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About Michael Foods, Inc.

Breakfast food company Post Holdings has a healthy appetite. The maker of Grape-Nuts, Golden Puffs, Honey Bunches of Oats, Raisin Bran, Shredded Wheat, Pebbles, and Alpha-Bits, Post is the third-best-selling breakfast cereal brand in the US (behind Kellogg and General Mills). As well as cereal, the company also makes egg products, potato products, and cheese, pasta, and other dairy-based products. More recently it has moved beyond the breakfast table by adding snacks, active nutrition products, and pasta through a series of major acquisitions. It also manufactures nut butters and cereals for private labels. The company has warehouses, manufacturing facilities, and distribution facilities located throughout the US and Canada.

Operations

Post operates five reportable segments: Post Consumer Brands, Weetabix, Refrigerated Food, Active Nutrition, and Private Brands.

The Refrigerated Food segment makes egg products, sausage, side dishes, cheese and other refrigerated products. Egg brands include Papetti's, Easy Eggs, and Table Ready; and refrigerated side dish brands include Bob Evans, Simply Potatoes, and Pineland Farms. Cheese and other dairy brands are marketed mainly under the Crystal Farms brand. The segment accounts for more than 35% of sales.

The Consumer Brands segment comprises Post's North America cereal business, which makes and sells branded and private-label ready-to-eat cereal products and hot cereal products. Brands include Honey Bunches of Oats, Pebbles, Oreo O’s, Great Grains. Consumer Brands represent 30% of sales.

The Private Brands business pulls in 15% of total sales and makes peanut butter, dried fruit and nuts, pasta, and granola and cereals.

Active Nutrition provides high-protein products, including drinks, bars, and snacks, for fitness enthusiasts. Brands include Premier Protein, Dymatiza, Power Bar, Supreme Protein, and Joint Juice. It accounts for 15% of sales.

The Weetabix segment is dedicated to sales of the Weetabix brand of wheat-based breakfast products as well as Alpen, Weetos, Ready Brek, and Weetabix on the Go. It generates 5% of total sales from a customer base mainly within the UK and Ireland.

 

Geographic Reach

Post is headquartered in Missouri. More than 90% of the company's products are sold to customers in the US. 

The company's manufacturing footprint spans nine consumer brands facilities, eight egg factories and two sausage production plants in the US. Post has Private Brands factories in Georgia (peanut butter), North Dakota and Minnesota (pasta), Oregon (granola), Washington, Alabama, Ontario, and British Columbia (nut butter and dried fruit). Nutrition products are made in Germany and Weetabix products are made at four factories in the UK.

Sales and Marketing

Post Holdings deploys a variety of consumer-targeted marketing campaigns across television, digital and print advertisement, coupon offers, co-op advertising with certain retail customers, and co-marketing arrangements with complementary consumer product companies. It also utilizes traditional billboard, print, digital, and social media advertising, as well as grass-roots advertising using sampling events and business drops.

Retail giant Wal-Mart Stores is the company's largest customer, accounting for around 15% of total sales. Weetabix sells to a narrow customer base of the UK's largest retailers, including Tesco, Asda, Morrison's, and Sainsbury's, which together account for more than 50% of sales. Nutrition brands are sold in mass merchandise, grocery, drugstore, specialty, and convenience stores. Private Brands products are sold in natural and specialty grocery stores, such as Whole Foods, which accounts for 15% of the segment's sales.

Financial Performance

Post Holding's sales have been growing strongly thanks to a robust acquisition program that has reshaped the company's brand portfolio.

In fiscal 2018 (ended September 30) the company's sales grew 20% to $6.3 billion due to the incremental contribution of Bob Evans and the full-year contribution of Weetabix Group, acquired in the previous year. Like-for-like sales were steady across most product categories, except Active Nutrition, which saw a 26% increase in volume of protein shakes and other ready-to-drink products.

Post's net income has been growing strongly. After a big loss in 2014, it broke even in 2016 and posted a big profit in 2018. Net income of $467.3 million in 2018 represented a near-900% increase on 2017. The change was a result of a $222.9 million loss on debt extinguishment that negatively impacted the previous year, coupled with a $204.0 million tax benefit in 2018 relating to the US Tax Cuts and Jobs Act.

