BellRing Brands, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended September 30, 2023. This filing reports annual results; it does not provide a standalone fourth-quarter income statement.
Business context
BellRing is a single-segment convenient nutrition company, led by Premier Protein and Dymatize. Premier Protein represented 83.2% of FY2023 net sales; RTD shakes and other beverages represented 79.6%. The U.S. generated 89.5% of sales. Costco, Walmart and its affiliates, and Amazon together represented approximately 75.3% of sales.
Key financial metrics
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Net sales | $1,666.8 million | $1,371.5 million | +22% |
| Gross profit / margin | $530.2 million / 31.8% | $421.8 million / 30.8% | Margin +1.0 point |
| Operating profit / margin | $287.3 million / 17.2% | $212.4 million / 15.5% | +35% |
| Net earnings available to common stockholders | $165.5 million | $82.3 million | +101% |
| Basic / diluted EPS | $1.24 / $1.23 | $0.88 / $0.88 | Up |
| Cash from operating activities | $215.6 million | $21.0 million | +$194.6 million |
| Capital expenditures | $1.8 million | $1.8 million | Unchanged |
Cash and cash equivalents were $48.4 million at year-end. Total debt principal was $865.0 million: $840.0 million of 7.00% senior notes due 2030 and $25.0 million drawn on the revolving facility. The facility had $225.0 million of remaining capacity at year-end; the company repaid the remaining $25.0 million borrowing after year-end. The reported current ratio was approximately 2.8, based on current assets of $424.2 million and current liabilities of $150.2 million. Operating cash flow less capital expenditures was approximately $213.8 million.
Changes versus FY2022
- Sales rose $295.3 million. Premier Protein sales increased 25%, including 11% higher volume; Dymatize sales increased 11%, mainly from higher average selling prices.
- Operating profit increased $74.9 million. Higher sales and $13.8 million lower separation costs helped; higher net product costs of $87.3 million, advertising, employee costs, professional fees and $7.1 million of accelerated amortization partially offset those gains.
- Operating cash flow improved substantially, primarily because FY2022 included cash outflows to rebuild powder inventories after supply constraints. FY2023 also benefited from higher earnings and working-capital timing, partly offset by higher tax and interest payments.
- Interest expense increased 36% to $66.9 million; the weighted-average borrowing rate rose to 7.2% from 6.2%.
- Comparability of common-stockholder earnings is affected by the 2022 Spin-off and the elimination of redeemable noncontrolling interest. FY2022 also included a $17.6 million debt-extinguishment loss.
Outlook, risks and unusual items
- No numerical FY2024 earnings or sales guidance is provided in the supplied filing text. Management expected protein-cost inflation to ease in FY2024, while packaging and manufacturing cost pressures were expected to continue. Supply-chain capacity expansion challenges were also expected to extend into FY2024.
- Management expected positive operating cash flow and stated that cash, operating cash flows and potential credit facilities should meet foreseeable needs. No significant capital expenditures were planned for FY2024.
- Key operating risks include dependence on RTD shakes and a concentrated customer base, reliance on a limited contract-manufacturer network, and input-cost volatility. One manufacturer supplied approximately 53.8% of Premier Protein RTD shakes; one facility supplied 31.9%.
- FY2023 included $7.1 million accelerated amortization after the decision to discontinue PowerBar in North America. Joint Juice litigation liabilities were accrued at $21.0 million at September 30, 2023. A separate class action and a California Proposition 65 notice allege lead-related issues with protein products; the company said it intended to defend these matters and did not expect material effects.
- Purchase commitments totaled $1,487.7 million, including $459.6 million due in FY2024. The company repurchased 4.2 million shares for a total cost of $126.3 million during FY2023.
- The company reported compliance with its 6.00:1.00 maximum total net leverage covenant. Its financial statements received an unqualified audit opinion, and management and the auditor reported effective internal control over financial reporting.
Important facts for investors to verify
- Whether FY2024 volume growth and planned manufacturing-capacity additions can meet demand without further allocation or supply disruption.
- How pricing, promotions and persistent packaging and manufacturing inflation affect margins and consumer demand.
- Customer and manufacturer concentration, including the ongoing importance of the largest retail accounts and RTD protein shakes.
- The outcome and potential financial exposure of Joint Juice litigation and the protein-product lead allegations; the filing reports a $21.0 million Joint Juice accrual but no clear quantified accrual for the newer claims.
- Debt-service capacity, the effect of interest costs, and the size and timing of purchase commitments relative to cash generation.
- The extent to which FY2023 earnings growth reflects continuing operations versus changes in ownership and tax treatment following the Spin-off.