BellRing Brands, Inc.

Good day and welcome to the Bell Ring Brands second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand has been raised. Please be advised that today's conference is being recorded. I would now like to hand the call over to Jennifer Meyer, Investor Relations for Bellring.

Good morning, and thank you for joining us today for Bellring Brands' second quarter fiscal 2023 earnings call. With me today are Darcy Davenport, our President and CEO, and Paul Rhode, 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 FTC filing section at bellring.com. In addition, the release and slides are available on the FTC'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, thank you all for joining us. Last evening we reported our second quarter results and posted a supplemental presentation to our website. I'm pleased to share that our first half performance was strong, with Q2 results above our expectations. The business is steadily accelerating and gaining momentum as we bring on new capacity and begin to drive demand. Net sales grew 22% over prior year and adjusted EBITDA was up 34%. We continue to see higher shake production, leading to higher in-stocks, which is driving higher consumption at the shelf. You saw last night we raised our outlook for the year. We now expect net sales to grow between 17% and 21% over fiscal 22, with adjusted EBITDA to grow 18% to 23%. Our better than expected first half performance, along with strong consumption trends and continued category momentum, drove our decision to raise the top and bottom line. In addition, the updated guidance factors in lower than expected input costs in Q4. Let's start with shake production. We saw double digit production growth this quarter as we finished lapping the worst of our supply constraints. Our capacity expansion plans are on track, with annual production expected to grow low double digits in fiscal 23. Our bottle co-manufacturers performing above our expectations, and our newest tetra co-man had a smooth start up in Q2. As a reminder, our two greenfield facilities were scheduled to come online in Q4. One of these commands is slightly ahead of schedule. However, we are not expecting meaningful contribution from either of these new commands 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. Now to our category and brand update. The convenient nutrition category remained strong at 16% in Q2, accelerating two points compared to prior quarter. Ready to drink was at 21% and ready to mix grew 24%. Both segments are growing despite price increases and continued capacity constraints across the RTD competitive set. Every day and sports nutrition segments are driving category growth, as more consumers seek functional food and beverages and pursue their fitness goals. New powder products, in particular, are boosting sports nutrition growth. Premier protein shake consumption strength accelerated this quarter at 22%. Growth was robust across all key channels with the highest growth in food and mass as those channels were the most impacted by our capacity constraints last year. The e-commerce channel returned to growth this quarter as our bottle supply is now sufficient to meet demand. In April, overall shake consumption continued to grow up 31%, demonstrating continued strength. Our brand metrics made great strides this quarter and reflect the strong momentum we are feeling in the business. Premier Protein market share ended the quarter up 19%, up 130 basis points versus a year ago. And I'm proud to share that across tract channels, the brand became not only the number one brand in the RTD segment, but also the number one brand in the convenient nutrition category. This is especially exciting given we still had limited SKUs on the shelf and hadn't started meaningful marketing and promotion. I'm pleased with the progress Premier Protein made in household penetration this quarter. with the brand increasing 3% versus Q1, reaching 14.2% of households, the highest in the category. We expect to steadily grow households as we increase items on the shelf and restart marketing and promotion activities. Our repeat and buy rates are holding steady, demonstrating our consumer loyalty. Excuse me. Premier Protein powders more than doubled this quarter, with consumption up an astounding 123% beyond our first ever national marketing campaign. It exceeded our expectations, driving record-breaking sales and household penetration for the product. We continue to be excited about the growth potential for Premier Protein in this incremental form. Turning to Dymatize, the brand had a great quarter, with consumption dollars up 38% across tracked and untracked panels, We saw double-digit growth in nearly all channels driven by distribution gains, pricing, and promotion. The brand's strength continued into April with consumption at 32%. The one exception was Club, where we went from two full-time items in 22 to one full-time, less expensive item this year. Consumption on the new SKU is performing well. Our strategy around expanding Dymatize to mainstream channels is working. Market share and TDPs reached all-time highs this quarter and household penetration continues to grow. We ended the quarter with 5.5% market share in tract channels. Encouragingly, as Dymatize adds new households and distribution, repeat and buy rates are holding steady. In closing, I'm encouraged by our first half progress. In almost every part of our business, Whether it is brand, format, or channel, we are gaining momentum. Our category continues to show remarkable growth on strong macro-trend tailwinds. Premier Protein reached the number one share of both tracked RTD and the entire convenient nutrition category for the first time. Premier's household penetration is back to growth. We are expanding shake capacity and are now only months away from a step change in our shake production run rate. We are reintroducing our full range of Premier Protein Shake flavors and restarting marketing and promotion. Premier Protein Powder and Dymatize consumption are rapidly climbing, bringing mainstream consumers into the category. We have a deep innovation pipeline that will help fuel our future growth. Lastly, and I would argue most importantly, our culture is thriving. For the seventh year in a row, we earned the Great Place to Work certification our U.S. employees voted and we received our highest average score ever, with 93% of our U.S. organization said that it was a great place to work. We remain confident in our long-term outlook for Bellring and look forward to providing further updates next quarter. Thank you for your continued support. I will now turn the call over to Paul.