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Quarterly report which provides a continuing view of a company's financial position

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-Q
__________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number: 1-39093
https://cdn.kscope.io/07a3e0c02b19ac43c456a00c846044dc-brbr-20210630_g1.jpg
BellRing Brands, Inc.
(Exact name of registrant as specified in its charter)
Delaware83-4096323
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
2503 S. Hanley Road
St. Louis, Missouri 63144
(Address of principal executive offices) (Zip Code)
(314) 644-7600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 par value per shareBRBRNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class A Common Stock, $0.01 par value per share – 39,510,430 shares as of August 2, 2021
Class B Common Stock, $0.01 par value per share - 1 share as of August 2, 2021



BELLRING BRANDS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 6.


i

PART I.    FINANCIAL INFORMATION.
ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED).
BELLRING BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except per share data)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net Sales$342.6 $204.2 $907.1 $705.7 
Cost of goods sold231.3 135.5 616.9 457.5 
Gross Profit111.3 68.7 290.2 248.2 
Selling, general and administrative expenses42.6 32.6 129.1 116.6 
Amortization of intangible assets17.2 5.5 46.3 16.6 
Other operating income, net  (0.1) 
Operating Profit51.5 30.6 114.9 115.0 
Interest expense, net9.5 15.3 33.6 41.2 
Loss on refinancing of debt0.1  1.6  
Earnings before Income Taxes41.9 15.3 79.7 73.8 
Income tax expense3.4 1.1 5.8 9.2 
Net Earnings Including Redeemable Noncontrolling Interest38.5 14.2 73.9 64.6 
Less: Net earnings attributable to redeemable noncontrolling interest29.0 10.9 56.0 51.1 
Net Earnings Available to Class A Common Stockholders$9.5 $3.3 $17.9 $13.5 
Earnings per share of Class A Common Stock:
Basic$0.24 $0.08 $0.45 $0.34 
Diluted$0.24 $0.08 $0.45 $0.34 
Weighted Average shares of Class A Common Stock Outstanding:
Basic39.5 39.4 39.5 39.4 
Diluted39.7 39.5 39.7 39.5 
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
1


BELLRING BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in millions)
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net Earnings Including Redeemable Noncontrolling Interest$38.5 $14.2 $73.9 $64.6 
Hedging adjustments:
Net loss on derivatives   (10.4)
Reclassifications to net earnings0.6 0.6 1.7 0.4 
Foreign currency translation adjustments:
Unrealized foreign currency translation adjustments0.3 0.4 0.3 0.6 
Tax (expense) benefit on other comprehensive income (loss):
Net loss on derivatives   0.8 
Reclassifications to net earnings(0.1)(0.1)(0.1)(0.1)
Total Other Comprehensive Income (Loss) Including Redeemable Noncontrolling Interest0.8 0.9 1.9 (8.7)
Less: Comprehensive income attributable to redeemable noncontrolling interest29.6 11.6 57.4 44.1 
Total Comprehensive Income Available to Class A Common Stockholders$9.7 $3.5 $18.4 $11.8 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).


2

BELLRING BRANDS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
June 30,
2021
September 30,
2020
ASSETS
Current Assets
Cash and cash equivalents$89.4 $48.7 
Receivables, net131.2 83.1 
Inventories141.7 150.5 
Prepaid expenses and other current assets9.6 7.9 
Total Current Assets371.9 290.2 
Property, net8.7 10.2 
Goodwill65.9 65.9 
Intangible assets, net228.0 274.3 
Other assets10.9 12.9 
Total Assets$685.4 $653.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt$114.5 $63.8 
Accounts payable109.0 56.7 
Other current liabilities40.9 32.6 
Total Current Liabilities264.4 153.1 
Long-term debt490.7 622.6 
Deferred income taxes6.7 9.0 
Other liabilities23.7 29.8 
Total Liabilities785.5 814.5 
Redeemable noncontrolling interest3,054.9 2,021.6 
Stockholders’ Equity
Preferred stock  
Common stock0.4 0.4 
Accumulated deficit(3,151.9)(2,179.0)
Accumulated other comprehensive loss(3.5)(4.0)
Total Stockholders’ Equity(3,155.0)(2,182.6)
Total Liabilities and Stockholders’ Equity$685.4 $653.5 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
3

BELLRING BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)
Nine Months Ended
June 30,
20212020
Cash Flows from Operating Activities
Net earnings including redeemable noncontrolling interest$73.9 $64.6 
Adjustments to reconcile net earnings including redeemable noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization48.3 19.0 
Unrealized (gain) loss on interest rate swaps(1.9)1.2 
Loss on refinancing of debt1.6  
Non-cash stock-based compensation expense3.4 1.8 
Deferred income taxes(2.3)(3.6)
Other, net3.9 3.9 
Other changes in operating assets and liabilities:
Increase in receivables(48.0)(6.4)
Decrease (increase) in inventories9.0 (46.1)
Increase in prepaid expenses and other current assets(1.7)(0.9)
Decrease in other assets1.9 1.9 
Increase (decrease) in accounts payable and other current liabilities57.9 (8.2)
Decrease in non-current liabilities(0.1) 
Net Cash Provided by Operating Activities145.9 27.2 
Cash Flows from Investing Activities
Additions to property(0.8)(1.3)
Net Cash Used in Investing Activities(0.8)(1.3)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt20.0 871.0 
Proceeds from issuance of common stock, net of issuance costs 524.4 
Repayments of long-term debt(105.0)(1,372.5)
Payments of debt issuance costs and deferred financing fees (9.6)
Payment of debt refinancing fees(1.6) 
Distributions to Post Holdings, Inc., net(17.5)(22.4)
Other, net(0.9) 
Net Cash Used in Financing Activities(105.0)(9.1)
Effect of Exchange Rate Changes on Cash and Cash Equivalents0.6 0.2 
Net Increase in Cash and Cash Equivalents40.7 17.0 
Cash and Cash Equivalents, Beginning of Year48.7 5.5 
Cash and Cash Equivalents, End of Period$89.4 $22.5 
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 
