Corporate & Financial
BellRing Brands Reports Results for the First Quarter of Fiscal Year 2022
Highlights:
- Net sales of
$306.5 million - Operating profit of
$50.6 million ; net earnings available to Class A common stockholders of$8.2 million and Adjusted EBITDA of$59.8 million - Reaffirmed fiscal year 2022 net sales guidance of
$1.36-$1.41 billion and Adjusted EBITDA (non-GAAP) guidance of$255-$265 million
First Quarter Operating Results
Net sales were
Dollar consumption of Premier Protein RTD shakes and
Gross profit was
Selling, general and administrative (“SG&A”) expenses were
Operating profit was
Interest expense, net was
Income tax expense was
Net earnings available to Class A common stockholders were
Adjusted EBITDA was
Basis of Presentation
Effective
Share Repurchases and New Share Repurchase Authorization
During the first quarter of 2022, BellRing repurchased 0.8 million shares of its Class A common stock for
Post’s Plan to Distribute Its Interest in BellRing to Post Shareholders
On
COVID-19 Commentary
BellRing continues to closely monitor the impact of the COVID-19 pandemic on its business and remains focused on ensuring the health and safety of its employees and serving customers and consumers. BellRing’s primary categories returned to growth rates in line with their pre-pandemic levels during the fourth quarter of fiscal year 2020 and have remained strong in subsequent periods.
As the overall economy continues to recover from the impact of the COVID-19 pandemic, input and freight inflation and labor and input availability are pressuring BellRing’s supply chain. Lower than anticipated production and delays in capacity expansion across the broader third party shake contract manufacturer network have resulted in low inventories and missed sales. Service levels and fill rates remain below normal levels, and certain products have been placed on allocation. These factors are expected to improve but persist throughout fiscal year 2022 and are dependent upon BellRing’s contract manufacturer partners’ ability to deliver committed volumes, add capacity on expected timelines, retain manufacturing staff and rebuild inventory levels. Raw material, packaging and freight inflation has been widespread, rapid and significant, and has put downward pressure on profit margins. As a result, BellRing has taken pricing actions on nearly all products.
Outlook
For fiscal year 2022, BellRing management continues to expect net sales and Adjusted EBITDA each to grow 9%-13% over fiscal year 2021 (resulting in a net sales range of
BellRing provides Adjusted EBITDA guidance only on a non-GAAP basis and does not provide a reconciliation of its forward-looking Adjusted EBITDA non-GAAP guidance measure to the most directly comparable GAAP measure due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, including adjustments that could be made for restructuring and facility closures costs, separation costs, net earnings attributable to redeemable NCI and other charges reflected in BellRing’s reconciliation of historical numbers, the amounts of which, based on historical experience, could be significant. For additional information regarding BellRing’s non-GAAP measures, see the related explanations presented under “Use of Non-GAAP Measures.”
Use of Non-GAAP Measures
BellRing uses certain non-GAAP measures in this release to supplement the financial measures prepared in accordance with
Management uses certain of these non-GAAP measures, including Adjusted EBITDA, as key metrics in the evaluation of underlying company performance, in making financial, operating and planning decisions and, in part, in the determination of bonuses for its executive officers and employees. Additionally,
BellRing Conference Call to Discuss Earnings Results and Outlook
BellRing will host a conference call on
Interested parties may join the conference call by dialing (866) 518-6930 in
A replay of the conference call will be available through
Prospective Financial Information
Prospective financial information is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the prospective financial information described above will not materialize or will vary significantly from actual results. For further discussion of some of the factors that may cause actual results to vary materially from the information provided above, see “Forward-Looking Statements” below. Accordingly, the prospective financial information provided above is only an estimate of what BellRing’s management believes is realizable as of the date of this release. It also should be recognized that the reliability of any forecasted financial data diminishes the farther in the future that the data is forecasted. In light of the foregoing, the information should be viewed in context and undue reliance should not be placed upon it.
