NYSE:BRBR BellRing Brands Q4 2023 Earnings Report $74.75 +0.82 (+1.11%) As of 03:59 PM Eastern Earnings HistoryForecast BellRing Brands EPS ResultsActual EPS$0.41Consensus EPS $0.40Beat/MissBeat by +$0.01One Year Ago EPS$0.31BellRing Brands Revenue ResultsActual Revenue$472.60 millionExpected Revenue$462.65 millionBeat/MissBeat by +$9.95 millionYoY Revenue Growth+24.60%BellRing Brands Announcement DetailsQuarterQ4 2023Date11/21/2023TimeAfter Market ClosesConference Call DateTuesday, November 21, 2023Conference Call Time9:00AM ETUpcoming EarningsBellRing Brands' Q2 2025 earnings is scheduled for Monday, May 5, 2025, with a conference call scheduled on Tuesday, May 6, 2025 at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Annual Report (10-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by BellRing Brands Q4 2023 Earnings Call TranscriptProvided by QuartrNovember 21, 2023 ShareLink copied to clipboard.There are 15 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Bellring Brands 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Meyer, Investor Relations for Bellring. Speaker 100:00:34Good morning and thank you for joining us today for Bellring Brands 4th 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 SEC filings section atbellring.com. In addition, the release and slides are available on the SEC's website. Speaker 100:01:09Before 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 a reconciliation of these non GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. Speaker 100:01:49With that, I will turn the call over to Darcy. Speaker 200:01:53Thanks, Jennifer, and thank you all for joining us. Last evening, we reported our 4th quarter and fiscal 2023 results and posted a supplemental presentation to our website. Fiscal 2023 was a fantastic year for Bellring Brands. Our net sales grew 22% with adjusted EBITDA of 25%. As I reflect on the year, there were there are 3 things that stood out to me. Speaker 200:02:18The first is the expanding growth opportunity of this category, specifically the segments that we compete in ready to drink shakes and ready to mix powders. Both segments have experienced double digit growth in each of the last 3 years. Low household penetration combined with strong macro trends highlights a long path of growth. 2nd, the power and the future potential of our brands. This year we saw tremendous growth on Premier Protein and Dymatize both reaching new highs across many key metrics. Speaker 200:02:55Premier Protein demonstrates strong resilience as it quickly regained the PDPs and households lost in prior years during our capacity constraints. This shows the unbelievable consumer and retailer excitement around this brand, which will help fuel future growth. 3rd, I've been blown away by our organization. It is hard to manage a high growth business with limited supply. It is a heavy load on all functions to optimize supply and demand, especially operations and sales. Speaker 200:03:28Despite this added pressure, our organization is stronger than ever, a reflection of the amazing people and our unique culture. We still have work to do, but are well positioned for a strong 'twenty four and beyond. Now to Q4. I'm pleased to share our results came in at the high end of our expectations. Net sales grew 25% over prior year and adjusted EBITDA was up Significant production growth allowed us to restart light shake promotions this quarter. Speaker 200:04:00We gained meaningful new shelf space on both Premier Protein and Dymatize and our relaunch shake flavors and seasonal offerings continue to drive incremental sales. Moving to shake production. In fiscal 2023, we made notable progress to grow and diversify our shake supply. Our production grew 17% over fiscal 2022, modestly above our expectations. We added 2 co mans this year, which continue to scale up. Speaker 200:04:30And our 2nd greenfield facility, Michael Foods, will start up in December. They will be a much larger contributor to our second half of fiscal twenty twenty four and beyond. Over the past 2 years, we have transformed our shake toman network. We have partnered with the biggest and most reputable players in the aseptic low acid industry. We now have a scalable, Regionally diverse supply chains, which will enable many years of robust growth. Speaker 200:04:58Now to the category and brand updates. The convenient nutrition category grew 9% in Q4 as tailwinds around health and wellness and fitness continued to drive growth. Consumer interest in functional beverages and sports nutrition products continues to be high. Ready to drink led the category up 21% and ready to mix grew 11%. Increased supply and distribution gains are lifting ready to drink growth While increased marketing is boosting both segments. Speaker 200:05:29Premier Protein shake consumption accelerated this quarter, up 36%. Growth was tremendous across all channels driven by improved supply which allowed us to restart light promotion and expand distribution. The highest growth was in mass and e commerce benefiting from our expanded range of flavors and higher in stock levels. Additionally, e commerce and club both saw strong growth behind promotional activity. Our fall seasonal flavor pumpkin spice demonstrated an impressive 90% incrementality to the brand. Speaker 200:06:04Q4 trends continued into October with shake consumption up 27 with volume driving 2 thirds of this growth. Our brand metrics reflect our building momentum as premier protein reached all time highs in TDPs and market share. Shake TDPs grew 11% versus Q3 behind distribution gains and relaunched shake flavors. Premier Protein RTD market share reached 21%, maintaining 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 household penetration added 1 percentage point versus Q3 reaching over 16% of households. Speaker 200:06:53Our household penetration continues to be the highest in the category with this quarter's growth driven by promotions and distribution gains. Our repeat and buy rates are holding steady demonstrating our consumer loyalty. According to our most recent Brand Equity Study Premier Protein remains the number one brand I love and net promoter score in the RTD category. We are very encouraged by all of these achievements even though we still haven't restarted meaningful marketing and promotion. Premier Protein saw great success this year in other forms showing the power of the brand. Speaker 200:07:29In Q4, Premier Protein Powders remained strong, growing over 50% behind new distribution and strong velocities. It reached over $50,000,000 in net sales this year and we expect robust growth in 2024 as we invest behind marketing programs to drive awareness. In addition to powder, our licensing strategy continues to perform well. Although not a significant revenue driver, we are encouraged that the brand has seen Turning to DYMETYZE, the brand had a great quarter with consumption up 38%. We saw double digit growth in nearly all channels driven by distribution gains and incremental promotion. Speaker 200:08:10Consumption growth continued into October with the brand up 23%. Diamatize continues to have success in mainstream channels with both TDPs and household penetration reaching new highs this quarter. Encouragingly as Dymatize adds new households and distribution points, repeat and buy rates are holding steady. In fiscal 2024, we are launching a new marketing campaign to continue the momentum and drive awareness and new users to DYMETEZ. Before reviewing our outlook, I want to give our point of view on GLP-one weight loss medications. Speaker 200:08:45Our proprietary research indicates Consumers most likely to adopt GLP-1s are currently light users of protein shakes, but will become heavy users once on the medication. These individuals have reduced total caloric intake, but actually need more protein to mitigate muscle loss and certain other side effects. Products like premier protein are perfect because they are delicious, compact size, high protein nutrition, giving these individuals what they need without making them Research also indicates that once on the medication consumers start exercising more and choosing healthier food and