Business Strategies / Industry News

Post Still Considering Blockbuster Acquisitions

By Dave Fusaro, Editor in Chief

Nov 30, 2015

Despite several recent transformative acquisitions, which have saddled the company with $4.5 billion in long-term debt, Post Holdings remains open to blockbuster purchases in the year ahead.

Responding to a question in a Nov. 24 earnings call with financial analysts, Pres/CEO Robert Vitale said, "Two years ago, to really move the needle, we needed the blockbuster acquisitions. Now we don't have to. But that said, we continue to pursue transformative acquisitions."

Vitale and CFO Jeff Zadoks disclosed fourth quarter and fiscal year 2015 (which ended Sept. 30) figures they say show marked improvements in the company's financial position, despite a net loss for the year of $132 million (better than the $359 million loss in FY2014), $77 million of that in the fourth quarter.

For the year, earnings before interest, taxes, depreciation and amortization (EBITDA) was a positive $657 million, and operating profit was a profit – a positive $213 million, compared to a $208 million loss the year earlier. Sales for fiscal 2015 were $4.6 billion, nearly double the $2.4 billion of that in FY 2014.

Much of that growth spurt was driven by the acquisition of MOM Brands, formerly Malt-O-Meal. The integration of that purchase with Post's legacy cereals business is proceeding well, the two executives said, with "optimization" of production and capacity but no planned factory shutdowns.

On the other hand, the company did shut down internal manufacturing of its early 2014 acquisition Dymatize, which makes protein powders, bars and nutritional supplements. Dymatize was the key underperformer in the financial report, and Post plans to terminate its private label business and cut back the branded business to a few key products.

Its Michael Foods unit, acquired in mid-2014, weathered well such changes over the past year as avian influenza, the move to cage-free eggs and McDonald's all-day breakfasts.

Post management expects fiscal 2016 adjusted EBITDA to be between $780-820 million.

Post Foods has made a string of acquisitions large and small since it was spun off from Ralcorp in 2012. Its business units now are Consumer Brands (primarily cereals), Michael Foods Group (predominantly foodservice and food ingredients), Active Nutrition (protein shakes, bars and powders, including PowerBar) and Private Brands.