# To Our Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NYSE_POST_2020/NYSE_POST_2020.mmd` · pages 3-9_

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To Our Shareholders

In 2020 distance brought us closer together. The economic imperative that normally drives our organization was preempted by the imperative to protect each other and continue the role we serve in feeding you. We learned the language and acronyms of epidemiology like social distancing, contact tracing and PPE. The most technologically challenged among us learned how to navigate tools that brought us into each other's homes. Homework questions, dogs barking and home deliveries became part of our meeting experience. The most important fashion choice became a ball cap. Despite the separations, our interactions proved more intimate.

We learned each day the meaning of what it means to be "essential." While many of our colleagues navigated the challenges of suddenly working from home, many of our colleagues are not able to do their jobs from home. Thousands of men and women continued to produce the food that keeps us nourished and comforted. They worked extra shifts to meet demand and sacrificed much. To them, we are profoundly grateful.

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"Thousands of men and women continued to produce the food that keeps us nourished and comforted. To them we are profoundly grateful."

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Weetabix is one of the top producers in the U.K. ready-to-eat cereal category

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#1

Ready-to-eat U.K. cereal brand \( ^{(4)} \) 

![](images/5_1.jpg)

45%

Household penetration of Weetabix
Food Company products in the U.K. \( ^{(5)} \) 

#1

Muesli brand in the U.K. \( ^{(4)} \) 

![](images/5_2.jpg)

We view ourselves as serving five constituents—colleagues, customers, consumers, communities and capital providers. Long-term success for each constituent requires long-term balance to all constituents. However, in any short-term period, this balance may be properly set aside in response to the exigency of the day.

In our past annual shareholder letters, we have focused on our success with respect to serving capital providers. This year our share price performed poorly. It was a tale of two halves (well, halves liberally defined). From October 1, 2019, until January 17, 2020, our share price appreciated 6.5%. Once the full threat of the pandemic became apparent in March, our share price dropped to a low of \(71.55 before settling the year at \)86.00 for a full year decline of 18.3%. We are never happy to report to you that your investment declined. However, in 2020 we intentionally prioritized our other constituents, and we believe that was the correct prioritization for our future success.

At the outset of the pandemic, we established three priorities for the crisis:

• We would seek to protect our employees from the physical and economic hardships to come;

• We would protect our supply chains to ensure our ability to service our customers and consumers during a time of heightened food insecurity; and

• We would manage our liquidity to ensure that we had the flexibility and cushion to weather any storm created by the pandemic in our business, the interconnected supply chains upon which we depend or in the capital markets.

These priorities guided our actions. We reserved aggressive cost reduction until supplemental unemployment benefits made that counterproductive. We provided significant cash bonuses to frontline workers. We donated millions of dollars of food to food banks to

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"We believe this
organization is a
source of good that
can be better. And we
will be better."

strengthen local communities. We invested heavily in personal protective equipment and a myriad of safety measures aimed at giving every person the comfort to know their health is a top priority. We temporarily suspended share buybacks to ensure that come what may, our financial position was strong.

During 2020 we prioritized our more vulnerable constituents because it was the right thing to do and because by doing so, we will be better able to deliver to you the returns you expect. We appropriately measure our business by the financial results it generates. The predicates for generating our results include our culture and our trust for each other. These predicates are greater as a result of the challenges we have faced together. The financial results will follow.

This year, events in our broader society occurred that once again forced us to ask if freedom and opportunity are fairly distributed across our nation and within our organization. Our approach was to begin with analysis. We asked for feedback from across our organization. The feedback was raw, personal, discouraging and uplifting—all at the same time. We believe this organization is a source of good that can be better. And we will be better. From diversity and inclusion efforts at each business across our holding company, we created an enterprise-wide council tasked with setting goals and determining standards. We are seeking results that are authentic, measurable and sustainable.
Post's Foodservice business offers innovative, value-added egg and potato products

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3

New products launched in fiscal 2020

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97%

Customer service performance in fiscal 2020

#1

Foodservice provider of value-added egg and potato products \( ^{(6)} \) 

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Post Holdings, Inc. 2020 Annual Report — 5

