Related Party Transactions (Notes)

6 Months Ended

Mar. 31, 2022

Related Party Transactions [Abstract]

Related party transactions

RELATED PARTY TRANSACTIONS

Immediately prior to the Spin-off, Post held 97.5 million BellRing LLC units, equal to 71.5% of the economic interest in BellRing LLC, and one share of Old BellRing Class B Common Stock which represented 67% of the combined voting power of the common stock of the Company. Subsequent to the Spin-off, Post owned 14.2% of the BellRing Common Stock. As such, both prior to and subsequent to the Spin-off, transactions with Post are considered related party transactions.

The Company sells certain products to, purchases certain products from and licenses certain intellectual property to and from Post and its subsidiaries based upon pricing governed by agreements between the Company and Post and its subsidiaries, consistent with pricing of similar arm's-length transactions. During each of the three and six months ended March 31, 2022 and 2021, net sales to, purchases from and royalties paid to and received from Post and its subsidiaries were immaterial.

The Company has a series of agreements with Post which are intended to govern the ongoing relationship between the Company and Post. Prior to the Spin-off, these agreements included the amended and restated limited liability company agreement of BellRing LLC (the “BellRing LLC Agreement”), an employee matters agreement, an investor rights agreement, a tax matters agreement, a tax receivable agreement and a master services agreement, among others. In connection with the Spin-off, the Company and Post amended and restated the master services agreement (the “MSA”) and the employee matters agreement and entered into a new tax matters agreement (the “Tax Matters Agreement”). The current investor rights agreement between the Company and Post was terminated, and the Company and Post entered into a new registration rights agreement. Under certain of these agreements, the Company incurs expenses payable to Post in connection with certain administrative services provided for varying lengths of time. The Company had immaterial receivables with Post at both March 31, 2022 and September 30, 2021 related to sales with Post and its subsidiaries. The Company had $2.7 and $2.2 of payables with Post at March 31, 2022 and September 30, 2021, respectively, related to MSA fees and pass-through charges owed by the Company to Post, as well as related party purchases. The receivables and payables were included in “Receivables, net” and “Accounts payable,” respectively, on the Condensed Consolidated Balance Sheets.

The MSA

The Company uses certain functions and services performed by Post under the MSA. These functions and services include finance, internal audit, treasury, information technology support, insurance and tax matters, the use of office and/or data center space, payroll processing services and tax compliance services. Prior to the Spin-off, Post also provided legal services. The MSA was amended and restated upon completion of the Spin-off to provide for similar services following the Spin-off and such other services as BellRing and Post may agree. For the three and six months ended March 31, 2022, MSA fees were $1.2 and $1.8, respectively. For the three and six months ended March 31, 2021, MSA fees were $0.5 and $1.1, respectively. MSA fees were reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.

Stock Based Compensation

Prior to the Spin-off, the Company incurred pass-through charges from Post relating to stock-based compensation for employees participating in Post’s stock-based compensation plans. There were no material charges incurred subsequent to the Spin-off. For the three and six months ended March 31, 2022, stock-based compensation expense related to Post’s stock-based

compensation plans was $0.3 and $0.8, respectively. For the three and six months ended March 31, 2021, stock-based compensation expense related to Post’s stock-based compensation plans was $0.6 and $1.4, respectively. Stock-based compensation expense was reported in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Operations.

Tax Agreements

Prior to the Spin-off, BellRing LLC made payments to Post related to quarterly tax distributions and state corporate tax withholdings made pursuant to the terms of the BellRing LLC Agreement. During the six months ended March 31, 2022, BellRing LLC paid $3.2 to Post related to quarterly tax distributions and had immaterial payments for state corporate tax withholdings on behalf of Post. During the six months ended March 31, 2021, BellRing LLC paid $9.3 to Post related to quarterly tax distributions and $1.4 for state corporate tax withholdings on behalf of Post.

Based on the provisions of the tax receivable agreement prior to the Spin-off, Old BellRing paid Post (or certain of its transferees or other assignees) 85% of the amount of cash savings, if any, in U.S. federal income tax, as well as state and local income tax and franchise tax (using an assumed tax rate) and foreign tax that Old BellRing realized (or, in some circumstances, was deemed to realize) as a result of (a) the increase in the tax basis of assets of BellRing LLC attributable to (i) the redemption of Post’s (or certain transferees’ or assignees’) BellRing LLC units for shares of Old BellRing Class A Common Stock or cash, (ii) deemed sales by Post (or certain of its transferees or assignees) of BellRing LLC units or assets to Old BellRing, (iii) certain actual or deemed distributions from BellRing LLC to Post (or certain transferees or assignees) and (iv) certain formation transactions, (b) disproportionate allocations of tax benefits to Old BellRing as a result of Section 704(c) of the Internal Revenue Code and (c) certain tax benefits (e.g., imputed interest, basis adjustments, etc.) attributable to payments under the tax receivable agreement.

Amounts payable to Post related to the tax receivable agreement of $0.4 were recorded in “Accounts Payable” on the Condensed Consolidated Balance Sheet at March 31, 2022. Amounts payable to Post related to the tax receivable agreement of $0.3 and $10.2 were recorded in “Accounts Payable” and “Other liabilities,” respectively, on the Condensed Consolidated Balance Sheet at September 30, 2021.

In connection with and upon completion of the Spin-off, the Company entered into the Tax Matters Agreement by and among Post, BellRing and Old BellRing. The Tax Matters Agreement (i) governs the parties’ respective rights, responsibilities and obligations with respect to taxes, including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of the failure of the Distribution to qualify for its intended tax treatment, (ii) addresses U.S. federal, state, local and non-U.S. tax matters and (iii) sets forth the respective obligations of the parties with respect to the filing of tax returns, the administration of tax contests and assistance and cooperation on tax matters.

Pursuant to the Tax Matters Agreement, BellRing is expected to indemnify Post for (i) all taxes for which BellRing is responsible (as described in the Tax Matters Agreement) and (ii) all taxes incurred by reason of certain actions or events, or by reason of any breach by BellRing or any of its subsidiaries of any of their respective representations, warranties or covenants under the Tax Matters Agreement that, in each case, affect the intended tax-free treatment of the Spin-off. Additionally, Post is expected to indemnify BellRing for the (i) taxes for which Post is responsible (as described in the Tax Matters Agreement) and (ii) taxes attributable to a failure of the Spin-off to qualify as tax-free, to the extent incurred by any action or failure to take any action within the control of Post. There were no amounts paid under the Tax Matters Agreement during the six months ended March 31, 2022.

Contract Manufacturing Arrangement

In the first quarter of fiscal 2022, Premier Nutrition Company, LLC (“Premier Nutrition”), a subsidiary of the Company, and Michael Foods, Inc. (“MFI”), a subsidiary of Post, entered into a reimbursement agreement relating to MFI’s acquisition and development of property intended to be used as an aseptic processing plant to produce RTD shakes for Premier Nutrition (such agreement, the “Reimbursement Agreement” and such arrangement to produce RTD shakes for Premier Nutrition, the “Co-Man Arrangement”). Pursuant to the reimbursement agreement, prior to the execution of a definitive agreement governing the Co-Man Arrangement, Premier Nutrition will indemnify MFI for certain costs and expenses incurred in the acquisition and development of property for the Co-Man Arrangement. For the three and six months ended March 31, 2022, Premier Nutrition did not reimburse MFI for any amounts under the Reimbursement Agreement.