brbr-20230331

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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 March 31, 2023

☐ 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

BellRing Brands, Inc.

(Exact name of registrant as specified in its charter)


Delaware						87-3296749
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	BRBR	New 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:

Common Stock, $0.01 par value per share – 132,802,631 shares as of May 2, 2023

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BELLRING BRANDS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Statements of Operations (Unaudited)	1

	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	2

	Condensed Consolidated Balance Sheets (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows (Unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited)	5

	Notes to Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	23

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24



Item 6.	Exhibits	25

	SIGNATURES	26

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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 March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Net Sales	$	385.6	$	315.2	$	748.3	$	621.7
Cost of goods sold	268.5		228.2		509.4		442.4
Gross Profit	117.1		87.0		238.9		179.3
Selling, general and administrative expenses	54.3		48.9		96.0		85.7

Amortization of intangible assets	4.8		4.9		9.7		9.8



Operating Profit	58.0		33.2		133.2		83.8
Interest expense, net	16.8		8.5		33.5		16.9
Loss on extinguishment of debt, net	—		17.6		—		17.6


Earnings before Income Taxes	41.2		7.1		99.7		49.3
Income tax expense	10.3		3.2		24.6		6.1
Net Earnings Including Redeemable Noncontrolling Interest	30.9		3.9		75.1		43.2
Less: Net earnings attributable to redeemable noncontrolling interest	—		2.6		—		33.7
Net Earnings Available to Common Stockholders	$	30.9	$	1.3	$	75.1	$	9.5



Earnings per share of Common Stock:
Basic	$	0.23	$	0.02	$	0.56	$	0.19
Diluted	$	0.23	$	0.02	$	0.56	$	0.19

Weighted-Average shares of Common Stock Outstanding:
Basic	133.4		62.7		134.1		51.0
Diluted	134.5		62.9		134.8		51.2

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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BELLRING BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions)


	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
Net Earnings Including Redeemable Noncontrolling Interest	$	30.9	$	3.9	$	75.1	$	43.2
Hedging adjustments:

Reclassifications to net earnings	—		6.6		—		7.1

Foreign currency translation adjustments:
Unrealized foreign currency translation adjustments	0.3		(0.4)		1.8		(0.8)

Tax expense on other comprehensive income:

Reclassifications to net earnings	—		(0.4)		—		(0.4)
Total Other Comprehensive Income Including Redeemable Noncontrolling Interest	0.3		5.8		1.8		5.9
Less: Comprehensive income attributable to redeemable noncontrolling interest	—		7.1		—		38.3
Total Comprehensive Income Available to Common Stockholders	$	31.2	$	2.6	$	76.9	$	10.8

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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BELLRING BRANDS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions)


	March 31, 2023		September 30, 2022
ASSETS
Current Assets
Cash and cash equivalents	$	25.5	$	35.8
Receivables, net	193.8		173.3
Inventories	265.5		199.8


Prepaid expenses and other current assets	12.2		12.4
Total Current Assets	497.0		421.3
Property, net	8.3		8.0
Goodwill	65.9		65.9
Intangible assets, net	193.7		203.3


Other assets	7.6		8.7
Total Assets	$	772.5	$	707.2

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities

Accounts payable	$	105.0	$	93.8

Other current liabilities	52.0		49.7
Total Current Liabilities	157.0		143.5
Long-term debt	970.1		929.5
Deferred income taxes	1.3		2.2

Other liabilities	7.2		8.2
Total Liabilities	1,135.6		1,083.4

Stockholders’ Deficit

Common stock	1.4		1.4


Additional paid-in capital	12.0		7.0
Accumulated deficit	(280.5)		(355.6)

Accumulated other comprehensive loss	(2.5)		(4.3)
Treasury stock, at cost	(93.5)		(24.7)
Total Stockholders’ Deficit	(363.1)		(376.2)
Total Liabilities and Stockholders’ Deficit	$	772.5	$	707.2

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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BELLRING BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)


	Six Months Ended March 31,
	2023		2022
Cash Flows from Operating Activities
Net earnings including redeemable noncontrolling interest	$	75.1	$	43.2
Adjustments to reconcile net earnings including redeemable noncontrolling interest to net cash provided by operating activities:
Depreciation and amortization	10.5		10.6


Loss on extinguishment of debt, net	—		17.6


Non-cash stock-based compensation expense	7.0		3.3


Deferred income taxes	(0.9)		1.7
Other, net	0.2		(0.9)
Other changes in operating assets and liabilities:
Increase in receivables, net	(19.8)		(28.9)
Increase in inventories	(64.5)		(27.3)
Decrease in prepaid expenses and other current assets	0.3		0.7
Decrease in other assets	0.9		1.1
Increase (decrease) in accounts payable and other current liabilities	11.5		(3.4)
Decrease in non-current liabilities	—		(0.1)
Net Cash Provided by Operating Activities	20.3		17.6

