BellRing Brands, Inc.

Good day and thank you for standing by. Welcome to the Bellring Brand's second quarter fiscal year 2026 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 ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to Jennifer Meyer, Investor Relations for Bellring Brands. Please go ahead.

Good morning. Thank you for joining us today for Bellring Brands' second quarter fiscal 2026 earnings call. With me today are Darcy Davenport, our President and CEO, and Paul Rose, 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, PR Press release issued this morning 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. Our second quarter results came in below our expectations, and we were disappointed with our results. We faced a challenging operating environment as multiple dynamics pressured our financial results. While net sales grew 2%, which was only modestly below expectations, the mix of our revenues differed meaningfully from both our forecast and what we've seen historically. The combination of negative sales mix, higher than expected freight costs, and an isolated inventory related charge weighed significantly on our Q2 profitability. The challenging operating environment was driven by increased competitive intensity, a more pressured consumer, and macro-driven cost headwinds. Our updated outlook, which I'll discuss in greater detail, assumes these conditions persist through the back half and that our demand drivers will have a more muted impact on growth. We are also seeing protein-driven commodity inflation running above our expectations, which will impact us in the second half. Against this backdrop, we are making the deliberate choice to continue to invest in promotion and advertising to defend share and support our long-term growth. To put this in context, I'll step back and walk through how the environment has evolved over the course of the year. At the beginning of the fiscal year, the category was one of the fastest growing in CPG, fueled by consumer health and wellness trends. Strong category growth combined with increased industry capacity attracted new competition. Retailers also expanded space, particularly in the club channel, which represents just over 40% of bell ring sales. As a result, we expected some higher levels of promotional investment. As the year progressed, the most meaningful change has been the rising cost required to maintain our leadership position. In the first quarter, we noted increased promotional frequency across the category, which largely played out as expected. This quarter, however, we saw a more pronounced including higher levels of trade down and a greater response to promoted price. These dynamics drove higher than expected promotional lifts across the category and pressured our baselines, further elevating the cost required to defend share. To illustrate, in Q2, promotional frequency and breadth increased sharply year over year as newer brands, particularly smaller entrants, continued to invest aggressively to gain traction. As a result, 27% of RTV shake category volumes were sold on price promotion, up eight percentage points versus last year, and a meaningful step up from Q1. Household penetration in protein shakes continues to grow, with little evidence of consumers shifting spend out of shakes into other protein enhanced products. However, in recent months, we have seen a contraction in RTV shake spend per household, marking the first decline in buy rate in five years. This reflects an increasingly value-focused consumer with greater reliance on promotions, low-priced brands, and value-priced pack sizes. In short, the category remains strong with RTV shakes up 8%, which is well ahead of the broader food and beverage industry. However, the impacts of increased competition are more pronounced than we anticipated at the start of the year. and the added factor of an increasingly price-sensitive consumer has put near-term pressure on our business, especially the bottom line. That said, our category remains highly relevant to both consumers and retailers with meaningful runway for growth. For fiscal 26, we expect RTD's Shake category to grow at the low end of high single digits, primarily driven by volume. While we expect heightened promotional intensity to continue, We also anticipate base pricing across the category to rise, considering the rapidly inflating input environment. Against this backdrop, I'll now turn to details on our second quarter results, operating plans, and an updated outlook. Net sales increased 2% in the second quarter, with Premier approaching net sales in line and Dimeti sales down 2%. Premier RTD shake net sales increased 2.3%, with double-digit volume growth mostly offset by price mix declines. Premier powder and dimetized net sales were consistent with expected consumer elasticities following our price increase. Premier shake dollar consumption was up 3%. Consumption outside of club continues to be strong, up 15%. with the mass channel up high teens driven by distribution and incremental promotion. We were pleased with the performance of our key promotions this quarter with a club retailer and a large mass retailer driving a record quarter for both sales and consumption. Both events exceeded our expectations and delivered significant household gains with meaningful portion coming from new to category consumers. Consistent with category trends, we saw softer velocities in non-promoted weeks and retailers, reflecting shifts in consumer purchase