Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 1-39093 BellRing Brands, Inc. (Exact name of registrant as specified in its charter) Delaware 83-4096323 (State or other jurisdiction of incorporation or organizat ...

BellRing Brands, Inc. (NYSE:BRBR) Q3 2020 Earnings Conference Call August 7, 2020 10:30 AM ET Company Participants Jennifer Meyer - Investor Relations Darcy Davenport - President and Chief Executive Officer Paul Rode - Chief Financial Officer Conference Call Participants Andrew Lazar - Barclays Ken Goldman - JP Morgan David Palmer - Evercore ISI Jason English - Goldman Sachs Rob Dickerson - Jefferies John Baumgartner - Wells Fargo Brian Holland - D.A. Davidson Bill Chappell - Truist Securities Ken Zaslow - ...

Table of Contents Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☒ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ FORM 10-Q __________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Numbe ...

Financial Data and Key Metrics Changes - The company reported record sales of $258 million, an increase of 19% year-over-year, and adjusted EBITDA of $43 million, down 12.5% due to planned marketing investments [10][23] - Gross profit increased by 11.6%, while gross margin declined by 220 basis points to 34.3%, primarily due to higher input costs and increased trade promotions [23][26] - SG&A expenses as a percentage of net sales increased by 330 basis points to 18.4%, driven by increased marketing spend and public company costs [27] Business Line Data and Key Metrics Changes - Premier Protein's net sales grew by 26%, with volume increasing by 27%, driven by distribution gains and higher promotional activity [24] - Dymatize's net sales declined by 2%, with strong eCommerce growth offset by declines in international and club channels [25] - PowerBar's net sales and volumes decreased by 20% and 27%, respectively, due to lower international volumes and portfolio optimization [25] Market Data and Key Metrics Changes - The overall category grew by 6.5%, with the liquid subcategory growing by 11% during the second quarter [12] - eCommerce sales for Premier Protein grew by nearly 200%, indicating a significant shift in consumer purchasing behavior [16][50] - The company noted that pantry loading during COVID-19 contributed to growth, but expected a reversal in the third quarter as consumers deload [30] Company Strategy and Development Direction - The company plans to continue focusing on national advertising campaigns, which have generated over 1 billion impressions and increased household penetration from 5.3% to 6.6% [17] - Distribution expansion remains a key driver, with significant gains in untracked channels, including clubs and eCommerce [18] - New product launches, such as Café Latte and Protein with Oats, are performing well and contributing to growth [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in reaffirming full-year guidance despite the challenges posed by COVID-19, citing strong momentum in growth strategies [22][30] - The company anticipates that the long-term effects of COVID-19 will be positive for the category due to increased trial gains [14] - Management expects operating cash flow to improve in the second half of fiscal 2020 as working capital timing reverses [27] Other Important Information - The company ended the quarter with approximately $77 million in cash and borrowed $65 million as a precautionary measure [28] - The net debt was reported at $735 million, with a net leverage of 3.5 times, targeting a reduction to 3 times by fiscal 2021 [28] Q&A Session Summary Question: Insights on household penetration and consumer behavior - Management noted that high repeat rates indicate strong consumer loyalty, and they expect new buyers to convert into long-term customers [33][34] Question: Inventory dynamics and retail destocking - Management expects retailers to deload inventory in the third quarter due to lower consumption pull-through in April [39][40] Question: Impact of dairy costs on business - Management acknowledged a drop in dairy prices but indicated that protein prices may not fully track this decline [44][45] Question: eCommerce growth trends - eCommerce growth was reported at 200% in April, with expectations that this trend will continue post-COVID [50] Question: Private label competition - Private label share in convenient nutrition is still small, and management does not foresee significant impact on their business from private label competition [51][52] Question: Guidance and long-term growth outlook - Management remains confident in maintaining full-year guidance despite short-term challenges, with expectations of pent-up demand post-COVID [78][79]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited).) This section presents the unaudited condensed consolidated financial statements for BellRing Brands, Inc. for the periods ended March 31, 2020, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity, along with detailed notes on accounting policies and financial items following the company's IPO in October 2019 [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited).) For the three months ended March 31, 2020, net sales grew to $257.5 million from $216.5 million year-over-year, but operating profit decreased to $35.1 million from $40.8 million due to higher costs, while for the six-month period, net sales increased to $501.5 million from $402.3 million, and operating profit rose to $84.4 million from $73.7 million, with net earnings available to Class A stockholders of $4.2 million for the quarter and $10.2 million for the six-month period Consolidated Statements of Operations Highlights (in millions) | Metric | Three Months Ended Mar 31, 2020 | Three Months Ended Mar 31, 2019 | Six Months Ended Mar 31, 2020 | Six Months Ended Mar 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $257.5 | $216.5 | $501.5 | $402.3 | | **Gross Profit** | $88.2 | $79.0 | $179.5 | $144.6 | | **Operating Profit** | $35.1 | $40.8 | $84.4 | $73.7 | | **Net Earnings Available to Class A Stockholders** | $4.2 | $— | $10.2 | $— | Earnings Per Share of Class A Common Stock | Metric | Three Months Ended Mar 31, 2020 | Six Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | **Basic EPS** | $0.11 | $0.26 | | **Diluted EPS** | $0.11 | $0.26 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited).) As of March 31, 2020, total assets increased to $725.6 million from $594.5 million at September 30, 2019, driven by a significant increase in cash and cash equivalents to $76.7 million, while total liabilities surged to $926.9 million from $108.1 million, primarily due to $791.4 million in long-term debt, resulting in a total stockholders' deficit of $1,863.2 million after recording a redeemable noncontrolling interest of $1,661.9 million Balance Sheet Comparison (in millions) | Account | March 31, 2020 | September 30, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $349.5 | $219.5 | | **Total Assets** | $725.6 | $594.5 | | **Total Current Liabilities** | $128.0 | $92.7 | | **Long-term debt** | $756.4 | $— | | **Total Liabilities** | $926.9 | $108.1 | | **Redeemable noncontrolling interest** | $1,661.9 | $— | | **Total Stockholders' Equity (Deficit)** | $(1,863.2) | $486.4 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited).) For the six months ended March 31, 2020, the company experienced a net cash outflow from operating activities of $5.1 million, a reversal from a $1.6 million inflow in the prior year period, with stable net cash used in investing activities at $1.2 million, while financing activities provided a significant net cash inflow of $77.6 million, driven by IPO proceeds and debt issuance used to repay a bridge loan, resulting in a net increase in cash and cash equivalents of $71.2 million Cash Flow Summary for Six Months Ended March 31 (in millions) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net Cash (Used in) Provided by Operating Activities** | $(5.1) | $1.6 | | **Net Cash Used in Investing Activities** | $(1.2) | $(1.4) | | **Net Cash Provided by (Used in) Financing Activities** | $77.6 | $(8.0) | | **Net Increase (Decrease) in Cash** | $71.2 | $(8.0) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited).) The notes detail the company's background, IPO, and formation transactions, establishing a new corporate structure where BellRing Inc. is a holding company for BellRing LLC, with Post Holdings retaining a **71.2%** economic interest, and include key details such as revenue breakdown by product, related-party transactions with Post, accounting for the new redeemable noncontrolling interest, incurrence of significant debt, and adoption of the new lease accounting