# Post Holdings, Inc. (POST) FY 2022 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Post Holdings, Inc.'s 10-K for fiscal year 2022.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1530950/000153095022000375/post-20220930.htm
Accession: 0001530950-22-000375
Filing date: 2022-11-17
Report date: 2022-09-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/POST/
All MD&A years: /company/POST/mda/
Previous year: /company/POST/mda/fy2021/ (FY 2021)
Next year: /company/POST/mda/fy2023/ (FY 2023)

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of Post Holdings, Inc. This discussion should be read in conjunction with the financial statements under Item 8 of this report and the “Cautionary Statement on Forward-Looking Statements” on page 1 of this report. The terms “our,” “we,” “us,” “Company” and “Post” as used herein refer to Post Holdings, Inc. and its consolidated subsidiaries.

On March 10, 2022, we completed the BellRing Spin-off (as defined below), which represented a strategic shift that had a major effect on our operations and consolidated financial results. Accordingly, the historical results of BellRing Intermediate Holdings, Inc. (formerly known as BellRing Brands, Inc.) (“Old BellRing”) and BellRing Distribution, LLC prior to the BellRing Spin-off have been presented as discontinued operations in our Consolidated Statements of Operations, Consolidated Balance Sheets and Consolidated Statements of Cash Flows. The following discussion reflects continuing operations only, unless otherwise indicated. See below for additional information.

OVERVIEW

We are a consumer packaged goods holding company, operating in four reportable segments: Post Consumer Brands, Weetabix, Foodservice and Refrigerated Retail. Our products are sold through a variety of channels, including grocery, club and drug stores, mass merchandisers, foodservice, food ingredient and eCommerce.

At September 30, 2022, our reportable segments were as follows:

•Post Consumer Brands: North American ready-to-eat (“RTE”) cereal and Peter Pan nut butters;

•Weetabix: primarily United Kingdom (the “U.K.”) RTE cereal, muesli and protein-based ready-to-drink shakes;

•Foodservice: primarily egg and potato products; and

•Refrigerated Retail: primarily side dish, egg, cheese and sausage products.

Transactions

BellRing Brands, Inc.

On October 21, 2019, Old BellRing (our subsidiary at the time) closed its initial public offering (the “BellRing IPO”) of 39.4 million shares of its Class A common stock, $0.01 par value per share (the “Old BellRing Class A Common Stock”). As a result of the BellRing IPO and certain other transactions completed in connection with the BellRing IPO, Old BellRing became a publicly-traded company, with the Old BellRing Class A Common Stock being traded on the New York Stock Exchange (the “NYSE”) under the ticker symbol “BRBR”, and the holding company of BellRing Brands, LLC, a Delaware limited liability company (“BellRing LLC”), owning 28.8% of its non-voting membership units (the “BellRing LLC units”) with us owning 71.2% of the BellRing LLC units and one share of Old BellRing’s Class B common stock, $0.01 par value per share (the “Old BellRing Class B Common Stock”). Our ownership of the BellRing LLC units and the share of Old BellRing Class B Common Stock gave us a controlling interest in Old BellRing following the BellRing IPO. This controlling interest resulted in the full consolidation of Old BellRing and its subsidiaries into our financial statements prior to the BellRing Spin-off, while the remaining interest in Old BellRing’s consolidated net earnings and net assets not held by us were allocated to noncontrolling interest (“NCI”) prior to the BellRing Spin-off.

On March 9, 2022, pursuant to the Transaction Agreement and Plan of Merger, dated as of October 26, 2021 (as amended by Amendment No.1 to the Transaction Agreement and Plan of Merger, dated as of February 28, 2022, the “Spin-off Agreement”), by and among us, Old BellRing, BellRing Brands, Inc. (formerly known as BellRing Distribution, LLC) (“BellRing”) and BellRing Merger Sub Corporation, a wholly-owned subsidiary of BellRing (“BellRing Merger Sub”), we contributed our share of Old BellRing Class B Common Stock, all of our BellRing LLC units, and $550.4 million of cash to BellRing in exchange for certain limited liability company interests of BellRing and the right to receive $840.0 million in aggregate principal amount of BellRing’s 7.00% senior notes maturing in 2030 (the “BellRing Notes” and such transactions, collectively, the “BellRing Contribution”).

On March 10, 2022, BellRing converted into a Delaware corporation and changed its name to “BellRing Brands, Inc.”, and we distributed an aggregate of 78.1 million, or 80.1%, of our shares of BellRing common stock, $0.01 par value per share (“BellRing Common Stock”), to our shareholders of record as of the close of business, Central Time, on February 25, 2022 (the “Record Date”) in a pro-rata distribution (the “BellRing Distribution”). Our shareholders received 1.267788 shares of BellRing Common Stock for every one share of our common stock held as of the Record Date. No fractional shares of BellRing Common Stock were issued, and instead, cash in lieu of any fractional shares was paid to our shareholders.

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Upon completion of the BellRing Distribution, BellRing Merger Sub merged with and into Old BellRing (the “BellRing Merger”), with Old BellRing continuing as the surviving corporation and becoming a wholly-owned subsidiary of BellRing. Pursuant to the BellRing Merger, each outstanding share of Old BellRing Class A Common Stock was converted into one share of BellRing Common Stock plus $2.97 in cash. The transactions described above, including the BellRing Contribution, the BellRing Distribution and the BellRing Merger, as well as the Debt-for-Debt Exchange described under “Liquidity and Capital Resources” below, are collectively referred to as the “BellRing Spin-off.”

Immediately following the BellRing Spin-off, we owned approximately 14.2% of the BellRing Common Stock and our shareholders owned approximately 57.3% of the BellRing Common Stock. The former Old BellRing stockholders owned approximately 28.5% of the BellRing Common Stock, maintaining the same effective percentage ownership interest in the Old BellRing business as prior to the BellRing Spin-off. As a result of the BellRing Spin-off, the dual class voting structure in the BellRing business was eliminated. The BellRing Distribution was structured in a manner intended to qualify as a tax-free distribution to our shareholders for United States (“U.S.”) federal income tax purposes, except to the extent of any cash received in lieu of fractional shares of BellRing Common Stock.

On March 17, 2022, we utilized proceeds received in connection with the BellRing Spin-off to redeem a portion of our existing 5.75% senior notes.

On August 11, 2022, we transferred 14.8 million of our remaining shares of BellRing Common Stock to repay certain outstanding debt obligations as part of a Debt-for-Equity Exchange (as defined in “Liquidity and Capital Resources” below). As of September 30, 2022, we owned 4.6 million shares of BellRing Common Stock, or 3.4% of the equity interest in BellRing.

We incurred separation-related expenses of $29.9 million during the year ended September 30, 2022 related to the BellRing Spin-off and subsequent partial divestment of our Investment in BellRing (as defined below). For additional discussion, refer to “Liquidity and Capital Resources” within this section. These expenses generally included third party costs for advisory services, fees charged by other service providers and government filing fees and were included in “Selling, general and administrative expenses” in the Consolidated Statement of Operations.

For additional information on the BellRing Spin-off, refer to Notes 4 and 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Initial Public Offering of Post Holdings Partnering Corporation

In May and June of 2021, we and Post Holdings Partnering Corporation, a special purpose acquisition company (“PHPC”), consummated the initial public offering of 34.5 million units of PHPC (the “PHPC Units” and such transaction, the “PHPC IPO”), of which PHPC Sponsor, LLC, our wholly-owned subsidiary (“PHPC Sponsor”), purchased 4.0 million PHPC Units. Each PHPC Unit consists of one share of Series A common stock of PHPC, $0.0001 par value per share (“PHPC Series A Common Stock”), and one-third of one redeemable warrant of PHPC, each whole warrant entitling the holder thereof to purchase one share of PHPC Series A Common Stock at an exercise price of $11.50 per share (the “PHPC Warrants”). The PHPC Units were sold at a price of $10.00 per PHPC Unit, generating gross proceeds to PHPC of $345.0 million. The PHPC Units, PHPC Series A Common Stock and PHPC Warrants each trade on the NYSE under the ticker symbols “PSPC.U”, “PSPC” and “PSPC WS”, respectively. Under the terms of the PHPC IPO, PHPC is required to consummate a partnering transaction by May 28, 2023 (which may be extended to August 28, 2023 in certain circumstances).

Substantially concurrently with the closing of the PHPC IPO, PHPC completed the private sale of 1.1 million units of PHPC (the “PHPC Private Placement Units”), at a purchase price of $10.00 per PHPC Private Placement Unit, to PHPC Sponsor, generating proceeds to PHPC of $10.9 million (the “PHPC Private Placement”). The PHPC Private Placement Units sold in the PHPC Private Placement are identical to the PHPC Units sold in the PHPC IPO, except that, with respect to the warrants underlying the PHPC Private Placement Units (the “PHPC Private Placement Warrants”) that are held by PHPC Sponsor or its permitted transferees, such PHPC Private Placement Warrants (i) may be exercised for cash or on a cashless basis, (ii) are not subject to being called for redemption (except in certain circumstances when the PHPC Warrants are called for redemption and a certain price per share of PHPC Series A Common Stock threshold is met) and (iii) subject to certain limited exceptions, will be subject to transfer restrictions until 30 days following the consummation of PHPC’s partnering transaction. If the PHPC Private Placement Warrants are held by holders other than PHPC Sponsor or its permitted transferees, the PHPC Private Placement Warrants will be redeemable by PHPC in all redemption scenarios and exercisable by holders on the same basis as the PHPC Warrants.

