Welcome to Post Holdings Fourth Quarter and Fiscal Year 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. The dial-in number is 800-585-8367 and the passcode is 62412257. 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 fourth quarter and fiscal year. 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, and thank you all for joining us. As you have seen from our press release, we finished 2015 with a strong fourth quarter and we are encouraged by our prospects for 2016. We expect 2016 to build upon the momentum we have gained and enable us to attractively grow adjusted EBITDA despite incremental investments in brand building and modestly higher net commodity costs. As for the quarter, each business unit, except Dymatize achieved organic growth in adjusted EBITDA. We recorded sales and adjusted EBITDA of $1.3 billion and $193.1 million respectively. Jeff will provide more color around the results. We enter 2016 having spent two years building a portfolio that provides a balance of diversification, organic growth and M&A optionality. Each of our business units, including ready-to-eat cereal has a strategy to deliver organic growth and each business unit has opportunities for more dramatic growth via M&A. Together, the business units complement each other in a manner that enables aggressive balance sheet management to fuel the growth and leverage the return potential. Our cereal business is in the midst of the integration between legacy Post Foods and legacy MOM Brands. Combined our share of the RTE cereal market is now 18% and 20.7% in dollars and volume respectively. Thus far, we have met each milestone towards a successful integration. Our next key milestone is our conversion this spring to a single ERP system. Operating from a single ERP system becomes the enabling aspect in identifying and executing synergies beyond our initial estimate of $50 million. We are highly confident in delivering the announced synergies by the end of fiscal 2017 or earlier. The cereal category has continued to show improvements in its rate of decline. While we would certainly like to be discussing category growth, the first step…

Thanks, Rob. Good morning. Starting with Post Consumer Brands, fourth quarter sales were $442.5 million. On a comparable basis, sales increased approximately 0.2%, driven by increased sales of branded bags and private label, plus four additional days at MOM Brands. Growth was offset by distribution declines, primarily for Honey Bunches of Oats. Volumes were up 2.5%, while net pricing decreased 2.2% mostly from unfavorable mix. Post Consumer Brands adjusted EBITDA was nearly $100 million for the quarter. Adjusted EBITDA benefited from lower advertising and consumer spending and a 2.4% decline in cost of sale per pound in the Post Foods business. This was driven by favorable commodity price trends and from cost management initiatives. Moving to the Michael Foods Group, net sales were $591.4 million for the fourth quarter, a decline of 0.7% compared to the prior year. Egg volumes were down 25% in line with our estimate of AI supply losses. However, Egg revenues were up 1.1% behind AI related price increases and favorable product mix. Potato volumes declined approximately 13%. This was primarily driven by lower food service sales resulting from exiting low margin business. We expect to shift capacity to higher margin customers in fiscal 2016. Pasta volumes were up 13.5%, primarily related to increased volumes in the food ingredient channel. Cheese volumes declined a 11.3% resulting from discontinued low margin product lines and declines in private label. Michael Foods Group adjusted EBITDA was $90 million and benefited from increased profitability per pound in egg, potato and pasta. Turning to Active Nutrition, sales were $136.2 million. On a comparable basis, sales increased less than 1% as lower sales of Dymatize and PowerBar, mostly offset the greater than 50% growth at Premier. Premier sales performance was driven by increased distribution and organic growth in the club channel. Dymatize…

Thank you. [Operator Instructions] Our first question comes from the line of Bill Chappell of SunTrust.

Good morning, thanks. Two questions. I guess first on, Dymatize, I'm not sure how much you’ll give me. But when you bought it, it had kind of mid-30s EBITDA. With the changes you’re making to the manufacturing, can you get back to that number or is it permanently kind of a lower number as you’ve chose to kind of outsource it going forward?

So when we bought Dymatize, it had a historical 28 and then anticipated going into the mid-30s in the next year. We do not expect to get back to 28 any time soon as we migrate to this model. We expect it to be in the low-teens off a base of closer to 120 million to 150 million position for growth, but certainly it will be a while before we get back to the acquisition case.

Okay. And then I think you mentioned that you de-levered faster than you expected, maybe can you help us understand what happened versus your expectations that help I mean in terms of the cash flow coming in and the leverage ratio where we are?

The increase in EBITDA certainly contributed to it. So as a multiple, that had a significant effect on the ratio of de-leveraging, but we also generated a considerable amount of free cash flow in part because of working capital monetization.

