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Press Release: BellRing Brands Reports Results for the First Quarter of Fiscal Year 2021

· 02/04/2021 17:00
-- Net sales of $282.4 million -- Operating profit of $47.8 million; net earnings available to Class A common stockholders of $7.8 million and Adjusted EBITDA of $60.7 million -- Reaffirmed fiscal year 2021 net sales guidance of $1.07-$1.12 billion and Adjusted EBITDA (non-GAAP) guidance of $207-$217 million

BellRing Brands Reports Results for the First Quarter of Fiscal Year 2021

ST. LOUIS, Feb. 04, 2021 (GLOBE NEWSWIRE) -- BellRing Brands, Inc. (NYSE:BRBR) ("BellRing"), a holding company operating in the global convenient nutrition category, today reported results for the first fiscal quarter ended December 31, 2020.

Highlights:

First Quarter Operating Results

Net sales were $282.4 million, an increase of 15.7%, or $38.4 million, compared to the prior year period. Premier Protein net sales increased 17.4%, with volumes up 21.9%, and Premier Protein ready-to-drink ("RTD") shake net sales increased 17.5%, with volumes up 22.9%. Premier Protein net sales benefited from RTD shake distribution gains for both existing and new products, incremental promotional activity and a modest increase in customer trade inventory levels to support certain promotional events that occurred early in January 2021. Dollar consumption of Premier Protein RTD shakes increased 27.5% in the 13-week period ended December 26, 2020 as compared to the same period in 2019 (inclusive of Nielsen Total US xAOC including Convenience and management estimates of untracked channels). Dymatize net sales increased 16.2%, with volumes increasing 10.4%, and benefited from distribution gains for both existing and new products with strong growth in the club, eCommerce and mass channels. Net sales of all other products decreased 11.2%.

Gross profit was $91.9 million, or 32.5% of net sales, an increase of 0.7%, or $0.6 million, compared to the prior year period gross profit of $91.3 million, or 37.4% of net sales. The lower gross profit margin was driven by higher input costs (predominantly milk-based proteins and freight for RTD shakes) and lower average net selling prices, resulting from incremental promotional activity.

Selling, general and administrative ("SG&A") expenses were $38.3 million, or 13.6% of net sales, an increase of $1.8 million compared to the prior year period SG&A expenses of $36.5 million, or 15.0% of net sales. SG&A expenses in the first quarter of 2021 included $4.6 million of restructuring and facility closure costs (which are discussed later in this release), which were partially offset by $1.5 million of lower costs related to BellRing's separation from Post Holdings, Inc. ("Post") in the first quarter of 2020. Restructuring and facility closure costs and separation costs were treated as adjustments for non-GAAP measures.

Operating profit was $47.8 million, a decrease of 3.0%, or $1.5 million, compared to the prior year period operating profit of $49.3 million.

Interest expense, net was $12.8 million in the first quarter of 2021, compared to $11.6 million in the first quarter of 2020. The increase was primarily driven by the timing of the issuance of debt in connection with the creation of BellRing's capital structure in the first quarter of 2020.

Income tax expense was $2.1 million in the first quarter of 2021, an effective income tax rate of 6.0%, compared to $5.9 million in the first quarter of 2020, an effective income tax rate of 15.6%. In both periods, the effective income tax rate differed significantly from the statutory rate primarily as a result of taking into account for U.S. federal, state and local income tax purposes a 28.8% distributive share of the items of income, gain, loss and deduction of BellRing Brands, LLC ("BellRing LLC") in the periods subsequent to BellRing's initial public offering (the "IPO").

Net earnings available to Class A common stockholders were $7.8 million, an increase of 30.0%, or $1.8 million, compared to the prior year period net earnings of $6.0 million. Net earnings available to Class A common stockholders excluded $25.1 million of net earnings attributable to the Company's redeemable noncontrolling interest ("NCI") compared to $25.8 million excluded in the prior year period. Net earnings per diluted share of Class A common stock were $0.20, compared to $0.15 in the prior year period. Adjusted net earnings available to Class A common stockholders were $9.3 million, or $0.23 per diluted share of Class A common stock compared to the prior year period Adjusted net earnings available to Class A common stockholders of $6.4 million, or $0.16 per diluted share of Class A common stock.

Adjusted EBITDA was $60.7 million, an increase of 3.6%, or $2.1 million, compared to the prior year period Adjusted EBITDA of $58.6 million. Adjusted EBITDA in both periods included an adjustment for the portion of BellRing LLC's consolidated net earnings which was allocated to NCI, resulting in the calculation of Adjusted EBITDA including 100% of BellRing.

Business Realignment

In the first quarter of 2021, BellRing management decided to strategically realign its business, resulting in the closing of its Dallas, Texas office and downsizing of its Munich, Germany location. These actions are expected to be completed by the end of the third quarter of 2021. In connection with this business realignment, BellRing incurred $4.6 million of restructuring and facility closure costs and $0.1 million of accelerated depreciation in the first quarter of 2021, which were treated as adjustments for non-GAAP measures.

Basis of Presentation

On October 21, 2019, BellRing closed its IPO of 39.4 million shares of Class A common stock. Upon completion of the IPO and certain transactions completed in connection with the IPO, BellRing became the holding company for BellRing LLC (which became the holding company for Post's historical active nutrition business). Effective October 21, 2019, BellRing allocates a portion of the consolidated net earnings of BellRing LLC to NCI, reflecting the entitlement of Post to a portion of the consolidated net earnings. As of December 31, 2020, Post held 71.2% of the economic interest of BellRing LLC. Prior to October 21, 2019, Post held 100% of the economic interest of BellRing LLC, which was allocated to NCI.

For the period prior to the IPO included in the three months ended December 31, 2019, BellRing's financial statements present the combined results of Post's historical active nutrition business which have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Post. The combined financial statements reflect the historical results of operations, financial position and cash flows of the active nutrition business. In the opinion of management, the assumptions underlying the active nutrition business's historical combined financial statements were reasonable.

COVID-19 Commentary

BellRing continues to monitor the impact of the COVID-19 pandemic on its business and remains focused on ensuring its ability to safeguard the health of its employees, maintaining the continuity of its supply chain and preserving financial liquidity. BellRing's primary categories, liquids and powders, have returned to growth relatively in line with their pre-pandemic growth rates. The bar category continues to experience year-over-year declines and BellRing's international sales continue to be soft when compared to the prior year. As of December 31, 2020, BellRing had $50.8 million in cash and cash equivalents and the available borrowing capacity under BellRing LLC's revolving credit facility was $150.0 million.

Outlook

For fiscal year 2021, BellRing management continues to expect net sales and Adjusted EBITDA to grow 8%-13% and 5%-10%, respectively, over fiscal year 2020 (resulting in a net sales range of $1.07-$1.12 billion and an Adjusted EBITDA range of $207-$217 million) and capital expenditures of approximately $4 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 NCI, restructuring and facility closures costs, separation 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 Class A common stockholders, Adjusted diluted earnings per share of Class A 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."

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February 04, 2021 17:00 ET (22:00 GMT)