In addition, we, through PHPC Sponsor’s ownership of 8.6 million shares of Series F common stock of PHPC, $0.0001 par value per share, have certain governance rights in PHPC relating to the election of PHPC directors and voting rights on amendments to PHPC’s certificate of incorporation.

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In connection with the completion of the PHPC IPO, PHPC also entered into a forward purchase agreement with PHPC Sponsor (the “Forward Purchase Agreement”), providing for the purchase by PHPC Sponsor, at the election of PHPC, of up to 10.0 million units of PHPC (the “PHPC Forward Purchase Units”), subject to the terms and conditions of the Forward Purchase Agreement, with each PHPC Forward Purchase Unit consisting of one share of PHPC’s Series B common stock, $0.0001 par value per share, and one-third of one warrant to purchase one share of PHPC Series A Common Stock, for a purchase price of $10.00 per PHPC Forward Purchase Unit, in an aggregate amount of up to $100.0 million in a private placement to occur concurrently with the closing of PHPC’s partnering transaction.

In determining the accounting treatment of our equity interest in PHPC, management concluded that PHPC is a variable interest entity (“VIE”) as defined by Accounting Standards Codification (“ASC”) Topic 810, “Consolidation.” A VIE is an entity in which equity investors at risk lack the characteristics of a controlling financial interest. VIEs are consolidated by the primary beneficiary, the party who has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, as well as the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. PHPC Sponsor is the primary beneficiary of PHPC as it has, through its equity interest, the right to receive benefits or the obligation to absorb losses from PHPC, as well as the power to direct a majority of the activities that significantly impact PHPC’s economic performance, including target identification. As such, PHPC is fully consolidated into our financial statements.

As of both September 30, 2022 and 2021, we beneficially owned 31.0% of the equity of PHPC and the net earnings and net assets of PHPC were consolidated within our financial statements. The remaining 69.0% of the consolidated net earnings and net assets of PHPC, representing the percentage of economic interest in PHPC held by the public stockholders of PHPC through their ownership of PHPC equity, were allocated to redeemable NCI. All transactions between PHPC and PHPC Sponsor, as well as related financial statement impacts, eliminate in consolidation.

Acquisitions

We completed the following acquisitions during the reporting period:

Fiscal 2022

•Lacka Foods Limited (“Lacka Foods”), acquired on April 5, 2022 and reported in our Weetabix segment.

Fiscal 2021

•Private label RTE cereal business of TreeHouse Foods, Inc. (the “PL RTE Cereal Business”), acquired on June 1, 2021 and reported in our Post Consumer Brands segment;

•Egg Beaters liquid egg brand (“Egg Beaters”), acquired on May 27, 2021 and reported in our Refrigerated Retail segment;

•Almark Foods business and related assets (“Almark”), acquired on February 1, 2021 and reported in our Foodservice and Refrigerated Retail segments; and

•Peter Pan nut butter brand (“Peter Pan”), acquired on January 25, 2021 and reported in our Post Consumer Brands segment.

Fiscal 2020

•Henningsen Foods, Inc. (“Henningsen”), acquired on July 1, 2020 and reported in our Foodservice segment.

Divestitures

We completed the sale of the Willamette Egg Farms business (the “WEF Transaction”) on December 1, 2021. Prior to the WEF Transaction, Willamette Egg Farms’ operating results were reported in our Refrigerated Retail segment.

COVID-19

We continue to closely monitor the impact of the COVID-19 pandemic on our businesses. We have experienced higher demand in our foodservice business during fiscal 2022 compared to fiscal 2021 as away-from-home food demand has continued to recover from the impacts of the pandemic. While foodservice volumes remain slightly below pre-pandemic levels, we continue to expect foodservice profitability will return to pre-pandemic levels in fiscal 2023. Our products sold through retail channels generally experienced an uplift in sales through the first half of fiscal 2021, driven by increased at-home consumption in reaction to the COVID-19 pandemic, and returned to normalized levels in fiscal 2022. We have experienced inflationary headwinds across all segments of our business and we continue to mitigate these impacts through sales price increases and cost saving measures. We expect this trend to continue into fiscal 2023.

As the overall economy continues to recover from the impact of the COVID-19 pandemic, uncertainty remains and such trends ultimately depend on the length and severity of the pandemic and introduction of new strains and variants of the virus;

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the federal, state, and local government actions taken in response; and the macroeconomic environment. We have experienced some challenges resulting from the COVID-19 pandemic, including labor shortages, input and freight inflation and other supply chain disruptions, including input availability. We cannot predict the ultimate impact from the COVID-19 pandemic on customer and consumer demand, our suppliers or the labor market.

For additional discussion, refer to “Liquidity and Capital Resources” within this section, as well as “Cautionary Statement on Forward-Looking Statements” on page 1 of this report and “Risk Factors” in Item 1A of this report.

Conflict in Ukraine

The ongoing conflict in Ukraine and the subsequent economic sanctions imposed by some countries have had, and may continue to have, an adverse impact on fuel, transportation and commodity costs and may cause supply and demand disruptions in the markets we serve, including Europe. While we do not have operations in Russia, Ukraine or Belarus and do not have significant direct exposure to customers or suppliers in those countries, our businesses and operations have been negatively impacted by increased inflation, escalating energy and fuel prices and constrained availability, and thus increasing costs, of certain raw materials and other commodities, and declarations of force majeure by certain suppliers during fiscal 2022. We expect certain energy costs and raw material costs to remain elevated as a result of the ongoing conflict. To date, the economic sanctions imposed on Russian businesses have not had a direct impact on our procurement of energy and raw materials, however, there can be no assurance that additional sanctions will not be implemented. If our energy and raw materials purchases are directly impacted by sanctions, we may incur additional costs to procure such commodities. Our ability to procure energy and raw materials in the quantities necessary for the normal operations of our business may be limited. In addition, the U.K. government has established an energy price cap, which is currently keeping our U.K.-based business energy costs below prevailing market rates. The price cap is set to expire in April 2023, after which energy costs to operate our U.K.-based facilities could increase materially.

Avian Influenza

During fiscal 2022 and continuing into fiscal 2023, our Foodservice and Refrigerated Retail segments were impacted by outbreaks of avian influenza (“AI”). As a result of AI, we have incurred, and anticipate will continue to incur, increased costs related to production inefficiencies, egg supply constraints and higher market-based egg prices due to the decreased availability of eggs on the open market. We have mitigated, and plan to continue to mitigate, these increased costs through the management of volume needs with customers and pricing actions to cover the higher cost structure. Through these actions, we anticipate we will continue to mitigate the impact of AI on the profitability of our egg business. However, these actions do not contemplate further AI outbreaks, and we expect AI to have continued impact on our egg business.

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RESULTS OF OPERATIONS

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["Net Sales","$","5,851.2","","","$","4,980.7","","","$","870.5","","","17","%","","$","4,980.7","","","$","4,711.0","","","$","269.7","","","6","%"],["Operating Profit","$","415.6","","","$","487.7","","","$","(72.1)","","","(15)","%","","$","487.7","","","$","536.5","","","$","(48.8)","","","(9)","%"],["Interest expense, net","317.8","","","332.6","","","14.8","","","4","%","","332.6","","","333.9","","","1.3","","","\u2014","%"],["(Gain) loss on extinguishment of debt, net","(72.6)","","","93.2","","","165.8","","","178","%","","93.2","","","72.9","","","(20.3)","","","(28)","%"],["(Income) expense on swaps, net","(268.0)","","","(122.8)","","","145.2","","","118","%","","(122.8)","","","187.1","","","309.9","","","166","%"],["Gain on investment in BellRing","(437.1)","","","\u2014","","","437.1","","","n/a","","\u2014","","","\u2014","","","\u2014","","","n/a"],["Other income, net","(19.8)","","","(29.3)","","","(9.5)","","","(32)","%","","(29.3)","","","(11.5)","","","17.8","","","155","%"],["Income tax expense (benefit)","85.7","","","58.2","","","(27.5)","","","(47)","%","","58.2","","","(21.3)","","","(79.5)","","","(373)","%"],["Equity method loss, net of tax","67.1","","","43.9","","","(23.2)","","","(53)","%","","43.9","","","30.9","","","(13.0)","","","(42)","%"],["Less: Net earnings attributable to noncontrolling interests from continuing operations","7.5","","","7.0","","","(0.5)","","","(7)","%","","7.0","","","1.0","","","(6.0)","","","(600)","%"],["Net earnings from discontinued operations, net of tax and noncontrolling interest","21.6","","","61.8","","","(40.2)","","","(65)","%","","$","61.8","","","$","57.3","","","4.5","","","8","%"],["Net Earnings","$","756.6","","","$","166.7","","","$","589.9","","","354","%","","$","166.7","","","$","0.8","","","$","165.9","","","20,738","%"]]
[[/GREPCENT_TABLE]]

Net Sales

Fiscal 2022 compared to 2021

Net sales increased $870.5 million, or 17%, during the year ended September 30, 2022. This increase was due to growth in our Foodservice, Post Consumer Brands and Refrigerated Retail segments, which included incremental contributions from our fiscal 2021 acquisitions. For further discussion, refer to “Segment Results” within this section.

Fiscal 2021 compared to 2020

Net sales increased $269.7 million, or 6%, during the year ended September 30, 2021. This increase was due to growth in our Foodservice, Weetabix and Refrigerated Retail segments, which included incremental contributions from our fiscal 2021 and 2020 acquisitions. These positive impacts were partially offset by a decline in our Post Consumer Brands segment. For further discussion, refer to “Segment Results” within this section.

