Welcome to Post Holdings Third Quarter 2015 Earnings Conference Call and Webcast. Hosting the call today from Post are Rob Vitale, President and Chief Executive Officer; and Jeff Zadoks, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12 p.m. Eastern Time. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Brad Harper, Investor Relations of Post Holdings, for introduction. Sir, you may begin.

Thank you, and good morning. Welcome to the Post Holdings conference call where we will discuss results for the third quarter of fiscal 2015. With me today are Rob Vitale, our President and CEO; and Jeff Zadoks, our CFO. Rob and Jeff will begin the call with prepared remarks. And afterwards, will be available for a brief question-and-answer session. The press release that supports these remarks is posted on our website at www.postholdings.com in the Investor Relations section and in the SEC filing section. In addition, the release is available in our SEC filings on the SEC's website. Before we continue, I would like to remind you that this call will contain forward-looking statements. These forward-looking statements are subject to risks and uncertainties, which should be carefully considered by investors, as actual results could differ materially from these forward-looking statements. For more information, please visit the SEC filings page in the Investor Relations section of our website. These statements speak only as of the date of this call, and management undertakes no obligation to update or revise these statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. As a reminder, this call is being recorded for audio replay. And finally, this call will discuss certain non-GAAP measures. For a reconciliation of non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Rob.

Thanks, Brad. Good morning and thank you for joining us to discuss an eventful three months. During the quarter we completed the MOM Brands acquisition, announced the combination of Post Foods and MOM into our Lakefield campus and began that transition, managed through an unprecedented incident of avian influenza and delivered consolidated revenue of $1.2 billion and adjusted EBITDA of $187.5 million. As a result of the momentum generated this quarter we raised our adjusted EBITDA guidance for fiscal 2015. Jeff will provide further details later in the call. Let me start with avian influenza and Michael Foods. Recall our initial outbreak of AI occurred in April and throughout the quarter it was a challenge to determine the ultimate impact on [Fox]. In fact we had one instance of an announced positive test that was not corroborated by subsequent testing. In response to the AI outbreak our approach was to control costs as tightly as we could and work extremely closely with our entire supply chain from farms to production to customers in an effort to triage supply in a fair and reasonable manner. Our goal was for Michael Foods to emerge from AI as a better partner to our customers and with our business healthy and positioned for continued growth. While this continues to have moving pieces I believe we are working successfully towards that outcome. We took an aggressive position on cost management including a plan for low-end shift reduction, we suspended production of several product lines to focus remaining eggs on high-velocity items. We took several unauthorized price increases in cooperation with our customers. As a result of this cost management and close collaboration across Michael Foods, third-party supply chain and customer partners, the impact of AI on Q3 financial results is essentially mitigated. We set flock…

Thanks, Rob. Good morning. Before reviewing results I want to remind you of the components of each of four of our four segments. First Post Consumer Brands, includes Post Foods and MOM brands. Second Michael Foods group consists of the legacy Michael Foods businesses and the Dakota Growers Pasta business. Third Active Nutrition includes Premier, Dymatize and PowerBar. Fourth Private Brands include Attune Foods and Golden Boy. Starting with Consumer Brands, third quarter sales were $356.9 million. On a comparable basis sales increased approximately 1.4%. Post Food sales were down 2.7% and MOM Brand sales were up 6.8%. As expected Post Foods third quarter sales volumes were between first quarter and second quarter levels. On a sequential basis Post Foods saw increased average net pricing resulting from lower trade spending. When compared to the prior year quarter, sales volumes declined 2.4% while net pricing increased 0.8%. MOM brands had a strong quarter. Sales were up nearly 7% compared to a year ago driven by increased sales of Malt-O-Meal branded bags, licensed brands and private label. Volumes increased approximately 9% and net pricing declined approximately 2%. The net pricing decline resulted primarily from an unfavorable mix associated with higher private label volumes. Post Consumer Brands adjusted EBITDA was $90.1 million. Adjusted EBITDA benefited from a 2.9% decline in cost of sale per pound in the Post Foods business compared to the prior year period, primarily from favorable commodity price trends and from cost management initiatives. This was partially offset by an unfavorable Post Food sales mix associated with the continuing shift to larger pack sizes. Moving to Michael Foods Group, net sales were $564.7 million for the third quarter. On a comparable basis sales were up 0.9% over the prior year. As Rob mentioned the impact of avian influenza on the…

Thank you. [Operator Instructions] Our first question comes from the line of Tim Ramey of Pivotal Research.

