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]

Financial Data and Key Metrics Changes - The company reported net sales of $588 million, a 19% increase year-over-year, and adjusted EBITDA of $119 million, which is a 14% increase [21][22] - Adjusted EBITDA margins were 20.2%, in line with expectations, and adjusted gross profit margin increased by 80 basis points to 34.5% [22][24] - The company affirmed its fiscal 2025 guidance for net sales between $2.26 billion and $2.34 billion, indicating a growth of 13% to 17% [25][26] Business Line Data and Key Metrics Changes - Premier Protein net sales grew by 22%, driven by strong volume growth in ready-to-drink (RTD) shakes and powders [21][22] - Dymatize's net sales increased by 3%, supported by a 20% rise in volume, with double-digit growth in international markets [16][21] Market Data and Key Metrics Changes - The convenient nutrition category grew by 12% in Q2, with RTD growth at 19%, indicating strong consumer demand [7][8] - Premier Protein achieved all-time highs in household penetration, reaching nearly 21% [11] Company Strategy and Development Direction - The company plans to expand promotions in Q4, leveraging strong brand metrics and inventory levels to drive household penetration [12][18] - The focus remains on innovation, with new product lines like the indulgent shakes targeting incremental consumption occasions [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the protein category, citing strong macro tailwinds [18] - Despite a weakening consumer sentiment, the company does not anticipate significant impacts on its category, modeling various scenarios for growth [32][58] 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 [24][25] - Increased advertising and promotion expenses were noted, with A&P spending at 4.7% of net sales, up from 3.1% in the previous year [23][24] Q&A Session Summary Question: Expectations for category growth in the second half given weakening consumer environment - Management noted that category fundamentals remain strong, with RTD category growth expected to continue despite broader consumer sentiment challenges [31] Question: Insights on retailer inventory changes - Management indicated that the inventory adjustments are primarily a one-time reset related to previous over-ordering by retailers, not a reflection of consumption decline [36][42] Question: Impact of tariffs on input costs - Dairy inputs constitute about 30% to 40% of total COGS, with potential tariff impacts expected to be minor and manageable [48] Question: Marketing and advertising spending levels - The second quarter's marketing spend was in line with expectations, with a slight reallocation towards promotions anticipated for the second half of the year [54] Question: Competitive landscape and protein content trends - Management believes that while some competitors are increasing protein levels, the focus will remain on a balanced approach that includes taste and nutritional value [66][69] Question: Future innovation plans - Upcoming innovations will target new consumer segments and occasions, with the indulgent line already showing promising results in attracting new customers [111][113]

Financial Data and Key Metrics Changes - The company reported net sales of $588 million, representing a 19% increase year-over-year, and adjusted EBITDA of $119 million, which is a 14% increase [20][21] - Adjusted EBITDA margins were 20.2%, in line with expectations, and adjusted gross profit margin increased by 80 basis points to 34.5% [21][22] - Cash flow from operations was $48 million for the second quarter, with a total of $51 million for the first half of the fiscal year [23] Business Line Data and Key Metrics Changes - Premier Protein net sales grew by 22%, driven by strong volume growth in ready-to-drink (RTD) shakes and powders [20] - Dymatize's net sales increased by 3%, supported by a 20% rise in volume, with double-digit growth in international markets [16][20] Market Data and Key Metrics Changes - The convenient nutrition category grew by 12% in Q2, with RTD growth at 19%, indicating strong consumer demand [8][9] - Premier Protein achieved an all-time high in household penetration, reaching nearly 21% [11] Company Strategy and Development Direction - The company plans to expand promotions in Q4, leveraging strong brand metrics and inventory levels to drive household penetration [12][121] - The innovation pipeline remains robust, with new products aimed at capturing new consumer occasions and expanding market share [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the protein category, citing strong macro tailwinds [18] - The company is cautious about consumer uncertainty but remains optimistic about its growth trajectory [60][62] Other Important Information - The company is actively monitoring potential tariff impacts on input costs, particularly related to dairy protein sourced from New Zealand and the EU [27][50] - Marketing and advertising expenses increased to 4.7% of net sales, driven by a national advertising campaign and support for new product launches [22][54] Q&A Session Summary Question: What are the expectations for category growth in the second half given the weakening consumer environment? - Management indicated that category fundamentals remain strong, with expectations for continued growth despite consumer uncertainty [31][32] Question: What is driving the change in retailer inventories? - Management noted that the inventory adjustments are primarily a one-time response to previous supply constraints, with no significant changes in consumption [37][39] Question: How are tariffs expected to impact input costs? - Management clarified that dairy inputs constitute about 30% to 40% of total costs, with potential minor impacts from tariffs expected to start in fiscal 2026 [48][50] Question: What is the outlook for marketing spend? - Management confirmed that the increased marketing spend aligns with expectations and is focused on driving brand awareness and consumer engagement [54][56] Question: How does the company view competition in the protein shake market? - Management believes that while competitors are increasing protein levels, the company's focus on taste and nutritional balance will continue to resonate with consumers [68][70]

Category Performance - The convenient nutrition category demonstrated continued growth, increasing by 12%[1], with ready-to-drink (RTD) products leading with a 19%[1] increase - Ready-to-mix (RTM) products also experienced healthy growth[16] Premier Protein Brand - Premier Protein RTD shakes showed strong dollar growth of 25%[16] compared to Q2 FY2024 - Premier Protein powders experienced strong consumption growth of 22%[16] due to velocity strength and expanded distribution - Premier Protein RTD shakes achieved a new RTD category market share high in March, reaching 30%[16] Distribution and Penetration - Premier Protein RTD shakes reached an all-time high in household penetration at 20.9%[16] - Premier Protein powder distribution saw strong year-over-year growth[37] Dymatize Brand - Dymatize consumption grew by 3%[16] compared to Q2 FY2024, supported by incremental promotion and a new RTD shake launch - Dymatize reached the 4 powder share position[16] - Dymatize TDPs reached an all-time high due to distribution gains[44]

Group 1 - BellRing Brands reported quarterly earnings of $0.53 per share, matching the Zacks Consensus Estimate, and showing an increase from $0.45 per share a year ago [1] - The company posted revenues of $588 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 2.09%, compared to $494.6 million in the same quarter last year [2] - Over the last four quarters, BellRing Brands has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2][3] Group 2 - The stock has increased approximately 4.8% since the beginning of the year, while the S&P 500 has declined by 3.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.57 on revenues of $580.42 million, and for the current fiscal year, it is $2.25 on revenues of $2.31 billion [7] - The Zacks Industry Rank for Food - Miscellaneous is in the top 38% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]