# Post Holdings, Inc. (POST) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Post Holdings, Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1530950/000153095024000365/post-20240930.htm
Accession: 0001530950-24-000365
Filing date: 2024-11-15
Report date: 2024-09-30
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/fy2023/ (FY 2023)
Next year: /company/POST/mda/fy2025/ (FY 2025)

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 subsidiaries.

The following should be read in conjunction with the discussion and analysis of our fiscal 2023 results compared to our fiscal 2022 results, including any related discussion of fiscal 2022 results and activity, which can be found in Item 7 under the title “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended September 30, 2023, and such discussion and analysis is incorporated by reference herein.

OVERVIEW

We are a consumer packaged goods holding company, operating in four reportable segments. 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, 2024, our reportable segments were as follows:

•Post Consumer Brands: primarily North American ready-to-eat (“RTE”) cereal, pet food and peanut butter;

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

•Foodservice: primarily egg and potato products; and

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

Transactions

Post Holdings Partnering Corporation

In May and June 2021, we and Post Holdings Partnering Corporation (“PHPC”), a special purpose acquisition company, consummated the initial public offering of 34.5 million units of PHPC (the “PHPC Units” and such transaction, the “PHPC IPO”), of which our wholly-owned subsidiary (“PHPC Sponsor”) purchased 4.0 million PHPC Units. Each PHPC Unit consisted of one share of Series A common stock of PHPC (“PHPC Series A Common Stock”) and one-third of one redeemable warrant 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. Under the terms of the PHPC IPO, PHPC was required to consummate a partnering transaction by May 28, 2023, which could have been extended to August 28, 2023 in certain circumstances (the “Combination Period”).

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”). Each PHPC Private Placement Unit consisted of one share of PHPC Series A Common Stock and one-third of one redeemable warrant of PHPC to purchase one share of PHPC Series A Common Stock at an exercise price of $11.50 per share (the “PHPC Private Placement Warrants”).

In addition, we, through PHPC Sponsor’s ownership of 8.6 million shares of Series F common stock of PHPC (the “PHPC Series F Common Stock”), had certain governance rights in PHPC relating to the election of PHPC directors and voting rights on amendments to PHPC’s amended and restated certificate of incorporation.

Proceeds of $345.0 million were deposited in a trust account established for the benefit of PHPC’s public stockholders, which consisted of certain proceeds from the PHPC IPO and certain proceeds from the PHPC Private Placement, net of underwriters’ discounts and commissions and other costs and expenses.

The public stockholders’ ownership of PHPC equity represented a noncontrolling interest (“NCI”) to us, which was classified outside of permanent shareholders’ equity as the PHPC Series A Common Stock was redeemable at the option of the public stockholders in certain circumstances.

On May 11, 2023, PHPC announced that it would not complete a partnering transaction within the Combination Period and that the entity would liquidate and dissolve in accordance with the terms of its amended and restated certificate of incorporation. Subsequent to the decision to liquidate and dissolve, PHPC completed certain winding-up activities, which included writing-off the deferred underwriting commissions as the underwriters agreed to waive their rights to these amounts should a partnering transaction not occur. We recorded a $10.7 million gain in connection with this write-off during the third quarter of fiscal 2023.

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On May 28, 2023, the PHPC Warrants and the PHPC Private Placement Warrants expired worthless, as PHPC had not completed a partnering transaction before the expiration of the Combination Period.

On May 30, 2023, PHPC redeemed all of the outstanding public shares of PHPC Series A Common Stock (the “PHPC Redemption”). Each share of PHPC Series A Common Stock was redeemed for approximately $10.24 per share, representing the per share price equal to the aggregate amount then on deposit in the trust account, including interest earned on the trust account not previously released to pay taxes or dissolution expenses, divided by the number of then outstanding shares of PHPC Series A Common Stock. In connection with the PHPC Redemption, $353.4 million of funds held in the trust account immediately prior to the PHPC Redemption were distributed to redeem all of the outstanding shares of PHPC Series A Common Stock. We received $40.9 million from the PHPC Redemption related to our ownership of 4.0 million shares of PHPC Series A Common Stock.

