BellRing Brands, Inc. (NYSE:BRBR) (“BellRing”), a holding company
operating in the global convenient nutrition category, today
reported results for the second fiscal quarter ended March 31,
2022.
Highlights:
- Second quarter net sales of $315.2
million
- Operating profit of $33.2 million; net earnings
available to common stockholders of $1.3 million and Adjusted
EBITDA of $50.9 million
- Raised fiscal year 2022 net sales guidance to
$1.39-$1.43 billion and Adjusted EBITDA (non-GAAP) guidance to
$258-$268 million
Basis of Presentation
On March 10, 2022, Post Holdings, Inc.’s (“Post”) distribution
to its shareholders of 80.1% of its interest in BellRing was
completed (the “Distribution” and, together with the other
transactions described in “Spin-off from Post,” the “Spin-off”). As
a result of the Spin-off, BellRing became the new public parent
company of, and successor issuer to, BellRing Intermediate
Holdings, Inc. (which was previously named “BellRing Brands, Inc.”
and is now a wholly-owned subsidiary of BellRing) (“Old BellRing”).
BellRing was previously named “BellRing Distribution, LLC” and was
renamed “BellRing Brands, Inc.” upon conversion to a Delaware
corporation. Please see “Spin-off from Post” later in this release
for more information.
From October 21, 2019 through March 10, 2022, BellRing allocated
a portion of the consolidated net earnings of BellRing Brands, LLC
(“BellRing LLC”) to its redeemable noncontrolling interest (“NCI”),
reflecting the entitlement of Post to a portion of the consolidated
net earnings. Subsequent to the Spin-off, there was no NCI in the
consolidated net earnings of BellRing LLC.
Second Quarter Operating Results
Net sales were $315.2 million, an increase of 11.7%, or $33.1
million, compared to the prior year period. Premier Protein net
sales increased 6.5% and volumes declined 4.4%; Premier Protein
ready-to-drink (“RTD”) shake net sales increased 8.4% and volumes
declined 3.9%. Premier Protein net sales benefited from higher
average net selling prices driven by reduced promotional activity
and price increases. As discussed in previous earnings releases,
capacity constraints across the broader shake contract manufacturer
network have resulted in certain products placed on allocation and
reduced demand-driving promotional activity which caused an
expected reduction in volumes sold when compared to the prior year
period. Dymatize net sales increased 54.9%, with volumes up 25.1%,
and benefited from (i) higher average net selling prices (driven by
price increases and a favorable product and customer mix), (ii)
strong velocities driven in part by continued category momentum and
(iii) distribution gains. Net sales of all other products decreased
12.9%.
Dollar consumption of Premier Protein RTD shakes
decreased 2.0% and Dymatize United States (“U.S.”) powder
products increased 45.6% in the 13-week period ended April 2, 2022,
as compared to the same period in 2021 (inclusive of NielsenIQ
Total US xAOC including Convenience and management estimates of
untracked channels).
Gross profit was $87.0 million, or 27.6% of net sales, flat
compared to $87.0 million, or 30.8% of net sales, in the prior year
period. The lower gross profit margin was driven by higher raw
material costs (predominantly dairy-based proteins) and freight, as
well as higher-than-expected logistics inefficiencies (which
resulted from capacity constraints).
Selling, general and administrative (“SG&A”) expenses were
$48.9 million, or 15.5% of net sales, an increase of $0.7 million
compared to $48.2 million, or 17.1% of net sales, in the prior year
period. SG&A expenses in the second quarter of 2022 included
$10.3 million of separation costs related to the Spin-off. SG&A
expenses in the second quarter of 2021 included $0.7 million of
restructuring and facility closure costs. Separation costs and
restructuring and facility closure costs were treated as
adjustments for non-GAAP measures.
Operating profit was $33.2 million, an increase of 112.8%, or
$17.6 million, compared to $15.6 million in the prior year period.
Operating profit in the second quarter of 2021 was negatively
impacted by $17.7 million of accelerated amortization, which was
incurred in connection with the discontinuance of a brand and was
treated as an adjustment for non-GAAP measures.