standard (ASC 842) - On October 21, 2019, BellRing Inc. closed its IPO, receiving net proceeds of approximately **$524.4 million**. BellRing LLC became the holder of Post's active nutrition business. Post holds a **71.2%** economic interest in BellRing LLC, which is treated as a redeemable noncontrolling interest[27](index=27&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) Net Sales by Product for Six Months Ended March 31 (in millions) | Product | 2020 | 2019 | | :--- | :--- | :--- | | Shakes and other beverages | $411.2 | $302.3 | | Powders | $59.6 | $62.1 | | Nutrition bars | $26.9 | $32.8 | | Other | $3.8 | $5.1 | | **Total Net Sales** | **$501.5** | **$402.3** | - In connection with the IPO, BellRing LLC entered into a new Credit Agreement for a **$700.0 million** Term B loan facility and a **$200.0 million** Revolving Credit Facility. As of March 31, 2020, total long-term debt on the balance sheet was **$756.4 million**[79](index=79&type=chunk)[77](index=77&type=chunk) - The company is involved in ongoing litigation regarding advertising claims for its Joint Juice® products. As of March 31, 2020, the company had an accrued liability of **$8.5 million** related to this matter[82](index=82&type=chunk)[84](index=84&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses the company's performance, highlighting a 25% increase in net sales for the first six months of fiscal 2020, driven by strong volume growth in Premier Protein RTD shakes, partially offset by declines in Dymatize and PowerBar sales, with operating profit increasing despite higher advertising, employee-related, and public company costs, and addresses significant changes in liquidity and capital resources due to the IPO and new debt facilities, along with the initial impacts of the COVID-19 pandemic [Results of Operations](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) For the six months ended March 31, 2020, net sales grew by $99.2 million (25%) year-over-year, primarily due to a 34% increase in Premier Protein sales from higher volumes, offsetting declines in Dymatize and PowerBar products, while operating profit rose by $10.7 million (15%), as higher sales outweighed increased costs, including **$11.7 million** more in advertising, higher raw material costs, and new public company expenses, with the effective tax rate decreasing significantly due to the new corporate structure post-IPO Six Months Ended March 31, 2020 vs 2019 (in millions) | Metric | 2020 | 2019 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $501.5 | $402.3 | $99.2 | 25% | | **Operating Profit** | $84.4 | $73.7 | $10.7 | 15% | - Premier Protein sales grew **$107.4 million (34%)** in the six-month period, driven by a **32%** volume increase in RTD shakes due to distribution gains, lapping prior year capacity constraints, and COVID-19 pantry loading[98](index=98&type=chunk) - Operating profit growth was tempered by higher net product costs (**$6.5M**), increased advertising (**$11.7M**), higher employee expenses (**$5.0M**), and incremental public company costs (**$4.8M**)[99](index=99&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's liquidity profile was transformed by its October 2019 IPO, which generated **$524.4M** in net proceeds, and the establishment of a new credit agreement with a **$700M** term loan and a **$200M** revolver, with these funds used to repay a **$1,225.0M** bridge loan assumed from Post, while cash used in operations was $5.1 million for the six-month period, a decrease from the prior year, mainly due to higher interest payments on the new debt, and the company increased its cash position by drawing an additional **$65.0 million** from its revolving credit facility to enhance financial flexibility amid COVID-19 uncertainty - The company executed its IPO for **$524.4M** in net proceeds and entered a new Credit Agreement (**$700M** Term B Facility, **$200M** Revolver) to repay a **$1,225.0M** Bridge Loan[104](index=104&type=chunk) - Cash from financing activities was a net inflow of **$77.6 million** for the six months ended March 31, 2020, compared to an **$8.0 million** outflow in the prior year, reflecting the major recapitalization[110](index=110&type=chunk) - In response to COVID-19, the company drew an additional **$65.0 million** from its revolving credit facility during the quarter to enhance liquidity[93](index=93&type=chunk)[106](index=106&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company is exposed to market risks from **commodity price risk** for raw materials, **foreign currency risk (euro)**, and **interest rate risk** on its variable-rate debt, and to manage interest rate risk on its new debt facilities, the company entered into interest rate swaps with a notional value of **$350.0 million**, with the report noting that the COVID-19 pandemic has created significant volatility and uncertainty, potentially heightening these risks - The company is exposed to **commodity price risk** for raw materials, **foreign currency risk (euro)**, and **interest rate risk** on its variable-rate debt[122](index=122&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - As of March 31, 2020, the company had **$811.3 million** in outstanding variable-rate debt (**$691.3M** Term B Facility and **$120.0M** Revolver)[125](index=125&type=chunk) - To mitigate interest rate risk, the company held interest rate swaps with a notional value of **$350.0 million** as of March 31, 2020[126](index=126&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were **effective** as of March 31, 2020, with no significant changes in the company's internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[127](index=127&type=chunk) - No significant changes were made to the company's internal control over financial reporting during the quarter ended March 31, 2020[127](index=127&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings.) The company provides an update on the ongoing 'Joint Juice Litigation,' which involves multiple class-action complaints alleging false advertising for its glucosamine and chondroitin dietary supplements, with one case dismissed and on appeal, while ten other state-based class actions remain pending, and the company continues to defend these cases vigorously and does not believe their resolution will have a **material adverse effect** on its financials - The company is defending multiple class-action lawsuits related to advertising claims for its Joint Juice® products[128](index=128&type=chunk) - The company does not expect the resolution of these cases to have a **material adverse effect** on its financial condition, results of operations, or cash flows[130](index=130&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors.) This section highlights that the COVID-19 pandemic is identified as a **significant risk factor**, expected to negatively impact the global economy, capital markets, and the company's financial and operational performance, with specific pandemic-related risks including interruptions in the supply chain and manufacturing, closures of customer retail locations, and potential labor shortages, and the pandemic is noted to have heightened many of the other risks previously disclosed in the company's Form 10-K - The COVID-19 pandemic is identified as a **significant risk factor**, expected to negatively impact the global economy, capital markets, and the company's financial and operational performance[131](index=131&type=chunk) - Specific pandemic-related risks include interruptions in the supply chain and manufacturing, closures of customer retail locations, and potential labor shortages[131](index=131&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, a credit agreement amendment, and certifications by the company's officers as required by the Sarbanes-Oxley Act - Lists exhibits filed with the Form 10-Q, including the First Amendment to the Credit Agreement and various officer certifications[134](index=134&type=chunk)

BellRing Brands, Inc. (NYSE:BRBR) Q1 2020 Earnings Conference Call February 7, 2020 10:30 AM ET Corporate Participants Matt Mainer - Investor Relations Darcy Davenport - President and Chief Executive Officer Paul Rode - Chief Financial Officer Conference Call participants Ken Goldman - JPMorgan Andrew Lazar - Barclays Chris Growe - Stifel John Baumgartner - Wells Fargo Ken Zaslow - Bank of Montreal Bryan Spillane - Bank of America David Palmer - Evercore ISI Jason English - Goldman Sachs Robert Dickerson - ...

Table of Contents Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☒ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ FORM 10-Q __________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transitio ...