Cash Flows from Investing Activities


Additions to property	(0.5)		(1.1)






Net Cash Used in Investing Activities	(0.5)		(1.1)

Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	115.0		109.0




Payment of merger consideration	—		(115.5)
Repayments of long-term debt	(75.0)		(609.9)
Purchases of treasury stock	(68.5)		(18.1)


Payments of debt issuance, extinguishment costs and deferred financing fees	—		(11.1)




Distributions to Post Holdings, Inc., net	—		547.2

Other, net	(2.2)		(1.1)
Net Cash Used in Financing Activities	(30.7)		(99.5)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	0.6		(0.1)
Net Decrease in Cash and Cash Equivalents	(10.3)		(83.1)
Cash and Cash Equivalents, Beginning of Year	35.8		152.6
Cash and Cash Equivalents, End of Period	$	25.5	$	69.5

Supplemental noncash information:
Debt issued to Post Holdings, Inc. in connection with Spin-off	$	—	$	840.0

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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BELLRING BRANDS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited)

(in millions)


	As of and for the Three Months Ended March 31,				As of and for the Six Months Ended March 31,
	2023		2022		2023		2022










Common Stock
Beginning of period	$	1.4	$	0.4	$	1.4	$	0.4
Impact of Spin-off	—		1.0		—		1.0

End of period	1.4		1.4		1.4		1.4
Additional Paid-in Capital
Beginning of period	8.4		—		7.0		—
Activity under stock and deferred compensation plans	0.1		—		(2.0)		(1.0)
Non-cash stock-based compensation expense	3.5		1.8		7.0		3.3

Redemption value adjustment to redeemable noncontrolling interest	—		(1.4)		—		(1.9)
End of period	12.0		0.4		12.0		0.4
Accumulated Deficit
Beginning of period	(311.4)		(2,806.6)		(355.6)		(3,059.7)
Net earnings available to common stockholders	30.9		1.3		75.1		9.5
Distribution to Post Holdings, Inc.	—		—		—		(3.2)




Redemption value adjustment to redeemable noncontrolling interest	—		124.3		—		372.4
Impact of Spin-off	—		2,252.6		—		2,252.6
End of period	(280.5)		(428.4)		(280.5)		(428.4)







Accumulated Other Comprehensive Loss
Hedging Adjustments, net of tax
Beginning of period	—		(1.5)		—		(1.6)
Net change in hedges, net of tax	—		1.5		—		1.6
End of period	—		—		—		—
Foreign Currency Translation Adjustments
Beginning of period	(2.8)		(2.0)		(4.3)		(1.9)
Foreign currency translation adjustments	0.3		(0.2)		1.8		(0.3)
End of period	(2.5)		(2.2)		(2.5)		(2.2)
Treasury Stock
Beginning of period	(65.9)		(18.1)		(24.7)		—
Purchases of treasury stock	(27.6)		—		(68.8)		(18.1)
Impact of Spin-off	—		18.1		—		18.1
End of period	(93.5)		—		(93.5)		—
Total Stockholders’ Deficit	$	(363.1)	$	(428.8)	$	(363.1)	$	(428.8)

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

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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

On October 21, 2019, BellRing Intermediate Holdings, Inc. (formerly known as BellRing Brands, Inc.) (“Old BellRing”) 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 “Old BellRing Class A Common Stock”), and contributed the net proceeds from the IPO to BellRing Brands, LLC, a Delaware limited liability company and subsidiary of Old BellRing (“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”). Old BellRing, as a holding company, had no material assets other than its ownership of BellRing LLC units and its indirect interests in the subsidiaries of BellRing LLC and had no independent means of generating revenue or cash flow. The members of BellRing LLC were Post and Old BellRing.

During the second quarter of fiscal 2022, Post completed its distribution of 80.1% of its ownership interest in BellRing Brands, Inc. (formerly known as BellRing Distribution, LLC) (“BellRing”) to Post’s shareholders. On March 9, 2022, pursuant to the Transaction Agreement and Plan of Merger, dated as of October 26, 2021 (as amended by Amendment No. 1 to the Transaction Agreement and Plan of Merger, dated as of February 28, 2022, the “Transaction Agreement”), by and among Post, Old BellRing, BellRing and BellRing Merger Sub Corporation, a wholly-owned subsidiary of BellRing (“BellRing Merger Sub”), Post contributed its share of Old BellRing Class B common stock, $0.01 par value per share (“Old BellRing Class B Common Stock”), all of its BellRing LLC units and $550.4 of cash to BellRing (collectively, the “Contribution”) in exchange for certain limited liability company interests of BellRing (prior to the conversion of BellRing into a Delaware corporation) and the right to receive $840.0 in aggregate principal amount of BellRing’s 7.00% Senior Notes (as defined in Note 13).