Net earnings available to common stockholders was $1.3 million,
an increase of 116.7%, or $0.7 million, compared to $0.6 million in
the prior year period. Net earnings included loss on extinguishment
and refinancing of debt of $17.6 million and $1.5 million in the
second quarter of 2022 and 2021, respectively, which is discussed
later in this release and was treated as an adjustment for non-GAAP
measures. Net earnings available to common stockholders excluded
$2.6 million of net earnings attributable to the Company’s
redeemable NCI, compared to $1.9 million excluded in the prior year
period. Net earnings per diluted share of common stock were $0.02
in both the second quarter of 2022 and 2021. Adjusted net earnings
available to common stockholders were $14.5 million, or $0.23 per
diluted share of common stock, compared to $5.0 million, or $0.13
per diluted share of common stock, in the prior year period.
Adjusted EBITDA was $50.9 million, an increase of 20.6%, or $8.7
million, compared to $42.2 million in the prior year period.
Adjusted EBITDA in both periods included an adjustment for the
portion of BellRing LLC’s consolidated net earnings which was
allocated to NCI in the periods prior to the Spin-off, resulting in
the calculation of Adjusted EBITDA including 100% of BellRing.
Six Month Operating Results
Net sales were $621.7 million, an increase of 10.1%, or $57.2
million, compared to the prior year period. Premier Protein net
sales increased 5.5%, with volumes down 5.6%. Dymatize net sales
increased 48.2%, with volumes up 16.3%. Net sales of all other
products decreased 5.5%.
Gross profit was $179.3 million, or 28.8% of net sales, an
increase of 0.2%, or $0.4 million, compared to $178.9 million, or
31.7% of net sales, in the prior year period. The lower gross
profit margin was driven by higher raw material costs
(predominantly dairy-based proteins) and freight, as well as
logistics inefficiencies (which resulted from capacity
constraints).
SG&A expenses were $85.7 million, or 13.8% of net sales, a
decrease of $0.8 million compared to $86.5 million, or 15.3% of net
sales, in the prior year period. SG&A expenses in the six
months ended March 31, 2022 included $12.3 million of separation
costs related to the Spin-off. SG&A expenses in the six months
ended March 31, 2021 included $5.3 million of restructuring and
facility closure costs. Separation costs and restructuring and
facility closure costs were treated as adjustments for non-GAAP
measures.
Operating profit was $83.8 million, an increase of 32.2%, or
$20.4 million, compared to $63.4 million in the prior year period.
Operating profit in the six months ended March 31, 2021 was
negatively impacted by $18.1 million of accelerated amortization,
which was incurred in connection with the discontinuance of a brand
and was treated as an adjustment for non-GAAP measures.
Net earnings available to common stockholders were $9.5 million,
an increase of 13.1%, or $1.1 million, compared to $8.4 million in
the prior year period. Net earnings included loss on extinguishment
and refinancing of debt of $17.6 million and $1.5 million in the
six months ended March 31, 2022 and 2021, respectively, which is
discussed later in this release and was treated as an adjustment
for non-GAAP measures. Net earnings available to common
stockholders excluded $33.7 million of net earnings attributable to
the Company’s redeemable NCI, compared to $27.0 million excluded in
the prior year period. Net earnings per diluted share of common
stock were $0.19, compared to $0.21 in the prior year period.
Adjusted net earnings available to common stockholders were $24.5
million, or $0.48 per diluted share of common stock, compared to
$13.8 million, or $0.35 per diluted share of common stock, in the
prior year period.
Adjusted EBITDA was $110.7 million, an increase of 7.6%, or $7.8
million, compared to $102.9 million in the prior year period.
Adjusted EBITDA in both periods included an adjustment for the
portion of BellRing LLC’s consolidated net earnings which was
allocated to NCI in the periods prior to the Spin-off, resulting in
the calculation of Adjusted EBITDA including 100% of BellRing.
Interest, Loss on Extinguishment and Refinancing of Debt
and Income Tax
Interest expense, net was $8.5 million in the second quarter of
2022, compared to $11.3 million in the second quarter of 2021.
Interest expense, net was $16.9 million in the six months ended
March 31, 2022, compared to $24.1 million in the six months ended
March 31, 2021. The decrease in both periods was primarily driven
by a reduction in the average amount of aggregate principal amount
of debt outstanding during the current year period when compared to
the prior year period. As of March 31, 2022, BellRing had $949.0
million in total principal value of debt. Please see “Spin-off from
Post” later in this release for more information on the change in
debt that occurred in the second quarter of 2022.