4

BELLRING BRANDS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(in millions)
As Of and For The
Three Months Ended
June 30,
As Of and For The
 Nine Months Ended
June 30,
2021202020212020
Preferred Stock
Beginning and end of period$ $ $ $ 
Common Stock
Beginning of period0.4 0.4 0.4  
Issuance of common stock   0.4 
End of period0.4 0.4 0.4 0.4 
Additional Paid-in Capital
Beginning of period    
Activity under stock and deferred compensation plans 0.1 (0.8)0.1 
Non-cash stock-based compensation expense1.2 0.6 3.4 1.7 
Redemption value adjustment to redeemable noncontrolling interest(1.2)(0.7)(2.6)(1.8)
End of period    
Accumulated Deficit
Beginning of period(2,431.9)(1,859.1)(2,179.0) 
Net earnings available to Class A Common Stockholders9.5 3.3 17.9 13.5 
Distribution to Post Holdings, Inc.(6.8)(7.6)(17.5)(19.3)
Issuance of common stock   (0.4)
Impact of initial public offering   (2,112.4)
Reclassification of net investment of Post Holdings, Inc.   524.4 
Redemption value adjustment to redeemable noncontrolling interest(722.7)(269.4)(973.3)(538.6)
End of period(3,151.9)(2,132.8)(3,151.9)(2,132.8)
Net Investment of Post
Beginning of period   489.0 
Net earnings attributable to Post Holdings, Inc.   5.5 
Impact of initial public offering   29.9 
Reclassification of net investment of Post Holdings, Inc.   (524.4)
End of period    
Accumulated Other Comprehensive Loss
Hedging Adjustments, net of tax
Beginning of period
(1.8)(2.3)(2.1) 
Net change in hedges, net of tax
0.1 0.1 0.4 (2.2)
End of period
(1.7)(2.2)(1.7)(2.2)
Foreign Currency Translation Adjustments
Beginning of period(1.9)(2.2)(1.9)(2.6)
Foreign currency translation adjustments0.1 0.1 0.1 0.5 
End of period(1.8)(2.1)(1.8)(2.1)
Total Stockholders’ Equity$(3,155.0)$(2,136.7)$(3,155.0)$(2,136.7)
 See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited). 
5

BELLRING BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
($ in millions, except per share information and where indicated otherwise)
NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION
Background
BellRing Brands, Inc. (along with its consolidated subsidiaries, “BellRing” or “the Company”) is a consumer products holding company operating in the global convenient nutrition category and is a provider of ready-to-drink (“RTD”) protein shakes, other RTD beverages, powders, nutrition bars and nutritional supplements. The Company has a single operating and reportable segment, with its principal products being protein-based consumer goods. The Company’s primary brands are Premier Protein and Dymatize.
On October 21, 2019, BellRing Brands, Inc. (“BellRing Inc.”) closed its initial public offering (the “IPO”) of 39.4 million shares of its Class A common stock, $0.01 par value per share (the “Class A Common Stock”), and contributed the net proceeds from the IPO to BellRing Brands, LLC, a Delaware limited liability company and subsidiary of BellRing Inc. (“BellRing LLC”), in exchange for 39.4 million BellRing LLC non-voting membership units (the “BellRing LLC units”).
As a result of the IPO and certain other transactions completed in connection with the IPO (the “formation transactions”), BellRing LLC became the holder of the active nutrition business of Post Holdings, Inc. (“Post”). BellRing Inc., as a holding company, has no material assets other than its ownership of BellRing LLC units and its indirect interests in the subsidiaries of BellRing LLC and has no independent means of generating revenue or cash flow. The members of BellRing LLC are Post and BellRing Inc.
As of June 30, 2021, Post held 97.5 million BellRing LLC units, equal to 71.2% of the economic interest in BellRing LLC, and one share of Class B common stock of BellRing Inc., $0.01 par value per share (the “Class B Common Stock”), which represented 67% of the combined voting power of the common stock of BellRing Inc. The Class B Common Stock has no dividend or other economic rights.
As of June 30, 2021, the public stockholders of BellRing Inc. (i) owned 39.5 million shares of Class A Common Stock, which represented 33% of the combined voting power of BellRing Inc. common stock and 100% of the economic interest in BellRing Inc., and (ii) through BellRing Inc.’s ownership of BellRing LLC units, indirectly held 28.8% of the economic interest in BellRing LLC.
BellRing Inc. and BellRing LLC will at all times maintain, subject to certain exceptions, a one-to-one ratio between the number of shares of Class A Common Stock issued by BellRing Inc. and the number of BellRing LLC units owned by BellRing Inc. BellRing Inc. holds the voting membership unit of BellRing LLC (which represents the power to appoint and remove the members of the Board of Managers of, and no economic interest in, BellRing LLC). BellRing Inc. has the right to appoint the members of the BellRing LLC Board of Managers, and therefore, controls BellRing LLC. The Board of Managers is responsible for the oversight of BellRing LLC’s operations and overall performance and strategy, while the management of the day-to-day operations of the business of BellRing LLC and the execution of business strategy are the responsibility of the officers and employees of BellRing LLC and its subsidiaries. Post, in its capacity as a member of BellRing LLC, does not have the power to appoint any members of the Board of Managers or voting rights with respect to BellRing LLC. Post controls BellRing Inc. through its ownership of the share of Class B Common Stock.
The financial results of BellRing LLC and its subsidiaries are consolidated with BellRing Inc., and a portion of the consolidated net earnings of BellRing LLC are allocated to the redeemable noncontrolling interest (the “NCI”). The calculation of the NCI is based on Post’s ownership percentage of BellRing LLC units during each period, and reflects the entitlement of Post to a portion of the consolidated net earnings of BellRing LLC.