Operating Profit

Fiscal 2022 compared to 2021

Operating profit decreased $72.1 million, or 15%, for the year ended September 30, 2022. This decrease was due to increased general corporate expenses and lower segment profit within our Refrigerated Retail, Weetabix and Post Consumer Brands segments, partially offset by increased segment profit within our Foodservice segment. For further discussion, refer to “Segment Results” within this section.

Fiscal 2021 compared to 2020

Operating profit decreased $48.8 million, or 9%, for the year ended September 30, 2021. This decrease was primarily due to lower segment profit within our Post Consumer Brands and Refrigerated Retail segments, partially offset by increased segment profit within our Foodservice and Weetabix segments, as well as decreased general corporate expenses and other. For further discussion, refer to “Segment Results” within this section.

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Interest Expense, net

Interest expense decreased $14.8 million, or 4%, for the year ended September 30, 2022, compared to the prior year. The decrease was driven by a lower weighted-average interest rate when compared to fiscal 2021, lower average outstanding principal amounts of debt compared to the prior year and increased interest income. Our weighted-average interest rate on our total outstanding debt was 5.0% and 5.1% for the years ended September 30, 2022 and 2021, respectively.

Interest expense decreased $1.3 million, or less than 1%, for the year ended September 30, 2021, compared to the prior year. The decrease was driven by a lower weighted-average interest rate when compared to fiscal 2020, decreased amortization of debt issuance costs, deferred financing fees and debt discount of $1.7 million and increased amortization of debt premium of $1.7 million. These positive impacts were partially offset by lower interest income of $5.6 million on our cash balances. Our weighted-average interest rate on our total outstanding debt was 5.1% and 5.3% for the years ended September 30, 2021 and 2020, respectively.

For additional information on our debt, refer to Note 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report and “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of this report.

(Gain) Loss on Extinguishment of Debt, net

During the year ended September 30, 2022, we recognized a net gain of $72.6 million related to the extinguishment of debt. The net gain primarily related to the partial repurchase of our 4.50% senior notes, our 4.625% senior notes and our 5.50% senior notes maturing in December 2029 (our “5.50% senior notes”), partially offset by a net loss related to the partial redemption of our 5.75% senior notes. The net gain included net debt discounts received of $73.7 million and the write-off of unamortized premiums of $15.3 million, partially offset by the write-offs of debt issuance costs and tender fees of $12.2 million related to our senior notes and $4.2 million of write-offs of debt issuance costs related to our First Incremental Term Loan and Second Incremental Term Loan (as defined in “Liquidity and Capital Resources” within this section).

During the year ended September 30, 2021, we recognized a loss of $93.2 million related to extinguishment of debt. The loss related to the repayment of the outstanding principal balance of our 5.00% senior notes. The loss included debt premiums paid of $74.3 million and write-offs of debt issuance costs of $18.9 million.

During the year ended September 30, 2020, we recognized a loss of $72.9 million related to extinguishment of debt. The loss related to repayments of the outstanding principal balances of our 2020 bridge loan, our previously outstanding term loan, our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes, as well as the amendment and restatement of our credit agreement (as amended, restated or amended and restated, the “Credit Agreement”). The loss included premiums paid of $49.8 million and write-offs of debt issuance costs of $23.1 million.

For additional information on our debt, refer to Note 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

(Income) Expense on Swaps, net

During the years ended September 30, 2022, 2021 and 2020, we recognized net (income) expense of $(268.0) million, $(122.8) million and $187.1 million, respectively, related to mark-to-market adjustments on our interest rate swaps that were not designated as hedging instruments. For additional information on our interest rate swaps, refer to Note 13 within “Notes to Consolidated Financial Statements” in Item 8 of this report and “Quantitative and Qualitative Disclosures About Market Risk” in Item 7A of this report.

Gain on Investment in BellRing

During the year ended September 30, 2022, we recorded a gain of $437.1 million related to our equity interest in BellRing subsequent to the BellRing Spin-off (our “Investment in BellRing”), which is accounted for as an equity security.

For additional information on our Investment in BellRing, refer to Notes 4, 5 and 14 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

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Income Tax Expense (Benefit)

Our effective income tax rate for fiscal 2022 was 9.6% compared to 27.2% for fiscal 2021 and (46.4)% for fiscal 2020. A reconciliation of income tax expense (benefit) with amounts computed at the statutory federal rate follows:

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

(a)No deferred income taxes have been recorded with respect to the non-cash realized and unrealized book gains on the Company’s Investment in BellRing during the year ended September 30, 2022, as the Company expects to fully divest, and has already partially divested through the Debt-for-Equity Exchange (as defined under “Liquidity and Capital Resources” below), its remaining Investment in BellRing within 12 months of the BellRing Spin-off in a manner intended to qualify as tax-free for U.S. federal income tax purposes. For additional information on our Investment in BellRing, refer to Notes 4, 5 and 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

In fiscal 2022, our effective income tax rate was impacted by (i) a $91.8 million tax-effected benefit from the non-cash realized and unrealized book gains on our Investment in BellRing, of which a portion was divested in a manner intended to qualify as tax-free for U.S. federal income tax purposes through the Debt-for-Equity Exchange and which the remaining portion is also expected to be divested in a manner intended to be tax-free, and (ii) $14.1 million of discrete income tax benefit items related to our equity method loss attributable to 8th Avenue Food and Provisions, Inc. (“8th Avenue”). See Notes 4 and 5 within “Notes to Consolidated Financial Statements” in Item 8 of this report and “Liquidity and Capital Resources” within this section for additional information on our Investment in BellRing and the 8th Avenue equity method loss. In fiscal 2021, our effective income tax rate was impacted by enacted tax law changes in the U.K., which included a provision to increase the U.K.’s corporate income tax rate from 19% to 25%, effective April 1, 2023. During the years ended September 30, 2022 and 2021, we remeasured our existing deferred tax assets and liabilities considering the 25% U.K. corporate income tax rate for future periods and recorded tax expense of $0.9 million and $40.0 million, respectively. Other changes made to the U.K.’s tax law did not have a material impact on our financial statements during the years ended September 30, 2022 and 2021. Additionally, in fiscal 2020, our effective income tax rate was impacted by enacted tax law changes in the U.K., which included a provision to increase the U.K.’s corporate income tax rate from 17% to 19%. During the year ended September 30, 2020, we remeasured our existing deferred tax assets and liabilities considering the 19% U.K. corporate income tax rate for future periods and recorded tax expense of $13.0 million.

Discontinued Operations

The BellRing Spin-off represented a strategic shift that had a major effect on our operations and consolidated financial results. Accordingly, the historical results of Old BellRing and BellRing Distribution, LLC prior to the BellRing Spin-off were presented as discontinued operations in the Consolidated Statements of Operations. For additional information on the BellRing Spin-off, refer to Notes 4 and 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

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SEGMENT RESULTS

We evaluate each segment’s performance based on its segment profit, which for all segments is its earnings/loss before income taxes and equity method earnings/loss before impairment of property, goodwill and other intangible assets, facility closure related costs, restructuring expenses, gain/loss on assets and liabilities held for sale, gain/loss on sale of businesses and facilities, gain on/adjustment to bargain purchase, interest expense and other unallocated corporate income and expenses.

Post Consumer Brands

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["Net Sales","$","2,242.7","","","$","1,915.3","","","$","327.4","","","17","%","","$","1,915.3","","","$","1,949.1","","","$","(33.8)","","","(2)","%"],["Segment Profit","$","314.6","","","$","316.6","","","$","(2.0)","","","(1)","%","","$","316.6","","","$","393.5","","","$","(76.9)","","","(20)","%"],["Segment Profit Margin","14","%","","17","%","","","","","","17","%","","20","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2022 compared to 2021

Net sales for the Post Consumer Brands segment increased $327.4 million, or 17%, for the year ended September 30, 2022. Net sales for the year ended September 30, 2022 were positively impacted by the inclusion of incremental months of net sales of $150.6 million attributable to our fiscal 2021 acquisitions of Peter Pan and the PL RTE Cereal Business. Excluding this impact, net sales increased $176.8 million, or 9%, driven by increased average net selling prices primarily due to increased pricing taken to mitigate inflation. In addition, volumes increased 1% driven by increases in Peter Pan nut butters (driven partially by competitor out-of-stocks) and Pebbles, partially offset by volume decreases in Honey Bunches of Oats.

Segment profit for the year ended September 30, 2022 decreased $2.0 million, or 1%, compared to the prior year. Segment profit for the year ended September 30, 2022 was negatively impacted by the inclusion of incremental months of segment operating loss of $15.5 million attributable to our fiscal 2021 acquisitions of Peter Pan and the PL RTE Cereal Business. Additionally, prior year segment profit was negatively impacted by a $15.0 million legal settlement. Excluding these impacts, segment profit decreased $1.5 million, or less than 1%, driven by raw material inflation of $53.5 million, higher manufacturing costs of $51.8 million (primarily due to supply constraints, reduced production attainment and product mix, partially offset by manufacturing cost efficiencies) and increased freight costs of $44.6 million (excluding volume-driven impacts) when compared to the prior year. These negative impacts were largely offset by higher net sales, as previously discussed, and lower advertising and consumer spending of $6.1 million.