Loss on extinguishment of debt, net of $17.6 million was
recorded in the three and six months ended March 31, 2022 in
connection with BellRing LLC’s repayment of the entire principal
balance of its term loan and termination of its prior credit
agreement. Loss on refinancing of debt, net of $1.5 million was
recorded in the three and six months ended March 31, 2021 in
connection with an opportunistic repricing of BellRing LLC’s term
loan.
Income tax expense was $3.2 million in the second quarter of
2022, an effective income tax rate of 45.1%, compared to $0.3
million in the second quarter of 2021, an effective income tax rate
of 10.7%. Income tax expense was $6.1 million in the six months
ended March 31, 2022, an effective income tax rate of 12.4%,
compared to $2.4 million in the six months ended March 31, 2021, an
effective income tax rate of 6.3% in the prior year period. In the
three and six months ended March 31, 2022, the increase in the
effective income tax rate was driven primarily by (i) certain
separation-related expenses incurred in connection with the
Spin-off that were treated as non-deductible and (ii) inclusion of
100% of the items of income, gain, loss and deduction of BellRing
LLC in the periods subsequent to the Spin-off. In the three and six
months ended March 31, 2021, the effective income tax rate differed
significantly from the statutory rate as a result of taking into
account for U.S. federal, state and local income tax purposes its
distributive share of the items of income, gain, loss and deduction
of BellRing LLC in the periods prior to the Spin-off.
Share Repurchases
BellRing did not repurchase any shares of its common stock
during the second quarter of 2022. During the six months ended
March 31, 2022, BellRing repurchased 0.8 million shares of its
common stock for $18.1 million at an average price of $23.34 per
share. In connection with the Spin-off, the 0.8 million shares held
in treasury stock were cancelled.
Spin-off from Post
On March 10, 2022, Post completed the Distribution of 80.1% of
Post’s interest in the BellRing business to Post shareholders
through a distribution of 78.1 million shares of common stock of
BellRing on a pro rata basis in which Post shareholders received
1.267788 shares of BellRing common stock for each share of Post
common stock held as of February 25, 2022. Post retained 19.4
million shares of BellRing common stock and as of March 31, 2022,
Post owned 14.2% of BellRing common stock. As of March 31, 2022,
there were 136.4 million shares of BellRing common stock
outstanding.
At the time of the Distribution, a subsidiary of BellRing merged
with and into Old BellRing and each outstanding share of Old
BellRing Class A common stock was converted into one share of
BellRing common stock and $2.97 in cash. As a result of certain
contributions made in connection with the transaction, BellRing
received $550.4 million from Post 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 million in aggregate principal amount of BellRing’s senior
notes described below.
In connection with the Spin-off, (i) BellRing issued $840.0
million in aggregate principal amount of 7.00% senior notes due
2030 and borrowed $109.0 million in aggregate principal amount
under a new revolving credit agreement, and (ii) BellRing LLC
repaid the entire principal balance of $519.8 million outstanding
under its term loan.
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 improving but expected
to 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 has raised its
guidance range for net sales to $1.39-$1.43 billion from
$1.36-$1.41 billion and Adjusted EBITDA to $258-$268 million from
$255-$265 million (resulting in net sales and Adjusted EBITDA
growth of 11%-15% and 10%-15%, respectively, over fiscal year
2021). Gross margins are expected to improve in the second half of
fiscal year 2022 when compared to the first half of fiscal year
2022 as a result of recent pricing actions. BellRing management
expects fiscal year 2022 capital expenditures of approximately $3
million.
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
loss on extinguishment and refinancing of debt, separation costs,
restructuring and facility closures costs 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 U.S.
generally accepted accounting principles (“GAAP”). These non-GAAP
measures include Adjusted net earnings available to common
stockholders, Adjusted diluted earnings per share of common stock
and Adjusted EBITDA. The reconciliation of each of these non-GAAP
measures to the most directly comparable GAAP measure is provided
later in this release under “Explanation and Reconciliation of
Non-GAAP Measures.”
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 is
required to comply with certain covenants and limitations that are
based on variations of EBITDA in its financing documents.
Management believes the use of these non-GAAP measures provides
increased transparency and assists investors in understanding the
underlying operating performance of BellRing and in the analysis of
ongoing operating trends. Non-GAAP measures are not prepared
in accordance with GAAP, as they exclude certain items as described
later in this release. These non-GAAP measures may not be
comparable to similarly titled measures of other companies. For
additional information regarding BellRing’s non-GAAP measures, see
the related explanations provided under “Explanation and
Reconciliation of Non-GAAP Measures” later in this release.
