7 percent, or 1.0 million USD, over the same period in fiscal 2014, with strong growth at Premier Nutrition offset by declines at Dymatize and PowerBar. Segment loss was (10.9) million USD and (3.7) million USD for fourth quarter 2015 and 2014, respectively. Segment Adjusted Ebitda was (3.8) million USD and 2.4 million USD for fourth quarter 2015 and 2014, respectively.
Active Nutrition fourth quarter 2015 results were negatively impacted by reduced sales and unfavorable production absorption at Dymatize, which was driven by insufficient product supply resulting from the previously announced production issues that led to the decision to close the Dymatize manufacturing facility. Results were also negatively impacted by an inventory write-off of approximately 9.2 million USD related to unsalable inventory, which, as previously disclosed, was not treated as an adjustment for the purpose of calculating Adjusted Ebitda and other non-GAAP measures. Additionally, 9.7 million USD of inventory write-offs related to usable inventory rendered less than fully recoverable were recorded as plant closure expenses within general corporate expenses and other.
For fiscal year 2015, net sales were 555.0 million USD, up 261.7 million USD over the reported prior year. Segment loss was (13.8) million USD, compared to (1.8) million USD in the prior year. Segment loss for fiscal year 2015 was negatively impacted by an inventory adjustment of 1.9 million USD resulting from acquisition accounting and by integration expenses of 5.0 million USD. Segment Adjusted Ebitda was 20.5 million USD, compared to 19.9 million USD in the prior year.
Private Brands
Private Brands primarily includes nut butters, nut and dried fruit snacks and granola.
Net sales were 140.3 million USD for the fourth quarter, up 39.7 million USD over the reported prior year fourth quarter. On a comparable basis, net sales were up 1.8 percent, or 2.4 million USD, over the same period in fiscal 2014, with granola and cereal up 14.9 percent and nut butters and nut and dried fruit snacks declining 1.1 percent. Segment profit was 13.7 million USD and 7.5 million USD for fourth quarter 2015 and 2014, respectively. Segment Adjusted Ebitda was 21.3 million USD and 12.4 million USD for fourth quarter 2015 and 2014, respectively.
For fiscal year 2015, net sales were 529.7 million USD, up 249.1 million USD over the reported prior year. Segment profit was 41.5 million USD, compared to 19.0 million USD in the prior year. Segment profit for fiscal year 2015 was negatively impacted by an inventory adjustment of 1.3 million USD resulting from acquisition accounting. Segment Adjusted Ebitda was 70.0 million USD, compared to 35.9 million USD in the prior year.
Impairment of Goodwill and Other Intangible Assets
Non-cash goodwill and intangible asset impairment charges of 60.8 million USD were recorded in the fourth quarter of fiscal 2015 within the Active Nutrition and Post Consumer Brands segments. Active Nutrition recognized goodwill impairment charges of 57.0 million USD primarily resulting from production issues at Dymatize which led to the decision to close the Dymatize manufacturing facility and permanently transfer production to third party facilities. Post Consumer Brands recognized intangible asset impairment charges of 3.8 million USD primarily related to the Grape-Nuts brand.
Interest, Other Expense and Income Tax
Interest expense, net was 102.6 million USD for the fourth quarter compared to 60.4 million USD for the prior year quarter. For the fiscal year ended September 30, 2015, interest expense, net was 287.5 million USD, compared to 183.7 million USD for the fiscal year ended September 30, 2014. The increase for the fiscal year was driven by the issuance of approximately 2.4 billion USD in incremental debt in fiscal year 2014 and 700 million USD in incremental debt in fiscal year 2015.
Other expense was 51.0 million USD and 92.5 million USD for the fourth quarter and fiscal year 2015, respectively, compared to 28.7 million USD and 35.5 million USD for the fourth quarter and fiscal year 2014, respectively, and related to non-cash mark-to-market adjustments on interest rate swaps.
Income tax benefit was (40.3) million USD in the fourth quarter of fiscal 2015, compared to a benefit of (42.3) million USD in the fourth quarter of fiscal 2014. The effective income tax rate was 35.7 percent for the fourth quarter of fiscal 2015, compared to 12.8 percent for the fourth quarter of fiscal 2014. For the fiscal year ended September 30, 2015, the income tax benefit was (52.0) million USD, an effective income tax rate of 31.1 percent, compared to a benefit of (83.7) million USD and an effective income tax rate of 19.6 percent for the fiscal year ended September 30, 2014.
Outlook
Post management expects fiscal 2016 Adjusted Ebitda to be between 780 million USD and 820 million USD, with a modest favourability to the first half of the year. Capital expenditures for fiscal 2016 are expected 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 are expected to be between 105 million USD and 115 million USD.
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