Company Overview - BellRing Brands, Inc. is a consumer nutrition company that produces and sells ready-to-drink protein shakes, powders, bars, and other nutrition products under brands such as Premier Protein, Dymatize, and PowerBar [3]. Allegations of Wrongdoing - On May 6, 2025, BellRing disclosed during its quarterly earnings call that it anticipated a reduction in retailer inventory levels for the third quarter of 2025. The company projected "Q3 net sales growth of low-single-digits with Premier Protein the main driver and all others flat to down" [4]. - Following this announcement, BellRing's stock price experienced a significant decline, falling by $14.88 per share, or 18.97%, to close at $63.55 per share on the same day [4]. Legal Investigation - Edelson Lechtzin LLP is investigating potential violations of federal securities laws involving BellRing, stemming from allegations of providing misleading business information to the investing public [1].

Core Insights - Pomerantz LLP is investigating claims on behalf of investors of BellRing Brands, Inc. regarding potential securities fraud or unlawful business practices by the company and its officers or directors [1] - During the second quarter 2025 earnings call, BellRing disclosed that certain customers are optimizing their inventories, leading to a slowdown in sales growth projected for the third quarter to low-single-digits [3] - Following the earnings call, BellRing's stock price dropped by $14.88 per share, or 18.97%, closing at $63.55 on May 6, 2025 [3] Company Overview - BellRing Brands, Inc. is publicly traded on the NYSE under the ticker BRBR [1] - The company is facing scrutiny due to claims of potential securities fraud, which may impact investor confidence and stock performance [1] Legal Context - Pomerantz LLP is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4] - The firm has successfully recovered multimillion-dollar damages on behalf of class members in the past, indicating a strong track record in handling such cases [4]

Core Viewpoint - BellRing Brands, Inc. experienced a significant decline in share price following the announcement of anticipated reductions in retailer inventory levels, raising concerns about the company's sales practices and consumer demand for its products [1][4]. Company Overview - BellRing Brands, Inc. is a consumer products holding company that specializes in ready-to-drink (RTD) protein shakes and powders, with its primary brands being Premier Protein and Dymatize [3]. Recent Developments - On May 6, 2025, during its Q2 2025 earnings call, BellRing announced expectations of "third quarter reductions in retailer trade inventory levels," which is projected to create a mid-single-digit headwind to growth [4]. - The company revised its Q3 net sales growth expectations to low-single-digits, attributing Premier Protein as the main driver while other products are expected to remain flat or decline [4]. Market Reaction - Following the announcement, BellRing's share price fell by approximately 19%, translating to a decrease of $14.88 per share [1][4]. Legal Investigation - Hagens Berman, a national shareholders rights firm, has initiated an investigation into whether BellRing may have violated securities laws related to its sales practices, particularly concerning misleading statements about consumer demand and inventory levels [2][5].

Core Insights - BellRing Brands, Inc. is currently under investigation for potential violations of federal securities laws following a significant drop in stock price after a disappointing earnings call [1][2]. Group 1: Company Performance - During the second quarter 2025 earnings call, BellRing Brands reported that certain customers are optimizing their inventories, leading to a slowdown in sales growth projected for the third quarter to "low-single-digits" [2]. - Following this announcement, BellRing Brands' stock price fell nearly 19%, from $78.43 on May 5, 2025, to $63.55 on May 6, 2025 [2]. Group 2: Legal Investigation - Kessler Topaz Meltzer & Check, LLP is investigating potential securities law violations on behalf of BellRing Brands investors [1]. - The law firm has a history of prosecuting class actions related to securities fraud and has recovered billions for investors [3].

Company Performance - BellRing Brands (BRBR) closed at $58.54, reflecting a +2.24% increase from the previous day, outperforming the S&P 500's gain of 0.52% [1] - Over the last month, BellRing Brands' shares decreased by 7.21%, contrasting with the Consumer Staples sector's loss of 1.61% and the S&P 500's gain of 5.95% [1] Upcoming Earnings - The upcoming earnings release is projected to show an EPS of $0.49, indicating a 9.26% decline compared to the same quarter last year [2] - Revenue is expected to reach $531.21 million, representing a 3.07% increase from the year-ago quarter [2] Fiscal Year Estimates - For the fiscal year, earnings are projected at $2.2 per share and revenue at $2.3 billion, reflecting increases of +13.99% and +15.21% respectively from the prior year [3] Analyst Estimates and Rankings - Recent changes in analyst estimates indicate a dynamic business outlook, with positive revisions suggesting optimism [3] - The Zacks Rank for BellRing Brands is currently 3 (Hold), with the consensus EPS estimate moving 0.45% lower over the past month [5] Valuation Metrics - BellRing Brands has a Forward P/E ratio of 26.05, which is a premium compared to the industry average Forward P/E of 15.22 [6] - The company has a PEG ratio of 1.81, compared to the industry average PEG ratio of 1.58 [7] Industry Context - The Food - Miscellaneous industry, part of the Consumer Staples sector, has a Zacks Industry Rank of 176, placing it in the bottom 29% of over 250 industries [8]

