Ralcorp Holdings' CEO Discusses F1Q12 Results - Earnings Call Transcript

Ralcorp Holdings, Inc. (

RAH

)

F1Q12 Earnings Conference Call

February 08, 2012, 08:00 a.m. ET

Executi

ve

s

Matt Pudlowski - Director, Business Development

Kevin Hunt - President and CEO

Scott Monette - Corporate VP and CFO

Analyst

s

Andrew Lazar - Barclays Capital

Jonathan Feeney - Janney Montgomery Scott

Chris Growe - Stifel Nicolaus

Eric Serotta - Wells Fargo

Heather Jones - BB&T Capital Markets

David Palmer - UBS

Presentation

Operator

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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Ralcorp Holdings First Quarter Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode, and the call will be open for your questions following management’s prepared remarks (Operator Instructions)

I would now like to turn the call over to Matt Pudlowski, Director of Business Development for Ralcorp Holdings. Please go ahead.

Matt Pudlowski

Thank you, Kelly, and good morning, everyone. Welcome to today’s conference call to discuss Ralcorp’s financial results for the first quarter. Participating on the call this morning are Kevin Hunt, Ralcorp’s CEO and President, and Scott Monette, Corporate Vice President and Chief Financial Officer.

Before we begin, I would like to remind everyone that today’s remarks contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual results to differ materially from those included in the forward-looking statements. Ralcorp undertakes no obligation to publicly update any forward-looking statement whether as a result of new information, future events or otherwise. Forward-looking statements and these remarks should be evaluated together with many risks and uncertainties that affect Ralcorp’s business, particularly those mentioned in the cautionary statements in yesterday’s earnings press release and in the periodic reports filed by Ralcorp with the Securities and Exchange Commission.

In addition, during today’s call we will reference certain non-GAAP financial measures such as adjusted earnings before interest, income taxes, depreciation and amortization and adjusted diluted earnings per share, which have been reconciled to the most comparable GAAP measure in yesterday’s earnings press release. I would also like to point out that a replay of today’s call will be made available on our website. At the conclusion of the prepared remarks, we will open the call for questions.

With that, let me now turn the call over to Kevin.

Kevin Hunt

Thank you, Matt, and good morning, everyone. First, I want to acknowledge that this has been a very busy quarter and past several months for Ralcorp. I will spend some time on today’s call highlighting a few of Ralcorp’s recent major accomplishments, including the spin-off of Post. I will also clarify the strategic focus of the new Ralcorp going forward and help you better understand the private brand industry and related dynamics in some of our largest product categories.

Next, I will provide an overview of Ralcorp’s results for the quarter and will then turn it over to Scott who will conclude our prepared remarks with details on our segments’ results, including a brief review of Post’s performance.

Our most significant accomplishment was the separation of the Post cereals business, which we announced in a press release on Monday. We first announced our intent to separate these businesses in July of last year. This type of complex transaction often takes companies well over a year to complete and thanks to the hard work of numerous employees at Ralcorp and Post. We successfully spun off Post in just over six-and-a-half months. I would also like to congratulate the senior management teams of both these businesses for their hard work and cooperation. We think this accomplishment is remarkable and we look forward to the bright futures ahead for both Ralcorp and Post.

Ralcorp received $900 million in cash from transactions related to the spin-off. We have used a portion of the proceeds from the transactions to repay short-term debt incurred in connection with the Refrigerated Dough acquisition as well as other outstanding pre-payable debt. As previously announced, we plan to use the remainder of these proceeds for general corporate purposes, including acquisitions and share repurchases.

To ensure the smoothest possible transition for both businesses, Ralcorp will continue to provide support to Post for specified periods of time through a transition services agreement covering areas such as distribution, information technology, payroll and benefits.

We believe the separation unlocks value for shareholders over the long-term and allows investors to select discrete themes in terms of private brand and branded foods. For Ralcorp, this means returning to our private brand and food service roots, allowing us greater opportunity to focus on growing our business and expanding our leadership position in private brands.

In addition to working on the Post separation, during the past quarter we also completed two acquisitions. As we discussed briefly on our last call, the first of these was our acquisition of Sara Lee’s North American private brand Refrigerated Dough business, which we completed on October 3rd. This acquisition immediately positioned Ralcorp in the number one private brand position in this $1.8 billion Refrigerated Dough category.

We are off to a great start with the Refrigerated Dough acquisition, which is our second largest private brand acquisition behind American Italian Pasta Company. The integration of this business is going very well and we are on-track in all areas. We still have much work ahead of us and I am confident that we will be successful in realizing our synergies on schedule. I appreciate the hard work of the teams and the successes that they have achieved so far.

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