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,
2023.
Highlights:
- Second quarter net sales of $385.6
million
- Operating profit of $58.0
million; net earnings available to common
stockholders of $30.9 million and
Adjusted EBITDA* of $68.0 million
- Raised fiscal year 2023 net sales guidance to
$1.61-$1.66 billion and Adjusted EBITDA* guidance to $320-$335
million
*Adjusted EBITDA is a non-GAAP measure. For additional
information regarding non-GAAP measures, see the related
explanations presented under “Use of Non-GAAP Measures” later in
this release. 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 the adjustments
described under “Outlook” later in this release.
“We delivered a strong performance this quarter, coming in ahead
of our expectations. Premier Protein and Dymatize saw robust
consumption growth, with both gaining share. Encouragingly, both
brands gained new households with increased brand investment and
continued category tailwinds. Our powder products were remarkably
strong this quarter, aided by brand building investments,” said
Darcy H. Davenport, President and Chief Executive Officer of
BellRing. “Our shake capacity expansions remain on track, enabling
significant future growth. Our momentum in the first half gives us
greater confidence to deliver our second half expectations and
drives our decision to raise our full year outlook.”
Dollar consumption of Premier Protein ready-to-drink
(“RTD”) shakes and Dymatize United States (“U.S.”) powder
products increased 21.9% and 38.3%, respectively, in the 13-week
period ended April 2, 2023, as compared to the same period in 2022
(inclusive of IRI Multi Outlet including Convenience and management
estimates of untracked channels).
Second Quarter Operating Results
Net sales were $385.6 million, an increase of 22.3%, or $70.4
million, compared to the prior year period, driven by 17.8%
improvement in price/mix and 4.5% increase in volume.
Premier Protein net sales increased 26.2%, driven by 20.0%
improvement in price/mix and 6.2% increase in volume. Premier
Protein RTD shake net sales increased 22.5%, driven by 17.3%
improvement in price and 5.2% increase in volume. Net sales
benefited from higher average net selling prices driven by price
increases to offset significant cost inflation. Higher RTD shake
production, along with RTD category growth, drove underlying net
sales growth.
Dymatize net sales increased 10.5%, driven by 11.9% improvement
in price/mix, which was partially offset by 1.4% decrease in
volume. Net sales benefited from higher average net selling prices
(driven by price increases to offset significant cost inflation),
which was partially offset by increased promotional spending.
Volume contraction was driven by declines from lapping discontinued
products, which was partially offset by organic growth and
promotional activities.
Gross profit was $117.1 million, or 30.4% of net sales, an
increase of 34.6%, or $30.1 million, compared to $87.0 million, or
27.6% of net sales, in the prior year period. The higher gross
profit margin was driven by improved pricing that offset
significant cost inflation and lapping logistics inefficiencies in
the prior year period (resulting from capacity constraints).
Selling, general and administrative (“SG&A”) expenses were
$54.3 million, or 14.1% of net sales, an increase of $5.4 million
compared to $48.9 million, or 15.5% of net sales, in the prior year
period. SG&A expenses included $0.4 million and $10.3 million
in the second quarter of 2023 and 2022, respectively, of costs
incurred in connection with BellRing’s separation from Post
Holdings, Inc. (“Post”), which were treated as adjustments for
non-GAAP measures. SG&A expenses in the second quarter of 2023
included higher marketing and consumer advertising expenses of $7.4
million and higher employee expenses and professional fees.
Operating profit was $58.0 million, an increase of 74.7%, or
$24.8 million, compared to $33.2 million in the prior year
period.
