BellRing Brands, Inc.

Welcome to Bellring Brands' 4th Quarter 2022 Earnings Conference Call and Webcast. Hosting the call today from Bellring Brands are Darcy Davenport, President and Chief Executive Officer, and Paul Rode, 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 800-839-7000. 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 Myers, Investor Relations of Bellring Brands, for introductions. You may begin.

Good morning, and thank you for joining us today for Bellring Brands' fourth 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 forward-looking 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 fourth quarter and fiscal 22 results and posted a supplemental presentation to our website. Fiscal 22 was a transitional year for Bellring Brands. As a result of our outsized growth in 21, We spent fiscal 22 laying the foundation and gearing up for the future. We made significant progress in our Shake capacity expansion plan to grow and diversify our supply and deepen our competitive mode. Lastly, our organization invested in consumer and category insights, prepared plans to restart marketing and promotion, and created a robust innovation pipeline. The work done in fiscal 22 sets us up for a strong 23 and beyond. Now to the quarter results. Q4 net sales came in at $379 million, 12% over prior year. However, this was below our expectations as a result of a production shortfall from our new bottle co-manufacturer, a delayed load-in to the e-commerce channel, and an expansion of the previously announced shake recall. Overall, the recall was immaterial to our business, but it led to shelf disruption that uniquely impacted Q4. Fiscal 22 saw our net sales grow to $1.37 billion at 10%. Our profit trajectory remained extremely healthy with adjusted EBITDA growing 16% to $271 million and adjusted EBITDA margins at the top end of our long-term algorithm. Paul will go into more detail on the quarter, but I'm incredibly proud of the team for delivering these results given the challenges we encountered throughout the year. The Premier Protein brand continues to demonstrate strength and resilience. As a reminder, in November 21, we announced a plan to intentionally dampen shake demand while we expanded our co-manufacturing network. we reduced our full-time shake portfolio from 14 to seven flavors, temporarily turned off promotion and marketing, and still sold every shake we could produce. These supply constraints have made our year-over-year volume trends a bit confusing. In the fourth quarter of 21, we significantly and unsustainably reduced inventory as a result of our high promoted volumes outstripping our capacity. In Q4 22, we had limited flavors and did not repeat the promotions because we did not have the inventory. Nonetheless, consumption declined only 5%. During fiscal 22, a better measure of brand momentum is our sequential dollar consumption, which grew each quarter. Starting in fiscal 23, we are no longer lapping heavy promotional periods with October consumption dollars back to growth up 16% versus prior year. Almost all key measures for Premier Protein remain strong and reaffirm our long runway for sustained growth. According to our most recent brand equity study, Premier Protein remains the number one brand I love, the number one brand I would pay more for, and has the number one net promoter score in the category. Our consumption results support these measures, with non-promoted volume in 22 increasing, clearly showing that our consumers are willing to pay more for Premier proteins. The power of the brand comes through in velocity as well. Premier holds four of the RTD category's top highest velocity items in tract channels. In fact, at a key mass customer, Premier holds nine of the top ten items. Household penetration is the only exception to a landscape of bright performance metrics. With Premier Protein's pullback in flavors, promotion, and marketing, we have seen the overall shake category as well as our brand decline in households. However, our buy rate has risen, signifying our loyal, high-value buyers are staying with us. while we are temporarily losing occasional deal-seeking buyers. We fully expect household penetration to rebound once we reintroduce our full portfolio and restart promotion and marketing. As we enter 23, our trade inventory levels have improved. However, some retail partners are still below target. Based on our current capacity ramp-up plan, we will focus the first half of 23 on rebuilding these remaining retailers' inventory levels. so we can get back to full shelves and pallets everywhere. Now to shake capacity. Last November, we outlined a plan to aggressively add capacity for our shake business, and we've made significant progress. In fiscal 22, we added three co-manufacturers and signed agreements with an additional three that will start up in fiscal 23. As you may recall, the big step up in production happens in Q4 23, when our two dedicated greenfield facilities come online. Consequentially, their benefit will not fully be realized until fiscal 24. As you would expect, adding this much capacity has not been without its challenges. In addition to the July recall at one of our smaller co-manufacturers, Q4 production scale-up at our new bottle co-manufacturer has been slower than anticipated. which didn't allow us to drive the expected growth in the e-commerce channel. The good news is that our production is growing, with second-half production significantly increasing versus the first half. We expect low double-digit production growth in fiscal 23. In 24, with the additions of the dedicated facilities, we expect to add north of 20% incremental capacity on top of the 23 volumes. This year, we have laid the foundation for many years of robust shake growth. Turning to Dymatize, the brand had a terrific quarter, with consumption dollars in the U.S. up 32% across tracked and untracked channels. We saw strong double-digit growth in all key channels, except for Club, where we temporarily lost distribution. The momentum has continued in October, October with consumption up 44%. A return of marketing and promotions drove this growth with sales lifts exceeding our expectations. Equity metrics are incredibly strong with Dymatize being the number one high quality brand and number two brand I love among powder brands. Lastly, Dymatize is expanding distribution in mainstream accounts adding 21% more TDPs this quarter which are now at an all-time high. Moreover, with only 35% ACV today, Dymatize has a ton of room to grow future distribution, which is a major organizational focus this year. Now to our outlook. As you saw in yesterday's press release, we expect fiscal 23 net sales to grow between 14% and 20%, and adjusted EBITDA to grow between 11% and 20%. This sales guidance is above our long-term algorithm reflecting our pricing actions and lapping capacity constraints in 22 as shake volumes return to growth. We expect to begin driving demand in our premier protein shake business again this year. Our current plan is to start reintroducing our temporarily discontinued flavors mid-year and restart marketing and light promotion in the back half. Obviously, these decisions depend on the demand and supply dynamic. and we will remain nimble so we can navigate effectively. In closing, we believe we have many strong growth years ahead of us. Our high growth category continues to accelerate above historic mid-single-digit growth rates with strong macro trend tailwinds. We now have two powerful, growing, mainstream brands transforming the category and gearing up to innovate, market, and promote again. Since our 2019 IPO, we have delivered a 17% revenue CAGR and an 11% adjusted EBITDA CAGR, outperforming our long-term algorithm, despite the COVID-19 pandemic and major supply chain disruptions. We are well along in our shake capacity expansion plan. We are a rare combination of scale, organic growth, strong margins, and high free cash flow generations. Given our asset-light model, we will have significant cash flow to de-lever rapidly. Lastly, Bellring has a nimble, collaborative culture that will continue to fuel its success for years to come. We remain confident in our long-term outlook for Bellring and look forward to demonstrating our success. Thank you for your continued support. I will now turn the call over to Paul.