Document

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________

FORM 10-Q

__________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 1-35305

Post Holdings, Inc.

(Exact name of registrant as specified in its charter)



Missouri		45-3355106
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2503 S. Hanley Road

St. Louis, Missouri 63144

(Address of principal executive offices) (Zip Code)

(314) 644-7600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	POST	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $0.01 par value – 68,177,336 shares as of May 4, 2020

Table of Contents

POST HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS



		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited).	1

	Condensed Consolidated Statements of Operations (Unaudited).	1

	Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)	2

	Condensed Consolidated Balance Sheets (Unaudited).	3

	Condensed Consolidated Statements of Cash Flows (Unaudited).	4

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited).	5

	Notes to Condensed Consolidated Financial Statements (Unaudited).	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	42

Item 4.	Controls and Procedures.	43

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings.	43

Item 1A.	Risk Factors.	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	44

Item 6.	Exhibits.	46

	SIGNATURES.	48

Table of Contents

PART I. FINANCIAL INFORMATION.

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).

POST HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in millions, except per share data)



	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
Net Sales	$	1,494.2		$	1,387.8		$	2,951.0		$	2,799.1
Cost of goods sold	1,055.4			936.5			2,040.7			1,921.3
Gross Profit	438.8			451.3			910.3			877.8
Selling, general and administrative expenses	245.0			225.8			480.3			442.9
Amortization of intangible assets	40.0			40.4			80.1			80.7
Gain on sale of business	—			(2.6		)	—			(127.3		)
Other operating expenses, net	0.3			1.4			0.4			1.3
Operating Profit	153.5			186.3			349.5			480.2
Interest expense, net	94.0			85.5			196.9			144.9
Loss on extinguishment of debt, net	60.0			—			72.9			6.1
Expense on swaps, net	224.6			63.0			163.2			114.7
Other income, net	(3.3		)	(3.7		)	(6.5		)	(7.4		)
(Loss) Earnings before Income Taxes and Equity Method Loss	(221.8		)	41.5			(77.0		)	221.9
Income tax (benefit) expense	(47.1		)	(11.6		)	(16.7		)	32.2
Equity method loss, net of tax	11.1			8.8			18.4			19.5
Net (Loss) Earnings Including Noncontrolling Interests	(185.8		)	44.3			(78.7		)	170.2
Less: Net earnings attributable to noncontrolling interests	5.6			0.3			13.5			0.6
Net (Loss) Earnings	(191.4		)	44.0			(92.2		)	169.6
Less: Preferred stock dividends	—			1.0			—			3.0
Net (Loss) Earnings Available to Common Shareholders	$	(191.4	)	$	43.0		$	(92.2	)	$	166.6

(Loss) Earnings per Common Share:
Basic	$	(2.76	)	$	0.61		$	(1.32	)	$	2.43
Diluted	$	(2.76	)	$	0.58		$	(1.32	)	$	2.26

Weighted-Average Common Shares Outstanding:
Basic	69.3			70.6			70.0			68.6
Diluted	69.3			75.3			70.0			75.2

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

POST HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited)

(in millions)



	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
Net (Loss) Earnings Including Noncontrolling Interests	$	(185.8	)	$	44.3		$	(78.7	)	$	170.2
Pension and postretirement benefits adjustments:
Reclassifications to net (loss) earnings	(0.5		)	(1.1		)	(1.0		)	(2.3		)
Hedging adjustments:
Net gain (loss) on derivatives	55.8			(11.9		)	22.5			12.5
Reclassifications to net (loss) earnings	(0.2		)	(0.4		)	7.0			(30.5		)
Foreign currency translation adjustments:
Unrealized foreign currency translation adjustments	(109.5		)	37.7			5.6			(2.5		)
Reclassifications to net (loss) earnings (see Note 4)	—			—			—			42.1
Tax benefit (expense) on other comprehensive income:
Pension and postretirement benefits adjustments:
Reclassifications to net (loss) earnings	0.1			0.2			0.2			0.5
Hedging adjustments:
Net gain/loss on derivatives	(13.9		)	11.1			(5.4		)	5.1
Reclassifications to net (loss) earnings	—			0.1			(1.6		)	7.5
Total Other Comprehensive (Loss) Income Including Noncontrolling Interests	(68.2		)	35.7			27.3			32.4
Less: Comprehensive income attributable to noncontrolling interests	2.1			0.6			10.5			0.9
Total Comprehensive (Loss) Income	$	(256.1	)	$	79.4		$	(61.9	)	$	201.7

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

POST HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)



	March 31, 2020			September 30, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	1,179.4		$	1,050.7
Restricted cash	17.2			3.8
Receivables, net	551.2			445.1
Inventories	569.0			579.8
Prepaid expenses and other current assets	66.9			46.9
Total Current Assets	2,383.7			2,126.3
Property, net	1,729.2			1,736.0
Goodwill	4,404.6			4,399.8
Other intangible assets, net	3,261.1			3,338.5
Equity method investments	126.4			145.5
Other assets	332.6			205.5
Total Assets	$	12,237.6		$	11,951.6

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	$	36.1		$	13.5
Accounts payable	317.1			395.6
Other current liabilities	383.7			393.8
Total Current Liabilities	736.9			802.9
Long-term debt	7,171.3			7,066.0
Deferred income taxes	771.0			688.5
Other liabilities	693.2			456.9
Total Liabilities	9,372.4			9,014.3

Shareholders’ Equity
Preferred stock	—			—
Common stock	0.8			0.8
Additional paid-in capital	4,207.0			3,734.8
Retained earnings	115.6			207.8
Accumulated other comprehensive loss	(66.5		)	(96.8		)
Treasury stock, at cost	(1,349.8		)	(920.7		)
Total Shareholders’ Equity Excluding Noncontrolling Interests	2,907.1			2,925.9
Noncontrolling interests	(41.9		)	11.4
Total Shareholders’ Equity	2,865.2			2,937.3
Total Liabilities and Shareholders’ Equity	$	12,237.6		$	11,951.6

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

POST HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)



	Six Months Ended March 31,
	2020			2019
Cash Flows from Operating Activities
Net (Loss) Earnings Including Noncontrolling Interests	$	(78.7	)	$	170.2
Adjustments to reconcile net (loss) earnings including noncontrolling interests to net cash flow provided by operating activities:
Depreciation and amortization	181.8			191.4
Unrealized loss on interest rate swaps	150.9			114.4
Gain on sale of business	—			(127.3		)
Loss on extinguishment of debt, net	72.9			6.1
Non-cash stock-based compensation expense	24.7			18.1
Equity method loss, net of tax	18.4			19.5
Deferred income taxes	(58.6		)	(12.6		)
Other, net	5.5			2.9
Other changes in operating assets and liabilities:
Increase in receivables, net	(90.4		)	(34.8		)
Decrease (increase) in inventories	9.9			(71.6		)
(Increase) decrease in prepaid expenses and other current assets	(23.2		)	10.3
(Increase) decrease in other assets	(16.9		)	4.4
Decrease in accounts payable and other current liabilities	(111.1		)	(91.2		)
Increase in non-current liabilities	3.8			5.0
Net Cash Provided by Operating Activities	89.0			204.8
Cash Flows from Investing Activities
Additions to property	(117.5		)	(135.5		)
Proceeds from sale of property and assets held for sale	2.4			2.0
Proceeds from sale of business	—			266.8
Cross-currency swap cash settlements	52.7			29.6
Net Cash (Used in) Provided by Investing Activities	(62.4		)	162.9
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	3,846.0			—
Repayments of long-term debt	(3,731.5		)	(919.1		)
Payments to appraisal rights holders	(3.8		)	(253.6		)
Purchases of treasury stock	(437.8		)	(65.8		)
Payments of preferred stock dividends	—			(4.0		)
Proceeds from initial public offering	524.4			—
Payments of debt issuance costs and deferred financing fees	(39.8		)	(8.7		)
Refund of debt issuance costs	15.3			7.8
Payments of premiums on debt extinguishment	(49.8		)	—
Proceeds from exercises of stock awards	3.4			41.5
Other, net	(10.5		)	(7.5		)
Net Cash Provided by (Used in) Financing Activities	115.9			(1,209.4		)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(0.4		)	(0.9		)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	142.1			(842.6		)
Cash, Cash Equivalents and Restricted Cash, Beginning of Year	1,054.5			994.5
Cash, Cash Equivalents and Restricted Cash, End of Period	$	1,196.6		$	151.9

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

POST HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(in millions)



	As Of and For The Three Months Ended March 31,						As Of and For The Six Months Ended March 31,
	2020			2019			2020			2019
Preferred Stock
Beginning and end of period	$	—		$	—		$	—		$	—
Common Stock
Beginning and end of period	0.8			0.8			0.8			0.8
Additional Paid-in Capital
Beginning of period	4,195.6			3,592.4			3,734.8			3,590.9
Activity under stock and deferred compensation plans	0.3			41.4			(7.0		)	34.2
Non-cash stock-based compensation expense	12.5			9.4			23.6			18.1
Initial public offering, net of tax	(1.4		)	—			455.6			—
Preferred stock conversion	—			(0.1		)	—			(0.1		)
End of period	4,207.0			3,643.1			4,207.0			3,643.1
Retained Earnings
Beginning of period	307.0			210.7			207.8			88.0
Net (loss) earnings	(191.4		)	44.0			(92.2		)	169.6
Adoption of accounting standards update	—			—			—			(0.9		)
Preferred stock dividends declared	—			(2.0		)	—			(4.0		)
End of period	115.6			252.7			115.6			252.7
Accumulated Other Comprehensive Loss
Retirement Benefit Adjustments, net of tax
Beginning of period	26.2			37.0			26.6			37.9
Net change in retirement benefits, net of tax	(0.4		)	(0.9		)	(0.8		)	(1.8		)
End of period	25.8			36.1			25.8			36.1
Hedging Adjustments, net of tax
Beginning of period	25.1			33.1			44.5			37.4
Net change in hedges, net of tax	44.7			(1.1		)	25.3			(5.4		)
End of period	69.8			32.0			69.8			32.0
Foreign Currency Translation Adjustments
Beginning of period	(53.1		)	(112.8		)	(167.9		)	(114.7		)
Foreign currency translation adjustments	(109.0		)	37.7			5.8			39.6
End of period	(162.1		)	(75.1		)	(162.1		)	(75.1		)
Treasury Stock
Beginning of period	(1,143.8		)	(615.2		)	(920.7		)	(589.9		)
Purchases of treasury stock	(206.0		)	(40.5		)	(429.1		)	(65.8		)
End of period	(1,349.8		)	(655.7		)	(1,349.8		)	(655.7		)
Total Shareholders’ Equity Excluding Noncontrolling Interests	2,907.1			3,233.9			2,907.1			3,233.9
Noncontrolling Interests
Beginning of period	(46.2		)	10.4			11.4			10.1
Initial public offering	1.4			—			(64.9		)	—
Net earnings attributable to noncontrolling interests	5.6			0.3			13.5			0.6
Non-cash stock-based compensation expense	0.8			—			1.1			—
Net change in hedges, net of tax	(3.0		)	—			(2.8		)	—
Foreign currency translation adjustments	(0.5		)	0.3			(0.2		)	0.3
End of period	(41.9		)	11.0			(41.9		)	11.0
Total Shareholders’ Equity	$	2,865.2		$	3,244.9		$	2,865.2		$	3,244.9

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

Table of Contents

POST HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(in millions, except per share information and where indicated otherwise)

NOTE 1 — BASIS OF PRESENTATION

These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of Post Holdings, Inc. (herein referred to as “Post,” “the Company,” “us,” “our” or “we,” and unless otherwise stated or context otherwise indicates, all such references herein mean Post Holdings, Inc. and its consolidated subsidiaries) as of and for the fiscal year ended September 30, 2019. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019, filed with the SEC on November 22, 2019.

These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations, comprehensive income, financial condition, cash flows and shareholders’ equity for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire fiscal year.

On October 21, 2019, BellRing Brands, Inc. (“BellRing”), a subsidiary of the Company, closed its initial public offering (the “IPO”) of 39.4 shares of its Class A common stock, $0.01 par value per share (the “Class A Common Stock”), which number of shares included the underwriters’ exercise in full of their option to purchase up to an additional 5.1 shares of Class A Common Stock. The IPO was completed at an offering price of $14.00 per share and BellRing received net proceeds from the IPO of $524.4, after deducting underwriting discounts and commissions. As a result of the IPO and certain other transactions completed in connection with the IPO (the “formation transactions”), BellRing is a publicly-traded company whose Class A Common Stock is traded on the New York Stock Exchange under the ticker symbol “BRBR”. BellRing is a 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”). Post owns 71.2% of the BellRing LLC units and one share of BellRing’s Class B common stock, $0.01 par value per share (the “Class B Common Stock” and, collectively with the Class A Common Stock, the “BellRing Common Stock”). The Class B Common Stock has voting rights but no rights to dividends or other economic rights. For so long as Post or its affiliates (other than BellRing and its subsidiaries) directly own more than 50% of the BellRing LLC units, the Class B Common Stock represents 67% of the combined voting power of the BellRing Common Stock. BellRing LLC is the holding company for Post’s historical active nutrition business, reported herein as the BellRing Brands segment and reported historically as the Active Nutrition segment. In connection with the IPO, the Company incurred transaction-related expenses of $0.3 and $2.4 during the three and six months ended March 31, 2020, respectively, and $1.7 and $2.9 during the three and six months ended March 31, 2019, respectively. These expenses generally included third party costs for due diligence, advisory services and government filing fees and were recorded as “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.

Effective October 21, 2019, the financial results of BellRing and its subsidiaries were consolidated within Post’s financial results and 28.8% of the consolidated net income and net assets of BellRing and its subsidiaries, representing the percentage of economic interest in BellRing LLC held by BellRing (and therefore indirectly held by the public stockholders of BellRing through their ownership of the Class A Common Stock), is allocated to noncontrolling interest (“NCI”) (see Note 5). The term “BellRing” as used herein generally refers to BellRing Brands, Inc.; however, in discussions related to debt facilities, the term “BellRing” refers to BellRing Brands, LLC.

NOTE 2 — RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

The Company has considered all new accounting pronouncements and has concluded there are no new pronouncements (other than the ones described below) that had or will have a material impact on the Company’s results of operations, comprehensive income, financial condition, cash flows, shareholders’ equity or disclosures based on current information.

Recently Issued

In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and effective for all entities as of March 12, 2020, the date this ASU was issued. An entity may elect to apply the amendments for contract modifications provided by this ASU as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date

Table of Contents

within an interim period that includes or is subsequent to March 12, 2020. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company is currently evaluating the impact of this ASU as it relates to its debt and hedging relationships that reference LIBOR.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments. This ASU replaces the current incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates.This ASU is effective for annual periods beginning after December 15, 2019 and interim periods therein (i.e., Post’s financial statements for the year ending September 30, 2021), with early adoption permitted. The Company is currently evaluating the timing and impact of adopting this ASU.

Recently Adopted

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This ASU requires a company to recognize right-of-use (“ROU”) assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for lessees, lessors and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements.” This ASU provides an additional transition method by allowing entities to initially apply the new lease standard at the date of adoption with a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. This ASU also gives lessors the option of electing, as a practical expedient by class of underlying asset, not to separate the lease and non-lease components of a contract when those lease contracts meet certain criteria. The Company adopted these ASUs on October 1, 2019, as required by these ASUs, and utilized the cumulative effect adjustment approach. At adoption, the Company recognized ROU assets and lease liabilities of $158.1 and $168.2, respectively, on the balance sheet at October 1, 2019. The new standard did not materially impact the statements of operations or cash flows. In addition, the Company provides expanded disclosures related to its leasing arrangements in accordance with these ASUs. For additional information, refer to Note 15.

NOTE 3 — RESTRUCTURING

In February 2018, the Company announced its plan to close its ready-to-eat (“RTE”) cereal manufacturing facility in Clinton, Massachusetts, which manufactured certain Weetabix products distributed in North America. The transfer of production capabilities to other Post Consumer Brands facilities and the closure of the facility was completed at September 30, 2019. Final cash payments for employee-related costs were made in the first quarter of fiscal 2020. No additional restructuring costs have been or are expected to be incurred in fiscal 2020. For additional information on assets held for sale related to the closure, see Note 4.

Restructuring charges and the related liabilities are shown in the following table.



	Employee-Related Costs			Accelerated Depreciation			Total
Balance, September 30, 2018	$	2.7		$	—		$	2.7
Charge to expense	1.5			4.3			5.8
Cash payments	(0.1		)	—			(0.1		)
Non-cash charges	—			(4.3		)	(4.3		)
Balance, March 31, 2019	$	4.1		$	—		$	4.1

Balance, September 30, 2019	$	0.1		$	—		$	0.1
Cash payments	(0.1		)	—			(0.1		)
Balance, March 31, 2020	$	—		$	—		$	—

Total expected restructuring charges	$	4.9		$	9.9		$	14.8
Cumulative restructuring charges incurred to date	4.9			9.9			14.8
Remaining expected restructuring charges	$	—		$	—		$	—

In the three and six months ended March 31, 2019, the Company incurred total restructuring charges of $3.3 and $5.8, respectively. Employee-related costs were included in “Selling, general and administrative expenses” and accelerated depreciation

Table of Contents

expense was included in “Cost of goods sold” in the Condensed Consolidated Statements of Operations. These expenses are not included in the measure of segment performance (see Note 19).

NOTE 4 — DIVESTITURES AND AMOUNTS HELD FOR SALE

Divestiture

On October 1, 2018, 8th Avenue Food & Provisions, Inc. (“8th Avenue”) was separately capitalized through a series of transactions (the “8th Avenue Transactions”), and 8th Avenue became the holding company for Post’s historical private brands business. Post received total gross proceeds of $875.0, as well as $16.8 received in the second quarter of fiscal 2019 related to final working capital adjustments, from the 8th Avenue Transactions. Post’s gross proceeds consisted of (i) $250.0 from a third party and (ii) $625.0 from a committed senior increasing rate bridge loan (the “2018 Bridge Loan”), which was funded in fiscal 2018 prior to the closing of the 8th Avenue Transactions (see Note 16). During the three and six months ended March 31, 2019, the Company recorded gains of $2.6 and $127.3, respectively (adjusted to $126.6 for the full year ended September 30, 2019), related to the 8th Avenue Transactions, which was reported as “Gain on sale of business” in the Condensed Consolidated Statements of Operations. The gain recorded in the six months ended March 31, 2019 included foreign exchange losses previously recorded in accumulated other comprehensive loss (“OCI”) of $42.1. In connection with the 8th Avenue Transactions, the Company incurred transaction-related expenses of $0.8 and $9.9 during the three and six months ended March 31, 2019, respectively. These expenses generally included third party costs for advisory services and transaction success fees, and were recorded as “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. No such gain or loss or transaction-related expenses were recorded during the three or six months ended March 31, 2020.

Amounts Held For Sale

In connection with the closure of the Company’s Post Consumer Brands RTE cereal manufacturing facility in Clinton, Massachusetts (see Note 3), the Company had a manufacturing plant (the “Clinton Plant”) classified as held for sale with a book value of $6.0 and $8.4 at March 31, 2020 and September 30, 2019, respectively. The Company sold a portion of the Clinton Plant in March 2020. Additionally, the Company had land and a building with a combined book value of $1.5 classified as held for sale at its Post Consumer Brands RTE cereal manufacturing facility in Asheboro, North Carolina (the “Asheboro Facility”) at both March 31, 2020 and September 30, 2019. In accordance with Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant, and Equipment,” these assets held for sale were classified as current, and were reported as “Prepaid expenses and other current assets” on the Condensed Consolidated Balance Sheets.

There were no held for sale gains or losses recorded in the three or six months ended March 31, 2020. A gain of $0.6 was recorded related to the sale of the Company’s Post Consumer Brands RTE cereal warehouse in Clinton, Massachusetts during the six months ended March 31, 2019 and was included in “Other operating expenses, net” in the Condensed Consolidated Statement of Operations. Related to the 8th Avenue Transactions, the Company recorded gains of $2.6 and $127.3 during the three and six months ended March 31, 2019, respectively (adjusted to $126.6 for the full year ended September 30, 2019), which were reported as “Gain on sale of business” in the Condensed Consolidated Statements of Operations and a held for sale loss of $2.6 in the six months ended March 31, 2019, which was included in “Loss on extinguishment of debt, net” in the Condensed Consolidated Statement of Operations (see Note 16).

Table of Contents

NOTE 5 — EQUITY INTERESTS AND RELATED PARTY TRANSACTIONS

BellRing

As a result of the IPO on October 21, 2019 (see Note 1), the Company (other than BellRing and its subsidiaries) owned 71.2% of the BellRing LLC units and one share of Class B Common Stock. The Class B Common Stock has voting rights but no rights to dividends or other economic rights. For so long as the Company (other than BellRing and its subsidiaries) directly owns more than 50% of the BellRing LLC units, the Class B Common Stock represents 67% of the combined voting power of the BellRing Common Stock, which provides the Company control over BellRing’s board of directors and results in the full consolidation of BellRing and its subsidiaries into the Company’s financial statements. The remaining interest in BellRing’s consolidated net income and net assets will be allocated to NCI. The BellRing LLC units held by the Company include a redemption feature that allows the Company to, at BellRing LLC’s option (as determined by its board of managers), redeem BellRing LLC units for either (i) Class A Common Stock of BellRing or (ii) cash equal to the market value of the BellRing Class A Common Stock at the time of redemption.

In the event the Company (other than BellRing and its subsidiaries) holds 50% or less of the BellRing LLC units, the holder of the share of Class B Common Stock will be entitled to a number of votes equal to the number of BellRing LLC units held by all persons other than BellRing and its subsidiaries. In such situation, the Company, as the holder of the share of Class B Common Stock, will only be entitled to cast a number of votes equal to the number of BellRing LLC units held by the Company (other than BellRing and its subsidiaries). Also, in such situation, if any BellRing LLC units are held by persons other than the Company, then the Company, as the holder of the share of Class B Common Stock, will cast the remainder of votes to which the share of Class B Common Stock is entitled only in accordance with the instructions and directions from such other holders of the BellRing LLC units.

As of March 31, 2020, the Company owned 71.2% of the BellRing LLC units and the net income and net assets of BellRing and its subsidiaries were consolidated within the Company’s financial statements, and the remaining 28.8% of the consolidated net income and net assets of BellRing and its subsidiaries, representing the percentage of economic interest in BellRing LLC held by BellRing (and therefore indirectly held by the public stockholders of BellRing through their ownership of the Class A Common Stock), were allocated to NCI.

The following table summarizes the effects of changes in ownership of BellRing on the Company’s equity:



	Three Months Ended March 31, 2020			Six Months Ended March 31, 2020
Increase in additional paid-in capital related to net proceeds from IPO	$	—		$	524.4
(Decrease) increase in additional paid-in capital related to establishment of noncontrolling interest	(1.4		)	64.9
Decrease in additional paid-in capital related to tax effects of IPO	—			(133.7		)
Net transfers (to) from noncontrolling interest	$	(1.4	)	455.6

8th Avenue

The Company has a 60.5% common equity interest in 8th Avenue that is accounted for using the equity method. In determining the accounting treatment of the common equity interest, management concluded that 8th Avenue was not a variable interest entity as defined by ASC Topic 810, “Consolidation” and, as such, was evaluated under the voting interest model. Based on the terms of 8th Avenue’s governing documents, management determined that the Company does not have a controlling voting interest in 8th Avenue due to substantive participating rights held by third parties associated with the governance of 8th Avenue. However, Post does retain significant influence, and therefore, the use of the equity method of accounting is required.

Table of Contents

The following table presents the calculation of the Company’s equity method loss attributable to 8th Avenue:



	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
8th Avenue’s net loss available to 8th Avenue’s common shareholders	$	(15.2	)	$	(11.3	)	$	(23.9	)	$	(22.8	)
	60.5		%	60.5		%	60.5