Fiscal 2021 compared to 2020

Net sales for the Post Consumer Brands segment decreased $33.8 million, or 2%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $121.8 million attributable to our fiscal 2021 acquisitions of Peter Pan and the PL RTE Cereal Business. Excluding this impact, net sales decreased $155.6 million, or 8.0%, primarily due to 11% lower volume. This decrease in volume was primarily due to the lapping of increased purchases in the prior year driven by consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic, broader softness across value and private label cereal products and the decision to exit certain low-margin private label business. Volume declines in private label cereal, Malt-O-Meal bag cereal, Honey Bunches of Oats and licensed and adult classic brands were partially offset by increased Pebbles volume and incremental volumes from new product innovations. Average net selling prices increased when compared to the prior year as a result of a favorable product mix, partially offset by increased trade spending. Additionally, net sales for the year ended September 30, 2021 were negatively impacted by an estimated $9.8 million in lost revenue, resulting from COVID-19 related production shutdowns and employee absences at our Battle Creek, Michigan RTE cereal facility.

Segment profit for the year ended September 30, 2021 decreased $76.9 million, or 20%, compared to the prior year. Segment profit for the year ended September 30, 2021 was negatively impacted by the inclusion of a net incremental segment loss of $3.0 million attributable to our fiscal 2021 acquisitions of Peter Pan and the PL RTE Cereal Business. Excluding this impact, segment profit decreased $73.9 million, or 19%, primarily driven by lower net sales, as previously discussed, higher manufacturing costs of $44.2 million (primarily due to unfavorable fixed cost absorption resulting from lower volume, partially offset by other manufacturing cost efficiencies), increased freight costs of $19.3 million (excluding volume-driven impacts), a provision for legal settlement of $15.0 million and increased raw material costs of $5.4 million. These negative impacts were partially offset by lower advertising and consumer spending of $5.9 million, gains on sale of property of $4.0 million and lower employee-related expenses. Additionally, segment profit for the year ended September 30, 2021 was negatively impacted by lost revenue at our Battle Creek, Michigan RTE cereal facility, as previously discussed, resulting in an estimated $5.6 million in lost profit contribution.

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Weetabix

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["Net Sales","$","477.3","","","$","477.5","","","$","(0.2)","","","\u2014","%","","$","477.5","","","$","440.4","","","$","37.1","","","8","%"],["Segment Profit","$","109.5","","","$","115.4","","","$","(5.9)","","","(5)","%","","$","115.4","","","$","112.3","","","$","3.1","","","3","%"],["Segment Profit Margin","23","%","","24","%","","","","","","24","%","","25","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2022 compared to 2021

Net sales for the Weetabix segment decreased $0.2 million, or less than 1%, for the year ended September 30, 2022, including the impact of unfavorable foreign exchange rates and the inclusion of six incremental months of net sales of $12.9 million attributable to our current year acquisition of Lacka Foods. Excluding these impacts, net sales increased $18.8 million, or 4%, driven by higher average net selling prices primarily due to list price increases. This positive impact was largely offset by a 2% volume decrease driven by reduced service levels (driven by supply constraints), declines in demand for RTE cereal products as a result of the lapping of increased purchases in the prior year driven by consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic.

Segment profit decreased $5.9 million, or 5%, for the year ended September 30, 2022, which was primarily driven by unfavorable exchange rates. Excluding the impact of unfavorable foreign exchange rates, segment profit increased $1.6 million, or 1%. This increase was driven by higher net sales, as previously discussed, partially offset by higher raw material inflation of $9.1 million and higher transportation costs.

Fiscal 2021 compared to 2020

Net sales for the Weetabix segment increased $37.1 million, or 8%, for the year ended September 30, 2021, primarily due to improved average net selling prices and favorable foreign exchange rates. Excluding the impact of favorable exchange rates, net sales increased $4.5 million, or 1%, on 1% lower volume. Average net selling prices increased primarily due to targeted price increases that went into effect in March 2020 and a favorable product mix. The decrease in volume was driven by declines in RTE cereal products as a result of the lapping of increased purchases in the prior year driven by consumer pantry loading and increased at-home consumption in reaction to the COVID-19 pandemic, partially offset by private label distribution gains and new product innovations.

Segment profit increased $3.1 million, or 3%, for the year ended September 30, 2021. This increase was driven by favorable foreign exchange rates, higher average net selling prices and lower employee-related expenses, partially offset by unfavorable input costs of $5.7 million and higher advertising and consumer spending of $2.0 million.

Foodservice

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["Net Sales","$","2,095.0","","","$","1,615.6","","","$","479.4","","","30","%","","$","1,615.6","","","$","1,361.8","","","$","253.8","","","19","%"],["Segment Profit","$","151.0","","","$","61.7","","","$","89.3","","","145","%","","$","61.7","","","$","25.6","","","$","36.1","","","141","%"],["Segment Profit Margin","7","%","","4","%","","","","","","4","%","","2","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2022 compared to 2021

Net sales for the Foodservice segment increased $479.4 million, or 30%, for the year ended September 30, 2022. Net sales for the year ended September 30, 2022 were positively impacted by the inclusion of four incremental months of net sales attributable to our fiscal 2021 acquisition of Almark. Excluding this impact, net sales increased $463.1 million, or 29%, on 8% higher volume. This increase in net sales was primarily driven by higher average net selling prices during the current year and the lapping of lower product demand as a result of the COVID-19 pandemic in the prior year. Egg product sales were up $420.6 million, or 30%, with volumes up 6%, driven by higher average net selling prices resulting from the pass-through of higher raw material costs due to increased grain and egg markets. Egg volumes increased primarily due to higher volume in the foodservice channel, partially offset by lower food ingredient volumes. Sale of side dishes were up $47.9 million, or 30%, with volumes up 20%, driven by increased product demand compared to the prior year as a result of the continued recovery from the COVID-19 pandemic, distribution gains and higher average net selling prices due to price increases taken to mitigate inflation.

Segment profit increased $89.3 million, or 145%, for the year ended September 30, 2022, driven by higher net sales, as previously discussed, partially offset by raw material inflation of $236.2 million (primarily driven by higher egg raw material

47

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costs due to increased grain and egg markets), higher freight costs of $44.4 million (excluding volume-driven impacts), a provision for legal settlement and related legal fees of $18.2 million in fiscal 2022, higher warehousing costs of $6.8 million and increased employee-related expenses of $5.4 million. For additional information on the legal settlement, refer to Note 17 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Fiscal 2021 compared to 2020

Net sales for the Foodservice segment increased $253.8 million, or 19%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $45.8 million attributable to our fiscal 2021 acquisition of Almark. Excluding this impact, net sales increased $208.0 million, or 15%, on 5% higher volume. Volume growth was negatively impacted in fiscal 2021 by reduced service levels (driven by labor shortages). Egg product sales were up $174.8 million, or 15%, with volume up 5%, driven by higher average net selling prices resulting from the pass-through of higher input costs due to increased grain markets. Egg volumes increased primarily due to increased foodservice product demand compared to the prior year as a result of the partial recovery from the COVID-19 pandemic and incremental volumes attributable to our fiscal 2020 acquisition of Henningsen. Sales of side dishes were up $8.7 million, or 6%, with volume up 2%, driven by increased product demand compared to the prior year as a result of the partial recovery from the COVID-19 pandemic and higher average net selling prices resulting from targeted price increases. Sausage sales were up $6.3 million, or 41%, driven by 27% higher volume and higher average net selling prices resulting from the pass-through of higher input costs due to increased sow costs. Other product sales were up $18.2 million, or 75%, with volume up 33%, primarily due to the inclusion of incremental results attributable to our fiscal 2020 acquisition of Henningsen and higher average net selling prices resulting from the decision to exit certain low-margin business.

Segment profit increased $36.1 million, or 141%, for the year ended September 30, 2021, driven by higher net sales, as previously discussed, and an insurance recovery of $6.1 million related to previously incurred business interruption losses as a result of a fire at our Bloomfield, Nebraska laying facility in the second quarter of fiscal 2020, partially offset by higher raw material costs of $80.5 million (primarily driven by higher egg input costs due to increased grain markets), a $6.0 million loss on the disposal of certain assets related to our wastewater facility never put into service in Chaska, Minnesota, higher freight costs of $13.6 million (excluding volume-driven impacts) and increased employee-related costs. Prior year segment profit was negatively impacted by a $2.5 million insurance deductible and $0.4 million of repair and clean-up expenses due to the Bloomfield fire previously discussed.

Refrigerated Retail

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["Net Sales","$","1,036.6","","","$","974.5","","","$","62.1","","","6","%","","$","974.5","","","$","961.2","","","$","13.3","","","1","%"],["Segment Profit","$","57.1","","","$","75.9","","","$","(18.8)","","","(25)","%","","$","75.9","","","$","125.6","","","$","(49.7)","","","(40)","%"],["Segment Profit Margin","6","%","","8","%","","","","","","8","%","","13","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2022 compared to 2021

Net sales for the Refrigerated Retail segment increased $62.1 million, or 6%, for the year ended September 30, 2022. Net sales for the year ended September 30, 2022 were positively impacted by the inclusion of incremental months of net sales of $47.5 million attributable to our fiscal 2021 acquisitions of Almark and Egg Beaters, which were partially offset by the absence of net sales as a result of the WEF Transaction. Excluding these impacts, net sales increased $47.9 million, or 5%, on 3% lower volumes, driven by higher average net selling prices. Average net selling prices increased primarily due to price increases taken to mitigate input cost inflation. Sales of side dishes increased $29.5 million, or 7%, on flat volumes, driven by higher average net selling prices. Egg product sales increased $18.8 million, or 15%, on 1% higher volumes, driven by higher average net selling prices. Sausage sales increased $10.6 million, or 7%, driven by higher average net selling prices. This positive impact was partially offset by volume decreases of 5%, primarily due to price elasticities. Cheese and other dairy product sales were down $8.7 million, or 4%, with volume down 11%, driven by lower branded cheese volumes. Sales of other products were down $2.3 million.