Couple of things, it's difficult to picture exactly how Michael Foods sales were up only 0.9% in the quarter, I know that the outbreak didn’t impact a lot of the quarter maybe a third of it or so, can you give us any kind of sense of how the sales will work in the fourth quarter so that we can kind of better understand what margins might be doing there?

So we don’t give that level of guidance going forward, but directionally what we can tell you is that the issue is loss of volume increase in pricing and resulting expansion of margin, but we’re not -- we don’t go into that level of detail on our quarterly guidance.

And on Active Nutrition, I mean a pretty large delta year-over-year, I know that’s most likely coming from depressed results the year before, but can you put a little more color around that improvement the ’15 five versus five?

Sure, as we mentioned it really is the tale of two cities. I think we’ve used that phrase before and may need to get a new one. But the situation is that Active Nutrition, I mean the Premier Nutrition is growing quite rapidly north of 30% in volume and revenue and ahead of that in EBITDA driven by both velocities and expanded distribution. So it is lapping a relatively lower period the prior year not so much from a sales perspective, but from an EBITDA perspective because of the timing of prior year promotions. On the other hand Dymatize continues to be flat to last year. So all the growth of Premier is comping against the relatively low period of EBITDA last year resulting from Dymatize being flat and Premier being heavily promoted.

Our next question comes from the line of Andrew Lazar of Barclays.

Just a couple of things from me. First of Rob, you have been building back a Private Label business for the last couple of years. I think in a past slide though you're having a large Private Label and branded business specifically in the same category but it didn’t work out as well for what was there [indiscernible]. So I'm just trying to get a sense of is that a sort of a structure or dynamic that you would repeat? Or are you less worried about that maybe potentially than some investors may be?

I think understanding the answer to question requires really understanding the nature of the Post business model, which is for Post Holdings to be a holding company operating highly decentralized strong operating companies. So in that context the ability to manage a private brand business and a branded business within the same ownership structure is entirely consistent. Where I think some of the challenges are created it's an attempt to overly integrate the two routes to market or the two businesses in a manner that starts to create internal conflict, both from our route to market logistics all of the different capabilities that would be relevant in terms of attacking each opportunity. So I will answer that by saying that, on a disintegrated basis the holding company structure yes, we can do it and I think investors should not be overly concerned about the implications of that on a highly integrated structure I would be worried.

And at Ralcorp just remind me, I should know this, it was trying to become more integrated at least let's call it within sort of the surreal piece?

I would call it a hybrid.

And then with respect to Michael obviously the results were quite a bit better than at least we and I think most others have modeled, and I guess my concern there would be, did you get a sense that where the margin structure is there? Are we kind of entering sort of an overearnings period to some extent given the success in mitigating AI and some of the pricing actions that you have been taking that we should think about that going forward where perhaps this sort of a structural profile isn't necessarily sustainable?

Well I think we’re not entering our, we've not been in an over earning cycle, but we potentially have been in an over margin cycle. So we've been in a situation in which volume has been compressed and margins have expanded, but we would expect to return to a normalized level where volumes are expanding and margins are potentially, lower keep in mind on Michael we tend to think in terms of a penny profit rather than percentage margin. So we would expect the dollar level to be sustained at a lower margin structure.

And then last one from me would be, it may be too early but you'd mentioned I think on the last call that there could well be some incremental impact from AIs as we go into fiscal 2016. And I don't know whether you've got more clarity on that or if the mitigation efforts make that comment less relevant now or still as relevant as it was then. Any perspective there would be helpful?

Well the activities aimed to mitigating AI will certainly continue into fiscal 2016. We’re not in a position right now to quantify what that impact will be, but as we mentioned in the prepared remarks repopulation of the flocks is a process that will take through most of calendar 2016. So all of the dynamics that are in place now will continue through the bulk of calendar 2016.

Our next question comes from the line of Cornell Burnette of Citi.

Just wanted to dart back into private label and M&A opportunities, and looking at you guys in the past lot of the TL acquisitions that you did when you think about maybe Attune and Golden Boy seemed like they were things that were outside the center of the store and natural and organic and got you into some faster growing channels. So I wanted to kind of take the temperature on how you thought about if you look at maybe some of the old Ralcorp assets something that’s more center-of-the-store, it seems like you just have the less robust growth profile from a top perspective because obviously center-of-the-stores are doing well and you are saying earlier maybe it's not the best integrate of those assets with what you have currently in the portfolio and so maybe there is not as much cost synergy that can come out of it. So how do you balance that with maybe what you've been doing on an M&A front in private label thus far?