[Cautionary Statement on Forward-Looking Statements](index=4&type=section&id=Cautionary%20Statement%20on%20Forward-Looking%20Statements) [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) The report contains forward-looking statements based on management's current views, subject to risks and uncertainties, with no obligation for the company to update them - Forward-looking statements are identified by words such as 'believe,' 'expect,' 'project,' 'estimate,' 'predict,' 'anticipate,' 'intend,' 'plan,' 'forecast,' 'target,' 'will,' 'can,' 'may,' 'would' or similar expressions[12](index=12&type=chunk) - The company's financial condition, results of operations, and cash flows may differ materially from those in forward-looking statements due to various risks and uncertainties[12](index=12&type=chunk) - The company does not undertake any obligation to publicly update forward-looking statements after the report date to conform to actual results or changes in expectations[15](index=15&type=chunk) [Key Risks and Uncertainties](index=4&type=section&id=Key%20Risks%20and%20Uncertainties) The company identifies several key risks and uncertainties that could affect its expected results, including dependence on RTD protein shakes, reliance on limited third-party manufacturers and suppliers, strong competition, supply chain disruptions, and the ability to adapt to consumer preferences - Dependence on sales from ready-to-drink ("RTD") protein shakes is a **significant risk**[12](index=12&type=chunk) - Reliance on a limited number of third-party contract manufacturers and suppliers, especially for RTD protein shakes, poses a risk to production and supply[12](index=12&type=chunk) - Operating in a **highly competitive** category and the ability to anticipate and respond to changes in consumer preferences are critical challenges[12](index=12&type=chunk) - Risks include volatility in raw material costs, supply chain disruptions, consolidation in distribution channels, product liability claims, and legal/regulatory compliance[12](index=12&type=chunk) - Other risks involve high leverage, ability to obtain financing, managing growth, international business risks, and the ongoing relationship with Post Holdings, Inc., including Post's control over the company[12](index=12&type=chunk) [PART I](index=7&type=section&id=PART%20I) [Business Overview](index=7&type=section&id=Item%201.%20Business) BellRing Brands, Inc. completed its IPO on October 21, 2019, becoming a publicly traded company focused on the global convenient nutrition category. The company's primary brands are Premier Protein, Dymatize, and PowerBar, offering RTD protein shakes, powders, and nutrition bars. The business model is asset-light, relying heavily on contract manufacturers - BellRing Brands, Inc. completed its IPO on October 21, 2019, issuing **39.4 million shares** of Class A common stock at **$14.00 per share**, raising approximately **$524.4 million** in net proceeds[18](index=18&type=chunk) - The company is a leader in the global convenient nutrition category, with primary brands Premier Protein, Dymatize, and PowerBar, distributed across club, food, drug, mass (FDM), eCommerce, specialty, and convenience channels[19](index=19&type=chunk) Net Sales and Net Income Growth (FY2017-FY2019) | Metric | FY2017 (Millions) | FY2019 (Millions) | Growth (FY2017-FY2019) | | :---------- | :---------------- | :---------------- | :--------------------- | | Net Sales | $713.2 | $854.4 | +$141.2 (+19.8%) | | Net Income | $35.2 | $123.1 | +$87.9 (+249.7%) | - The business model is asset-light, primarily engaging contract manufacturers and third-party logistics firms, with modest capital expenditures (e.g., **$3.2 million** in FY2019)[34](index=34&type=chunk)[39](index=39&type=chunk) [General Business Information](index=7&type=section&id=General%20Business%20Information) BellRing Brands, Inc. was incorporated in March 2019 and completed its IPO in October 2019, with its Class A Common Stock now trading on the NYSE under 'BRBR'. The company received $524.4 million in net proceeds from the IPO, which were used to acquire non-voting common units of BellRing Brands, LLC - BellRing Brands, Inc. completed its IPO on October 21, 2019, selling **39.4 million shares** of Class A common stock at **$14.00 per share**[18](index=18&type=chunk) - Net proceeds of approximately **$524.4 million** from the IPO were used to acquire newly issued non-voting common units of BellRing Brands, LLC[18](index=18&type=chunk) - The company's Class A Common Stock is traded on the New York Stock Exchange under the ticker symbol 'BRBR'[18](index=18&type=chunk) [Our Company and History](index=7&type=section&id=Our%20Company%20and%20History) BellRing Brands is a leader in convenient nutrition, formed in 2019 to hold Post Holdings' Active Nutrition business, which includes Premier Nutrition, Dymatize, and PowerBar. The company has a history of acquiring and integrating these brands, transitioning most manufacturing to third parties - BellRing Brands is a leader in the global convenient nutrition category, providing nutritious, great-tasting products under brands like Premier Protein, Dymatize, and PowerBar[19](index=19&type=chunk) - The company was incorporated in March 2019, and through formation transactions, BellRing Brands, LLC became the holder of Post's Active Nutrition business[20](index=20&type=chunk) - Key acquisitions by Post Holdings include Premier Nutrition (2013), Dymatize (2014), and PowerBar/Musashi (2015), with a strategic shift to third-party manufacturing for most products[20](index=20&type=chunk)[21](index=21&type=chunk) [Our Organizational Structure](index=8&type=section&id=Our%20Organizational%20Structure) Following the IPO, BellRing Brands, Inc. operates as a holding company, owning non-voting common units of BellRing Brands, LLC. Post Holdings retains a significant economic and voting interest, controlling BellRing Brands, Inc. through its Class B common stock - BellRing Brands, Inc. is a holding company with no material assets other than its ownership of non-voting common units of BellRing Brands, LLC[22](index=22&type=chunk) Economic and Voting Interests (as of Nov 22, 2019) | Entity/Interest | Owner | Percentage | | :-------------- | :---------------------------------- | :--------- | | Economic (LLC) | Post Holdings | 71.2% | | Economic (LLC) | BellRing Brands, Inc. (via Class A) | 28.8% | | Voting (Inc.) | Post Holdings (via Class B) | 67% | | Voting (Inc.) | Class A Common Stockholders | 33% | - Post Holdings controls BellRing Brands, Inc. through its ownership of Class B Common Stock, which represents **67%** of the combined voting power as long as Post owns more than **50%** of BellRing Brands, LLC units[22](index=22&type=chunk) [Our Industry and Brands](index=8&type=section&id=Our%20Industry%20and%20Brands) The company operates in the rapidly growing global convenient nutrition category, primarily in the U.S. market. Its brand portfolio, including Premier Protein, Dymatize, and PowerBar, targets various consumer need states and product forms, with RTD protein shakes being the dominant sales driver - The company operates in the global convenient nutrition category, with the U.S. as its primary market, focusing on everyday nutrition and sports nutrition consumer need states[23](index=23&type=chunk) Net Sales by Brand (FY2019) | Brand | % of Net Sales | | :-------------- | :------------- | | Premier Protein | 80% | | Dymatize | 13% | | PowerBar | 5% | | Other | 2% | Net Sales by Product Form (FY2017-FY2019) | Product Form | FY2017 | FY2018 | FY2019 | | :--------------------------- | :----- | :----- | :----- | | RTD protein shakes & other RTDs | 66% | 74% | 78% | | Powders | 16% | 14% | 14% | | Nutrition bars | 16% | 11% | 7% | - Premier Protein is the largest brand, offering RTD protein shakes (**30g protein, 1g sugar, 160 calories**), refreshing protein beverages, and nutrition bars, expanding internationally[26](index=26&type=chunk) - Dymatize targets fitness enthusiasts with science-based protein powders (e.g., ISO100) and supplements, sold globally[27](index=27&type=chunk) - PowerBar focuses on athletes and active individuals with nutrient-dense products, strong in Western