beverage options, ultimately increasing the demand for convenient and sports nutrition products. After our initial phase of research, we believe our current products and growth strategies are already well aligned with this opportunity. They are great compliments to GLPs while consumers are on the medication and a perfect nutrition solution when people decide to stop taking the drugs to maintain the weight loss benefit. Speaker 200:09:54We have begun our next phase of research to better understand this consumer and how we can serve them on this important health journey. In 2024, we plan to test media platforms and creative to determine the strongest most effective strategies and tactics to reach these consumers. We're encouraged by the early results of these medications and feel that they strengthen the already strong macro trends behind our category and specifically our business. Now to our outlook. As you saw in yesterday's press release, we expect fiscal 2024 net sales to grow between 10% 15% And adjusted EBITDA to grow between 6% 15%. Speaker 200:10:35At the midpoint, this guidance is on the high side of our long term algorithm in both net sales growth And adjusted EBITDA margin. As a reminder, our algorithm in net sales growth is between 10% to 12% with EBITDA margins of between 18% 20%. Our plan reflects strong volume growth for both Premier Protein and Dymatize and the restart of shake promotions in the Q2. We plan to step up marketing on shakes in Q4, which is when we expect to hit our target weeks of supply. The demand and supply dynamics remain tight for most of the year and we will continue to be nimble so we can navigate effectively. Speaker 200:11:19In closing, I'm thrilled with our performance this year. We continue to gain momentum in every part of our business. Strong macro trends are driving sustained long term growth in our categories. Premier Protein and Dymatize continue to reach new consumers and maintain all time high market share positions. Our flavor strategy is working and our innovation pipeline is rich, enabling us to bring excitement to consumers and retail partners. Speaker 200:11:47Last, we are moving forward on our shakes capacity plan to support our future growth. Before passing over to Paul, I'm sure most of you have heard that Rob Vitale, our Executive Chairman is currently on medical leave. We have been in close contact with him over the last several weeks. We wish him and his family the best throughout his recovery and we'll be excited to have him back at full strength soon. I will now turn the call over to Paul. Speaker 300:12:15Thanks, Darcy, and good morning, everyone. As Darcy highlighted, our 4th quarter results came in at the high end of our expectations. Net sales for the quarter were $473,000,000 and adjusted EBITDA was $99,000,000 Net sales grew 25% over prior year Adjusted EBITDA increased 23% with adjusted EBITDA margin of 20.8%. Starting with brand performance, Premier Protein net sales grew 30% with volume growing 21%. In Q4, our shake production increased meaningfully over prior year, which allowed us to restart modest shake promotions Volumes also benefited from the relaunch of temporarily discontinued flavors, performance of our seasonal offerings and strong growth from Premier Powders. Speaker 300:12:58Net pricing for Premier Protein grew 9%, reflecting the October 2022 price increase. Shake consumption dollars grew 36 percent outpacing shipment growth of 29%. The latter was modestly impacted by the lapping of a trade inventory build in the prior year. Diamatized net sales were relatively flat this quarter as the brand faced a tough prior year comparable. Recall last year's Q4 had heavy trade inventory build in the international domestic specialty channels. Speaker 300:13:26This headwind combined with continued weakness in the specialty channel was offset by strong growth in domestic mainstream channels driven by distribution gains and organic growth. Gross profit of $155,000,000 grew 27% with an increase in gross profit margin of 60 basis points to 32.9%. The margin increase resulted from improved pricing that mitigated input cost inflation. This was partially offset by incremental promotional activity. Excluding one time costs in the prior year period, SG and A expenses as a percentage of net sales increased 40 basis points, half of which was driven by higher marketing spend. Speaker 300:14:05Operating profit of $78,000,000 increased $17,000,000 compared to prior year and was negatively impacted by $7,000,000 of accelerated amortization. Speaker 400:14:13This was Speaker 300:14:13a non cash expense recorded in connection with our decision to discontinue the PowerBar North American business and was treated as an adjustment for non GAAP measures. We expect the remaining $17,000,000 of non cash accelerated amortization to be recorded in the Q1. Our international PowerBar business is unaffected by this decision and continues to grow. Turning to full year 2023 results. Net sales were approximately 1,700,000,000 up 22% over the prior year with gross profit of $530,000,000 growing 26%. Speaker 300:14:46Gross profit margins increased 100 basis points over 2022, driven by pricing actions that mitigated input cost inflation along with favorable freight rates. SG and A expenses were $216,000,000 and excluding one time items increased 60 basis points as a percentage of net sales. Higher marketing spend drove the increase as our marketing spend in fiscal 2022 was exceptionally low. We saw modest leverage on our remaining G and A base. Adjusted EBITDA increased 25 percent to 338000000 with a margin of 20.3 percent, an increase of 50 basis points. Speaker 300:15:22Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We generated $85,000,000 in cash flow from operations in the 4th quarter and $216,000,000 for the year. In fiscal 2023, net working capital declined slightly despite our strong top line growth. In fiscal 2024, our net working capital growth will moderately exceed our net sales growth rate as we add weeks of shake supply. As a result, our cash flow in fiscal 2024 will be modestly lower than fiscal 2023. Speaker 300:15:53During the quarter, we repaid $54,000,000 against our revolving credit facility. As of September 30, net debt was $817,000,000 and net leverage was 2.4 times. With our EBITDA growth and strong cash flow generation, we anticipate net leverage to fall under 2 times by the end of fiscal 2024. With respect to our share repurchases this quarter, we bought 200,000 shares at an average price of 39 dollars per share or $125,000,000 in total. Our remaining share repurchase authorization is 23,000,000 Turning to our outlook, we expect fiscal 2024 net sales of $1,830,000,000 to 1,910,000,000 and adjusted EBITDA of $360,000,000 to $390,000,000 Our guidance implies strong top line growth of 10% to 15% and adjusted EBITDA growth of 6% to 15% with healthy adjusted EBITDA margins of 20% at the midpoint. Speaker 300:16:54We expect dollar and percentage growth for both measures to be weighted to the first half of the year. From a brand perspective, we expect double digit sales growth for both Premier Protein and Dymatize driven primarily by volume gains and continued category tailwinds. Key drivers of Premier Protein's volume growth include increased promotional activity, distribution gains and the first half benefit of our relaunched flavors. Organic growth and distribution gains are the primary volume drivers for DYMETYZE. We expect fiscal 2024 adjusted EBITDA margins to largely in line with fiscal 2023 with increased gross margins offset by higher SG and A. Speaker 300:17:35Gross margins are expected to benefit from favorable input costs, notably in the first half of the year offset partially by higher promotional activity. Investments behind our brands including promotional marketing spend are expected to skew higher in both the second and fourth quarters. Turning to our first quarter forecast, low double digit net sales growth compared to a year ago. We expect strong growth from Dymatize as it has an easier prior year comparable Lapping a trade inventory de load in the international and domestic specialty channels. Premier Protein sales growth is expected to be in the high single digits as we lap a prior year trade inventory build, which we estimate to be a low double digit headwind to Premier's growth rate. Speaker 300:18:17As a result, we expect consumption growth to outpace net sales growth as we lap headwind. Consumption growth will also benefit from higher net pricing as price increases at retail lagged our October 22 price increase on shakes. We expect 1st quarter adjusted EBITDA margins to be similar to prior year as higher SG and A as a percentage of net sales is offset by higher gross margins. 