BellRing Brands has lowered its forecast for a key earnings metric amid inventory and ingredient issues.
The cut to the US company’s guidance for annual adjusted EBITDA was alongside a set of third-quarter results that included sales that were above market expectations.
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BellRing Brands now sees its adjusted EBITDA coming in at $275-295m for the year as a whole, compared to its previous forecast of $315-335m.
The US protein-shakes and bars business said the new forecast includes $28m of “unfavourable inventory-related impacts”.
BellRing said $21.3m was recorded in its second and third quarters. The amount included an $11.3m “inventory-related charge associated with a third-party supplied ingredient that did not meet BellRing’s quality requirements”, the company explained.
It added the recovery of the charge had not been incorporated into its outlook. The group recorded a further $10m charge for “excess shake bottle inventory”.
BellRing expects its adjusted EBITDA to be affected by around $7m in trade spending in the fourth quarter to “support sell-through of excess shake bottle inventory and optimise inventory levels ahead of fiscal year-end”.
In the three months to the end of June, BellRing’s net sales grew 4% to $570.4m. Volumes increased 1.7% and the company noted a 2.5% increase in “price/mix”.
The company is forecasting its annual net sales will grow 1-3% to $2.335-$2.375bn. Its previous estimate was an increase of 0-2% to $2.325-$2.365bn.
BellRing said the “dollar consumption” of its Premier Protein RTD shakes during the third quarter increased 6% and its Dymatize powder and RTD products 2.7%. However, Premier Protein powder products decreased 4.2%.
Third-quarter operating profit stood at $65.4m, compared to $44.8m a year earlier. Net earnings were $34.2m, versus $21m in the same period a year ago.
William Blair analyst Jon Andersen said: “The quarter was noisy with sales above expectations and the fiscal year sales guide raised. However, EBITDA in the quarter were below and EBITDA guidance was lowered, although these appear to be related to transitory inventory charges and actions to optimise inventory levels by the end of the fiscal year.”
