Bellring Brands Inc.
08/04/2026 | Press release | Distributed by Public on 08/04/2026 08:09
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and capital resources of BellRing Brands, Inc. and its consolidated subsidiaries. This discussion should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included herein, our audited consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 and the "Cautionary Statement on Forward-Looking Statements" section included below. The terms "our," "we," "us," "Company" and "BellRing" refer to BellRing Brands, Inc. and its consolidated subsidiaries.
OVERVIEW
We are a consumer products holding company operating in the global proactive wellness category and are a provider of ready-to-drink ("RTD") protein shakes and powders. We have a single operating and reportable segment, with our principal products being protein-based consumer goods. Our primary brands are Premier Protein and Dymatize.
Market Trends
During fiscal 2026, input costs, including raw materials, packaging, manufacturing, and freight have been subject to inflationary pressures, in part due to the impact of tariffs, evolving global trade policies, and logistical constraints. Existing tariffs, as well as potential future increases or modifications, may further contribute to supply chain disruption, commodity cost volatility and broader economic uncertainty. We have implemented mitigation initiatives, including pricing actions, cost optimization, supply chain adjustments, and inventory optimization actions, which may only partially offset these pressures. However, if such cost increases persist and we are unable to fully mitigate their impact, they could have a material adverse effect on our results of operations.
In February 2026, a military conflict began in the Middle East. While we do not have operations in the region, the conflict has disrupted global energy markets, which has resulted in higher energy prices and increased inflationary pressures. A prolonged conflict has the potential to disrupt global supply chains and consumer demand. We continue to monitor developments in the region and assess potential impacts on our business. At this time, we do not expect the conflict to have a material adverse effect on our results of operations.
For additional discussion, refer to "Liquidity and Capital Resources" and "Cautionary Statement on Forward-Looking Statements" within this section.
Items Affecting Comparability
During the three and nine months ended June 30, 2026 and 2025, operating profit was impacted by the following item:
•Provision for legal matters of $68.1 million and $69.0 million for the three and nine months ended June 30, 2025, respectively, which was included in "Selling, general and administrative expenses" on the Condensed Consolidated Statements of Operations. For additional information, refer to Note 13 within "Notes to Consolidated Financial Statements" in Item 1 of this report.
For further discussion, refer to "Results of Operations" below.
RESULTS OF OPERATIONS
| Three Months Ended June 30, | Change in | Nine Months Ended June 30, | Change in | ||||||||||||||||||||||||||||||||||||||||||||
| dollars in millions | 2026 | 2025 | $ | % | 2026 | 2025 | $ | % | |||||||||||||||||||||||||||||||||||||||
|
Net Sales
|
$ | 570.4 | $ | 547.5 | $ | 22.9 | 4 | % | $ | 1,706.4 | $ | 1,668.4 | $ | 38.0 | 2 | % | |||||||||||||||||||||||||||||||
|
Operating Profit
|
$ | 65.4 | $ | 44.8 | $ | 20.6 | 46 | % | $ | 209.9 | $ | 255.2 | $ | (45.3) | (18) | % | |||||||||||||||||||||||||||||||
|
Interest expense, net
|
19.9 | 18.4 | 1.5 | 8 | % | 60.0 | 49.3 | 10.7 | 22 | % | |||||||||||||||||||||||||||||||||||||
| Income tax expense | 11.3 | 5.4 | 5.9 | 109 | % | 38.1 | 49.3 | (11.2) | (23) | % | |||||||||||||||||||||||||||||||||||||
| Net Earnings | $ | 34.2 | $ | 21.0 | $ | 13.2 | 63 | % | $ | 111.8 | $ | 156.6 | $ | (44.8) | (29) | % | |||||||||||||||||||||||||||||||
Net Sales
Net sales increased $22.9 million, or 4%, during the three months ended June 30, 2026 compared to the prior year period. Sales of Premier Protein products were up $3.1 million, or 1%, on 2% higher volumes and partially offset by lower average net selling prices. Volumes rose primarily due to distribution gains. Average net selling prices decreased due to incremental promotional investment. Sales of Dymatize products were up $18.5 million, or 27%, driven by 21% higher average net selling prices and higher volumes. Average net selling prices increased primarily due to targeted price increases. Volume increases were driven by international distribution gains. Sales of all other products were up $1.3 million.