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 encouraged with our strong performance in fiscal 2023. Speaker 300:18:51Our momentum continues to grow and we are excited about our prospects in fiscal 2024. I will now turn it over to the operator for questions. Operator00:19:00Thank Our first question comes from Andrew Lazar with Barclays. You may proceed. Speaker 500:19:20Great. Thanks so much. Darsha, on your Q3 earnings call, you provided initial 24 guidance to be at the high end of your long term algorithm on sales and EBITDA margins. And today you provided a range for guidance, which as you said at the midpoint correlates to that. There is a wider range, particularly on EBITDA that you provided. Speaker 500:19:40And I guess my question is just, does that indicate something has maybe changed in your confidence in the outlook? It doesn't seem that way from all the metrics you provided. But if so, maybe you could get into some of the key factors or maybe I'm just reading too much into the range that you provided? Speaker 200:19:56Yes. There's been no change in our confidence. I think that, yes, I wouldn't read too much into the slightly Banned range and EBITDA. Speaker 500:20:08Okay. And then, Paul, I think pricing, I think was expected to be somewhat lower year over year in shakes in 'twenty four just in light of the move in dairy protein costs. I guess what sort of magnitude should we expect around pricing in Premier Protein? And have you seen any shifts in sort of competitive behavior along these lines that may have impacted your initial thinking on the shape pricing will likely take in 2024? Thanks so much. Speaker 300:20:35Yes. We had planned in 2024 to get back to a more normal cadence of Promotion and so that would obviously drive a pricing headwind for the year. So we're calling for a low to mid single digit headwind on pricing to net sales growth. As far as competitive dynamic, I wouldn't say anything's dramatically changed. We've actually seen some competitors take pricing higher recently. Speaker 300:20:58Because keep in mind, it's not just protein costs. We have we're seeing those obviously we're expecting those to come down in fiscal 2024, but we're also seeing inflation across A lot of the other input costs including packaging and manufacturing costs, while net we expect to be partially somewhat favorable From an overall cost perspective, there are other things going the other direction. Speaker 500:21:21Great. Thank you so much. Speaker 300:21:24Thanks, Andrew. Operator00:21:26Thank you. One moment for questions. Our next question comes from David Palmer with Evercore. You may proceed. Speaker 600:21:36Thank you. Just a question on Some of the data that you're showing us here on Premier Protein ready to drink shakes. On slide 9, you talk about the Shipments being in line with consumption or roughly in line with consumption in the last couple of quarters, but the all channel consumption outpaced your shipped dollars by 8 points and 6 points respectively the last two quarters. I'm wondering maybe give us a sense of what's going on there. And do you expect that negative price mix gap to all channel consumption to Speaker 300:22:19Yes. There's a couple of things going on there. So for 1, As you go into fiscal 2024 particularly in Q1 and even into Q2, we did see and I mentioned this in So we're seeing a lag in retailers taking price on shelf. So we took a price increase on our shakes in October of 2022. So as we get Q1, we've now fully lapped pricing from a shipments perspective. Speaker 300:22:44But for the consumption growth, that's still benefiting from From a high single digit growth and kind of into the Q1 and we expect that to continue a bit into the 2nd quarter as some retailers just didn't fully reflect price until later. In the Q4 in particular, we are lapping a trade inventory build in Q4 last So that is part of the that is really the main reason between the difference between consumption outpacing shipment growth in Q4. But as we go into Q1 and Q2, it's more about The pricing element there. Speaker 600:23:18And then just on the capacity increase that Michaels is bringing on in December heading into calendar 2024, is that about 10% and do is all signs there that Consumption should go up with that capacity that basically retailers are buying everything they can get from you guys? And thank you. Speaker 200:23:43Yes. Ultimately from Michael's, yes, I mean it will be about 10%, but that's going to take Time to scale up. So, I mentioned that, December, we should Startup, but it won't be until the back half, that really it'll be More of a contributor to our sales, but you're absolutely right. Yes, we need that volume to Be able to feel comfortable to build our inventory and start marketing. We should be good. Speaker 200:24:19As I mentioned, We'll be starting promotion in Q2, and then looking at from a premier TETRA standpoint looking at starting marketing in Q4. Speaker 700:24:36Great. Thank you. Thank you. Operator00:24:40Thank you. Speaker 800:24:42One moment for questions. Operator00:24:45Our next question comes from Ken Goldman with JPMorgan. You may proceed. Speaker 900:24:50Hi, thank you very much. I just wanted to build on Andrew's Question if I could. And Darcy, you were quite clear that nothing's changed in your outlook or your confidence in the business. But Yes, the EBITDA dollar spread sort of from high to low in guidance is higher than what you've typically done in the past. And I didn't know if there was a Specific reason for that. Speaker 900:25:11And I guess kind of more importantly, maybe we could get a little bit of sense from you about what The key drivers would be that would lead that number to come in toward the upside or toward the downside. I mean, obviously, No one has a crystal ball, but just as you kind of think of what you're most excited about and what you're most concerned about, but what some of the risks might be that you think are more important to call out. I'm just curious what those might be for this year. Speaker 200:25:38Sure. Yes. So why don't I start just with net sales. So the biggest factor that and would force us to go to the high or the low side is really production. So it's the timing of our production scale up as you might expect. Speaker 200:25:56Other factors are response to promotion, competition, Also the overall economy, but the biggest one from a net sales perspective is the timing of the production scale up. When you think of EBITDA, obviously net sales, is a fact is the major factor and that would just flow through. And then protein mix and freight rates could also push us up or down. Paul, I don't know if you want to talk a little bit about Some of the fluctuations within protein, but again, I wouldn't I really wouldn't read too much into the Slightly expanded EBITDA range. Speaker 300:26:42Yes. From a protein perspective, we have good line of sight Really through the first half of the year into the third quarter. So I think it's still kind of wait and see how the Protein costs, there's been some fluctuations on the milk protein side. And then on whey protein, which is our primary input for our powder business, we have seen some tightness in that market recently, Which likely will start to affect our second half. The question there is if that's a temporary blip or if it stays at an elevated rate, We have seen some fluctuations there. Speaker 300:27:17But to Darcy's point, the wider range is just more of a reflection of our growth versus Really anything fundamentally changing from how we're thinking about fiscal 