The food business has seen a lot of competitive pressures on even the largest suppliers, and Post Holdings Inc (NYSE:POST) hasn't been immune to those pressures. The company lost money in the fiscal fourth quarter of 2015, but beneath the bottom-line loss reported on Nov. 23 there are some encouraging numbers.  

Post Holdings Inc results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals


$1.31 billion

$1.04 billion

Net Income

($72.5 million)

($287.4 million)

Adjusted EPS



Data source: Company earnings release.

What happened with Post Holdings Inc this quarter?
While the top-line growth number looks strong, it's heavily affected by three acquisitions made in the past year. Without those acquisitions, growth was flat from a year earlier. Below are a few of the highlights from the segment operations and other impacts on results.

  • Results included the acquisition of PowerBar, American Blanching Company, and MOM Brands Company.
  • Post consumer brands sales were up 0.2% in the fourth quarter to $442.5 million.
  • Michael foods group sales were down 0.7% to $591.4 million in the fiscal fourth quarter.
  • Active nutrition sales rose 0.7% on a comparable basis to $136.2 million with Premier Nutrition having a positive impact on sales, offset by declines in Dymatize and PowerBar.
  • Private brands sales were up 1.8% to $140.3 million, led by granola and cereal growth of 14.9%.
  • A non-cash goodwill and intangible asset impairment of $60.8 million was recorded in the quarter related to Post's active Nutrition and consumer brands segments. A $57 million writedown of the Dymatize business was related to shuting down a manufacturing facility permanently.

What management had to say
While the net loss wasn't a positive for Post, the company's operations appear to be heading in the right direction. Management expects adjusted EBITDA to improve from $657.4 million in fiscal 2015 to a range of $780 million to $820 million in fiscal 2016.

Growth won't likely pick up much in 2016, but cost-cutting measures and fewer writedowns could have a positive impact on the bottom line. In the past two years Post has taken impairments totaling $356.4 million, which pull directly from the bottom line, so fewer impairments in 2016 could help push the company to a net income.

Hedging instruments like interest-rate swaps and commodity hedges have also had a negative impact, to the tune of $58 million in the fourth quarter alone. Without some of these impacts, management estimates that adjusted net earnings were $4.1 million. However, don't take adjusted figures as gospel, because companies often use adjustments to their advantage, but it's worth understanding why there's a gap between the official net loss and the adjusted earnings for Post.

Looking forward
Post has been on an acquisition binge lately and that's helped grow the company's range of products in the grocery store. The next step is to consolidate those businesses into the company and cut costs to make it profitable again. Management is taking steps in the right direction, reducing net loss in the quarter and projecting higher EBITDA in 2016.

What investors will want to watch for is execution on this plan and maybe even some organic growth in 2016. Both would go a long way to helping this food company generate even more long-term value for shareholders.