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), under the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (the “SEC”), and on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended September 30, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with such audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020, filed with the SEC on November 20, 2020, as amended on March 9, 2021.
These unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments and accruals) that management considers necessary for a fair statement of the Company’s results of operations,
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comprehensive income, financial position, cash flows and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of the results for any other interim period or for the entire fiscal year.
For the period prior to the IPO included in the nine months ended June 30, 2020, these unaudited condensed consolidated financial statements present the combined results of operations, comprehensive income, financial position, cash flows and stockholders’ equity of the active nutrition business of Post, including allocations of certain Post corporate expenses related to various services that were provided to the Company by Post. All intercompany balances and transactions have been eliminated. Transactions between the Company and Post are included in these financial statements. See Note 5 for further information on transactions with Post.
NOTE 2 — RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS
The Company has considered all new accounting pronouncements and has concluded there are no new pronouncements (other than the ones described below) that had or will have a material impact on the Company’s results of operations, comprehensive income, financial condition, cash flows, stockholders’ equity or disclosures based on current information.
Recently Issued
In March 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional expedients and exceptions for contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by this ASU do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. This ASU is elective and effective for all entities as of March 12, 2020, the date this ASU was issued. An entity may elect to apply the amendments for contract modifications provided by this ASU as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020. Once elected, this ASU must be applied prospectively for all eligible contract modifications. The Company is currently evaluating the impact of this ASU as it relates to its debt and hedging relationships.
Recently Adopted
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU provides guidance on the measurement of credit losses for most financial assets and certain other instruments. This ASU replaced the prior incurred loss impairment approach with a methodology to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to explain credit loss estimates. The Company adopted this ASU on October 1, 2020. In conjunction with the adoption of this ASU, the Company updated its methodology for calculating its allowance for doubtful accounts. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.
NOTE 3 — REVENUE
The following table presents net sales by product.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Shakes and other beverages$278.6 $167.7 $740.2 $578.9 
Powders49.7 25.8 126.5 85.4 
Nutrition bars11.9 9.4 34.6 36.3 
Other2.4 1.3 5.8 5.1 
   Net Sales$342.6 $204.2 $907.1 $705.7 
NOTE 4 — RESTRUCTURING
In October 2020, the Company announced its plan to strategically realign its business, resulting in the closing of its Dallas, Texas office and the downsizing of its Munich, Germany location. These actions were substantially completed as of June 30, 2021.
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Restructuring charges and the associated liabilities for employee-related costs are shown in the following table.
Balance, September 30, 2020$ 
Charge to expense4.7 
Cash payments(4.6)
Non-cash charges 
Balance, June 30, 2021$0.1 
Total expected restructuring charges$4.8 
Cumulative restructuring charges incurred to date4.7 
Remaining expected restructuring charges$0.1 
During the three and nine months ended June 30, 2021, the Company incurred total restructuring charges of $(0.1) and $4.7, respectively. Restructuring charges were included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. No restructuring charges were incurred during the three or nine months ended June 30, 2020.
NOTE 5 — RELATED PARTY TRANSACTIONS
The Company uses certain functions and services performed by Post. These functions and services include legal, finance, internal audit, treasury, information technology support, insurance and tax matters, the use of office and/or data center space, payroll processing services and tax compliance services. These functions and services are provided by Post under a master services agreement (the “MSA”). In addition to charges for these services, the Company also incurs certain pass-through charges from Post, primarily relating to stock-based compensation for employees participating in Post’s stock-based compensation plans. For the three and nine months ended June 30, 2021, MSA fees were $0.6 and $1.7, respectively, and stock-based compensation expense related to Post’s stock-based compensation plans was $0.6 and $2.0, respectively. For the three and nine months ended June 30, 2020, MSA fees were $0.6 and $1.6, respectively, and stock-based compensation expense related to Post’s stock-based compensation plans was $1.0 and $2.9, respectively. MSA fees and stock-based compensation expense were reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.
The Company sells certain products to and licenses certain intellectual property to and from Post and its subsidiaries based upon pricing governed by agreements between the Company and Post and its subsidiaries, consistent with pricing of similar arm's-length transactions. During each of the three and nine months ended June 30, 2021 and 2020, net sales to, purchases from and royalties paid to and received from Post and its subsidiaries were immaterial.
The Company has a series of agreements with Post which govern the ongoing relationship between the Company and Post. These agreements include the amended and restated limited liability company agreement of BellRing LLC (the “LLC Agreement”), an employee matters agreement, an investor rights agreement, a tax matters agreement, a tax receivable agreement and the MSA, among others. Under certain of these agreements, the Company incurs expenses payable to Post in connection with certain administrative services provided for varying lengths of time. The Company had immaterial receivables with Post at both June 30, 2021 and September 30, 2020 related to sales with Post and its subsidiaries. The Company had $1.4 and $1.3 of payables with Post at June 30, 2021 and September 30, 2020, respectively, related to MSA fees and pass-through charges owed by the Company to Post, as well as related party purchases. The receivables and payables were included in “Receivables, net” and “Accounts payable,” respectively, on the Condensed Consolidated Balance Sheets. During the nine months ended June 30, 2021, BellRing LLC paid $15.7 to Post related to quarterly tax distributions from BellRing LLC to Post made pursuant to the terms of the LLC Agreement and $1.8 for state corporate tax withholdings on behalf of Post. During the nine months ended June 30, 2020, BellRing LLC paid $17.3 to Post related to quarterly tax distributions from BellRing LLC to Post made pursuant to the terms of the LLC Agreement and $2.0 for state corporate tax withholdings on behalf of Post.