Subsequent to the PHPC Redemption, PHPC dissolved in June 2023, and all classes of shares of PHPC equity were cancelled, including the PHPC Private Placement Units and the shares of PHPC Series F Common Stock, which were surrendered by PHPC Sponsor for no consideration. PHPC Sponsor subsequently dissolved in August 2023.

Acquisitions

Fiscal 2024

On December 1, 2023, we completed our acquisition of substantially all of the assets of Perfection Pet Foods, LLC (“Perfection”), a manufacturer and packager of private label and co-manufactured pet food and baked treat products, which is reported in our Post Consumer Brands segment.

Also on December 1, 2023, we completed our acquisition of Deeside Cereals I Ltd (“Deeside”), a private label cereal manufacturer based in the U.K., which is reported in our Weetabix segment.

Fiscal 2023

On April 28, 2023, we completed our acquisition of a portion of The J. M. Smucker Company’s (“Smucker”) pet food business, including brands such as Rachael Ray Nutrish, Nature’s Recipe, 9Lives, Kibbles ’n Bits and Gravy Train, private label pet food assets and certain manufacturing and distribution facilities (collectively, “Pet Food”), which is reported in our Post Consumer Brands segment. In connection with the Pet Food acquisition, we entered into a transition services agreement with Smucker (the “TSA”) pursuant to which Smucker provided certain Pet Food support services to us for a transition period of 18 months following the close of the acquisition based on the terms set forth in the TSA, which ended in the first quarter of fiscal 2025. Pet Food receivables and payables were settled between us and Smucker monthly on a net basis per the terms of the TSA.

For additional information on our acquisitions, refer to Note 6 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Market and Company Trends

Our Company, as well as the consumer packaged goods industry in which we operate, has been impacted by the following trends which have impacted our results of operations and may continue to impact our results of operations in the future, including:

•inflationary pressures on input costs across all segments of our business (refer to “Commodity Trends and Seasonality” section below);

•shifting consumer preferences from branded to private label or other value products as consumers continue to be impacted by rising costs, which has negatively impacted sales volumes within our Refrigerated Retail, Post Consumer Brands and Weetabix segments and driven shifts in product mix toward lower margin products within our Post Consumer Brands and Weetabix segments; and

•outbreaks of highly pathogenic avian influenza (“HPAI”), which impacted our Foodservice and Refrigerated Retail segments. During fiscal 2023, we incurred increased costs as a result of outbreaks, which were mitigated through management of volume needs with customers and pricing actions. During fiscal 2024, we experienced additional outbreaks of HPAI; however, the impact to our results of operations during the year ended September 30, 2024 were not material. The impact from these outbreaks, or further outbreaks in the future, could have a materially adverse impact on our results of operations if we are unable to mitigate the impact on our businesses.

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RESULTS OF OPERATIONS

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[[/GREPCENT_TABLE]]

Net Sales

Net sales increased $931.7 million, or 13%, during the year ended September 30, 2024, when compared to the prior year, driven by higher net sales within our Post Consumer Brands and Weetabix segments, partially offset by lower net sales within our Foodservice and Refrigerated Retail segments. For further discussion, refer to “Segment Results” within this section.

Operating Profit

Operating profit increased $194.6 million, or 32%, during the year ended September 30, 2024, when compared to the prior year, primarily driven by higher segment profit within our Post Consumer Brands, Weetabix and Refrigerated Retail segments and lower general corporate expenses, partially offset by lower segment profit within our Foodservice segment. For further discussion, refer to “Segment Results” within this section.

Interest Expense, net

Interest expense increased $37.4 million, or 13%, for the year ended September 30, 2024, when compared to the prior year. This increase was driven by higher average outstanding principal amounts of debt, a higher weighted-average interest rate and lower interest income compared to the prior year. Our weighted-average interest rate on our total outstanding debt was 5.1% and 4.9% for the years ended September 30, 2024 and 2023, respectively.

