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Item 1. Financial Statements

2024-11-26 compared with 2024-08-28 · 213 added, 116 removed, 673 unchanged (33% of the section changed)

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CONDENSED STATEMENTS OF CONSOLIDATED INCOME

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

Dollars in millions, except per share data 2024 2023 2024 2023

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Other special project costs (A)

10.7 6.8 17.8 6.8

Loss (gain) on divestitures – net 260.8 13.8 260.8 12.6

Other operating expense (income) – net ( 1.6 ) 31.6 ( 7.1 ) 30.7

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Interest expense – net ( 98.7 ) ( 35.1 ) ( 199.1 ) ( 67.2 )

Other income (expense) – net ( 3.1 ) ( 33.0 )

Income Before Income Taxes 246.0 238.4

Other debt costs (A)

— ( 19.5 ) — ( 19.5 )

Other income (expense) – net (A)

( 4.2 ) 5.1 ( 7.3 ) ( 27.9 )

Income (Loss) Before Income Taxes 66.8 249.4 312.8 487.8

Income tax expense 91.3 54.5 152.3 109.3

Net Income $ 185.0 $ 183.6

Net Income (Loss) $ ( 24.5 ) $ 194.9 $ 160.5 $ 378.5

Earnings per common share:

Net Income $ 1.74 $ 1.79

Net Income – Assuming Dilution $ 1.74 $ 1.79

Net Income (Loss) $ ( 0.23 ) $ 1.91 $ 1.51 $ 3.70

Net Income (Loss) – Assuming Dilution $ ( 0.23 ) $ 1.90 $ 1.51 $ 3.69

(A) Includes certain divestiture, acquisition, integration, and restructuring costs (“special project costs”).

For more information, see Note 5:

Special Project Costs and Note 6:

Reportable Segments.

Special Project Costs, Note 6:

Reportable Segments, and Note 8:

Debt and Financing Arrangements.

See notes to unaudited condensed consolidated financial statements.

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CONDENSED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

Dollars in millions 2024 2023 2024 2023

Net income $ 185.0 $ 183.6

Net income (loss) $ ( 24.5 ) $ 194.9 $ 160.5 $ 378.5

Other comprehensive income (loss):

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Available-for-sale securities activity, net of tax 0.4 ( 0.2 ) 0.4 ( 0.4 )

Total Other Comprehensive Income 2.4 10.2

Comprehensive Income $ 187.4 $ 193.8

Total Other Comprehensive Income (Loss) ( 6.8 ) ( 11.5 ) ( 4.4 ) ( 1.3 )

Comprehensive Income (Loss) $ ( 31.3 ) $ 183.4 $ 156.1 $ 377.2

See notes to unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS

Dollars in millions July 31, 2024 April 30, 2024

Dollars in millions October 31, 2024 April 30, 2024

Current Assets

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Other intangible assets – net 6,779.6 7,255.4

Assets held for sale – net 394.3 —

Other noncurrent assets 159.3 154.2

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Noncurrent operating lease liabilities 117.8 143.5

Liabilities held for sale 105.5 —

Other noncurrent liabilities 159.1 164.1

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CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS

Three Months Ended July 31,

Six Months Ended October 31,

Dollars in millions 2024 2023

Operating Activities

Net income $ 185.0 $ 183.6

Adjustments to reconcile net income to net cash provided by (used for) operations:

Net income (loss) $ 160.5 $ 378.5

Adjustments to reconcile net income (loss) to net cash provided by (used for) operations:

Depreciation 145.2 103.2

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Share-based compensation expense 15.8 13.7

Loss (gain) on divestitures – net 260.8 12.6

Deferred income tax expense (benefit) 23.9 ( 16.3 )

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Short-term borrowings (repayments) – net ( 121.6 ) —

Proceeds from long-term debt — 3,485.0

Capitalized debt issuance costs — ( 28.9 )

Quarterly dividends paid ( 226.5 ) ( 213.2 )

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CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDERS’ EQUITY

Three Months Ended July 31, 2024

Six Months Ended October 31, 2024

Dollars in millions Common

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Balance at May 1, 2024 106,194,281 $ 26.5 $ 5,713.9 $ 2,188.1 $ ( 234.6 ) $ 7,693.9

Net income 185.0 185.0

Net income (loss) 185.0 185.0

Other comprehensive income (loss) 2.4 2.4

Comprehensive income 187.4

Comprehensive income (loss) 187.4

Purchase of treasury shares ( 22,748 ) — ( 3.2 ) 0.6 ( 2.6 )

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Balance at July 31, 2024 106,408,530 $ 26.6 $ 5,715.2 $ 2,259.9 $ ( 232.2 ) $ 7,769.5

Three Months Ended July 31, 2023

Net income (loss) ( 24.5 ) ( 24.5 )

Other comprehensive income (loss) ( 6.8 ) ( 6.8 )

Comprehensive income (loss) ( 31.3 )

Purchase of treasury shares ( 972 ) — 0.3 — 0.3

Stock plans 8,972 — 8.2 8.2

Cash dividends declared, $ 1.08 per common share

( 113.6 ) ( 113.6 )

Balance at October 31, 2024 106,416,530 $ 26.6 $ 5,723.7 $ 2,121.8 $ ( 239.0 ) $ 7,633.1

