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Post Holdings, Inc. Reports Results for the First Quarter of Fiscal Year 2013

Post Holdings, Inc. Reports Results for the First Quarter of Fiscal Year 2013

PR Newswire

ST. LOUIS, Feb. 7, 2013

ST. LOUIS, Feb. 7, 2013 /PRNewswire/ -- Post Holdings, Inc. (NYSE:POST), a
leading manufacturer, marketer and distributor of branded ready to eat
cereals, today reported results for the fiscal quarter ended December 31,
2012.

(Logo: http://photos.prnewswire.com/prnh/20120523/CG12577LOGO)

First Quarter 2013 Highlights:

  oNet sales of $236.9 million
  oAdjusted EBITDA up 15% year over year to $52.5 million
  oU.S. dollar market share for expanded all outlets combined (xAOC) of 10.2%
    for the thirteen weeks ended December 29, 2012

Post net sales increased 8% for the quarter ended December 31, 2012 as
compared to the prior year, primarily driven by a 6% improvement in overall
volumes and a 2% increase in average net selling prices. For the quarter ended
December 31, 2012, the improved volumes were driven by increases in the Honey
Bunches of Oats, Grape Nuts and Pebbles brands which increased 3%, 15% and 5%,
respectively, as well as increases from the recently introduced Good Morenings
value brand and co-manufacturing agreements. Average net selling prices
increased primarily due to lower overall trade and promotional spending
despite incrementally higher slotting fees for new product introductions.

Gross profit increased by 7.9% for the first quarter versus prior year on
improved net sales, gross profit margin percentage decreased by 0.1% primarily
due to higher raw materials costs (primarily grains, fruit and packaging),
partially offset by improved fixed cost absorption. Production volume
increased with sales volumes, but also reflected inventory build-up as a
contingency plan in anticipation of work stoppage at one of our manufacturing
facilities. We were successful in reaching an agreement with the labor union
without a work stoppage. We anticipate lower production volumes aimed at
reducing inventory may unfavorably impact fixed cost absorption in future
periods.

Excluding the effect of $2.8 million and $2.7 million of costs related to the
transition and separation from Ralcorp incurred during the first quarter of
fiscal 2013 and 2012, respectively, selling, general and administrative
expenses as a percentage of net sales increased from 27.7% in the first
quarter of fiscal 2012 to 29.3% in the first quarter of fiscal 2013. This
increase was primarily driven by incremental holding company costs, non-cash
mark to market adjustments on deferred compensation liabilities and higher
operating company overhead for the new direct sales force.

Adjusted EBITDA for the quarter was $52.5 million versus $45.6 million for the
same time period a year ago.

Income tax expense was $3.5 million, which represents an effective income tax
rate of 31.5%, for the first quarter, compared to an effective income tax rate
of 32.3% for the same period a year ago.

Net earnings were $7.6 million, or $0.23 per diluted share, for the first
quarter. Adjusted net earnings and Adjusted diluted earnings per share for
the quarter were $10.0 million and $0.31, respectively. 

Operating cash flow was $23.6 million and $26.2 million in the first quarters
of 2013 and 2012, respectively. The current year amount was favorably
impacted by a $15.0 million premium on our $250 million high yield bond
offering completed in October 2012. Increases in inventory and accounts
receivable unfavorably impacted operating cash flow for the 2013 quarter in
the aggregate amount of approximately $28.8 million. Inventory increased for
the aforementioned work stoppage contingency plan, and the increase in
accounts receivable resulted from large pipeline shipments of new products
during the last two weeks of the 2013 first quarter. 

According to Nielsen, ready to eat cereal category revenues were down
slightly, -0.8%, for the thirteen weeks ended December 29, 2012 as compared to
the prior year, and category volumes, measured in pounds, declined -1.9%.
Category dollars for the quarter were not down as significantly as consumption
volume due to slight increases in every day and promoted average selling
prices. The current year Nielsen data referenced in this press release is as
of December 29, 2012.

Post's U.S. xAOC dollar market share was 10.2% for the thirteen weeks ended
December 29, 2012, down 0.5 share points versus the same prior year time
period. Post's xAOC pounds share was steady at 10.4% for the thirteen week
period ended December 29, 2012.

Post and Ralcorp entered into a Transition Services Agreement in connection
with the spin-off of Post from Ralcorp, covering over 20 different services
areas. The most critical service area, information technology, is on track
to go live and on an independent basis this summer. Management does not
expect the recent merger of Ralcorp with ConAgra Foods Inc. to materially
impact Post's information technology transition plans.