Additional Information Regarding the Proposed Distribution of Post’s Interest in BellRing and Where to Find It
This release does not constitute an offer to sell, the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the proposed transaction, New BellRing has filed a registration statement of New BellRing on Form S-4 (File No. 333-261741) with the
The transaction and distribution of this release may be restricted by law in certain jurisdictions and persons who come into possession of any document or other information referred to herein should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No offering of securities will be made, directly or indirectly, in or into any jurisdiction where to do so would be inconsistent with the laws of such jurisdiction.
Participants in a Solicitation
BellRing, New BellRing, Post and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from BellRing’s stockholders with respect to the approvals required to complete the proposed transaction. More detailed information regarding the identity of these potential participants, and any direct or indirect interests they may have in the proposed transaction, by security holdings or otherwise, is set forth in BellRing’s definitive proxy statement filed with the
Forward-Looking Statements
Certain matters discussed in this release and on BellRing’s conference call are forward-looking statements, including BellRing’s net sales, Adjusted EBITDA and capital expenditures outlook for fiscal year 2022, the effect of the COVID-19 pandemic on BellRing’s business, BellRing’s continuing response to the COVID-19 pandemic and the proposed transaction between Post and BellRing for the distribution of a significant portion of Post’s interest in BellRing to Post’s shareholders, including the amount of BellRing equity Post intends to distribute, the form of the distribution, the amount of cash Post and BellRing currently anticipate to be distributed to BellRing stockholders and Post and the expected timing of the completion of the proposed transaction. These forward-looking statements are sometimes identified from the use of forward-looking words such as “believe,” “should,” “could,” “potential,” “continue,” “expect,” “project,” “estimate,” “predict,” “anticipate,” “aim,” “intend,” “plan,” “forecast,” “target,” “is likely,” “will,” “can,” “may” or “would” or the negative of these terms or similar expressions, and include all statements regarding future performance, earnings projections, events or developments. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. These risks and uncertainties include, but are not limited to, the following:
- the impact of the COVID-19 pandemic, including negative impacts on the global economy and capital markets, the health of BellRing’s employees, BellRing’s ability and the ability of its third party contract manufacturers to manufacture and deliver its products, operating costs, demand for its on-the-go products and its operations generally;
- BellRing’s dependence on sales from its RTD protein shakes;
- BellRing’s ability to continue to compete in its product categories and its ability to retain its market position and favorable perceptions of its brands;
- disruptions or inefficiencies in BellRing’s supply chain, including as a result of BellRing’s reliance on third party suppliers or manufacturers for the manufacturing of many of its products, pandemics (including the COVID-19 pandemic) and other outbreaks of contagious diseases, labor shortages, fires and evacuations related thereto, changes in weather conditions, natural disasters, agricultural diseases and pests and other events beyond BellRing’s control;
- BellRing’s dependence on a limited number of third party contract manufacturers for the manufacturing of most of its products, including one manufacturer for the substantial majority of its RTD protein shakes;
- the ability of BellRing’s third party contract manufacturers to produce an amount of BellRing’s products that enables BellRing to meet customer and consumer demand for the products;
- BellRing’s reliance on a limited number of third party suppliers to provide certain ingredients and packaging;
- significant volatility in the cost or availability of inputs to BellRing’s business (including freight, raw materials, packaging, energy, labor and other supplies);