For additional information on our debt, refer to Note 17 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.

Loss (Gain) on Extinguishment of Debt, net

During the year ended September 30, 2024, we recognized a net loss of $2.1 million related to the repayment of our Fourth Incremental Term Loan (as defined in “Liquidity and Capital Resources” within this section), the redemption of our 5.75% senior notes and the partial repurchase of our 5.625% senior notes and 4.50% senior notes. The net loss included tender fees and the write-off of debt issuance costs of $6.0 million and net premiums paid of $0.7 million, offset by the write-off of $4.6 million of unamortized premiums.

During the year ended September 30, 2023, we recognized a net gain of $40.5 million related to the partial repurchase of our 4.50% senior notes and our 4.625% senior notes. The net gain included net debt discounts received of $42.9 million and the write-off of unamortized premiums of $0.9 million, offset by the write-off of debt issuance costs of $3.3 million related to our senior notes and our Third Incremental Term Loan (as defined in “Liquidity and Capital Resources” within this section).

For additional information on our debt, refer to Note 17 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Expense (Income) on Swaps, net

During the years ended September 30, 2024 and 2023, we recognized expense (income) on swaps, net of $15.7 million and $(39.9) million, respectively, related to mark-to-market adjustments on our interest rate swaps. For additional information on

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our interest rate swaps, refer to Note 14 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, 2023, we recorded a gain related to our equity interest in BellRing Brands, Inc. (“BellRing”), which we retained subsequent to our distribution of a portion of our interest in BellRing (our “Investment in BellRing”), of $5.1 million. For additional information on our Investment in BellRing, refer to Notes 5 and 17 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Income Tax Expense

Our effective income tax rate for fiscal 2024 was 22.3% compared to 24.1% for fiscal 2023. The following table presents the reconciliation of income tax expense with amounts computed at the United States (the “U.S.”) federal statutory tax rate.

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[[/GREPCENT_TABLE]]

(a)No income taxes were 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, 2023, as the Company fully divested its remaining Investment in BellRing within 12 months of our previous transactions related to the distribution of a portion of our interest in BellRing 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 5 and 17 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

The Organization for Economic Cooperation and Development’s global tax reform initiative (referred to as Pillar 2) is aimed at ensuring multinational enterprises pay a minimum level of tax in all countries in which they operate, with certain aspects of Pillar 2 effective January 1, 2024 and other aspects effective January 1, 2025. We continue to evaluate the impact of these proposed and enacted legislative changes as new guidance becomes available and do not expect Pillar 2 to have a material impact on our effective income tax rate or our consolidated results of operations, financial position or cash flows.

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, demolition and site remediation costs related to unused facilities, gain on/adjustment to bargain purchase, interest expense and other unallocated corporate income and expenses.

Post Consumer Brands

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[[/GREPCENT_TABLE]]

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Net sales for the Post Consumer Brands segment increased $1,076.5 million, or 35%, for the year ended September 30, 2024, when compared to the prior year. The increase in net sales was primarily driven by the inclusion of seven incremental months of Pet Food net sales of $932.8 million and ten months of Perfection net sales of $213.7 million. In addition to these impacts, average net selling prices increased primarily due to the annualization of prior year price increases taken to mitigate inflation. Volumes increased 56%, primarily driven by the inclusion of seven incremental months of Pet Food and ten months of Perfection, partially offset by volume decreases in branded and non-retail cereal.

Segment profit for the year ended September 30, 2024 increased $162.4 million, or 43%, when compared to the prior year. The increase in segment profit was primarily driven by higher net sales, as previously discussed, partially offset by higher product costs. The increase in product costs was primarily driven by the inclusion of seven incremental months of costs attributable to Pet Food of $661.7 million and ten months of costs attributable to Perfection of $179.8 million and higher manufacturing costs of $33.4 million, partially offset by lower raw material costs of $31.0 million and lower freight costs of $19.0 million. In addition, warehousing costs, advertising and consumer spending and amortization expense increased compared to the prior year, primarily due to the inclusion of seven incremental months of Pet Food results and ten months of Perfection results.