Segment profit decreased $18.8 million, or 25%, for the year ended September 30, 2022. This decrease was driven by increased manufacturing costs of $41.1 million, raw material inflation of $36.5 million and higher freight costs of $19.6 million (excluding volume-driven impacts). These negative impacts were partially offset by higher net sales, as previously discussed, and decreased advertising and consumer spending of $11.9 million.

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Fiscal 2021 compared to 2020

Net sales for the Refrigerated Retail segment increased $13.3 million, or 1%, for the year ended September 30, 2021. Net sales for the year ended September 30, 2021 were positively impacted by the inclusion of incremental net sales of $29.5 million attributable to our fiscal 2021 acquisitions of Almark and Egg Beaters. Excluding this impact, net sales decreased $16.2 million, or 2%, with volume down 3%. Sales of side dishes increased $29.7 million, or 8%, driven by increased average net selling prices and 2% higher volume. The increase in average net selling prices was primarily due to targeted price increases and a favorable product mix. The increase in volume was driven by higher branded dinner and breakfast sides volume, partially offset by lower private label dinner sides volume resulting from the decision to exit certain low-margin business and reduced service levels (driven by labor shortages). Sausage sales decreased $8.4 million, or 6%, with volume down 8%, driven by the lapping of increased purchases in the prior year due to increased at-home consumption in response to the COVID-19 pandemic and reduced service levels (driven by labor shortages). Cheese and other dairy product sales were down $30.2 million, or 12%, with volume down 13%, driven by the lapping of increased purchases in the prior year due to increased at-home consumption in response to the COVID-19 pandemic. Egg product sales were down $1.9 million, or 1%, with volume down 2%, driven by the decision to exit certain low-margin business. Sales of other products were down $5.4 million.

Segment profit decreased $49.7 million, or 40%, for the year ended September 30, 2021. This decrease was driven by higher raw material costs of $45.9 million for sows, cheese and eggs, increased manufacturing costs of $13.9 million and higher freight costs of $8.6 million (excluding volume-driven impacts). These negative impacts were partially offset by lower consulting fees and decreased advertising and consumer spending of $0.6 million.

Other Items

General Corporate Expenses and Other

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","% Change","","2021","","2020","","$ Change","","% Change"],["General corporate expenses and other","$","196.8","","","$","52.6","","","$","(144.2)","","","(274)","%","","$","52.6","","","$","109.0","","","$","56.4","","","52","%"]]
[[/GREPCENT_TABLE]]

Fiscal 2022 compared to 2021

General corporate expenses and other increased $144.2 million, or 274%, during the year ended September 30, 2022, primarily driven by increased net losses related to mark-to-market adjustments on economic hedges and the PHPC Warrants of $75.6 million (compared to gains in fiscal 2021), increased separation-related expenses in connection with the BellRing Spin-off of $28.3 million, higher stock-based compensation of $16.7 million and increased net losses related to mark-to-market adjustments of equity securities of $11.0 million (compared to net gains in fiscal 2021). In addition, we recognized a gain on bargain purchase of $11.5 million in the prior year related to our acquisition of the PL RTE Cereal Business. These negative impacts were partially offset by increased net gains on assets held for sale of $8.9 million.

Fiscal 2021 compared to 2020

General corporate expenses and other decreased $56.4 million, or 52%, during the year ended September 30, 2021, primarily driven by increased net gains related to mark-to-market adjustments on commodity and foreign currency hedges and the PHPC Warrants of $65.4 million (compared to losses in fiscal 2020), gains related to mark-to-market adjustments on equity securities of $9.6 million and a $3.2 million net gain related to assets held for sale (compared to losses in the prior year). These positive impacts were partially offset by increased losses related to mark-to-market adjustments on deferred compensation of $8.6 million (compared to gains in the prior year), higher stock-based compensation of $6.4 million and increased third party transaction costs of $5.5 million.

Restructuring and Facility Closure

The table below shows the amount of restructuring and facility closure costs attributable to each segment. These amounts are excluded from the measure of segment profit and are included in general corporate expenses and other.

49

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[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

(Gain) Loss on Assets Held for Sale

The table below shows the amount of net (gains) losses on assets held for sale attributable to each segment. These amounts are excluded from the measure of segment profit and are included in general corporate expenses and other. In the year ended September 30, 2022, final adjustments to the fair values of certain production equipment in Klingerstown, Pennsylvania and Jefferson City, Tennessee were recognized upon sale of the assets. In the year ended September 30, 2021, final adjustments to the fair values of our Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina and our Corby, U.K. manufacturing facilities were recognized upon sale of the assets. In the year ended September 30, 2020, adjustments to the fair values of the Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina manufacturing facility were recognized as a result of third party data. For additional information on our assets and liabilities held for sale, refer to Note 7 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

[[GREPCENT_TABLE]]
[["","Fiscal 2022 compared to 2021","","Fiscal 2021 compared to 2020"],["","","","","","favorable/(unfavorable)","","","","","","favorable/(unfavorable)"],["dollars in millions","2022","","2021","","$ Change","","2021","","2020","","$ Change"],["Post Consumer Brands (a)","$","\u2014","","","$","0.2","","","$","0.2","","","$","0.2","","","$","2.7","","","$","2.5"],["Weetabix (b)","\u2014","","","(0.7)","","","(0.7)","","","(0.7)","","","\u2014","","","0.7"],["Foodservice (c)","(9.4)","","","\u2014","","","9.4","","","\u2014","","","\u2014","","","\u2014"],["","$","(9.4)","","","$","(0.5)","","","$","8.9","","","$","(0.5)","","","$","2.7","","","$","3.2"]]
[[/GREPCENT_TABLE]]

(a)Amounts included are attributable to our Clinton, Massachusetts manufacturing facility and certain assets at our Asheboro, North Carolina manufacturing facility.

(b)Amounts included are attributable to our Corby, U.K. manufacturing facility.

(c)Amounts included are attributable to certain production equipment in Klingerstown, Pennsylvania and Jefferson City, Tennessee.

Loss on Sale of Business

During the year ended September 30, 2022, we recorded a net loss of $6.3 million related to the WEF Transaction, which included a favorable working capital adjustment of $0.4 million. This amount was excluded from the measure of segment profit and was included in general corporate expenses and other. Prior to the WEF Transaction, Willamatte Egg Farms’ operating results were previously reported in the Refrigerated Retail segment. For additional information on loss on sale of business, see Note 7 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

LIQUIDITY AND CAPITAL RESOURCES

We completed the following activities during the reporting period (for additional information, see Notes 4, 5, 6, 16 and 20 within “Notes to Consolidated Financial Statements” in Item 8 of this report) impacting our liquidity and capital resources:

Fiscal 2022

•entered into a second amendment to our Credit Agreement to, among other provisions, facilitate the BellRing Spin-off and to, among other things, change the reference interest rate applicable to revolving loan borrowings in U.S. Dollars from the London Interbank Offered Rate (“LIBOR”) to a rate based on the secured overnight financing rate;

•entered into a Joinder Agreement No. 1 (the “First Joinder Agreement”), in connection with the BellRing Spin-off, which provided for an incremental term loan (the “First Incremental Term Loan”) of $840.0 million under our Credit Agreement, which we borrowed in full on March 8, 2022;

•contributed $550.4 million to BellRing in exchange for certain limited liability company interests of BellRing and the right to receive $840.0 million in aggregate principal amount of BellRing Notes in connection with the BellRing Spin-

50

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off. On March 10, 2022, we delivered the BellRing Notes to the lenders under the First Joinder Agreement in full satisfaction of the principal amount of the First Incremental Term Loan (the “Debt-for-Debt Exchange”);

•$840.0 million principal value repaid, or approximately 65%, of our outstanding 5.75% senior notes using the $840.0 million proceeds from the First Incremental Term Loan, and $24.1 million premium payment made on the partial extinguishment of our 5.75% senior notes;

•entered into a Joinder Agreement No. 2 (the “Second Joinder Agreement”), which provided for an incremental term loan (the “Second Incremental Term Loan”) of $450.0 million under our Credit Agreement, which we borrowed in full on July 25, 2022;

•transferred 14.8 million shares of our remaining BellRing Common Stock to the lenders under the Second Joinder Agreement to repay $342.3 million in aggregate principal amount of the Second Incremental Term Loan (the “Debt-for-Equity Exchange”) on August 11, 2022;

•repaid the remaining principal amount of $107.7 million of the Second Incremental Term Loan on September 14, 2022;

•$575.0 million principal value issued of 2.50% convertible senior notes;

•settled a modified “Dutch Auction” tender offer and purchased $139.8 million principal value, or approximately 8%, of our 4.625% senior notes at 87% of par, including a 5% tender premium, and $381.8 million principal value, or approximately 22%, of our 4.50% senior notes at 86% of par, including a 5% tender premium, for aggregate cash consideration of $450.0 million, excluding accrued interest and fees;

•$147.7 million principal value of our 4.50% senior notes repurchased at a discount of $21.3 million;

•$28.0 million principal value of our 4.625% senior notes repurchased at a discount of $3.8 million;

•$15.0 million principal value of our 5.50% senior notes repurchased at a discount of $1.2 million;

•$500.0 million additional principal value issued of 5.50% senior notes;

•$439.0 million paid (including broker’s commissions) for the repurchase of 4.9 million shares of our common stock; and

•our $750.0 million revolving credit facility under our Credit Agreement (the “Revolving Credit Facility”) had outstanding letters of credit of $19.7 million, which reduced the available borrowing capacity under our Revolving Credit Facility to $730.3 million, at September 30, 2022.