Net sales increased $38.0 million, or 2%, during the nine months ended June 30, 2026 compared to the prior year period. Sales of Premier Protein products were up $6.4 million, or less than 1%, on 5% higher volumes and partially offset by lower average net selling prices. Volumes increased primarily due to increased promotional activity and distribution gains. Average net selling prices decreased due to incremental promotional investment and unfavorable mix. Sales of Dymatize products were up $27.1 million, or 14%, driven by 9% higher volumes and higher average net selling prices. Volumes increased primarily due to international business growth. In addition, average net selling prices increased due to targeted price increases. Sales of all other products were up $4.5 million.
Operating Profit
Operating profit increased $20.6 million, or 46%, during the three months ended June 30, 2026, compared to the prior year period. This increase was primarily attributable to a $68.1 million provision for legal matters in the prior year period, and higher net sales, as previously discussed. These impacts were partially offset by higher net product costs of $48.6 million, increased advertising expenses of $6.7 million, and $5.4 million of reorganization charges. Higher net product costs were primarily driven by higher raw material, manufacturing, and freight costs, including a $10.0 million charge related to a finished products inventory reserve.
Operating profit decreased $45.3 million, or 18%, during the nine months ended June 30, 2026 compared to the prior year period. This decrease was primarily driven by higher net product costs of $94.3 million, increased advertising expenses of $12.7 million, and $5.9 million of reorganization charges. Higher net product costs were primarily driven by higher manufacturing, raw material, and freight costs, including an $11.3 million inventory-related charge associated with a third-party supplied ingredient that did not meet our quality requirements and a $10.0 million charge related to a finished products inventory reserve. These higher net product costs were partially offset by a $30.9 million favorable change in (gains) losses on commodity derivatives. The negative impacts on operating profit were partially offset by a $69.0 million provision for legal matters in the prior year period, and higher net sales, as previously discussed.
Interest Expense, Net
Interest expense, net increased $1.5 million during the three months ended June 30, 2026 compared to the prior year period primarily due to higher outstanding borrowings under our Revolving Credit Facility (as defined in "Liquidity and Capital Resources" below). The weighted-average interest rate on our total outstanding debt was 6.7% and 7.4% for the three months ended June 30, 2026 and 2025, respectively.
Interest expense, net increased $10.7 million during the nine months ended June 30, 2026 compared to the prior year period primarily due to higher outstanding borrowings under our Revolving Credit Facility. The weighted-average interest rate on our total outstanding debt was 6.7% and 7.2% for the nine months ended June 30, 2026 and 2025, respectively. See Note 12 within "Notes to Condensed Consolidated Financial Statements" for additional information on our debt.
Income Tax Expense
Our effective income tax rate was 24.8% and 20.5% for the three months ended June 30, 2026 and 2025, respectively, and 25.4% and 23.9% for the nine months ended June 30, 2026 and 2025, respectively. The increase in our effective income tax rate during the three months ended June 30, 2026, compared to the prior year period was primarily due to discrete tax benefits recognized in the prior year period.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended June 30, 2026, we borrowed $325.0 million and repaid $275.0 million under our revolving credit facility, which is provided for under our amended credit agreement (the "Credit Agreement") in an aggregate principal amount of $500.0 million (the "Revolving Credit Facility"). As of June 30, 2026, we had $197.6 million of available borrowing capacity, taking into account the $2.4 million letters of credit outstanding under the Revolving Credit Facility, which reduce the amount available for borrowing under the Revolving Credit Facility. Letters of credit are available under the Revolving Credit Facility in an aggregate amount of up to $20.0 million. Our Credit Agreement provides for potential incremental revolving and term facilities at the Company's request and at the discretion of the lenders or other persons providing such incremental facilities, in each case on terms to be determined, and also permits the Company to incur other secured or unsecured debt, in all cases subject to conditions and limitations as specified in the Credit Agreement.
During the nine months ended June 30, 2026, we repurchased 4.9 million shares of our common stock at an average share price of $27.41 per share and at a total cost, including any accrued excise tax and broker's commissions, of $134.5 million. In addition, during the nine months ended June 30, 2026, we paid $3.9 million of excise tax that related to fiscal 2025 share repurchases.