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OUR COVID-19 RESPONSE

## $2.2M

spent in plant and office modifications and incremental PPE, including plexiglass barriers, curtains, new picnic tables for social distancing and breaks/lunchroom, hand sanitizing stations, fogging events, infrared cameras, thermometers, temporary shelters/tents for testing, masks, gloves and other protective gear

## $7.8M

provided in special bonuses to 4200+ employees

## $3M

spent on safety measures, including on-site nurses, COVID-19 testing and PPE for manufacturing employees

Guiding principles to help us through the challenge:

Minimize the impact the pandemic had on our people

Maintain our supply chain readiness

![](images/7_1.jpg)

Bob Evans Farms and Michael Foods donated 3 million pounds of eggs and potatoes to our employees, food banks and community charities

COVID-19 protection
pay was extended for
those employees who were
quarantined, sick, or needed to
provide care for their families

All furloughed employees were returned to full employment after necessary hour reductions in our Foodservice business

Minimize the impact the pandemic had on our business

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Now, to comment on our business results.

Our company has terrific businesses that serve consumers in-home food choices and a terrific business that provides food for away-from-home eating occasions. Historically, this diversification has served us well. This year, our in-home consumption businesses did extremely well, but our away-from-home business had a devastating drop in second-half demand. When the United States was largely locked down from March to May, we saw an 80% drop in demand at its trough. I want to commend the management team. Led by Mark Westphal, Mike Elliott and Steve Schonhoff, the team ably led us during the most challenging business experience we have endured.

Despite the gut punch to a key channel, our business results were reasonable. Sales were flat at \(5.7 billion and Adjusted EBITDA \( ^{1} \)  declined 5.8%. The central accomplishment of the year was to effectively and safely navigate COVID-19. While we are not past the challenges as of the date of this letter, we are extremely proud of the outcome so far. Beyond this, some key highlights of the year included:

• We completed the initial public offering of our active nutrition segment into the now named BellRing Brands, Inc., receiving tax-free proceeds of ~$1.2 billion, while maintaining 71% ownership of BellRing. This transaction helped us illustrate the sum of the parts analysis that we believe is needed to properly value our business.

• Before COVID-19 struck, as well as after we had passed the highest sense of crisis, we were active in purchasing our shares. During 2020 we retired 6.1 million shares for an average cost of $97.65 per share, while maintaining our "B" credit rating.

• We generated nearly $400 million in free cash flow \( ^{1} \)  despite our Foodservice business being significantly off plan.
Post's Refrigerated Retail business markets side dish, egg, sausage and cheese products

![](images/8_0.jpg)

![](images/8_1.jpg)

Refrigerated side dish manufacturer \( ^{(7)} \) 

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## 12.5%

Household penetration of Bob Evans branded side dish products \( ^{(7)} \) 

## #1

Cheese brand in core Midwest Markets and the #4 U.S. cheese brand \( ^{(8)} \) 

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BellRing Brands operates in the global convenient nutrition category and is a leader in ready-to-drink shakes

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6.8%

Household penetration of Premier Protein brand \( ^{(9)} \) 

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26%

Premier Protein total distribution point growth in fiscal 2020 \( ^{(10)} \) 

4

New shake flavor introductions in fiscal 2020

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8 — Post Holdings, Inc. 2020 Annual Report

BELLRING BRANDS

# "The central
accomplishment
of the year was to
effectively and safely
navigate COVID-19."

• We continue to aggressively use what has been an attractive high yield bond market to finance our business. We issued $1.650 billion in 10-year senior notes at record low rates, further extending our bond maturity ladder to 2030. Our approach to leverage enables us to deliver long-term returns, and our approach to liquidity positioned us well for the dramatic uncertainty of the year.

In closing, 2020 was a year like no other. As of this writing, we have heard quite encouraging news with respect to the end of this pandemic. At the same time, we face a short term of considerable uncertainty. The virus continues to spread unabated through all markets in which we operate. We expect to be further tested, but we also expect to rise to whatever challenges present themselves. We remain quite optimistic for the long-term trajectory of our business, and we always appreciate your support.

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William P. Sitritz
Chairman of the Board

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Robert V. Vitale
President and Chief Executive Officer