BellRing Brands (NYSE:BRBR) reported third-quarter fiscal 2026 net sales growth that exceeded its expectations, but lowered its profitability outlook as inventory-related charges and higher freight costs weighed on margins.
Net sales increased 4% in the quarter, supported by better-than-expected performance from both the Premier Protein and Dymatize brands. Adjusted EBITDA margins, however, fell below the company’s guidance, prompting BellRing to revise its full-year outlook.
“Premier remains the category leader,” Axelrod said. “Consumer trends improved every quarter this year, and we continue to see considerable opportunities to better realize the full potential of the business.”
Third-Quarter Sales Growth and Margin Pressure
Premier Protein brand and ready-to-drink shake net sales rose 1% during the quarter. Shake volume increased 3%, while price and mix declined 2%, resulting in a 6% increase in dollar consumption. BellRing said sales growth trailed consumption because of e-commerce promotional timing, the greater effect of promotions on net sales than retail consumption, and modestly lower trade inventory.
Excluding a roughly one-percentage-point benefit from an e-commerce promotional timing shift, consumption outside of club channels grew about 16%, according to the company. BellRing also cited an early start to a small portion of a promotion at a major mass retailer and stronger baseline velocities as sources of upside versus its expectations.
Dymatize net sales increased 27%, with volume up 6% and price and mix up 21%. CFO Paul Rode said the price-and-mix gain reflected inflation-driven price increases implemented earlier in the year. Consumer demand was particularly strong in e-commerce and international channels, while overseas distribution gains also supported the brand.
Adjusted gross profit was $158 million, and adjusted gross margin declined to 27.7% from 35.1% a year earlier. The decline reflected protein and freight cost inflation, including tariffs, as well as a charge tied to excess bottle-shake inventory.
The inventory charge represented a 180-basis-point headwind during the third quarter and was the main source of variance from BellRing’s forecast, Rode said. Higher-than-expected freight costs also pressured results, though higher sales partly offset the impact.
SG&A expenses totaled $94 million, or 16.4% of sales, including a $7 million increase in advertising spending. BellRing also recorded a $5 million charge related to an organizational realignment announced in late June. The company expects the changes to produce annualized operating-expense savings of $10 million to $12 million once completed, with most of the benefit expected in fiscal 2027.
Updated Fiscal 2026 Outlook
BellRing now expects fiscal 2026 net sales of $2.335 billion to $2.375 billion, representing growth of 1% to 3%. Its previous guidance called for sales ranging from flat to up 2%.
The company forecasts adjusted EBITDA of $275 million to $295 million, with an adjusted EBITDA margin of about 12%. The outlook includes $28 million in unfavorable inventory-related impacts, including $21 million already recorded in the second and third quarters. The remaining impact is primarily tied to targeted fourth-quarter trade spending intended to support sell-through of excess bottle inventory.
- Tariffs are expected to be an 80-basis-point margin headwind for the full year.
- Higher freight rates are expected to weigh on second-half margins by about 140 basis points versus the company’s prior outlook.
- Fourth-quarter net sales are expected to be flat at the midpoint of guidance.
- Fourth-quarter adjusted EBITDA margin is expected to be about 10%.
For the fourth quarter, Premier sales are expected to rise by a low-single-digit percentage, including an approximately 100-basis-point headwind from powders. BellRing expects double-digit ready-to-drink shake volume growth to be mostly offset by unfavorable price mix caused by promotional activity in club, mass and e-commerce channels.
Rode said the company expects Premier shake consumption to rise at a mid-single-digit rate in the fourth quarter, modestly ahead of sales because promotions have a larger effect on BellRing’s net sales. Dymatize and other sales are expected to decline by a mid-single-digit percentage against a difficult comparison period.
Pricing, Distribution and Supply Chain Actions
To address sustained input-cost inflation, BellRing announced a double-digit price increase on Premier Protein shakes and additional pricing on powders, both effective in the first quarter of fiscal 2027. The company expects volume-related elasticities from the shake price increase to be slightly greater than one.
Rode said the company’s last shake price increase was nearly two years ago and that the new action is intended to support healthier margins while allowing BellRing to continue investing in the business. He said another major ready-to-drink competitor previously implemented a double-digit increase.
BellRing also plans to broaden its presence across channels. It expects meaningful distribution gains in food, drug and mass retail and e-commerce during fiscal 2027, supported by core products and innovation. In convenience, the company is pursuing targeted regional direct-store-delivery expansion and has hired personnel with DSD expertise.
The company said its 30-gram protein shakes and newly introduced Premier Protein Ultimate product, containing 42 grams of protein, are suited for convenience retail. BellRing is also launching Premier Protein Sparkling Soda, which it said expands the brand into the refreshment category.
Both Ultimate and Sparkling Soda are rolling out to mass, food and e-commerce channels during the fourth quarter. BellRing plans to monitor distribution, consumption, repeat rates and consumer response to advertising and social-media activity as it evaluates the launches.
Fiscal 2027 Focus
Rode said BellRing does not view fiscal 2026 margins as its “new normal” and expects adjusted EBITDA margins to improve in fiscal 2027. The company cited the absence of certain inventory-related charges, planned price increases, productivity programs and organizational savings as factors expected to support improvement.
Axelrod said he is not yet prepared to set a long-term margin target. He said his initial priorities include assessing the business’s structural earnings power, identifying execution issues and building a path toward sustainable, profitable growth.
BellRing generated $79 million in operating cash flow during the third quarter and ended the period with net leverage of 3.2 times. The company expects leverage of approximately four times at fiscal year-end due to an anticipated sizable legal-settlement payment in the fourth quarter.
About BellRing Brands (NYSE:BRBR)
BellRing Brands, Inc is a consumer packaged goods company specializing in high‐protein, better‐for‐you nutrition products. Formed in March 2020 as a spin‐off from Post Holdings, the company focuses on delivering convenient protein solutions to health‐conscious consumers through a portfolio of well‐known and emerging brands.
The company’s product offerings include ready‐to‐drink protein shakes, protein powders, nutrition bars and other performance nutrition items. BellRing Brands’ flagship brands include Premier Protein, a line of shakes and bars designed for everyday protein supplementation, as well as Dymatize and PowerBar, which cater to athletes and active individuals seeking advanced sports nutrition formulas.
BellRing Brands markets its products primarily across North America, leveraging relationships with major retailers, wholesale clubs and e-commerce platforms to reach consumers in the United States and Canada.
