Operational and quality issues lead Post Holdings to shut Dymatize facility

By Stephen DANIELLS

- Last updated on GMT

Post said that approximately 115 employees are impacted by the decision. Image © iStockPhoto
Post said that approximately 115 employees are impacted by the decision. Image © iStockPhoto

Related tags: Manufacturing

Citing operational and quality issues and a strategy to focus on brand building and sales infrastructure, Post Holdings has announced it will close the Farmers Branch, Texas-based manufacturing facility for Dymatize on December 1, 2015.

The operational and quality issues led to a write-off of approximately $9.2 million of unsalable inventory. Production is already transferring permanently to third party facilities under co-manufacturing agreements, said the company.

Post has owned Dymatize for less than two years, having announced the acquisition in late 2013 from private-equity firm TA Associates for $380 million​. An additional $17.5 million was also built into the deal contingent upon Dymatize achieving certain profit targets in 2014. Prior to the acquisition, Dymatize had net sales of $146 million for the nine months ended September 30, 2013.

“We have determined that the cost and effort to bring this facility to an acceptable reliability and margin level is better deployed in brand building and sales infrastructure,”​ said Rob Vitale, Post's President and CEO. “This decision enables us to focus on rapidly changing consumer trends, developing innovative products and building upon the strong Dymatize brand.”

Post said that approximately 115 employees are impacted by the decision, and will be provided severance and transition assistance.

The company is expecting to incur pretax charges of approximately $11 million to $16 million as a result of the closure. These charges include approximately $4 million to $6 million for severance, retention and other plant closure costs and a reserve of approximately $7 million to $10 million for usable inventory rendered less than fully recoverable by the decision to close the manufacturing facility. 

Dymatize manufactures and markets protein powders, bars and nutritional supplements under the Dymatize and Supreme Protein brands.

Related topics: Manufacturers, Sports nutrition

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