BellRing Brands, Inc.

Increased supply and distribution gains are lifting ready-to-drink growth, while the growth in ready-to-mix remained healthy despite lapping significant price increases. Premier protein shake consumption remained strong this quarter, up 29%. Growth was robust across all channels, driven by improved supply, distribution expansion, and continued excitement around our seasonal flavors. The highest growth was in mass and e-commerce. Mass benefited from higher in-stock levels and distribution gains, while e-commerce saw strong growth behind promotional activity. Our latest seasonal flavor, Winter Mint Chocolate, demonstrated remarkable incrementality to the brand. January consumption growth continues up 34%, lifted by incremental promotional activity and track channels. Our brand metrics reflect our continued momentum as Premier Protein reached all-time highs in TDPs and household penetration. Premier Protein, with RTD market share of 21%, maintained its position as the number one brand in the RTD segment as well as the number one brand in the broader convenient nutrition category. Premier Protein continues to gain new users, reaching over 17% of households this quarter. adding nearly one percentage point versus Q4. In calendar year 23, the brand grew household penetration 24%, a significant contributor to the overall RTD category growth. Premier Protein's household penetration continues to be the highest in the category, and we expect our marketing and promotional activities in the remainder of fiscal 24 to further grow our reach. With the RTD segment's household penetration still below categories such as nutrition bars and energy drinks, we still see tremendous opportunity to grow in our existing channels. Premier Protein Powder continued its strong trajectory, growing 66% in Q1 behind distribution gains, strong velocities, and promotional support. The momentum continued in January up 50% as we begin a powder-focused marketing campaign. We remain encouraged by the growth potential of the Premier Protein brand in this format. In fact, during calendar year 23, Premier Powder's household penetration grew 82%, the highest of any key competitor in the powder category. We believe the brand will continue to bring mainstream consumers into the powder category in the same way Premier did to the ready to drink category. Turning to Dymatize, the brand had a solid quarter, with household penetration maintaining record highs and consumption up 16%, significantly outpacing the category. We saw double-digit growth in nearly all channels, driven by distribution gains, promotion, and continued top-tier velocities. Specialty consumption growth was the only exception. It remains challenged as consumers shift purchases to mainstream channels. Looking forward, Dymatize launched a new national marketing campaign in Q2, which focuses on what makes the brand unique, its super premium ingredients and amazing taste. The Formulated for More campaign has three pillars. The first focuses on the brand's superior ingredients and how they support superior results for athletes. The second pillar showcases our amazing tasting flavors like Fruity Pebbles, to highlight the fun they bring to even the most serious athletes. The third is possibly the most exciting if you're a football fan. I'm thrilled to share we have expanded our core team of Dymatize athletes and influencers, and we are partnering with San Francisco all-pro running back Christian McCaffrey. We are eager to see the impact this type of enhanced digital marketing and top-tier influencer will have on our brand awareness and household penetration. In closing, our Q1 results position us well for an above algorithm fiscal year. Our confidence in our long-term outlook for Bellring remains strong. Our business is focused on the strongest segments of a growing category with a ton of upside. Premier Protein and Dymatize are leading mainstream brands with low household penetration and strong loyalty. Our momentum continues to grow as we begin to drive shake demand and ramp up our powder marketing efforts. We continue to increase our shake supply and our scalable supply chain will enable many years of robust shake growth. We are bringing flavor excitement to consumers and retail partners and more innovation in our pipeline to fuel future growth. Before passing over to Paul, I'm sure that most of you have heard that Rob Vitale, our executive chairman, has returned from his medical leave. We are incredibly excited to have him back at full strength. We look forward to sharing our progress next quarter, and I will now turn the call over to Paul.

Thanks, Darcy, and good morning, everyone. As Darcy highlighted, our first quarter results came in above our expectations. Net sales for the quarter were $430 million, and adjusted EBITDA was $101 million. Net sales grew 19% over prior year, and adjusted EBITDA increased 18%, with adjusted EBITDA margins of 23.4%. Starting with brand performance, premier protein net sales grew 19% behind strong volume growth for RTD shakes and powders. Distribution gains, organic growth, and light promotional activity drove shake growth. Shake consumption dollars grew 29% outpacing shipment growth of 19%. The former benefited primarily from higher net pricing, as price increases at retail lagged our October 2022 price increase on shakes. Diametized net sales increased 21% this quarter, as the brand benefited from increased distribution and organic growth in domestic mainstream channels. These gains, combined with lapping last year's Q1 trade inventory deload, drove volume gains in the quarter. Price mix was a partial offset to this growth, driven by incremental promotional activity and unfavorable mix. Gross profit of $148 million grew 22%, with an increase in gross profit margin of 80 basis points to 34.4%. The margin increase resulted from net input cost deflation partially offset by incremental promotional activity and lapping production attainment fees received in the prior year. Excluding one-time costs in the prior year period, SG&A expenses as a percentage of net sales increased 90 basis points as we lapped our lowest SG&A spend quarter in 2023. Operating profit of $73 million decreased $2 million compared to prior year and was negatively impacted by $17 million of accelerated amortization. This was a non-cash expense recorded in connection with our Q4 decision to discontinue the Power Bar North American business and was treated as an adjustment for non-GAAP measures. The intangible assets associated with this business were fully amortized in the first quarter. Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We generated $74 million in cash flow from operations in the first quarter. While our working capital modestly decreased in the first quarter, we continue to expect net working capital growth in fiscal 24 to exceed our net sales growth rate as we add weeks of shake supply. As a result, our cash flow in fiscal 24 will be modestly lower than fiscal 23. During the quarter, we repaid the remaining $25 million of borrowings under our revolving credit facility. As of December 31, net debt was $755 million and net leverage was 2.1 times. With our adjusted EBITDA growth and strong cash flow generation, we anticipate net leverage will decline below two times in fiscal 24. With respect to our share repurchases this quarter, we bought 200,000 shares at an average price of $44.27 per share, or $9 million in total. Our remaining share repurchase authorization is $14 million. Turning to our outlook, we raised our fiscal 24 guidance for net sales to be $1.87 to $1.95 billion and adjusted EBITDA of $375 to $400 million. Our guidance applies strong top line growth of 12% to 17% and adjusted EBITDA growth of 11% to 18% with healthy adjusted EBITDA margins of 20.3% at the midterm. As Dorothy mentioned, our better than expected first quarter performance drove our decision to raise our outlook, and we don't expect any major changes to the cadence we communicated last quarter. Moving to our second quarter forecast, We expect net sales growth to exceed 20%, with the majority of the growth driven by premier protein as we restart meaningful shake promotions. Consequently, we expect pricing to be a significant offset to strong shake volume growth. We expect second quarter adjusted EBITDA margins to improve modestly compared to prior year, as higher gross margins are partially offset by higher SG&A as a percentage of net sales. Gross margins are expected to benefit from lower protein costs, offset partially by increased promotional spend and other input cost inflation. In closing, we are pleased with our good start to fiscal 24. Our strong Q1 results give us greater confidence in our full-year outlook and long-term growth prospects. I will now turn it over to the operator for questions.

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Andrew Lazar from Barclays.