Conference Call to Discuss Earnings Results and
Outlook
BellRing will host a conference call on Friday, May 6, 2022 at
10:30 a.m. EDT to discuss financial results for the second quarter
of fiscal year 2022 and fiscal year 2022 outlook and to respond to
questions. Darcy H. Davenport, President and Chief Executive
Officer, and Paul A. Rode, Chief Financial Officer, will
participate in the call.
Interested parties may join the conference call by dialing (866)
831-8713 in the United States and (203) 518-9713 from outside of
the United States. The conference identification number is
BRBRQ222. Interested parties are invited to listen to the webcast
of the conference call, which can be accessed by visiting the
Investor Relations section of BellRing’s website at
www.bellring.com. A slide presentation containing supplemental
material will also be available at the same location on BellRing’s
website.
A replay of the conference call will be available through
Friday, May 13, 2022 by dialing (800) 934-7879 in the United States
and (402) 220-6986 from outside of the United States. A webcast
replay also will be available for a limited period on BellRing’s
website in the Investor Relations section.
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.
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 and BellRing’s continuing response to the
COVID-19 pandemic. 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, including as a result of the
ongoing conflict in Ukraine, 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
following the Spin-off, including BellRing’s obligations under
various agreements with Post;
- 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 previously completed Spin-off, including
BellRing’s inability to take certain actions because such actions
could jeopardize the tax-free status of the Distribution and
BellRing’s possible responsibility for U.S. federal tax liabilities
related to the 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 BellRing Brands, Inc.
BellRing Brands, Inc. is a rapidly growing leader in the global
convenient nutrition category offering ready-to-drink shake and
powder protein products. Its primary brands, Premier Protein® and
Dymatize®, appeal to a broad range of consumers and are distributed
across a diverse network of channels including club, food, drug,
mass, eCommerce, specialty and convenience. BellRing’s commitment
to consumers is to strive to make highly effective products that
deliver best-in-class nutritionals and superior taste. For more
information, visit www.bellring.com.
Contact:Investor RelationsJennifer
Meyerjennifer.meyer@bellringbrands.com(314) 644-7665
Media RelationsLisa Hanlylisa.hanly@bellringbrands.com(314)
665-3180
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)(in
millions, except for per share data)
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
| Net
Sales |
$ |
315.2 |
|
$ |
282.1 |
|
$ |
621.7 |
|
$ |
564.5 |
|
| Cost of goods sold |
|
228.2 |
|
|
195.1 |
|
|
442.4 |
|
|
385.6 |
|
| Gross
Profit |
|
87.0 |
|
|
87.0 |
|
|
179.3 |
|
|
178.9 |
|
| Selling, general and
administrative expenses |
|
48.9 |
|
|
48.2 |
|
|
85.7 |
|
|
86.5 |
|
| Amortization of intangible
assets |
|
4.9 |
|
|
23.2 |
|
|
9.8 |
|
|
29.1 |
|
| Other operating income,
net |
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
| Operating
Profit |
|
33.2 |
|
|
15.6 |
|
|
83.8 |
|
|
63.4 |
|
| Interest expense, net |
|
8.5 |
|
|
11.3 |
|
|
16.9 |
|
|
24.1 |
|
| Loss on extinguishment and
refinancing of debt, net |
|
17.6 |
|
|
1.5 |
|
|
17.6 |
|
|
1.5 |
|
| Earnings before Income
Taxes |
|
7.1 |
|
|
2.8 |
|
|
49.3 |