Based on the provisions of the tax receivable agreement, BellRing Inc. must pay to Post (or certain of its transferees or other assignees) 85% of the amount of cash savings, if any, in U.S. federal income tax, as well as state and local income tax and franchise tax (using an assumed tax rate) and foreign tax that BellRing Inc. realizes (or, in some circumstances, is deemed to realize) as a result of (a) the increase in the tax basis of assets of BellRing LLC attributable to (i) the redemption of Post’s (or certain transferees’ or assignees’) BellRing LLC units for shares of Class A Common Stock or cash, (ii) deemed sales by Post (or certain of its transferees or assignees) of BellRing LLC units or assets to BellRing Inc., (iii) certain actual or deemed distributions from BellRing LLC to Post (or certain transferees or assignees) and (iv) certain formation transactions, (b) disproportionate allocations of tax benefits to BellRing Inc. as a result of Section 704(c) of the Internal Revenue Code and (c) certain tax benefits (e.g., imputed interest, basis adjustments, etc.) attributable to payments under the tax receivable agreement.
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Amounts payable to Post related to the tax receivable agreement were $10.5 and $10.9 at June 30, 2021 and September 30, 2020, respectively, and were recorded in “Other liabilities” on the Condensed Consolidated Balance Sheets.
NOTE 6 — REDEEMABLE NONCONTROLLING INTEREST
At both June 30, 2021 and September 30, 2020, Post held 97.5 million BellRing LLC units, equal to 71.2% of the economic interest in BellRing LLC. Post may redeem BellRing LLC units for, at BellRing LLC’s option (as determined by its Board of Managers), (i) shares of Class A Common Stock or (ii) cash (based on the market price of the shares of Class A Common Stock). The redemption of BellRing LLC units for shares of Class A Common Stock will be at an initial redemption rate of one share of Class A Common Stock for one BellRing LLC unit, subject to customary redemption rate adjustments for stock splits, stock dividends and reclassifications.
Post’s ownership of BellRing LLC units represents a NCI to the Company, which is classified outside of permanent stockholders’ equity as the BellRing LLC units are redeemable at the option of Post, through Post’s ownership of the Company’s Class B Common Stock (see Note 1). The carrying amount of the NCI is the greater of (i) the initial carrying amount, increased or decreased for the NCI’s share of net income or loss, other comprehensive income or loss (“OCI”) and distributions or dividends or (ii) the redemption value. As of June 30, 2021 and September 30, 2020, the carrying amount of the NCI was recorded at its redemption value of $3,054.9 and $2,021.6, respectively. Changes in the redemption value of the NCI are recorded to additional paid-in capital, to the extent available, and “Accumulated deficit” on the Condensed Consolidated Balance Sheets.
As of both June 30, 2021 and September 30, 2020, BellRing Inc. owned 28.8% of the outstanding BellRing LLC units. For the three and nine months ended June 30, 2021 and 2020, the financial results of BellRing LLC and its subsidiaries were consolidated with BellRing Inc., and the portion of the consolidated net earnings of BellRing LLC to which Post was entitled was allocated to the NCI during each period.
The following table summarizes the changes to the Company’s NCI. The period as of and for the nine months ended June 30, 2020 represents the period beginning October 21, 2019, the effective date of the IPO, and ending June 30, 2020 (see Note 1).
As Of and For The
Three Months Ended
June 30,
As Of and For The
 Nine Months Ended
June 30,
2021202020212020
Beginning of period$2,301.4 $1,661.9 $2,021.6 $ 
Net earnings attributable to NCI after IPO29.0 10.9 56.0 45.6 
Net change in hedges, net of tax0.4 0.4 1.2 (7.1)
Foreign currency translation adjustments0.2 0.3 0.2 0.1 
Impact of IPO   1,364.6 
Redemption value adjustment to NCI723.9 270.1 975.9 540.4 
End of period$3,054.9 $1,943.6 $3,054.9 $1,943.6 
The following table summarizes the effects of changes in ownership in BellRing LLC on BellRing Inc.’s equity. The period for the nine months ended June 30, 2020 represents the period beginning October 21, 2019, the effective date of the IPO, and ending June 30, 2020 (see Note 1).
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net earnings available to Class A Common Stockholders$9.5 $3.3 $17.9 $13.5 
Transfers to NCI:
Impact of IPO   1,364.6 
Redemption value adjustment to NCI723.9 270.1 975.9 540.4 
Changes from net earnings available to Class A Common Stockholders and transfers to NCI$733.4 $273.4 $993.8 $1,918.5 

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NOTE 7 — INCOME TAXES
At both June 30, 2021 and 2020, BellRing Inc. held 28.8% of the economic interest in BellRing LLC (see Note 1), which, as a result of the IPO and formation transactions, is treated as a partnership for U.S. federal income tax purposes. As a partnership, BellRing LLC itself is generally not subject to U.S. federal income tax under current U.S. tax laws.
The effective income tax rate was 8.1% and 7.3% for the three and nine months ended June 30, 2021, respectively, and 7.2% and 12.5% for the three and nine months ended June 30, 2020, respectively. The decrease in the effective income tax rate for the nine months ended June 30, 2021 compared to the prior year period was primarily due to the Company taking into account for U.S. federal, state and local income tax purposes its 28.8% distributive share of the items of income, gain, loss and deduction of BellRing LLC in the period subsequent to the IPO. Prior to the IPO and formation transactions, the Company reported 100% of the income, gain, loss and deduction of BellRing LLC.
NOTE 8 EARNINGS PER SHARE
Basic earnings per share is based on the average number of shares of Class A Common Stock outstanding during each period. Diluted earnings per share is based on the average number of shares of Class A Common Stock used for the basic earnings per share calculation, adjusted for the dilutive effect of stock options and restricted stock units using the “treasury stock” method. In addition, “Net earnings available to Class A Common Stockholders for diluted earnings per share” in the table below has been adjusted for diluted net earnings per share attributable to NCI, to the extent it is dilutive.