- BellRing’s ability to anticipate and respond to changes in consumer and customer preferences and behaviors and introduce new products;
- consolidation in BellRing’s distribution channels;
- BellRing’s ability to expand existing market penetration and enter into new markets;
- the loss of, a significant reduction of purchases by or the bankruptcy of a major customer;
- legal and regulatory factors, such as compliance with existing laws and regulations, as well as new laws and regulations and changes to existing laws and regulations and interpretations thereof, affecting BellRing’s business, including current and future laws and regulations regarding food safety, advertising, labeling, tax matters and environmental matters;
- fluctuations in BellRing’s business due to changes in its promotional activities and seasonality;
- BellRing’s ability to maintain the net selling prices of its products and manage promotional activities with respect to its products;
- BellRing’s high leverage, its ability to obtain additional financing (including both secured and unsecured debt) and its ability to service its outstanding debt (including covenants that restrict the operation of its business);
- the accuracy of BellRing’s market data and attributes and related information;
- changes in estimates in critical accounting judgments;
- economic downturns that limit customer and consumer demand for BellRing’s products;
- changes in economic conditions, disruptions in the
U.S. and global capital and credit markets, changes in interest rates, volatility in the market value of derivatives and fluctuations in foreign currency exchange rates; - risks related to BellRing’s ongoing relationship with Post, including Post’s control over BellRing and ability to control the direction of BellRing’s business, conflicts of interest or disputes that may arise between Post and BellRing, and BellRing’s obligations under various agreements with Post, including under the tax receivable agreement;
- conflicting interests or the appearance of conflicting interests resulting from certain of BellRing’s directors also serving as officers or directors of Post;
- risks related to the proposed distribution by Post of a significant portion of its ownership interest in BellRing, including that it is subject to various conditions and may not occur, BellRing’s inability to take certain actions because such actions could jeopardize the tax-free status of the proposed distribution and BellRing’s possible responsibility for
U.S. federal tax liabilities related to the proposed distribution; - the ultimate impact litigation or other regulatory matters may have on BellRing;
- risks associated with BellRing’s international business;
- BellRing’s ability to protect its intellectual property and other assets and to continue to use third party intellectual property subject to intellectual property licenses;
- costs, business disruptions and reputational damage associated with information technology failures, cybersecurity incidents and/or information security breaches;
- impairment in the carrying value of goodwill or other intangibles;
- BellRing’s ability to identify, complete and integrate or otherwise effectively execute acquisitions or other strategic transactions and effectively manage its growth;
- BellRing’s ability to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002;
- significant differences in BellRing’s actual operating results from BellRing’s guidance regarding its performance;
- BellRing’s ability to hire and retain talented personnel, employee absenteeism, labor strikes, work stoppages or unionization efforts; and
- other risks and uncertainties described in BellRing’s filings with the
SEC .
These forward-looking statements represent BellRing’s judgment as of the date of this release. BellRing disclaims, however, any intent or obligation to update these forward-looking statements.
About
Contact:
Investor Relations
jennifer.meyer@bellringbrands.com
(314) 644-7665
Media Relations
lisa.hanly@bellringbrands.com
(314) 665-3180
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in millions, except for per share data)
Three Months Ended |
||||||
2021 | 2020 | |||||
$ | 306.5 | $ | 282.4 | |||
Cost of goods sold | 214.2 | 190.5 | ||||
Gross Profit | 92.3 | 91.9 | ||||