We expect to generate positive cash flows from operations over the next twelve months and believe our cash on hand, cash flows from operations and available borrowing capacity will be sufficient to satisfy our future working capital requirements, purchase commitments, research and development activities, debt repayments (including interest payments), share repurchases and other financing requirements for the foreseeable future. We are currently not aware of any trends or demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact meeting our capital needs during or beyond the next twelve months. Our ability to generate positive cash flows from operations is dependent on general economic conditions, competitive pressures and other business risk factors. We believe that we have sufficient liquidity and cash on hand to satisfy our cash needs. If we are unable to generate sufficient cash flows from operations, or otherwise to comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.
Short-term financing needs primarily consist of working capital requirements, interest payments on our 7.00% senior notes maturing in March 2030 (the "7.00% Senior Notes") and on outstanding borrowings under our Revolving Credit Facility and payments on our provision for legal matters, which we currently expect to make during the three months ended September 30, 2026. Long-term financing needs include the repayment of our 7.00% Senior Notes and outstanding borrowings under our Revolving Credit Facility. Additional long-term financing needs will depend largely on potential growth opportunities, including acquisition activity and other strategic transactions. Our asset-light business model requires modest capital expenditures, with annual capital expenditures over the last three fiscal years averaging less than 1% of net sales. No significant capital expenditures are planned during the next 12 months. Additionally, we may seek to repurchase shares of our common stock. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
The following table presents select cash flow data, which is discussed below.
|
Nine Months Ended June 30, |
|||||||||||
| dollars in millions | 2026 | 2025 | |||||||||
| Cash provided by (used in): | |||||||||||
|
Operating activities
|
$ | 65.0 | $ | 91.5 | |||||||
|
Investing activities
|
(8.1) | (3.7) | |||||||||
|
Financing activities
|
(95.5) | (104.4) | |||||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
0.5 | 0.4 | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | $ | (38.1) | $ | (16.2) | |||||||
Operating Activities
Cash provided by operating activities for the nine months ended June 30, 2026 decreased $26.5 million compared to the prior year period. This decrease was primarily due to lower net earnings, which included noncash gains and losses from commodity derivative remeasurement, higher investment in inventory in the current year, and cash outflows related to other assets. These impacts were partially offset by a favorable year-over-year change in deferred income taxes, fluctuations in the timing of collections of trade receivables, and lower use of cash for prepaid expenses and other current assets compared to the prior year.
Investing Activities
Cash used in investing activities for the nine months ended June 30, 2026 increased $4.4 million compared to the prior year period driven by an increase in capital expenditures.
Financing Activities
Cash used in financing activities for the nine months ended June 30, 2026 decreased $8.9 million compared to the prior year period, driven by lower payments of $130.7 million, including broker's commissions, for the repurchase of our common stock, and lower tax withholding payments related to stock compensation plans of $3.2 million. These drivers were partially offset by lower net borrowings of $125.0 million under our Revolving Credit Facility.
Debt Covenants
The Credit Agreement contains affirmative and negative covenants applicable to us and our restricted subsidiaries customary for agreements of this type, including delivery of financial and other information; compliance with laws; maintenance of property, existence, insurance and books and records; providing inspection rights; obligation to provide collateral and guarantees by certain new subsidiaries; delivery of environmental reports; participation in an annual meeting with the agent and the lenders; further assurances; and limitations with respect to indebtedness, liens, fundamental changes, restrictive agreements, use of proceeds, amendments of organization documents, prepayments and amendments of certain indebtedness, dispositions of assets, acquisitions and other investments, sale leaseback transactions, changes in the nature of business, transactions with affiliates and dividends and redemptions or repurchases of stock. Under the terms of the Credit Agreement, we are also required to comply with a financial covenant requiring us to maintain a total net leverage ratio (as defined in the Credit Agreement) not to exceed 6.00:1.00, measured as of the last day of each fiscal quarter. We were in compliance with the financial covenant as of June 30, 2026, and we do not believe non-compliance is reasonably likely in the foreseeable future.
The Credit Agreement provides for potential incremental revolving and term facilities at our request and at the discretion of the lenders or other persons providing such incremental facilities, in each case on terms to be determined, and also permits us to incur other secured or unsecured debt, in all cases subject to conditions and limitations as specified in the Credit Agreement.
In addition, the indenture governing the 7.00% Senior Notes contains negative covenants customary for this type of agreement that limit our ability and the ability of our restricted subsidiaries to, among other things: borrow money or guarantee debt; create liens; pay dividends on, or redeem or repurchase, stock; make specified types of investments and acquisitions; enter into or permit to exist contractual limits on the ability of our subsidiaries to pay dividends to us; enter into transactions with affiliates; and sell assets or merge with other companies. Certain of these covenants are subject to suspension when and if the 7.00% Senior Notes receive investment grade ratings.
