BellRing Brands, Inc.

Hello, everyone, and welcome to the Bell Ring Brand's second quarter fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call over to Jennifer Mayer with Investor Relations for Behring Brands. The floor is yours.

Good morning, and thank you for joining us today for Behring Brands' second quarter fiscal 2025 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 this morning. Last evening, we reported our second quarter results and posted a supplemental presentation to our website. I'm happy to share that we had a good first half, delivering a second quarter largely in line with our expectations. For the first time since 2021, we had a full quarter with premier protein demand drivers. This drove net sales of 19% with strong EBITDA margins of over 20%. Premier shake consumption accelerated up 25% and we reached new highs in household penetration, market share, and shake TDPs. As you saw in yesterday's press release, we affirmed our fiscal 25 outlook for net sales growth of 13 to 17% over fiscal 24 and EBITDA growth of 7 to 14%. While we have some puts and takes in the second half that Paul will review, I am pleased that our outlook and consumption remain resilient and strong. Now to our Q2 category and brand highlights. Even though broad consumer sentiment is weakening, protein, and specifically our category, remain incredibly healthy. The convenient nutrition category grew 12% in Q2, with every day and sports nutrition driving most of this growth. From a form perspective, ready-to-drink growth was strong and continued to lead the category up 19%, driven by robust consumer demand and increased promotions. RTDs remain the second fastest growing category in the entire store, only behind eggs. Mainstream everyday and sports nutrition RTD brands continue to bring new consumers into the category and are up over 30%. Ready to Mix grew 10%, a slight acceleration from the last two quarters, behind distribution gains and increased consumer demand. Turning to our brands. As I mentioned earlier, Premier Shake consumption was up 25% this quarter. Growth was robust in all channels, driven by increased promotions, distribution expansion, and strong velocities. Expansion in pack size and form, including bottles, drove the distribution gains, along with space gained for our new indulgence line. Improved retailer in-stocks also contributed to our year-over-year growth. Our newest seasonal flavor, Lemon Bar, drove high consumer interest with sell-through outpacing expectations. As we come off a heavy promotional quarter, consumption remains healthy, with April up 16%. We expect distribution gains, improved in-stocks, and display activity to continue to drive consumption, resulting in Q3 growth in the mid to high teens. Moving to our brand metrics, Premier Protein reached all-time highs in household penetration and market share. Household penetration gained one percentage point, nearly reaching 21%. Promotional activity, our media campaign, and new products contributed to this result. We saw growth in buy rate with repeat rate remaining steady, demonstrating our category-leading consumer loyalty. Premier Protein, with ROTD market share of 27%, 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. All of this is especially encouraging because in a high growth category with low household penetration, we see plenty of room to continue to grow our brand and expand the overall category. Given our brand metric gains this quarter, driven by promotions and the new media campaign, we decided to expand our Q4 promotions. We know from experience, promotions, and more importantly, the displays that come with them are key to reaching new households and growing our business. With our capacity position better than ever, it allows us to lean into effective tactics to drive demand and grow the overall category. Premier Protein Powder continued its growth with consumption up 22% in Q2 behind strong velocities and distribution gains. I'm delighted to share that the product recently gained full distribution at a club retailer and currently has the highest velocity across all whey protein powders in this key customer. We remain encouraged by the growth potential of Premier Protein brand in this format. With household penetration of only 2%, we continue to believe Premier Powder has a long runway for future growth. Our new premier protein marketing campaign ran nationally during the second quarter, reaching TV, streaming, and social media audiences. We are pleased with the first wave's results, with all key measures exceeding benchmarks. We expect the second wave, which starts later in Q3, to feature a new logo and package design. As a reminder, the new package builds on our strong performing current design and brings a modern look that improves discoverability at shelf. Our median interim is focused on our new indulgent line. Recall we launched this new line late in Q1 with four decadent shake flavors and one powder flavor. These items are richer and creamier, targeting an incremental consumption occasion while still delivering on the nutritionals that our consumers expect from the Premier brand. The items continue to build distribution and are off to a promising start. Indulgence has demonstrated impressive incrementality, bringing in a considerable number of consumers new to the brand and category. More innovation is planned later this year. Turning to Dymatize, the brand posted positive domestic consumption growth this quarter, up 3% lifted by brand investments and new products. Dymatize improved its market share in the powders category to the number four position and continues to hold the number two share position within sports nutrition powders. While the domestic business made progress this quarter, the global brand continues to be driven by momentum outside the U.S., with Dymatize's international business up double digits. Our Dymatize athlete-focused marketing campaign is generating high consumer engagement. The campaign has improved our brand metrics and shown great success in bringing in consumers new to the brand. We will continue to add top tier athletes to our Dymatize roster in the coming years. Recall we launched two new Dymatize products this quarter, RTD shakes as well as a pre-workout called Energize. We are encouraged by the positive signs we are seeing in the Dymatize business as we expand our portfolio and we remain bullish on the sports nutrition category opportunity. In closing, our Q2 results position as well for another above algorithm year. Strong macro tailwinds around protein are driving robust long-term growth in our category with ready-to-drink and powder segments in the early stages of growth. Premier Protein is already the number one convenient nutrition brand, and we are just starting to drive demand. Our innovation pipeline for both brands is rich, enabling us to bring excitement to consumers and our retailer partners for years to come. Our confidence in the long-term outlook for Bellring remains high. Thank you for your interest in our company. We look forward to sharing our progress next quarter.