Selling, general and administrative expenses | 36.8 | 38.3 | ||||
Amortization of intangible assets | 4.9 | 5.9 | ||||
Other operating income, net | — | (0.1 | ) | |||
Operating Profit | 50.6 | 47.8 | ||||
Interest expense, net | 8.4 | 12.8 | ||||
Earnings before Income Taxes | 42.2 | 35.0 | ||||
Income tax expense | 2.9 | 2.1 | ||||
Net Earnings Including Redeemable Noncontrolling Interest | 39.3 | 32.9 | ||||
Less: Net earnings attributable to redeemable noncontrolling interest | 31.1 | 25.1 | ||||
Net Earnings Available to Class A Common Stockholders | $ | 8.2 | $ | 7.8 | ||
Earnings per share of Class A Common Stock: | ||||||
Basic | $ | 0.21 | $ | 0.20 | ||
Diluted | $ | 0.21 | $ | 0.20 | ||
Weighted-Average shares of Class A Common Stock Outstanding: | ||||||
Basic | 39.4 | 39.5 | ||||
Diluted | 39.6 | 39.6 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
ASSETS | |||||||
Current Assets | |||||||
Cash and cash equivalents | $ | 30.4 | $ | 152.6 | |||
Receivables, net | 118.2 | 103.9 | |||||
Inventories | 130.2 | 117.9 | |||||
Prepaid expenses and other current assets | 18.8 | 13.7 | |||||
Total Current Assets | 297.6 | 388.1 | |||||
Property, net | 9.1 | 8.9 | |||||
65.9 | 65.9 | ||||||
Intangible assets, net | 218.2 | 223.1 | |||||
Other assets | 9.8 | 10.5 | |||||
Total Assets | $ | 600.6 | $ | 696.5 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current Liabilities | |||||||
Current portion of long-term debt | $ | 35.0 | $ | 116.3 | |||
Accounts payable | 72.5 | 91.9 | |||||
Other current liabilities | 38.2 | 43.1 | |||||
Total Current Liabilities | 145.7 | 251.3 | |||||
Long-term debt | 473.4 | 481.2 | |||||
Deferred income taxes | 8.5 | 7.6 | |||||
Other liabilities | 19.9 | 21.9 | |||||
Total Liabilities | 647.5 | 762.0 | |||||
Redeemable noncontrolling interest | 2,780.9 | 2,997.3 | |||||
Stockholders’ Deficit | |||||||
Preferred stock | — | — | |||||
Common stock | 0.4 | 0.4 | |||||
Accumulated deficit | (2,806.6 | ) | (3,059.7 | ) | |||
Accumulated other comprehensive loss | (3.5 | ) | (3.5 | ) | |||
(18.1 | ) | — | |||||
Total Stockholders’ Deficit | (2,827.8 | ) | (3,062.8 | ) | |||
Total Liabilities and Stockholders’ Deficit | $ | 600.6 | $ | 696.5 |
SELECTED CONDENSED CONSOLIDATED CASH FLOWS INFORMATION (Unaudited)
(in millions)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Cash (used in) provided by: | |||||||
Operating activities | $ | (9.1 | ) | $ | 23.3 | ||
Investing activities | (0.6 | ) | — | ||||
Financing activities | (112.5 | ) | (22.0 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | — | 0.8 | |||||
Net (decrease) increase in cash and cash equivalents | $ | (122.2 | ) | $ | 2.1 |
EXPLANATION AND RECONCILIATION OF NON-GAAP MEASURES
BellRing uses certain non-GAAP measures in this release to supplement the financial measures prepared in accordance with
Adjusted net earnings available to Class A common stockholders and Adjusted diluted earnings per share of Class A common stock
BellRing believes Adjusted net earnings available to Class A common stockholders and Adjusted diluted earnings per share of Class A common stock are useful to investors in evaluating BellRing’s operating performance because they exclude items that affect the comparability of BellRing’s financial results and could potentially distort an understanding of the trends in business performance.
Adjusted net earnings available to Class A common stockholders and Adjusted diluted earnings per share of Class A common stock are adjusted for the following items:
a. | Accelerated amortization: BellRing has excluded non-cash accelerated amortization charges recorded in connection with the discontinuation of certain brands as the amount and frequency of such charges are not consistent. Additionally, BellRing believes that these charges do not reflect expected ongoing future operating expenses and do not contribute to a meaningful evaluation of BellRing’s current operating performance or comparisons of BellRing’s operating performance to other periods. |
b. | Restructuring and facility closure costs, including accelerated depreciation: BellRing has excluded certain costs associated with facility closures as the amount and frequency of such adjustments are not consistent. Additionally, BellRing believes that these costs do not reflect expected ongoing future operating expenses and do not contribute to a meaningful evaluation of BellRing’s current operating performance or comparisons of BellRing’s operating performance to other periods. |