Group 1 - The investigation by Robbins Geller Rudman & Dowd LLP focuses on potential violations of U.S. federal securities laws involving BellRing Brands, Inc., particularly regarding false or misleading statements made by the company and its executives [1] - BellRing Brands is a consumer packaged goods holding company that offers ready-to-drink protein shakes, other beverages, protein powders, nutrition bars, and products primarily under the Premier Protein and Dymatize brands [3] - During the second quarter of 2025 earnings call, BellRing Brands disclosed that certain customers were optimizing their inventories, which would slow sales growth in the third quarter to low-single-digits, leading to a nearly 19% drop in the company's stock price [4] Group 2 - Robbins Geller Rudman & Dowd LLP is recognized as one of the leading law firms in securities fraud and shareholder litigation, having secured over $2.5 billion for investors in 2024 alone [5]

Core Insights - BellRing Brands (NYSE: BRBR) reported earnings that fell short of investor expectations, leading to a decline in stock price despite what appeared to be a solid report [1] Financial Performance - The company's earnings report was characterized by a history of "beat and raise," which set a high bar for performance [1] - The disappointing earnings results contributed to a drop in the stock price, indicating investor sentiment was negatively impacted [1]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with BellRing Brands identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Earnings Growth - BellRing Brands has a historical EPS growth rate of 29.7%, with projected EPS growth of 16.8% for the current year, significantly outperforming the industry average of 3.5% [4]. Cash Flow Growth - The company exhibits a year-over-year cash flow growth of 42.1%, well above the industry average of 5.2%. Its historical annualized cash flow growth rate over the past 3-5 years stands at 14.5%, compared to the industry average of 4.6% [5][6]. Earnings Estimate Revisions - Current-year earnings estimates for BellRing Brands have been revised upward, with the Zacks Consensus Estimate increasing by 0.1% over the past month, indicating positive momentum [8]. Overall Assessment - BellRing Brands holds a Zacks Rank of 2 (Buy) and a Growth Score of B, suggesting it is a potential outperformer and a solid choice for growth investors [9][10].