2024. Speaker 900:27:30I'll pass it on. Thank you. Operator00:27:33Thank you. One moment for questions. Our next question comes from Pamela Kaufman with Morgan Stanley. You may proceed. Speaker 1000:27:43Hi, good morning. Speaker 200:27:45Good morning. Good morning. Speaker 1000:27:47I have a follow-up question on your production And capacity, I think you previously indicated that it would be up around 20% year on year in fiscal 2024. Is that still fair? And then in addition to Michael's capacity, is there additional production that you're bringing online? And then what is the visibility into production expansion beyond this year? Speaker 200:28:12Yes, we feel good about the 20% plus And it the growth slightly skews to the second half and that's just a factor of the startup From Michael Foods. If you break down the production growth for 2024, about 40 Percent of it is coming from new co mans in 2024, so new adds that we're adding in 2024. About 40% of the growth is coming from lapping the 23 ads and then about 20% is coming from just Additional volume from our existing. So that gives you kind of a flavor for the growth that we're bringing on this year. I think you asked Pam what other Facilities or partners are coming on this year. Speaker 200:29:11So in addition to Michael Foods, We have 2 existing partners that are adding capacity. So some of our existing partners adding a line basically. And then your last question about looking forward on adding capacity, We have in our visibility. So currently because of how much Capacity we added this year last year and this year, we will get the benefit of kind of a full year and as they get up to Kind of their run rate, the expected run rate. So we actually we do long range planning, every Twice a year or if anything fundamentally changes, so our long range planning are 5 years out now. Speaker 200:30:06And currently we're looking that we think that we will need additional capacity in 2020 Bringing on late 'twenty five, 'twenty six and into 'twenty seven. So that's our current and so we are already talking to all of our partners and figuring out who we're going to partner with to expand the capacity. Speaker 1000:30:31Great. Thank you. And then also thanks for sharing your Thoughts on how you're thinking about the impact from GLP-1 drugs on the business and it's consistent with our research on the benefits to higher protein and weight management foods. But can you elaborate on your initiative to target these consumers and how do you plan to identify them? Speaker 200:30:54I mean as you know Pam it's still early. So I think in general we're very encouraged by the results of the drugs just For society but also for our category and our business. But we are in learning mode. So we did kind of our initial research, mining the data. We're now adding some additional research. Speaker 200:31:21We had already started we did a pretty thorough study around consumers and how they approach Kind of weight wellness, and now we're adding to that. So we're going to we need to better understand What these consumers needs and their journey, how they get information and then we're going to test media to determine the best way to reach these consumers. So Whether it's outreach to support communities to partner with etcetera. So I don't want to go into too much detail, but Suffice to say we are definitely digging in and better understanding and it'll be this year doing a lot of testing and learning and Further understanding kind of their health journey. Speaker 1000:32:12Thanks. I'll pass it on. Operator00:32:16Thank you. One moment for questions. Our next question comes from Matt Smith with Stifel. You may proceed. Speaker 1100:32:25Hi, good morning. I wanted to ask about promotional events timing through the year. Can you talk about the timing of your planned activity? You called out investments in 2Q and 4Q. And I guess when we think about the large promotional events to the extent that there will be timing differences between consumption and shipments beyond 1Q that would be helpful? Speaker 200:32:47Sure, Matt. Yes, so Q2 will be so remember Q1 is kind of a seasonally low period, so no promotions or Very few promotions in marketing. Q2 is where in the category most new users are entering into the category. So that's when we will have promotions on both Premier and Dymatize. We will also be launching for Dymatize a new media campaign In Q2 along with some media on Premier Powder. Speaker 200:33:23When you go to Q3, Extension of the media campaign on Dymatize and then in Q4, we will have Promotions on the premier protein full brand and our plan right now is to launch A national marketing campaign in Q4, again barring capacity. So that is kind of when you look at the marketing and promotional Calendar for 2024 as it sits today. In regards to where there will be Kind of low promotional loads. I think one encouraging piece is that We will I think in Q2 our major one of our major Club promotions is a little bit later in the quarter in Q2. So there won't There shouldn't be a massive difference between where you have a load in, in 1 quarter and consumption in the next. Speaker 200:34:32It will mostly be in the same quarter versus back in kind of 2021 when we are doing big promotions. I don't know Paul, is there anything else that we're going to see a big change between Shipments and consumption? Speaker 300:34:50No. If you look at consumption and shipment volumes, we're expecting those to be largely tracked Throughout the year, we're not to Darcy's point, we're not expecting any major loads, deloads. We are lapping in our Q1 a trade inventory deload, Which is or actually a load, I should say. So it's actually a headwind in the Q1. So that's I want to point that out, but that also we also had a deload in the Q2 last year, which also benefits our which should be a tailwind to our Q2. Speaker 300:35:21So those are the only two pieces. But from a True consumption volume versus shipment volume, we expect them to largely track in fiscal 2024 by quarter. Speaker 1100:35:30Thank you. And as a follow-up, if we take a step back and we think about the level of promotional activity behind Premier Protein Shakes and the rest of the business in fiscal 2024, is this still Just a step towards getting back to a full investment level or would you consider this year once you get through the Q1 kind of representative the level of promotional activity that you think you need behind the 2 brands? Speaker 200:35:56It will largely be on track, I would say. We have there isn't I think We've communicated this before, but back in 2021, I think we were a bit heavy on promotion. And so I mean I think we were doing up to kind of 3 major promotions a year. I think what we've learned over the last couple years is that we were probably subsidizing a fair amount of volume. So as we move forward in 2024 and beyond, I think we are getting back To the level that we think is appropriate for our business without yes subsidizing a lot of So I would say 24 is representative. Speaker 1100:36:49Thank you, Darcy. I'll pass it on. Operator00:36:53Thank you. Speaker 800:36:56One moment for questions. Operator00:36:59Our next question comes from Jim Zallaro with Stephens. You may proceed. Speaker 400:37:04Hi, guys. Thanks for taking our question. Josh, I wanted to ask, you had touched on The benefit from having some temporarily discontinued flavors come back online, could you just offer some color around Does that represent an opportunity to bring incremental households back to the brands that maybe are more focused on a specific flavor? And so if their flavor is not available, they don't shop premier? Or is it more represent just increased buy rate where a consumer is likely to buy both have their plain vanilla flavor and then their preferred flavor? Speaker 200:37:43Yes, Jim, it's really both. So you saw a bump up In household penetration in the supplemental presentation that we have on our website, you saw a bump up about a point in household penetration. It's a combination of We did start light promotion in the quarter and so that was part of it, but it's also partially Bringing back those paused