c. | Separation costs: BellRing has excluded certain expenses incurred (i) to effect its separation from Post, (ii) in connection with Post’s plan to distribute Post’s interest in BellRing and (iii) to support its transition into a separate stand-alone, publicly-traded entity, as the amount and frequency of such expenses are not consistent. Additionally, BellRing believes that these costs do not reflect expected ongoing future operating expenses and do not contribute to a meaningful evaluation of BellRing’s current operating performance or comparisons of BellRing’s operating performance to other periods. |
d. | Foreign currency gain/loss on intercompany loans: BellRing has excluded the impact of foreign currency fluctuations related to intercompany loans denominated in currencies other than the functional currency of the respective legal entity in evaluating BellRing’s performance to allow for more meaningful comparisons of performance to other periods. |
e. | Mark-to-market adjustments on commodity hedges: BellRing has excluded the impact of mark-to-market adjustments on commodity hedges due to the inherent uncertainty and volatility associated with such amounts based on changes in assumptions with respect to fair value estimates. Additionally, these adjustments are primarily non-cash items and the amount and frequency of such adjustments are not consistent. |
f. | NCI adjustment: BellRing has included an adjustment to reflect the removal of non-GAAP adjustments which are attributable to redeemable NCI in the calculation of Adjusted net earnings available to Class A common stockholders and Adjusted diluted earnings per share of Class A common stock. |
g. | Income tax effect on adjustments: BellRing has included the income tax impact of the non-GAAP adjustments using a rate described in the applicable footnote of the reconciliation tables, as BellRing believes that its GAAP effective income tax rate as reported is not representative of the income tax expense impact of the adjustments. |
Adjusted EBITDA
BellRing believes that Adjusted EBITDA is useful to investors in evaluating BellRing’s operating performance and liquidity because (i) BellRing believes it is widely used to measure a company’s operating performance without regard to items such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets, (ii) it presents a measure of corporate performance exclusive of BellRing’s capital structure and the method by which the assets were acquired and (iii) it is a financial indicator of a company’s ability to service its debt, as
Adjusted EBITDA reflects adjustments for income tax expense, interest expense, net and depreciation and amortization including accelerated depreciation and amortization and the adjustments for restructuring and facility closure costs excluding accelerated depreciation, separation costs, foreign currency gain/loss on intercompany loans and mark-to-market adjustments on commodity hedges, as discussed above. Additionally, Adjusted EBITDA reflects adjustments for the following items:
h. | Stock-based compensation: BellRing’s compensation strategy after the initial public offering (the “IPO”) includes the use of BellRing stock-based compensation to attract and retain executives and employees by aligning their long-term compensation interests with BellRing’s stockholders’ investment interests. BellRing’s director compensation strategy includes an election by any director who earns retainers in which the director may elect to defer compensation granted as a director to BellRing Class A common stock, earning a match on the deferral, both of which are stock-settled upon the director’s retirement from the BellRing board of directors. BellRing’s compensation strategy prior to the IPO included the use of Post stock-based compensation to attract and retain executives and employees by aligning their long-term compensation interests with Post’s shareholders’ investment interests; after the IPO, BellRing continues to be charged for Post stock-based compensation through the master services agreement with Post. BellRing has excluded stock-based compensation as stock-based compensation can vary significantly based on reasons such as the timing, size and nature of the awards granted and subjective assumptions which are unrelated to operational decisions and performance in any particular period and does not contribute to meaningful comparisons of BellRing’s operating performance to other periods. |
