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Post Holdings Announces Its Preliminary 3Q16 Results

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Price movement

Post Holdings (POST) has a market cap of $5.5 billion. It fell by 1.4% to close at $86.10 per share on July 25, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -2.0%, 8.3%, and 39.6%, respectively, on the same day. POST is trading 1.5% above its 20-day moving average, 8.8% above its 50-day moving average, and 25.1% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Small Core ETF (JKJ) invests 0.89% of its holdings in Post Holdings. The ETF tracks a market-cap-weighted index of US small-cap core stocks. The index selects stocks from 90%-97% of market-cap companies that fall into Morningstar’s core style categorization. The YTD price movement of JKJ was 11.1% on July 25.

The market caps of Post Holdings’ competitors are as follows:

  • Kellogg (K)—$29.1 billion
  • TreeHouse Foods (THS)—$5.7 billion
  • B&G Foods (BGS)—$2.9 billion

Latest news on Post Holdings

In a press release on July 25, Post Holdings reported, “Post Holdings, Inc. (POST) today announced it has commenced a cash tender offer to purchase any and all of its 7.375% senior notes due 2022 having an aggregate outstanding principal amount of $1.375.0 million.” The company added that “the Tender offer will expire at 5:00 pm, New York City time, on July 29, 2016, unless extended or earlier terminated as described in the Offer to Purchase.”

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The company is also planning to commence a private offering of $1.5 billion in aggregate principal amount of senior notes due 2026 to eligible purchasers. Post added, “The notes will be unsecured unsubordinated obligations of the company and will be guaranteed by the company’s domestic subsidiaries.”

In another press release, “The company priced $1,750.0 million [$1.75 billion] aggregate principal amount of 5.00% senior notes due 2026 at par, representing an increase from the original offering size of $1,500.0 million [$1.5 billion]. The notes offering is expected to close on August 3, 2016, subject to customary closing conditions.”

Moody’s rating

Moody’s Investors Service has rated Post Holdings’ proposed $1.5 billion ten-year notes as “B3.” The proceeds from this offering will be used to fund the tender offer for ~$1.4 billion in 7.375% notes due 2022 and for general corporate purposes. Moody’s gave Post Holdings’ outlook as stable.

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Preliminary results for fiscal 3Q16

Post Holdings reported the following number for fiscal 3Q16:

  • net sales of ~$1,246.1 million
  • net income of ~$3.3 million
  • adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of ~$231.0 million

Quarterly dividend

Post Holdings has declared a quarterly dividend of $0.9375 per share on its 3.75% Series B Cumulative Perpetual Convertible Preferred Stock.

It also declared a quarterly dividend of $0.625 per share on its 2.5% Series C Cumulative Perpetual Convertible Preferred Stock.

The dividends will be paid on August 15, 2016, to preferred shareholders as of August 1, 2016.

Projection

The company has made the following projections:

  • It expects adjusted EBITDA in the range of $915 million to $925 million for fiscal 2016.
  • It expects adjusted EBITDA to exceed $900 million for fiscal 2017.

In the next part, we’ll discuss Molson Coors Brewing.

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