Six Months Ended October 31, 2023

Dollars in millions Common

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Balance at May 1, 2023 104,398,618 $ 26.1 $ 5,371.8 $ 2,132.1 $ ( 239.2 ) $ 7,290.8

Net income 183.6 183.6

Net income (loss) 183.6 183.6

Other comprehensive income (loss) 10.2 10.2

Comprehensive income 193.8

Comprehensive income (loss) 193.8

Purchase of treasury shares ( 2,410,863 ) ( 0.6 ) ( 132.1 ) ( 242.9 ) ( 375.6 )

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Balance at July 31, 2023 102,132,673 $ 25.5 $ 5,242.1 $ 1,964.8 $ ( 229.0 ) $ 7,003.4

Net income (loss) 194.9 194.9

Other comprehensive income (loss) ( 11.5 ) ( 11.5 )

Comprehensive income (loss) 183.4

Purchase of treasury shares ( 3,139 ) — ( 0.4 ) — ( 0.4 )

Stock plans 25,067 — 11.1 11.1

Cash dividends declared, $ 1.06 per common share

( 108.6 ) ( 108.6 )

Balance at October 31, 2023 102,154,601 $ 25.5 $ 5,252.8 $ 2,051.1 $ ( 240.5 ) $ 7,088.9

See notes to unaudited condensed consolidated financial statements.

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In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included.

Operating results for the three months ended July 31, 2024, are not necessarily indicative of the results that may be expected for the year ending April 30, 2025.

Operating results for the six months ended October 31, 2024, are not necessarily indicative of the results that may be expected for the year ending April 30, 2025.

For further information, reference is made to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended April 30, 2024.

Recently Issued Accounting Standards

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses .

ASU 2024-03 will provide investors with more decision-useful information about an entity’s expenses by improving disclosures on income statement expenses.

The amendments in this ASU will require public business entities to disclose disaggregated information about specific categories underlying certain income statement expense line items.

It will be effective for our annual period beginning May 1, 2027, and interim periods beginning May 1, 2028, with the option to early adopt at any time prior to the effective dates on either a prospective or retrospective basis.

We do not anticipate any impact to our financial statements upon adoption and are currently evaluating the impacts of the standard on our disclosures.

In March 2024, the U.S.

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however, we do not anticipate any impact to our financial statements upon adoption and continue to evaluate the impacts on our disclosures.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures .

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures .

ASU 2023-09 will improve the transparency and decision usefulness of income tax disclosures to better assess how operations and related tax risks affect tax rates and future cash flows on an interim and annual basis.

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(“Hostess Brands”).

The total purchase consideration in connection with the acquisition was $ 5.4 billion, which reflects an exchange offer of all outstanding shares of Hostess Brands common stock at a price of $ 34.25 per share, consisting of $ 30.00 in cash and 0.03002 shares of our common shares, based on the closing stock price on September 8, 2023, that were exchanged for each share of Hostess Brands common stock as of the transaction date.

common shares, based on the closing stock price on September 8, 2023, that were exchanged for each share of Hostess Brands common stock as of the transaction date.

The purchase price included the issuance of approximately 4.0 million of our common shares to Hostess Brands’ shareholders, valued at $ 450.2 , as discussed in Note 16:

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In addition, we paid $ 3.9 billion in cash, net of cash acquired, and assumed $ 991.0 of debt from Hostess Brands and $ 67.8 of an other debt-like item, reflecting consideration transferred for the cash payment of Hostess Brands’ employee equity awards.

New debt of $ 5.0 billion was borrowed, consisting of $ 3.5 billion in Senior Notes, an $ 800.0 senior unsecured delayed-draw Term Loan Credit Agreement (“Term Loan”), and $ 700.0 of short-term borrowings under our commercial paper program to partially fund the transaction and pay off the debt assumed as part of the

For additional information on the financing associated with this transaction, refer to Note 8:

Debt and Financing Arrangements.

Hostess Brands is a manufacturer and marketer of sweet baked goods brands including Hostess ® Donettes ® , Twinkies ® , CupCakes , DingDongs ® , Zingers ® , CoffeeCakes , HoHos ® , Mini Muffins , and Fruit Pies , and the Voortman ® cookie brand.

In addition to its headquarters in Lenexa, Kansas, the transaction included six manufacturing facilities located in Emporia, Kansas;

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and Arkadelphia, Arkansas, a distribution facility in Edgerton, Kansas, and a commercial center of excellence in Chicago, Illinois.

The transaction was accounted for under the acquisition method of accounting, and accordingly, the results of Hostess Brands operations, including $ 333.7 in net sales and $ 50.8 in operating income, are included within the Sweet Baked Snacks segment for the three months ended July 31, 2024.

The operating income for the three months ended July 31, 2024, excludes special project costs related to transaction and integration costs recognized within the segment.

The transaction was accounted for under the acquisition method of accounting, and accordingly, the results of Hostess Brands operations, including $ 315.5 and $ 649.2 in net sales, and $ 210.0 and $ 159.2 in operating loss, are included within the Sweet Baked Snacks segment for the three and six months ended October 31, 2024, respectively.

The operating loss for the three and six months ended October 31, 2024, includes a $ 260.8 pre-tax loss on the Voortman business disposal group classified as held for sale and excludes special project costs related to transaction and integration costs recognized within the segment.

For additional information, refer to Note 4:

Divestitures.

The purchase price was preliminarily allocated to the underlying assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition on a provisional basis.