I think everything you said is accurate, but I think everything you said can be priced. So I think the equilibrium tool is what you pay for those assets and I think Post should be characterized as an opportunistic company. And if we think an asset can be priced attractively at a slower growth rate or a faster growth rate we would take an interest in it.

And then diving a little bit in Active Nutrition I know it's a smaller part of the portfolio but a good year-over-year performance there and I think you guys did a good job of explaining why. Couple of questions there, with the PowerBar deal I believe that the thought there that was for the most part it wasn't going to really contribute to earnings this year. Was that the case in the quarter and then going forward do you just expect things to get a little bit better because you start to get some of the cost savings as you move through the co-packing for that business?

The answer to both questions is yes. It was negligible in the quarter, and we expected the gradual increase as we realized those cost savings.

And then also on Dymatize, the understand there is that you are still kind of a using a co-packer for some portion of that business which is probably detrimental to margins there. What’s the timeline that you think you can move some of that Dymatize production back in house?

The timeline for moving it back in house is determined by an FDA review. The FDA has visited, they had essentially no comments on their review, but we’re in a waiting period to get the go ahead from them and that waiting period is entirely within their control.

And so when you bring it altogether, I mean over time what do you think is a realistic kind of operating or EBITDA margin, how do you like to give it go for that segment because kind of given the issues that you have at Dymatize and PowerBar seems like the margins here are still relatively low versus where they can be over time?

Well as we migrate increasingly towards a [co-man] model in this segment which we believe strategically is the right thing to do. We would expect an EBITDA margin structure in low teens, but a very cash conversion of EBITDA to free cash flow because that model inherently has essentially no capital behind it. So we would expect on a blended basis the lower EBITDA margin, but free cash flow entirely consistent with the balance of the businesses.

And then the last one for me is just obviously on cereal, you guys did very good in the quarter and obviously as you said the overall categories starting to look better with sales only down 1% in the quarter. Just wanted to get your take on maybe what do you think is driving some of the improvement in the category kind of on a sequential basis? And then as we go forward maybe over the next year, what’s your outlook that you can share with us on a category and then again for you guys internally in terms of sales?

Well to start with the obvious, we are cycling easier comps so that’s one thing. The leaders in the category seem to have reinvigorated some of their spending behind it and that seems to be paying off for the entire category. Within our business specifically, we focused on a sub-segment of the category with a few exceptions and that sub-segment seems to be quite strong with value consumers being the heart of the ongoing RTE category. So as we mentioned in our prepared remarks, we continue to feel good about our migration to value pricing and where we are in the overall segment.

Our next question comes from the line of Bill Chappell of SunTrust.

Just trying to understand the dynamics of force majeure as we look over the next few quarters, I mean will there be some time framework reverses will you have enough volume and so we see kind of a reversal of sales versus margin kind of an intra quarter?

So force majeure is really a different issue but the dynamic that will occur is as supply expands that the supply pricing relationship will normalize and any profit will stay roughly in line as margins come down.

So I mean there should be at some point and you're saying kind of six to nine months now supply normalizes is that the right way to look at it?

It's a bit longer than that, we’re calling it through 2016 so that’s 16 months.

And then switching gears on Dymatize, I just wanted to kind of clarify obviously you pulled out the sales still haven't recovered and I thought the year ago or over the past year the issue was just you had supply constraints and so you weren’t really able to meet the orders. Either the thought that those out of stocks or empty shows over that timeframe you’ve lost market-share and you can’t get it back, is that the best way to look at it, or it's going to take time to get back or there is still something else that I'm missing?

No, the sales have held up reasonably well, despite a series of operating miscues. The issue is more operational, we have the factory in Dallas that has the structural impediments operating as efficiently as it should and trying to work through those structural impediments has been a more arduous task than we expected it to be.

I think it was in sales or relatively flat with kind of depress quarter year ago and Dymatize had been running kind of double-digit, could you expect to get back double-digit?

So when last year we went from double-digit to flat and we’re still flat that’s correct, but they held up albeit losing their growth rate, the category continue to grow nicely and yes we expect if we can fix the operational issues that the brand should grow at the same or better rate growth as category.

And the last one for me, just make sure I understand on the commodities excluding eggs, kind of your outlook especially as you get into almonds and nuts over the kind of six to 12 months.