behavior toward promotions and value priced options. This, coupled with increased promotional lifts, led to a higher than expected mix of promoted versus non-promoted volume. Note, our promotions in Q2 ran as we communicated in early February, with no further events added during the quarter. I'll now turn to an update on our demand drivers, which remain centered on growing our distribution both in and out of the aisle, increasing advertising investment while elevating its impact, and launching innovation that provides consumer excitement, adds occasions, and drives trial. Distribution growth continued during the quarter, and we remain on track for double-digit TDP growth in 26. It's worth noting that single-serve bottles represent a decent portion of these gains, and while not as productive as larger pack sizes, they drive trial and are a critical part of our display strategy. Our promotion with a large mass retailer, which included extensive displays and end caps across both pharmacy and grocery aisles, drove strong consumption, increased household penetration, and delivered solid trial for our coffeehouse innovation. Given these successes, we now plan to repeat this promotion in the mass channel in the fourth quarter. Our second priority is advertising, where we've increased investment and elevated our creatives. Our new Go Get Em campaign, launched in late December, is showing early signs of success with lifts in awareness, brand equity, and traffic to our website and e-commerce product pages. Our analysis indicates strong ROI and incremental sales from the campaign. We believe continued brand investment is the right strategy to strengthen brand equity and support long-term growth, and we expect to maintain our investment this year at approximately 4% of sales with more tempered near-term returns given the more competitive promotional environment. Turning to innovation, as I've discussed previously, we conducted a comprehensive demand study to identify white space opportunities as the category evolves to meet a wider range of consumer needs and occasions. Two of the most attractive and underserved areas were performance protein and refreshing protein. I'm pleased to announce we will be launching new products in both spaces in the fourth quarter. The first, Premier Protein Ultimate, is a new 42-gram shake for consumers looking for high protein levels. Available in both multi-packs and single-serve bottles, the item targets a fast-growing 40-plus protein gram segment and launches in mass. e-commerce, and select food retailers. I'm especially excited about our second new offering, Premier Protein Sparkling Soda, which targets one of the most underserved segments of the category. Premier will be the first scaled player to enter this rapidly growing segment. Our sparkling soda is bubbly and refreshing with 15 grams of protein in a vibrant canned format in four different fruit flavors. It has a very clean label with only five ingredients. We expect our protein soda to bring in new, younger consumers, increase basket sizes, and expand usage, particularly the afternoon and midday occasions. The initial launch of this refreshing protein item will be in a significant mass retailer, e-commerce, and many other FDM retailers. It will be supported by strong display merchandising, targeted retail media, and an exciting social media campaign to drive awareness. I'll now move on to the details of our outlook. We expect Q3 premier state conception to be relatively flat with continued double digit growth outside of Club. Club remains challenged in Q3 with increased competitive promotional intensity and consumer trade down weighing on our performance in this channel. Our promotional activity in Q3 is expected to be fairly modest slightly below last year's Q3 levels. We now expect full year 26 net sales growth of flat to up 2%. Our updated adjusted EBITDA margin outlook is 14%, inclusive of 50 basis points of impact from the Q2 inventory related charge. This assumes that price mix and freight cost headwinds continue in the second half of the year. As consumer demand for protein remains strong and protein products continue to proliferate, demand for protein inputs has materially increased. This is resulting in protein-driven commodity inflation above our initial assumptions, which will begin to impact us in the third quarter with a greater impact in our fourth quarter. In this environment, we are balancing near-term investment to defend market share with actions to strengthen long-term profitability. We believe that our results this year are below the long-term potential of the business and closing that gap through innovation, pricing discipline, and cost optimization is a clear priority. In closing, the near-term environment is challenging as we navigate competitive, consumer, and macroinflation headwinds. However, consumer demand for protein remains healthy, and while competitive intensity from insurgent brands remain elevated, we would expect it to gradually moderate over time. In the long term, we continue to expect scaled players with deep category expertise, mainstream appeal, and high repeats to be the winners as retailers consolidate shelf space behind the best performing brands. Premier's strength across each of these attributes positions us well to capture our fair share of the long-term growth. Our team is acting with urgency to adapt to the evolving environment and position our business for long-term success. Now I'll turn the call over to Paul.