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8-K - FORM 8-K - RALCORP HOLDINGS INC /MO | c16314e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - RALCORP HOLDINGS INC /MO | c16314exv99w2.htm |
Exhibit 99.1
PRESS RELEASE
For Release:
|
Immediate | |
Contact:
|
Matt Pudlowski (314/877-7091) |
RALCORP HOLDINGS ANNOUNCES RESULTS FOR
THE SECOND QUARTER OF FISCAL 2011
THE SECOND QUARTER OF FISCAL 2011
| Net sales up 22%, including 4% base-business growth |
| Adjusted diluted EPS of $1.43 compared to $1.12 last year |
| Acquisition accretion expected to be at least $.90 per share for the year |
| Full year diluted EPS expected to be between $5.45 and $5.55 |
ST. LOUIS, MO, May 1, 2011 ... Ralcorp Holdings, Inc. (NYSE:RAH) today reported results for the
quarter ended March 31, 2011, which include the operations of American Italian Pasta Company
(AIPC), Sepps Gourmet Foods Ltd., J.T. Bakeries Inc., and North American Baking Ltd., acquired in
the second half of fiscal 2010. Unless otherwise indicated, all comparisons of results in the
following discussions are for the second quarter of fiscal 2011 relative to the second quarter of
fiscal 2010 ended March 31, 2010.
Executive Summary
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
(dollars in millions, except per share data) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Net Sales |
$ | 1,172.6 | $ | 965.0 | 22 | % | $ | 2,345.9 | $ | 1,956.9 | 20 | % | ||||||||||||
Diluted Earnings per Share |
$ | 1.50 | $ | .84 | 79 | % | $ | 2.78 | $ | 2.03 | 37 | % | ||||||||||||
Adjusted Diluted Earnings per Share |
$ | 1.43 | $ | 1.12 | 28 | % | $ | 2.69 | $ | 2.33 | 15 | % |
| Net Sales grew as a result of incremental sales from acquisitions, higher net pricing in all segments, and private-brand volume gains. |
| Acquisitions completed in fiscal 2010 were accretive by approximately $.30 per share for the quarter, driven primarily by AIPC, and are expected to contribute at least $.90 per share for the full year. AIPCs private-brand sales volume grew approximately 6% from last years second quarter (pre-acquisition). |
| Diluted Earnings per Share (EPS) this year were positively affected by mark-to-market gains on economic hedges. In addition, the prior period was affected by an impairment of intangible assets as well as minor merger and integration costs and amounts related to plant closures. The effects of all of these items are excluded from Adjusted Diluted EPS. |
Co-CEO Kevin Hunt said, Our acquisitions completed in fiscal 2010 continued to perform well
and produced $.30 per share of accretion during the quarter. While we expect lower accretion in
the third quarter due to higher commodity costs (primarily durum wheat at AIPC), the earnings from
these acquisitions are expected to exceed our original expectations for the year. Additionally,
given our continued strong operating earnings and cash flow (with adjusted EBITDA growth of more
than 32% for the second quarter), we would expect to be within our target leverage ratio that will
allow us to consider share repurchases and acquisitions in our third quarter.
We continue to expect ingredient, packaging, and freight inflation amounting to about $200
million for fiscal year 2011. As we have noted in the prior quarters, we expect to be able to
cover all of this inflation through a combination of the reduction of inefficient trade spending
and internal costs, and pricing adjustments, where justified. We realized the benefit of some of
these actions in the second quarter and expect additional benefit in the second half of the year.
While we will continue to work to mitigate the rising input costs by other means, the costs of
several commodities are approaching all time highs, making further price increases unavoidable.
Commenting specifically on the Branded Cereal Products segment, co-CEO David Skarie said, We
are pleased with our accomplishments at Post during the quarter. We eliminated a significant
amount of inefficient trade spending while increasing advertising and consumer spending 29% over
last year. For the quarter, our two flagship brands, Honey Bunches of Oats and Pebbles, grew
revenue 8% and 18%, respectively. The combination of these factors helped us achieve our objective
of improving market share each month during the quarter, which is a trend that we expect to
continue into the third quarter.