i. | Net earnings attributable to redeemable noncontrolling interest: BellRing has included adjustments for the portion of its consolidated net earnings which was allocated to redeemable NCI, allowing for the calculation of Adjusted EBITDA to include 100% of BellRing as BellRing’s management evaluates BellRing’s operating performance on a basis that includes 100% of BellRing. |
RECONCILIATION OF NET EARNINGS AVAILABLE TO CLASS A COMMON STOCKHOLDERS
TO ADJUSTED NET EARNINGS AVAILABLE TO CLASS A COMMON STOCKHOLDERS (Unaudited)
(in millions)
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Net Earnings Available to Class A Common Stockholders | $ | 8.2 | $ | 7.8 | ||||
Dilutive impact of net earnings attributable to NCI | 0.1 | — | ||||||
Net Earnings Available to Class A Common Stockholders for Diluted Earnings per Share | 8.3 | 7.8 | ||||||
Adjustments: | ||||||||
Accelerated amortization | — | 0.4 | ||||||
Restructuring and facility closure costs, including accelerated depreciation | — | 4.7 | ||||||
Separation costs | 2.0 | — | ||||||
Foreign currency loss (gain) on intercompany loans | 0.2 | (0.3 | ) | |||||
Mark-to-market adjustments on commodity hedges | (0.3 | ) | — | |||||
NCI adjustment | 0.1 | (3.4 | ) | |||||
Total Net Adjustments | 2.0 | 1.4 | ||||||
Income tax effect on adjustments (1) | (0.5 | ) | (0.3 | ) | ||||
Adjusted Net Earnings Available to Class A Common Stockholders | $ | 9.8 | $ | 8.9 | ||||
(1) For all periods, income tax effect on adjustments was calculated on all items, except for separation costs and NCI adjustment, using a rate of 7.0%, which represents the effective income tax rate on BellRing’s distributive share from |
RECONCILIATION OF DILUTED EARNINGS PER SHARE OF CLASS A COMMON STOCK
TO ADJUSTED DILUTED EARNINGS PER SHARE OF CLASS A COMMON STOCK (Unaudited)
Three Months Ended |
||||||||
2021 |
2020 |
|||||||
Diluted Earnings per share of Class A Common Stock | $ | 0.21 | $ | 0.20 | ||||
Adjustments: | ||||||||
Accelerated amortization | — | 0.01 | ||||||
Restructuring and facility closure costs, including accelerated depreciation | — | 0.12 | ||||||
Separation costs | 0.05 | — | ||||||
Foreign currency loss (gain) on intercompany loans | 0.01 | (0.01 | ) | |||||
Mark-to-market adjustments on commodity hedges | (0.01 | ) | — | |||||
NCI adjustment | — | (0.09 | ) | |||||
Total Net Adjustments | 0.05 | 0.03 | ||||||
Income tax effect on adjustments (1) | (0.01 | ) | (0.01 | ) | ||||
Adjusted Diluted Earnings per share of Class A Common Stock | $ | 0.25 | $ | 0.22 | ||||
(1) For all periods, income tax effect on adjustments was calculated on all items, except for separation costs and NCI adjustment, using a rate of 7.0%, which represents the effective income tax rate on BellRing’s distributive share from |
RECONCILIATION OF NET EARNINGS AVAILABLE TO CLASS A COMMON STOCKHOLDERS
TO ADJUSTED EBITDA (Unaudited)
(in millions)
Three Months Ended |
|||||||
2021 | 2020 | ||||||
Net Earnings Available to Class A Common Stockholders | $ | 8.2 | $ | 7.8 | |||
Income tax expense | 2.9 | 2.1 | |||||
Interest expense, net | 8.4 | 12.8 | |||||
Depreciation and amortization, including accelerated depreciation and amortization | 5.3 | 6.7 | |||||
Restructuring and facility closure costs, excluding accelerated depreciation | — | 4.6 | |||||
Stock-based compensation | 2.0 | 1.9 | |||||
Separation costs | 2.0 | — | |||||
Foreign currency loss (gain) on intercompany loans | 0.2 | (0.3 | ) | ||||
Mark-to-market adjustments on commodity hedges | (0.3 | ) | — | ||||
Net earnings attributable to redeemable noncontrolling interest | 31.1 | 25.1 | |||||
Adjusted EBITDA | $ | 59.8 | $ | 60.7 | |||
Adjusted EBITDA as a percentage of |
19.5 | % | 21.5 | % |
![](https://ml.globenewswire.com/media/OGUxMjM0YTQtYzIzNi00MmQ0LWE4MTEtMThhODhlZDk5NDVkLTExOTk5MTc=/tiny/BellRing-Brands-Inc-.png)
Source: BellRing Brands, Inc.
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