BellRing Inc.’s Class B Common Stock does not have economic rights, including rights to dividends or distributions upon liquidation, and is therefore not a participating security. As such, separate presentation of basic and diluted earnings per share of Class B Common Stock under the two-class method has not been presented.
The following table sets forth the computation of basic and diluted earnings per share. The period for the nine months ended June 30, 2020 represents the period beginning October 21, 2019, the effective date of the IPO, and ending June 30, 2020 (see Note 1).
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Net earnings available to Class A Common Stockholders for basic earnings per share$9.5 $3.3 $17.9 $13.5 
Dilutive impact of net earnings attributable to NCI0.1  0.1  
Net earnings available to Class A Common Stockholders for diluted earnings per share$9.6 $3.3 $18.0 $13.5 
Weighted average shares for basic earnings per share (in millions)39.5 39.4 39.5 39.4 
Total dilutive restricted stock units (in millions)0.2 0.1 0.2 0.1 
Weighted average shares for diluted earnings per share (in millions)39.7 39.5 39.7 39.5 
Basic earnings per share of Class A Common Stock$0.24 $0.08 $0.45 $0.34 
Diluted earnings per share of Class A Common Stock$0.24 $0.08 $0.45 $0.34 
Weighted average shares for diluted earnings per share excluded equity awards of zero and 0.2 million for the three and nine months ended June 30, 2021, respectively, and 0.1 million for each of the three and nine months ended June 30, 2020, as they were anti-dilutive.
NOTE 9 — INVENTORIES
June 30,
2021
September 30,
2020
Raw materials and supplies$24.8 $33.7 
Work in process0.2 0.1 
Finished products116.7 116.7 
   Inventories$141.7 $150.5 

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NOTE 10 — PROPERTY, NET
June 30,
2021
September 30,
2020
Property, at cost$21.6 $22.6 
Accumulated depreciation(12.9)(12.4)
   Property, net$8.7 $10.2 
NOTE 11 — GOODWILL
The components of “Goodwill” on the Condensed Consolidated Balance Sheets at both June 30, 2021 and September 30, 2020 are presented in the following table.
Goodwill, gross$180.7 
Accumulated impairment losses(114.8)
   Goodwill$65.9 
NOTE 12 — INTANGIBLE ASSETS, NET
Total intangible assets are as follows:
June 30, 2021September 30, 2020
Carrying
Amount
Accumulated
Amortization
Net
Amount
Carrying
Amount
Accumulated
Amortization
Net
Amount
Customer relationships$178.6 $(72.9)$105.7 $209.4 $(76.9)$132.5 
Trademarks and brands195.1 (72.8)122.3 213.4 (71.6)141.8 
Other intangible assets3.1 (3.1) 3.1 (3.1) 
   Intangible assets, net$376.8 $(148.8)$228.0 $425.9 $(151.6)$274.3 
In December 2020, the Company finalized its plan to discontinue the Supreme Protein brand and related sales of Supreme Protein products. In connection with the discontinuance, the Company updated the useful lives of the customer relationships and trademarks associated with the Supreme Protein brand to reflect the remaining period in which the Company continued to sell existing Supreme Protein product inventory. Accelerated amortization of $11.8 and $29.9 was recorded during the three and nine months ended June 30, 2021, respectively, resulting from the updated useful lives of the customer relationships and trademarks associated with the Supreme Protein brand, which were fully amortized and written off as of June 30, 2021.
NOTE 13 — LEASES
The Company leases office space, certain warehouses and equipment primarily through operating lease agreements. The Company has no material finance lease agreements. Leases have remaining terms which range from less than 1 year to 6 years and most leases provide the Company with the option to exercise one or more renewal terms.
Operating lease expense is recognized on a straight-line basis over the lease term and is included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations. Costs associated with finance leases and lease income do not have a material impact on the Company’s financial statements.
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The following table presents the balance sheet location of the Company’s operating leases.
June 30,
2021
September 30,
2020
Right-of-use assets:
   Other assets$10.0 $11.9 
Lease liabilities:
   Other current liabilities$2.1 $2.2 
   Other liabilities9.2 11.0 
      Total liabilities$11.3 $13.2 
The following table presents maturities of the Company’s operating lease liabilities.
June 30,
2021
Remaining Fiscal 2021$0.7 
Fiscal 20222.8 
Fiscal 20232.5 
Fiscal 20241.9 
Fiscal 20252.0 
Thereafter2.7 
   Total future minimum payments12.6 
   Less: Implied interest(1.3)
      Total lease liabilities$11.3 
The following table presents supplemental operations statement information related to the Company’s operating leases.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Operating lease expense$0.9 $1.0 $2.9 $3.0 
Variable lease expense0.2 0.2 0.50.5 
Short-term lease expense during each of the three and nine months ended June 30, 2021 and 2020 was immaterial. Operating cash flows for amounts included in the measurement of the Company’s operating lease liabilities were $2.3 and $2.7 for the nine months ended June 30, 2021 and 2020, respectively. Right-of-use assets obtained in exchange for operating lease liabilities during the nine months ended June 30, 2021 and 2020 were immaterial.
The weighted average remaining lease term of the Company’s operating leases was approximately 5 years and 6 years as of June 30, 2021 and September 30, 2020, respectively. The weighted average incremental borrowing rate was 4.3% and 4.2% as of June 30, 2021 and September 30, 2020, respectively.
NOTE 14 — DERIVATIVE FINANCIAL INSTRUMENTS
In the ordinary course of business, the Company is exposed to commodity price risks relating to the acquisition of raw materials and supplies, interest rate risks relating to floating rate debt and foreign currency exchange rate risks. The Company utilizes swaps to manage certain of these exposures by hedging when it is practical to do so. The Company does not hold or issue financial instruments for speculative or trading purposes.