We are excited about the initial performance of our new products, Pebbles Treats (which is
Posts first entry outside of ready-to-eat cereal) and Honey Bunches of Oats Raisin Medley, both of
which have met with strong retailer and consumer acceptance. These products reflect the beginning
of our efforts to significantly improve our new product pipeline. Additionally, our relaunch of
Great Grains, supported by a new advertising campaign featuring celebrity chef Curtis Stone, has
been very well received. We expect these products to drive revenue improvement in the back half of
the year. Due to continued cost increases, we have announced pricing actions on many of our
products.
Mr. Hunt added, We are very optimistic looking forward to the remainder of fiscal 2011. We
currently expect full year diluted earnings per share to be between $5.45 and $5.55 (after
excluding $0.12 per share year-to-date gains on economic hedges and $.03 per share year-to-date
provision for legal settlement) subject to the potential impact of further disruptions in the costs
of key raw materials and the effects of pricing changes on consumer demand.
Accelerated Cost Reduction Program
Ralcorps management team provided the following information about its accelerated cost
reduction program: Beginning last summer, we initiated a study to evaluate ideas that could
fundamentally improve the competitive positioning of each of our businesses, focusing primarily on
cost structure. After a significant effort, all of our businesses have presented ideas that we
have prioritized over the last several months. The results of this work are significant and
reflect our core competencies around aggressive cost management.
This is a multi-year project that will span the 2012 through 2014 fiscal years but is already
in progress. Based on our current assumptions, we would expect total incremental capital
expenditures to be between $115 and $135 million higher over this period than our past experience
would otherwise indicate. This investment is expected to produce aggregate incremental operating
profit of between $80 and $100 million for the same period. The majority of these savings will
occur in 2013 and 2014, and savings will continue thereafter. The primary driver behind these
savings is capacity rationalization as we realign our production and distribution networks. We
expect these investments to add approximately 3% annually to our EPS growth rates over this time
frame. These investments are also expected to provide more flexibility in dealing with ingredient
and packaging cost increases in the future.
2
Net Sales
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
(dollars in millions) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Base-business Net Sales |
$ | 1,000.4 | $ | 965.0 | 4 | % | $ | 1,994.7 | $ | 1,956.9 | 2 | % | ||||||||||||
Net sales from recent acquisitions
excluded from base-business net sales: |
||||||||||||||||||||||||
AIPC |
143.5 | | 15 | % | 279.4 | | 14 | % | ||||||||||||||||
Other fiscal 2010 acquisitions |
28.7 | | 3 | % | 71.8 | | 4 | % | ||||||||||||||||
Net Sales |
$ | 1,172.6 | $ | 965.0 | 22 | % | $ | 2,345.9 | $ | 1,956.9 | 20 | % | ||||||||||||
Net sales increased 22%, primarily as a result of recent acquisitions. Base-business net
sales increased 4%, as an increase in net pricing and the effect of a favorable product mix
(largely due to increases in snack nuts, specialty crackers, and nutritional bars and declines in
ready-to-eat cereals) more than offset a slight 1% volume decline. Excluding branded cereals,
other base-business volume grew 1%.
Margins
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
(% of net sales) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Gross Profit |
29.0 | % | 27.6 | % | 28.0 | % | 27.6 | % | ||||||||
Selling, general and administrative expenses |
-13.3 | % | -13.9 | % | -12.9 | % | -13.4 | % | ||||||||
Amortization of intangible assets |
-1.6 | % | -1.2 | % | -1.6 | % | -1.2 | % | ||||||||
Impairment of intangible assets |
| -2.1 | % | | -1.1 | % | ||||||||||
Other operating expenses, net |
-.1 | % | -.3 | % | -.2 | % | -.2 | % | ||||||||
Operating Profit |
14.0 | % | 10.1 | % | 13.3 | % | 11.7 | % | ||||||||
Adjusted Gross Profit |
28.5 | % | 27.6 | % | 27.5 | % | 27.6 | % | ||||||||
Adjustments for economic hedges |
.5 | % | | .5 | % | | ||||||||||
Gross Profit |
29.0 | % | 27.6 | % | 28.0 | % | 27.6 | % | ||||||||
Adjusted Operating Profit |
13.5 | % | 12.7 | % | 12.9 | % | 13.0 | % | ||||||||
Adjustments for economic hedges |
.5 | % | | .5 | % | | ||||||||||
Provision for legal settlement |
| | -.1 | % | | |||||||||||
Merger and integration costs |
| -.5 | % | | -.3 | % | ||||||||||
Impairment of intangible assets |
| -2.1 | % | | -1.0 | % | ||||||||||
Operating Profit |
14.0 | % | 10.1 | % | 13.3 | % | 11.7 | % | ||||||||
Gross profit margin was positively impacted by the acquisition of the higher-margin pasta
business as well as a $6.0 million mark-to-market gain related to economic hedge contracts. For
the Companys base businesses on a combined basis, the effect of higher net selling prices
(including the effects of reduced trade promotion spending) offset the rising commodity costs that
negatively impacted many of Ralcorps product categories. Ingredient, packaging, and freight costs
(net of hedging activities) were approximately $32 million higher, with the most significant impact
in snack nuts (included in the Snacks, Sauces and Spreads segment).