On March 10, 2022, BellRing converted into a Delaware corporation and changed its name to “BellRing Brands, Inc.”, and Post distributed an aggregate of 78.1 million, or 80.1%, of its shares of BellRing common stock, $0.01 par value per share (“BellRing Common Stock”) to Post shareholders in a pro-rata distribution (the “Distribution”).

Upon completion of the Distribution, BellRing Merger Sub merged with and into Old BellRing (the “Merger”), with Old BellRing continuing as the surviving corporation and becoming a wholly-owned subsidiary of BellRing. Pursuant to the Merger, each outstanding share of Old BellRing Class A Common Stock was converted into one share of BellRing Common Stock and $2.97 in cash, or $115.5 total consideration paid to Old BellRing Class A common stockholders pursuant to the Merger. As a result of the transactions described above (collectively, the “Spin-off”), BellRing became the new public parent company of, and successor issuer to, Old BellRing, and shares of BellRing Common Stock were deemed to be registered under Section 12(b) of the Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a) promulgated thereunder.

Immediately prior to the Spin-off, Post held 97.5 million BellRing LLC units, equal to 71.5% of the economic interest in BellRing LLC, and one share of Old BellRing Class B Common Stock, which represented 67% of the combined voting power of the common stock of Old BellRing. Immediately following the Spin-off, Post owned 19.4 million shares, or 14.2% of BellRing Common Stock, which did not represent a controlling interest in BellRing. As a result of the Spin-off, the dual class voting structure in the BellRing business was eliminated.

On August 11, 2022, Post transferred 14.8 million shares of its BellRing Common Stock to certain financial institutions in satisfaction of term loan obligations of Post, which reduced Post’s ownership of BellRing Common Stock to 3.4% as of September 30, 2022. In connection with this transaction, BellRing repurchased 0.8 million of the transferred shares from certain of the financial institutions.

On November 25, 2022, Post transferred the remaining of its 4.6 million shares of BellRing Common Stock to certain financial institutions in satisfaction of term loan obligations of Post. In connection with this transaction, BellRing repurchased 0.9 million of the transferred shares from certain of the financial institutions. Post had no ownership of BellRing Common Stock as of March 31, 2023.

The Company incurred separation-related expenses in connection with its separation from Post of $0.4 and $0.7 during the three and six months ended March 31, 2023, respectively, and $10.3 and $12.3 during the three and six months ended March 31, 2022, respectively. These expenses generally included third party costs for advisory services, fees charged by other service providers and government filing fees and were included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.

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The term “Company” generally refers to Old BellRing and its consolidated subsidiaries during the periods prior to the Spin-off and to BellRing and its consolidated subsidiaries during the periods subsequent to the Spin-off, unless otherwise stated or context otherwise indicates. The term “Common Stock” generally refers to Old BellRing Class A Common Stock and Old BellRing Class B Common Stock during the periods prior to the Spin-off and to BellRing Common Stock during the periods subsequent to the Spin-off. The term “Net earnings available to common stockholders” generally refers to net earnings available to Old BellRing Class A common stockholders during the periods prior to the Spin-off and to net earnings available to BellRing common stockholders during the periods subsequent to the Spin-off.

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 and powders. 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.

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 (the “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 fiscal year ended September 30, 2022. 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, 2022, filed with the SEC on November 17, 2022.

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, 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. Certain reclassifications have been made to previously reported financial information to conform to the current period presentation.

Prior to the Spin-off, the financial results of BellRing LLC and its subsidiaries were consolidated with Old BellRing, and a portion of the consolidated net earnings of BellRing LLC was allocated to the redeemable noncontrolling interest (the “NCI”). The calculation of the NCI was based on Post’s ownership percentage of BellRing LLC units during each period prior to the Spin-off, and reflected the entitlement of Post to a portion of the consolidated net earnings of BellRing LLC prior to the Spin-off. During the periods subsequent to the Spin-off, any remaining ownership of BellRing by Post no longer represented a NCI to the Company (see Note 5). All intercompany balances and transactions have been eliminated. See Note 4 for further information on transactions with Post included in these financial statements.

NOTE 2 — RECENTLY ISSUED ACCOUNTING STANDARDS

The Company has considered all new accounting pronouncements and has concluded there are no new pronouncements that had or will have a material impact on the Company’s results of operations, comprehensive income, financial position, cash flows, stockholders’ equity or related disclosures based on current information.

NOTE 3 — REVENUE

The following table presents net sales by product.


	Three Months Ended March 31,			Six Months Ended March 31,
	2023		2022	2023	2022
Shakes and other beverages	$	299.9

SEC Form 10-Q filed by BellRing Brands Inc.