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The company's unaudited financial statements for Q1 and H1 2025 show significant growth in net sales and earnings, increased assets and liabilities, and decreased operating cash flow due to higher inventory [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Net sales for Q1 2025 increased 19% to $588.0 million, with net earnings reaching $58.7 million; for H1 2025, net sales rose 21% to $1,120.9 million, and net earnings grew 34% to $135.6 million | | Three Months Ended March 31, | Six Months Ended March 31, | | :--- | :--- | :--- | | (in millions, except per share data) | **2025** | **2024** | **2025** | **2024** | | **Net Sales (in millions)** | **$588.0** | **$494.6** | **$1,120.9** | **$925.0** | | Gross Profit (in millions) | $189.8 | $164.3 | $389.4 | $312.3 | | Operating Profit (in millions) | $95.1 | $91.0 | $210.4 | $164.0 | | **Net Earnings (in millions)** | **$58.7** | **$57.2** | **$135.6** | **$101.1** | | Diluted Earnings per Common Share | $0.45 | $0.43 | $1.04 | $0.76 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Total assets increased to $947.5 million as of March 31, 2025, driven by higher inventories and receivables, while total liabilities rose to $1,201.6 million due to increased long-term debt | (in millions) | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets (in millions)** | **$710.6** | **$592.7** | | Inventories (in millions) | $385.3 | $286.1 | | **Total Assets (in millions)** | **$947.5** | **$837.0** | | **Total Current Liabilities (in millions)** | **$243.4** | **$203.7** | | Long-term debt (in millions) | $953.7 | $833.1 | | **Total Liabilities (in millions)** | **$1,201.6** | **$1,042.9** | | Total Stockholders' Deficit (in millions) | ($254.1) | ($205.9) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Net cash from operating activities decreased to $51.2 million for H1 2025, primarily due to increased inventories, while net cash used in financing activities rose to $76.3 million due to higher treasury stock purchases | (in millions) | Six Months Ended March 31, | | :--- | :--- | | | **2025** | **2024** | | **Net Cash Provided by Operating Activities (in millions)** | **$51.2** | **$90.5** | | Net Cash Used in Investing Activities (in millions) | ($1.9) | ($0.5) | | **Net Cash Used in Financing Activities (in millions)** | **($76.3)** | **($59.2)** | | Net (Decrease) Increase in Cash (in millions) | ($26.9) | $30.9 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail operations, revenue breakdown, related-party transactions, debt, and legal contingencies, highlighting shakes as a primary revenue driver, a co-packing agreement, and a significant Joint Juice litigation liability Net Sales by Product (in millions) | Product | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Six Months Ended March 31, 2025 | Six Months Ended March 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Shakes (in millions) | $487.5 | $397.9 | $927.0 | $747.9 | | Powders (in millions) | $88.0 | $84.1 | $169.2 | $153.8 | | Other (in millions) | $12.5 | $12.6 | $24.7 | $23.3 | | **Total Net Sales (in millions)** | **$588.0** | **$494.6** | **$1,120.9** | **$925.0** | - The company has a co-packing agreement with Comet Processing, Inc., a subsidiary of Post Holdings, for RTD shakes. Purchases from Comet totaled **$20.8 million** and **$27.1 million** for the three and six months ended March 31, 2025, respectively[32](index=32&type=chunk) - As of March 31, 2025, the company had an estimated liability of **$21.9 million** related to the Joint Juice litigation, which is included in "Other current liabilities"[66](index=66&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting a 19% increase in quarterly net sales driven by Premier Protein volume growth, and analyzes inflationary pressures, operational results, liquidity, and capital resources [Results of Operations](index=17&type=section&id=RESULTS%20OF%20OPERATIONS) Q2 fiscal 2025 net sales increased 19% to $588.0 million, driven by Premier Protein sales, while operating profit grew 5% to $95.1 million, tempered by higher product, advertising, and warehousing costs - Q2 2025 net sales increased **19%** year-over-year, driven by a **$92.3 million (22%)** increase in Premier Protein product sales, primarily due to **15% higher volumes** from increased RTD shake production, distribution gains, and more promotional activity[83](index=83&type=chunk) - Dymatize product sales grew **3%** in Q2 2025, with **20% higher volumes** from international expansion and new products, partially offset by unfavorable product mix affecting average net selling prices[83](index=83&type=chunk) - The **5%** increase in Q2 2025 operating profit was partially offset by several factors: - Higher net product costs of **$17.8 million** (driven by raw material and manufacturing costs)[85](index=85&type=chunk) - Increased advertising expense of **$12.5 million**[85](index=85&type=chunk) - Higher warehousing and distribution costs of **$3.3 million**[85](index=85&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity is supported by cash from operations and its Revolving Credit Facility, with $130.0 million available, and $183.7 million spent on share repurchases in H1 2025, while cash from operations decreased due to higher inventory levels - As of March 31, 2025, the company had **$130.0 million** of available borrowing capacity under its **$250.0 million** Revolving Credit Facility[92](index=92&type=chunk) - During the six months ended March 31, 2025, the company repurchased **2.5 million shares** of its common stock for a total cost of **$183.7 million**[93](index=93&type=chunk) - Cash provided by operating activities decreased by **$39.3 million** to **$51.2 million** for the six months ended March 31, 2025, primarily due to increased inventory levels driven by higher production[98](index=98&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=22&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies primary market risks as commodity price fluctuations, foreign currency exchange rate changes, and interest rate volatility, using derivatives to manage commodity risk and noting variable interest rate exposure - The company is exposed to commodity price risk and uses futures and options to hedge; a hypothetical **10% adverse change** in the price of its principal hedged commodity, non-fat dry milk, would have decreased the fair value of its derivative portfolio by less than **$1 million** as of March 31, 2025[111](index=111&type=chunk) - As of March 31, 2025, the company had **$840.0 million** in fixed-rate **7.00% Senior Notes** and **$120.0 million** in variable-rate borrowings under its Revolving Credit Facility, exposing it to interest rate risk[113](index=113&type=chunk)[114](index=114&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[116](index=116&type=chunk) - No significant changes occurred in the company's internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, including Joint Juice and Protein Products Class Litigations, with an estimated $21.9 million liability accrued for Joint Juice, not expected to materially affect financial condition - The company is defending multiple lawsuits, including class actions related to its former Joint Juice product and its current protein shakes and powders[119](index=119&type=chunk) - Information regarding legal proceedings is detailed in Note 13 of the financial statements, which is incorporated by reference into this section[119](index=119&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - As of the date of this quarterly report, there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K filed on November 19, 2024[120](index=120&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased approximately 2.4 million shares of common stock, and in March 2025, the Board approved a new $300 million share repurchase authorization, replacing the previous one Share Repurchases for the Quarter Ended March 31, 2025 | Period | Total Shares Purchased | Average Price Paid per Share (in USD) | | :--- | :--- | :--- | | Jan 2025 | 549,577 | $72.79 | | Feb 2025 | 913,753 | $72.44 | | Mar 2025 | 931,541 | $70.28 | | **Total** | **2,394,871** | **$71.68** | - On March 6, 2025, the Board of Directors approved a new **$300 million** share repurchase authorization, effective until March 6, 2027, and cancelled the prior authorization[123](index=123&type=chunk) [Other Information](index=24&type=section&id=Item%205.%20Other%20Information) This section discloses that on February 26, 2025, the President and CEO adopted a Rule 10b5-1 trading plan for the potential sale of up to 59,200 shares of common stock, expiring February 26, 2026 - Darcy H. Davenport, President and CEO, adopted a Rule 10b5-1 trading arrangement on February 26, 2025, to sell up to **59,200 shares** of common stock, with the plan expiring on February 26, 2026[124](index=124&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various agreements, corporate governance documents, and CEO and CFO certifications required by the Sarbanes-Oxley Act - The report includes a list of exhibits filed, such as the CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, and the Interactive Data File (iXBRL)[125](index=125&type=chunk)[128](index=128&type=chunk)