3
Selling, general and administrative (SG&A) expenses as a percentage of net sales declined
primarily because of the addition of acquired businesses with a lower SG&A percentage relative to
the incremental sales. In addition, distribution-related costs were lower for the cereals
segments. Those effects were partially offset by an increase in advertising expense in the Branded
Cereal Products segment.
Amortization expense as a percentage of sales increased due to incremental amounts from fiscal
2010 acquisitions (primarily customer relationship intangible assets) and the acceleration of
amortization expense on a customer relationship intangible asset in the Other Cereal Products
segment due to a shortened estimate of the remaining life of the relationship. Total amortization
expense for the second quarter was $19.4 million ($.22 per share) compared to $11.3 last year ($.13
per share).
In addition to the items discussed above, the operating profit margin was affected by a
goodwill impairment and minor merger and integration costs in fiscal 2010.
Adjustments for Economic Hedges
In the second quarter of fiscal 2011, net mark-to-market gains on economic hedges which did
not meet the criteria for cash flow hedge accounting were $6.0 million. These net gains were
recognized in cost of goods sold on the statement of earnings but excluded from segment profit and
the Companys non-GAAP measures of Adjusted EBITDA and Adjusted Diluted Earnings per Share.
Interest Expense and Income Taxes
Interest expense increased $9.9 million due to a $814 million increase in weighted-average
outstanding borrowings. The weighted-average interest rate on all of the Companys outstanding
borrowings was 5.5% and 6.5% in the quarters ended March 31, 2011 and 2010, respectively.
The effective income tax rate was approximately 36.0% in this years second quarter, down
slightly from 36.7% in last years second quarter, primarily because of an increase in the Domestic
Production Activities Deduction for fiscal 2011.
4
Segment Results
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
March 31, | March 31, | |||||||||||||||||||||||
2011 | 2010 | % Change | 2011 | 2010 | % Change | |||||||||||||||||||
(pounds in millions) |
||||||||||||||||||||||||
Sales Volume |
||||||||||||||||||||||||
Branded Cereal Products |
122.0 | 131.8 | -7 | % | 225.9 | 252.3 | -10 | % | ||||||||||||||||
Other Cereal Products |
125.6 | 128.1 | -2 | % | 260.1 | 260.4 | 0 | % | ||||||||||||||||
Snacks, Sauces & Spreads |
331.1 | 318.7 | 4 | % | 672.9 | 643.2 | 5 | % | ||||||||||||||||
Frozen Bakery Products |
171.5 | 160.3 | 7 | % | 345.2 | 326.1 | 6 | % | ||||||||||||||||
Pasta |
214.8 | | n/a | 426.8 | | n/a | ||||||||||||||||||
Total Sales Volume |
965.0 | 738.9 | 31 | % | 1,930.9 | 1,482.0 | 30 | % | ||||||||||||||||
(dollars in millions) |
||||||||||||||||||||||||
Net Sales |
||||||||||||||||||||||||
Branded Cereal Products |
$ | 255.3 | $ | 260.6 | -2 | % | $ | 476.9 | $ | 506.5 | -6 | % | ||||||||||||
Other Cereal Products |