|
|
37.8 |
|
| Income tax expense |
|
3.2 |
|
|
0.3 |
|
|
6.1 |
|
|
2.4 |
|
| Net Earnings Including
Redeemable Noncontrolling Interest |
|
3.9 |
|
|
2.5 |
|
|
43.2 |
|
|
35.4 |
|
| Less: Net earnings
attributable to redeemable noncontrolling interest |
|
2.6 |
|
|
1.9 |
|
|
33.7 |
|
|
27.0 |
|
| Net Earnings Available
to Common Stockholders |
$ |
1.3 |
|
$ |
0.6 |
|
$ |
9.5 |
|
$ |
8.4 |
|
| |
|
|
|
|
|
|
|
| Earnings per share of
Common Stock: |
|
|
|
|
|
|
|
| Basic |
$ |
0.02 |
|
$ |
0.02 |
|
$ |
0.19 |
|
$ |
0.21 |
|
| Diluted |
$ |
0.02 |
|
$ |
0.02 |
|
$ |
0.19 |
|
$ |
0.21 |
|
| |
|
|
|
|
|
|
|
|
Weighted-Average shares of Common Stock
Outstanding: |
|
|
|
|
|
|
| Basic |
|
62.7 |
|
|
39.5 |
|
|
51.0 |
|
|
39.5 |
|
| Diluted |
|
62.9 |
|
|
39.7 |
|
|
51.2 |
|
|
39.6 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(in millions)
| |
March 31, 2022 |
|
September 30, 2021 |
| |
|
|
|
|
ASSETS |
| Current
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
69.5 |
|
|
$ |
152.6 |
|
|
Receivables, net |
|
132.5 |
|
|
|
103.9 |
|
|
Inventories |
|
144.7 |
|
|
|
117.9 |
|
|
Prepaid expenses and other current assets |
|
12.8 |
|
|
|
13.7 |
|
|
Total Current Assets |
|
359.5 |
|
|
|
388.1 |
|
| |
|
|
|
| Property, net |
|
8.9 |
|
|
|
8.9 |
|
| Goodwill |
|
65.9 |
|
|
|
65.9 |
|
| Intangible assets, net |
|
213.3 |
|
|
|
223.1 |
|
| Other assets |
|
10.1 |
|
|
|
10.5 |
|
|
Total Assets |
$ |
657.7 |
|
|
$ |
696.5 |
|
| |
|
|
|
| |
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| Current
Liabilities |
|
|
|
|
Current portion of long-term debt |
$ |
— |
|
|
$ |
116.3 |
|
|
Accounts payable |
|
85.5 |
|
|
|
91.9 |
|
|
Other current liabilities |
|
45.1 |
|
|
|
43.1 |
|
|
Total Current Liabilities |
|
130.6 |
|
|
|
251.3 |
|
| |
|
|
|
| Long-term debt |
|
938.8 |
|
|
|
481.2 |
|
| Deferred income taxes |
|
7.9 |
|
|
|
7.6 |
|
| Other liabilities |
|
9.2 |
|
|
|
21.9 |
|
|
Total Liabilities |
|
1,086.5 |
|
|
|
762.0 |
|
| |
|
|
|
|
Redeemable noncontrolling interest |
|
— |
|
|
|
2,997.3 |
|
| |
|
|
|
| Stockholders’
Deficit |
|
|
|
|
Preferred stock |
|
— |
|
|
|
— |
|
|
Common stock |
|
1.4 |
|
|
|
0.4 |
|
|
Additional paid-in capital |
|
0.4 |
|
|
|
— |
|
|
Accumulated deficit |
|
(428.4 |
) |
|
|
(3,059.7 |
) |
|
Accumulated other comprehensive loss |
|
(2.2 |
) |
|
|
(3.5 |
) |
|
Treasury stock, at cost |
|
— |
|
|
|
— |
|
|
Total Stockholders’ Deficit |
|
(428.8 |
) |
|
|
(3,062.8 |
) |
|
Total Liabilities and Stockholders’ Deficit |
$ |
657.7 |
|
|
$ |
696.5 |
|
SELECTED CONDENSED CONSOLIDATED CASH
FLOWS INFORMATION (Unaudited)(in
millions)
| |
Six Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
| Cash provided by (used
in): |
|
|
|
|
Operating activities |
$ |
17.6 |
|
|
$ |
73.8 |
|
|
Investing activities |
|
(1.1 |
) |
|
|
(0.5 |
) |
|
Financing activities |
|
(99.5 |
) |
|
|
(89.4 |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
(0.1 |
) |
|
|
0.6 |
|
| Net decrease in cash
and cash equivalents |
$ |
(83.1 |
) |
|
$ |
(15.5 |
) |
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 U.S.
generally accepted accounting principles (“GAAP”). These non-GAAP
measures include Adjusted net earnings available to common
stockholders, Adjusted diluted earnings per share of common stock
and Adjusted EBITDA. The reconciliation of each of these non-GAAP
measures to the most directly comparable GAAP measure is provided
in the tables following this section. Non-GAAP measures are not
prepared in accordance with GAAP, as they exclude certain items as
described below. These non-GAAP measures may not be comparable to
similarly titled measures of other companies.
