BellRing Brands(BRBR) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited consolidated financial statements for Q1 and H1 2024 show significant growth in sales, earnings, and cash flow Condensed Consolidated Statements of Operations Net sales and earnings significantly increased for both the three and six-month periods ended March 31, 2024 Consolidated Statements of Operations Highlights (in millions, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $494.6 | $385.6 | $925.0 | $748.3 | | Gross Profit | $164.3 | $117.1 | $312.3 | $238.9 | | Operating Profit | $91.0 | $58.0 | $164.0 | $133.2 | | Net Earnings | $57.2 | $30.9 | $101.1 | $75.1 | | Diluted EPS | $0.43 | $0.23 | $0.76 | $0.56 | Condensed Consolidated Balance Sheets Total assets increased to $765.0 million, improving the stockholders' deficit, while total liabilities remained stable Balance Sheet Summary (in millions) | Account | March 31, 2024 | September 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $513.2 | $424.2 | | Total Assets | $765.0 | $691.6 | | Total Liabilities | $1,012.7 | $1,015.1 | | Total Stockholders' Deficit | $(247.7) | $(323.5) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly increased to $90.5 million, leading to a net increase in cash Cash Flow Summary for Six Months Ended March 31 (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $90.5 | $20.3 | | Net Cash Used in Investing Activities | $(0.5) | $(0.5) | | Net Cash Used in Financing Activities | $(59.2) | $(30.7) | | Net Increase (Decrease) in Cash | $30.9 | $(10.3) | Notes to Condensed Consolidated Financial Statements Notes detail revenue breakdown, related party transactions, debt structure, and legal contingencies, including a $21.0 million litigation liability Net Sales by Product (in millions) | Product | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | Six Months Ended March 31, 2024 | Six Months Ended March 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Shakes and other beverages | $397.9 | $299.9 | $748.1 | $596.9 | | Powders | $84.1 | $73.8 | $153.8 | $129.9 | | Other | $12.6 | $11.9 | $23.1 | $21.5 | | Total Net Sales | $494.6 | $385.6 | $925.0 | $748.3 | - The company is involved in multiple lawsuits, with an estimated liability of $21.0 million recorded for the Joint Juice litigation[54][56][57] - The company discontinued its PowerBar business in North America in August 2023, resulting in full amortization and write-off of associated intangible assets by March 31, 2024[47] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Strong financial performance driven by Premier Protein volume growth, improved operating profit, and enhanced liquidity Results of Operations Net sales and operating profit increased significantly due to Premier Protein volume growth and lower raw material costs - Sales of Premier Protein products increased by $106.0 million (34%) in Q2 and $164.2 million (26%) in the first six months, driven by 45% and 32% higher volumes respectively[67] - The increase in operating profit was driven by higher net sales and lower net product costs, partially offset by increased employee-related and advertising expenses, and accelerated amortization[74][77] Liquidity and Capital Resources Liquidity strengthened with increased operating cash flow, full repayment of credit facility, and continued share repurchases - Cash provided by operating activities increased by $70.2 million year-over-year for the six months ended March 31, 2024, primarily due to moderated inventory levels[85] - As of March 31, 2024, the company had no outstanding borrowings under its $250.0 million Revolving Credit Facility, providing full availability[81] - During the six months ended March 31, 2024, the company repurchased 0.6 million shares of its common stock for a total cost of $32.5 million[81] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks including commodity price, foreign currency, and interest rate fluctuations through various strategies - The company's primary market risks include commodity price risk (managed via purchase commitments), foreign currency risk (from international subsidiary), and interest rate risk (primarily impacting fixed-rate Senior Notes)[99][100][101] Item 4. Controls and Procedures Disclosure controls and procedures were effective, with no significant changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2024[103] - No significant changes were made to the company's internal control over financial reporting during the quarter ended March 31, 2024[104] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 12 of the financial statements - Details regarding legal proceedings are provided in Note 12 within the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this report[109] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - As of the report date, 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 21, 2023[110] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 405,442 shares and approved a new $300 million share repurchase authorization effective March 11, 2024 Share Repurchases for the Three Months Ended March 31, 2024 | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 1 - Jan 31, 2024 | 167,430 | $52.56 | | Feb 1 - Feb 29, 2024 | 61,497 | $56.35 | | Mar 1 - Mar 31, 2024 | 176,515 | $60.20 | | Total | 405,442 | $56.46 | - On February 29, 2024, the Board of Directors approved a new $300 million share repurchase authorization, effective March 11, 2024, replacing the previous one[112] Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter ended March 31, 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2024[113] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including officer certifications and the Interactive Data File - The report includes several exhibits, such as CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, and the Interactive Data File (iXBRL)[115]