Ralcorp Holdings Announces Results for the First Quarter of Fiscal 2009
06 February 2009 - 9:15AM
PR Newswire (US)
ST. LOUIS, Feb. 5 /PRNewswire-FirstCall/ -- Ralcorp Holdings, Inc.
(NYSE: RAH) today filed its Quarterly Report on Form 10-Q for the
period ended December 31, 2008. Reported diluted earnings per share
(EPS) were $1.15 for the quarter compared to $1.61 last year,
including the effects of certain special items related to Ralcorp's
investment in Vail Resorts, Inc. (NYSE: MTN) and the Post Foods
acquisition as follows: Three Months Ended December 31,
------------ 2008 2007 ---- ---- Gain on forward sale contracts
$.25 $.92 Gain on sale of securities .18 - Post Foods transition
and integration costs (.08) - First quarter diluted EPS excluding
the above special items were $.80 compared to $.69 last year, a 16%
increase. Post Foods operating results for the first quarter met
expectations for sales and operating profit, and the transition and
integration into Ralcorp is proceeding as planned. Ralcorp's other
businesses reported significantly improved combined net sales and
profit contribution. The Post Foods acquisition (completed August
4, 2008) was not accretive to diluted EPS for the first quarter but
is expected to be approximately $.40 accretive for the remaining
nine months of fiscal 2009 (subject to a number of important
factors, risks, uncertainties and assumptions set forth under
"Cautionary Statement on Forward-Looking Statements" below). Other
reported results for the quarter ended December 31, 2008 included:
-- Net sales increased 49%, primarily as a result of the Post Foods
acquisition, as well as higher pricing in response to rising input
costs. -- Total segment profit contribution was up 123%, primarily
due to Post Foods and improved selling prices, partially offset by
higher costs. -- Earnings before income taxes and equity loss were
$110.8 million (compared to $69.7 million a year ago) including the
non-cash gains on Vail forward sale contracts, gain on sale of Vail
shares, and Post transition and integration costs. -- Equity in
loss of Vail Resorts, Inc. (after tax) was $4.1 million ($.07 per
share) compared to $2.8 million ($.10 per share) a year ago. -- Net
earnings were $65.5 million compared to $42.4 million last year. --
Weighted average shares for diluted EPS rose to 56.9 million from
26.2 million a year ago, primarily as a result of the 30.5 million
shares issued in the Post Foods acquisition. -- Food EBITDA was
$136.1 million compared to $66.2 million last year, generally due
to incremental EBITDA from Post Foods partially offset by
transition and integration costs related to Post Foods. -- The
Company reduced its debt by $102.9 million as a result of strong
cash flows from operations and the expansion of its trade
receivables securitization program. Segment results and other key
measures are summarized in the following tables (in millions):
Three Months Ended December 31, ------------ 2008 2007 ---- ----
Net Sales Cereals $449.3 $180.7 Frozen Bakery Products 191.1 182.5
Snacks 194.5 177.7 Sauces and Spreads 133.3 109.8 ----- ----- Total
$968.2 $650.7 ====== ====== Profit Contribution Cereals $74.1 $20.6
Frozen Bakery Products 15.0 17.7 Snacks 20.5 13.2 Sauces and
Spreads 9.2 1.7 --- --- Total segment profit contribution 118.8
53.2 Interest expense, net (26.3) (11.5) Gain on forward sale
contracts 22.5 37.8 Gain on sale of securities 15.8 - Restructuring
charges (.1) (.7) Stock-based compensation expense (4.1) (3.2) Post
Foods transition and integration costs (7.1) - Other unallocated
corporate expenses (8.7) (5.9) ---- ---- Earnings before Income
Taxes and Equity Loss $110.8 $69.7 ====== ===== Reconciliation of
Food EBITDA to Net Earnings Food EBITDA $136.1 $66.2 Depreciation
and amortization (37.3) (22.8) Interest expense, net (26.3) (11.5)
Gain on forward sale contracts 22.5 37.8 Gain on sale of securities
15.8 - Income taxes (41.2) (24.5) Equity in loss of Vail Resorts,
Inc., net of related deferred income taxes (4.1) (2.8) ---- ----
Net Earnings $65.5 $42.4 ===== ===== Approximately $256.3 million
of the first quarter's $317.5 million sales growth came from Post
Foods (included in the Cereals segment). Excluding Post Foods,
sales volume changes were mixed, with increases in Cereals (8%) and
Sauces and Spreads (3%) offset by declines in Frozen Bakery
Products (8%) and Snacks (6%). Ralcorp raised selling prices in a
number of its product categories in an effort to cover dramatically
higher input costs. Amortization of intangible assets other than
software (primarily related to brands and customers) increased,
primarily as a result of the addition of amounts for Post Foods.
Total amortization of such intangibles was $9.0 million ($.10 per
share) for the first quarter of fiscal 2009 and $5.5 million ($.13
per share) for the first quarter of fiscal 2008. Special Items
Related to Vail Resorts, Inc. and Post Foods Earnings were affected
by gains on the Company's forward sale contracts related to its
shares of Vail Resorts, Inc., totaling $22.5 million and $37.8
million in the first quarter of fiscal 2009 and 2008, respectively.
