BellRing Brands, Inc.

Welcome to the Bellring Brands First Quarter 2023 Earnings Conference Call and Webcast. Hosting the call today from Bellring Brands are Darcy Davenport, President and Chief Executive Officer, and Paul Rhoad, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 12 o'clock p.m. Eastern Time. The dial-in number is 800-695-0671, and 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. Ma'am, please begin.

Good morning, and thank you for joining us today for Bellring Brands' first quarter fiscal 2023 earnings call. With me today are Darcy Davenport, our President and CEO, and Paul Rhoad, 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 and 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 first quarter results and posted a supplemental presentation to our website. I'm pleased to share that fiscal 23 is off to a good start, with our first quarter results coming in ahead of our expectations. Net sales grew 18% over prior year and adjusted EBITDA was up 42%. Overall, net sales came in better than expected with slightly higher premier protein shake production that translated into stronger shipments. In addition, adjusted EBITDA benefited from COGS favorability. I'm particularly encouraged that premier protein volumes returned to growth in Q1, and we are starting to see momentum grow. As you saw in yesterday's press release, we reaffirmed our fiscal 23 outlook of net sales and raised the low end of our adjusted EBITDA range. We don't expect major changes to the cadence we communicated last quarter. Paul will provide more detail. Let's start with Shake production. We saw significant growth this quarter in production as we lapped the worst of our capacity constraints. This growth allowed us to modestly increase inventory at our retailers as well as increase our own inventory. Both have improved, but are still not at optimal levels. Over the next few months, we expect most of our customers will be at normal levels, while we don't expect our internal inventory to fully recover until early 24. Our state capacity expansion plans are on track with annual production expected to grow low double digits in fiscal 23. Our new bottle co-manufacturer continues to scale up with production improving each month throughout Q1. Our three new co-manufacturers for 23 are tracking the plan. Recall we have a small co-man that comes online late in Q2 with the step-up in production in Q4 with our two dedicated greenfield facilities coming online. Consequently, their benefit will not be fully realized until fiscal 24. Our incremental capacity in 24 is expected to be north of 20%, setting us up for many years of robust shake growth. Before reviewing category and brand updates, I want to share that we have changed our sources for tract consumption as well as household penetration. These changes are outlined in greater detail in our supplemental presentation, but in general, these new sources provide us with better coverage of our business and in turn, deeper, better insights. The convenient nutrition category remains strong, up 14% in Q1, accelerating compared to prior quarter. Ready to drink was up 18% and ready to mix, up 28%. Both segments are growing despite price increases and continued capacity constraints across the RTD competitive set. The sports nutrition segment is driving the category as more consumers pursue their fitness goals. The club channel is especially strong, with growth rates greater than 20% of top accounts. Protein as a macro trend continues to show a huge runway for growth. Premier protein consumption returned to growth this quarter, showing remarkable strength. The brand grew 15% with solid growth across mass, food, and club. This momentum continued through January, with consumption up 17%. E-commerce consumption growth was the only exception. It was hindered by the slower-than-anticipated scale-up at our new bottle command that we highlighted last quarter. Our key brand metrics reaffirm a long runway for sustained growth. Market share has stabilized at 18% for the past year, despite our reduced SKUs and limited demand-driving activities. Premier protein shakes lead in velocities with all SKUs performing in the top third and track channels. TDPs experienced small sequential gains this quarter, reflecting more inventory on shelf. As we discussed last quarter, household penetration has softened as a result of our intentional pullback in flavors, promotion, and marketing. Despite this slowdown, Premier Protein still has the highest household penetration in the category, and our buy rate and repeat rates are holding steady, demonstrating the loyalty of our high-value buyers. We expect household penetration to rebound later this year as we reintroduce our full portfolio and restart light shake promotion and marketing. Premier Protein powders are a small but growing part of our portfolio. powders currently have three flavors and are rapidly gaining distribution. The top two flavors, chocolate and vanilla, currently rank in the top 15% in tract channels. Consumption in the quarter was up 64% versus prior year, and we launched our first-ever national marketing campaign in January. It's exciting to see a premier protein brand successfully expand format. Train to Dymatize. The brand had another great quarter with consumption dollars up 30% across tracked and untracked channels. We saw strong double-digit growth in all key channels driven by distribution gains, pricing, and promotion. Impressively, the momentum accelerated into January with consumption up 50%. As you may remember, we temporarily lost distribution at a key club customer last year. I'm happy to report we regained that distribution late in Q1 and consumption rates are already performing well. Dymatize's expansion in the mainstream accounts is propelling the brand with market share, TDPs, and ACV reaching all-time highs this quarter. We ended the quarter with 4.6% market share in track channels, up significantly versus a year ago. Dymatize continues to add new households with repeat and buy rates holding steady. In closing, We are making significant progress in our shake capacity expansion to grow and diversify our supply and deepen our competitive modes. Our high growth category continues to accelerate above historic mid single digit growth rates with strong macro trend tailwinds. We are close to reintroducing our full range of premier protein shake flavors and restarting marketing and promotion. Lastly, we have a robust innovation pipeline that will help fuel our growth in 24 and beyond. We remain confident in the long-term outlook of Bellring and look forward to sharing our progress next quarter. Thank you for your continued support. I will now turn the call over to Paul.