flavors. So and those are people that they really like cinnamon roll for instance. And so they were waiting for it. Speaker 200:38:16So absolutely it's a combination and in addition So both buy rate as well as household time. Speaker 400:38:26And this might be too early for you guys to have an answer on this yet given that the national marketing campaign is towards the end of the year. But do Operator00:38:34you have a sense of kind of Speaker 400:38:35what the messaging is going to be there? Is it really to kind of communicate use occasions to consumers, so it's more like to grow the category or is it something specific for Premier? Speaker 200:38:49So I'll talk about so both. So we plan to have a new campaign on both of our brands. And since Dymatize starts in Q2, I have more information on that than I do on the Premier side of things. We're still Working on obviously we have our strategy. So first on Dymatize, very excited about the campaign. Speaker 200:39:13It's a stronger creative that really is going to differentiate Dymatizes versus the rest of the competitive set around its Premium positioning and science backed, aspect which is really why consumers pick Dymatize. It's because it is It's a super premium, high quality kind of the highest quality science backed brand. And so we're really hitting on that In our new campaign, on Premier, our strategy from a marketing standpoint Has always been to use our consumers to communicate We know why they love the brand so much. So it's super authentic. It's been very effective for the brand. Speaker 200:40:05So it's a combination of that as well as communicating the amazing taste. So I don't expect us To change from that overall strategy, but the teams are working hard to figure out what the right angle is To, for the Q4 campaign. Speaker 400:40:25Great. I'll hop back in the queue. Thank you. Speaker 100:40:28Thanks. Operator00:40:29Thank you. One moment for questions. Our next question comes from Matt McGinley with Needham. You may proceed. Speaker 400:40:39Thank you. So for the Speaker 1200:40:40higher marketing spend this year, I think you were targeting something like 3% or 4% this year versus the 2.5% of sales you spent last year. Is that 3% to 4% in marketing still the right range or do you have that tighter than that now? And is the critical decision point you made a couple of comments around How you would spend it? Is the critical decision point more around the production or is it more around the effectiveness of the Q2 advertising campaign that you would then kind of ramp the spend Into the Q4, if you really got good results from what happens earlier in the year? Speaker 300:41:14Yes, Darcy, I'll take the first question and you can take the second part of the question. Yes, we are modeling our marketing spend to be in kind of the 3% to 3 point 5 We don't think we'll get to 4%. That is more likely as we go forward with our full production capacity going, but We'll be in that 3%, 3.5% range is our expectation for 2024. Speaker 200:41:37Yes. And Your second part of the question, just want to be clear. So we are supporting fully supporting In marketing, the parts of the business where we have capacity. So think of we are fully supporting Dymatize, Premier Protein Powder, our premier bottles, what we are waiting on until From a marketing perspective until Q4 is really the Tetris side of the business on premier protein And that is purely a reflection of capacity. We just need to make sure that we have the capacity and we have The right level of inventory that we can support it from a marketing perspective and see the lift. Speaker 1200:42:31Got it. That makes sense. And with the debt repayments that you made on your revolver last year and into this one, you have a zero balance And I don't believe you can call your senior notes until a couple of years out. I think in the prepared remarks, it sounded like working capital would be more of an investment this year, but you'd You'd still probably be building cash over the course of this year. Do you expect share repurchase to become more of a priority this year? Speaker 1200:42:54Or does it make sense to sit on Larger cash balances this year, I guess, to have some dry powder if you see opportunities that present themselves? Speaker 300:43:03Yes. In 2024, we expect to continue to look at share repurchases as the primary use of our capital. I would say that in 2023, we actually we bought back 125,000,000 shares. I wouldn't say it was light in 2023 as well. But as we go into 20 24, to your point, we could build cash, but Share repurchases and being opportunistic there is the more likely use of our capital. Speaker 400:43:26Okay. Thank you. Operator00:43:29Thank you. One moment for questions. Our next question comes from Brian Spillane with Bank of America. You may proceed. Speaker 1300:43:38Hey, thanks operator. Good morning everyone. Speaker 200:43:41Good morning. Speaker 1300:43:41So I guess 2 kind of follow ups. 1, I think Matt asked earlier about Our promotion level this year kind of normalized. What about can you comment also on just marketing spend, Darcy? I guess I was thinking back, you've had capacity spend a limitation for a while on and off. And So you I think my impression is maybe restrained marketing spend a bit. Speaker 1300:44:06So now that you have more capacity and we're looking at this year, Is this the normal year or would you expect that you have more capacity again assuming demand continues to increase that marketing whether it's in absolute dollars or percentage of sales, How would that evolve with having more production? Speaker 200:44:24Yes. From a marketing perspective, it is not a normal year. So we would because we're really starting, like I said we are supporting the size of the business that we have capacity. So Normal year for Dymatize, Premier Protein Powder, bottles, but on the TETRA side of the business, which is really the bulk of the Premier Protein business, We are only marketing we are planning to only market in Q4. So getting into 2025, We would absolutely be spending and probably our biggest spend would be Q2. Speaker 200:45:01The reason why we're not doing Q2 this year Is capacity and we don't and the last thing we want to do and we were pushing promotion first And then marketing in the back half. So I think 2025 will be more of a normal marketing year For the entire business because we'll have all of our greenfields up to fully scaled up and we'll be able to really drive the business. Okay. Speaker 1300:45:29And then my second my follow-up is just to Pam's question around GLP-1s and I guess I was hearing it and listening to the prepared remarks. One question is just in terms of research, it sounds like what you're doing is a lot of Consumer research, but will you do any like product formulation research or anything that might be able to connect the efficacy of Premier Patients on GLP-1s and tied to that kind of like what we see in infant formula, is there the potential to market to doctors and nutritionists, right, to sort of promote the efficacy of the product and helping people on that weight loss journey? Speaker 200:46:12Yes. So first the exciting news is that we don't have to do much. I mean our products are very well formulated positioned And already resonating with GLP users I mean you can go on social media and you see our brand pop up kind of all on Reddit And Facebook feeds, etcetera. However, I think that and I would also say that We have experienced marketing to certain groups where certain specific kind of medical needs and we do it in a way that Doesn't change our brand overall brand positioning, but we do it in a very kind of Specific surgical way, which I think is how we would do this. And so we have some experience there. Speaker 200:47:14We just want to figure out the right place to communicate. Your last question around Would we go after doctors etcetera? We have some experience there and the answer is possibly. I think our experience would say that doctors really have no interest in communicating what products People use but some of the support groups or nurses or dietitians do. And so we'll see again this is a different It's