Fiscal 2021

•$1,800.0 million principal value issued of 4.50% senior notes;

•$1,697.3 million principal value repaid and $74.3 million premium payment made on the extinguishment of our 5.00% senior notes;

•$393.7 million paid (including broker’s commissions and amounts settled subsequent to fiscal 2021) for the repurchase of 4.0 million shares of our common stock;

•$47.5 million received in connection with share repurchase contracts entered into in the fourth quarter of fiscal 2020;

•our Revolving Credit Facility had outstanding letters of credit of $19.2 million, which reduced the available borrowing capacity under our Revolving Credit Facility to $730.8 million, at September 30, 2021; and

•amended our Credit Agreement to change the reference interest rate applicable to revolving loan borrowings in Pounds Sterling from a LIBOR-based rate to a rate based on the Sterling Overnight Index Average.

Fiscal 2020

•$1,650.0 million principal value issued of 4.625% senior notes, $22.0 million premium received;

•$1,000.0 million principal value repaid and $41.3 million premium payment made on the extinguishment of our 5.50% senior notes maturing in March 2025;

•$122.2 million principal value repaid and $8.5 million premium payment made on the extinguishment of our 8.00% senior notes;

•$1,309.5 million outstanding principal value repaid on our previously outstanding term loan;

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•entered into the Credit Agreement providing for the Revolving Credit Facility in an aggregate principal amount of $750.0 million;

•$500.0 million borrowed under the Revolving Credit Facility;

•$500.0 million outstanding principal value repaid on the Revolving Credit Facility;

•$1,225.0 million borrowed under our 2020 bridge facility agreement (the “2020 Bridge Loan”);

•$1,225.0 million principal value 2020 Bridge Loan assumed by Old BellRing in connection with the BellRing IPO, releasing us and our subsidiaries (other than Old BellRing and its domestic subsidiaries, who were our subsidiaries at the time) from any material obligations thereunder while we retained the proceeds from the 2020 Bridge Loan;

•$587.8 million paid (including broker’s commissions and amounts settled subsequent to fiscal 2020) for the repurchase of 6.1 million shares of our common stock; and

•$46.4 million paid for share repurchase contracts that settled in November 2020.

The following table shows cash flow data for fiscal 2022, 2021 and 2020, which is discussed below.

[[GREPCENT_TABLE]]
[["","Year ended September 30,"],["dollars in millions","2022","","2021","","2020"],["Cash provided by (used in):"],["Operating activities - continuing operations","$","384.2","","","$","362.1","","","$","528.4"],["Investing activities - continuing operations","(220.2)","","","(792.0)","","","(216.4)"],["Financing activities - continuing operations","(237.2)","","","(46.6)","","","(219.4)"],["Net cash used in discontinued operations","(151.9)","","","103.6","","","42.5"],["Effect of exchange rate changes on cash, cash equivalents and restricted cash","(9.0)","","","3.7","","","3.8"],["Net (decrease) increase in cash, cash equivalents and restricted cash","$","(234.1)","","","$","(369.2)","","","$","138.9"]]
[[/GREPCENT_TABLE]]

Sources and Uses of Cash

Historically, we have generated and expect to continue to generate positive cash flows from operations. We believe our cash on hand, cash flows from operations and current and possible future credit facilities will be sufficient to satisfy our future working capital requirements, interest payments, research and development activities, capital expenditures, pension contributions and other financing requirements for the foreseeable future. Our ability to generate positive cash flows from operations is dependent on general economic conditions, competitive pressures and other business risk factors. We believe that we have sufficient liquidity and cash on hand to satisfy our cash needs. If we are unable to generate sufficient cash flows from operations, or are otherwise unable to comply with the terms of our credit facilities, we may be required to seek additional financing alternatives, which may require waivers under our Credit Agreement and our indentures governing our senior notes, in order to generate additional cash. There can be no assurance that we would be able to obtain additional financing or any such waivers on terms acceptable to us or at all. For additional information on our debt, refer to Note 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Short-term financing needs primarily consist of working capital requirements and principal and interest payments on our long-term debt. Long-term financing needs will depend largely on potential growth opportunities, including acquisition activity and other strategic transactions and repayment or refinancing of our long-term debt obligations. We may, from time to time, seek to retire or purchase our outstanding debt through cash purchases in open market transactions, privately negotiated transactions or otherwise. Additionally, we may seek to repurchase shares of our common stock. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Obligations under our Credit Agreement are unconditionally guaranteed by our existing and subsequently acquired or organized subsidiaries (other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries, PHPC and PHPC Sponsor) and are secured by security interests in substantially all of our assets and the assets of our subsidiary guarantors, but excluding, in each case, real property.

Our senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing and subsequently acquired or organized domestic subsidiaries, other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries, PHPC and PHPC Sponsor. These guarantees are subject to release in certain circumstances.

Our 2.50% convertible senior notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of our existing domestic subsidiaries that have guaranteed our other senior notes, which excludes certain

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immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries, PHPC and PHPC Sponsor. If, after the date our 2.50% convertible senior notes were issued, any domestic wholly-owned subsidiary guarantees any of our existing senior notes or any other debt securities we may issue in the form of senior unsecured notes or convertible or exchangeable notes, then we will cause such subsidiary to become a guarantor under the 2.50% convertible senior notes as well.

8th Avenue and its subsidiaries, PHPC and PHPC Sponsor are not obligors or guarantors under our Credit Agreement or senior notes.

Cash Requirements

Our cash requirements within the next twelve months include working capital requirements, interest payments, research and development activities and capital expenditures. We believe our cash on hand, cash flows from operations and current and possible future credit facilities will be sufficient to satisfy these future requirements.

Our cash requirements under our various contractual obligations and commitments include:

•    Debt and interest obligations – See Note 16 within “Notes to Consolidated Financial Statements” in Item 8 of this report for information on our debt and the timing of future principal and interest payments. For information on our interest rate swaps that require monthly or lump sum settlements, see Note 13 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

•    Purchase obligations – Purchase obligations are legally binding agreements to purchase goods, services or equipment that specify all significant terms, including: fixed or minimum quantities to be purchased and/or penalties imposed for failing to meet contracted minimum purchase quantities (such as “take-or-pay” contracts); fixed, minimum or variable price provisions; and the approximate timing of the transaction. The Company has long-term ingredient, packaging, utility and information technology commitments used to support our various businesses for periods up to fiscal 2034. Minimum amounts committed to as of September 30, 2022 were $3,671.8 million (with $1,204.8 million due in fiscal 2023), primarily related to long-term egg contracts, open purchase orders and accrued capital expenditures.

•    Leases – See Note 15 within “Notes to Consolidated Financial Statements” in Item 8 of this report for information on our lease obligations and the amount and timing of future payments.

•    Pension and other postretirement benefit obligations – See Note 18 within “Notes to Consolidated Financial Statements” in Item 8 of this report for information on our pension and other postretirement benefit obligations and the amount and timing of future payments.

•    Other liabilities – Other liabilities include obligations associated with certain employee benefit programs, payments for workers’ compensation, general liability and auto liability claim losses, unrecognized tax benefits and various other long-term liabilities, all of which have some inherent uncertainty as to the amount and timing of payments and were reflected on our Consolidated Balance Sheet as of September 30, 2022.

Operating Activities - Continuing Operations

Fiscal 2022 compared to 2021

Cash provided by operating activities for the year ended September 30, 2022 increased by $22.1 million compared to the year ended September 30, 2021, primarily driven by lower interest payments of $28.2 million and lower payments on our interest rate swaps of $19.9 million. These positive impacts were partially offset by unfavorable changes in inventory pricing due to higher raw material costs in the current year.

Fiscal 2021 compared to 2020

Cash provided by operating activities for the year ended September 30, 2021 decreased by $166.3 million compared to the year ended September 30, 2020, primarily driven by unfavorable changes related to the fluctuations in the timing of sales and collections of trade receivables within our Foodservice, Refrigerated Retail and Post Consumer Brands segments, higher interest payments of $48.2 million and purchases of equity securities of $31.7 million. These cash outflows were partially offset by favorable changes in the timing of payments of trade accounts payables within our Foodservice and Post Consumer Brands segments and lower payments on our interest rate swaps of $29.6 million.

Investing Activities - Continuing Operations

Fiscal 2022

Cash used in investing activities for the year ended September 30, 2022 was $220.2 million. The cash outflow during the year ended September 30, 2022 was driven by capital expenditures of $255.3 million, net cash payments of $24.8 million primarily related to our acquisition of Lacka Foods and cash paid related to investments in partnerships of $9.0 million. These

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cash outflows were partially offset by proceeds from the sale of a business (primarily the WEF Transaction) of $50.5 million and proceeds from the sale of property and assets held for sale of $18.0 million. Capital expenditures in the period were primarily driven by ongoing projects in our Post Consumer Brands and Foodservice segments.

Fiscal 2021

Cash used in investing activities for the year ended September 30, 2021 was $792.0 million. The cash outflow during the year ended September 30, 2021 was driven by the deposit of $345.0 million of proceeds received by PHPC from the PHPC IPO and the PHPC Private Placement into a trust account, net cash paid for acquisitions of $290.3 million primarily driven by our fiscal 2021 acquisitions of the PL RTE Cereal Business, Egg Beaters, Peter Pan and Almark, capital expenditures of $190.9 million and cash paid related to investment in partnerships of $22.1 million. These cash outflows were partially offset by proceeds from the sale of equity securities and property and assets held for sale of $34.2 million and $19.4 million, respectively. The largest individual capital expenditure project in fiscal 2021 related to to the re-construction of a building that was destroyed in a fire at our Bloomfield, Nebraska laying facility in the second quarter of fiscal 2020.