Adjusted net earnings available to common stockholders and
Adjusted diluted earnings per share of common stockBellRing
believes Adjusted net earnings available to common stockholders and
Adjusted diluted earnings per share of 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 common stockholders and
Adjusted diluted earnings per share of 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. |
Loss on extinguishment and
refinancing of debt, net: BellRing has excluded losses recorded on
extinguishment and refinancing of debt, inclusive of the write-off
of debt issuance costs and deferred financing fees and the
write-off of net unamortized debt discounts, as such losses are
inconsistent in amount and frequency. Additionally, BellRing
believes that these losses 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 distribution of 80.1% of
its 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. |
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. |
|
e. |
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. |
|
f. |
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. |
|
g. |
NCI adjustment: BellRing has
included an adjustment to reflect the removal of non-GAAP
adjustments which are attributable to redeemable NCI in the periods
prior to the Spin-off in the calculation of Adjusted net earnings
available to common stockholders and Adjusted diluted earnings per
share of common stock. |
|
h. |
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 BellRing is required to comply with certain
covenants and limitations that are based on variations of EBITDA in
its financing documents. Management uses Adjusted EBITDA to provide
forward-looking guidance and to forecast future results.
Adjusted EBITDA reflects adjustments for income tax expense,
interest expense, net and depreciation and amortization including
accelerated depreciation and amortization, and the following
adjustments discussed above: loss on extinguishment and refinancing
of debt, net, separation costs, restructuring and facility closure
costs excluding accelerated depreciation, foreign currency
gain/loss on intercompany loans and mark-to-market adjustments on
commodity hedges. Additionally, Adjusted EBITDA reflects
adjustments for the following items:
|
i. |
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 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. |
|
j. |
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 for
the periods prior to the Spin-off, 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 COMMON STOCKHOLDERS TO ADJUSTED NET EARNINGS
AVAILABLE TO COMMON STOCKHOLDERS (Unaudited)(in
millions)
| |
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
| Net
Earnings Available to Common Stockholders |
$ |
1.3 |
|
|
$ |
0.6 |
|
|
$ |
9.5 |
|
|
$ |
8.4 |
|
| |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
| |
Accelerated amortization |
|
— |
|
|
|
17.7 |
|
|
|
— |
|
|
|
18.1 |
|
| |
Loss on extinguishment and
refinancing of debt, net |
|
17.6 |
|
|
|
1.5 |
|
|
|
17.6 |
|
|
|
1.5 |
|
| |
Separation costs |
|
10.3 |
|
|
|
— |
|
|
|
12.3 |
|
|
|
— |
|
| |
Restructuring and facility
closure costs, including accelerated depreciation |
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
|
5.5 |
|
| |
Foreign currency loss on
intercompany loans |
|
0.1 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
— |
|
| |
Mark-to-market adjustments on
commodity hedges |
|
(0.2 |
) |
|
|
— |
|
|
|
(0.5 |
) |
|
|
— |
|
| |
NCI adjustment |
|
(12.6 |
) |
|
|
(14.5 |
) |
|
|
(12.5 |
) |
|
|
(17.9 |
) |
| |
Total Net
Adjustments |
|
15.2 |
|
|
|
5.8 |
|
|
|
17.2 |
|
|
|
7.2 |
|
| Income tax effect
on adjustments (1) |
|
(2.0 |
) |
|
|
(1.4 |
) |
|
|
(2.2 |
) |
|
|
(1.8 |
) |
| Adjusted
Net Earnings Available to Common Stockholders |
$ |
14.5 |
|
|
$ |
5.0 |
|
|
$ |
24.5 |
|
|
$ |
13.8 |
|
| |
|
|
|
|
|
|
|
|
| (1) For the
periods subsequent to the Spin-off (March 11, 2022 through March
31, 2022), income tax effect on adjustments was calculated on all
items using a rate of 24.0%. For the periods prior to the Spin-off
(October 1, 2021 through March 10, 2022 and for the three and six
months ended March 31, 2021), 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 BellRing LLC.
