Bellring Brands, Inc 10-Q for FY2020 Q1

Bellring Brands, Inc. (BRBR)

10-Q 2020-02-07 For: 2019-12-31

Added on April 12, 2026

About this 10-Q

Bellring Brands, Inc filed this 10-Q on February 7, 2020, covering the quarter ended December 31, 2019 (FY2020 Q1).

Headline figures

Quarter ended December 31, 2019, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $244M; up 31.3% from $185.8M a year earlier
Net income: $6M; compared with net income of $0 a year earlier
Diluted EPS: $0.15

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Delaware		83-4096323
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value	BRBR	New York Stock Exchange



Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒



PART I.	FINANCIAL INFORMATION.	Page

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’ Equity (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.	21

Item 4.	Controls and Procedures.	22

PART II.	OTHER INFORMATION.

Item 1.	Legal Proceedings.	22

Item 1A.	Risk Factors.	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	23

Item 6.	Exhibits.	24

	SIGNATURES.	26



	Three Months Ended December 31,
	2019		2018
Net Sales	$	244.0	$	185.8
Cost of goods sold	152.7		120.2
Gross Profit	91.3		65.6
Selling, general and administrative expenses	36.5		27.2
Amortization of intangible assets	5.5		5.5
Operating Profit	49.3		32.9
Interest expense, net	11.6		—
Earnings before Income Taxes	37.7		32.9
Income tax expense	5.9		7.8
Net Earnings Including Redeemable Noncontrolling Interest	31.8		25.1
Less: Net earnings attributable to redeemable noncontrolling interest	25.8		25.1
Net Earnings Available to Class A Common Stockholders	$	6.0	$	—

Earnings per share of Class A Common Stock:
Basic	$	0.15	$	—
Diluted	$	0.15	$	—

Weighted-Average shares of Class A Common Stock Outstanding:
Basic	39.4		—
Diluted	39.4		—



	December 31, 2019			September 30, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	29.9		$	5.5
Receivables, net	94.0			68.4
Inventories	150.2			138.2
Prepaid expenses and other current assets	14.0			7.4
Total Current Assets	288.1			219.5
Property, net	10.6			11.7
Goodwill	65.9			65.9
Intangible assets, net	291.0			296.5
Other assets	15.3			0.9
Total Assets	$	670.9		$	594.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt	$	35.0		$	—
Accounts payable	46.5			61.7
Other current liabilities	25.9			31.0
Total Current Liabilities	107.4			92.7
Long-term debt	723.8			—
Deferred income taxes	17.2			14.1
Other liabilities	25.5			1.3
Total Liabilities	873.9			108.1
Redeemable noncontrolling interest	2,075.2			—
Stockholders’ Equity
Preferred stock	—			—
Common stock	0.4			—
Additional paid-in capital	0.3			—
Accumulated deficit	(2,276.9		)	—
Net investment of Post Holdings, Inc.	—			489.0
Accumulated other comprehensive loss	(2.0		)	(2.6		)
Total Stockholders’ Equity	(2,278.2		)	486.4
Total Liabilities and Stockholders’ Equity	$	670.9		$	594.5



	As Of and For The Three Months Ended December 31,
	2019			2018
Preferred Stock
Beginning and end of period	$	—		$	—
Common Stock
Beginning of period	—			—
Issuance of common stock	0.4			—
End of period	0.4			—
Additional Paid-in Capital
Beginning of period	—			—
Non-cash stock-based compensation expense	0.3			—
End of period	0.3			—
Accumulated Deficit
Beginning of period	—			—
Net earnings available to Class A Common Stockholders	6.0			—
Issuance of common stock	(0.4		)	—
Initial public offering	(2,117.1		)	—
Reclassification of net investment of Post Holdings, Inc.	524.4			—
Redemption value adjustment to redeemable noncontrolling interest	(689.8		)	—
End of period	(2,276.9		)	—
Net Investment of Post
Beginning of period	489.0			453.1
Net earnings attributable to Post Holdings, Inc.	5.5			25.1
Initial public offering	29.9			—
Reclassification of net investment of Post Holdings, Inc.	(524.4		)	—
Net decrease in net investment of Post Holdings, Inc.	—			(4.0		)
End of period	—			474.2
Accumulated Other Comprehensive Loss
Hedging Adjustments, net of tax
Beginning of period	—			—
Net change in hedges, net of tax	0.2			—
End of period	0.2			—
Foreign Currency Translation Adjustments
Beginning of period	(2.6		)	(1.4		)
Foreign currency translation adjustments	0.4			(0.3		)
End of period	(2.2		)	(1.7		)
Total Stockholders’ Equity	$	(2,278.2	)	$	472.5


•	BellRing Inc. as a holding company, has no material assets other than its ownership of BellRing LLC units and its indirect interests in the subsidiaries of BellRing LLC and has no independent means of generating revenue or cash flow.


•	BellRing Inc. and BellRing LLC will at all times maintain, subject to certain exceptions, a one-to-one ratio between the number of shares of Class A Common Stock issued by BellRing Inc. and the number of BellRing LLC units owned by BellRing Inc.



