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Category: Bellring Brands (BRBR)
Date: 5 February 2021 Stock price of Bellring (BRBR): $24.95 We take a more detailed look at Bellring Brands (BRBR) a leader in the global convenient nutrition category, aiming to enhance the lives of our consumers by providing them with highly nutritious, great-tasting products they can enjoy throughout the day
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Our primary brands, Premier Protein, Dymatize and PowerBar, target a broad range of consumers and compete in all major product forms, including ready-to-drink (“RTD”) protein shakes, other RTD beverages, powders, nutrition bars and nutritional supplements"
More About Bellring Brands (BRBR)
We are a leader in the global convenient nutrition category, aiming to enhance the lives of our consumers by providing them with highly nutritious, great-tasting products they can enjoy throughout the day. Our primary brands, Premier Protein, Dymatize and PowerBar, target a broad range of consumers and compete in all major product forms, including ready-to-drink (“RTD”) protein shakes, other RTD beverages, powders, nutrition bars and nutritional supplements. Our products are distributed across a diverse network of channels including club, food, drug and mass (“FDM”), eCommerce, specialty and convenience. We have organically grown our net sales from $827.5 million in our year ended September 30, 2018 to $988.3 million in our year ended September 30, 2020. Over the same period, net earnings including redeemable noncontrolling interest grew from $96.1 million in our year ended September 30, 2018 to $100.1 million in our year ended September 30, 2020.
Organizational Structure Of Bellring Brands
As a result of the IPO and completion of the formation transactions:
• Premier Nutrition, Dymatize, Supreme Protein, LLC and Active Nutrition International, the entities that formerly comprised the active nutrition business of Post, became direct or indirect subsidiaries of BellRing LLC.
• BellRing Inc. became a holding company, and has no material assets other than its ownership of BellRing LLC units.
• The members of BellRing LLC consist of Post and BellRing Inc. As of September 30, 2020, Post owns 71.2% of the economic interests in BellRing LLC, and BellRing Inc. (and, indirectly, the holders of our Class A Common Stock) owns 28.8% of the economic interests in BellRing LLC.
• Post holds one share of BellRing Inc. Class B common stock, $0.01 par value per share (the “Class B Common Stock”). For so long as Post or its affiliates (other than us) directly own more than 50% of BellRing LLC units, the share of Class B Common Stock represents 67% and the outstanding shares of Class A Common Stock represent 33%, respectively, of the combined voting power of the common stock of BellRing Inc. By virtue of its ownership of the Class B Common Stock, Post controls BellRing Inc.
• BellRing Inc. holds the voting membership unit of BellRing LLC (which represents the power to appoint and remove the members of the board of managers of BellRing LLC (the “Board of Managers”) and no economic interest in BellRing LLC). BellRing Inc. has the authority to appoint the members of the BellRing LLC Board of Managers and, therefore, controls BellRing LLC.
• The financial results of BellRing LLC and its subsidiaries are consolidated with BellRing Inc., and a portion of the consolidated net earnings are allocated to the redeemable noncontrolling interest (the “NCI”) to reflect the entitlement of Post to a portion of the consolidated net earnings.
• Premier Nutrition, Dymatize, Supreme Protein, LLC and Active Nutrition International, the entities that formerly comprised the active nutrition business of Post, became direct or indirect subsidiaries of BellRing LLC.
• BellRing Inc. became a holding company, and has no material assets other than its ownership of BellRing LLC units.
• The members of BellRing LLC consist of Post and BellRing Inc. As of September 30, 2020, Post owns 71.2% of the economic interests in BellRing LLC, and BellRing Inc. (and, indirectly, the holders of our Class A Common Stock) owns 28.8% of the economic interests in BellRing LLC.
• Post holds one share of BellRing Inc. Class B common stock, $0.01 par value per share (the “Class B Common Stock”). For so long as Post or its affiliates (other than us) directly own more than 50% of BellRing LLC units, the share of Class B Common Stock represents 67% and the outstanding shares of Class A Common Stock represent 33%, respectively, of the combined voting power of the common stock of BellRing Inc. By virtue of its ownership of the Class B Common Stock, Post controls BellRing Inc.