For the periods prior to the Spin-off, income tax effect for NCI
adjustment was calculated using a rate of 0.0%. For all periods,
income tax effect for separation costs was calculated using a rate
of 8.0%. |
RECONCILIATION OF DILUTED EARNINGS PER
SHARE OF COMMON STOCK TO ADJUSTED DILUTED EARNINGS
PER SHARE OF COMMON STOCK (Unaudited)
| |
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
| Diluted
Earnings per share of Common Stock |
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.19 |
|
|
$ |
0.21 |
|
| |
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
| |
Accelerated amortization |
|
— |
|
|
|
0.45 |
|
|
|
— |
|
|
|
0.46 |
|
| |
Separation costs |
|
0.16 |
|
|
|
— |
|
|
|
0.24 |
|
|
|
— |
|
| |
Restructuring and facility
closure costs, including accelerated depreciation |
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
0.14 |
|
| |
Loss on extinguishment and
refinancing of debt, net |
|
0.28 |
|
|
|
0.04 |
|
|
|
0.34 |
|
|
|
0.04 |
|
| |
Foreign currency loss on
intercompany loans |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
| |
Mark-to-market adjustments on
commodity hedges |
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
|
|
— |
|
| |
NCI adjustment |
|
(0.20 |
) |
|
|
(0.37 |
) |
|
|
(0.24 |
) |
|
|
(0.45 |
) |
| |
Total Net
Adjustments |
|
0.24 |
|
|
|
0.15 |
|
|
|
0.33 |
|
|
|
0.19 |
|
| Income tax effect
on adjustments (1) |
|
(0.03 |
) |
|
|
(0.04 |
) |
|
|
(0.04 |
) |
|
|
(0.05 |
) |
| Adjusted
Diluted Earnings per share of Common Stock |
$ |
0.23 |
|
|
$ |
0.13 |
|
|
$ |
0.48 |
|
|
$ |
0.35 |
|
| |
|
|
|
|
|
|
|
|
| (1) For the
periods subsequent to the Spin-off (March 11, 2022 through March
31, 2022), income tax effect on adjustments was calculated on all
items using a rate of 24.0%. For the periods prior to the Spin-off
(October 1, 2021 through March 10, 2022 and for the three and six
months ended March 31, 2021), 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 BellRing LLC.
For all periods, income tax effect for separation costs was
calculated using a rate of 8.0%. For the periods prior to the
Spin-off, income tax effect for NCI adjustment was calculated using
a rate of 0.0%. |
RECONCILIATION OF NET EARNINGS AVAILABLE
TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA
(Unaudited)(in millions)
| |
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
| Net Earnings Available
to Common Stockholders |
$ |
1.3 |
|
|
$ |
0.6 |
|
|
$ |
9.5 |
|
|
$ |
8.4 |
|
| Income tax expense |
|
3.2 |
|
|
|
0.3 |
|
|
|
6.1 |
|
|
|
2.4 |
|
| Interest expense, net |
|
8.5 |
|
|
|
11.3 |
|
|
|
16.9 |
|
|
|
24.1 |
|
| Depreciation and amortization,
including accelerated depreciation and amortization |
|
5.3 |
|
|
|
23.9 |
|
|
|
10.6 |
|
|
|
30.6 |
|
| Loss on extinguishment and
refinancing of debt, net |
|
17.6 |
|
|
|
1.5 |
|
|
|
17.6 |
|
|
|
1.5 |
|
| Separation costs |
|
10.3 |
|
|
|
— |
|
|
|
12.3 |
|
|
|
— |
|
| Restructuring and facility
closure costs, excluding accelerated depreciation |
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
5.3 |
|
| Stock-based compensation |
|
2.2 |
|
|
|
1.7 |
|
|
|
4.2 |
|
|
|
3.6 |
|
| Foreign currency loss on
intercompany loans |
|
0.1 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
— |
|
| Mark-to-market adjustments on
commodity hedges |
|
(0.2 |
) |
|
|
— |
|
|
|
(0.5 |
) |
|
|
— |
|
| Net earnings attributable to
redeemable noncontrolling interest |
|
2.6 |
|
|
|
1.9 |
|
|
|
33.7 |
|
|
|
27.0 |
|
| Adjusted
EBITDA |
$ |
50.9 |
|
|
$ |
42.2 |
|
|
$ |
110.7 |
|
|
$ |
102.9 |
|
| Adjusted EBITDA as a
percentage of Net Sales |
|
16.1 |
% |
|
|
15.0 |
% |
|
|
17.8 |
% |
|
|
18.2 |
% |
BellRing Brands (NYSE:BRBR)
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