Post Holdings Slips To Loss In Q3; To Buy American Blanching For $128 Mln

(RTTNews) - Cereal maker Post Holdings, Inc. (POST) on Thursday reported a loss for the third quarter as strong sales growth was offset by higher costs and expenses. The company reported an adjusted loss for the quarter, while analysts expected a profit. Shares of the company declined more than 10 percent in extended trades.

However, revenues for the quarter beat analysts' expectations. The company also said it has agreed to acquire American Blanching Co., a manufacturer of peanut butter, for $128 million as part of its efforts to expand its peanut butter operations.

St. Louis, Missouri-based Post Holdings, the maker of ready-to-eat breakfast cereals like the Raisin Bran, Honeycomb and Honey Bunches of Oats brands, said its net loss attributable to common stockholders for the third quarter was $39.3 million or $0.92 per share, compared to net income of $1.1 million or $0.03 per share in the prior-year period.

The latest quarter's results include, among others, inventory valuation adjustments of $2.4 million, acquisition-related transaction costs of $12.4 million, integration costs of $2.9 million, and mark-to-market adjustments and settlements on interest rate swaps of $6.8 million.

Adjusted net loss for the quarter was $12.6 million or $0.30 per share, compared to adjusted net income of $9.5 million or $0.29 per share in the prior-year period. On average, four analysts polled by Thomson Reuters expected the company to report earnings of $0.27 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter more than doubled to $633.0 million from $257.3 million in the prior-year quarter. Analysts had a consensus revenue estimate of $628.30 million for the quarter.

Acquisitions, defined as the Michael Foods, Active Nutrition, Private Brands and Attune Foods segments, contributed $394.8 million to consolidated net sales, the company noted.

Gross profit increased to $148.6 million from $104.2 million, while operating profit decreased to $8.0 million from $24.2 million.

Looking ahead to fiscal 2014, Post now forecasts fiscal 2014 adjusted earnings before interest, tax, debt and amortization or EBITDA between $260 million and $270 million, excluding the now completed acquisition of Michael Foods and the pending acquisitions of the PowerBar and Musashi brands as well as of American Blanching.

Earlier, Post had forecast fiscal 2014 adjusted EBITDA in a range of $300 million to $320 million, excluding the pending acquisitions of the PowerBar and Musashi brands as well as of Michael Foods.

Post said it has signed a stock purchase agreement to acquire American Blanching, a maker of peanut butter for national brands, private label retail and industrial markets, and also a provider of peanut blanching, granulation and roasting services for the commercial peanut industry.

Post will pay $128 million for the acquisition, on a cash-free, debt-free basis, subject to working capital and other adjustments, and to be funded from cash on hand. The company expects to complete the deal in the first quarter of fiscal 2015.

On a full-year basis, Post expects American Blanching to contribute about $135 million to net sales and about $14 million to $16 million of adjusted EBITDA.

American Blanching operates a peanut butter manufacturing facility located in Fitzgerald, Georgia. Post expects to combine American Blanching with Golden Boy Foods, its existing peanut and other nut butter business.

POST closed Thursday's regular trading session at $44.51, down $0.77 or 1.7 percent on a volume of 950,015 shares. In after-hours, the stock further declined $4.51 or 10.13 percent to $40.00.