a different product. Speaker 200:47:51It's a different kind of health journey. So we want to really understand it so we can do it the right way. And then from a last question around product formulation, Absolutely. It's part of what we're evaluating. Remember, this is early. Speaker 200:48:08So we want to better understand The nutrition that they're missing, we know that that when you are on these drugs that you do lose more muscle mass that we know protein is important. So kind of check that box. Tina is important. So kind of check that box. There are other areas if there's some micronutrients that are Potentially lost, those are things that we need to learn and we plan to. Speaker 1300:48:34All right. Thanks, Darcy. Happy Thanksgiving, everyone. Speaker 200:48:37Thank you. You too. Operator00:48:39Thank you. Speaker 800:48:42One moment for questions. Operator00:48:45Our next question comes from John Baumgartner with Mizuho Securities. You may proceed. Speaker 700:48:50Good morning. Thanks for the question. Speaker 200:48:52Good morning, John. Speaker 1300:48:54Darcy, first off, I wanted Speaker 700:48:55to ask about innovation. As the supply chain issues are being solved and advertising Promo is being turned back on. At what point do you think the model is ready and sort of capable of supporting innovation that's larger and more platform based in nature? You mentioned your long range planning. So how do we think about portfolio development from here, whether it's flavors, formats, differentiated products that we may even see in fiscal Speaker 200:49:232024? We dug into I think that we have some new learnings in this area, John. So we dug into our data over the last several months with an outside And I think that we have some exciting new learnings. I think the biggest piece is We have found we have much more upside with our existing products and what I'll just call Close in innovation, so think flavors, pack sizes, formats and so sort of Closer in innovation as well as just more distribution of our existing products. What I like about that is it is less risky, it's more efficient. Speaker 200:50:15However, We also have been spending the last two years, our R and I team, have been Working on new lines of products, especially on our premier protein, business. So we have a very full pipeline of new products, but my expectation is that we're going to focus on In 2024 more on the closer in innovation and then 2025 and beyond we'll be launching Some of those lines that we have developed and our goal is to launch a new line every 12 to 15 months on both Premier and Dymatize and focus on 25 and beyond. Speaker 700:51:04Okay. And then as a follow-up on marketing, You've also mentioned the TV campaigns obviously and the high ROI you're seeing from influencers in social media. But I'm curious, do other opportunities exist, whether it's Partnerships or brand sponsorships that can maybe amplify and complement that influencer breadth and accelerate brand awareness. What levers are still out there maybe that could be high impact but haven't been pulled yet given where the supply chain has been? Speaker 200:51:34I mean honestly a lot of lepers because we just haven't I mean so again I want to separate Diamatize and Premier. On Premier, we've been holding back. We have not had any significant marketing for 2 years. So other than kind of the basic Social media that what we call kind of every day keep the lights on marketing but we haven't had a big campaign since 2021. So absolutely a big opportunity on Dymatize and we use we have influencers. Speaker 200:52:05We call them our shaker program And they're basically every day that we have a bunch of criteria. They're still they're every day influencers But they actually have a lot of reach. So we have had a lot of success with the shaker program with In Premier now is there an opportunity to have a more high profile influencer possibly on Dymatize we actually have done that. So we've brought in a combination of just regular influencers which have Pretty high reach, but then we've also every year brought on some kind of higher profile influencers and we'll continue to do that Within the Dymatize business, even starting in 'twenty four. I'm not ready to tell you who our high profile influencers are, but we're absolutely using that lever. Speaker 700:52:59Okay. Well, I'm excited. Thanks, Darcy. Speaker 200:53:02Yes, awesome. Thanks. Operator00:53:04Thank you. Our next question comes from Bill Chappell with Truist Securities. You may proceed. Speaker 1400:53:20Yes. Thanks for squeezing me in and good morning. Speaker 200:53:23Good morning. Speaker 300:53:24I guess first maybe just Speaker 1400:53:26a little bit talk with Is it some of the additional capacity? Talk about kind of different distribution, both international opportunities, but also kind of single serve, It's C scores or stuff like that and kind of how that's progressing or if that will progress as we look at the next in the New Year? Speaker 200:53:44Yes. So, first of all international, actually I see both of those opportunities as More longer range. We have so much I mean I just said when I was talking to John is that From an innovation standpoint, this new learning around we have so much opportunity in the U. S. With our existing products, with kind of close in innovation, International is absolutely an opportunity, but it is, it takes a little longer to build And it is kind of it's a yes, it's a slower build. Speaker 200:54:26Right now international is about low teens about 10% to 12% of our business and it's growing very it's growing Strongly about the same rate as we're seeing in the U. S, but it's on a lower base. So we're going to continue. We have a dedicated team And that's focused. We have a nice sized business in Canada. Speaker 200:54:50We're growing in Mexico. We are growing through our global customers across the globe. We have a business in the EU and an office there. So I would say we are definitely investing and we see it as a future opportunity. It's just a slower build, especially when we have so much opportunity within the U. Speaker 200:55:11S. On the single serve question, the same thing again, we see that as an opportunity. It's a little more complicated because it requires a different route to market. So once again, we have this capacity. We are actually Expanding our bottle co man, which is exciting, which is also the format that we sell within e commerce. Speaker 200:55:38And we think that there is future opportunity with kind of bottles across channels. Speaker 1400:55:48Got it. Thanks so much. And then just a housekeeping, can you give us an idea of Interest expense and tax rate for fiscal 2024. Thanks so much. Speaker 300:55:58Yes. Our tax rate will be around 25 So 26% a little higher this year because of the accelerated amortization on PowerBar. What was your second question? It was cash interest? Speaker 1400:56:12Yes, yes, interest expense cash interest expense. Speaker 300:56:15Cash interest ought to be around 60,000,000 Speaker 1400:56:19Great. Thanks. Happy Thanksgiving. Speaker 400:56:21Thanks, Same to you. Speaker 200:56:21Thank you. You too, though. Operator00:56:24Thank you. One moment for Speaker 1300:56:30questions. Operator00:56:33Our next question comes from John Anderson with William Blair. You may proceed. Speaker 400:56:38Hey, good morning everybody. Thanks. Just one quick question on Premier Protein. From the slides, it looks like consumption growth for the brand has been running stronger in tracked channels relative to untracked channels, both on a 52 week and 13 week basis. John, assuming that's a function of where the new distribution or TDPs, the restoration of TDPs is hitting the market. Speaker 400:57:12Could you remind us of kind of for Premier Protein, how much of the consumption for that brand is tracked versus untracked. And as you look to 2024 and restarting promotions, etcetera. How do you expect that channel mix may evolve in 2024 from here? Thanks. Speaker 200:57:38So Jennifer might have to help me. I think it's about 60% of our business on Premier is in tracked. Jennifer, is that about right? Speaker 1000:57:48I believe