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BB

BELLRING BRANDS, INC. (BRBR)·Q3 2025 Earnings Summary

Executive Summary

  • Solid top-line but compressed margins: Q3 net sales rose 6.2% YoY to $547.5M, while GAAP diluted EPS fell to $0.16 on a $68.1M legal provision; adjusted EPS rose 1.9% to $0.55 and adjusted EBITDA ticked up 0.7% to $120.3M .
  • Broad-based consumption strength continued (Premier RTD +18.6%, powders +27.2%, Dymatize +4.5%), but promotional intensity and input inflation pressured gross margins (35.4% GAAP; 35.1% adjusted) .
  • FY25 guidance narrowed with unchanged midpoints: revenue $2.28–$2.32B and adjusted EBITDA $480–$490M; CapEx ~ $9M .
  • Stock reaction: shares fell 32% on Aug 5 following the release and call, driven by margin outlook, legal charge, and commentary that consumption was “in line” with shipments vs prior expectations; shares partially rebounded the next day .

What Went Well and What Went Wrong

  • What Went Well

    • Category and brand momentum: Premier Protein RTD consumption +18.6% YoY with RTD market share leadership; Premier powders +27.2%; Dymatize returned to growth +4.5% .
    • Distribution and penetration gains: Premier Protein TDPs and household penetration reached record levels; HH penetration 21.6% (52 weeks ended 6/29/25), with leading repeat and buy rates .
    • Adjusted EPS and adjusted EBITDA slightly ahead of expectations, aided by eCommerce promo load-in and brand strength; adjusted EPS $0.55, adjusted EBITDA $120.3M . CEO: “Our leading mainstream brands continue to resonate… we remain confident in the long-term trajectory” .

  • What Went Wrong

    • Margin compression: Adjusted gross margin declined 130 bps YoY to 35.1% on input cost inflation and higher trade spend; GAAP gross margin 35.4% (vs 36.8% LY) .
    • Legal provision: $68.1M provision for Joint Juice settlement drove GAAP operating profit down 59.9% YoY to $44.8M and GAAP diluted EPS to $0.16 .
    • Shipments vs consumption: Management noted consumption came “in line” with shipments due to heavier-than-expected eCommerce load-in masking deloads elsewhere; Q4 gross margin to face further pressure from promotions, protein costs, and packaging redesign .

Financial Results

  • Income statement comparisons (prior year, sequential, current)
MetricQ3 2024Q2 2025Q3 2025
Net Sales ($M)515.4 588.0 547.5
Gross Profit ($M)189.9 189.8 193.6
Gross Margin % (GAAP)36.8% 32.3% 35.4%
Adjusted Gross Profit ($M)187.6 202.7 192.4
Adjusted Gross Margin %36.4% 34.5% 35.1%
SG&A ($M)74.0 90.5 144.5
Operating Profit ($M)111.6 95.1 44.8
Net Earnings ($M)73.7 58.7 21.0
Diluted EPS (GAAP)$0.56 $0.45 $0.16
Adjusted Diluted EPS$0.54 $0.53 $0.55
Adjusted EBITDA ($M)119.5 118.6 120.3
Adjusted EBITDA Margin %23.2% 20.2% 22.0%
  • Results vs S&P Global Wall Street consensus (Q3 2025)
MetricActual Q3 2025S&P Global Consensus*Surprise
Revenue ($M)547.5 531.6+$15.9M / +3.0%
EPS (Adjusted/Normalized)$0.55 $0.500+$0.05 / +10%
Adjusted EBITDA ($M)**120.3 112.6+$7.7M / +6.8%

*Values retrieved from S&P Global.
**Company reports “Adjusted EBITDA”; consensus listed as “EBITDA Consensus Mean.” Definitions may vary.

  • Segment and brand growth (YoY)
MetricQ1 2025 YoYQ2 2025 YoYQ3 2025 YoY
Premier Protein Net Sales+26.3% +22.0% +6.0%
Premier RTD Shake Net Sales+25.3% +21.7% +5.9%
Dymatize Net Sales+12.6% +3.0% +5.4%
  • KPIs and category metrics
KPIQ1 2025Q2 2025Q3 2025
Premier RTD Consumption YoY+23.4% +24.9% +18.6%
Premier Powders Consumption YoY+24.4% +21.7% +27.2%
Dymatize Total Consumption YoY-8.2% +3.0% +4.5%
Premier Protein HH Penetration20.0% (52w) 20.9% (52w) 21.6% (52w)
Premier RTD Market Share (tracked)25.0% (trend) Peak ~30% in Mar 24.8%
Premier RTD TDPs (index)All-time high 1,237 1,273

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesFY2025$2.26–$2.34B (Q2 guide) $2.28–$2.32B (Q3) Narrowed, midpoint unchanged
Adjusted EBITDAFY2025$470–$500M (Q2 guide) $480–$490M (Q3) Narrowed, midpoint unchanged
Capital ExpendituresFY2025~$9M (Q2) ~$9M (Q3) Maintained
Q4 Net Sales Growth (implied)Q4 2025—~14% at midpoint (call) New color
Q4 Adj. EBITDA MarginQ4 2025—~19% (call) New color