Okay. So working capital, can you tell us what source it was for the full year?

It was approximately $100 million sourced for the year.

Great. Thanks so much.

Our next question comes from the line of Tim Ramey of Pivotal Research Group.

Good morning. Thanks a lot. If I missed it, I’m sorry, but did you say what cash taxes were in the fourth quarter?

We didn’t say what cash taxes were in the fourth quarter, but for the year, it's in the same neighborhood we've commented before, about $90 million. And then going forward for ‘16, at the midpoint of our range, we'd estimate it at about 105 million and then any increment or decrement from that midpoint, you’d model at about 35%.

Great. And just it's difficult as you might imagine to think about active nutrition with Premier growing so rapidly, and Dymatize retrenching. Can you say anything about kind of the sequencing of how that flows through in terms of just the top line for 2016?

So, we would expect the premier growth rate to continue through 2016 and that the Dymatize sales will be negative on a quarter-to-quarter comp because of the shrink out of private brands and the elimination of many of the non-core SKUs. So through 2016, it will be a negative comp.

Okay. But bottom line, anyway to kind of net those together to give us some sense on the model?

Low single-digits growth.

Okay. And then just also kind of sequencing on the consumer brands side, I think typically the first fiscal quarter for the calendar is your peak sales period, I assume that it continues and maybe even accelerates a bit with MOM brands in the mix.

That's correct. On the consumer brands side.

Okay. Terrific. That's it for me. Thanks.

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

Thank you, good morning. Rob, I’d like to ask in terms of the guidance for fiscal ‘16, how much of an EBITDA benefit are you assuming from MOM brand synergies coming through?

We’re not going to respond to the guidance on that granular level. What we have articulated is that we have meaningful synergies in the year, we have 50 million over two years, we have some incremental costs around brand building and some higher net commodity costs from sugar and nuts, but we’re not going to break down the numbers into that degree of specificity because of all the various ebbs and flows that occur throughout the year.

Okay. And I think I had heard maybe some upside to that 50 million target as well, is that correct?

Well, what we commented on is that with the conversion to a single ERP, we are thus in a better position to start expanding that target into areas around logistics, namely some joint shipping, joint warehousing, which we expect to be a promising source of synergies. We have been, as I think we’ve made clear, cautious in our synergy estimate thus far and we expect it to expand.

And the incremental synergies, would you expect it to fall in the fiscal ‘16 to fiscal ‘17 timeframe as well as from a 2018, 2019 type of horizon?

We certainly wouldn't expect much to occur in the fiscal ‘16 P&L. They would -- the actions would be taken towards the end of fiscal ‘16 and occur in the 2017 P&L and beyond.

Okay. And then just a follow-up in terms of active nutrition, looking at Premier, I mean the sales velocity there, maybe it's arguably the best in the category, why not move that brand more aggressively and more broadly in terms of distribution across FDM as opposed to just really in the club channel?

We agree and we have plans to do just that in tandem with our PowerBar expansion.

Okay, great. Thank you.

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

Good morning, guys. This is Cornell with just a few questions. First, I wanted to know just when you look back at Michael Foods and what your internal expectations were for that business at the beginning of the year, is it fair to say that despite AI that Michael’s Foods basically exceeded maybe where you were at in the beginning of the year in terms of EBITDA.

Modestly. If you go back to our acquisition case, it almost lands exactly on our acquisition case for 2015.

And can you talk about kind of what were the drivers of this. I mean, I felt like in the quarter, it looks like your egg prices were up about 26%, which is really strong and is it just kind of the pricing that you're able to get, which we’re really able to kind of mitigate all of the impacts of AI?

That's exactly the answer. If you’ve looked at the plan for 2016 or again 2015, while the end result was exactly in line with our acquisition case, the number of levers that resulted in that outcome were substantially different than we expected in that volumes shrunk dramatically because of AI and price increased dramatically.

And when we think about kind of modelling the business going forward next year, is it kind of the thought that at least for most of the year, you’re still looking at steep volume declines related to the loss of flock, but very strong pricing. Maybe, perhaps until we get in the back half of the calendar year and egg supply starts to replenish, is that the way that we should think about this?

That's correct. We will continue to be in a unusual post-AI scenario through part of the year. Jeff, you want to comment on repopulation.

It’s still consistent with what we've commented before. We expect the repopulation to take until the end of calendar ‘16 to be completely back online, and we would expect to get progressive repopulation between now and then. For our internal farms, we started that repopulation, our external suppliers are trailing a little bit behind us.