In addition to the unrealized non-cash gains due to changes in the
fair value of the contracts, the reported gains on these contracts
are net of charges for any related stock borrow costs incurred by
the counterparty in excess of a contractual limit. Ralcorp incurred
and paid $1.2 million of those excess stock borrow costs during the
three months ended December 31, 2008, but there were no such costs
or payments a year ago. Results for the first quarter of fiscal
2009 included a gain on the sale of 891,600 Vail shares, including
890,000 shares subject to the forward sale contracts. The $15.8
million gain represents the difference between the book value of
the shares and the $30.8 million net proceeds (received on a
discounted basis at the inception of the related forward sale
contract in November 2005). As planned, Ralcorp is incurring
significant costs related to transitioning Post Foods into Ralcorp
operations, including decoupling the cereal assets of Post Foods
from those of other operations of Kraft Foods Inc. (the former
owner), developing stand-alone Post Foods information systems,
developing independent sales, logistics and purchasing functions
for Post Foods, and other significant integration undertakings.
While a portion of those costs are capitalized, the expense portion
totaled $7.1 million in the three months ended December 31, 2008.
Additional Information The following measures, as reported herein,
are non-GAAP financial measures which the Company's management
believes provide useful information to investors regarding the
performance of Ralcorp's operations: -- Diluted earnings per share
excluding special items is an additional measure for comparing the
earnings generated by operations between periods, without the
effects of certain special items related to Ralcorp's investment in
Vail Resorts, Inc. and the Post Foods acquisition (as described
above). -- Food EBITDA (earnings before interest, income taxes,
depreciation, and amortization, excluding equity method earnings
and other gains or losses related to the Company's investment in
Vail Resorts, Inc.) provides information regarding the performance
of Ralcorp's food business operations, without the effects of the
Company's investment in Vail Resorts, Inc. and related
transactions. -- Total segment profit contribution is an
accumulation of the GAAP measures of profit contribution for each
reportable segment which are reported to the chief operating
decision maker for purposes of making decisions about allocating
resources to each segment and assessing its performance, which
gives investors a combined measure of these key amounts. For
additional information regarding the Company's results, refer to
the comparative statements of earnings below, as well as the
financial statements and management's discussion and analysis
included in its Quarterly Report on Form 10-Q for the period ended
December 31, 2008, filed February 5, 2009. Also on February 5,
2009, the Company filed a Current Report on Form 8-K to provide
historical segment information revised and updated from its
previous presentation solely to reflect the Company's new segment
structure, effective October 1, 2008. Ralcorp produces Post branded
cereals, a variety of value brand and store brand foods sold under
the individual labels of various grocery, mass merchandise and
drugstore retailers, and frozen bakery products sold to in-store
bakeries, restaurants and other foodservice customers. Ralcorp's
diversified product mix includes: ready-to-eat and hot cereals;
nutritional and cereal bars; snack mixes, corn-based chips and
extruded corn snack products; crackers and cookies; snack nuts;
chocolate candy; salad dressings; mayonnaise; peanut butter; jams
and jellies; syrups; sauces; frozen griddle products including
pancakes, waffles, and French toast; frozen biscuits and other
frozen pre-baked products such as breads and muffins; and frozen
dough for cookies, Danishes, bagels and doughnuts. In addition,
Ralcorp holds an interest of approximately 17 percent in Vail
Resorts, Inc., the leading mountain resort operator in the United
States. Cautionary Statement on Forward-Looking Statements
Information in this press release that includes information other
than historical data contains forward-looking statements as defined
by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are sometimes identified by their use of
terms and phrases such as "will," "believes," "intends,"
"anticipates," "plans," "expects," or similar expressions. All
forward-looking statements are subject to a number of important
factors, risks, uncertainties and assumptions that could cause
actual results to differ materially from those described in any
forward-looking statements. These factors and risks include, but
are not limited to, general economic conditions, changes in actual
or forecasted cash flows, competitive pressures, future sales
volume, impact of costs or lower consumer demand associated with
peanut product recalls in January 2009, significant increases in
the costs of certain commodities, timely implementation of price
increases, integration risks associated with the acquisition of the
Post Foods business, the relative profitability of Post Foods
compared to that of Ralcorp's other businesses, changes in weighted
average shares for diluted EPS, increases in transportation costs,
and other financial, operational and legal risks and uncertainties
detailed from time to time in the Company's cautionary statements
contained in its filings with the Securities and Exchange
Commission. The Company disclaims and does not undertake any
obligation to update or revise any forward-looking statement in
this press release. RALCORP HOLDINGS, INC. CONSOLIDATED STATEMENTS
OF EARNINGS (Dollars in millions except per share data, shares in
thousands) Three Months Ended December 31, ------------ 2008 2007
---- ---- Net Sales $968.2 $650.7 Cost of products sold (721.9)
(537.3) ------ ------ Gross Profit 246.3 113.4 Selling, general and
administrative expenses (147.4) (69.3) Interest expense, net (26.3)
(11.5) Gain on forward sale contracts 22.5 37.8 Gain on sale of
securities 15.8 - Restructuring charges (.1) (.7) --- --- Earnings
before Income Taxes and Equity Loss 110.8 69.7 Income taxes (41.2)
(24.5) ----- ----- Earnings before Equity Earnings 69.6 45.2 Equity
in loss of Vail Resorts, Inc., net of related deferred income taxes
(4.1) (2.8) ---- ---- Net Earnings $65.5 $42.4 ===== ===== Earnings
per Share Basic $1.17 $1.66 Diluted $1.15 $1.61 Weighted Average
Shares for Basic Earnings per Share 56,048 25,470 Dilutive effect
of: Stock options 543 568 Stock appreciation rights 155 71
Restricted stock awards 146 84 --- -- Weighted Average Shares for
Diluted Earnings per Share 56,892 26,193 ====== ====== DATASOURCE:
Ralcorp Holdings, Inc. CONTACT: Scott Monette of Ralcorp Holdings,
Inc., +1-314-877-7113
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