Forward-looking statements and these remarks should be evaluated together with the 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 J. Hunt Thank you Matt and good morning everyone. We’ll do a few things on the call this morning. First, I’ll provide an overview of our performance for the quarter and an update on our recent acquisitions, including our acquisition of the Petri cookie company, which we announced this morning. Then I’ll turn to category dynamics to offer some context before Scott reviews financial information and results for our segments. Lastly, I’ll provide you with our outlook for the remainder of the year before we take your questions. Starting with our performance, Ralcorp’s adjusted second quarter fully diluted earnings per share were $0.72 versus $0.75 last year, or a 4% decrease. Earnings per share were adjusted for a number of items that were highlighted in the press release last night. The primary factors in the EPS short fall were in our Pasta and Frozen Bakery Product segments. Past segment profit reflects sharply higher cost for durum wheat that could not be fully offset by pricing actions. In Frozen Bakery, our base business operating performance was negatively impacted by lower volumes in some key categories, higher input costs and increased trade spending. These declines were somewhat offsets by a favorable tax adjustment and the benefit of the Refrigerated Dough acquisition. On a consolidated basis, Ralcorp’s segment operating profit decreased 9%, while adjusted EBITDA was down 4%.
Our total revenue for the quarter was up 16% to $1.1 billion. The increase was largely due to the acquisition of the Refrigerated Dough business. Base business revenue was up 7% due to higher net selling prices in response to significantly higher raw material and freight costs.Volumes grew by 4% in the quarter as a result of the Refrigerated Dough and Annoni acquisitions. However base business volumes declined 4% in the quarter, as consumers reduced purchases and we exited businesses that did not meet our margin requirements. Now let me give you a little more color on our performance. Overall, we had a mix performance in the quarter, in a challenging operating environment. On the positive front was our price mix realization. As we stated over the last couple of quarters, our price mix matched our input cost inflation in the second quarter. As you may recall, we stated that our second quarter input cost inflation would be the highest of the year and it came in at $95 million. We were able to match this significant inflation with pricing and mix. Also on the positive side were acquisitions. Let me share some more information on our latest acquisition, Petri Baking Products, which we announced this morning. With annual sales exceeding $50 million, Petri Cookie Company is a leading private-brand supplier of high quality private-brand and value brand cookies that maintain a homemade look, feel and taste. Through their unique manufacturing process, the company produces both soft style and crunchy wire-cut cookies for customers in a variety of retail channels, including alternative channels at opening price points. We expect to take advantage of operational synergies, which will be delivered over three years with the majority of these benefits occurring by the end of the second year of ownership while we have yet to complete the intangible valuation analysis, which could impact accretion. Ralcorp anticipates the transaction will deliver five sense of GAAP accretion and eight sense of cash accretion to adjusted diluted earnings per share in the first year of ownership, excluding one-time cost. Read the rest of this transcript for free on seekingalpha.com