so. Speaker 200:57:50Okay. So about 60% of the premier business is Tracked, you're absolutely right John that the reason why it's outpacing on track is Mainly that's where we're gaining a lot of distribution. It's a lot of food accounts, mass accounts where we're increasing distribution Quite a lot. And then sorry, your second question around Was it just your view? Speaker 400:58:22More around the focus of marketing in 2024 and will it have a kind of a channel orientation to it that might affect that mix in 2024? Thanks. Speaker 200:58:34No. So All of our marketing is really supporting the overall brand which should raise all channels kind of equally. We do Some channel specific marketing, but the bulk of it will be overall. I think that the biggest I do expect that I mean it depends it will be I would say the difference between tracked and untracked moving forward Well, we expect to continue to see increases in distribution more in tracked, But also on untracked we'll see promotion can really push untracked Quite high when we have these big promotions within the quarter. So that's something that we will see kind of Speaker 100:59:28like in Q2 and Q4. Speaker 400:59:32Makes sense. Thank you very much. Speaker 200:59:34Thank you. Operator00:59:37Thank you. We've reached the end of our Q and A session. This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBellRing Brands Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Annual report(10-K) BellRing Brands Earnings HeadlinesUBS Initiates Coverage of BellRing Brands (BRBR) with Neutral RecommendationApril 24 at 12:48 AM | msn.comBank of America Securities Sticks to Its Buy Rating for BellRing Brands (BRBR)April 17, 2025 | markets.businessinsider.comTrump’s Bitcoin Reserve is No Accident…Bryce Paul believes this is the #1 coin to buy right now The catalyst behind this surge is a massive new blockchain development…April 24, 2025 | Crypto 101 Media (Ad)Morgan Stanley Remains a Buy on BellRing Brands (BRBR)April 17, 2025 | markets.businessinsider.comFive of the Top Better-for-You Snack Stocks for 2025April 14, 2025 | baystreet.caThe American Packaged Food IndustryApril 11, 2025 | uk.finance.yahoo.comSee More BellRing Brands Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like BellRing Brands? Sign up for Earnings360's daily newsletter to receive timely earnings updates on BellRing Brands and other key companies, straight to your email. Email Address About BellRing BrandsBellRing Brands (NYSE:BRBR), together with its subsidiaries, provides various nutrition products in the United States. The company offers ready-to-drink (RTD) protein shakes, other RTD beverages, powders, nutrition bars, and other products primarily under the Premier Protein and Dymatize brands. It distributes its products through club, food, drug, mass, eCommerce, specialty, and convenience channels. 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There are 15 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Bellring Brands 4th Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jennifer Meyer, Investor Relations for Bellring. Speaker 100:00:34Good morning and thank you for joining us today for Bellring Brands 4th 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 SEC filings section atbellring.com. In addition, the release and slides are available on the SEC's website. Speaker 100:01:09Before 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 a reconciliation of these non GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website. Speaker 100:01:49With that, I will turn the call over to Darcy. Speaker 200:01:53Thanks, Jennifer, and thank you all for joining us. Last evening, we reported our 4th quarter and fiscal 2023 results and posted a supplemental presentation to our website. Fiscal 2023 was a fantastic year for Bellring Brands. Our net sales grew 22% with adjusted EBITDA of 25%. As I reflect on the year, there were there are 3 things that stood out to me. Speaker 200:02:18The first is the expanding growth opportunity of this category, specifically the segments that we compete in ready to drink shakes and ready to mix powders. Both segments have experienced double digit growth in each of the last 3 years. Low household penetration combined with strong macro trends highlights a long path of growth. 2nd, the power and the future potential of our brands. This year we saw tremendous growth on Premier Protein and Dymatize both reaching new highs across many key metrics. Speaker 200:02:55Premier Protein demonstrates strong resilience as it quickly regained the PDPs and households lost in prior years during our capacity constraints. This shows the unbelievable consumer and retailer excitement around this brand, which will help fuel future growth. 3rd, I've been blown away by our organization. It is hard to manage a high growth business with limited supply. It is a heavy load on all functions to optimize supply and demand, especially operations and sales. Speaker 200:03:28Despite this added pressure, our organization is stronger than ever, a reflection of the amazing people and our unique culture. We still have work to do, but are well positioned for a strong 'twenty four and beyond. Now to Q4. I'm pleased to share our results came in at the high end of our expectations. Net sales grew 25% over prior year and adjusted EBITDA was up Significant production growth allowed us to restart light shake promotions this quarter. Speaker 200:04:00We gained meaningful new shelf space on both Premier Protein and Dymatize and our relaunch shake flavors and seasonal offerings continue to drive incremental sales. Moving to shake production. In fiscal 2023, we made notable progress to grow and diversify our shake supply. Our production grew 17% over fiscal 2022, modestly above our expectations. We added 2 co mans this year, which continue to scale up. Speaker 200:04:30And our 2nd greenfield facility, Michael Foods, will start up in December. They will be a much larger contributor to our second half of fiscal twenty twenty four and beyond. Over the past 2 years, we have transformed our shake toman network. We have partnered with the biggest and most reputable players in the aseptic low acid industry. We now have a scalable, Regionally diverse supply chains, which will enable many years of robust growth. Speaker 200:04:58Now to the category and brand updates. The convenient nutrition category grew 9% in Q4 as tailwinds around health and wellness and fitness continued to drive growth. Consumer interest in functional beverages and sports nutrition products continues to be high. Ready to drink led the category up 21% and ready to mix grew 11%. Increased supply and distribution gains are lifting ready to drink growth While increased marketing is boosting both segments. Speaker 200:05:29Premier Protein shake consumption accelerated this quarter, up 36%. Growth was tremendous across all channels driven by improved supply which allowed us to restart light promotion and expand distribution. The highest growth was in mass and e commerce benefiting from our expanded range of flavors and higher in stock levels. Additionally, e commerce and club both saw strong growth behind promotional activity. Our fall seasonal flavor pumpkin spice demonstrated an impressive 90% incrementality to the brand. Speaker 200:06:04Q4 trends continued into October with shake consumption up 27 with volume driving 2 thirds of this growth. Our brand metrics reflect our building momentum as premier protein reached all time highs in TDPs and market share. Shake TDPs grew 11% versus Q3 behind distribution gains and relaunched shake flavors. Premier Protein RTD market share reached 21%, maintaining 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 household penetration added 1 percentage point versus Q3 reaching over 16% of households. Speaker 200:06:53Our household penetration continues to be the highest in the category with this quarter's growth driven by promotions and distribution gains. Our repeat and buy rates are holding steady demonstrating our consumer loyalty. According to our most recent Brand Equity Study Premier Protein remains the number one brand I love and net promoter score in the