• BellRing Inc. holds the voting membership unit of BellRing LLC (which represents the power to appoint and remove the members of the board of managers of BellRing LLC (the “Board of Managers”) and no economic interest in BellRing LLC). BellRing Inc. has the authority to appoint the members of the BellRing LLC Board of Managers and, therefore, controls BellRing LLC.
• The financial results of BellRing LLC and its subsidiaries are consolidated with BellRing Inc., and a portion of the consolidated net earnings are allocated to the redeemable noncontrolling interest (the “NCI”) to reflect the entitlement of Post to a portion of the consolidated net earnings.
Brand Overview Of Bellring Brands
Our primary brands, based on fiscal 2020 sales, are Premier Protein, Dymatize and PowerBar. Together our brands cover the major product forms in the convenient nutrition category and appeal to a broad range of consumer need states. Our net sales by brand for our year ended September 30, 2020 were as follows: Premier Protein, 83.7%; Dymatize, 11.1%; PowerBar, 3.7%; and other, 1.5%. Three product forms accounted for the majority of our fiscal 2020 net sales. In our year ended September 30, 2020, RTD protein shakes and other RTD beverages were 82.0% of our net sales, powders were 12.3% of our net sales and nutrition bars were 5.0% of our net sales.
Premier Protein
Our largest brand, Premier Protein, is a leading mainstream, lifestyle brand. Premier Protein’s product portfolio consists of RTD protein shakes, refreshing protein beverages, nutrition bars and protein powders.
Premier Protein’s flagship RTD 6 protein shakes are available in 10 flavors and contain 30 grams of protein with only one gram of sugar and 160 calories. They are gluten- and soy-free, low fat and fortified with 24 vitamins and minerals. Premier Protein’s new shake line, Premier Protein with Oats, adds more balanced nutrition with 20 grams of protein plus 7 grams of fiber and can be enjoyed both hot and cold. Our RTD protein shakes are formulated to deliver great-tasting, leading protein levels while maintaining one of the leanest nutritional profiles in the category (as measured by sugar and calorie content). Premier Protein’s powder portfolio consists of 100% whey protein products. We believe the product profile appeals to consumers across age ranges in all four need states.
Dymatize
Our Dymatize brand is a market leader targeting fitness enthusiasts who value the brand for its science-based product development and athletic performance focus. The brand’s portfolio includes an assortment of sports nutrition products, including primarily protein powders as well as nutritional supplements. The majority of Dymatize’s sales are generated through protein powders. Our protein powder portfolio consists of three primary products: ISO.100 made with hydrolyzed 100% Whey Protein Isolate, Elite 100% Whey Protein and Super Mass Gainer. ISO.100, the brand’s flagship product, has a global reach with sales in more than 50 countries. In addition to powders, Dymatize offers a suite of products to meet the needs of athletes, including pre-workout and post-workout recovery products. Dymatize products are sold in a variety of retail channels including specialty, FDM, club and online.
PowerBar
Our PowerBar brand targets a range of consumers from committed athletes to active individuals. The brand delivers nutrient dense products to fuel consumers with ambitious, athletic lifestyles. PowerBar’s product portfolio ranges from protein and energy snacks for fitness enthusiasts to highly functional and technical energy products for competitive athletes’ in-game usage. PowerBar is positioned as a high-quality brand internationally and has a notable presence in Western Europe. In North America, the PowerBar product portfolio is focused on its most successful product offering, the PowerBar Protein Plus 20 gram protein bar that is gluten-free and a good source of fiber.
Premier Protein
Our largest brand, Premier Protein, is a leading mainstream, lifestyle brand. Premier Protein’s product portfolio consists of RTD protein shakes, refreshing protein beverages, nutrition bars and protein powders.
Premier Protein’s flagship RTD 6 protein shakes are available in 10 flavors and contain 30 grams of protein with only one gram of sugar and 160 calories. They are gluten- and soy-free, low fat and fortified with 24 vitamins and minerals. Premier Protein’s new shake line, Premier Protein with Oats, adds more balanced nutrition with 20 grams of protein plus 7 grams of fiber and can be enjoyed both hot and cold. Our RTD protein shakes are formulated to deliver great-tasting, leading protein levels while maintaining one of the leanest nutritional profiles in the category (as measured by sugar and calorie content). Premier Protein’s powder portfolio consists of 100% whey protein products. We believe the product profile appeals to consumers across age ranges in all four need states.