Weetabix

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[[/GREPCENT_TABLE]]

Net sales for the Weetabix segment increased $31.1 million, or 6%, for the year ended September 30, 2024, when compared to the prior year. The increase in net sales was primarily driven by the inclusion of ten months of Deeside net sales of $23.8 million and a favorable foreign currency exchange impact of $17.0 million. In addition to these impacts, average net selling prices increased primarily due to the annualization of prior year price increases and decreased promotional spending compared to the prior year. Volumes increased 12%, primarily driven by the inclusion of ten months of Deeside, partially offset by volume decreases in branded products.

Segment profit increased $9.0 million, or 12%, for the year ended September 30, 2024, when compared to the prior year. This increase was primarily driven by lower raw material and manufacturing costs of $5.1 million and a favorable foreign currency exchange impact of $2.8 million.

Foodservice

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[[/GREPCENT_TABLE]]

Net sales for the Foodservice segment decreased $118.8 million, or 5%, for the year ended September 30, 2024, when compared to the prior year. Egg product sales were down $141.7 million, or 7%, driven by lower average net selling prices due to a reduction in HPAI pricing and the pass-through of lower grain and egg market prices, partially offset by favorable product mix. Egg volumes increased 1% as a result of distribution gains. Sales of side dishes were up $14.3 million, or 5%, driven by the annualization of prior year price increases taken to mitigate inflation and volume increases of 2% as a result of distribution gains. Sales of other products were up $8.6 million.

Segment profit decreased $41.4 million, or 12%, for the year ended September 30, 2024, when compared to the prior year, driven by lower net sales, as previously discussed, and higher manufacturing costs of $34.2 million. These negative impacts were partially offset by lower raw material costs of $126.9 million, primarily due to favorable grain and egg market prices compared to the prior year, and lower freight costs of $25.5 million.

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Refrigerated Retail

[[GREPCENT_TABLE]]
[["","Year Ended September 30,","","Change in"],["dollars in millions","2024","","2023","","$","","%"],["Net Sales","$","962.2","","","$","1,019.7","","","$","(57.5)","","","(6)","%"],["Segment Profit","$","75.9","","","$","69.2","","","$","6.7","","","10","%"],["Segment Profit Margin","8","%","","7","%"]]
[[/GREPCENT_TABLE]]

Net sales for the Refrigerated Retail segment decreased $57.5 million, or 6%, for the year ended September 30, 2024, when compared to the prior year, driven by lower average net selling prices across all product categories primarily due to increased promotional spending and distribution losses in egg and cheese and other dairy products. Egg product sales were down $40.7 million, or 22%, on 11% lower volumes and were incrementally impacted by unfavorable product mix. Cheese and other dairy product sales decreased $22.7 million, or 12%, on 11% lower volumes. Sales of side dishes increased $8.5 million, or 2%, driven by 2% higher volumes due to distribution gains. Sausage sales increased $6.1 million, or 4%, on 6% higher volumes due to distribution gains. Sales of all other products were down $8.7 million driven by the exit of certain low-margin products.

Segment profit increased $6.7 million, or 10%, for the year ended September 30, 2024, when compared to the prior year, driven by lower manufacturing costs of $19.5 million, lower freight costs of $4.0 million and lower raw material costs of $2.6 million. These positive impacts were partially offset by lower net sales, as previously discussed, and higher advertising and consumer spending of $1.5 million.

Other Items

General Corporate Expenses and Other

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

General corporate expenses and other decreased $21.0 million, or 9%, for the year ended September 30, 2024, when compared to the prior year. This decrease was driven by increased net gains related to mark-to-market adjustments on economic hedges of $28.5 million (compared to net losses in the prior year), increased net gains related to mark-to-market adjustments and impairments on equity securities and investments of $19.0 million (compared to net losses in the prior year), decreased acquisition-related costs of $14.4 million primarily due to lapping Pet Food acquisition costs in the prior year and a gain on bargain purchase of $10.6 million related to our Deeside acquisition. These positive impacts were partially offset by increased restructuring and facility closure costs (including accelerated depreciation) of $24.4 million primarily related to our Post Consumer Brands segment, lapping a prior year gain related to the write-off of deferred underwriting commissions of $10.7 million and higher employee-related expenses of $9.5 million.