CRITICAL ACCOUNTING ESTIMATES
Our critical accounting estimates are more fully described in our Annual Report on Form 10-K for the year ended September 30, 2025, as filed with the Securities and Exchange Commission (the "SEC") on November 18, 2025. There have been no significant changes to our critical accounting estimates since September 30, 2025.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 2 within "Notes to Condensed Consolidated Financial Statements" for a discussion regarding recently issued accounting standards.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, are made throughout this report, including statements regarding unanticipated developments that negatively impact our common stock. These forward-looking statements are sometimes identified from the use of forward-looking words such as "believe," "should," "could," "potential," "continue," "expect," "project," "estimate," "predict," "anticipate," "aim," "intend," "plan," "forecast," "target," "is likely," "will," "can," "may" or "would" or the negative of these terms or similar expressions elsewhere in this report. Our financial condition, results of operations and cash flows may differ materially from those in the forward-looking statements. Such statements are based on management's current views and assumptions and involve risks and uncertainties that could affect expected results. Those risks and uncertainties include, but are not limited to, the following:
•our dependence on sales from our RTD protein shakes;
•our ability to continue to compete in our product categories and our ability to retain our market position and favorable perceptions of our brands;
•disruptions or inefficiencies in our supply chain, including as a result of our reliance on third-party suppliers or manufacturers for the manufacturing of many of our products, pandemics and other outbreaks of contagious diseases, labor shortages, fires and evacuations related thereto, changes in weather conditions, natural disasters, agricultural diseases and pests and other events beyond our control;
•our dependence on third-party contract manufacturers for the manufacture of most of our products, including one manufacturer for nearly half of our RTD protein shakes;
•the ability of our third-party contract manufacturers to produce an amount of our products that enables us to meet customer and consumer demand for the products;
•our reliance on a limited number of third-party suppliers to provide certain ingredients and packaging;
•significant volatility in the cost or availability of inputs to our business (including freight, raw materials, packaging, energy, labor and other supplies), including as a result of tariffs or inflationary pressures;
•our ability to anticipate and respond to changes in consumer and customer preferences and behaviors and introduce new products;
•our ability to expand existing market penetration and enter into new markets;
•consolidation in our distribution channels;
•the loss of, a significant reduction of purchases by or the bankruptcy of a major customer;
•legal and regulatory factors, such as compliance with existing laws and regulations, as well as new laws and regulations and changes to existing laws and regulations and interpretations thereof, affecting our business, including current and future laws and regulations regarding food safety, advertising, labeling, tax matters and environmental matters;
•fluctuations in our business due to changes in our promotional activities and seasonality;
•our ability to maintain the net selling prices of our products and manage promotional activities with respect to our products;
•our ability to obtain additional financing (including both secured and unsecured debt) and our ability to service our outstanding debt (including covenants that restrict the operation of our business);
•the ultimate impact litigation or other regulatory matters may have on us;
•the accuracy of our market data and attributes and related information;
•changes in critical accounting estimates;
•uncertain or unfavorable economic conditions that limit customer and consumer demand for our products or increase our costs;
•risks related to our ongoing relationship with Post Holdings, Inc. ("Post") following our separation from Post and Post's distribution of our stock to its shareholders (the "Spin-off"), including our obligations under various agreements with Post;
•conflicting interests or the appearance of conflicting interests resulting from certain of our directors also serving as officers and/or directors of Post;
•risks related to the previously completed Spin-off;
•risks associated with our international business;
•our ability to protect our intellectual property and other assets and to continue to use third-party intellectual property subject to intellectual property licenses;
•costs, business disruptions and reputational damage associated with technology failures, cybersecurity incidents and corruption of our data privacy protections;
•impairment in the carrying value of goodwill or other intangible assets or other long-lived assets;
•our ability to identify, complete and integrate or otherwise effectively execute acquisitions or other strategic transactions and effectively manage our growth;
•our ability to hire and retain talented personnel, employee absenteeism, labor strikes, work stoppages or unionization efforts;
•our ability to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002;
•significant differences in our actual operating results from any guidance we may give regarding our performance; and
•other risks and uncertainties included under "Risk Factors" in this report and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on November 18, 2025.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to actual results or to changes in our expectations.
Bellring Brands Inc. published this content on August 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 04, 2026 at 14:09 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]