And one more just on actually Cereal, now that you've had MOM for more than a quarter, and you look at the manufacturing footprint of legacy Post and MOM businesses, just was wondering how you’re thinking about potential capacity rationalizations and are there any opportunities that you see there?

There are opportunities to optimize capacity and the difference between optimize and rationalize is we tend to think a rationalize is shutting a plant and optimize as maximizing the utility of a particular line. So when you look at the capacity utilization line by line, the opportunity has really become more significant by optimizing production along common lines rather than by the elimination of bricks and mortar in any one facility. So, yes, we will see cost reduction, but it may not be the result of plant closures, more the result of plant line optimization.

Okay. But it sounds like you haven't really done anything in this regard to date and so going forward, is that something that's embedded in that $50 million cost savings figure or are these potential opportunities something that could be incremental to that?

Well, it is embedded in the 50 million and we expect there to be opportunities to expand it. So a little bit of both.

Okay. Sounds great. Thanks a lot guys.

Thank you.

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

Good morning and thank you for taking my questions. First, if I look at your Nielsen data, and the cereal volume, it looks like it's tracking nicely higher than what you reported for the quarter. Can you talk about what's going over there with inventories in this space? Are you seeing the same difference in the data, as well as do you see any changes for planned promotions for calendar ‘16?

We certainly see the same data, and there is obviously ebbs and flows with retail inventory that creates some disconnection between the Nielsen consumption and the shipments that will flow through the quarter and we’ve got that baked into our planning. With respect to trade promotions going forward, I think the likely scenario is that we will continue what has been working around fewer, deeper events.

Great. My next question is around the Michael's business, there has been increased announcements and it seems like it's gaining momentum around cage-free and the movement in the right direction. I was wondering if you could describe the difference in cost and maybe what capital requirements may be needed to migrate production in that direction.

First of all, I think it’s important to understand that Michael is the largest cage-free producer in the country. So we have a significant commitment to cage-free. The capital costs are about double the cost of various other forms of housing. The ongoing cost vary with a number of different scenarios, but the capital costs are considerably higher. And we look to make this migration to cage-free in tandem with our customers over time.

All right. Then my last question is, you made a comment about growth in all the businesses supplemented with acquisitions which could be significant. It sounds a little different from maybe the comments you made regarding acquisitions in the last couple of conference calls. And my interpretation is you are maybe looking at smaller acquisitions across all businesses instead of a single blockbuster acquisition. Is that a fair interpretation or maybe how would you describe how you are analyzing opportunities going forward?

I don't think that’s an entirely fair interpretation. We have a decision tree that now includes a much more substantial business than it included two years ago. So where two years ago to really move the meter we needed to make more of the blockbuster acquisition, now we have the luxury of having opportunities to build within the portfolio. On a tactical basis, it has a very high marginal return to that investment. That being said, we continue to look for transformational opportunities and would pursue them if the right one came along. We are not shying off of either.

And you are still limiting yourself to 6 times leverage including highly visible synergies?

Yes, I think we've actually suggested closer to 5.5.

All right, that’s all my questions. Thanks for your time.

Thank you, Bryan.

And happy Thanks Giving.

You too.

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

Thanks. Just in terms of – sorry, just a follow-up on the private brands business. Either you are seeing -- you talked about there were some positive pricing on the nut butter side, but I am just trying to understand what you're seeing as we go into next year. Are you seeing prices come down, are the gaps improving and you are taking some share just trying to get a better sense there?

So it’s a different story between peanut butter and the other nut butters. The cost environment is relatively flat in the peanut butter market and we are continuing to gain share in that segment as we have wins at retail. On the tree nut butter, mostly almonds, is a very significant cost increases mostly a result of the drought in California. So we are taking price there and starting to see some elasticity as the prices get pretty high for almond butter.

So you are taking the pricing, it’s kind of in line with the category?

Correct.

Okay. And then just last thing on, I know we keep going back to the egg business, but are you seeing any change in just demand as the overall pricing has gone that much higher? I mean are you forecasting kind of volumes to decline just from an organic basis as we move into next year.

We've seen some modest demand destruction in the ingredient business where companies have the ability to take eggs out of their ingredients or out of their recipes. So we have seen very modest if any at retail or in food service, but some in ingredients. And then I'm sorry, Bill, what was the second part of your question?

