Protein-loving investors who regularly visit the gym will be pleased to hear that Bellring Brands (NYSE:BRBR), the spinoff of the larger Post Holdings, is preparing for a blockbuster IPO that could generate well over half a billion dollars for the company if things go according to plan. By churning out popular brands like Premier Protein, Dymatize, and PowerBar, BellRing Brands has established itself as one of the leading providers of protein for the workout and fitness-oriented. Information revealed in the company’s prospectus also demonstrates investors should have high hopes for its IPO performance.
Here’s a breakdown of BellRing Brands’ forthcoming market debut, and what investors should expect.
Soaring Growth
Perhaps the best bit of news for proponents of BellRing Brands ahead of its IPO is that growth has been soaring lately.
Fitness trends have been taking ahold of Western marketplaces for years now, leading those who were once couch potatoes to get up and start pumping iron. A good workout is almost worthless if it’s not matched by an excellent diet, however, which is why companies like BellRing Brands have been enjoying prosperous times as of late by providing a plethora of protein solutions to the nutrient-starved who are desperate to bulk up.
According to an S-1 filing made with the SEC ahead of its forthcoming market debut, for instance, one of the company’s largest brands, Premier Protein, is one of the “top growth brands in the U.S. convenient nutrition category based on Nielsen data.” Premier Protein holds the top position in the convenient nutrition category, and net sales for Premier Protein products enjoyed CAGR growth of 42 percent from fiscal year 2016 to fiscal year 2018.
Other brands owned by the company like Dymatize are also incredibly popular with fitness gurus who are constantly looking for easy ways to provide their bodies with much-needed protein. Over the past two years, sales growth has hit 20 percent, demonstrating to potential investors that BellRing Brands is more than capable when it comes to bolstering future cash flow.
Given that the ongoing social trends focused on fitness and healthier lifestyles aren’t likely to abate anytime soon, either, it stands to reason that investors can keep expecting the products provided by BellRing Brands to gain larger and larger market shares. When you understand why the fitness industry is booming, it can be easy to see why companies like BellRing Brands are situated to overperform compared to other sectors in the near future.
Supply Issues Could Cause Hiccups
Not everything is perfect for BellRing Brands, however; the company has consistent supply issues, for instance, which could cause hiccups in the future if they’re not resolved sooner rather than later. This isn’t entirely bad news, however, as BellRing Brands is effectively suffering from the problem of being too popular with its customers. According to information provided in the company’s prospectus, BellRing Brands is experiencing these supply constraints because of “better than expected volume growth” for Premier Protein shakes and delays in production capacity improvements managed by its third-party contract manufacturer network.
If third-party the company, however, investors may very well be eager to take them on, given their relatively less-than-serious nature. After all, improvements to manufacturing capacity or a course with Forex Academy won’t just alleviate the company’s major problem, but indeed bolster its future profitability by ensuring it can churn out even more of its popular shakes (which show no sign of giving up their top spot in the marketplace).
The company has admitted, however, that its previous decision to restrict the variety of flavors available to customers was a mistake that mitigated the year-over-year growth enjoyed for the nine months ended June 30, 2019. Now that all flavors are re-introduced, however, and that “inventory levels [have] returned to normal levels” since June 30, 2019, there are few downsides to see in the company’s forthcoming market debut. Financial figures have been on the up, too; recorded sales of $713.2 million in 2017 spiked upwards to a staggering $827.5 million in 2018, for instance. Clearly, consumers everywhere are deeply infatuated with protein shakes, powders, and bars which enable them to hit new levels of physical fitness.
Ultimately, BellRing Brands is set to offer about 30 million shares at a price range of $16-19, something that could generate a whopping $666.5 million for the company. The company’s prospectus claims a portion of its proceeds will go towards paying down the Post bridge loan and related interest that helped get it started. Given that the St. Louis-based company is part of a global market that’s worth an astonishing $32.7 billion, and that it earned a gross profit of $277.7 million in 2018, we have every reason to expect a rock star performance from BellRing Brands when it makes its debut.