Outlook

Post management confirms its previously provided guidance for fiscal 2013
Adjusted EBITDA to be between $210 million and $225 million, after considering
the estimated year-over-year unfavorable commodity cost effect of between $10
million and $15 million. Post management continues to expect that capital
expenditures will be in the range of $30 to $35 million, inclusive of between
$11 and $13 million of capital costs associated with establishing stand-alone
information systems separate from Ralcorp. Finally, management expects net
interest expense to be between $80 and $83 million in fiscal 2013.

Use of Non-GAAP Measures

Management has determined that the Adjusted EBITDA, Adjusted net earnings and
Adjusted diluted earnings per share metrics presented herein are key metrics
that will help investors understand the ultimate income and near-term cash
flows generated by our business. Adjusted EBITDA is a non-GAAP measure which
represents net earnings excluding income taxes, net interest expense, net
other nonoperating income/expense, depreciation and amortization, noncash
stock based compensation, nonrecurring cash compensation for
retention/severance, accounts receivable servicing fees, costs to effect
Post's separation from Ralcorp and to establish stand-alone systems and
processes, mark to market adjustments on economic hedges and intangible asset
impairments, if any, and including an estimate of incremental costs Post would
have incurred had it been a stand-alone public company during the periods
presented. The Company believes that Adjusted EBITDA is useful to an investor
in evaluating the Company's operating performance and liquidity because (i) it
is widely used to measure a company's operating performance without regard to
items such as depreciation and amortization, which can vary depending upon
accounting methods and the book value of assets, (ii) it presents a meaningful
measure of corporate performance exclusive of the Company's capital structure
and the method by which the assets were acquired, and (iii) it is a widely
accepted financial indicator of a company's ability to service its debt, as
the Company is required to comply with certain covenants and limitations that
are based on variations of EBITDA in the Company's financing documents.
Adjusted net earnings is a non-GAAP measure which represents net earnings
excluding costs to effect Post's separation from Ralcorp and to establish
stand-alone systems and processes, nonrecurring cash compensation for
retention/severance, items not transferred to Post after the separation from
Ralcorp such as equity income and currency gains on intercompany debt, and
includes an estimate of incremental selling, general and administrative costs
and interest expense Post would have incurred had it been a stand-alone public
company for the entire period reported. The Company believes Adjusted net
earnings and Adjusted diluted earnings per share are useful to investors in
evaluating the Company's operating performance because they exclude items that
could affect the comparability of our financial results and could potentially
distort the trends in business performance. In addition, for the historical
periods presented, they provide investors with insight into the Company's
performance on a basis consistent with being a stand-alone public company
rather than an operating segment of Ralcorp. The calculations of Adjusted
EBITDA, Adjusted net earnings and Adjusted diluted earnings per share are not
specified by United States generally accepted accounting principles. Our
calculations of Adjusted EBITDA, Adjusted net earnings and Adjusted diluted
earnings per share may not be comparable to similarly-titled measures of other
companies. See the reconciliation tables provided at the end of this press
release.

Conference Call

The Company will host a conference call on Thursday, February 7, 2013 at 4:30
p.m. Eastern Time. During the call, Terence E. Block, President and Chief
Operating Officer, and Robert V. Vitale, Chief Financial Officer, will discuss
the results for the first quarter of 2013 and fiscal 2013 guidance.

The call will be broadcast over the Internet and can be accessed by visiting
the investor relations section of the Company's website at www.postfoods.com.
Participants may join the conference call by dialing (877) 540-0891 in the
United States and (678) 408-4007 from outside the United States. The
conference identification number for all participants is 91491617.

For those unable to participate during the live call and webcast, a replay
will be available on the Company's website until February 21, 2013.