Net earnings available to common stockholders were $30.9
million, an increase of 2,276.9%, or $29.6 million, compared to
$1.3 million in the prior year period. Net earnings available to
common stockholders in the prior year period included loss on
extinguishment of debt, net of $17.6 million, which is discussed
later in this release and was treated as an adjustment for non-GAAP
measures, and excluded $2.6 million of net earnings attributable to
the Company’s redeemable noncontrolling interest (the “NCI”). Net
earnings per diluted share of common stock were $0.23, compared to
$0.02 in the prior year period. Adjusted net earnings available to
common stockholders* were $31.9 million, or $0.24 per diluted share
of common stock*, compared to $14.5 million, or $0.23 per diluted
share of common stock*, in the prior year period. Diluted
weighted-average shares of common stock outstanding were 134.5
million, compared to 62.9 million in the prior year period, with
the increase driven by the Spin-off (see definition below).
Adjusted EBITDA* was $68.0 million, an increase of 33.6%, or
$17.1 million, compared to $50.9 million in the prior year period.
Adjusted EBITDA in the prior year period included an adjustment for
the portion of BellRing Brands, LLC’s (“BellRing LLC”) consolidated
net earnings which was allocated to the NCI in the period prior to
Post’s distribution to its shareholders of 80.1% of Post’s interest
in BellRing (the “Distribution” and, together with the transactions
related thereto, the “Spin-off”), resulting in the calculation of
Adjusted EBITDA including 100% of BellRing.
*Adjusted net earnings available to common stockholders,
Adjusted diluted earnings per share of common stock and Adjusted
EBITDA are non-GAAP measures. For additional information regarding
non-GAAP measures, see the related explanations presented under
“Use of Non-GAAP Measures” later in this release.
Six Month Operating Results
Net sales were $748.3 million, an increase of 20.4%, or $126.6
million, compared to the prior year period driven by 16.7%
improvement in price/mix and 3.7% increase in volume. Premier
Protein net sales increased 24.5%, driven by 19.0% improvement in
price and 5.5% increase in volume. Dymatize net sales increased
6.9%, driven by 16.5% improvement in price/mix, which was partially
offset by 9.6% decrease in volume.
Gross profit was $238.9 million, or 31.9% of net sales, an
increase of 33.2%, or $59.6 million, compared to $179.3 million, or
28.8% of net sales, in the prior year period. The higher gross
profit margin was driven by improved pricing that offset
significant cost inflation, lapping logistics inefficiencies in the
prior year period (resulting from capacity constraints) and higher
production attainment fees received in the current year period from
shake contract manufacturers.
SG&A expenses were $96.0 million, or 12.8% of net sales, an
increase of $10.3 million compared to $85.7 million, or 13.8% of
net sales, in the prior year period. SG&A expenses included
$0.7 million and $12.3 million in the six months ended March 31,
2023 and 2022, respectively, of costs incurred in connection with
BellRing’s separation from Post, which were treated as adjustments
for non-GAAP measures. SG&A expenses in the six months ended
March 31, 2023 included higher marketing and consumer advertising
expenses of $8.4 million and higher employee expenses and
professional fees.
Net earnings available to common stockholders were $75.1
million, an increase of 690.5%, or $65.6 million, compared to $9.5
million in the prior year period. Net earnings available to common
stockholders in the prior year period included loss on
extinguishment of debt, net of $17.6 million, which is discussed
later in this release and was treated as an adjustment for non-GAAP
measures, and excluded $33.7 million of net earnings attributable
to the NCI. Net earnings per diluted share of common stock were
$0.56, compared to $0.19 in the prior year period. Adjusted net
earnings available to common stockholders* were $76.8 million, or
$0.57 per diluted share of common stock*, compared to $24.5
million, or $0.48 per diluted share of common stock*, in the prior
year period. Diluted weighted-average shares of common stock
outstanding were 134.8 million, compared to 51.2 million in the
prior year period, with the increase driven by the Spin-off.
Adjusted EBITDA* was $152.9 million, an increase of 38.1%, or
$42.2 million, compared to $110.7 million in the prior year period.
Adjusted EBITDA in the prior year period included an adjustment for
the portion of BellRing LLC’s consolidated net earnings which was
allocated to the NCI in the period prior to the Spin-off, resulting
in the calculation of Adjusted EBITDA including 100% of
BellRing.