198.9 | 193.3 | 3 | % | 403.6 | 388.2 | 4 | % | ||||||||||||||||
Snacks, Sauces & Spreads |
382.2 | 338.2 | 13 | % | 799.6 | 707.5 | 13 | % | ||||||||||||||||
Frozen Bakery Products |
192.7 | 172.9 | 11 | % | 386.4 | 354.7 | 9 | % | ||||||||||||||||
Pasta |
143.5 | | n/a | 279.4 | | n/a | ||||||||||||||||||
Total Net Sales |
$ | 1,172.6 | $ | 965.0 | 22 | % | $ | 2,345.9 | $ | 1,956.9 | 20 | % | ||||||||||||
Segment Profit |
||||||||||||||||||||||||
Branded Cereal Products |
$ | 56.9 | $ | 55.0 | 3 | % | $ | 106.6 | $ | 104.1 | 2 | % | ||||||||||||
Other Cereal Products |
21.3 | 22.0 | -3 | % | 42.5 | 46.2 | -8 | % | ||||||||||||||||
Snacks, Sauces & Spreads |
33.3 | 40.5 | -18 | % | 70.7 | 88.0 | -20 | % | ||||||||||||||||
Frozen Bakery Products |
22.9 | 18.2 | 26 | % | 45.9 | 44.6 | 3 | % | ||||||||||||||||
Pasta |
36.6 | | n/a | 64.8 | | n/a | ||||||||||||||||||
Total Segment Profit |
$ | 171.0 | $ | 135.7 | 26 | % | $ | 330.5 | $ | 282.9 | 17 | % | ||||||||||||
Segment Profit Margin |
||||||||||||||||||||||||
Branded Cereal Products |
22 | % | 21 | % | 22 | % | 21 | % | ||||||||||||||||
Other Cereal Products |
11 | % | 11 | % | 11 | % | 12 | % | ||||||||||||||||
Snacks, Sauces & Spreads |
9 | % | 12 | % | 9 | % | 12 | % | ||||||||||||||||
Frozen Bakery Products |
12 | % | 11 | % | 12 | % | 13 | % | ||||||||||||||||
Pasta |
26 | % | n/a | 23 | % | n/a | ||||||||||||||||||
Total Segment Profit Margin |
15 | % | 14 | % | 14 | % | 14 | % | ||||||||||||||||
Depreciation and Amortization |
||||||||||||||||||||||||
Branded Cereal Products |
$ | 14.4 | $ | 13.8 | 4 | % | $ | 29.1 | $ | 27.4 | 6 | % | ||||||||||||
Other Cereal Products |
6.6 | 5.3 | 25 | % | 13.4 | 10.5 | 28 | % | ||||||||||||||||
Snacks, Sauces & Spreads |
10.2 | 8.4 | 21 | % | 20.5 | 16.9 | 21 | % | ||||||||||||||||
Frozen Bakery Products |
9.7 | 9.0 | 8 | % | 19.7 | 17.7 | 11 | % | ||||||||||||||||
Pasta |
13.1 | | n/a | 26.3 | | n/a | ||||||||||||||||||
Corporate |
2.1 | 2.5 | -16 | % | 4.0 | 4.9 | -18 | % | ||||||||||||||||
Total Depreciation and Amortization |
$ | 56.1 | $ | 39.0 | 44 | % | $ | 113.0 | $ | 77.4 | 46 | % |
5
Branded Cereal Products
Net sales declined 2% driven primarily by lower overall volume (down 7%). The Honey Bunches
of Oats brand volume improved 4% and Pebbles brand volume was flat, but volumes across the rest of
the Post brand portfolio were impacted by the continued weakness and competitive promotional
activity in the ready-to-eat cereal category as well as lower trade spending behind the brands as
compared to more aggressive spending levels a year ago. Overall trade spending declined 17%,
exceeding volume declines, as a continued focus on more efficient trade program investments helped
to partially offset the net sales impact of lower volumes.
The 3% increase in segment profit and improved profit margin was mostly attributable to
favorable net pricing and lower manufacturing costs, partially offset by a $6.7 million increase in
advertising expenses, lower sales volume, and higher raw material costs (driven by sugar and nuts).