Forward-Looking Statements

Certain matters discussed in this press release and on the conference call are
forward-looking statements, including statements regarding the timing of our
inventory reduction, our Adjusted EBITDA guidance for fiscal 2013, expected
capital spending in fiscal 2013, expected net interest expense in fiscal 2013,
our expected unfavorable commodity cost effect in fiscal 2013, and our
expectations regarding the timing of our information technology transition.
Such statements involve certain risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. Potential risks and uncertainties include the impact of our
separation from Ralcorp and risks relating to our ability to operate
effectively as a stand-alone, publicly traded company; our high leverage and
substantial debt, including covenants that will restrict the operation of our
business; the impact of the restatement of Post's financial statements;
significant increases in the costs of certain commodities, packaging or energy
used to manufacture our products; changes in our cost structure, management,
financing and business operations following the separation; labor strikes or
work stoppages by our employees; our ability to achieve benefits from our
separation; our obligations to indemnify Ralcorp if the separation is taxable
under certain circumstances; restrictions on our taking certain actions due to
tax rules and covenants with Ralcorp; our ability to continue to compete in
our product market against manufacturers of both branded and private label
cereal products and our ability to retain our market position; our ability to
maintain competitive pricing, successfully introduce new products or
successfully manage our costs; our ability to successfully implement business
strategies to reduce costs; impairment in the carrying value of goodwill or
other intangibles; the loss or bankruptcy of a significant customer;
allegations that our products cause injury or illness, product recalls and
product liability claims and other litigation; our ability to anticipate
changes in consumer preferences and trends; changes in consumer demand for
ready-to-eat cereals; our ability to service our outstanding debt or obtain
additional financing; disruptions in the U.S. and global capital and credit
markets; legal and regulatory factors including changes in food safety,
advertising and labeling laws and regulations; disruptions or inefficiencies
in supply chain; fluctuations in foreign currency exchange rates;
consolidations among the retail grocery and foodservice industries; change in
estimates in critical accounting judgments and changes to or new laws and
regulations affecting our business; losses or increased funding and expenses
related to our qualified pension plan; loss of key employees; changes in
weather conditions, natural disasters and other events beyond our control;
business disruptions caused by information technology failures; and other
risks described in the Company's filings with the Securities and Exchange
Commission. These forward-looking statements represent the Company's judgment
as of the date of this press release. The Company disclaims, however, any
intent or obligation to update these forward-looking statements.

About Post Holdings, Inc.

Post Holdings, Inc. is the parent company of Post Foods, LLC. Post has
enriched the lives of consumers, bringing quality foods to the breakfast table
since the company's founding in 1895. Post's products are generally sold to
supermarket chains, wholesalers, supercenters, club stores, mass
merchandisers, distributors, convenience stores and the foodservice channel in
North America. Those products are manufactured at four facilities located in
Battle Creek, Michigan; Jonesboro, Arkansas; Modesto, California; and Niagara
Falls, Ontario. Post's portfolio of brands includes diverse offerings to meet
the taste and nutritional needs of all families, including such favorites as
Honey Bunches of Oats®, Pebbles™, Great Grains®, Post Shredded Wheat®, Post®
Raisin Bran, Grape-Nuts®, and Honeycomb®. With the acquisition of Attune
Foods, Post's portfolio of brands now also includes Attune®, Uncle Sam® and
Erewhon®. Post is dedicated to health and wellness, offering consumers a
variety of cereal choices to meet their nutritional needs from whole grain and
fiber to lower sugar offerings. For more information, visit
www.postfoods.com.



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except per share data)
                                             Quarter Ended

                                             December 31,
                                             2012      2011
Net Sales                                    $ 236.9   $ 219.3
Cost of goods sold                           131.2     121.3
Gross Profit                                 105.7     98.0
Selling, general and administrative expenses 72.1      63.5
Amortization of intangible assets            3.2       3.2
Other operating expenses, net                0.1       —
Operating Profit                             30.3      31.3
Interest expense, net                        19.2      13.0
Other income, net                            —         (0.6)
Earnings before Income Taxes                 11.1      18.9
Income tax expense                           3.5       6.1
Net Earnings                                 $ 7.6     $ 12.8
Earnings per share:
Basic                                        $ 0.23    $ 0.37
Diluted                                      $ 0.23    $ 0.37
Weighted-Average Common Shares Outstanding:
Basic                                        32.6      34.4
Diluted                                      32.7      34.4



