Fourth Quarter Consolidated Operating Results
Net sales for the fourth quarter were $291.7 million and increased $44.5 million, or 18.0%, compared to the prior year. Acquisitions, net of $0.3 million of intersegment eliminations, contributed $37.8 million of the overall growth, while the Post Foods segment accounted for $6.7 million of the overall growth, representing an increase of 2.7% versus the prior year.
Gross profit improved $2.4 million to $112.5 million for the fourth quarter compared to the prior year. Gross profit benefitted from $11.1 million of incremental gross profit from acquisitions and was negatively impacted by $4.8 million of accelerated depreciation associated with the Modesto, California plant closure. Excluding these two items, gross profit for the fourth quarter declined $3.9 million to $106.2 million, with gross margin of 41.8% (on net sales excluding acquisitions), down approximately 270 basis points compared to the prior year.
Selling, general and administrative (SG&A) expenses for the fourth quarter increased $7.5 million to $79.2 million compared to the prior year. Excluding $5.7 million in SG&A related to acquired businesses, SG&A of $73.5 million was 28.9% of net sales excluding acquisitions, flat compared to prior year.
Adjusted EBITDA was $57.2 million for the fourth quarter, up $3.7 million compared to the prior year, including $6.3 million from acquisitions.
For the fourth quarter, the net loss attributable to common stockholders was $3.2 million, or ($0.10) per diluted common share. Adjusted net earnings available to common stockholders and adjusted diluted earnings per common share for the quarter were $5.3 million and $0.16, respectively.
Fiscal Year 2013 Consolidated Operating Results
Net sales were $1,034.1 million for fiscal year 2013, up $75.2 million, or 7.8%, versus the prior year. The Post Foods segment grew 2.5%, while acquisitions, net of $0.4 million of intersegment eliminations, contributed $51.3 million to overall growth.
Gross profit for the fiscal year decreased $4.0 million to $424.9 million versus the prior year. Acquisitions contributed $14.1 million to gross profit, offsetting $9.6 million in accelerated depreciation. Excluding these two items, fiscal year gross profit declined $8.5 million to $420.4 million, with gross margin of 42.8% (on net sales excluding acquisitions), a decline of approximately 190 basis points from the prior year.
SG&A increased $19.9 million to $294.4 million for the fiscal year versus the prior year. Excluding $8.6 million in SG&A related to acquired businesses, SG&A increased $11.3 million to $285.8 million, 29.1% of net sales excluding acquisitions, up approximately 50 basis points compared to prior year.
Adjusted EBITDA improved $2.1 million to $216.7 million for fiscal year 2013 compared to prior year, with acquisitions contributing $8.0 million.
Net earnings available to common stockholders were $9.8 million, or $0.30 per diluted common share, for the fiscal year ended September 30, 2013. Adjusted net earnings available to common stockholders and adjusted diluted earnings per common share for the fiscal year ended September 30, 2013 were $31.1 million and $0.94, respectively.
Post Foods
In the Post Foods segment, which includes predominately the Post branded cereal business, net sales for the fourth quarter were $253.9 million and increased 2.7%, or $6.7 million. The increase was due to higher volumes partially offset by a slight decrease in average net selling prices. Post Foods segment profit was $42.9 million and $40.9 million for fourth quarter 2013 and 2012, respectively.
Post Foods segment net sales for the fiscal year were $982.8 million and increased $23.9 million, or 2.5%, on higher volumes and lower average net selling prices. Segment profit was $168.1 million and $165.9 million for fiscal years 2013 and 2012, respectively.
According to Nielsen, U.S. ready to eat cereal category dollars were down 3.5% for the 13 weeks ended September 28, 2013, compared to prior year, and category pounds declined 2.8%.
Post Foods U.S. dollar market share was 10.2% and 10.4% for the 13 weeks and 52 weeks ended September 28, 2013, respectively, flat compared to the year ago quarter and down 0.1 share point compared to the prior year 52 week period. Post Foods' U.S. pounds share was 10.4% for the 13 weeks ended September 28, 2013, up 0.1 share point compared to the prior year.