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Certain estimated fair values for the acquisition, including goodwill and income taxes, are not yet finalized.

The purchase price was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our analysis of the fair values at the date of the acquisition during the one-year measurement period, as permitted under FASB Accounting Standards Codification (“ASC”) 805, Business Combinations .

The purchase price was preliminarily allocated based on information available at the acquisition date and is subject to change as we complete our

analysis of the fair values at the date of the acquisition during the one-year measurement period, as permitted under FASB Accounting Standards Codification (“ASC”) 805, Business Combinations .

As a result of the acquisition, we recognized a total of $ 2.4 billion of goodwill within the Sweet Baked Snacks segment.

Of the total goodwill, $ 196.6 was deductible for tax purposes at the acquisition date, of which $ 181.3 remains deductible as of July 31, 2024.

Of the total goodwill, $ 196.6 was deductible for tax purposes at the acquisition date, of which $ 175.8 remains deductible as of October 31, 2024.

Goodwill represents the value we expect to achieve through the implementation of operational synergies and growth opportunities as we integrate Hostess Brands into our Company.

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Hostess Brands’ results of operations are included in our condensed consolidated financial statements from the date of the transaction within our Sweet Baked Snacks segment.

If the transaction had occurred on May 1, 2022, unaudited pro forma consolidated results for the three months ended July 31, 2023, would have been as follows:

Three Months Ended July 31, 2023

If the transaction had occurred on May 1, 2022, unaudited pro forma consolidated results for the three and six months ended October 31, 2023, would have been as follows:

Three Months Ended October 31, 2023 Six Months Ended October 31, 2023

Net sales $ 2,294.1 $ 4,453.9

Net income 162.5

Net income per common share – assuming dilution $ 1.52

Net income (loss) 183.4 345.9

Net income (loss) per common share – assuming dilution 1.72 $ 3.25

The unaudited pro forma consolidated results are based on our historical financial statements and those of Hostess Brands and do not necessarily indicate the results of operations that would have resulted had the acquisition been completed at the beginning of the applicable period presented.

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The unaudited pro forma consolidated results do not give effect to the synergies of the acquisition and are not indicative of the results of operations in future periods.

On October 22, 2024, we entered into a definitive agreement to sell the Voortman business to Second Nature Brands (“Second Nature”).

We expect the transaction to close during the third quarter of 2025, subject to customary closing conditions.

The transaction includes products sold under our Voortman brand, inclusive of certain trademarks, a leased manufacturing facility in Burlington, Ontario, and approximately 300 employees who support the business.

Under our ownership, the Voortman business generated net sales of approximately $ 65.0 in 2024, which represents a partial year of net sales reported in the Sweet Baked Snacks segment results following the acquisition on November 7, 2023.

The transaction is valued at approximately $ 305.0 , subject to a working capital adjustment.

As of October 31, 2024, the disposal group met the criteria to be classified as held for sale, and as a result, a valuation allowance was established to reflect the fair value of the disposal group less costs to sell, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The valuation allowance was included within assets held for sale – net in the Condensed Consolidated Balance Sheet and the estimated pre-tax loss on the disposal group was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

The following table summarizes the net assets held for sale at October 31, 2024, inclusive of a valuation allowance, reflecting fair value less costs to sell.

October 31, 2024

Assets held for sale:

Inventories $ 8.3

Property, plant, and equipment – net 34.1

Operating lease right-of-use assets 8.4

Goodwill 251.7

Other intangible assets – net 352.6

Valuation allowance ( 260.8 )

Total assets held for sale $ 394.3

Liabilities held for sale:

Other current liabilities $ 1.8

Deferred income taxes 95.3

Noncurrent operating lease liabilities 7.5

Other noncurrent liabilities 0.9

Total liabilities held for sale 105.5

Net assets held for sale $ 288.8

On January 2, 202 4, we sold the Canada condiment business to TreeHouse Food s, Inc.

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Under our ownership, these brands generated net sales of $ 43.8 in 2024, which were included in the International operating segment.

Final net proceeds from the divestiture were $ 25.3 , inclusive of a working capital adjustment and cash transaction costs .

We recognized a pre-tax loss of $ 5.7 during the third quarter of 2024.

On November 1, 2023, we sold the Sahale Snacks ® business to Second Nature Brands (“Second Nature”).

Final net proceeds from the divestiture were $ 25.3 , inclusive of a working capital adjustment and cash transaction costs, resulting in a final pre-tax loss of $ 5.7 , of which $ 5.2 was recognized during the second quarter of 2024, as the disposal group met the criteria to be classified as held for sale and a valuation allowance was established to reflect the fair value of the disposal group less costs to sell.

The valuation allowance was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

On November 1, 2023, we sold the Sahale Snacks ® business to Second Nature.

The transaction included products sold under the Sahale Snacks brand, inclusive of certain trademarks and licensing agreements, a leased manufacturing facility in Seattle, Washington, and approximately 100 employees who supported the brand.

Under our ownership, the Sahale Snacks brand generated net sales of $ 24.1 in 2024, primarily included in the U.S.

Retail Frozen Handheld and Spreads segment.

Final net proceeds from the divestiture were $ 31.6 , inclusive of a working capital adjustment and cash transaction costs .

We recognized a pre-tax loss of $ 6.7 during the third quarter of 2024.