Europe, and optimizing its North American portfolio[28](index=28&type=chunk) [Customers and Sales Channels](index=9&type=section&id=Customers%20and%20Sales%20Channels) The company sells products domestically and in over 50 countries, utilizing a direct sales force and broker/distributor networks. Costco and Walmart (including Sam's Club) are major customers, accounting for approximately 70% of net sales in FY2019 - The U.S. market accounted for **86%** of net sales in FY2019, with international markets representing **14%**[30](index=30&type=chunk) - Distribution channels include club, FDM, convenience, specialty, and eCommerce, utilizing both direct sales forces and broker/distributor networks[30](index=30&type=chunk)[31](index=31&type=chunk) - Costco and Walmart (including Sam's Club) were the largest customers, collectively accounting for approximately **70%** of net sales in FY2019[31](index=31&type=chunk) [Sales, Marketing, and R&D](index=10&type=section&id=Sales%2C%20Marketing%2C%20and%20R%26D) The company employs a multi-faceted, consumer-driven marketing strategy tailored to each brand's target audience, heavily utilizing social media and influencer programs. Research and development efforts focus on expanding product offerings with new flavors, ingredients, and packaging - Each primary brand (Premier Protein, Dymatize, PowerBar) has a dedicated marketing strategy, leveraging social media platforms and influencer programs (e.g., 'Premier Shakers,' 'Team Dymatize')[32](index=32&type=chunk) - R&D focuses on improving and expanding product offerings through new flavors, ingredients, and packaging, supported by an innovation team and third-party experts[33](index=33&type=chunk) [Supply Chain and Manufacturing](index=10&type=section&id=Supply%20Chain%20and%20Manufacturing) The company primarily uses contract manufacturers and third-party logistics for production and distribution, with one owned manufacturing facility in Voerde, Germany. Raw materials, mainly milk-based, whey-based, and soy-based proteins, are sourced from various suppliers, and quality is rigorously managed - The company primarily relies on third-party contract manufacturers in North America and the E.U. for finished goods production[34](index=34&type=chunk) - An owned manufacturing operation in Voerde, Germany, produces nutrition bars and gels, primarily for the E.U. and U.K. markets[34](index=34&type=chunk) - Raw materials, including milk-based, whey-based, and soy-based proteins, are sourced from local, regional, and international suppliers, with active management of cost and quality[34](index=34&type=chunk) - The largest contract manufacturer supplied approximately **81%** of Premier Protein RTD shake supply in FY2019, with minimum volume commitments in place[34](index=34&type=chunk) [Competition and Seasonality](index=11&type=section&id=Competition%20and%20Seasonality) The convenient nutrition category is highly competitive, with competition based on product quality, taste, functional benefits, and price. The business experiences seasonal fluctuations, with the first fiscal quarter typically being low due to holiday consumption slowdown and colder weather - The convenient nutrition category is **highly competitive**, with numerous competitors of varying sizes, including branded and private label manufacturers[37](index=37&type=chunk) - Competition factors include product quality, taste, functional benefits, convenience, brand loyalty, product variety, packaging, shelf space, price, promotional efforts, and ingredients[37](index=37&type=chunk) - Sales and EBIT margins experience seasonal fluctuations, with the first fiscal quarter being seasonally low due to holiday season and colder weather, followed by increases throughout the year due to promotional activity and organic growth[38](index=38&type=chunk) [Intellectual Property and Regulation](index=11&type=section&id=Intellectual%20Property%20and%20Regulation) The company owns critical trademarks like Premier Protein®, Dymatize®, and PowerBar®, protected through registrations and trade secret laws. It is subject to extensive federal, state, and international regulations concerning food safety, labeling, advertising, and environmental matters - Key trademarks include Premier Protein®, Dymatize®, PowerBar®, ISO.100®, Joint Juice®, and Supreme Protein®, protected through registration in the U.S., Germany, and other countries[40](index=40&type=chunk) - The company relies on trademark, copyright, trade secret laws, and confidentiality agreements to protect its proprietary rights[40](index=40&type=chunk) - Products are regulated as food or dietary supplements by agencies like the FDA, USDA, and FTC in the U.S., and similar international bodies, requiring compliance with stringent standards[42](index=42&type=chunk) - The company is also subject to data privacy laws (e.g., E.U.'s GDPR) and environmental regulations (e.g., Clean Air Act, Clean Water Act)[42](index=42&type=chunk) [Employees and Executive Officers](index=12&type=section&id=Employees%20and%20Executive%20Officers) As of November 1, 2019, the company had approximately 400 employees globally. Key executive officers include Robert V. Vitale (Executive Chairman), Darcy H. Davenport (President and CEO), and Paul A. Rode (CFO) - As of November 1, 2019, the company had approximately **400 employees**, with **200 in the U.S.**, **175 in Germany**, and **10 in other countries**[43](index=43&type=chunk) - Robert V. Vitale serves as Executive Chairman and co-principal executive officer, also President and CEO of Post Holdings, Inc[44](index=44&type=chunk) - Darcy H. Davenport serves as President and Chief Executive Officer and co-principal executive officer, previously President of Post's Active Nutrition business[44](index=44&type=chunk) - Paul A. Rode serves as Chief Financial Officer and principal financial officer, previously CFO of Post's Active Nutrition business[46](index=46&type=chunk) [Emerging Growth Company Status](index=13&type=section&id=Emerging%20Growth%20Company%20Status) The company qualifies as an 'emerging growth company' under the JOBS Act, allowing it to rely on reduced disclosure requirements. It has elected not to use the extended transition period for complying with new or revised financial accounting standards - The company qualifies as an 'emerging growth company' due to gross revenue less than **$1.07 billion** in the last fiscal year[47](index=47&type=chunk) - This status permits reduced disclosure requirements, including less than five years of selected financial data and reduced executive compensation disclosure[49](index=49&type=chunk) - The company has elected not to use the extended transition period for complying with new or revised financial accounting standards, making its financial statements subject to all standards generally applicable to public companies[49](index=49&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Various risks, categorized by business, indebtedness, relationship with Post, and Class A Common Stock ownership, could materially affect the company's financial condition and operations - Risks are categorized into those related to the business, indebtedness, relationship with Post Holdings, and ownership of Class A Common Stock[52](index=52&type=chunk) - Additional risks not currently known or deemed immaterial may also impair the business[52](index=52&type=chunk) [Risks Related to Our Business](index=15&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include heavy reliance on RTD protein shakes and a limited number of contract manufacturers, intense competition, volatility in raw material costs, supply chain disruptions, and the need to adapt to changing consumer preferences. Product safety, regulatory compliance, and the ability to manage growth are also significant concerns - A substantial amount of net sales (approx. **75%** in FY2019) comes from RTD protein shakes, making the business vulnerable to declines in this market or production disruptions[53](index=53&type=chunk) - Dependence on a single supplier for **81%** of Premier Protein RTD shake supply and a sole supplier for aseptic packaging for 11-ounce RTD shakes creates **significant supply chain risk**[53](index=53&type=chunk) - The