Dymatize
Our Dymatize brand is a market leader targeting fitness enthusiasts who value the brand for its science-based product development and athletic performance focus. The brand’s portfolio includes an assortment of sports nutrition products, including primarily protein powders as well as nutritional supplements. The majority of Dymatize’s sales are generated through protein powders. Our protein powder portfolio consists of three primary products: ISO.100 made with hydrolyzed 100% Whey Protein Isolate, Elite 100% Whey Protein and Super Mass Gainer. ISO.100, the brand’s flagship product, has a global reach with sales in more than 50 countries. In addition to powders, Dymatize offers a suite of products to meet the needs of athletes, including pre-workout and post-workout recovery products. Dymatize products are sold in a variety of retail channels including specialty, FDM, club and online.
PowerBar
Our PowerBar brand targets a range of consumers from committed athletes to active individuals. The brand delivers nutrient dense products to fuel consumers with ambitious, athletic lifestyles. PowerBar’s product portfolio ranges from protein and energy snacks for fitness enthusiasts to highly functional and technical energy products for competitive athletes’ in-game usage. PowerBar is positioned as a high-quality brand internationally and has a notable presence in Western Europe. In North America, the PowerBar product portfolio is focused on its most successful product offering, the PowerBar Protein Plus 20 gram protein bar that is gluten-free and a good source of fiber.
Customers Of Bellring Brands
Our customers are predominantly club stores, FDM customers, online retailers, specialty retailers, convenience stores and distributors. We sell our products domestically and in more than fifty countries globally. Our U.S. business represented 88.9% of our net sales in our year ended September 30, 2020 and our international business represented 11.1% of our net sales in our year ended September 30, 2020. Our largest customers, Costco and Walmart (which includes its affiliates, including Sam’s Club), accounted for approximately 67.3% of our net sales in our year ended September 30, 2020. No other customer accounted for more than 10% of our fiscal 2020 net sales.
Sales And Marketing Of Bellring Brands
In the U.S., we utilize a direct sales force in multiple channels, including club, FDM, convenience, specialty and eCommerce. We also sell through a broker network for customers in the convenience, grocery and mass channels, and through distributors for the specialty channel. In international markets, we sell our products through a combination of direct sales to retailers and to third party distributors. We utilize a direct sales force in key markets in the European Union (the “E.U.”) and the United Kingdom (the “U.K.”) for multiple channels, including FDM, convenience, specialty and eCommerce. We also sell through distributors in the specialty channel. We maintain a dedicated multi-faceted and consumer-driven marketing strategy for each of our primary brands, tailoring initiatives to each brand’s target audience. Each of our brands maintains a presence across all major social media platforms. Premier Protein. Premier Protein’s marketing strategy is aimed at accelerating the brand’s positioning as a lifestyle brand for mainstream consumers. Premier Protein’s marketing initiatives are focused on increasing awareness to drive product trial and adoption as well as expanding household penetration among this group of consumers. Premier Protein employs a broad media strategy, which includes digital media, search marketing, television, in-store marketing and demos and online dedicated programming. As part of its marketing strategy, Premier Protein leverages its fans’ enthusiasm for the brand to spread the word of our products. The brand utilizes an influencer marketing program called “Premier Shakers” that leverages micro-influencers, content creators and top-tier influencers to generate further awareness of Premier Protein. Dymatize. Dymatize’s marketing strategy is focused on retailer-specific programs, online and specialty print media and social media. Social media is a high-touch medium that resonates with Dymatize’s core fitness-focused consumers. The brand also utilizes a social media influencer model, “Team Dymatize,” engaging with athletes. This team promotes product usage via personal social media channels to drive awareness for the brand among its target demographic. PowerBar. Similar to Dymatize, PowerBar’s marketing efforts include retailer programs, online and specialty print media and social media as well as traditional sports marketing through events and activations to reach not only its core sports 7 enthusiast consumers but also active lifestyle consumers. The brand’s social media content strategy is supported by seasonal cross-channel marketing and influencer campaigns. Sponsorships of sports events drive product trial. PowerBar’s key initiatives are focused on the European market, showcasing its range of offerings.
