ST. LOUIS – Inflated customer inventory building during the second quarter pressured BellRing Brands, Inc.’s fiscal 2020 third-quarter earnings and sales. Adding to the pressure has been a W-shaped recovery that accelerated as April progressed, dipped in May and not reached pre-COVID levels until July, according to the company.

Net income for the quarter ended June 30 totaled $3.3 million, equal to 8¢ per share on the common stock. The business, a spinoff from Post Holding’s, Inc., did not record third-quarter net income in fiscal 2019.

Sales for the quarter were $204 million, down from $238 million the year prior.

“We ended Q2 with inflated trade inventories after our customers overbought following the mid-March consumer stock-up,” said Darcy Horn Davenport, president and chief executive officer, during an Aug. 7 conference call with analysts. “This elevated Q2 sales at the expense of Q3 and factored into our second-half planning.

“In reaffirming guidance in May, we highlighted that the second half would be backloaded. More specifically, we expected roughly 56% of our second-half revenue to fall into the fourth quarter. With July net sales coming in at close to $100 million, this plan is proving out.”

Premier Protein sales declined 12% during the quarter, with ready-to-drink shake sales down 10%, said Paul A. Rode, chief financial officer. Domestic sales of BellRing’s Dymatize powdered products rose 9%, led by club and e-commerce.

PowerBar sales declined 44%, reflecting the impacts from a portfolio optimization strategy in North America, lower international volumes driven by specialty store closings and fewer on-the-go consumption opportunities for consumers due to COVID-19.

“I still believe that the on-the-go use education is still under-indexing,” Ms. Davenport said. “People are not out and about like they were before.”

Mr. Rode added, “We expect COVID to weigh on the brand's results in the fourth quarter, but the decline should moderate now that we have fully lapped the portfolio optimization strategy in North America.”

The pandemic has created strong category headwinds and the slower-than-expected recovery has affected both of BellRing’s domestic and international businesses, Ms. Davenport said.

“As a result, we have lowered our back half sales; however, despite those challenges, we still expect to deliver double-digit net sales growth for the year,” she said. “In Q4, we have significant growth drivers lined up, including promotions in most major retailers, expanded distribution, and we already have a strong July in the books. Given we exceeded our expectations for the first two quarters and we are confident in our ability to achieve our Q4 forecast, I’m happy to reaffirm our full-year EBITDA guidance.”

Full-year EBITDA is expected to be between $192 million to $202 million. The sales forecast, however, has been lowered to a range of $960 million to $980 million due to lower second half expectations.