At both June 30, 2021 and September 30, 2020, the Company had pay-fixed, receive-variable interest rate swaps with a notional amount of $350.0. The interest rate swaps mature in December 2022 and require monthly settlements, which began on January 31, 2020, and are used to hedge forecasted interest payments on the Company’s variable rate debt (see Note 16). On April 1, 2020, the Company changed the designation of the interest rate swaps from cash flow hedges to non-designated hedging instruments as the swaps were no longer effective (as defined by GAAP). In connection with the new designation, the Company started reclassifying losses previously recorded in accumulated OCI to “Interest expense, net” in the Condensed Consolidated Statements of Operations on a straight-line basis over the term of the related debt.
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At June 30, 2021, accumulated OCI, including amounts reported as NCI, included a $7.7 net hedging loss before taxes ($7.2 after taxes). At September 30, 2020, accumulated OCI, including amounts reported as NCI, included a $9.4 net hedging loss before taxes ($8.8 after taxes). Approximately $2.3 of the net hedging loss reported in accumulated OCI at June 30, 2021 is expected to be reclassified into earnings within the next 12 months.
The following table presents the balance sheet location and fair value of the Company’s derivative instruments on a gross basis. The Company does not offset derivative assets and liabilities within the Condensed Consolidated Balance Sheets.
June 30,
2021
September 30,
2020
Other current liabilities$4.7 $4.6 
Other liabilities2.1 5.8 
Total liabilities$6.8 $10.4 
The following table presents the components of the Company’s net hedging losses on interest rate swaps which were included in “Interest expense, net” in the Condensed Consolidated Statements of Operations and the net cash settlements paid on interest rate swaps.
Three Months Ended
June 30,
Nine Months Ended
June 30,
2021202020212020
Mark-to-market adjustments$0.1 $1.5 $ $1.3 
Net loss amortized from accumulated OCI0.6 0.6 1.7 0.6 
Total net hedging losses$0.7 $2.1 $1.7 $1.9 
Cash settlements paid$(1.2)$(0.9)$(3.6)$(0.7)
NOTE 15 — FAIR VALUE MEASUREMENTS
The following table represents the Company’s liabilities and NCI measured at fair value on a recurring basis and the basis for that measurement according to the levels in the fair value hierarchy in Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurement.”
June 30, 2021September 30, 2020
TotalLevel 1Level 2TotalLevel 1Level 2
Derivative liabilities$6.8 $ $6.8 $10.4 $ $10.4 
NCI$3,054.9 $3,054.9 $ $2,021.6 $2,021.6 $ 
The Company’s calculation of the fair value of interest rate swaps is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve on a recurring basis. The fair value of the NCI is calculated as its redemption value based on the Class A Common Stock price and number of BellRing LLC units owned by Post as of the end of each period (see Note 6).
The Company’s financial assets and liabilities include cash and cash equivalents, receivables and accounts payable for which the carrying value approximates fair value due to their short maturities (less than 12 months). The Company does not record its short-term and long-term debt at fair value on the Condensed Consolidated Balance Sheets. The fair value of any outstanding borrowings under the Revolving Credit Facility (as defined in Note 16) as of June 30, 2021 and September 30, 2020 approximated their carrying values. Based on current market rates, the fair value (Level 2) of the Term B Facility (as defined in Note 16) was $622.6 and $674.0 as of June 30, 2021 and September 30, 2020, respectively.
Certain assets and liabilities, including property, plant and equipment, goodwill and other intangible assets, are measured at fair value on a non-recurring basis.
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NOTE 16 — LONG-TERM DEBT
The following table presents the components of “Long-term debt” on the Condensed Consolidated Balance Sheets.
June 30,
2021
September 30,
2020
Term B Facility$618.7 $673.7 
Revolving Credit Facility 30.0 
Total principal amount of debt618.7 703.7 
Less: Current portion of long-term debt114.5 63.8 
Debt issuance costs, net5.1 6.6 
Unamortized discount8.4 10.7 
Long-term debt$490.7 $622.6 
On October 21, 2019, BellRing LLC entered into a credit agreement (as amended, the “Credit Agreement”) which provides for a term B loan facility in an aggregate principal amount of $700.0 (the “Term B Facility”) and a revolving credit facility in an aggregate principal amount of $200.0 (the “Revolving Credit Facility”), with the commitments under the Revolving Credit Facility to be made available to BellRing LLC in U.S. Dollars, Euros and Pounds Sterling. Letters of credit are available under the Credit Agreement in an aggregate amount of up to $20.0. Any outstanding amounts under the Revolving Credit Facility and Term B Facility must be repaid on or before October 21, 2024.
On February 26, 2021, BellRing LLC entered into a second amendment to its Credit Agreement (the “Amendment”). The Amendment provided for the refinancing of the Term B Facility on substantially the same terms as in effect prior to the Amendment, except that it (i) reduced the interest rate margin by 100 basis points resulting in (A) for Eurodollar rate loans, an interest rate of the Eurodollar rate plus a margin of 4.00% and (B) for base rate loans, an interest rate of the base rate plus a margin of 3.00%, (ii) reduced the floor for the Eurodollar rate to 0.75%, (iii) modified the Credit Agreement to address the anticipated unavailability of LIBOR as a reference interest rate and (iv) provided that if on or before August 26, 2021 BellRing LLC repays the Term B Facility in whole or in part with the proceeds of new or replacement debt at a lower effective interest rate, or further amends the Credit Agreement to reduce the effective interest rate applicable to the Term B Facility, BellRing LLC must pay a 1.00% premium on the amount repaid or subject to the interest rate reduction. In connection with the Amendment, BellRing LLC paid debt refinancing fees of $0.1 and $1.6 in the three and nine months ended June 30, 2021, respectively, which were included in “Loss on refinancing of debt” in the Condensed Consolidated Statements of Operations.