Research And Development Of Bellring Brands
We continue to improve and expand our product offerings with new flavors, ingredients and packaging technologies. We leverage our dedicated innovation team, supplemented by leading design firms, product development companies, third party flavor houses and consultants.
Supply Chain Of Bellring Brands
Raw Materials.
Raw materials used in our business consist of ingredients and packaging materials purchased from local, regional and international suppliers. Our principal ingredients include milk-based, whey-based and soy-based proteins, protein blends, sweeteners and vitamin and mineral blends. Our primary packaging materials include aseptic foil and plastic lined cardboard cartons, flexible and rigid plastic film and containers, beverage packaging and corrugate. We purchase our raw materials in accordance with rigorous standards to assure food quality and safety. Supply availability and prices paid for raw materials can fluctuate widely due to external factors, such as pandemics (including the COVID-19 pandemic), weather conditions, labor disputes, governmental programs, regulations and trade and tariff policies, industry consolidation, economic climate, energy shortages, transportation delays, commodity market prices, currency fluctuations and other unforeseen circumstances. We regularly monitor supply and cost trends of these raw materials to enable us to obtain ingredients and packaging needed for our products. Although the prices of the principal raw materials can be expected to fluctuate, we believe such raw materials to be in adequate supply and generally available to us from several sources. Under the terms of an agreement with a significant protein powder supplier, Premier Nutrition is required to purchase a minimum periodic volume of protein powder and has the right (but not the obligation) to order quantities in excess of such minimum amount provided the supplier has the capacity and the ability to produce such additional quantities. The agreement also contains detailed provisions regarding the product specifications and quality standards for the raw materials to be provided by the supplier, the rights of a party in the event the other party does not comply with its obligations under the agreement and other customary contractual terms and conditions. The agreement expires on October 30, 2024.
Manufacturing.
We primarily engage third party contract manufacturers in North America and the E.U. to produce our products. We receive products from our contract manufacturers for an agreed-upon tolling charge for each item produced as well other minor costs. We own a manufacturing plant in Voerde, Germany that supplies nutrition bars and gels primarily for the E.U. and the U.K. We regularly monitor the capacity and performance of our contract manufacturing partners and qualify new suppliers as needed. In order to secure supply of most of our RTD protein shakes, our relationships with these third parties are subject to minimum volume commitments, whereby these third party contract manufacturers have committed to produce, and we have committed to purchase, a minimum quantity of product. Given the growth profile of our primary products, we continuously plan for incremental capacity and review additional strategic alternatives to support our business. From three separate and geographically diverse manufacturing locations, our largest contract manufacturer provided approximately 71.3% of our Premier Protein RTD shake supply for our year ended September 30, 2020. Under the terms of a manufacturing agreement with the manufacturer, Premier Nutrition is required to purchase a minimum annual order volume of RTD protein shakes and has the right (but not the obligation) to order quantities in excess of a monthly minimum amount provided the manufacturer has the capacity and the ability to produce such additional quantities. In addition, under the terms of the manufacturing agreement, the manufacturer has committed to produce an annual minimum volume of RTD protein shakes. The manufacturing agreement also contains detailed provisions regarding the product specifications and quality standards for the products to be manufactured and packaged by the manufacturer, the tolling charges for each item produced (and certain other costs) to be paid by Premier Nutrition (and related payment terms), shipping and storage obligations, the rights of a party in the event the other party does not comply with its obligations under the manufacturing agreement and other customary contractual terms and conditions. The manufacturing agreement expires on December 31, 2022. We regularly evaluate our contract manufacturing arrangements to ensure the cost-effective manufacturing of our products. We select our manufacturing partners based on expertise, quality, cost and location. Our quality assurance team frequently monitors manufacturing partners to ensure our partners meet our rigorous processing and quality standards, detailed in our Quality Expectations Manual, including requirements for third party certification of Good Manufacturing Practices. Our owned production plant in Voerde, Germany is additionally certified to one of the international Food Safety Standards (ISO/FSSC 22.000, IFS or BRC), SMETA 4-pillars (Labour, Environment, Health and Safety, Business Ethics) and OHSAS 18001 (Health and Safety).