Impairment of Goodwill

There were no goodwill impairment charges recorded during the year ended September 30, 2024. During the year ended September 30, 2023, we recorded a goodwill impairment charge of $42.2 million related to our Cheese and Dairy reporting unit, which is reported in our Refrigerated Retail segment. For additional information on our goodwill impairment charge, refer to Note 9 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 5, 6, 17 and 21 within “Notes to Consolidated Financial Statements” in Item 8 of this report) impacting our liquidity and capital resources:

Fiscal 2024

•$1,000.0 million principal value issued of 6.25% senior secured notes;

•$1,200.0 million principal value issued of 6.375% senior notes;

•entered into a third amendment to our second amended and restated credit agreement dated March 18, 2020 (as amended, the “Credit Agreement” and such amendment, the “Third Amendment”), which replaced our previous revolving credit facility in an aggregate principal amount of $750.0 million (the “Old Revolving Credit Facility”) with a new revolving credit facility in an aggregate principal amount of $1,000.0 million (the “New Revolving Credit Facility”), and extended the maturity date of the New Revolving Credit Facility to February 20, 2029, provided that certain criteria are met;

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•$645.0 million borrowed under our Revolving Credit Facility (such term refers to our Old Revolving Credit Facility prior to the Third Amendment and our New Revolving Credit Facility subsequent to the Third Amendment);

•$645.0 million repaid under our Revolving Credit Facility;

•$69.1 million principal value of our 4.50% senior notes repurchased at a discount of $7.9 million;

•$475.0 million principal value of our 5.625% senior notes repurchased at a premium of $4.2 million;

•$459.3 million principal value of our 5.75% senior notes redeemed at a premium of $4.4 million;

•$400.0 million principal value repaid on our Fourth Incremental Term Loan (as defined below);

•3.0 million shares of our common stock repurchased at an average share price of $101.74 per share and at a total cost, including accrued excise tax and broker’s commissions, of $303.1 million; and

•$50.0 million paid and $50.9 million received related to a structured share repurchase contract.

In addition, subsequent to September 30, 2024, we issued $600.0 million principal value of 6.250% senior notes. See Note 23 within “Notes to Consolidated Financial Statements” in Item 8 of this report for additional information.

Fiscal 2023

•entered into a Joinder Agreement No. 4 (the “Fourth Joinder Agreement”), which provided for an incremental term loan (the “Fourth Incremental Term Loan”) of $400.0 million under our Credit Agreement, which we borrowed in full on April 26, 2023;

•issued 5.4 million shares of our common stock to Smucker to fund a portion of the Pet Food acquisition;

•entered into a Joinder Agreement No. 3 (the “Third Joinder Agreement”), which provided for an incremental term loan (the “Third Incremental Term Loan”) of $130.0 million under our Credit Agreement, which we borrowed in full on November 18, 2022;

•transferred the remaining 4.6 million shares of our Investment in BellRing to the lender under the Third Joinder Agreement to repay $99.9 million in aggregate principal amount of the Third Incremental Term Loan (the “Second Debt-for-Equity Exchange”) on November 25, 2022;

•repaid the remaining principal amount of $30.1 million on the Third Incremental Term Loan on November 25, 2022;

•$220.8 million principal value of our 4.50% senior notes repurchased at a discount of $31.5 million;

•$96.8 million principal value of our 4.625% senior notes repurchased at a discount of $11.4 million;

•$1.0 million principal value of our 5.625% senior notes repurchased;

•$43.5 million paid related to the termination of certain of our rate-lock interest rate swap contracts, which contained non-cash, off-market financing elements;

•$345.0 million of investments held in the trust account returned in connection with the PHPC Redemption, of which $312.5 million was distributed to PHPC public stockholders; and

•4.4 million shares of our common stock repurchased at an average share price of $87.13 per share and at a total cost, including broker’s commissions, of $387.1 million.

