4. BellRing Brands, Inc. (NYSE:BRBR)
Number of Hedge Fund Holders: 42
BellRing Brands, Inc. (NYSE:BRBR) is a food and nutrition company that promotes healthy eating through flavorful, nutritious, and convenient packaged goods, such as protein shakes, bars, and powders. All these products are available for immediate consumption. Distribution channels include grocery, drugstores, e-commerce, retailers, and some club stores, like Costco.
In FQ3 2024, revenue was $515.4 million, with a 15.59% year-over-year growth, and EPS was $0.54. Both beat expectations. Consumption grew 10% and accelerated to 20% in July.
The Premier Protein brand recorded an overall 19.8% sales growth. The RTD shakes and protein powder have a strong demand. There was a 9.6% and 43.6% dollar consumption increase in Premier Protein RTD shakes and Premier Protein powder products respectively, as compared to 2023.
The brand Dymatize’s international business increased net sales by 18% in FQ3. However, overall net sales fell by 3%. So most of the loss came from US consumption, which represents ~60% of the brand. Now BellRing Brands, Inc. (NYSE:BRBR) is increasing its investment in marketing and promotion at Dymatize within the US.
BellRing Brands, Inc. (NYSE:BRBR) is expanding product lines. On March 4 and June 17, the company debuted Cookie Dough High Protein Shake, and Premier Protein Pancake & Waffle Mixes. In 2023, it launched 3 new products.
The company has been expanding its production capabilities since FQ3 2023, as indicated by the successful launch of a new greenfield co-manufacturing facility – which meant setting up a new manufacturing facility to increase production capacity. This was done to scale up production to meet the growing demand for protein products.
Wasatch Core Growth Fund stated the following regarding BellRing Brands, Inc. (NYSE:BRBR) in its fourth quarter 2023 investor letter:
“BellRing Brands, Inc. (NYSE:BRBR)) was also a significant contributor. BellRing’s offerings include nutritional shakes, powders, bars and other products primarily marketed under the Premier Protein and Dymatize brands. We like the company’s asset-light operating model, which relies on outsourced production. Given the low cost of BellRing’s products and perceived value among a loyal and growing group of health-conscious consumers, we believe the company has a durable, economically resilient business. Moreover, we think the intellectual property associated with BellRing’s shelf-stable, good-tasting products is relatively difficult for competitors to replicate. Amid the fallout from the Covid-19 pandemic, the company’s production capacity had been severely constrained, impacting revenues and earnings. In 2023, BellRing was able to add new outsourced production facilities—and even more will be added in 2024. Finally, the company and the stock benefited from the proliferation of GLP-1 agonists, such as Ozempic, being used for weight loss. Dieters often consume BellRing’s products in an effort to ingest enough nutrients. That said, the GLP-1 trend wasn’t part of our original investment thesis and isn’t why we continue to own the stock.”