I was just trying to understand if that was anything in your forecast going for the next year if you are expecting –

Yeah, certainly we’ve factored in all available information into that forecast.

Got it. And happy Thanksgiving as well.

Thank you.

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

Thanks for the follow-up.

Sure.

Just wanted to come back to Michael for a second. In terms of McDonald's expanding breakfast, the day part and some of the other moves across the food service industry favoring eggs, how do you see producers meeting this demand? And how do you see new business wins potentially accruing to Michael going forward?

Well, we've always viewed Michael as an opportunity to deploy internal capital. We tend to talk about M&A as our main deployment of capital but within Michael we have internal growth opportunities that capital could be used to fund as we put more flocks on the ground both internally and externally. So certainly there will be a need to increase supply and I'm speaking separately from AI separately. [ph] It creates the need to repopulate, but beyond that as we see additional demand and the migration to cage-free, there will be opportunities with the corrective returns to invest in Michael internally.

And is it fair to say the growth investment in your CapEx guidance for this year that flows substantially towards Michael?

It depends if you – yes, and unless you include -- there are some capital investments required to handle the integration between Post and MOM that we’ve characterized this growth.

Okay. And then just as your egg supply normalizes through the end of I guess calendar ‘16, how likely is that you can kind of continue to tilt your business towards higher-margin customers with that incremental supply or should we expect the incremental supply flows back towards kind of lower margin food service customers. How about the customer mix going forward?

Well, we seek to invest in the highest marginal returns, so we will invest capacity first in the highest marginal opportunities. So we would skew it to the more value-added products.

Great, I think contractually in terms of with the – okay, great. Thank you.

Thank you.

[Operator Instructions] Our next question comes from the line of Chris Growe of Stifel.

Hi, good morning.

Hey, Chris.

Hey, Chris.

Hi. I just had two quick ones and really kind of follow-ons to earlier questions. I wanted to ask with in relation to the egg business. How much are we seeing the volume changes with elasticity versus maybe plant rationalization? I was trying to get a sense of what you can kind of build back potentially going forward and then are you prioritizing your sales nuance by margin or more by customers as you look at the egg business?

Well, the volume decline is almost exactly linear with the loss of supply, so the elasticity with some very limited exceptions in ingredients has been modest and we prioritize mostly by customer.

Okay. And then can I ask a question in relation to the active nutrition division? How do you foresee the rebuilding of profitability in that division as you move to the co-manufacturing model? Is there – should we expect it to be pretty linear by quarter or does it get better in the second half versus first half, just curious how that will play out throughout the year.

No, it will be nonlinear. It will increase throughout the year.

Okay. Would there be operating losses early in the year?

We don't anticipate operating losses, but we don’t anticipate meaningful income either. When I was speaking specifically with respect to Dymatize.

Okay, got it. Thanks very much.

Thank you.

Our next question comes from the line of Tim Ramey with Pivotal Research Group.

Just a couple more on Michael. It’s interesting to even talk about demand destruction because it seems like there is an awful lot of pressure on incremental demand for breakfast all day, McDonald’s is not your customer but presumably that ripples through to other QSRs. And we haven’t seen – other than the Willamette acquisition, we haven’t seen a lot of new capital deployed there. Do you think of that as greenfield capital or are there other businesses like Willamette that are potential acquisition targets?

There is plenty of acquisition targets in the segment before going to a greenfield approach, but we are also not shying away from looking at greenfield opportunities.

Is it fair to say we are going to see one or the other this year?

I wouldn't want to take a position on anything that near end, but I think it is fair to say longer-term we will see one or both.

Okay, thank you.

And we have time for one more question. Our final question will come from the line of Kenneth Zaslow of BMO Capital Markets. Kenneth, your line is open, make sure you are not on mute.

Hi, this is Vishal Patel in for Ken. I just have one quick question. So you had mentioned that you are in a more advantaged position within the egg industry post AI, can you provide any update on if that includes any customer wins or if like your share of the market has increased? Thanks.

No, it has not increased because frankly everyone in the category is selling everything that they can make. So when I make that comment, it’s more a subjective comment about the conduct and the navigation of the AI crisis more than a quantitative statement on where we stand today.

Okay, thanks. I appreciate it.

I would now like to turn the call back over to Rob Vitale for any additional or closing remarks.

Well, thank you again everyone for attending the call. We recognize that this morning has become busy for all of you. So thank you. We look forward to next quarter and have a very nice Thanksgiving.

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