On balance is a pretty flat situation, but if you look internally the basket of commodities you got a lot of variability you rightly highlight almonds as one that is highly inflationary, but offset by a number of commodities going the opposite direction. So one of the nice things about the business as it currently stands as that we’ve got quite a few uncorrelated commodities that are resulting essentially a zero change year-over-year despite a great deal of internal volatility.

Our next question comes from the line of Jason English of Goldman Sachs.

I want to come back and build of Mr. Lazar's question on over earning in eggs. It sounds like you are confident from penny profit basis despite hitting record quarterly EBITDA on Michael Foods, that you are not over earning there. Can we start by just helping us understand what’s really driving the record level of EBITDA?

Keep in mind when we report Michael Foods now we also include Dakota in that. Michael Foods EBITDA was strong this quarter, I'm not actually sure it's a record quarter for Michael Foods, I don't believe it is. So I mean what’s driving it is, is what we talked about strong margin and penny profit performance as a result of very diligent focus on cost, pricing actions all the things we characterized in our prepared remarks, but I think it's probably not as strong a quarter on a standalone basis as it appeared because of the aggregation with Dakota. It is a very solid quarter, but I think it's one that we can repeat.

So is there any flaw looking at this quarter it's not tremendous on seasonality of your business. So looking this quarter which is really the first clean quarter with all your acquisitions in it and annualizing this number to get a cleaner read of what your underlying EBITDA is on an annualized basis?

We've given guidance for the balance of the year and we’ll give guidance in November for 2016. Every quarter has some nuance we expect a slightly softer quarter in RTE we expect a continued strong quarter in Michael Foods, strengthen the balance of the business. The quick answer is that we have modest seasonality as you rightly pointed out, you can interpolate some quarterly numbers from what we gave today and I think that you can build upon longer period of time that one quarter with what we given to draw some conclusions around the balance of the year and the annualization particularly if you include the fact that we only have five months of MOM in our current year guidance.

Yes, exactly, okay, sorry I'm drawing this out but let me layer on top of the little bit more now. Now that you've got -- you've been living with MOM, that initial synergy target that doesn't even start to build to next year.

I don't know that I like the characterization of living with MOM but go ahead.

The $50 million cost synergy number, do you still feel confident that are you seeing opportunity for more or where do we say now that you've owned the business for period of time.

We feel very good about the acquisition. We feel very confident on our ability to deliver the synergies. If and when we determine that the synergy number is a greater number, we’ll report that. But for now our position is a great deal of confidence and delivering what we've announced. So I think it is appropriate to look at the annualization of the MOM numbers plus synergies that’s the right way to think about MOM.

All right and then last question I'll close it out I promise. Those are cost synergies are you seeing any opportunity on revenue synergies related to trade spend reductions since you kind of both compete and almost owned the value to your outside of private label?

The competitive dynamic is so complicated that I think us and MOM coming together is one is not enough to change that markedly, we’re highly focused on the cost side of the equation.

Our next question comes from the line of Ken Zaslow of Bank of Montreal.

Two quick questions. One is, what actually exceeded your expectations and what drove the exceeding of expectations?

The biggest over performance was in ready-to-eat cereal, I think as we've moved into the integration with MOM, some of these things are obvious in retrospect but we’re by nature a very aggressive company and we were aggressive in M&A and aggressive in new product introduction as we moved into the integration with MOM one of the things we decided to do was highly focus the organization around cereal as a result a lot of extraneous activities fell away. I think that focus is essential to the go forward plan, and that has resulted in better performance across the cereal business both in terms of volumes and cost management.

Then my next question is excluding PowerBar you mentioned and obviously you mentioned MOM brand as well. Where are the other cost savings? And can you talk about the opportunities that you see in other parts of your portfolio, where you are in that just give us a little bit more color on that, that would be helpful?

Obviously the biggest one is in the integration of MOM and Post and taking the duplicative cost out of that combined organization. We have cost reduction as you highlight going underway with PowerBar but we've an ongoing cost reduction program in each of the individual businesses that has targeted 2% to 3% of cogs annually.

What about with the new organizational structure the co-CEO structure going away. There is a litany of opportunities throughout the organization, it would be helpful if, even if it kind of was a little bit anecdotal would be helpful to see if there's anything, again the MOM is very clear and is very open. But the other pieces of it seems more settled and any sort of color on that would be greatly helpful?