Subsequent to the Amendment, borrowings under the Term B Facility bear interest, at the option of BellRing LLC, at an annual rate equal to either (a) the Eurodollar rate or (b) the base rate determined by reference to the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.50% per annum and (iii) the one-month Eurodollar rate plus 1.00% per annum, in each case plus an applicable margin of 4.00% for Eurodollar rate-based loans and 3.00% for base rate-based loans.
The Term B Facility requires quarterly scheduled amortization payments of $8.75 which began on March 31, 2020, with the balance to be paid at maturity on October 21, 2024. Interest was paid on each Interest Payment Date (as defined in the Credit Agreement) during each of the nine months ended June 30, 2021 and 2020. The Term B Facility contains customary mandatory prepayment provisions, including provisions for mandatory prepayment (a) from the net cash proceeds of certain asset sales and (b) of 75% of consolidated excess cash flow (as defined in the Credit Agreement) (which percentage will be reduced to 50% if the secured net leverage ratio (as defined in the Credit Agreement) is less than or equal to 3.35:1.00 as of a fiscal year end). During the nine months ended June 30, 2021, the Company repaid $28.8 on its Term B Facility as a mandatory prepayment from fiscal 2020 excess cash flow, which was in addition to the scheduled amortization payments. The Company classified $79.5 related to the estimated mandatory prepayment of fiscal 2021 excess cash flow in “Current portion of long-term debt” on the Condensed Consolidated Balance Sheet at June 30, 2021. The Company may prepay the Term B Facility at its option without penalty or premium, except as restricted by the Amendment. The interest rate on the Term B Facility was 4.75% and 6.00% as of June 30, 2021 and September 30, 2020, respectively.
Borrowings under the Revolving Credit Facility bear interest, at the option of BellRing LLC, at an annual rate equal to either the Eurodollar rate or the base rate (determined as described above) plus a margin, which initially was 4.25% for Eurodollar rate-based loans and 3.25% for base rate-based loans, and thereafter, will be determined by reference to the secured net leverage ratio, with the applicable margin for Eurodollar rate-based loans and base rate-based loans being (i) 4.25% and 3.25%, respectively, if the secured net leverage ratio is greater than or equal to 3.50:1.00, (ii) 4.00% and 3.00%, respectively, if the secured net leverage ratio is less than 3.50:1.00 and greater than or equal to 2.50:1.00 or (iii) 3.75% and 2.75%, respectively, if the secured net leverage ratio is less than 2.50:1.00. Facility fees on the daily unused amount of commitments under the Revolving Credit Facility were initially accrued at the rate of 0.50% per annum and thereafter, depending on BellRing LLC’s secured net leverage ratio, will accrue at rates ranging from 0.25% to 0.50% per annum. There were no amounts drawn
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under the Revolving Credit Facility as of June 30, 2021. The interest rate on the drawn portion of the Revolving Credit Facility was 5.25% as of September 30, 2020.
During the nine months ended June 30, 2021 and 2020, BellRing LLC borrowed $20.0 and $185.0 under the Revolving Credit Facility, respectively, and repaid $50.0 and $130.0 on the Revolving Credit Facility, respectively. The available borrowing capacity under the Revolving Credit Facility was $200.0 and $170.0 as of June 30, 2021 and September 30, 2020, respectively. There were no outstanding letters of credit as of June 30, 2021 or September 30, 2020.
Under the terms of the Credit Agreement, BellRing LLC is required to comply with a financial covenant requiring it to maintain a total net leverage ratio not to exceed 6.00 to 1.00, measured as of the last day of each fiscal quarter. The total net leverage ratio of BellRing LLC did not exceed this threshold as of June 30, 2021.
The Credit Agreement provides for incremental revolving and term facilities, and also permits other secured or unsecured debt, if, among other conditions, certain financial ratios are met, as defined and specified in the Credit Agreement.
The Credit Agreement provides for customary events of default, including material breach of representations and warranties, failure to make required payments, failure to comply with certain agreements or covenants, failure to pay or default under certain other material indebtedness, certain events of bankruptcy and insolvency, inability to pay debts, the occurrence of one or more unstayed or undischarged judgments in excess of $65.0, certain events under the Employee Retirement Income Security Act of 1974, the invalidity of any loan document, a change in control, and the failure of the collateral documents to create a valid and perfected first priority lien. Upon the occurrence and during the continuance of an event of default, the maturity of the loans under the Credit Agreement may accelerate and the agent and lenders under the Credit Agreement may exercise other rights and remedies available at law or under the loan documents, including with respect to the collateral and guarantees of BellRing LLC’s obligations under the Credit Agreement.
BellRing LLC’s obligations under the Credit Agreement are unconditionally guaranteed by its existing and subsequently acquired or organized domestic subsidiaries (other than immaterial domestic subsidiaries, certain excluded subsidiaries and subsidiaries BellRing LLC designates as unrestricted subsidiaries) and are secured by security interests in substantially all of BellRing LLC’s assets and the assets of its subsidiary guarantors, but excluding, in each case, real property (subject to limited exceptions).
NOTE 17 — COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Joint Juice Litigation
In March 2013, a complaint was filed on behalf of a putative, nationwide class of consumers against Premier Nutrition Company, LLC (“Premier Nutrition”) in the U.S. District Court for the Northern District of California seeking monetary damages and injunctive relief. The case asserted that some of Premier Nutrition’s advertising claims regarding its Joint Juice line of glucosamine and chondroitin dietary supplements were false and misleading. In April 2016, the district court certified a California-only class of consumers in this lawsuit (this lawsuit is hereinafter referred to as the “California Federal Class Lawsuit”).
In 2016 and 2017, the lead plaintiff’s counsel in the California Federal Class Lawsuit filed ten additional class action complaints in the U.S. District Court for the Northern District of California on behalf of putative classes of consumers under the laws of Connecticut, Florida, Illinois, New Jersey, New Mexico, New York, Maryland, Massachusetts, Michigan and Pennsylvania. These additional complaints contain factual allegations similar to the California Federal Class Lawsuit, also seeking monetary damages and injunctive relief. The New Jersey case was voluntarily dismissed.