Retail Frozen Handheld and Spreads segmen t.

Final net proceeds from the divestiture were $ 31.6 , inclusive of a working capital adjustment and cash transaction costs, resulting in a final pre-tax loss of $ 6.7 , of which $ 6.8 was recognized during the second quarter of 2024, as the disposal group met the criteria to be classified as held for sale and a valuation allowance was established to reflect the fair value of the disposal group less costs to sell.

The valuation allowance was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income and Condensed Statement of Consolidated Cash Flows.

On April 28, 2023, we sold certain pet food brands to Post Holdings, Inc.

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With the exception of accelerated depreciation, these costs are expensed as incurred.

These special project costs are reported in cost of products sold and other special project costs in the Condensed Statements of Consolidated Income and are not allocated to segment profit.

These special project costs are reported in cost of products sold, other special project costs, other debt costs, and other income (expense) – net in the Condensed Statements of Consolidated Income and are not allocated to segment profit.

The obligation related to employee separation costs is included in other current liabilities in the Condensed Consolidated Balance Sheets.

Divestiture Costs:

Total divestiture costs related to the divested Sahale Snacks and Canada condiment businesses are anticipated to be approximately $ 6.0 , consisting primarily of employee-related and lease termination costs, all of which are expected to be cash charges.

The majority of these costs were recognized in 2024, and the remainder are expected to be recognized during the first half of 2025.

We incurred divestiture costs of $ 0.3 during the three months ended July 31, 2024, primarily consisting of employee-related costs.

Total divestiture costs incurred to date were $ 5.8 , which included $ 4.2 and $ 1.6 of employee-related and other transition and termination costs, respectively.

The obligation related to severance and retention bonuses was $ 0.8 and $ 2.5 at July 31, 2024 and April 30, 2024, respectively.

Total divestiture costs incurred to date related to the divested Sahale Snacks and Canada condiment businesses were $ 5.9 , which included $ 4.3 and $ 1.6 of employee-related and other transition and termination costs, respectively, all of which were cash charges.

We incurred divestiture costs of $ 0.1 and $ 0.4 during the three and six months ended October 31, 2024, respectively, primarily consisting of employee-related costs.

As of October 31, 2024, we have incurred the majority of the anticipated costs related to these divestitures and expect costs incurred during the second half of 2025 to be minimal.

The obligation related to severance and retention bonuses was $ 0.3 and $ 2.5 at October 31, 2024, and April 30, 2024, respectively.

Furthermore, we identified opportunities to address certain distribution inefficiencies, as a result of the divestiture of certain pet food brands.

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The majority of these costs are expected to be cash charges and incurred by the end of 2026, with approximately half of the costs expected to be recognized in 2025.

We incurred $ 0.1 of other transition and termination costs during the three months ended July 31, 2024.

We incurred $ 0.8 and $ 0.9 of other transition and termination costs during the three and six months ended October 31, 2024, respectively.

For additional information, see Note 4:

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The following table summarizes our integration costs incurred related to the acquisition of Hostess Brands.

Three Months Ended

July 31, 2024 Total Costs Incurred to Date

at July 31, 2024

Three Months Ended October 31, 2024 Six Months Ended

October 31, 2024 Total Costs Incurred to Date at October 31, 2024

Transaction costs $ — $ — $ 99.0

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Total integration costs $ 15.1 $ 27.1 $ 174.5

Cumulative noncash charges incurred through July 31, 2024, were $ 8.8 and included $ 5.6 incurred during the three months ended July 31, 2024, which primarily consisted of accelerated depreciation.

Transaction costs primarily reflected equity compensation payouts, legal fees, and fees related to the Bridge Loan that provided committed financing for the acquisition of Hostess Brands.

Cumulative noncash charges incurred through October 31, 2024, were $ 14.7 and included $ 5.9 and $ 11.5 incurred during the three and six months ended October 31, 2024, respectively, which primarily consisted of accelerated depreciation.

Transaction costs primarily reflected equity compensation payouts, legal fees, and fees related to a 364-day senior unsecured Bridge Term Loan Credit Facility (“Bridge Loan”) that provided committed financing for the acquisition of Hostess Brands.

Other transition and termination costs primarily consisted of contract termination charges, accelerated depreciation, and consulting fees.

The obligation related to severance and retention bonuses was $ 23.4 and $ 28.0 at July 31, 2024 and April 30, 2024, respectively.

The obligation related to severance and retention bonuses was $ 22.4 and $ 28.0 at October 31, 2024, and April 30, 2024, respectively.

For additional information, see Note 3:

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Retail Coffee segment primarily inclu des the domestic sales of Folgers ® , Dunkin’ ® , and Café Bustelo ® branded coffee;

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables ® , Smucker’s ® , and Jif ® branded products;

Retail Frozen Handheld and Spreads segment primarily includes the domestic sales of Uncrustables ® , Jif ® , and Smucker’s ® branded products;

Retail Pet Foods segment primarily includes the domestic sales of Meow Mix ® , Milk-Bone ® , Pup-Peroni ® , and Canine Carry Outs ® branded products;

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The following table reconciles segment profit to income before income taxes.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Retail Coffee $ 704.0 $ 685.7 $ 1,327.4 $ 1,310.8

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Cost of products sold – special project costs (A)

( 5.3 ) — ( 10.6 ) —

Other special project costs (A)

( 10.7 ) ( 6.8 ) ( 17.8 ) ( 6.8 )

Other debt costs (A)

— ( 19.5 ) — ( 19.5 )

Corporate administrative expenses ( 88.2 ) ( 71.5 ) ( 170.2 ) ( 133.3 )

Other income (expense) – net ( 3.1 ) ( 33.0 )

Other income (expense) – net (A)

( 4.2 ) 5.1 ( 7.3 ) ( 27.9 )

Income before income taxes $ 66.8 $ 249.4 $ 312.8 $ 487.8

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For more information, see Note 5:

Special Project Costs.