*Adjusted net earnings available to common stockholders,
Adjusted diluted earnings per share of common stock and Adjusted
EBITDA are non-GAAP measures. For additional information regarding
non-GAAP measures, see the related explanations presented under
“Use of Non-GAAP Measures” later in this release.
Interest, Loss on Extinguishment of Debt and Income
Tax
Interest expense, net was $16.8 million and $8.5 million in the
second quarter of 2023 and 2022, respectively, and was $33.5
million and $16.9 million in the six months ended March 31, 2023
and 2022, respectively. The increase in both periods was primarily
driven by increases in the aggregate principal amount of debt
outstanding and the weighted-average interest rate, both of which
resulted from the Spin-off transactions.
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
amount of its term loan and termination of its prior credit
agreement.
Income tax expense was $10.3 million in the second quarter of
2023, an effective income tax rate of 25.0%, compared to $3.2
million in the second quarter of 2022, an effective income tax rate
of 45.1%. The decrease in the effective income tax rate in the
second quarter of 2023 when compared to the prior year period was
primarily driven by lapping certain separation-related expenses
incurred in connection with the Spin-off that were treated as
non-deductible, partially offset by the inclusion of 100% of the
income, gain, loss and deduction of BellRing LLC in the periods
subsequent to the Spin-off. Income tax expense was $24.6 million in
the six months ended March 31, 2023, an effective income tax rate
of 24.7%, compared to $6.1 million in the six months ended March
31, 2022, an effective income tax rate of 12.4%. The increase in
the effective income tax rate in the six months ended March 31,
2023 when compared to the prior year period was driven by the
inclusion of 100% of the income, gain, loss and deduction of
BellRing LLC in the periods subsequent to the Spin-off.
Share Repurchases
During the second quarter of 2023, BellRing repurchased 0.9
million shares for $27.3 million at an average price of $29.74 per
share. During the six months ended March 31, 2023, BellRing
repurchased 2.7 million shares for $68.5 million at an average
price of $25.52 per share.
On May 3, 2023, BellRing’s Board of Directors approved a new $80
million share repurchase authorization, with share repurchases
under the new authorization beginning on May 3, 2023. As of May 3,
2023, BellRing had repurchased approximately $48 million under its
previous $50 million share repurchase authorization, which became
effective on December 5, 2022, and was cancelled effective May 3,
2023.
Repurchases may be made from time to time in the open market,
private purchases, through forward, derivative, alternative,
accelerated repurchase or automatic purchase transactions, or
otherwise. The authorization does not, however, obligate BellRing
to acquire any particular amount of shares, and repurchases may be
suspended or terminated at any time at BellRing’s discretion. The
amount and timing of repurchases are subject to a variety of
factors including liquidity, share price, market conditions and
legal requirements.
Basis of Presentation
On March 10, 2022, Post’s distribution to its shareholders of
80.1% of its interest in BellRing was completed. From October 21,
2019 through March 10, 2022, BellRing allocated a portion of the
consolidated net earnings of BellRing LLC to the NCI, reflecting
the entitlement of Post to a portion of the consolidated net
earnings. Subsequent to the Spin-off, any remaining ownership of
BellRing by Post did not represent a NCI to BellRing LLC. On
November 25, 2022, Post transferred its remaining ownership in
BellRing to certain financial institutions and, as a result, no
longer had ownership of any shares of BellRing’s common stock.