In April 2018, the district court dismissed the California Federal Class Lawsuit with prejudice. This dismissal was upheld on appeal by the U.S. Court of Appeals for the Ninth Circuit and Plaintiff’s petition for an en banc rehearing by the Ninth Circuit was denied. The other complaints remain pending in the U.S. District Court for the Northern District of California, and the court has certified individual state classes in each of those cases.
In January 2019, the same lead counsel filed an additional class action complaint against Premier Nutrition in California Superior Court for the County of Alameda, alleging claims similar to the above actions and seeking monetary damages and injunctive relief on behalf of a putative class of California consumers, beginning after the California Federal Class Lawsuit class period.
In September 2020, the same lead counsel filed another class action complaint against Premier Nutrition in California Superior Court for the County of Alameda, alleging identical claims and seeking restitution and injunctive relief on behalf of the same putative class of California consumers as the California Federal Class Lawsuit.
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The Company continues to vigorously defend these cases. The Company does not believe that the resolution of these cases will have a material adverse effect on its financial condition, results of operations or cash flows.
Other than legal fees, no expense related to this litigation was incurred during the three or nine months ended June 30, 2021 or 2020. At both June 30, 2021 and September 30, 2020, the Company had accrued $8.5 related to this matter that was included in “Other current liabilities” on the Condensed Consolidated Balance Sheets.
Other
The Company is subject to various other legal proceedings and actions arising in the normal course of business. In the opinion of management, based upon the information presently known, the ultimate liability, if any, arising from such pending legal proceedings, as well as from asserted legal claims and known potential legal claims which are likely to be asserted, taking into account established accruals for estimated liabilities (if any), are not expected to be material individually or in the aggregate to the financial condition, results of operations or cash flows of the Company. In addition, although it is difficult to estimate the potential financial impact of actions regarding expenditures for compliance with regulatory matters, in the opinion of management, based upon the information currently available, the ultimate liability arising from such compliance matters is not expected to be material to the financial condition, results of operations or cash flows of the Company.
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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of BellRing Brands, Inc. and its consolidated subsidiaries. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein, our audited financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended September 30, 2020, as amended, and the “Cautionary Statement on Forward-Looking Statements” section included below. The terms “our,” “we,” “us,” “Company” and “BellRing” as used herein refer to BellRing Brands, Inc. and its consolidated subsidiaries.
OVERVIEW
We are a consumer products holding company operating in the global convenient nutrition category and a provider of ready-to-drink (“RTD”) protein shakes, other RTD beverages, powders, nutrition bars and nutritional supplements. We have a single operating and reportable segment, with our principal products being protein-based consumer goods. Our primary brands are Premier Protein and Dymatize.
On October 21, 2019, BellRing Brands, Inc. (“BellRing Inc.”) closed its initial public offering (the “IPO”) of 39.4 million shares of its Class A common stock, $0.01 par value per share (the “Class A Common Stock”) and contributed the net proceeds from the IPO to BellRing Brands, LLC, a Delaware limited liability company and BellRing Inc.’s subsidiary (“BellRing LLC”), in exchange for 39.4 million BellRing LLC non-voting membership units (the “BellRing LLC units”).
As a result of the IPO and certain other transactions completed in connection with the IPO (the “formation transactions”), BellRing LLC became the holder of the active nutrition business of Post Holdings, Inc. (“Post”). BellRing Inc., as a holding company, has no material assets other than its ownership of BellRing LLC units and its indirect interests in the subsidiaries of BellRing LLC and has no independent means of generating revenue or cash flow. For additional information on the IPO, see Note 1 within “Notes to Condensed Consolidated Financial Statements.”
The members of BellRing LLC are Post and BellRing Inc. BellRing Inc. holds the voting membership unit of BellRing LLC (which represents the power to appoint and remove the members of the Board of Managers of, and no economic interest in, BellRing LLC). BellRing Inc. has the right to appoint the members of the BellRing LLC Board of Managers, and therefore, controls BellRing LLC. The Board of Managers is responsible for the oversight of BellRing LLC’s operations and overall performance and strategy, while the management of the day-to-day operations of the business of BellRing LLC and the execution of business strategy are the responsibility of the officers and employees of BellRing LLC and its subsidiaries. Post, in its capacity as a member of BellRing LLC, does not have the power to appoint any members of the Board of Managers or voting rights with respect to BellRing LLC.
COVID-19
We continue to closely monitor the impact of the COVID-19 pandemic on our business and remain focused on ensuring the health and safety of our employees, and serving customers and consumers. Our primary categories returned to growth rates in line with their pre-pandemic levels during the fourth quarter of fiscal 2020 and have remained strong in subsequent periods. For additional discussion, refer to “Liquidity and Capital Resources” and “Cautionary Statement on Forward-Looking Statements” within this section, as well as “Risk Factors” in Item 1A of Part II of this report.
Restructuring Charges
In October 2020, we announced our plan to strategically realign our business, resulting in the closing of our Dallas, Texas office and the downsizing of our Munich, Germany location. These actions were substantially completed as of June 30, 2021. For additional information on restructuring costs, refer to Note 4 within “Notes to Condensed Consolidated Financial Statements.”
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RESULTS OF OPERATIONS
Three Months Ended June 30,Nine Months Ended June 30,
favorable/(unfavorable)favorable/(unfavorable)
dollars in millions20212020$ Change% Change20212020$ Change% Change
Net Sales
$342.6 $204.2 $138.4 68 %$907.1 $705.7 $201.4 29 %
Operating Profit
$51.5 $30.6 $20.9 68 %$114.9 $115.0 $(0.1)— %
Interest expense, net
9.5 15.3 5.8 38 %