convenient nutrition category is **highly competitive**, with larger competitors having more resources and smaller ones having unique retail ties, potentially leading to pricing pressures or market share loss[56](index=56&type=chunk) - Reliance on a limited number of suppliers for key ingredients (e.g., milk-based protein) and packaging, along with fluctuating freight and energy costs, can negatively impact profits[56](index=56&type=chunk) - The company must continuously identify and respond to changing consumer preferences and introduce new products to remain competitive[59](index=59&type=chunk) - Product adulteration, contamination, misbranding, or mislabeling could lead to recalls, product liability claims, and reputational damage[63](index=63&type=chunk) - Operating in the dietary supplement category subjects some products to higher regulatory scrutiny, potentially increasing costs and delaying sales[65](index=65&type=chunk) - Failure to effectively manage growth, including increased investment in manufacturing relationships, personnel, and systems, could harm the business[66](index=66&type=chunk) - International business operations expose the company to risks such as currency fluctuations, trade restrictions, political instability, and compliance with foreign laws[68](index=68&type=chunk) - Loss of major customers (Costco and Walmart accounted for ~**70%** of FY2019 net sales) or significant reductions in purchases could severely impact revenues[69](index=69&type=chunk)[70](index=70&type=chunk) - Litigation, including claims of deceptive advertising, could result in significant costs, damage to reputation, and monetary damages[71](index=71&type=chunk) - Inaccurate market size estimates could lead to flawed strategic decisions[72](index=72&type=chunk) - Agricultural diseases or pests could harm the quality and quantity of raw materials[73](index=73&type=chunk) - Inability to attract and retain key personnel or management turnover could harm the business[75](index=75&type=chunk) - Increases in employee health and welfare benefits costs may reduce profitability[76](index=76&type=chunk) - Economic downturns could limit consumer demand for products, especially for higher-priced offerings[77](index=77&type=chunk) - Disruptions in capital and credit markets could negatively affect liquidity and increase borrowing costs[78](index=78&type=chunk) - Inability to protect intellectual property rights could reduce the value of products and brands[80](index=80&type=chunk) - Technology failures, cybersecurity incidents, and data privacy breaches could disrupt operations and lead to reputational damage[82](index=82&type=chunk) - Impairment in the carrying value of goodwill or other intangible assets could negatively impact financial condition (e.g., **$26.5 million** goodwill impairment in FY2017)[82](index=82&type=chunk) - Environmental laws and regulations can impose significant costs and liabilities, and climate change may negatively affect business and operations[85](index=85&type=chunk)[86](index=86&type=chunk) [Risks Related to Our Indebtedness](index=24&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) Significant debt could limit future financing, increase borrowing costs, and restrict operational flexibility. Debt covenants require specific financial ratios, and non-compliance could accelerate debt maturity. Variable-rate debt exposes the company to interest rate increases - The company had **$800.0 million** in total debt upon IPO consummation and **$140.0 million** remaining borrowing capacity under its secured revolving credit facility as of October 31, 2019[87](index=87&type=chunk) - High leverage could limit additional financing, make debt servicing difficult, restrict refinancing options, and reduce flexibility in responding to market conditions[87](index=87&type=chunk) - Debt agreements contain covenants, including a total net leverage ratio not to exceed **6.00:1.00**, which, if violated, could lead to accelerated debt maturity and foreclosure on collateral[89](index=89&type=chunk) - Variable-rate debt (Term B Facility and Revolving Credit Facility) exposes the company to interest rate risk; a **100 basis point** change in LIBOR would result in an approximate **$8 million** change in annual cash interest expense[92](index=92&type=chunk) - The phase-out of LIBOR by the end of 2021 introduces uncertainty regarding interest rate calculations and potential impact on financial performance[92](index=92&type=chunk) [Risks Related to Our Relationship with Post](index=26&type=section&id=Risks%20Related%20to%20Our%20Relationship%20with%20Post) Post Holdings' control creates potential conflicts of interest and may lead to unfavorable agreements or substantial cash payments for tax benefits, even if later disallowed. Restrictions on capital raising and potential stock price depression from future sales are also risks - Post Holdings controls BellRing Brands, Inc. through its Class B Common Stock, representing **67%** of total voting power, enabling control over significant corporate actions[93](index=93&type=chunk) - Conflicts of interest may arise between Post and BellRing, as Post's interests could differ from other stockholders, potentially leading to unfavorable resolutions for BellRing[94](index=94&type=chunk) - The amended and restated certificate of incorporation renounces corporate opportunities that become known to directors/officers who also serve Post, potentially preventing BellRing from pursuing such opportunities[96](index=96&type=chunk) - The tax receivable agreement requires BellRing to pay Post **85%** of certain cash tax savings, which could be substantial (estimated **$617.1 million** if all LLC units were redeemed post-IPO)[99](index=99&type=chunk) - Payments under the tax receivable agreement may be accelerated or exceed actual benefits, and BellRing will not be reimbursed if tax benefits are disallowed[100](index=100&type=chunk) - Post's ability to distribute its beneficial retained interest in BellRing Brands, LLC on a tax-free basis may prevent BellRing from pursuing capital raising or acquisition opportunities[97](index=97&type=chunk) - Future sales or distributions of Class A Common Stock by Post could depress the stock price or result in a change of control[103](index=103&type=chunk) - Services provided by Post under the master services agreement may not meet BellRing's needs, potentially leading to increased costs[104](index=104&type=chunk) [Risks Related to Ownership of Our Class A Common Stock](index=31&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) Risks include lack of public company operating history, increased costs, stock price volatility, and potential exclusion from stock indices due to dual-class voting. Future stock sales by Post could depress the price, and no dividends are expected - The company has **no operating history** as a separate public company, and historical financial information may not be representative of future results[105](index=105&type=chunk) - Operating as a public company incurs additional expenses for corporate infrastructure and ongoing compliance, including Section 404 of Sarbanes-Oxley Act[105](index=105&type=chunk) - The market price and trading volume of Class A Common Stock may be volatile due to factors like analyst reports, economic conditions, and investor perceptions[109](index=109&type=chunk) - The dual-class voting structure may prevent inclusion in certain stock indices (e.g., S&P Composite 1500), potentially leading to a less active trading market[109](index=109&type=chunk) - Future sales of a substantial portion of Class A Common Stock by Post could significantly depress the market price[110](index=110&type=chunk) - Issuance of additional capital stock for financings, acquisitions, or incentive plans could dilute existing stockholders[111](index=111&type=chunk) - The company does not intend to pay cash dividends on Class A Common Stock for the foreseeable future, requiring stockholders to rely on price appreciation for gains[112](index=112&type=chunk) - Provisions in the certificate of incorporation and bylaws, along with Delaware law, may delay or prevent third-party acquisition, potentially diminishing stock value[113](index=113&type=chunk) - As an 'emerging growth company,' reliance on reduced disclosure requirements may make Class A Common Stock less attractive to some investors[114](index=114&type=chunk) - As a 'controlled company' under NYSE standards, the company is eligible for exemptions from certain corporate governance requirements, though it does not currently rely on them[114](index=114&type=chunk) - Actions by stockholders could incur substantial costs and divert management's attention[114](index=114&type=chunk) - BellRing Brands, Inc. is a holding company dependent on distributions from BellRing Brands, LLC to pay taxes and expenses, including tax receivable agreement payments, which may be subject to limitations[116](index=116&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved comments from the SEC staff [Properties](index=35&type=section&id=Item%202.