Fiscal 2020

Cash used in investing activities for the year ended September 30, 2020 was $216.4 million. The cash outflow during the year ended September 30, 2020 was driven by capital expenditures of $232.5 million, purchases of equity securities of $29.2 million and cash payments of $19.9 million related to our fiscal 2020 acquisition of Henningsen. These cash outflows were partially offset by cross-currency swap settlement proceeds received of $52.7 million largely resulting from the termination of $448.7 million notional value of cross-currency swaps that were designated as hedging instruments. The largest individual capital expenditure project in fiscal 2020 related to the purchase of a previously leased manufacturing plant in Sulphur Springs, Texas.

Financing Activities - Continuing Operations

Fiscal 2022

Cash used in financing activities was $237.2 million for the year ended September 30, 2022. We paid $550.4 million of cash to BellRing in connection with the BellRing Spin-off, which was partially offset by cash receipts from BellRing of $3.2 million prior to the BellRing Spin-off related to quarterly tax distributions pursuant to BellRing LLC’s amended and restated limited liability company agreement. We received proceeds of $840.0 million from our First Incremental Term Loan, which were used to repay $840.0 million principal value of our 5.75% senior notes. We received proceeds of $450.0 million from our Second Incremental Term Loan. The Second Incremental Term Loan was partially repaid through the Debt-for-Equity Exchange and the remaining principal balance of $107.7 million was repaid using cash on hand. We repaid $712.3 million principal value of our 4.50% senior notes, our 4.625% senior notes and our 5.50% senior notes, net of $97.8 million in discounts. These repayments, combined with a principal payment of $1.1 million on a municipal bond, resulted in total net repayments of long-term debt of $1,563.3 million. In connection with the repayment of the 5.75% senior notes (discussed above), we paid $24.1 million in debt premiums. We received proceeds of $500.0 million and a premium of $17.5 million from our additional 5.50% senior notes issuance. We received proceeds of $575.0 million from our 2.50% convertible senior notes issuance. We paid $26.4 million in debt issuance costs and deferred financing fees primarily in connection with our additional 5.50% senior notes issuance, our 2.50% convertible senior notes issuance, our First Incremental Term Loan, our Second Incremental Term Loan and the amendment of our Credit Agreement. We paid $443.0 million, including broker’s commissions, for the repurchase of shares of our common stock, which included repurchases of shares of our common stock that were accrued at September 30, 2021 and did not settle until fiscal 2022.

Fiscal 2021

Cash used in financing activities was $46.6 million for the year ended September 30, 2021. We received proceeds of $1,800.0 million from the issuance of our 4.50% senior notes. In connection with the 4.50% senior notes issuance, we paid $16.8 million in debt issuance costs. We repaid the outstanding principal balance under our 5.00% senior notes and made a principal payment on a municipal bond. In connection with the repayment of the 5.00% senior notes, we paid $74.3 million in debt premiums. We paid $397.1 million, including broker’s commissions, for the repurchase of shares of our common stock, which included repurchases of shares of our common stock that were accrued at September 30, 2020 and did not settle until fiscal 2021. We received $47.5 million related to the settlement of share repurchase contracts that were entered into in fiscal 2020 and did not settle until fiscal 2021. PHPC received $345.0 million of gross proceeds from the PHPC IPO and PHPC Sponsor purchased $40.0 million in PHPC Units in the PHPC IPO, which resulted in proceeds received from the PHPC IPO of $305.0 million.

Fiscal 2020

Cash used in financing activities was $219.4 million for the year ended September 30, 2020. We received proceeds of $1,650.0 million from the issuance of our 4.625% senior notes, borrowed $1,225.0 million under the 2020 Bridge Loan and

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borrowed $500.0 million under the Revolving Credit Facility. These issuances and borrowings, combined with proceeds received of $2.2 million from a municipal bond, resulted in total proceeds from the issuance of long-term debt of $3,377.2 million. Additionally, we received a premium of $22.0 million related to the issuance of additional 4.625% senior notes in August 2020. In connection with the senior note issuances, borrowings and our entry into the Credit Agreement, we paid $35.7 million in debt issuance costs and deferred financing fees. We repaid the outstanding principal balances of our previously outstanding term loan, our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes, repaid $500.0 million of outstanding principal borrowings on our Revolving Credit Facility and made a principal payment on the municipal bond. We paid premiums of $49.8 million related to the early extinguishment of our 5.50% senior notes maturing in March 2025 and our 8.00% senior notes. In connection with the BellRing IPO, we were refunded $15.3 million of debt issuance costs paid in connection with the 2020 Bridge Loan. We paid $589.1 million, including broker’s commissions, for the repurchase of shares of our common stock, which included repurchases of shares of our common stock that were accrued at September 30, 2019 and did not settle until fiscal 2020, as well as a premium paid of $46.4 million for share repurchase contracts that settled in November 2020.

Debt Covenants

Credit Agreement

Under the terms of our Credit Agreement, we are required to comply with a financial covenant consisting of a secured net leverage ratio (as defined in the Credit Agreement) not to exceed 4.25:1.00, measured as of the last day of any fiscal quarter, if, as of the last day of such fiscal quarter, the aggregate outstanding amount of all revolving credit loans, swing line loans and letter of credit obligations (subject to certain exceptions specified in the Credit Agreement) exceeds 30% of our revolving credit commitments. As of September 30, 2022, we were not required to comply with such financial covenant as the aggregate amount of the aforementioned obligations did not exceed 30% of our revolving credit commitments. We do not believe non-compliance is reasonably likely in the foreseeable future.

Our Credit Agreement provides for incremental revolving and term loan facilities, and also permits other secured or unsecured debt, if, among other conditions, certain financial ratios are met, as defined and specified in the Credit Agreement.

COMMODITY TRENDS AND SEASONALITY

Our Company is exposed to regular price fluctuations primarily from purchases of raw materials, including ingredients and packaging materials, energy and other inputs. Primary exposures include wheat, oats, rice, corn, other grain products, eggs, sows, pasta, potatoes, cheese, milk, butter, vegetable oils, dairy- and vegetable-based proteins, sugar and other sweeteners, fruit, nuts, natural gas, electricity, diesel fuel, carbon dioxide, folding cartons, corrugated boxes, flexible and rigid plastic film, trays and containers, beverage packaging and plastic lined cartonboard. These costs have been volatile in recent years and future changes in such costs may cause our results of operations and our operating margins to fluctuate significantly. We manage the impact of cost increases, wherever possible, on commercially reasonable terms, by locking in prices on the quantities required to meet our anticipated production requirements. In addition, we may offset the effect of increased costs by raising prices to our customers. However, for competitive reasons, we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

Inflationary pressures can have an adverse effect on us through higher raw material and energy costs. We experienced inflationary headwinds across all segments of our business during the year ended September 30, 2022; however, these impacts were largely mitigated, with some time lag, through sales price increases, cost savings measures and hedging programs, when possible. We expect inflationary pressures to continue into fiscal 2023, and this trend could have a materially adverse impact in the future if inflation rates significantly exceed our ability to continue to achieve price increases or cost savings or if such price increases adversely impact demand for our products.

Demand for certain of our products may be influenced by holidays, changes in seasons or other events, which may impact customer and consumer spending patterns and the timing of promotional activities. For example, demand for our egg products, potatoes, sausage, side dishes, butter and cheese tends to increase during the Thanksgiving, Christmas, Easter and other holiday seasons, which may result in increased net sales during the first and third quarters of our fiscal year. Demand for our Malt-O-Meal hot wheat, Better Oats oatmeal and Ready Brek hot oats cereals also tends to be seasonably skewed towards the colder winter season. However, on a consolidated basis our net sales and results of operations generally are distributed relatively evenly over the quarters of our fiscal year.

CURRENCY

Certain sales and costs of our foreign operations were denominated in Pounds Sterling, Canadian Dollars, Euros, South African Rand, Kenyan Shillings, Chinese Yuan and United Arab Emirates Dirhams. Consequently, profits from these businesses can be impacted by fluctuations in the value of these currencies relative to the U.S. Dollar. We incur gains and losses within our shareholders’ equity due to the translation of our financial statements from foreign currencies into U.S. Dollars. Our results of operations may be impacted by the translation of the results of operations of our foreign operations into U.S. Dollars.

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The exchange rates used to translate our foreign sales into U.S. Dollars negatively affected consolidated net sales by less than 1% during the year ended September 30, 2022, and did not have a material impact on our operating profit or net earnings during the year ended September 30, 2022.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of judgment, estimates and assumptions. We make these subjective determinations after considering our historical performance, management’s experience, current economic trends and events and information from outside sources. Inherent in this process is the possibility that actual results could differ from these estimates and assumptions for any particular period.

Our significant accounting policies are described in Note 2 within “Notes to Consolidated Financial Statements” in Item 8 of this report. Our critical accounting estimates are those that involve a significant amount of estimation uncertainty and have a meaningful impact on the reporting of our financial condition and results of operations.