Outlook
For fiscal year 2023, BellRing management has raised its
guidance range for net sales to $1.61-$1.66 billion from
$1.56-$1.64 billion and Adjusted EBITDA to $320-$335 million from
$306-$325 million (resulting in net sales and Adjusted EBITDA
growth of 17%-21% and 18%-23%, respectively, over fiscal year
2022). BellRing management now expects fiscal year 2023 capital
expenditures of approximately $6 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
separation costs, mark-to-market adjustments on commodity hedges
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 Tuesday, May 9, 2023 at
9:00 a.m. EDT to discuss financial results for the second quarter
of fiscal year 2023 and fiscal year 2023 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 registering
in advance at the following link: BellRing Q2 2023 Earnings
Conference Call. Upon registration, participants will receive a
dial-in number and a unique passcode to access the conference call.
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 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 and Adjusted EBITDA and capital expenditures
outlook for fiscal year 2023. 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:
- 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 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);
- 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 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 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;
- uncertain or unfavorable economic conditions that limit
customer and consumer demand for BellRing’s products or increase
its costs;
- risks related to BellRing’s ongoing relationship with Post
following BellRing’s separation from Post and 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 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 any guidance BellRing may give 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 Securities and Exchange Commission.
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(415) 814-9388
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited)(in
millions, except for 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 |
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 |
|
SELECTED CONDENSED CONSOLIDATED CASH
FLOWS INFORMATION (Unaudited)(in
millions)
|
Six Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash provided by (used
in): |
|
|
|
Operating activities |
$ |
20.3 |
|
|
$ |
17.6 |
|
Investing activities |
|
(0.5) |
|
|
|
(1.1) |
|
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) |
|
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. |
Loss on extinguishment, net: BellRing has excluded losses recorded
on extinguishment 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. |
b. |
Separation costs: BellRing has excluded certain expenses incurred
in connection with (i) Post’s distribution of 80.1% of its interest
in BellRing and (ii) secondary offerings of shares of BellRing
common stock previously held by Post, 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. |
c. |
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. |
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. |
NCI adjustment: BellRing has included an adjustment to reflect the
removal of non-GAAP adjustments which are attributable to the 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, as BellRing believes this
adjustment contributes to a more meaningful evaluation of
BellRing’s current operating performance. |
f. |
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 EBITDABellRing 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, and the
following adjustments discussed above: loss on extinguishment of
debt, net, separation costs, mark-to-market adjustments on
commodity hedges and foreign currency gain/loss on intercompany
loans. Additionally, Adjusted EBITDA reflects adjustments for the
following items:
g. |
Stock-based compensation: BellRing’s compensation strategy 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 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. |