Financial Data and Key Metrics Changes - The company reported net sales of $588 million, representing a 19% increase year-over-year, while adjusted EBITDA grew 14% to $119 million, with adjusted EBITDA margins at 20.2% [19][20][21] - The fiscal year 2025 outlook for net sales growth is affirmed at 13% to 17% over fiscal year 2024, with adjusted EBITDA growth expected at 7% to 14% [7][23] Business Line Data and Key Metrics Changes - Premier Protein net sales increased by 22%, driven by strong volume growth in ready-to-drink (RTD) shakes and powders [19][20] - Dymatize's net sales grew 3%, supported by brand investments and new products, with international business showing double-digit growth [15][19] Market Data and Key Metrics Changes - The convenient nutrition category grew 12% in Q2, with RTD growth leading at 19% [8][30] - Premier Protein achieved all-time highs in household penetration, reaching nearly 21% [10][11] Company Strategy and Development Direction - The company is focusing on expanding its promotional activities and distribution, particularly for the new indulgence line, which targets incremental consumption occasions [14][17] - The management is optimistic about the long-term growth potential in the protein category, emphasizing the importance of innovation and consumer engagement [17][19] Management's Comments on Operating Environment and Future Outlook - Management noted that despite weakening consumer sentiment, the fundamentals of the protein category remain strong, with expectations for continued growth [7][30] - The company is cautious in its guidance due to uncertainties in the consumer environment but remains confident in its growth potential [61][90] Other Important Information - The company generated $48 million in cash flow from operations in Q2, with net debt at $932 million and net leverage at 1.9 times [22][23] - The company plans to continue monitoring potential tariff impacts on input costs, particularly related to dairy protein sourced from New Zealand and the EU [26][49] Q&A Session Summary Question: What are the expectations for category growth in the back half of the year? - Management indicated that the fundamentals remain strong, with expectations for continued growth in the RTD category despite broader consumer challenges [30] Question: What is driving the change in retailer inventories? - Management explained that the destocking is primarily a one-time adjustment by retailers who previously over-ordered, and consumption remains strong [36][42] Question: How are tariffs expected to impact input costs? - Management stated that dairy inputs constitute about 30% to 40% of total costs, with potential minor impacts from tariffs expected to start in fiscal year 2026 [47][49] Question: What is the outlook for marketing and advertising spending? - Management confirmed that the increased marketing spend aligns with expectations and is focused on driving consumption growth [52][54] Question: How does the company view competition in the protein shake market? - Management believes that while competitors are increasing protein levels, the focus remains on taste and nutritional balance, with opportunities for innovation [66][68] Question: What is the strategy behind the fourth-quarter promotions? - Management views the expanded promotions as a strategic move to enhance household penetration and drive consumer engagement, supported by inventory levels [116]