Post Holdings Inc (NYSE:POST) reported fiscal first-quarter 2018 results before the market opened Friday and there was a lot for investors to like. Acquisitions drove strong growth, but there was organic growth in the core business as well.

Here's a look at the highlights from a strong quarter for this food giant.

Cereal in a bowl on a wood table.

Image source: Getty Images.

Post Holdings: The raw numbers

Metric Q1 2018 Q1 2017 Year-Over-Year Change
Sales $1.43 billion $1.25 billion  14.7% 
Net income $294.9 million  $101.8 million  189.7% 
Diluted EPS $3.82  $1.27  200.8% 

Data source: Post Holdings. 

What happened with Post Holdings this quarter? 

The headline numbers look amazing for Post Holdings, but there were some one-time benefits that boosted profits and the segment results were mixed. Here are the highlights investors should know.

  • Pro forma net sales, which pull out the Weetabix acquisition completed in late 2016, were up a more modest 3.9%. 
  • Net income was helped by a $263.6 million one-time tax benefit, offset partially by a $37.3 million loss on the early retirement of debt. On an adjusted basis, earnings were $67.9 million, or $0.88 per share.
  • Post Consumer Brands sales rose 1.9% to $456 million and segment profit fell 12.1% to $72.9 million.
  • Weetabix net sales were $99.7 million, which was down 1.2% on a pro forma basis versus a year ago. Segment profit was $16.8 million.
  • Michael Foods Group had a 6.9% increase in net sales to $577.1 million and segment profit was $74.9 million versus a loss of $17 million a year ago.
  • Active Nutrition net sales were up 20.9% to $186 million and segment profit of $19.8 million versus $24.9 million a year ago. Profits were negatively impacted by a $9 million legal settlement.
  • Private Brands sales were up 5.2% to $114.3 million and segment profit jumped from $5.7 million a year ago to $8.4 million.

What management had to say

Revenue has been improving steadily and one-time headwinds from the egg business appear to be a thing of the past. What I found interesting about the earnings release was the tangible benefit management said they expect to see from the tax bill passed in the U.S. in December.

In a press release, Post said, "Post management estimates U.S. income tax reform will reduce its fiscal year 2018 cash taxes by approximately $30-$35 million."

That's a very significant increase in cash flow for Post Holdings and, given that tax cuts are permanent, this is value investors can expect to be an ongoing benefit. 

Looking forward

Fiscal year 2018 guidance was updated to include the Bob Evans acquisition completed in January. Management now expects adjusted EBITDA of $1.22 billion to $1.25 billion, up from an estimate of $1.14 billion to $1.18 billion given in November.

While some segment results were mixed, overall Post Holdings showed significant growth in the food business and acquisitions should keep the company growing.

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