Other Cereal Products
Net sales increased 3% fueled by strong volume growth for nutritional bars (up 11%). The
segments overall net sales growth was due to higher net selling prices and a positive sales mix
(with a shift to nutritional bars, which have a higher price per pound), partially offset by the
effect of a decline in overall volume. Private-brand ready-to-eat cereal volume was down 7%, as
the overall weakness in the ready-to-eat category and competitive promotional activities impacted
sales to many of the segments retail customers.
Segment profit declined 3%. Lower gross profit margins (mainly due to a sales shift from
higher-margin ready-to-eat cereals and an increase in raw material and production costs) and an
increase in amortization expense were only slightly offset by reduced distribution-related costs.
Material cost increases were driven by sugar, cocoa, nuts, oats, wheat, and packaging materials.
Snacks, Sauces & Spreads
Net sales grew 13% as a result of acquisitions, higher snack nut and cracker volumes (up 7%
and 8%, respectively), increased net selling prices, and product mix. Incremental sales from the
fiscal 2010 acquisitions of J.T. Bakeries and North American Baking accounted for 6 percentage
points of the segments overall net sales increase. Excluding acquisitions, base-business volume
was flat, as gains for snack nuts, crackers, and dressings were offset by declining volumes for
cookies, syrups, peanut butter, and preserves and jellies. This favorable sales mix shift from
products with a lower price per pound to products with a higher price per pound added to the
overall sales growth.
Segment profit decreased 18% as a result of significantly higher raw material costs (primarily
cashews and tree nuts but also including oils, peanuts, and packaging) and unfavorable freight
costs. Net selling price increases offset less than half of the increase in raw materials costs.
Frozen Bakery Products
Net sales were up 11%, with growth primarily attributable to volume gains for foodservice and
retail products, incremental sales from the fiscal 2010 acquisition of Sepps Gourmet Foods, and
higher pricing, partially offset by the effects of volume declines in the in-store bakery channel
(primarily cookies and frozen dough). Strong net sales growth in the retail channel was fueled by
new griddle products distributed through two major retailers. Foodservice sales benefited from a
new product for a major restaurant chain. Shortfalls in the sales of in-store bakery cookies are
attributable to the later timing of the Easter holiday this year.
Segment profit was up 26% as the effects of higher volumes, increased net selling prices, and
the acquisition were only partially offset by higher commodity costs, increased warehousing costs
as a result of the initial inventory build on new products, and a $1.6 million unfavorable effect
of foreign exchange rate changes.
Pasta
The Pasta segment consists of American Italian Pasta Company (AIPC), which Ralcorp acquired on
July 27, 2010. Net sales in the second quarter of fiscal 2011 were $143.5 million, down 2% from
last year (pre-acquisition) as a result of 3% lower overall volumes and slightly higher net selling
prices.
Retail sales volume was flat as a 6% increase in private brands was offset by declines in
branded products. Last year, AIPC exited certain geographic markets where the brands were
underperforming the market and shifted focus to private-brand products. Institutional volumes
declined 13%, primarily as a result of reduced sales to foodservice customers.
6
Non-GAAP Financial Measures and Additional Information
The non-GAAP financial measures presented herein and discussed below do not comply with
accounting principles generally accepted in the United States, or GAAP, because they are adjusted
to exclude (include) certain cash and non-cash income and expenses that would otherwise be included
in (excluded from) the most directly comparable GAAP measure in the statement of earnings. These
non-GAAP financial measures, which are not necessarily comparable to similarly titled captions of
other companies due to potential inconsistencies in the methods of calculation, should not be
considered an alternative to, or more meaningful than, related measures determined in accordance
with GAAP. As further discussed below, these non-GAAP measures supplement other metrics used by
management to internally evaluate its businesses and facilitate the comparison of operations over
time.
