BellRing Brands, Inc.

Welcome to Bellring Brands Second Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today from Bellring Brands are Darcy Davenport, President and Chief Executive Officer, and Paul Rose, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 1.30 p.m. Eastern Time. The dial-in number is 800-934-7879. No passcode is required. At this time, all participants have been placed in a listen-only mode. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Bellring Brands, for introductions. You may begin.

Good morning, and thank you for joining us today for Bellring Brands' second quarter fiscal 2022 earnings call. With me today are Darcy Davenport, our President and CEO, and Paul Rode, our CFO. Darcy and Paul will begin with prepared remarks. and afterwards we'll have a brief question and answer session. The press release and supplemental slide presentation that support these remarks are posted on our website in both the investor relations and the SEC filing sections at bellring.com. In addition, the release and slides are available on the SEC's website. Before we continue, I would like to remind you that this call will contain overlooking statements which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward-looking statements are current as of the date of this call and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. And finally, this call will discuss certain non-GAAP measures. For reconciliation of these non-GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. With that, I will turn the call over to Darcy.

Thanks, Jennifer, and thank you all for joining us. Last evening, we reported our second quarter results and posted a supplemental presentation to our website. On March 10th, Post completed its distribution of 80% of its interest in Bellring to Post shareholders. The spinoff positions us with more strategic flexibility to manage our capital structure and provide additional liquidity in our shares. I want to thank all the people at both Bellring and Post who worked incredibly hard to make this transaction successful. Given the large number of investors participating on this call who are new to Bellring, I want to step back and give a quick overview of our business. Bellring is a unique company. It's rare to have our size but still only be in the early stages of the category and brand growth. We compete in a large and growing convenient nutrition category, specifically in the ready-to-drink and ready-to-mix segments. Both segments are highly underpenetrated, with only 26% and 14% household penetration, respectively. The growth in both segments is driven by mainstream health and wellness trends, which have only accelerated throughout the COVID-19 pandemic. We fully expect both segments to continue to mainstream and dramatically increase household penetration. We have two leading brands, Premier Protein and Dymatize, that target differentiated consumer segments. Premier Protein was the original mainstream ready to drink brand with the vision to improve people's health by putting great tasting nutrition within everyone's reach. It is now over a billion dollar brand with incredible loyalty. but still has less than 8% household penetration, leaving us with a tremendous long-term opportunity. Dymatize, our second largest business, is a world-class sports nutrition brand known for high quality and trusted products. The brand has proven it has strong appeal with mainstream athletes and will be a major future growth driver. Our business has scaled double-digit organic growth, strong margins, and high free cash flow generation. Since 2017, we have organically grown sales at a compound annual growth rate of 15%. We operate an asset-light model which drives significant free cash flow generation, allowing us to invest in the growth of our business and quickly de-lever. From our IPO in October 2019 to the first quarter of 2022, we reduced our funded debt by nearly $250 million, and net leverage decreased from 3.8 to 2.1 times. When we went public, we laid out our vision and growth strategies. They included increasing household penetration, expanding distribution, launching innovation, expanding internationally, and, when appropriate, M&A. Since our IPO, we have made such great progress against each one of these organic strategies that we have outpaced our shake capacity, as well as the capacity in the North American aseptic shake co-manufacturing network. As a result, we are dramatically accelerating our multi-year capacity expansion plan that will support our company's long-term strategy. You saw last night we raised our outlook for the year. Our first half results, combined with increased confidence in our Shake supply chain, drove this increase. We feel confident in our ability to deliver our second half results. and as our capacity constraints begin to ease over the next several quarters, we expect to resume our historical shake volume growth rates. Our co-manufacturing partners are producing at the levels we need to deliver the year, and our planned production is expected to increase every quarter through the next several years. This planned expansion will return unit volume growth to double digits in fiscal 2023, However, as anticipated, for the balance of fiscal 22, we will see a decline in volume compared to a year ago as we rebuild inventory. Remember, in the back half of last year, we drew down inventory to an unsustainable level to satisfy the step change in demand. I'm highlighting this because the underlying growth of the category and the company's unit volume growth will continue to diverge for the next two quarters. We have a great growth story that is currently constrained by our capacity. We feel good about our progress this year. And while certainly not finished with our planning process, we expect that 22 back half revenue and EBITDA run rate is a reasonable proxy for 2023. Now turning to Q2 category and brand highlights. The convenient nutrition category continues to see strong growth with ready to drink beverages and ready to mix powders both growing dollars 13% versus a year ago. Even though most major competitors have taken price, volumes continue to be strong, with RTD ounces growing 8%. Premier Protein continues to demonstrate tremendous strength, despite our need to pull back promotion, marketing, and reduce our SKUs in order to dampen demand. Premier Protein repeat rates and velocities have held steady, demonstrating our high consumer loyalty. Our trailing 52-week consumption is at 20%, which is on pace with category growth despite the recent six months of capacity constraints. Impressively, Premier Protein's Q2 shake consumption was only down 2%, even though we lapped significant New Year promotions and strong advertising support in the year-ago period. Retailers have largely held our shelf space through this period of lower supply, given our category-leading velocities. We saw a brief sequential decline in shake TDPs this quarter as retailers worked through remaining inventory of the temporarily discontinued Tetra SKUs. Since then, our TDPs have stabilized, and we expect them to remain at these levels for the balance of the year until we begin building TDPs again in fiscal 23. I continue to be impressed by the strength and the resilience of the Premier Protein brand. Dymatize had another terrific quarter, with U.S. consumption up 46% across tracked and untracked channels. All key channels saw double-digit growth, and brand velocities remained strong. Our newest Dymatize ISO 100 flavors, Dunkin', Cappuccino, and Mocha Latte, drove excitement and velocities for the brand. Pebbles and Dunkin', together, are driving nearly half of Dymatize's growth. I'm encouraged by our progress so far this year. New capacity is coming along as expected, and we are confident the brand will reaccelerate when we are fully in stock. Dymatize is on fire and appealing to mainstream athletes. We have successfully taken price on both businesses to offset commodity increases and seen little elasticity to date. We have two high-growth complementary brands that have strong mainstream appeal and significant upside. All in all, we feel confident about our long-term outlook and the building blocks we have in place to get there. Thank you for your time and support. I look forward to updating you on our progress next quarter. I'll now turn the call over to Paul.