Beginning of period	$	—
Net earnings attributable to NCI after IPO	20.3
Net change in hedges, net of tax	0.4
Foreign currency translation adjustments	0.1
Impact of IPO	1,364.6
Redemption value adjustment to NCI	689.8
End of period	$	2,075.2



Net earnings available to Class A Common Stockholders	$	6.0
Transfers to NCI:
Impact of IPO	1,364.6
Redemption value adjustment to NCI	689.8
Changes from net earnings available to Class A Common Stockholders and transfers to NCI	$	2,060.4



Net earnings available to Class A Common Stockholders	$	6.0

Weighted-average shares for basic earnings per share (in millions)	39.4
Total dilutive securities	—
Weighted-average shares for diluted earnings per share (in millions)	39.4

Basic and Diluted earnings per share of Class A Common Stock	$	0.15



	December 31, 2019		September 30, 2019
Raw materials and supplies	$	27.0	$	26.4
Work in process	0.1		0.1
Finished products	123.1		111.7
Inventories	$	150.2	$	138.2



	December 31, 2019			September 30, 2019
Property, at cost	$	20.8		$	21.1
Accumulated depreciation	(10.2		)	(9.4		)
Property, net	$	10.6		$	11.7



Goodwill, gross	$	180.7
Accumulated impairment losses	(114.8		)
Goodwill, net	$	65.9



	December 31, 2019							September 30, 2019
	Carrying Amount		Accumulated Amortization			Net Amount		Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	$	209.4	$	(68.3	)	$	141.1	$	209.4	$	(65.5	)	$	143.9
Trademarks and brands	213.4		(63.5		)	149.9		213.4		(60.8		)	152.6
Other intangible assets	3.1		(3.1		)	—		3.1		(3.1		)	—
Intangible assets, net	$	425.9	$	(134.9	)	$	291.0	$	425.9	$	(129.4	)	$	296.5


•	Lease vs non-lease components — The Company elected to combine lease and non-lease components as a single component and the total consideration for the arrangements were accounted for as a lease.



	December 31, 2019
Remaining Fiscal 2020	$	2.6
Fiscal 2021	2.8
Fiscal 2022	2.7
Fiscal 2023	2.5
Fiscal 2024	1.9
Thereafter	4.7
Total future minimum payments	17.2
Less: Implied interest	(2.1		)
Total lease liabilities	$	15.1



	September 30, 2019
Fiscal 2020	$	2.7
Fiscal 2021	2.7
Fiscal 2022	2.7
Fiscal 2023	2.7
Fiscal 2024	1.9
Thereafter	4.7
Total future minimum payments	$	17.4



	December 31, 2019
ROU assets:
Other assets	$	13.9

Lease liabilities:
Other current liabilities	$	2.7
Other liabilities	12.4
Total lease liabilities	$	15.1



Balance Sheet Location	Fair Value		Portion Designated as Hedging Instrument
Other current assets	$	0.4	$	0.4
Other assets	0.2		0.2
Total assets	$	0.6	$	0.6



	December 31, 2019
Term B Facility	$	700.0
Revolving Credit Facility	80.0
	780.0
Less: Current portion of long-term debt	(35.0		)
Debt issuance costs, net	(8.0		)
Unamortized discount	(13.2		)
Long-term debt	$	723.8



	Three Months Ended December 31,
					favorable/(unfavorable)
dollars in millions	2019		2018		$ Change			% Change
Net Sales	$	244.0	$	185.8	$	58.2		31	%

Operating Profit	$	49.3	$	32.9	$	16.4		50	%
Interest expense, net	11.6		—		(11.6		)	(100	)%
Income tax expense	5.9		7.8		1.9			24	%
Less: Net earnings attributable to NCI	25.8		25.1		(0.7		)	(3	)%
Net Earnings Available to Class A Common Stockholders	$	6.0	$	—	$	6.0		100	%


•	our dependence on a limited number of third party contract manufacturers and suppliers for the manufacturing of most of our products, including one manufacturer for the substantial majority of our RTD protein shakes;


•	our reliance on a limited number of third party suppliers to provide certain ingredients and packaging;


•	higher freight costs, significant volatility in the costs or availability of certain commodities (including raw materials and packaging used to manufacture our products) or higher energy costs;


•	disruptions in our supply chain, changes in weather conditions and other events beyond our control;


•	our ability to anticipate and respond to changes in consumer and customer preferences and trends and to introduce new products;


•	our ability to maintain favorable perceptions of our brands;


•	our ability to expand existing market penetration and enter into new markets;


•	allegations that our products cause injury or illness, product recalls and withdrawals and product liability claims and other litigation;


•	legal and regulatory factors, such as compliance with existing laws and regulations and changes to and new laws and regulations affecting our business, including current and future laws and regulations regarding food safety and advertising;


•	our high leverage, our ability to obtain additional financing (including both secured and unsecured debt) and our ability to service our outstanding debt (including covenants that restrict the operation of our business);


•	our ability to manage our growth and to identify, complete and integrate any acquisitions or other strategic transactions;


•	fluctuations in our business due to changes in our promotional activities and seasonality;


•	risks related to our ongoing relationship with Post, including Post’s control over us and ability to control the direction of our business, conflicts of interest or disputes that may arise between Post and us and our obligations under various agreements with Post, including under the tax receivable agreement;


•	the loss of, a significant reduction of purchases by or the bankruptcy of a major customer;


•	the ultimate impact litigation or other regulatory matters may have on us;


•	the accuracy of our market data and attributes and related information;