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Shipments vs Consumption / Trade InventoryQ2 flagged Q3 headwind from retailer weeks-of-supply reductions; consumption outpacing shipments in Q2 Consumption “in line” with shipments due to heavier eCommerce load-in masking club/other deloads; expects deload in Q4 Normalizing; timing shift
Promotions & Gross MarginQ1/Q2: promotions ramping; margins pressured by trade and input costs Q4 gross margin to be notably lower YoY on higher promo, protein cost inflation, packaging redesign; Q4 EBITDA margin ~19% More pressure near-term
Competition & Club SpaceQ1/Q2: strong category, leadership gains Temporary club floor space expansion invited competitors; seen as category-growing; unique situation expected to abate Competitive intensity elevated short-term
Capacity & DistributionQ2: TDPs at highs; capacity unconstrained TDPs continued to rise; short-term incremental pallet at key club retailer Improving
InnovationQ1/Q2: launched indulgence line; pipeline active Indulgence performing well; almond milk RTD launched late June; more “wholesome” offerings ahead Positive
Tariffs/MacroQ2: monitoring potential 2026 dairy tariffs 15% tariff rates on NZ/EU dairy inputs; low-single-digit FY26 COGS headwind expected New headwind in FY26
A&P & Brand SupportQ2: media campaign; A&P up A&P ~3% of sales in Q3; likely to lean further into marketing over time Gradual increase

Management Commentary

  • CEO Darcy Davenport on category momentum: “The ready to drink shake category is on fire… RTDs grew 16% this quarter… One in two households now consume RTD shakes” .
  • On Premier Protein leadership: “Premier Protein with RTD market share of 25% is the number one brand… Our consumption grew 19% in Q3… TDPs up 34%” .
  • On competition and club dynamics: temporary club space increases broad competition but “it is great for the category… completely mainstreamed” .
  • On innovation: “Two new shake lines… indulgence… almond milkshakes… early results are promising” .
  • CFO Paul Rode on Q4 outlook: “We expect net sales to grow 14% at the midpoint in the fourth quarter… adjusted EBITDA margins of approximately 19%” .

Q&A Highlights

  • FY26 outlook: Too early to guide; reiterated long-term algorithm of 10–12% top-line with 18–20% margins, but planning still in process (capacity no longer constraining) .
  • Guide narrowing: Q3 beat had offsets (mix/pricing benefit; short-term club pallet gains offset by higher competitive intensity); thus narrowed rather than raised range .
  • Promotions cadence: Returning to historical cadence (Jan–Mar and back-to-school are peak), consistent with consumer seasonality .
  • Gross margins: Q4 down YoY on higher promos and protein input costs (whey) plus ~100 bps from packaging redesign and lapping one-time favorability .
  • Tariffs: Newly communicated 15% tariff rates on NZ/EU dairy proteins likely a low-single-digit FY26 COGS headwind; mitigation underway .
  • Distribution strategy: Expanding single-serve (ambient and cooler) displays across the store; DSD could follow to unlock convenience channel .

Estimates Context

  • Q3 beat versus S&P Global consensus: Revenue $547.5M vs $531.6M and normalized/adjusted EPS $0.55 vs $0.50. Adjusted EBITDA $120.3M vs $112.6M. Drivers include strong consumption, distribution gains, and heavier eCommerce promo load-in; headwinds included higher trade spending and protein input inflation . Values retrieved from S&P Global.
  • Street models likely adjust:
    • Lift on near-term revenue/EPS to reflect consistent consumption strength and Q3 beats.
    • Lower gross margin assumptions for Q4 and into FY26 (promos, protein costs, tariff headwinds) based on call color .

Key Takeaways for Investors

  • Despite a sharp stock drawdown on Q3 print/call, the fundamental demand signal remains strong (Premier RTD +18.6% consumption; leadership in share, penetration) supporting medium-term growth .
  • Near-term margin pressure is the core risk: elevated promotions, higher protein inputs, packaging refresh costs, and Q4 guidance for ~19% EBITDA margins .
  • FY25 outlook is intact at midpoints (narrowed ranges), with Q4 implied ~14% sales growth; execution on trade inventory normalization and promo ROI is key .
  • FY26 watch items: tariff-related low-single-digit COGS headwind and sustained whey inflation; cost actions and mix management will be required to defend margins .
  • Strategic positives: accelerating distribution (including singles/coolers), innovation traction (indulgence, non-dairy), and category captaincy with major retailers .
  • Stock reaction was driven by margin messaging and legal provision; watch for evidence of Q4 deload unwind and improved flow-through as catalysts .

Additional Details and Cross-References

  • Legal provision: $90M settlement in principle for legacy Joint Juice litigation; $68.1M Q3 provision recognized; payment expected in FY26 (subject to court approval) .
  • Share repurchases: 1.3M shares for $83.0M in Q3 (avg $65.07); YTD 3.8M shares for $265.6M; $197M remaining authorization as of 6/30/25 .
  • Balance sheet: Long-term debt $1,009M; net leverage ~2x as of 6/30; inventories $415.6M reflecting growth and timing .