h. |
Net earnings attributable to redeemable noncontrolling interest:
BellRing has included adjustments for the portion of its
consolidated net earnings which were allocated to the 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, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net
Earnings Available to Common Stockholders |
$ |
30.9 |
|
|
$ |
1.3 |
|
|
$ |
75.1 |
|
|
$ |
9.5 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Loss on extinguishment of
debt, net |
|
— |
|
|
|
17.6 |
|
|
|
— |
|
|
|
17.6 |
|
|
Separation costs |
|
0.4 |
|
|
|
10.3 |
|
|
|
0.7 |
|
|
|
12.3 |
|
|
Mark-to-market adjustments on
commodity hedges |
|
0.8 |
|
|
|
(0.2 |
) |
|
|
2.0 |
|
|
|
(0.5 |
) |
|
Foreign currency loss (gain)
on intercompany loans |
|
— |
|
|
|
0.1 |
|
|
|
(0.6 |
) |
|
|
0.3 |
|
|
NCI adjustment |
|
— |
|
|
|
(12.6 |
) |
|
|
— |
|
|
|
(12.5 |
) |
|
Total Net
Adjustments |
|
1.2 |
|
|
|
15.2 |
|
|
|
2.1 |
|
|
|
17.2 |
|
Income tax effect
on adjustments (1) |
|
(0.2 |
) |
|
|
(2.0 |
) |
|
|
(0.4 |
) |
|
|
(2.2 |
) |
Adjusted
Net Earnings Available to Common Stockholders |
$ |
31.9 |
|
|
$ |
14.5 |
|
|
$ |
76.8 |
|
|
$ |
24.5 |
|
|
|
|
|
|
|
|
|
|
(1) For the
periods subsequent to the Spin-off (October 1, 2022 through March
31, 2023 and March 11, 2022 through March 31, 2022), income tax
effect on adjustments was calculated on all items, except for
separation costs, using a rate of 24.0%. For the periods prior to
the Spin-off (October 1, 2021 through March 10, 2022), 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, |
|
|
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
Diluted
Earnings per share of Common Stock |
$ |
0.23 |
|
$ |
0.02 |
|
|
$ |
0.56 |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Loss on extinguishment of
debt, net |
|
— |
|
|
0.28 |
|
|
|
— |
|
|
0.34 |
|
|
Separation costs |
|
— |
|
|
0.16 |
|
|
|
— |
|
|
0.24 |
|
|
Mark-to-market adjustments on
commodity hedges |
|
0.01 |
|
|
— |
|
|
|
0.01 |
|
|
(0.01 |
) |
|
NCI adjustment |
|
— |
|
|
(0.20 |
) |
|
|
— |
|
|
(0.24 |
) |
|
Total Net
Adjustments |
|
0.01 |
|
|
0.24 |
|
|
|
0.01 |
|
|
0.33 |
|
Income tax effect
on adjustments (1) |
|
— |
|
|
(0.03 |
) |
|
|
— |
|
|
(0.04 |
) |
Adjusted
Diluted Earnings per share of Common Stock |
$ |
0.24 |
|
$ |
0.23 |
|
|
$ |
0.57 |
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
(1) For the
periods subsequent to the Spin-off (October 1, 2022 through March
31, 2023 and March 11, 2022 through March 31, 2022), income tax
effect on adjustments was calculated on all items, except for
separation costs, using a rate of 24.0%. For the periods prior to
the Spin-off (October 1, 2021 through March 10, 2022), 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 NET EARNINGS AVAILABLE
TO COMMON STOCKHOLDERS TO ADJUSTED EBITDA
(Unaudited)(in millions)
|
Three Months Ended March 31, |
|
Six Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net Earnings Available
to Common Stockholders |
$ |
30.9 |
|
|
$ |
1.3 |
|
|
$ |
75.1 |
|
|
$ |
9.5 |
|
Income tax expense |
|
10.3 |
|
|
|
3.2 |
|
|
|
24.6 |
|
|
|
6.1 |
|
Interest expense, net |
|
16.8 |
|
|
|
8.5 |
|
|
|
33.5 |
|
|
|
16.9 |
|
Depreciation and
amortization |
|
5.2 |
|
|
|
5.3 |
|
|
|
10.5 |
|
|
|
10.6 |
|
Loss on extinguishment of
debt, net |
|
— |
|
|
|
17.6 |
|
|
|
— |
|
|
|
17.6 |
|
Separation costs |
|
0.4 |
|
|
|
10.3 |
|
|
|
0.7 |
|
|
|
12.3 |
|
Stock-based compensation |
|
3.6 |
|
|
|
2.2 |
|
|
|
7.1 |
|
|
|
4.2 |
|
Mark-to-market adjustments on
commodity hedges |
|
0.8 |
|
|
|
(0.2) |
|
|
|
2.0 |
|
|
|
(0.5) |
|
Foreign currency loss (gain)
on intercompany loans |
|
— |
|
|
|
0.1 |
|
|
|
(0.6) |
|
|
|
0.3 |
|
Net earnings attributable to
redeemable noncontrolling interest |
|
— |
|
|
|
2.6 |
|
|
|
— |
|
|
|
33.7 |
|
Adjusted
EBITDA |
$ |
68.0 |
|
|
$ |
50.9 |
|
|
$ |
152.9 |
|
|
$ |
110.7 |
|
Adjusted EBITDA as a
percentage of Net Sales |
|
17.6% |
|
|
|
16.1% |
|
|
|
20.4% |
|
|
|
17.8% |
|
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