Special Project Costs and Note 8:

Debt and Financing Arrangements.

The following table presents certain geographical information.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

United States $ 2,136.2 $ 1,796.3 $ 4,151.6 $ 3,472.7

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The following table presents product category information.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023 Primary Reportable Segment (A)

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Earnings per Share

We computed net income per common share (“basic earnings per share”) under the two-class method for the three months ended July 31, 2024 and 2023, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

Further, we computed net income per common share – assuming dilution (“diluted earnings per share”) under the two-class and treasury stock methods to determine the method that was most dilutive, in accordance with FASB ASC 260, Earnings Per Share .

For the three months ended July 31, 2024 and 2023, the computation of diluted earnings per share was more dilutive under the treasury stock method, as compared to the two-class method.

We computed net income (loss) per common share (“basic earnings per share”) under the two-class method for the three and six months ended October 31, 2024 and 2023, due to certain unvested common shares that contained non-forfeitable rights to dividends (i.e., participating securities) during these periods.

Further, we computed net income (loss) per common share – assuming dilution (“diluted earnings per share”) under the two-class and treasury stock methods to determine the method that was most dilutive, in accordance with FASB ASC 260, Earnings Per Share .

For the three and six months ended October 31, 2024 and 2023, the computation of diluted earnings per share was more dilutive under the treasury stock method, as compared to the two-class method.

Therefore, the treasury stock method was used.

The following table sets forth the computation of basic and diluted earnings per share under the two-class method.

Three Months Ended July 31,

Net income $ 185.0 $ 183.6

Net income allocated to participating securities — 0.1

Net income allocated to common stockholders $ 185.0 $ 183.5

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Net income (loss) $ ( 24.5 ) $ 194.9 $ 160.5 $ 378.5

Net income (loss) allocated to participating securities — 0.1 — 0.2

Net income (loss) allocated to common stockholders $ ( 24.5 ) $ 194.8 $ 160.5 $ 378.3

Weighted-average common shares outstanding 106.4 102.1 106.4 102.3

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Weighted-average common shares outstanding – assuming dilution 106.4 102.2 106.4 102.4

Net income per common share $ 1.74 $ 1.79

Net income per common share – assuming dilution $ 1.74 $ 1.79

Net income (loss) per common share $ ( 0.23 ) $ 1.91 $ 1.51 $ 3.70

Net income (loss) per common share – assuming dilution $ ( 0.23 ) $ 1.91 $ 1.51 $ 3.70

The following table sets forth the computation of diluted earnings per share under the treasury stock method.

Three Months Ended July 31,

Net income $ 185.0 $ 183.6

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Net income (loss) $ ( 24.5 ) $ 194.9 $ 160.5 $ 378.5

Weighted-average common shares outstanding – assuming dilution:

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Weighted-average common shares outstanding – assuming dilution 106.7 102.4 106.6 102.6

Net income per common share – assuming dilution $ 1.74 $ 1.79

Net income (loss) per common share – assuming dilution $ ( 0.23 ) $ 1.90 $ 1.51 $ 3.69

Debt and Financing Arrangements

The following table summarizes the components of our long-term debt.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Outstanding Carrying

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As of April 30, 2024, the $ 800.0 Term Loan was prepaid in full.

In September 2023, we entered into a commitment letter for a $ 5.2 billion Bridge Loan that provided committed financing for the acquisition of Hostess Brands, as disclosed in Note 3:

No balances were drawn against this facility, as the commitment letter was terminated after completion of the Senior Notes offering and drawing on the Term Loan.

Included in other debt costs on the Condensed Statement of Consolidated Income at October 31, 2023, was $ 19.5 related to financing fees associated with the Bridge Loan.

In October 2023, we completed an offering of $ 3.5 billion in Senior Notes due November 15, 2028, November 15, 2033, November 15, 2043, and November 15, 2053.

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Interest is payable either on a quarterly basis or at the end of the borrowing term.

We did no t have a balance outstanding under the revolving credit facility at July 31, 2024, or April 30, 2024.

We did no t have a balance outstanding under the revolving credit facility at October 31, 2024, or April 30, 2024.

We participate in a commercial paper program under which we can issue short-term, unsecured commercial paper not to exceed $ 2.0 billion at any time.

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Commercial paper is used as a continuing source of short-term financing for general corporate purposes.

As of July 31, 2024 and April 30, 2024, we had $ 697.0 and $ 591.0 of short-term borrowings outstanding, respectively, which were both issued under our commercial paper program at a weighted-average interest rate of 5.48 percent.

Interest paid totaled $ 140.9 and $ 8.4 for the three months ended July 31, 2024 and 2023, respectively.

This differs from interest expense due to the timing of interest payments, capitalized interest, the effect of interest rate contracts, amortization of debt issuance costs and discounts, and the payment of other debt fees.

