Post Holdings (POST) Q4 2014 earnings summary

Executive summary

• FY14 net sales rose to $2,411.1M from $1,034.1M, driven mainly by acquisitions; excluding acquisitions, sales declined 2% despite 1.4% Post Foods volume growth.

• Operating loss of $207.7M and net loss of $343.2M reflected $295.6M of goodwill and trademark impairments, alongside higher amortization, currency losses and acquisition-related costs.

• Portfolio expanded into eggs, potatoes, pasta, nut products and sports nutrition through multiple acquisitions; fiscal 2015 operations were realigned into Consumer Brands, Michael Foods and Private Label groups.

Financial highlights

• FY14 net sales $2,411.1M, gross profit $621.2M, operating loss $207.7M, net loss $343.2M and diluted EPS $(9.03), versus FY13 sales $1,034.1M and net earnings $15.2M.

• Acquisitions drove reported sales growth of ~133%; excluding acquisitions, net sales declined 2%.

• Impairment charges totaled $295.6M; other notable costs included $26.1M acquired-inventory valuation adjustments, $29.7M acquisition costs and $5.3M integration costs.

• FY14 operating cash flow was $183.1M, up $63.9M YoY; cash ended at $268.4M, down $133.6M from FY13.

• Q4 net loss was $287.4M and loss available to common stockholders was $291.7M; diluted EPS was $(5.86), including the impairment charges.

Outlook and guidance

• Modesto plant closure completed in Sep. 2014; expected net pretax annual cash manufacturing savings of ~$14.0M, fully phased in with FY15.

• FY15 structure combines Post Foods and Active Nutrition in Consumer Brands, Dakota Growers with Michael Foods, and Golden Boy with Attune Foods in Private Label.

• PowerBar and Musashi acquisition closed Oct. 1, 2014; American Blanching Company acquisition closed Nov. 1, 2014, for $128.0M on a debt-free, cash-free basis.

• Expected FY15 pension contributions were $6.9M to defined benefit plans and $2.1M to postretirement medical plans.