Attune Foods
The Attune Foods segment combines the results of Attune Foods (acquired on December 31, 2012) and the Hearthside private label and branded cereal, granola and snack businesses (the assets of which were acquired on May 28, 2013). Net sales for the segment (including intersegment sales) were $24.2 million and $37.8 million for the fourth quarter and the fiscal year, respectively. Attune Foods' segment profit was $2.9 million and $2.5 million for the quarter and the fiscal year, respectively.
Active Nutrition
The Active Nutrition segment comprises the results of Premier Nutrition Corporation ("PNC"), which was acquired on September 1, 2013. The segment contributed $13.9 million to net sales for the fourth quarter and the fiscal year, with segment profit of $1.0 million for the quarter and the fiscal year.
Interest and Tax
Net interest expense was $25.5 million for the fourth quarter compared to $16.1 million for the prior year quarter. For the fiscal year ended September 30, 2013, net interest expense was $85.5 million, compared to $60.3 million for the fiscal year ended September 30, 2012. The increase for both the quarter and the fiscal year is driven primarily by the issuance of $250.0 million and $350.0 million of aggregate principal value of senior notes in October 2012 and July 2013, respectively.
Income tax benefit was $0.2 million in the fourth quarter of fiscal 2013 primarily resulting from a loss before income taxes combined with certain nondeductible transaction expenses incurred in the quarter related to the acquisition of PNC. The effective income tax rate was 36.5% for the same period a year ago. For the fiscal year ended September 30, 2013, income tax expense was $7.1 million, an effective income tax rate of 31.8%, compared to an expense of $30.5 million and an effective income tax rate of 37.9% for the fiscal year ended September 30, 2012. The decrease in the effective income tax rate from fiscal year 2012 to fiscal year 2013 was primarily the result of an uncertain tax position taken on the Company's 2012 short-period tax return and higher nondeductible transaction expenses in the prior year.
Dakota Growers Pasta Company Acquisition Update
In a press release dated September 16, 2013, the Company announced that it has signed a definitive agreement to acquire Dakota Growers Pasta Company ("Dakota Growers"). The transaction was granted early termination under the Hart-Scott-Rodino Act in October and is expected to be completed in January 2014, subject to various closing conditions including the delivery of audited financial statements for the Dakota Growers business.
Modesto, California Plant Closure Update
As announced in April 2013, Post management has decided to close its manufacturing facility in Modesto, California. Upon completion of the transfer and start-up of production to other facilities, Post expects to achieve net pretax annual cash manufacturing cost savings of approximately $14.0 million. The first phase of the closure project is on track to be completed in the first quarter of fiscal 2014 and is expected to achieve approximately 20% of the savings, or approximately $2.8 million, in fiscal 2014. The second phase is expected to be completed by September 2014 and the remaining savings are expected to be fully phased in by fiscal 2015.
During the fourth quarter, Post incurred an incremental $4.8 million of accelerated depreciation expense recorded in cost of sales and $0.8 million related to employee termination benefits. For the fiscal year, Post incurred an incremental $9.6 million of accelerated depreciation expense and $3.8 million related to employee termination benefits. Post anticipates recognizing additional accelerated depreciation expense of $8.5 million through the completion of the project in September 2014 and an additional $1.4 million of employee termination benefits.
Outlook
Including results of acquisitions completed through fiscal 2013, Post management expects fiscal 2014 Adjusted EBITDA to be between $245 million and $260 million. As previously announced, Dakota Growers is expected to contribute approximately $42-$46 million to Adjusted EBITDA on a full year basis. Additionally, Post management expects fiscal 2014 capital expenditures to between $65 million and $75 million, inclusive of acquisitions completed through fiscal 2013. Capital expenditure outlook reflects requirements to complete the start-up and transfer of production to other facilities related to the Company's previously announced Modesto, California facility closure along with corporate initiatives.