As of October 31, 2024, and April 30, 2024, we had $ 488.0 and $ 591.0 of short-term borrowings outstanding, respectively, which were issued under our commercial paper program at weighted-average interest rates of 4.95 and 5.48 percent, respectively.

Interest paid totaled $ 74.0 and $ 65.2 for the three months ended October 31, 2024 and 2023, respectively, and $ 214.9 and $ 73.6 for the six months ended October 31, 2024 and 2023, respectively.

This differs from interest expense due to capitalized interest, the timing of interest payments, the effect of interest rate contracts, amortization of debt issuance costs and discounts, and the payment of other debt fees.

Our debt instruments contain covenant restrictions, including an interest coverage ratio.

As of July 31, 2024, we are in compliance with all covenants.

As of October 31, 2024, we are in compliance with all covenants.

Pensions and Other Postretirement Benefits

The following table summarizes our net periodic benefit cost for defined benefit pension and other postretirement benefit plans.

Three Months Ended July 31,

Three Months Ended October 31,

Defined Benefit Pension Plans Other Postretirement Benefits

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Amortization of prior service cost (credit) — — ( 0.1 ) ( 0.2 )

Net periodic benefit cost $ 2.7 $ 1.7 $ 0.1 $ 0.3

Six Months Ended October 31,

Defined Benefit Pension Plans Other Postretirement Benefits

2024 2023 2024 2023

Service cost $ 0.4 $ 0.5 $ 0.3 $ 0.4

Interest cost 8.8 9.3 1.3 1.3

Expected return on plan assets ( 6.2 ) ( 8.2 ) — —

Amortization of net actuarial loss (gain) 2.2 1.7 ( 1.0 ) ( 0.8 )

Amortization of prior service cost (credit) 0.1 0.1 ( 0.3 ) ( 0.3 )

Settlement loss (gain) — 3.2 — —

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The settlement charge was included within other income (expense) – net in the Condensed Statement of Consolidated Income.

We did not recognize any charges related to the Canadian Buy-Out Contract during the three months ended July 31, 2024.

We made direct benefit payments of $ 0.7 for both the three months ended July 31, 2024 and 2023.

We did not recognize any charges related to the Canadian Buy-Out Contract during the three and six months ended October 31, 2024.

We made direct benefit payments of $ 1.7 and $ 1.8 for the six months ended October 31, 2024 and 2023, respectively.

Derivative Financial Instruments

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We did not qualify the forward sale derivative contract for hedge accounting treatment, and as a result, derivative gains and losses associated with the economic hedge were immediately recognized in earnings within other income (expense) – net in the Condensed Statement of Consolidated Income, netting with the change in fair value of the underlying shares.

All 5.4 million shares of Post common stock were hedged and later settled on November 15, 2023, for $ 466.3 , resulting in a pre-tax gain of $ 5.4 during the year ended April 30, 2024, inclusive of an unrealized gain of $ 0.6 recognized during the three months ended July 31, 2023.

All 5.4 million shares of Post common stock were hedged and later settled on November 15, 2023, for $ 466.3 , resulting in a pre-tax gain of $ 5.4 during the year ended April 30, 2024, inclusive of an unrealized gain of $ 33.0 and $ 33.6 recognized during the three and six months ended October 31, 2023, respectively.

For additional information, see Note 4:

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The following table presents the gross notional value of outstanding derivative contracts.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Commodity contracts $ 868.0 $ 787.7

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The following tables set forth the gross fair value amounts of derivative instruments recognized in the Condensed Consolidated Balance Sheets.

July 31, 2024

October 31, 2024

Liabilities Other

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We are required to maintain cash margin accounts in connection with funding the settlement of our open positions.

Our cash margin accounts represented collateral pledged of $ 46.7 and collateral received of $ 1.9 at July 31, 2024 and April 30, 2024, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

Our cash margin accounts represented collateral pledged of $ 13.0 and collateral received of $ 1.9 at October 31, 2024, and April 30, 2024, respectively, and are included in other current assets in the Condensed Consolidated Balance Sheets.

The change in the cash margin accounts is included in other – net, investing activities in the Condensed Statements of Consolidated Cash Flows.

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The following table presents the net gains and losses recognized in cost of products sold in the Condensed Statements of Consolidated Income on derivatives not designated as hedging instruments.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Derivative gains (losses) on commodity contracts $ 20.6 $ ( 5.0 ) $ ( 9.4 ) $ 2.8

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The following table presents the net change in cumulative unallocated derivative gains and losses.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Net derivative gains (losses) recognized and classified as unallocated $ 22.1 $ ( 0.2 ) $ ( 7.7 ) $ 5.4

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Change in net cumulative unallocated derivative gains and losses $ 11.7 $ ( 26.3 ) $ ( 18.3 ) $ ( 15.9 )

As of July 31, 2024, the net cumulative unallocated derivative losses were $ 7.4 , and at April 30, 2024, the net cumulative unallocated derivative gains were $ 22.6 .

The net cumulative unallocated derivative gains were $ 4.3 and $ 22.6 at October 31, 2024, and April 30, 2024, respectively.