POST HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)
                                         December 31, 2012  September 30, 2012
ASSETS
Current Assets
Cash and cash equivalents                $    310.9         $    58.2
Receivable from Ralcorp                  0.9                —
Receivables, net                         66.7               56.5
Inventories                              100.1              78.6
Deferred income taxes                    1.6                1.1
Prepaid expenses and other current       9.6                15.3
assets
Total Current Assets                     489.8              209.7
Property, net                            396.3              405.1
Goodwill                                 1,370.1            1,366.6
Other intangible assets, net             736.6              736.0
Other assets                             22.0               14.9
Total Assets                             $    3,014.8       $    2,732.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt        $    17.5          $    15.3
Accounts payable                         42.2               50.0
Other current liabilities                79.7               61.1
Total Current Liabilities                139.4              126.4
Long-term debt                           1,190.7            930.3
Deferred income taxes                    314.0              314.9
Other liabilities                        129.5              129.2
Total Liabilities                        1,773.6            1,500.8
Total Stockholders' Equity               1,241.2            1,231.5
Total Liabilities and Stockholders'      $    3,014.8       $    2,732.3
Equity



SELECTED CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)

(in millions)
                                                      Quarter Ended

                                                      December 31,
                                                      2012      2011
Cash provided by (used in):
Operating activities                                  $ 23.6    $ 26.2
Investing activities                                  (14.2)    (9.1)
Financing activities                                  243.4     (6.0)
Effect of exchange rates on cash and cash equivalents (0.1)     0.1
Net increase in cash and cash equivalents             $ 252.7   $ 11.2



RECONCILIATION OF NET EARNINGS TO ADJUSTED EBITDA (Unaudited)

(in millions)
                                                 Quarter Ended

                                                 December 31,
                                                 2012      2011
Net Earnings                                     $ 7.6     $ 12.8
Income tax expense                               3.5       6.1
Interest expense, net                            19.2      13.0
Depreciation and amortization                    16.2      14.9
Spin-Off costs/post Spin-Off non-recurring costs 2.8       2.7
Non-cash stock-based compensation                2.5       0.4
Mark to market adjustments on economic hedges    0.7       0.6
Nonrecurring cash compensation/retention         —         0.3
Other nonoperating income, net                   —         (0.6)
Accounts receivable servicing fees               —         (0.8)
Public company costs ^(1)                        —         (3.8)
Adjusted EBITDA                                  $ 52.5    $ 45.6
Adjusted EBITDA as a percentage of Net Sales     22.2   %  20.8   %



    

    Represents Post management's estimate of the incremental cash costs Post
   would have incurred as a separate, stand-alone public company if the
    Company had been separated from Ralcorp for the quarter ended December 31,
(1) 2011. These costs were not actually incurred during the quarter ended
    December 31, 2011. The estimated costs have been deducted in the
    calculation of Adjusted EBITDA to provide a frame of reference for future
    periods.



RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS (Unaudited)

(in millions, except per share data)
                                                  Quarter Ended

                                                  December 31,
                                                  2012      2011
Net Earnings                                      $  7.6    $ 12.8
Adjustments to Net Earnings:
Spin-Off costs/post Spin-Off non-recurring costs  2.8       2.7
Mark to market adjustments on economic hedges     0.7       0.6
Nonrecurring cash compensation/retention          —         0.3
Other nonoperating income, net                    —         (0.6)
Accounts receivable servicing fees                —         (0.8)
Incremental interest expense ^(1)                 —         (3.2)
Public company costs ^(2)                         —         (3.8)
                                                  3.5       (4.8)
Income tax effect on adjustments                  (1.1)     1.5
Adjusted Net Earnings                             $  10.0   $ 9.5
Weighted-Average Shares Outstanding - Diluted     32.7      34.4
Adjusted Diluted Earnings per Share               $  0.31   $ 0.28



    

    Represents Post management's estimate of incremental interest expense Post
    would have incurred if the debt incurred on February 3, 2012 to effect the
   spin-off from Ralcorp had been outstanding for all of fiscal 2012. These
    costs were not actually incurred during the quarter ended December 31,
(1) 2011. The estimated costs have been deducted in the calculation of
    Adjusted Net Earnings and Adjusted Diluted Earnings per Share to provide a
    frame of reference for future periods.

    
    Represents Post management's estimate of the incremental cash costs Post
    would have incurred as a separate, stand-alone public company if the
    Company had been separated from Ralcorp for the quarter ended December 31,
(2) 2011. These costs were not actually incurred during the quarter ended
    December 31, 2011. The estimated costs have been deducted in the
    calculation of Adjusted Net Earnings and Adjusted Diluted Earnings per
    Share to provide a frame of reference for future periods.



SOURCE Post Holdings, Inc.

Website: http://www.postfoods.com
Contact: Pia Koster, Director, Investor Relations, +1-314-644-7678 (POST)
 
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