%20Properties) The company's principal executive offices are provided by Post in St. Louis, Missouri, with leased administrative and R&D facilities globally, and one owned manufacturing facility in Voerde, Germany - Principal executive offices are in St. Louis, Missouri, provided by Post under a Master Services Agreement[118](index=118&type=chunk) - Leased facilities include R&D and administrative offices in Emeryville, CA; Dallas, TX; Boise, ID; Rogers, AR; Munich, Germany; Worb, Switzerland; and Manchester, England[118](index=118&type=chunk) - The company owns one manufacturing facility in Voerde, Germany, which produces nutrition bars and gels[118](index=118&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in class action lawsuits regarding advertising claims for its Joint Juice dietary supplements, but management does not expect a material adverse effect on financial results - Premier Nutrition is a defendant in multiple class action lawsuits (including the California Class Lawsuit) alleging false and misleading advertising claims for its Joint Juice glucosamine dietary supplements[119](index=119&type=chunk)[120](index=120&type=chunk) - The California Class Lawsuit was dismissed with prejudice in April 2018, but the dismissal is pending appeal, and ten other similar complaints remain pending[120](index=120&type=chunk) - Management believes the resolution of these cases will not have a **material adverse effect** on the company's combined financial condition, results of operations, or cash flows[120](index=120&type=chunk) - Accrued legal settlements related to this matter totaled **$8.5 million** at both September 30, 2019, and 2018[265](index=265&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [PART II](index=37&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BellRing Brands, Inc.'s Class A Common Stock began trading on the NYSE on October 17, 2019, following its IPO. The company does not intend to pay cash dividends in the foreseeable future, and its IPO proceeds were used to repay debt and cover IPO-related expenses - Class A Common Stock began trading on the NYSE under 'BRBR' on October 17, 2019[125](index=125&type=chunk) - As of November 1, 2019, there were approximately **90 stockholders** of record for Class A Common Stock and **1 for Class B Common Stock**[126](index=126&type=chunk) - The company does not intend to pay cash dividends on its Class A Common Stock for the foreseeable future[127](index=127&type=chunk) - Net proceeds of approximately **$524.4 million** from the IPO were used by BellRing Brands, LLC to repay a portion of the Post bridge loan, pay IPO and formation transaction fees, reimburse Post for cash on the balance sheet, and for general corporate purposes[129](index=129&type=chunk) - In connection with the IPO, BellRing Brands, LLC issued **39.4 million units** to BellRing Brands, Inc. and **97.5 million units** to Post, with Post also receiving one share of Class B Common Stock[130](index=130&type=chunk) [Selected Financial Data](index=38&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data for fiscal years 2016-2019, including statements of operations, cash flows, and balance sheet, demonstrate significant growth in net sales and net earnings Selected Statements of Operations Data (FY2016-FY2019, in millions) | Metric | 2019 | 2018 | 2017 | 2016 | | :----------------- | :------ | :------ | :------ | :------ | | Net sales | $854.4 | $827.5 | $713.2 | $574.7 | | Gross profit | $311.8 | $277.7 | $245.8 | $179.2 | | Net earnings | $123.1 | $96.1 | $35.2 | $19.9 | Selected Statements of Cash Flows Data (FY2016-FY2019, in millions) | Metric | 2019 | 2018 | 2017 | 2016 | | :----------------------- | :------ | :------ | :------ | :------ | | Operating activities | $98.3 | $141.2 | $80.4 | $40.8 | | Investing activities | $(3.2) | $(5.0) | $2.1 | $(2.6) | | Financing activities | $(100.2)| $(133.0)| $(84.0) | $(34.8) | Selected Balance Sheet Data (as of September 30, in millions) | Metric | 2019 | 2018 | 2017 | | :---------------------- | :------ | :------ | :------ | | Cash and cash equivalents | $5.5 | $10.9 | $7.8 | | Total assets | $594.5 | $560.4 | $583.2 | | Total parent company equity | $486.4 | $451.7 | $484.4 | - A goodwill impairment charge of **$26.5 million** was recorded in fiscal 2017[137](index=137&type=chunk) - The effective tax rate in fiscal 2018 was impacted by the Tax Cuts and Jobs Act[137](index=137&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) A detailed analysis of BellRing Brands' financial performance, condition, liquidity, and capital resources covers key trends, operational results, IPO impact, net sales, earnings, cash flows, and critical accounting estimates - The discussion summarizes significant factors affecting combined operating results, financial condition, liquidity, and capital resources of BellRing Brands, Inc. and its subsidiaries[139](index=139&type=chunk) - The historical combined financial statements are derived from Post's records and reflect allocations of corporate expenses, which may not represent costs as a separate company[139](index=139&type=chunk) [Overview and Industry Trends](index=39&type=section&id=Overview%20and%20Industry%20Trends) BellRing Brands, a convenient nutrition provider, operates in an industry driven by active lifestyles and nutrition interest, but faces intense competition and changing consumer preferences, with FY2019 growth impacted by RTD protein shake supply constraints - BellRing was formed in 2019 as the holding company for Post's Active Nutrition business, including Premier Nutrition, Dymatize, and PowerBar[141](index=141&type=chunk) - Industry growth is supported by consumers' pursuit of active lifestyles, increased interest in nutrition and wellness, awareness of protein benefits, and the rise of snacking[142](index=142&type=chunk) - Challenges include intense competition from various food and beverage companies and the need to adapt to changing consumer preferences[142](index=142&type=chunk) - Short-term supply constraints for RTD protein shakes in FY2019, due to better-than-expected volume growth and production capacity delays, adversely impacted growth rates[142](index=142&type=chunk)[146](index=146&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Net sales increased 3% to $854.4 million in FY2019, driven by Premier Protein despite supply constraints, while net earnings grew 28% to $123.1 million, with the effective income tax rate at 24.2% Financial Performance Summary (FY2017-FY2019, in millions) | Metric | 2019 | 2018 | 2017 | 2019 vs 2018 ($ Change) | 2019 vs 2018 (% Change) | 2018 vs 2017 ($ Change) | 2018 vs 2017 (% Change) | | :------------------------- | :------ | :------ | :------ | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Net Sales | $854.4 | $827.5 | $713.2 | $26.9 | 3% | $114.3 | 16% | | Gross Profit | $311.8 | $277.7 | $245.8 | $34.1 | 12% | $31.9 | 13% | | Selling, general & admin. | $127.1 | $135.1 | $131.0 | $8.0 | 6% | $(4.1) | (3)% | | Earnings before Income Taxes | $162.5 | $119.8 | $65.6 | $42.7 | 36% | $54.2 | 83% | | Net Earnings | $123.1 | $96.1 | $35.2 | $27.0 | 28% | $60.9 | 173% | | Gross Profit Margin | 36% | 34% | 34% | | | | | | EBIT Margin | 19% | 14% | 9% | | | | | | Effective Income Tax Rate | 24% | 20% | 46% | | | | | - FY2019 net sales increase of **$26.9 million** (**3%**) was