I am not sure what you mean by the co-CEO structure going away but the -- we have opportunities to reduce cost over long-term and the holding company as we get to more of a stabilization rate we pay a very high level of cost around things like becoming SAS compliant. When you do 10 acquisitions in three years and none of them are SAS compliant coming on board there is a considerable expense investment in making those businesses SAS compliant. So that’s one anecdote, but there is an ongoing cost reduction program in each business again. But the big ones in terms of fundamentally changing the margin structure of the individual business segment or the overall holding company would be the Post MOM integration.

Our next question comes from the line of John Baumgartner of Wells Fargo.

I'd like to ask about structural changes in the egg industry, in terms of any changes we can expect going forward as we emerge from the influenza outbreak. Maybe to the extent that some of these smaller egg producers exist, and maybe don't come back financially, what's the opportunity or interest level for Michael -- maybe go out and consolidate and bring more of this production in house going forward?

Well in many situations like this the party that goes into the incident the strongest tends to come out stronger and I wouldn’t be surprised if on the other side of this event you do some of the weaker participants in the marketplace not return, we don’t know that, we’re in the early stages of reviewing the landscape following this and frankly we want to be very cautious because we don’t know what’s going to happen in the fall. But I think your intuition is correct that coming out of this stronger providers who performed exceptionally well during this will stand to gain where exactly that come from will remain to be seen. I think structural changes we all have to look at geography, we all have to look at bio security, we all have to look at flock size. Everything that we’ve talked about before in terms of how a threat like this can change our behavior going forward and we are actively doing that analysis.

And then sticking with Michael, is there a way that you think about the potato and cheese businesses going forward, in terms of how strategic those are for you? If they are strategic, any opportunity to generate consistent growth, better growth, in cheese or potatoes?

So cheese is a nicely attractive cash generating business and we view ourselves as a business driven by free cash flow more than EPS. So while it is not a large business within the overall holding company is a nice steady contributor to free cash flow and in order for it to become more strategic would likely have to involve M&A event. Potatoes while we had a bit of softer corner for potatoes, we see that as a form and a product that has lot of growth potential inherent to it as the food service channel makes a transition from raw potatoes to further process potatoes not unlike the transition that occurred with eggs. So we view potatoes as more long-term strategic than cheese because there are some natural growth opportunities contained within the business, but on -- at the same time there are also a number of M&A opportunities that could emerge with potatoes.

In terms of just acquiring smaller brands?

Correct.

Our next question comes from the line of Brian Hunt of Wells Fargo.

First question is, when I look at the egg business, there's definitely some rumblings of imports starting to filter in. Is that something you all are evaluating? If not, why couldn't you add to your volumes with importation of eggs?

We will react to that as it develops. So far it's been relatively modest, but as it develops we’ll certainly look at that.

And then my next question is, sticking with eggs, given how you performed during the quarter and your ability to move product mix around, do you all feel like you gained share on the food service side relative to your various competitor during the period?

Difficult to say, I think what we can say is that we gained a great deal of confidence from our customers, I think we performed very well, I think you have to give a tip of the hat to the Michael Foods team for executing very closely with its customer base and making sure that we managed supply as effectively as we could, whether we actually gain share or not is hard to say given the shrinking volumes the share was gained or loss. I think the question about the ability to gain share in the future is accurate or in cycle. But whether we actually have gained share or not is very difficult to say.

And my last question, when I look at the silos of segment that you have under the holding company you know Post on the cereal side obviously has great scale. But when I look at Michael's Active Nutrition and private brands, where ideally do you think that the company needs to build incremental scale. And would you all along those lines consider adding another silo to the business.

Well certainly active nutrition and private brands are currency subscale I think Michael is a full scale business and one of the best go-to-market teams in food service. So I think we have opportunities to further enhance our food service business, but that’s already at scale level. So active nutrition and private brands are where transformational M&A is likely. In terms of adding another silo I think that our first blush is to look at opportunities that are synergistic and had a higher marginal return on capital, but as I responded to the comment about center store opportunities, we’re an opportunistic organization and if the opportunity to add a silo at an attractive price emerges we would certainly consider it.

Ladies and gentlemen at this time we've reached the allotted time for questions. I would now like to turn the floor back over to Mr. Rob Vitale for any additional or closing remarks.

Again everyone thank you. We’re very pleased with the quarter. We appreciate everybody's ongoing support. And look forward to talking to you again next quarter.

Thank you Ladies and gentlemen. This does conclude today's Post Holdings' third quarter 2015 earnings conference call. You may now disconnect and have a wonderful day.