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 working capital requirements, purchase commitments, interest payments, research and development activities, capital expenditures, pension contributions and benefit payments and other financing requirements for the foreseeable future. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact meeting our capital needs during or beyond the next twelve months. 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 17 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

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Short-term financing needs primarily consist of working capital requirements 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 Food & Provisions, Inc. (“8th Avenue”) and its subsidiaries) 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. These guarantees are subject to release in certain circumstances.

Our senior notes, other than certain of our senior notes described below, 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). Our 6.25% senior secured notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis, and our 6.375% 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 wholly-owned domestic subsidiaries that guarantee the Credit Agreement or certain of our other indebtedness (other than immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries, which include 8th Avenue and its subsidiaries). 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 immaterial subsidiaries, certain excluded subsidiaries and subsidiaries we designate as unrestricted subsidiaries under our other senior notes indentures, which include 8th Avenue and its subsidiaries. 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 must cause such subsidiary to become a guarantor for the 2.50% convertible senior notes as well.

Cash Requirements

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

•    Debt and interest obligations – See Note 17 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 settlements, see Note 14 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, 2024 were $4,450.8 million (with $2,234.8 million due in fiscal 2025), primarily related to long-term egg contracts, open purchase orders and accrued capital expenditures.

•    Leases – See Note 16 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 19 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 Sheets as of September 30, 2024.

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The following table presents cash flow data, which is discussed below.

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Operating Activities

Cash provided by operating activities for the year ended September 30, 2024 increased $181.4 million compared to the year ended September 30, 2023. This increase was primarily driven by lapping inventory cash outflows in the prior year within our Post Consumer Brands and Foodservice segments, cash inflows related to fluctuations in timing of purchases and payments of trade payables within our Post Consumer Brands and Foodservice segments, and increased net cash receipts on our interest rate swaps of $15.8 million. These positive impacts were partially offset by higher tax payments of $63.8 million and higher interest payments of $21.0 million.

Investing Activities

Fiscal 2024

Cash used in investing activities for the year ended September 30, 2024 was $677.5 million, primarily driven by capital expenditures of $429.5 million and net cash payments of $248.1 million related to the Perfection and Deeside acquisitions. Capital expenditures in the period primarily related to ongoing projects in our Post Consumer Brands and Foodservice segments.

Fiscal 2023

Cash used in investing activities for the year ended September 30, 2023 was $669.3 million, primarily driven by net cash payments of $715.2 million related to the Pet Food acquisition and capital expenditures of $303.0 million. Capital expenditures in the year primarily related to ongoing projects in our Post Consumer Brands and Foodservice segments. These cash outflows were partially offset by a return of $345.0 million in connection with the PHPC Redemption which had been deposited in a trust account in connection with the PHPC IPO and the PHPC Private Placement.

Financing Activities

Fiscal 2024

Cash provided by financing activities for the year ended September 30, 2024 was $415.6 million. We received proceeds of $1,200.0 million and $1,000.0 million from the issuance of our 6.375% senior notes and 6.25% senior secured notes, respectively, and $645.0 million from borrowings under our Revolving Credit Facility. In addition, we received net proceeds of $0.9 million related to our structured share repurchase contract. We repaid $1,003.4 million principal value of our 4.50%, 5.625% and 5.75% senior notes (net of $7.9 million of discounts), repaid $400.0 million principal value of our Fourth Incremental Term Loan, repaid $645.0 million under our Revolving Credit Facility and repaid $1.1 million principal value of our municipal bond, which resulted in total net repayments of debt of $2,041.6 million. We paid $300.7 million, including broker’s commissions, for the repurchase of shares of our common stock. In addition, we paid $35.0 million of debt issuance costs and deferred financing fees (in connection with the issuance of our 6.375% senior notes and 6.25% senior secured notes and entry into the Third Amendment) and $8.6 million of debt premiums related to the redemption of our 5.625% senior notes and 5.75% senior notes.