driven by Premier Protein (up **$43.8 million**, **7%**), partially offset by PowerBar declines (down **$15.6 million**, **26%**) and short-term supply constraints for RTD protein shakes[153](index=153&type=chunk) - FY2019 EBIT increased **$42.7 million** (**36%**), influenced by **$6.7 million** in separation costs and **$9.0 million** litigation settlement accrual in FY2018. Excluding these, EBIT increased **$40.4 million** (**31%**) due to higher net sales, lower product costs, and reduced marketing[155](index=155&type=chunk) - A goodwill impairment charge of **$26.5 million** related to the Dymatize reporting unit was recorded in FY2017 due to weak sales in the specialty channel[157](index=157&type=chunk) - The effective income tax rate was **24.2%** in FY2019, **19.8%** in FY2018, and **46.3%** in FY2017. The FY2018 rate was impacted by the Tax Act, which reduced the U.S. federal corporate income tax rate[159](index=159&type=chunk) - Adoption of ASU 2014-09 on October 1, 2018, resulted in reclassification of **$8.8 million** in certain customer payments from selling expenses to net sales in FY2019, with **no material impact** on financial statements[160](index=160&type=chunk)[247](index=247&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased in FY2019 due to unfavorable working capital, particularly increased inventory. Post-IPO, new debt facilities totaling $900.0 million were secured to repay a bridge loan, and the company expects sufficient liquidity for future needs Cash Flow Summary (FY2017-FY2019, in millions) | Activity | 2019 | 2018 | 2017 | | :------------------- | :-------- | :-------- | :-------- | | Operating activities | $98.3 | $141.2 | $80.4 | | Investing activities | $(3.2) | $(5.0) | $2.1 | | Financing activities | $(100.2) | $(133.0) | $(84.0) | | Net (decrease) increase | $(5.4) | $3.1 | $(1.1) | - Cash provided by operating activities decreased by **$42.9 million** in FY2019, primarily due to an **$86.7 million** unfavorable change in working capital, driven by increased Premier Protein RTD shake inventory[167](index=167&type=chunk) - On October 21, 2019, BellRing Brands, LLC entered into a Credit Agreement for a **$700.0 million** Term B Facility and a **$200.0 million** Revolving Credit Facility[164](index=164&type=chunk)[286](index=286&type=chunk) - Proceeds from the new debt facilities and IPO were used to repay the **$1,225.0 million** Post bridge loan, cover IPO/formation transaction expenses, and for general corporate purposes[164](index=164&type=chunk) - As of October 31, 2019, **$60.0 million** was outstanding under the Revolving Credit Facility, with **$140.0 million** available borrowing capacity[164](index=164&type=chunk) - The company expects positive cash flows from operations and believes current resources and future credit facilities will be sufficient for working capital, R&D, and other financing needs[164](index=164&type=chunk) Contractual Obligations (as of September 30, 2019, in millions) | Obligation | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | | :--------------------- | :------ | :--------------- | :-------- | :-------- | :---------------- | | Purchase obligations | $419.6 | $221.4 | $130.2 | $44.2 | $23.8 | | Operating lease obligations | $17.4 | $2.7 | $5.4 | $4.6 | $4.7 | | **Total** | **$437.0**| **$224.1** | **$135.6**| **$48.8** | **$28.5** | [Commodity and Currency Trends](index=45&type=section&id=Commodity%20and%20Currency%20Trends) The company is exposed to commodity price fluctuations for ingredients (milk-based, whey-based, soy-based proteins) and packaging materials, as well as transportation and energy costs. It manages these risks through purchase commitments and price adjustments to customers. Foreign currency fluctuations, particularly with the Euro, impact profits from international operations - Exposure to commodity price risks from ingredients (milk-based, whey-based, soy-based proteins) and packaging materials, transportation, and energy costs[176](index=176&type=chunk) - Risks are managed by locking in prices through purchase commitments and attempting to offset cost increases by raising prices to customers[176](index=176&type=chunk) - Profits from foreign operations are impacted by fluctuations in the Euro relative to the U.S. Dollar[178](index=178&type=chunk) [Critical Accounting Estimates](index=45&type=section&id=Critical%20Accounting%20Estimates) Key accounting estimates involve revenue recognition, long-lived assets, goodwill, and income taxes. Revenue is recognized upon transfer of control, with variable consideration estimated. Goodwill is tested annually for impairment, and income tax expense is estimated based on current exposures and temporary differences - Critical accounting estimates include revenue recognition, long-lived assets, goodwill, and income taxes, requiring significant judgment and assumptions[182](index=182&type=chunk)[184](index=184&type=chunk) - Revenue is recognized when performance obligations are satisfied by transferring control of goods to customers, with variable consideration (trade promotions, rebates, discounts) treated as a reduction of revenue[184](index=184&type=chunk) - Goodwill is reviewed annually for impairment using a combined income and market approach, with a greater weighting on the income approach (**75%**)[184](index=184&type=chunk) - Income tax expense is estimated based on current tax exposures and temporary differences, resulting in deferred tax assets and liabilities, with valuation allowances established if future benefits are unlikely to be realized[186](index=186&type=chunk) [Recently Issued and Adopted Accounting Standards](index=47&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Standards) The company is implementing ASU 2016-02 (Leases) and ASU 2018-11, expecting to recognize $10-20 million in right-of-use assets and lease liabilities upon adoption on October 1, 2019. It adopted ASU 2018-15 (Internal-Use Software) and ASU 2014-09 (Revenue from Contracts with Customers) on October 1, 2018, with the latter resulting in classification changes but no material financial statement impact - The company is implementing ASU 2016-02 and ASU 2018-11 (Leases), effective October 1, 2019, expecting to recognize **$10-20 million** in right-of-use assets and lease liabilities[242](index=242&type=chunk) - ASU 2018-15 (Internal-Use Software) was adopted on October 1, 2018, with **no material impact**[243](index=243&type=chunk) - ASU 2014-09 (Revenue from Contracts with Customers) was adopted on October 1, 2018, resulting in reclassification of **$8.8 million** in customer payments from selling expenses to net sales in FY2019, but **no material impact** on financial statements[244](index=244&type=chunk)[247](index=247&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to commodity price risk from raw materials and fuels, managed through purchase commitments and price adjustments. Foreign currency risk primarily relates to the Euro, impacting cash flows and earnings. Interest rate risk stems from variable-rate debt, with a 100 basis point change in LIBOR affecting annual cash interest expense by approximately $8 million - The company is exposed to commodity price risks from raw materials (ingredients, packaging) and fuels, managed by locking in prices and adjusting customer prices[189](index=189&type=chunk) - Foreign currency risk primarily relates to the Euro, impacting cash flows and earnings of Active Nutrition International GmbH[190](index=190&type=chunk) - Interest rate risk arises from **$760.0 million** in variable-rate debt (Term B Facility and Revolving Credit Facility); a **100 basis point** change in LIBOR would result in an approximate **$8 million** change in annual cash interest expense[191](index=191&type=chunk) - The phase-out of LIBOR by the end of 2021 introduces uncertainty regarding interest rate calculations and potential impact[92](index=92&type=chunk) [Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited financial statements for BellRing Brands, Inc. and Active Nutrition for fiscal years 2017-2019, with comprehensive notes on accounting policies, goodwill, income taxes, and related party transactions, are presented - Includes audited financial statements for BellRing Brands, Inc. (Balance Sheet as of September 30, 2019) and Active Nutrition (Combined Statements of Operations, Balance Sheets, Cash Flows, and Parent Company Equity for FY2017-FY2019)[194](index=194&type=chunk) - Notes to the financial statements provide details on background, significant accounting policies, recently issued and adopted accounting standards, revenue recognition, goodwill, income taxes, related party transactions, commitments and contingencies, stock-based compensation, geographic information, quarterly data, and subsequent events[194](index=194&type=chunk) [BellRing Brands, Inc. Financial Statements](index=49&type=section&id=BellRing%20Brands%2C%20Inc.