Distribution.
In North America, our products typically are shipped directly from our contract manufacturing partners to a network of third party warehouses. Products are distributed from third party warehouses to customer distribution centers or retail stores or are exported to international customers. Occasionally, we ship products directly from our contract manufacturers to our customers’ distribution centers. We maintain one third party warehouse location in Germany, which receives products from our production facility located in Voerde, Germany or directly from our contract manufacturers. Our branded products are distributed from the main third party warehouses to customer distribution centers or retail stores or are exported to international customers.
Raw materials used in our business consist of ingredients and packaging materials purchased from local, regional and international suppliers. Our principal ingredients include milk-based, whey-based and soy-based proteins, protein blends, sweeteners and vitamin and mineral blends. Our primary packaging materials include aseptic foil and plastic lined cardboard cartons, flexible and rigid plastic film and containers, beverage packaging and corrugate. We purchase our raw materials in accordance with rigorous standards to assure food quality and safety. Supply availability and prices paid for raw materials can fluctuate widely due to external factors, such as pandemics (including the COVID-19 pandemic), weather conditions, labor disputes, governmental programs, regulations and trade and tariff policies, industry consolidation, economic climate, energy shortages, transportation delays, commodity market prices, currency fluctuations and other unforeseen circumstances. We regularly monitor supply and cost trends of these raw materials to enable us to obtain ingredients and packaging needed for our products. Although the prices of the principal raw materials can be expected to fluctuate, we believe such raw materials to be in adequate supply and generally available to us from several sources. Under the terms of an agreement with a significant protein powder supplier, Premier Nutrition is required to purchase a minimum periodic volume of protein powder and has the right (but not the obligation) to order quantities in excess of such minimum amount provided the supplier has the capacity and the ability to produce such additional quantities. The agreement also contains detailed provisions regarding the product specifications and quality standards for the raw materials to be provided by the supplier, the rights of a party in the event the other party does not comply with its obligations under the agreement and other customary contractual terms and conditions. The agreement expires on October 30, 2024.
Manufacturing.
We primarily engage third party contract manufacturers in North America and the E.U. to produce our products. We receive products from our contract manufacturers for an agreed-upon tolling charge for each item produced as well other minor costs. We own a manufacturing plant in Voerde, Germany that supplies nutrition bars and gels primarily for the E.U. and the U.K. We regularly monitor the capacity and performance of our contract manufacturing partners and qualify new suppliers as needed. In order to secure supply of most of our RTD protein shakes, our relationships with these third parties are subject to minimum volume commitments, whereby these third party contract manufacturers have committed to produce, and we have committed to purchase, a minimum quantity of product. Given the growth profile of our primary products, we continuously plan for incremental capacity and review additional strategic alternatives to support our business. From three separate and geographically diverse manufacturing locations, our largest contract manufacturer provided approximately 71.3% of our Premier Protein RTD shake supply for our year ended September 30, 2020. Under the terms of a manufacturing agreement with the manufacturer, Premier Nutrition is required to purchase a minimum annual order volume of RTD protein shakes and has the right (but not the obligation) to order quantities in excess of a monthly minimum amount provided the manufacturer has the capacity and the ability to produce such additional quantities. In addition, under the terms of the manufacturing agreement, the manufacturer has committed to produce an annual minimum volume of RTD protein shakes. The manufacturing agreement also contains detailed provisions regarding the product specifications and quality standards for the products to be manufactured and packaged by the manufacturer, the tolling charges for each item produced (and certain other costs) to be paid by Premier Nutrition (and related payment terms), shipping and storage obligations, the rights of a party in the event the other party does not comply with its obligations under the manufacturing agreement and other customary contractual terms and conditions. The manufacturing agreement expires on December 31, 2022. We regularly evaluate our contract manufacturing arrangements to ensure the cost-effective manufacturing of our products. We select our manufacturing partners based on expertise, quality, cost and location. Our quality assurance team frequently monitors manufacturing partners to ensure our partners meet our rigorous processing and quality standards, detailed in our Quality Expectations Manual, including requirements for third party certification of Good Manufacturing Practices. Our owned production plant in Voerde, Germany is additionally certified to one of the international Food Safety Standards (ISO/FSSC 22.000, IFS or BRC), SMETA 4-pillars (Labour, Environment, Health and Safety, Business Ethics) and OHSAS 18001 (Health and Safety).