Fiscal 2023

Cash used in financing activities was $555.7 million for the year ended September 30, 2023. We received proceeds of $400.0 million and $130.0 million from our Fourth Incremental Term Loan and our Third Incremental Term Loan, respectively. The Third Incremental Term Loan was partially repaid through the Second Debt-for-Equity Exchange, and the remaining principal balance of $30.1 million was repaid using cash on hand. In addition, we repaid $318.6 million principal value of our 4.50%, 4.625% and 5.625% senior notes (net of $42.9 million of discounts) and $1.1 million principal value of our municipal bond, which resulted in total net repayments of debt of $306.9 million. We distributed $312.5 million to PHPC public stockholders in connection with the PHPC Redemption. We paid $387.1 million, including broker’s commissions, for

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repurchases of shares of our common stock and $43.5 million related to the termination of certain of our rate-lock interest rate swap contracts, which contained non-cash, off-market financing elements.

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 to 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, 2024, we were in compliance with these financial covenants. 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 supplies. Primary exposures include wheat, oats, rice, corn, other grain products, eggs, sows, pork and other animal proteins and fats, pasta, potatoes and various other vegetables, bakery products, cheese, milk, butter, vegetable oils, dairy- and vegetable-based proteins, sugar and other sweeteners, fruit, nuts, natural gas, electricity, diesel fuel, cooling agents, folding cartons, corrugated containers, flexible film, rigid plastic trays and containers, foam trays, beverage packaging, plastic lined carton board, large format printed bags and steel cans and lids. 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, including ingredients and packaging, and energy costs. During fiscal 2023, input cost inflation put downward pressures on our profit margins, which we largely mitigated through pricing actions across all segments, cost savings measures and hedging programs. During fiscal 2024, inflationary pressures on certain input costs eased, while other input costs continued to face inflationary pressures, and we expect this trend to continue into fiscal 2025. These trends could have a materially adverse impact on our businesses in the future if inflation rates significantly exceed our ability to continue to achieve price increases or cost savings or if such price increases significantly 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 corresponding quarters of our fiscal year when such holidays occur. 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 currencies other than our reporting currency, primarily Pounds Sterling and Canadian Dollars. 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. The exchange rates used to translate our foreign sales into U.S. Dollars positively affected consolidated net sales by less than 1% during the year ended September 30, 2024, and did not have a material impact on our operating profit or net earnings during the year ended September 30, 2024.

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 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 and should be read in conjunction with

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our significant accounting policies as described in Note 2 within “Notes to Consolidated Financial Statements” in Item 8 of this report.

Revenue Recognition, Allowance for Trade Promotions — The recognition of certain variable trade promotions requires significant management judgment regarding estimated purchase volumes and program participation. Estimates are based on contractual provisions, redemption rate assumptions and our assessment of current market provisions. Redemption rate assumptions are based on historical results of similar promotions on a program-by-program basis, adjusted for current expectations of promotion performance based on current market trends. 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. Based on historical experience, 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 that meet the criteria to be accounted for as a business combination, whereby the fair value of total consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition. The allocation of the purchase price in a business combination requires us to perform valuations with significant judgment and estimates. As such, in the case of significant acquisitions, we engage the assistance of third-party valuation specialists in estimating the fair value of certain assets acquired and liabilities assumed.

Various valuation methodologies may be used in estimating the fair value of assets acquired and liabilities assumed based on the nature of the underlying asset or liability. Inventory acquired is valued using a combination of the replacement cost and comparatives sales methodologies, while property acquired is valued using a combination of the market and replacement cost new approaches. Intangible assets acquired, including customer relationships and trademarks and licensing agreements, are valued using an income-based approach. The income approach utilizes inputs that require significant assumptions for each identifiable intangible asset, including estimates regarding future revenue growth, profitability, discount rates, attrition rates, royalty rates and economic lives. Revenue growth assumptions (along with profitability assumptions) are based on historical trends and management’s expectations for future growth. Discount rates are based on a weighted-average cost of capital utilizing industry market data of similar companies. Attrition rates are estimated based on historical customer experience and analysis of comparable peer transactions. Royalty rates are determined based on profit levels, research of external royalty rates by third-party specialists and the relative importance of each trademark to our Company.