Cash Flow Hedges

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The following table presents information on the pre-tax gains and losses recognized on all contracts previously designated as cash flow hedges.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Gains (losses) recognized in other comprehensive income (loss) $ — $ — $ — $ —

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Change in accumulated other comprehensive income (loss) $ 3.4 $ 3.4 $ 6.8 $ 6.8

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 100.4 and $ 32.1 for the three months ended July 31, 2024 and 2023, respectively.

(A) Interest expense – net, as presented in the Condensed Statements of Consolidated Income was $ 98.7 and $ 35.1 for the three months ended October 31, 2024 and 2023, respectively, and $ 199.1 and $ 67.2 for the six months ended October 31, 2024 and 2023, respectively.

The reclassification includes terminated contracts which were designated as cash flow hedges.

Included as a component of accumulated other comprehensive income (loss) at July 31, 2024, and April 30, 2024, were deferred net pre-tax losses of $ 183.7 and $ 187.1 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at July 31, 2024, and April 30, 2024, was $ 43.2 and $ 44.0 , respectively.

Included as a component of accumulated other comprehensive income (loss) at October 31, 2024, and April 30, 2024, were deferred net pre-tax losses of $ 180.3 and $ 187.1 , respectively, related to the terminated interest rate contracts.

The related net tax benefit recognized in accumulated other comprehensive income (loss) at October 31, 2024, and April 30, 2024, was $ 42.4 and $ 44.0 , respectively.

Approximately $ 13.8 of the net pre-tax loss will be recognized over the next 12 months related to the terminated interest rate contracts.

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The following table provides information on the carrying amounts and fair values of our financial instruments.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Amount Fair Value Carrying

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(Level 2) Significant

(Level 3) Fair Value at July 31, 2024

(Level 3) Fair Value at October 31, 2024

Marketable securities and other investments:

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Based on the short-term nature of these money market funds, carrying value approximates fair value.

As of July 31, 2024, our municipal obligations are scheduled to mature as follows:

As of October 31, 2024, our municipal obligations are scheduled to mature as follows:

$ 1.6 in 2025, $ 0.8 in 2026, $ 3.9 in 2027, $ 0.4 in 2028, $ 3.4 in 2029, and the remaining $ 7.5 in 2030 and beyond.

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Debt and Financing Arrangements.

As of October 31, 2024, the Voortman business disposal group met the criteria to be classified as held for sale, and as a result, a valuation allowance of $ 260.8 was established to reflect the fair value of the disposal group less costs to sell, which was based on the expected proceeds and the estimated carrying value of the net assets to be disposed.

The estimated pre-tax loss on the disposal group was included within loss (gain) on divestitures – net in the Condensed Statement of Consolidated Income.

We utilized Level 3 inputs based on management’s best estimates and assumptions to estimate the fair value of the disposal group.

For additional information, see Note 4:

Divestitures.

We lease certain warehouses, manufacturing facilities, office space, equipment, and vehicles, primarily through operating lease agreements.

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The following table sets forth the right-of-use assets and lease liabilities recognized in the Condensed Consolidated Balance Sheets.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Operating lease right-of-use assets $ 148.7 $ 174.6

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The following table summarizes the components of lease expense.

Three Months Ended July 31,

Three Months Ended October 31, Six Months Ended October 31,

2024 2023 2024 2023

Operating lease cost $ 12.0 $ 11.2 $ 24.5 $ 23.9

2 unchanged sentences

Interest on lease liabilities

0.1 0.2 0.3 0.3

Variable lease cost 5.8 5.1 12.3 11.2

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The following table sets forth cash flow and noncash information related to leases.

Three Months Ended July 31,

Six Months Ended October 31,

Cash paid for amounts included in the measurement of lease liabilities:

7 unchanged sentences

The following table summarizes the maturity of our lease liabilities by fiscal year.

July 31, 2024

October 31, 2024

Operating Leases Finance Leases

9 unchanged sentences

The following table sets forth the weighted average remaining lease term and discount rate.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Weighted average remaining lease term (in years):

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Finance leases

The effective income tax rates for the three months ended July 31, 2024 and 2023, were 24.8 and 23.0 percent, respectively.

The increase in the effective income tax rate was primarily due to a discrete unfavorable impact of share-based compensation, as compared to the prior year.

During the three months ended July 31, 2024 and 2023, the effective income tax rates varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes.

The effective income tax rates for the three months ended October 31, 2024 and 2023, were 136.7 and 21.9 percent, respectively, and for the six months ended October 31, 2024 and 2023, were 48.7 and 22.4 percent, respectively.

The increase in the effective income tax rates, as compared to the prior year, was primarily due to an unfavorable permanent tax impact and the recognition of a taxable outside basis difference reflecting the reversal of our indefinite reinvestment assertion on the Voortman Cookies Limited entity, both associated with the classification of the Voortman business as held for sale during the second quarter of 2025.

During the three and six months ended October 31, 2024, the effective income tax rate varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to the unfavorable impacts of the classification of the Voortman business as held for sale.

During the three and six months ended October 31, 2023, the effective income tax rate varied from the U.S.

statutory income tax rate of 21.0 percent primarily due to state income taxes, partially offset by the recognition of a deductible outside basis difference related to the divestiture of the Sahale Snacks brand, which was classified as held for sale as of October 31, 2023.

For additional information, see Note 4:

Divestitures.

Within the next 12 months, it is reasonably possible that we could decrease our unrecognized tax benefits by an estimated $ 1.1 , primarily as a result of the expiration of statute of limitation periods.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), including the reclassification adjustments for items that are reclassified from accumulated other comprehensive income (loss) to net income, are shown below.