Distribution.
In North America, our products typically are shipped directly from our contract manufacturing partners to a network of third party warehouses. Products are distributed from third party warehouses to customer distribution centers or retail stores or are exported to international customers. Occasionally, we ship products directly from our contract manufacturers to our customers’ distribution centers. We maintain one third party warehouse location in Germany, which receives products from our production facility located in Voerde, Germany or directly from our contract manufacturers. Our branded products are distributed from the main third party warehouses to customer distribution centers or retail stores or are exported to international customers.
Seasonality Of Bellring Brands Earnings
We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our sales and earnings before interest and taxes (“EBIT”) margins because of consumer spending patterns and timing of our key retailers’ promotional activity. Historically, our first quarter of the fiscal year is seasonally low for net sales for all brands driven by a slowdown of consumption of our products during the holiday season. Sales are typically higher throughout the remainder of the fiscal year as a result of stronger consumer demand in our second quarter of the fiscal year, promotional activity at key retailers and organic growth of the business. Seasonal fluctuations in our sales and EBIT margins may not be the same in the future as they have been historically.
Trademarks And Intellectual Property Of Bellring Brands
We own a number of trademarks that are critical to the success of our business. Our key trademarks include Premier Protein®, Premier Nutrition®, Dymatize®, PowerBar®, ISO.100®, Joint Juice®, Supreme Protein®, BellRing® and BellRing Brands®. Our owned trademarks are, in most cases, protected through registration in the U.S. or Germany, as well as in many other countries where the related brands or products are sold. We also own, or have applications pending, for several patents in the U.S. and other countries. While our patent portfolio as a whole is material to our business, no one patent or group of related patents is material to our business. In addition, we have copyrights, proprietary trade secrets, technology, know-how processes and other intellectual property rights that are not registered. We rely on a combination of trademark law, copyright law, trade secrets, non-disclosure and confidentiality agreements and provisions in agreements and other measures to establish and protect our proprietary rights to our products, packaging, processes and intellectual property
Employees Of Bellring Brands
We have approximately 390 employees as of November 1, 2020. Of these employees, approximately 220 are in the U.S., approximately 160 are in Germany and approximately 10 are in other countries. Our people are critical to our success and we prioritize providing a safe, rewarding and respectful workplace where our people are provided with opportunities to pursue career paths based on skills, performance and potential. We adhere to our Code of Conduct, which sets forth a commitment to our stakeholders, including our employees, to operate with integrity and mutual respect. We strive to recruit, hire and retain a talented and diverse team of people. Our employees are supported with training and development opportunities to pursue their career paths and to ensure compliance with our policies. In managing our business, we strive to develop and implement policies and programs that support our business goals, maintain competitiveness, promote shared fiscal responsibility among the Company and our employees, strategically align talent within our organization and reward performance, while also managing the costs of such policies and programs. We provide our employees with competitive fixed and/or variable pay and, for eligible employees, we currently provide access to medical, dental and life insurance benefits, disability coverage, a 401(k) plan and employee assistance programs, among other benefits. During the COVID-19 pandemic, we are taking necessary actions to safeguard the health of our employees. Steps we have taken include enhancing facility safety measures, encouraging hygiene practices advised by health authorities, restricting business travel and site visitors and implementing remote working for certain office employees. We continue to monitor our practices to remain aligned with federal, state, local and international laws, regulations and guidelines
BellRing Brands (BRBR) stock price chart since its listing
The image below shows the stock price history of BellRing Brands (BRBR) over the last 5 years. And its been a very good time for the stock of Bellring Brands. Since its listing the stock of BellRing increased by a strong 51.4%.
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