%20Financial%20Statements) The Balance Sheet for BellRing Brands, Inc. as of September 30, 2019, reflects its status as a newly formed holding company with no material assets or liabilities and no operations prior to the IPO - BellRing Brands, Inc. was formed on March 20, 2019, and had **no operations** through September 30, 2019[210](index=210&type=chunk) BellRing Brands, Inc. Balance Sheet (as of September 30, 2019, in millions) | Metric | Amount | | :--------------------- | :----- | | Total Assets | $0 | | Total Stockholder's Equity | $0 | - The balance sheet reflects the company's status as a holding company with no significant activities prior to its IPO[211](index=211&type=chunk) [Active Nutrition Combined Financial Statements](index=52&type=section&id=Active%20Nutrition%20Combined%20Financial%20Statements) Active Nutrition's combined financial statements show FY2019 net sales of $854.4 million and net earnings of $123.1 million, with notes detailing accounting policies, goodwill impairment, income taxes, and related party transactions with Post Holdings - Active Nutrition's combined financial statements are derived from Post's accounting records and reflect allocations of Post corporate expenses[236](index=236&type=chunk) Active Nutrition Combined Statements of Operations (FY2017-FY2019, in millions) | Metric | 2019 | 2018 | 2017 | | :------------------------- | :------ | :------ | :------ | | Net Sales | $854.4 | $827.5 | $713.2 | | Gross Profit | $311.8 | $277.7 | $245.8 | | Net Earnings | $123.1 | $96.1 | $35.2 | | Comprehensive Income | $121.9 | $95.7 | $36.2 | Active Nutrition Combined Balance Sheets (as of September 30, in millions) | Metric | 2019 | 2018 | | :------------------------- | :------ | :------ | | Cash and cash equivalents | $5.5 | $10.9 | | Total Current Assets | $219.5 | $163.7 | | Goodwill | $65.9 | $65.9 | | Other intangible assets, net | $296.5 | $318.7 | | Total Assets | $594.5 | $560.4 | | Total Liabilities | $108.1 | $108.7 | | Total Parent Company Equity | $486.4 | $451.7 | Active Nutrition Combined Statements of Cash Flows (FY2017-FY2019, in millions) | Activity | 2019 | 2018 | 2017 | | :------------------- | :-------- | :-------- | :-------- | | Operating Activities | $98.3 | $141.2 | $80.4 | | Investing Activities | $(3.2) | $(5.0) | $2.1 | | Financing Activities | $(100.2) | $(133.0) | $(84.0) | | Net (Decrease) Increase | $(5.4) | $3.1 | $(1.1) | - Goodwill impairment of **$26.5 million** was recorded in FY2017 for the Dymatize reporting unit due to weak sales in the specialty channel[253](index=253&type=chunk)[255](index=255&type=chunk) - The effective income tax rate was **24.2%** in FY2019, **19.8%** in FY2018, and **46.3%** in FY2017, with FY2018 impacted by the Tax Act[256](index=256&type=chunk) - Related party transactions include expense allocations from Post for general and administrative costs (**$12.6 million** in FY2019) and sales to Post affiliates (**$0.5 million** in FY2019)[263](index=263&type=chunk) - Subsequent events include the IPO and formation transactions, assumption of the Post Bridge Loan, and entry into the Credit Agreement and Tax Receivable Agreement[282](index=282&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk)[289](index=289&type=chunk) [Changes In and Disagreements With Accountants on Accounting and Financial Disclosure](index=73&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure [Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management evaluated disclosure controls and procedures as effective as of September 30, 2019, and reported no material changes in internal control over financial reporting during the quarter, being in a transition period for SOX Section 404 compliance - Disclosure controls and procedures were evaluated as **effective** by management (Executive Chairman, CEO, and CFO) as of September 30, 2019[294](index=294&type=chunk) - The Annual Report on Form 10-K does not include a management's assessment or auditor's attestation report on internal control over financial reporting due to a transition period for newly public companies[294](index=294&type=chunk) - **No activity materially affected** or is reasonably likely to materially affect internal control over financial reporting during the quarter ended September 30, 2019[294](index=294&type=chunk) [Other Information](index=73&type=section&id=Item%209B.%20Other%20Information) There is no other information required to be disclosed [PART III](index=74&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=74&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on director elections, corporate governance, and executive officers is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement, with the company having adopted a Code of Conduct - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[298](index=298&type=chunk) - The company has adopted a Code of Conduct, available on its website, applicable to its directors, officers, and employees[298](index=298&type=chunk) [Executive Compensation](index=74&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement - Information on executive compensation is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[299](index=299&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=74&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership of certain beneficial owners and management, and equity compensation plan information, is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement - Information on security ownership of certain beneficial owners and management, and equity compensation plan information, is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[300](index=300&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=74&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships and related transactions, and director independence, is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[301](index=301&type=chunk) [Principal Accounting Fees and Services](index=74&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[302](index=302&type=chunk) [PART IV](index=74&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=74&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) Financial statements for BellRing Brands, Inc. and Active Nutrition are filed, with no financial statement schedules included, and an Exhibit Index provides a list of other exhibits - Financial statements for BellRing Brands, Inc. (Balance Sheet, Notes) and Active Nutrition (Combined Statements of Operations, Balance Sheets, Cash Flows, Parent Company Equity, Notes) are filed as part of this report[304](index=304&type=chunk)[306](index=306&type=chunk) - No financial statement schedules are included, as they are either not applicable or the information is presented in the financial statements or notes[306](index=306&type=chunk) - A comprehensive Exhibit Index is provided at the end of the document[306](index=306&type=chunk) [Form 10-K Summary](index=78&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K Summary is included in the report [Signatures](index=78&type=section&id=Signatures) Signatures of BellRing Brands, Inc.'s authorized officers and directors affirm the report's compliance with the Securities Exchange Act of 1934 - The report is signed by Darcy H. Davenport (President and CEO), Robert V. Vitale (Executive Chairman), Paul A. Rode (CFO and Treasurer), and other directors[316](index=316&type=chunk)[319](index=319&type=chunk) - Signatures affirm compliance with the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[314](index=314&type=chunk)