| Base-business net sales, as reported herein, has been adjusted to exclude estimated current year sales attributable to recently acquired businesses for the period corresponding to the pre-acquisition period of the comparative period of the prior year. For each acquired business, the excluded period starts at the beginning of the respective quarter or year-to-date period and ends one year after the acquisition date. The Company has included financial measures for the base business (such as sales growth) because they provide useful and comparable trend information regarding the results of our businesses without the effect of the timing of acquisitions. |
| Total segment profit is an accumulation of the GAAP measures of profit for each reportable segment that 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. |
| Adjusted EBITDA, as presented herein, is defined as earnings before interest, income taxes, depreciation, and amortization, excluding impairment of intangible assets (if any), adjustments for economic hedges, provision for legal settlement, merger and integration costs, and amounts related to plant closures. Ralcorps board of directors, management, and investors use Adjusted EBITDA to assess the Companys performance because it allows them to compare operating performance on a consistent basis across periods by removing the effects of capital structure (such as varying levels of interest expense), items largely outside the control of the management team (such as income taxes), asset base (such as depreciation, amortization, and impairments), derivatives accounting that is not representative of the economic effect of hedges, amounts related to significant legal settlements, and items related to acquisition and disposal activity (such as merger and integration costs and amounts related to plant closures). |
| Adjusted diluted earnings per share is an additional measure for comparing the earnings generated by operations between periods, without the effects of intangible asset impairments (if any), adjustments for economic hedges, provision for legal settlement, merger and integration costs, and amounts related to plant closures. |
| Adjusted gross profit (as a percentage of net sales) is an additional measure for comparing gross margins between periods, without the effects of adjustments for economic hedges and acquired inventory valuation adjustments (if any). |
| Adjusted operating profit (as a percentage of net sales) is an additional measure for comparing operating margins between periods, without the effects of intangible asset impairments (if any), adjustments for economic hedges, provision for legal settlement, merger and integration costs, and amounts related to plant closures. |
7
For additional information regarding the Companys results, including reconciliations of
non-GAAP measures to related GAAP measures, refer to the schedules below, as well as to the
financial statements and managements discussion and analysis included in the Companys Quarterly
Report on Form 10-Q for the period ended March 31, 2011, expected to be filed on May 5, 2011.
Cautionary Statement on Forward-Looking Language
Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act
of 1934, are made throughout this release. These forward-looking statements are sometimes
identified by the use of terms and phrases such as believe, should, would, expect,
project, estimate, anticipate, intend, plan, will, can, may, or similar expressions
elsewhere in this release. 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 results of operations
(including future revenues, earnings per share and leverage ratios), competitive pressures, future
sales volume, significant increases in the costs of certain commodities, packaging and freight,
timely implementation of future price increases, successful execution of the cost reduction program
and resulting improvements to operating profit and earnings per share, changes in tax laws,
successful integration of recent acquisitions and related accretion, future capital expenditures,
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
Companys 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.
About Ralcorp Holdings, Inc.
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.
Ralcorps 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; frozen dough; and dry pasta. For more
information about Ralcorp, visit the Companys website at www.ralcorp.com.
8
RALCORP HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(Dollars in millions except per share data, shares in thousands)
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
(Dollars in millions except per share data, shares in thousands)
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Sales |
$ | 1,172.6 | $ | 965.0 | $ | 2,345.9 | $ | 1,956.9 | ||||||||
Cost of goods sold |
(832.6 | ) | (698.6 | ) | (1,687.9 | ) | (1,417.7 | ) | ||||||||
Gross Profit |
340.0 | 266.4 | 658.0 | 539.2 | ||||||||||||
Selling, general and administrative expenses |
(155.8 | ) | (133.9 | ) | (303.3 | ) | (262.4 | ) | ||||||||
Amortization of intangible assets |
(19.4 | ) | (11.3 | ) | (38.9 | ) | (22.6 | ) | ||||||||
Impairment of intangible assets |
| (20.5 | ) | | (20.5 | ) | ||||||||||
Other operating expenses, net |
(.7 | ) | (3.0 | ) | (4.6 | ) | (3.9 | ) | ||||||||
Operating Profit |
164.1 | 97.7 | 311.2 | 229.8 | ||||||||||||
Interest expense, net |
(33.8 | ) | (23.9 | ) | (69.5 | ) | (50.4 | ) | ||||||||
Earnings before Income Taxes |
130.3 | 73.8 | 241.7 | 179.4 | ||||||||||||
Income taxes |
(47.0 | ) | (27.1 | ) | (87.1 | ) | (65.5 | ) | ||||||||
Net Earnings |
$ | 83.3 | $ | 46.7 | $ | 154.6 | $ | 113.9 | ||||||||
Earnings per Share |
||||||||||||||||
Basic |
$ | 1.52 | $ | .85 | $ | 2.82 | $ | 2.06 | ||||||||
Diluted |
$ | 1.50 | $ | .84 | $ | 2.78 | $ | 2.03 | ||||||||
Weighted Average Shares Oustanding |
||||||||||||||||
Basic |
54,769 | 54,541 | 54,736 | 55,232 | ||||||||||||
Diluted |
55,508 | 55,497 | 55,464 | 56,030 |
9
RALCORP HOLDINGS, INC.