Revenue, Allowance for Trade Promotions — Many of our contracts with customers include some form of variable consideration. The most common forms of variable consideration are trade promotions, rebates and discounts. Depending on the nature of the variable consideration, we use either the “expected value” or the “most likely amount” method to estimate variable consideration, which is treated as a reduction of revenue at the time product revenue is recognized. The recognition of trade promotions requires significant management judgement regarding estimated purchase volumes and program participation. We review and update estimates of variable consideration quarterly. Uncertainties related to the estimates of variable consideration are resolved in a short time frame and do not require any additional constraint on variable consideration. Approximately 1% of our annual net sales represent variable consideration that will be resolved in the subsequent period. We do not believe that there will be significant changes to our estimates of variable consideration when any uncertainties are resolved with customers. However, significant changes in our estimates could have a material impact on our results of operations.

Business Combinations — We use the acquisition method of accounting for acquired businesses, which involves recording the assets acquired and liabilities assumed in a business acquisition at their respective estimated fair values at the date of acquisition. Significant judgment is often required in estimating the fair value of assets acquired, particularly intangible assets. As a result, in the case of significant acquisitions, we normally obtain the assistance of a third party valuation specialist in estimating fair values of tangible and intangible assets. The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants. The fair value of intangibles is determined using the income approach based on discounted future cash flows and requires significant assumptions, including estimates regarding future revenue, profitability, capital requirements and discount rates. While we believe those expectations and assumptions are reasonable, they are inherently uncertain. Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. Additionally, determining the useful lives of tangible and intangible assets requires judgment, as different types of assets will have different useful lives.

Indefinite-Lived Assets — In assessing trademarks with indefinite lives for impairment, we perform a qualitative or quantitative test in accordance with our policy in Note 2 within “Notes to Consolidated Financial Statements” in Item 8 of this report. If a quantitative test is performed, the fair value is determined using an income-based approach, which requires significant assumptions for each brand, including estimates regarding future revenue growth, discount rates and appropriate royalty rates. We estimated royalty rates based on consideration of several factors for each brand, including profit levels, research of external royalty rates by third party specialists and the relative importance of each brand to the Company. Revenue growth assumptions are based on historical trends and management’s expectations for future growth by brand. The discount rates are based on a weighted-average cost of capital utilizing industry market data of similar companies.

Changes in the assumptions used to estimate the fair value of our indefinite-lived intangible assets could result in impairment charges in future periods. These key assumptions are inherently uncertain and require a high degree of estimation and are subject to change based on, among others, industry and geopolitical conditions, our ability to navigate changing macro-economic conditions and trends and the timing and success of strategic initiatives. Additionally, certain factors have the potential to create variances in the estimated fair values of our indefinite-lived intangible assets, which also could result in impairment charges. These factors include (i) failure to achieve forecasted revenue growth rates, (ii) increases in the discount rate or (iii) a significant change in profitability and the corresponding royalty rate.

In fiscal 2022, 2021 and 2020, we performed a quantitative impairment test for all trademarks with indefinite lives and concluded each year there were no impairments of indefinite-lived intangible assets. The estimated fair value of all indefinite-lived trademarks exceeded book value by 23% or greater, 22% or greater and 24% or greater at September 30, 2022, 2021 and 2020, respectively.

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Goodwill — In assessing goodwill for impairment, we perform a qualitative or quantitative test in accordance with our policy in Note 2 within “Notes to Consolidated Financial Statements” in Item 8 of this report. If a quantitative test is performed, the fair value of each reporting unit is determined using a combined income and market approach with a greater weighting on the income approach (75% of the calculation for all reporting units). The income approach is based on discounted future cash flows and requires significant assumptions, including estimates regarding future revenue, profitability, capital requirements and discount rates. The market approach (25% of the calculation for all reporting units) is based on a market multiple (revenue and “EBITDA,” which stands for earnings before interest, income taxes, depreciation and amortization) and requires an estimate of appropriate multiples based on market data. Revenue growth assumptions (along with profitability and cash flow assumptions) were based on historical trends for the reporting units and management’s expectations for future growth. The discount rates were based on a risk adjusted weighted-average cost of capital utilizing industry market data of businesses similar to the reporting units and based upon management’s judgment. For the market approach, we used estimated EBITDA and revenue multiples based on industry market data.

Changes in the assumptions used to estimate the fair value of each reporting unit could result in impairment charges in future periods. These key assumptions are inherently uncertain and require a high degree of estimation and are subject to change based on, among others, industry and geopolitical conditions, our ability to navigate changing macro-economic conditions and trends and the timing and success of strategic initiatives. Variances between the actual performance of the businesses and the assumptions that were used in developing the estimates of fair value could result in impairment charges in future periods. Factors that could create variances in the estimated fair value of the reporting units include but are not limited to (i) fluctuations in forecasted sales volumes, which can be driven by external factors affecting demand such as changes in consumer preferences and consumer responses to marketing and pricing strategy, (ii) changes in product costs, including commodities, (iii) a significant change in profitability, (iv) interest rate fluctuations and (v) currency fluctuations.

At September 30, 2022, the Cheese and Dairy reporting unit and the Refrigerated Retail reporting unit fair values exceeded their carrying values by approximately 6.5% and 8.5%, respectively. The fair values of the Cheese and Dairy and Refrigerated Retail reporting units at September 30, 2022 were impacted by raw material cost inflation and supply constraints, which impacted near-term profitability. We expect these impacts to be transitory in nature; however, inherent risk to their respective cash flows remains. At September 30, 2022, the estimated fair values of all other reporting units exceeded their carrying values by at least 10%.

For additional information on the results sensitivity of the goodwill reporting units for the years ended September 30, 2022, 2021 and 2020, refer to Note 8 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Pension and Other Postretirement Benefits — Pension assets and liabilities are determined on an actuarial basis and are affected by the estimated market-related value of plan assets, estimates of the expected return on plan assets, discount rates, future salary increases and other assumptions inherent in these valuations. We annually review the assumptions underlying the actuarial calculations and make changes to these assumptions, based on current market conditions and historical trends, as necessary. Differences between the actual returns on plan assets and the expected returns on plan assets and changes to projected future rates of return on plan assets will affect the amount of pension expense or income ultimately recognized. The other postretirement benefits liability (partially subsidized retiree health and life insurance) is also determined on an actuarial basis and is affected by assumptions including discount rates and expected trends in healthcare costs. Changes in the discount rates and differences between actual and expected healthcare costs will affect the recorded amount of other postretirement benefits expense. For both pensions and other postretirement benefit calculations, the assumed discount rates are determined by projecting the plans’ expected future benefit payments as defined for the projected benefit obligation or accumulated postretirement benefit obligation, discounting those expected payments using a theoretical zero-coupon spot yield curve derived from a universe of high-quality (rated AA or better by Moody’s Investor Service) corporate bonds as of the measurement date and solving for the single equivalent discount rate that results in the same present value. A 1% decrease in the assumed discount rates (from 5.65% to 4.65% for U.S. pension; from 5.62% to 4.62% for U.S. other postretirement benefits; from 5.12% to 4.12% for Canadian pension; from 5.12% to 4.12% for Canadian other postretirement benefits and from 5.15% to 4.15% for other international pension) would have increased the recorded benefit obligations at September 30, 2022 by approximately $83 million for pensions and approximately $6 million for other postretirement benefits. The expected return on plan assets was determined based on historical and expected future returns of the various asset classes, using the target allocations of the plans. A 1% decrease in the assumed return on plan assets (from 5.75% to 4.75% for U.S.; from 5.25% to 4.25% for Canadian and from 2.73% to 1.73% for other international) would have increased the net periodic benefit cost for the pension plans by approximately $10 million. We expect to contribute $0.3 million to the combined pension plans in fiscal 2023. No contributions to our postretirement medical benefit plans are expected in fiscal 2023. Contributions beyond fiscal 2023 remain uncertain and will significantly depend on changes in actuarial assumptions, actual return on plan assets and any legislative or regulatory changes that may affect plan funding requirements. See Note 18 within “Notes to Consolidated Financial Statements” in Item 8 of this report for more information about pension and other postretirement benefit assumptions.

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Income Tax — We estimate income tax expense based on income earned and taxed in various U.S. federal and state, as well as foreign, jurisdictions in accordance with our policy in Note 2 within “Notes to Consolidated Financial Statements” in Item 8 of this report. Tax laws are complex and subject to different interpretations. Management’s judgement is required in determining income tax expense and in evaluating tax positions, including evaluating uncertainties or recording valuation allowances. We record valuation allowances to reduce deferred tax assets to the extent that it is more likely than not that the future benefits will not be realized. When assessing the need for valuation allowances, we consider future taxable income and ongoing prudent and feasible tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, we would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding adjustment to our provision for/(benefit from) income taxes.

We recognize tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities. The tax benefits recognized from such positions are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Our liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, new or emerging legislation and tax planning. We review tax positions and adjust the balances as new information becomes available. Should a change in circumstances lead to a change in judgment about the sustainability of tax positions, we would adjust the related tax benefit recognized in the period that the change in circumstances occurs, along with a corresponding adjustment to our provision for/(benefit from) income taxes. The tax position will be de-recognized when it is no longer more likely than not of being sustained.

We are subject to periodic audits by governmental tax authorities of our income tax returns. These audits generally include questions regarding our tax filing positions, including the amount and timing of deductions and the allocation of income among various tax jurisdictions. We evaluate our exposures associated with our tax filing positions, including state and local taxes, and record reserves for estimated exposures. See Note 9 within “Notes to Consolidated Financial Statements” in Item 8 of this report. for more information about estimates affecting income taxes.

RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

See Note 3 within “Notes to Consolidated Financial Statements” in Item 8 of this report for a discussion regarding recently issued and adopted accounting standards.