Post(US:POST)2024-02-02 15:54PART I. FINANCIAL INFORMATION This section provides the unaudited financial statements and management's discussion and analysis for the first fiscal quarter Financial Statements (Unaudited) This section presents Post Holdings, Inc.'s unaudited condensed consolidated financial statements for the quarter ended December 31, 2023, including operations, comprehensive income, balance sheets, cash flows, and equity Condensed Consolidated Statements of Operations (Unaudited) Net sales increased to $1,965.9 million, operating profit rose to $209.3 million, while net earnings slightly decreased to $88.1 million for the quarter Three Months Ended December 31 (in millions, except per share data) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Sales | $1,965.9 | $1,566.3 | | Gross Profit | $572.6 | $414.9 | | Operating Profit | $209.3 | $149.9 | | Net Earnings | $88.1 | $91.9 | | Diluted Earnings per Share | $1.35 | $1.52 | Condensed Consolidated Statements of Comprehensive Income (Unaudited) Total comprehensive income decreased to $153.6 million, primarily due to lower net earnings and reduced foreign currency translation adjustments Comprehensive Income (in millions) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Earnings Including Noncontrolling Interests | $88.1 | $93.7 | | Total Other Comprehensive Income | $65.1 | $116.8 | | Total Comprehensive Income | $153.6 | $209.0 | Condensed Consolidated Balance Sheets (Unaudited) Total assets increased to $12,072.4 million, driven by goodwill and intangibles, while total liabilities rose to $8,119.6 million due to increased long-term debt Balance Sheet Highlights (in millions) | Metric | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | | Total Assets | $12,072.4 | $11,646.7 | | Total Current Assets | $1,660.7 | $1,478.5 | | Goodwill | $4,652.4 | $4,574.4 | | Total Liabilities | $8,119.6 | $7,795.4 | | Long-term debt | $6,314.0 | $6,039.0 | | Total Shareholders' Equity | $3,952.8 | $3,851.3 | Condensed Consolidated Statements of Cash Flows (Unaudited) Operating cash flow increased to $174.4 million, investing activities used $333.8 million for acquisitions, and financing provided $206.3 million from debt Cash Flow Summary (in millions) | Activity | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $174.4 | $98.3 | | Net Cash Used in Investing Activities | $(333.8) | $(53.0) | | Net Cash Provided by (Used in) Financing Activities | $206.3 | $(28.3) | | Net Increase in Cash | $48.8 | $19.8 | Notes to Condensed Consolidated Financial Statements (Unaudited) Notes detail accounting policies, acquisitions of Perfection Pet Foods and Deeside Cereals, debt structure, segment performance, and the planned closure of the Lancaster facility - On December 1, 2023, the Company acquired Perfection Pet Foods for $235.0 million and Deeside Cereals for approximately $14.3 million, integrating them into the Post Consumer Brands and Weetabix segments respectively4752 - The company finalized plans to close its Lancaster, Ohio, cereal manufacturing facility by fiscal 2024, incurring a $7.5 million restructuring charge in the quarter5859 Segment Net Sales (in millions) | Segment | Q1 FY2024 | Q1 FY2023 | | :--- | :--- | :--- | | Post Consumer Brands | $988.6 | $554.7 | | Weetabix | $129.1 | $118.1 | | Foodservice | $567.1 | $600.5 | | Refrigerated Retail | $280.9 | $293.0 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 FY2024 financial performance, highlighting a 26% net sales increase to $1.97 billion, a 40% operating profit rise, segment results, liquidity, and market trends Q1 FY2024 vs Q1 FY2023 Performance (in millions) | Metric | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,965.9 | $1,566.3 | $399.6 | 26% | | Operating Profit | $209.3 | $149.9 | $59.4 | 40% | | Net Earnings | $88.1 | $91.9 | $(3.8) | (4)% | - Market trends include easing inflationary pressures, avian influenza impacts on Foodservice and Refrigerated Retail, and a consumer shift towards private label products136 - The company borrowed $345.0 million and repaid $45.0 million under its Revolving Credit Facility, and repurchased $25.9 million of its 4.50% senior notes162 Segment Results Post Consumer Brands sales increased 78% due to acquisitions, Weetabix grew 9%, Foodservice declined 6% from lower egg prices, and Refrigerated Retail profit surged 70% despite a 4% sales drop - Post Consumer Brands net sales increased by $433.9 million (78%), primarily from Pet Food ($407.1 million) and Perfection ($19.5 million) acquisitions, with segment profit growing 67% to $132.7 million149150 - Foodservice net sales decreased by $33.4 million (6%) due to lower egg product prices, despite a 4% increase in egg volumes153 - Refrigerated Retail segment profit increased by $14.6 million (70%), driven by reduced manufacturing, raw material, and freight costs, offsetting a 4% net sales decline155156 Liquidity and Capital Resources The company's liquidity is supported by cash, operating cash flow, and credit facilities, with Q1 FY2024 operating cash flow at $174.4 million, investing activities using $333.8 million, and financing providing $206.3 million - Cash from operating activities increased to $174.4 million from $98.3 million year-over-year, driven by favorable trade payable timing and prior year inventory cash outflow comparisons164165 - Investing activities included $252.7 million for Perfection and Deeside acquisitions and $80.8 million in capital expenditures166 - Financing activities included $345.0 million in Revolving Credit Facility borrowings and $36.7 million for common stock repurchases162168 Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from commodity prices, foreign currency, and interest rates using derivatives, with $6.32 billion in debt, and a 10% adverse commodity price change would impact derivatives by $5 million - A hypothetical 10% adverse change in principal hedged commodity prices would decrease the fair value of commodity-related derivatives by approximately $5 million as of December 31, 2023182 - Total outstanding debt was $6,323.7 million as of December 31, 2023, with $5,618.4 million at a weighted-average fixed interest rate of 4.8%185 - Interest rate swaps with a notional value of $700.0 million would see their fair value decrease by approximately $13 million with a hypothetical 10% interest rate increase187 Controls and Procedures Management concluded disclosure controls and procedures were effective as of December 31, 2023, with ongoing integration of controls for Perfection and Pet Food acquisitions - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of the report period end188 - Management is implementing control changes related to the Perfection and Pet Food acquisitions189 PART II. OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits Legal Proceedings The company is involved in various legal proceedings, with management expecting no material impact on financial condition, and no environmental proceedings exceeding the $1.0 million disclosure threshold - Management believes the ultimate liability from pending legal proceedings will not be material to the company's consolidated financial condition, results of operations, or cash flows109 - The company's $1.0 million disclosure threshold for environmental proceedings with a governmental entity resulted in no reportable proceedings for the period191 Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, have occurred - No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, have occurred as of this quarterly report date192 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 435,774 common shares at an average price of $84.28 during the quarter, with $165.7 million remaining under the existing authorization Share Repurchases for Quarter Ended Dec 31, 2023 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2023 | 283,951 | $83.57 | | Nov 2023 | 82,372 | $84.98 | | Dec 2023 | 69,451 | $86.39 | | Total | 435,774 | $84.28 | - On January 30, 2024, the Board cancelled the existing share repurchase authorization and approved a new $400.0 million authorization effective February 5, 2024, expiring February 5, 2026194 Other Information No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the first quarter of fiscal 2024 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the first quarter of fiscal 2024195 Exhibits This section lists exhibits filed with or incorporated by reference into the Form 10-Q, including agreements, corporate documents, indentures, and officer certifications - The report includes a list of filed exhibits, such as transaction agreements, indentures for senior notes, and CEO/CFO certifications197198