RECONCILIATIONS OF NON-GAAP MEASURES (Unaudited)
(Dollars in millions except per share data)
RECONCILIATIONS OF NON-GAAP MEASURES (Unaudited)
(Dollars in millions except per share data)
Three Months Ended | Six Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Adjusted Diluted Earnings per Share |
$ | 1.43 | $ | 1.12 | $ | 2.69 | $ | 2.33 | ||||||||
Adjustments for economic hedges |
.07 | | .12 | | ||||||||||||
Provision for legal settlement |
| | (.03 | ) | | |||||||||||
Merger and integration costs |
| (.05 | ) | | (.06 | ) | ||||||||||
Amounts related to plant closures |
| | | (.01 | ) | |||||||||||
Impairment of intangible assets |
| (.23 | ) | | (.23 | ) | ||||||||||
Diluted Earnings per Share |
$ | 1.50 | $ | .84 | $ | 2.78 | $ | 2.03 | ||||||||
Adjusted EBITDA |
$ | 214.5 | $ | 161.8 | $ | 416.6 | $ | 333.6 | ||||||||
Interest expense, net |
(33.8 | ) | (23.9 | ) | (69.5 | ) | (50.4 | ) | ||||||||
Income taxes |
(47.0 | ) | (27.1 | ) | (87.1 | ) | (65.5 | ) | ||||||||
Depreciation and amortization |
(56.1 | ) | (39.0 | ) | (113.0 | ) | (77.4 | ) | ||||||||
Adjustments for economic hedges |
6.0 | | 10.8 | | ||||||||||||
Provision for legal settlement |
| | (2.5 | ) | | |||||||||||
Merger and integration costs |
(.1 | ) | (4.5 | ) | (.3 | ) | (5.1 | ) | ||||||||
Amounts related to plant closures |
(.2 | ) | (.1 | ) | (.4 | ) | (.8 | ) | ||||||||
Impairment of intangible assets |
| (20.5 | ) | | (20.5 | ) | ||||||||||
Net Earnings |
$ | 83.3 | $ | 46.7 | $ | 154.6 | $ | 113.9 | ||||||||
Total Segment Profit |
$ | 171.0 | $ | 135.7 | $ | 330.5 | $ | 282.9 | ||||||||
Interest expense, net |
(33.8 | ) | (23.9 | ) | (69.5 | ) | (50.4 | ) | ||||||||
Adjustments for economic hedges |
6.0 | | 10.8 | | ||||||||||||
Provision for legal settlement |
| | (2.5 | ) | | |||||||||||
Merger and integration costs |
(.1 | ) | (4.5 | ) | (.3 | ) | (5.1 | ) | ||||||||
Amounts related to plant closures |
(.2 | ) | (.1 | ) | (.4 | ) | (.8 | ) | ||||||||
Impairment of intangible assets |
| (20.5 | ) | | (20.5 | ) | ||||||||||
Stock-based compensation expense |
(4.1 | ) | (4.5 | ) | (7.9 | ) | (9.5 | ) | ||||||||
Systems upgrade and conversion costs |
(1.5 | ) | (1.4 | ) | (3.9 | ) | (2.7 | ) | ||||||||
Other unallocated corporate expenses |
(7.0 | ) | (7.0 | ) | (15.1 | ) | (14.5 | ) | ||||||||
Earnings before Income Taxes |
$ | 130.3 | $ | 73.8 | $ | 241.7 | $ | 179.4 | ||||||||
10