Post's cash on hand fell $536.2 million during 2018, ending the year at $1.5 billion. The company's operations generated $719.3 million and its financing yielded $423.4 million, offset by $1.7 billion used in its investing activities. Post's main cash uses in 2018 were acquisition, share repurchases, and debt payments. 

After a game-changing fiscal 2015 that saw Post more than double its revenue, the company maintained its upward trajectory in fiscal 2016 (ended September) by growing its top line 8% to $5.0 billion.

The growth came from the first full-year contributions from businesses acquired in 2015, particularly MOM Brands, and from Willamette Egg Farms, acquired part-way through fiscal 2016. Beyond acquisitions, Post recorded organic growth in Premier Protein products and ready-to-eat cereal, peanut butter, and private brand granola. Egg, potato, cheese, pasta products saw sales decline.

Post incurred a net loss of $3.3 million in fiscal 2016, an improvement on the losses of $115 million and $343 million recorded in fiscals 2015 and 2014. The narrowing loss was a result of profit contributions of the acquired businesses.

Cash from operating activities increased 11%, or $50.8 million, to $502.4 million. As before incremental contributions from the acquired businesses drive operating cash growth, as did higher organic earnings from Post Consumer Brands, Michael Food, and Active Nutrition.

Strategy

Post Holdings has continued to move beyond breakfast cereal into higher-growth categories, including snacks, sports nutrition, supplements, and weight loss. The company's recent feeding frenzy of food companies included the $2.45 billion acquisition of Michael Foods, its largest-ever, which gave it the Simply Potatoes, All Whites, and Crystal Farms brands. The acquisitions demonstrate its willingness to adapt to shifts in consumer tastes, such as capitalizing on the popularity of high-protein products and away-from-home snacks.

Post made a major move into the UK with the purchase of British breakfast food firm Weetabix in 2017. As well as its famous eponymous wheat bricks, Weetabix owns Alpen, Weetos, and Oatibix.

In 2018 the company announced the creation of a new entity for its private brands, 8th Avenue Food & Provisions, which will be partially owned by private equity firm Thomas H. Lee Partners. The deal allows Post to monetize its investment in the private brands business while still benefiting from any future growth of 8th Avenue.

Post's extensive acquisition activity means it is highly leveraged, with total debt of $8 billion.

Mergers and Acquisitions

Post has made a ton of acquisitions in recent years as it reshapes its portfolio to tap into new markets. In 2018 it acquired Bob Evans Farms, a maker of various brands of potato, pasta, and vegetable side dishes, pork sausage, and convenience food. Post paid around $1.5 billion.

In 2017 it acquired UK cereal maker Weetabix in a $1.76 billion deal. The acquisition, which includes the Weetabix, Alpen, Barbara's Puffins, and other cereal brands, expands Post's international market presence and bolsters Weetabix's brand presence in the US.

Company Background

Prior to the spinoff, Post represented Ralcorp's branded cereal segment, which was in decline. (Ralcorp acquired Post from Kraft Foods in 2008 for about $2.7 billion, but its success with the brand was sporadic.) In the end, Ralcorp decided to launch Post on its own to focus on its own burgeoning private-label food business. The acquisition in 2014 of Michael Foods transformed the business, more than doubling its revenue. It followed Michael Foods up with two other major purchases, MOM Brands in 2015 and Weetabix in 2017.

Michael Foods, Inc.

301 CARLSON PKWY STE 400
Minnetonka, MN 55305-5370
Phone: 1 (507) 237-4600

Stats

Employer Type: Privately Owned
Vice President Sales: Michael Elliott
Executive Vice President Finance: Deborah Laue
Research And Development Group Manager: Irma Tardia
Employees (This Location): 226
Employees (All Locations): 3,596

Major Office Locations

Minnetonka, MN

Other Locations

Britt, IA
Lenox, IA
Gaylord, MN
Le Sueur, MN
Minneapolis, MN
Elizabeth, MO
Wakefield, NE
Elizabeth, NJ