Business Combinations

3 Months Ended

Dec. 31, 2023

BUSINESS COMBINATIONS

The Company uses the acquisition method of accounting for acquired businesses. Under the acquisition method, the Company’s financial statements reflect the operations of an acquired business starting from the date of acquisition. The assets acquired and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition based on Level 3 inputs. Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill. Any excess of the estimated fair values of the identifiable net assets acquired over the purchase price is recorded as a gain on bargain purchase. Goodwill represents the value the Company expects to achieve through the implementation of operational synergies, the expansion of the business into new or growing segments of the industry and the addition of new employees.

Fiscal 2024

On December 1, 2023, the Company completed its acquisition of substantially all of the assets of Perfection Pet Foods, LLC (“Perfection”) for $235.0, subject to working capital adjustments and other adjustments, resulting in a payment at closing of $238.8. Perfection is a manufacturer and packager of private label and co-manufactured pet food and baked treat products and is reported in the Post Consumer Brands segment. The acquisition was completed using cash on hand, including borrowings under the Revolving Credit Facility (as defined in Note 14). At December 31, 2023, the Company had recorded a receivable related to additional estimated working capital adjustments of $3.5, which was included in “Receivables, net” on the Condensed Consolidated Balance Sheets.

Based upon the preliminary purchase price allocation, the Company recorded $79.0 of customer relationships, which is being amortized over a weighted-average useful life of 16 years. Net sales and operating profit included in the Condensed Consolidated Statements of Operations attributable to Perfection were $19.5 and $0.1, respectively, for the three months ended December 31, 2023. The Company recorded $1.8 of acquisition-related costs related to Perfection, which were included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations during the three months ended December 31, 2023.

Preliminary values of Perfection are measured as of the date of the acquisition, are not yet finalized pending the final purchase price allocation and are subject to change. The goodwill generated by the Company’s Perfection acquisition is expected to be deductible for U.S. income tax purposes.

The following table presents the preliminary purchase price allocation related to the Perfection acquisition based upon the fair values of assets acquired and liabilities assumed as of December 31, 2023.



Cash and cash equivalents	$	0.3

Receivables, net	40.8

Inventories	21.1

Prepaid expenses and other current assets	0.4
Property, net	73.8
Other intangible assets, net	79.0

Other assets	2.9

Accounts payable	(21.2)

Other current liabilities	(1.6)


Other liabilities	(1.8)
Total identifiable net assets	193.7
Goodwill	41.6
Fair value of total consideration transferred	$	235.3

Also on December 1, 2023, the Company completed its acquisition of Deeside Cereals I Ltd (“Deeside”) for £11.3 (approximately $14.3). The acquisition was completed using cash on hand. Deeside is a producer of private label cereals in the United Kingdom (the “U.K.”) and is reported in the Weetabix segment. Based upon the preliminary purchase price allocation at December 31, 2023, the Company identified and recorded $20.5 of net assets, which exceeded the purchase price paid for Deeside. As a result, the Company recorded a gain of $6.2, which was included in “Other operating income, net” in the Condensed Consolidated Statements of Operations for the three months ended December 31, 2023. Net sales and operating loss included in the Condensed Consolidated Statements of Operations attributable to Deeside were $2.3 and $0.2, respectively, for the three months ended December 31, 2023. Preliminary values of Deeside are measured as of the date of the acquisition, are not yet finalized pending the final purchase price allocation and are subject to change.

Fiscal 2023

On April 28, 2023, the Company completed its 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”), facilitating the Company’s entry into the pet food category. The purchase price of the Pet Food acquisition was $1,207.5 which included (i) $700.0 in cash, subject to inventory adjustments, resulting in a payment at closing of $715.5, (ii) 5.4 shares of Post common stock, or $492.3, and (iii) immaterial working capital adjustments. The cash payment was made using cash on hand, including proceeds from the Fourth Incremental Term Loan (as defined in Note 14). Pet Food is reported in the Post Consumer Brands segment.

In connection with the Pet Food acquisition, the Company and Smucker entered into a transition services agreement (the “TSA”) pursuant to which Smucker provides certain Pet Food support services to Post for a transition period of 18 months (or up to 24 months at Post’s election) following the close of the acquisition based on the terms set forth in the TSA. Pet Food support services include, but are not limited to, certain sales, marketing, finance, information technology, procurement and supply chain services. During the three months ended December 31, 2023, Post incurred $5.0 related to TSA fees, which was recorded within “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. In accordance with the terms of the TSA, Smucker collects sales receivables from and remits payments to customers and vendors, respectively, in accordance with Smucker’s existing contractual terms. Pet Food receivables and payables are settled between Post and Smucker monthly on a net basis per the terms of the TSA. As of December 31, 2023 and September 30, 2023, the Company had recorded a net receivable due from Smucker related to the TSA of $56.3 and $35.5, respectively, which was recorded within “Receivables, net” on the Condensed Consolidated Balance Sheets.

Unaudited Pro Forma Information

The following unaudited pro forma information presents a summary of the results of operations of the Company combined with the results of the fiscal 2024 Perfection acquisition and the fiscal 2023 Pet Food acquisition for the periods presented as if the fiscal 2024 Perfection acquisition had occurred on October 1, 2022 and the fiscal 2023 Pet Food acquisition had occurred on October 1, 2021, along with certain pro forma adjustments. The results of operations for the fiscal 2024 Deeside acquisition were immaterial for presentation within the following unaudited pro forma information. These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation expense based upon the fair value of assets acquired, acquisition-related costs, inventory revaluation adjustments, interest expense, TSA fees and related income

taxes. The following unaudited pro forma information has been prepared for comparative purposes only and is not necessarily indicative of the results of operations as they would have been had the Perfection and Pet Food acquisitions occurred on the assumed dates, nor is it necessarily an indication of future operating results.



	Three Months Ended December 31,
		2023		2022
Pro forma net sales		$	2,006.8	$	2,016.0
Pro forma net earnings		$	91.9	$	95.7
Pro forma basic earnings per common share		$	1.52	$	1.58
Pro forma diluted earnings per common share		$	1.41	$	1.46