The fair value estimates are based on available historical information and on expectations and assumptions about the future, considering the perspective of marketplace participants. 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 — We assess indefinite-lived intangible assets for recoverability utilizing a quantitative test whereby the fair value is determined using an income-based approach, which requires significant assumptions for each indefinite-lived asset, including estimates regarding future revenue growth, discount rates and royalty rates. Revenue growth assumptions are based on historical trends and management’s expectations for future growth. The discount rates are based on a risk adjusted weighted-average cost of capital utilizing industry market data of similar companies. Royalty rates are determined based on profit levels, research of external royalty rates by third-party specialists and the relative importance of each brand to our Company.

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 macroeconomic 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 2024 and 2023, we performed a quantitative impairment test for all indefinite-lived intangible assets and concluded each year there were no impairments. The estimated fair value of all indefinite-lived trademarks and brands exceeded book value by 9% or greater and 11% or greater at September 30, 2024 and 2023, respectively.

Goodwill — We assess goodwill for recoverability using a quantitative test whereby 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 growth, profitability, capital requirements and discount rates. The

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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 macroeconomic 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, 2024, our Cheese and Dairy and Weetabix reporting units’ fair values exceeded their carrying values by approximately 5.3% and 5.2%, respectively. The Cheese and Dairy reporting unit was impacted by the narrowing of the pricing gap between branded and private label competitors, resulting in distribution losses. The Weetabix reporting unit was impacted by cost inflation as well as U.K. economic pressures negatively impacting consumer spending trends, both of which impacted near-term profitability. We expect these impacts to be transitory in nature; however, inherent risk to the reporting units’ cash flows remains. If we had increased the discount rate assumption used to estimate the fair values of our Cheese and Dairy and Weetabix reporting units as of the fiscal 2024 annual impairment test by 50 basis points, this isolated change, which is reasonably possible to occur, would have (i) decreased the Cheese and Dairy reporting unit’s fair value in excess of carrying value to 3.7% and (ii) decreased the Weetabix reporting unit’s fair value below its carrying value by 0.4%. The Cheese and Dairy and Weetabix reporting units had goodwill balances of $29.8 million and $937.4 million, respectively, as of September 30, 2024.

In fiscal 2023, we recorded a goodwill impairment charge of $42.2 million related to our Cheese and Dairy reporting unit driven primarily by narrowing of the pricing gap between branded and private label competitors, resulting in distribution losses and declining profitability. For additional information on the results of our annual goodwill impairment assessment for the years ended September 30, 2024 and 2023, refer to Note 9 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 one percentage point decrease in the assumed discount rates (from 5.09% to 4.09% for U.S. pension; from 4.99% to 3.99% for U.S. other postretirement benefits; from 4.64% to 3.64% for Canadian pension; from 4.73% to 3.73% for Canadian other postretirement benefits; from 4.87% to 3.87% for supplemental executive retirement plan and from 5.17% to 4.17% for other international pension) would have increased the recorded benefit obligations at September 30, 2024 by approximately $87 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 one percentage point decrease in the assumed return on plan assets (from 7.00% to 6.00% for U.S. pension; from 6.00% to 5.00% for Canada pension and from 6.26% to 5.26% for other international pension) would have increased the net periodic benefit cost for the pension plans by approximately $7 million. We do not

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expect to contribute to the combined pension plans in fiscal 2025. Contributions beyond fiscal 2025 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. We do not make contributions to our postretirement medical benefit plans. See Note 19 within “Notes to Consolidated Financial Statements” in Item 8 of this report for more information about pension and other postretirement benefit assumptions.

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 accounting standards.