Adjustment Net Gains (Losses)

10 unchanged sentences

Income tax benefit (expense) — ( 1.6 ) ( 0.3 ) ( 0.1 ) ( 2.0 )

Balance at July 31, 2024 $ ( 39.8 ) $ ( 140.5 ) $ ( 53.0 ) $ 1.1 $ ( 232.2 )

Balance at October 31, 2024 $ ( 49.9 ) $ ( 137.9 ) $ ( 52.7 ) $ 1.5 $ ( 239.0 )

Adjustment Net Gains (Losses)

10 unchanged sentences

Income tax benefit (expense) — ( 1.6 ) ( 0.2 ) 0.1 ( 1.7 )

Balance at July 31, 2023 $ ( 26.9 ) $ ( 151.0 ) $ ( 52.3 ) $ 1.2 $ ( 229.0 )

Balance at October 31, 2023 $ ( 40.9 ) $ ( 148.4 ) $ ( 52.2 ) $ 1.0 $ ( 240.5 )

(A) The reclassification from accumulated other comprehensive income (loss) is primarily composed of deferred gains (losses) related to terminated interest rate contracts which were reclassified to interest expense – net.

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We, like other food manufacturers, are from time to time subject to various administrative, regulatory, and other legal proceedings arising in the ordinary course of business.

We are currently a defendant in a variety of such legal proceedings, and while we cannot predict with certainty the ultimate results of these proceedings or potential settlements associated with these or other matters, we have accrued losses for certain contingent liabilities that we have determined are probable and reasonably estimable at July 31, 2024.

Based on the information known to date, with the exception of the matters discussed below, we do not believe the final outcome of these proceedings will have a material adverse effect on our financial position, results of operations, or cash flows.

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The outcome and the financial impact of these cases, if any, cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2024, as the likelihood of loss is not considered probable or reasonably estimable.

However, if we are required to pay significant damages, our business and financial results could be adversely impacted, and sales of those products could suffer not only in these locations but elsewhere.

2 unchanged sentences

The outcome and financial impact of this litigation cannot be predicted at this time.

Accordingly, no loss contingency has been recorded for these matters as of July 31, 2024, and the likelihood of loss is not considered probable or reasonably estimable.

Accordingly, no loss contingency has been recorded for these matters as of October 31, 2024, as the likelihood of loss is not considered probable or reasonably estimable.

Voortman Contingency:

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Although we believe that the Claim is meritorious, no assurance can be given as to whether we will recover all, or any part, of the amounts being pursued.

Upon completion of the sale of the Voortman business, which is anticipated to occur during the third quarter of 2025, we will retain rights to the Claim.

Common Shares

The following table sets forth common share information.

July 31, 2024 April 30, 2024

October 31, 2024 April 30, 2024

Common shares authorized 300.0 300.0

2 unchanged sentences

Repurchase Program:

During the three months ended July 31, 2024, we did not repurchase any common shares under a repurchase plan authorized by the Board of Directors (the “Board”).

As of July 31, 2024, approximately 1.1 million common shares remain available for repurchase pursuant to the Board’s authorizations.

During the six months ended October 31, 2024, we did not repurchase any common shares under a repurchase plan authorized by the Board of Directors (the “Board”).

As of October 31, 2024, approximately 1.1 million common shares remain available for repurchase pursuant to the Board’s authorizations.

On March 2, 2023, we entered into a share repurchase plan (the “10b5-1 Plan”) established in accordance with Rule 10b5-1 of the Exchange Act in connection with the remaining common shares authorized for repurchase by the Board, which was approximately 3.5 million common shares as of April 30, 2023.

In accordance with the 10b5-1 Plan, our designated broker had the authority to repurchase approximately 2.4 million common shares, which commenced upon the sale of certain pet food brands on April 28, 2023, and expired 45 calendar days after the closure of the transaction.

During the three months ended July 31, 2023, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan.

During the first quarter of 2024, we repurchased approximately 2.4 million common shares for $ 362.8 under the 10b5-1 Plan.

In accordance with The Inflation Reduction Act of 2022, H.R.

1 unchanged sentence

As a result, an excise tax of $ 3.6 was accrued on the repurchased shares during the first quarter of 2024 and included within additional capital in our Condensed Consolidated Balance Sheet.

All other share repurchases during the three months ended July 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

An accrued excise tax of $ 6.7 was paid during the three and six months ended October 31, 2024, which was related to the shares repurchased under the 10b5-1 Plan during 2023 and 2024.

All other share repurchases during the six months ended October 31, 2024 and 2023, consisted of shares repurchased from stock plan recipients in lieu of cash payments.

Shares Issued:

11 unchanged sentences

The payment of these obligations is included in cash provided by operating activities in the Condensed Statements of Consolidated Cash Flows.

Included in accounts payable in the Condensed Consolidated Balance Sheets as of July 31, 2024, and April 30, 2024, $ 366.8 and $ 384.9 of our outstanding payment obligations, respectively, that were elected and sold to a financial institution by participating suppliers.

Included in accounts payable in the Condensed Consolidated Balance Sheets as of October 31, 2024, and April 30, 2024, were $ 360.9 and $ 384.9 of our outstanding payment obligations, respectively, that were elected and sold to a financial institution by participating suppliers.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements