By Pet Age Staff//October 12, 2023//
By: Pet Age Staff//October 12, 2023//
Press release: Post Holdings
Post Holdings, Inc., a consumer packaged goods holding company, recently announced it has agreed to acquire the assets of Perfection Pet Foods, LLC for $235 million.
Perfection is a leading manufacturer and packager of private label and co-manufactured pet food and baked treat products. The acquisition includes two manufacturing facilities in Visalia, California, which will provide Post with additional manufacturing capacity to insource a portion of its current pet food business and an entry point into the private label and co-manufacturing pet food category. Upon closing of the acquisition, the financial results of Perfection are expected to be reported in the Post Consumer Brands segment.
Inclusive of stand-up costs, Post management expects Perfection to contribute approximately $25 million of Adjusted EBITDA in the next 12 months following the close of the acquisition. Additionally, Post expects the acquisition to result in a tax benefit to Post with a net present value of approximately $20 million and reduce future capital expenditures previously earmarked for capacity expansion. The acquisition is expected to be completed late in the fourth calendar quarter of 2023, Post’s first quarter of fiscal year 2024, subject to customary closing conditions.
Lincoln International LLC served as financial advisor to Perfection.
In this release, Post discloses its expectations as to the expected Adjusted EBITDA contribution from Perfection. Post uses Adjusted EBITDA, a non-GAAP measure, in this release to supplement the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP). Adjusted EBITDA represents earnings before interest, income taxes, depreciation and amortization and other adjustments. Adjusted EBITDA is not prepared in accordance with U.S. GAAP, as it excludes certain items, and may not be comparable to a similarly titled measure of other companies.
Post management uses certain non-GAAP measures, including Adjusted EBITDA, as key metrics in the evaluation of underlying company and segment performance, in making financial, operating and planning decisions, and, in part, in the determination of bonuses for its executive officers and employees. Additionally, Post is required to comply with certain covenants and limitations that are based on variations of EBITDA in its financing documents. Post management believes the use of non-GAAP measures, including Adjusted EBITDA, provides increased transparency and assists investors in understanding the underlying operating performance of Post and its segments and in the analysis of ongoing operating trends.
Because Post discusses Adjusted EBITDA in this release only in relation to management’s expectations of the future effect of the Perfection acquisition on this non-GAAP measure, Post has not provided a reconciliation of this forward-looking Adjusted EBITDA expectation to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for mark-to-market adjustments on commodity hedges, transaction and integration costs and other charges reflected in Post’s reconciliations of historical numbers, the amounts of which, based on historical experience, could be significant.