RTD category. We are very encouraged by all of these achievements even though we still haven't restarted meaningful marketing and promotion. Premier Protein saw great success this year in other forms showing the power of the brand. Speaker 200:07:29In Q4, Premier Protein Powders remained strong, growing over 50% behind new distribution and strong velocities. It reached over $50,000,000 in net sales this year and we expect robust growth in 2024 as we invest behind marketing programs to drive awareness. In addition to powder, our licensing strategy continues to perform well. Although not a significant revenue driver, we are encouraged that the brand has seen Turning to DYMETYZE, the brand had a great quarter with consumption up 38%. We saw double digit growth in nearly all channels driven by distribution gains and incremental promotion. Speaker 200:08:10Consumption growth continued into October with the brand up 23%. Diamatize continues to have success in mainstream channels with both TDPs and household penetration reaching new highs this quarter. Encouragingly as Dymatize adds new households and distribution points, repeat and buy rates are holding steady. In fiscal 2024, we are launching a new marketing campaign to continue the momentum and drive awareness and new users to DYMETEZ. Before reviewing our outlook, I want to give our point of view on GLP-one weight loss medications. Speaker 200:08:45Our proprietary research indicates Consumers most likely to adopt GLP-1s are currently light users of protein shakes, but will become heavy users once on the medication. These individuals have reduced total caloric intake, but actually need more protein to mitigate muscle loss and certain other side effects. Products like premier protein are perfect because they are delicious, compact size, high protein nutrition, giving these individuals what they need without making them Research also indicates that once on the medication consumers start exercising more and choosing healthier food and beverage options, ultimately increasing the demand for convenient and sports nutrition products. After our initial phase of research, we believe our current products and growth strategies are already well aligned with this opportunity. They are great compliments to GLPs while consumers are on the medication and a perfect nutrition solution when people decide to stop taking the drugs to maintain the weight loss benefit. Speaker 200:09:54We have begun our next phase of research to better understand this consumer and how we can serve them on this important health journey. In 2024, we plan to test media platforms and creative to determine the strongest most effective strategies and tactics to reach these consumers. We're encouraged by the early results of these medications and feel that they strengthen the already strong macro trends behind our category and specifically our business. Now to our outlook. As you saw in yesterday's press release, we expect fiscal 2024 net sales to grow between 10% 15% And adjusted EBITDA to grow between 6% 15%. Speaker 200:10:35At the midpoint, this guidance is on the high side of our long term algorithm in both net sales growth And adjusted EBITDA margin. As a reminder, our algorithm in net sales growth is between 10% to 12% with EBITDA margins of between 18% 20%. Our plan reflects strong volume growth for both Premier Protein and Dymatize and the restart of shake promotions in the Q2. We plan to step up marketing on shakes in Q4, which is when we expect to hit our target weeks of supply. The demand and supply dynamics remain tight for most of the year and we will continue to be nimble so we can navigate effectively. Speaker 200:11:19In closing, I'm thrilled with our performance this year. We continue to gain momentum in every part of our business. Strong macro trends are driving sustained long term growth in our categories. Premier Protein and Dymatize continue to reach new consumers and maintain all time high market share positions. Our flavor strategy is working and our innovation pipeline is rich, enabling us to bring excitement to consumers and retail partners. Speaker 200:11:47Last, we are moving forward on our shakes capacity plan to support our future growth. Before passing over to Paul, I'm sure most of you have heard that Rob Vitale, our Executive Chairman is currently on medical leave. We have been in close contact with him over the last several weeks. We wish him and his family the best throughout his recovery and we'll be excited to have him back at full strength soon. I will now turn the call over to Paul. Speaker 300:12:15Thanks, Darcy, and good morning, everyone. As Darcy highlighted, our 4th quarter results came in at the high end of our expectations. Net sales for the quarter were $473,000,000 and adjusted EBITDA was $99,000,000 Net sales grew 25% over prior year Adjusted EBITDA increased 23% with adjusted EBITDA margin of 20.8%. Starting with brand performance, Premier Protein net sales grew 30% with volume growing 21%. In Q4, our shake production increased meaningfully over prior year, which allowed us to restart modest shake promotions Volumes also benefited from the relaunch of temporarily discontinued flavors, performance of our seasonal offerings and strong growth from Premier Powders. Speaker 300:12:58Net pricing for Premier Protein grew 9%, reflecting the October 2022 price increase. Shake consumption dollars grew 36 percent outpacing shipment growth of 29%. The latter was modestly impacted by the lapping of a trade inventory build in the prior year. Diamatized net sales were relatively flat this quarter as the brand faced a tough prior year comparable. Recall last year's Q4 had heavy trade inventory build in the international domestic specialty channels. Speaker 300:13:26This headwind combined with continued weakness in the specialty channel was offset by strong growth in domestic mainstream channels driven by distribution gains and organic growth. Gross profit of $155,000,000 grew 27% with an increase in gross profit margin of 60 basis points to 32.9%. The margin increase resulted from improved pricing that mitigated input cost inflation. This was partially offset by incremental promotional activity. Excluding one time costs in the prior year period, SG and A expenses as a percentage of net sales increased 40 basis points, half of which was driven by higher marketing spend. Speaker 300:14:05Operating profit of $78,000,000 increased $17,000,000 compared to prior year and was negatively impacted by $7,000,000 of accelerated amortization. Speaker 400:14:13This was Speaker 300:14:13a non cash expense recorded in connection with our decision to discontinue the PowerBar North American business and was treated as an adjustment for non GAAP measures. We expect the remaining $17,000,000 of non cash accelerated amortization to be recorded in the Q1. Our international PowerBar business is unaffected by this decision and continues to grow. Turning to full year 2023 results. Net sales were approximately 1,700,000,000 up 22% over the prior year with gross profit of $530,000,000 growing 26%. Speaker 300:14:46Gross profit margins increased 100 basis points over 2022, driven by pricing actions that mitigated input cost inflation along with favorable freight rates. SG and A expenses were $216,000,000 and excluding one time items increased 60 basis points as a percentage of net sales. Higher marketing spend drove the increase as our marketing spend in fiscal 2022 was exceptionally low. We saw modest leverage on our remaining G and A base. Adjusted EBITDA increased 25 percent to 338000000 with a margin of 20.3 percent, an increase of 50 basis points. Speaker 300:15:22Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We generated $85,000,000 in cash flow from operations in the 4th quarter and $216,000,000 for the year. In fiscal 2023, net working capital declined slightly despite our strong top line growth. In fiscal 2024, our net working capital growth will moderately exceed our net sales growth rate as we add weeks of shake supply. As a result, our cash flow in fiscal 2024 will be modestly lower than fiscal 2023. Speaker 300:15:53During the quarter, we repaid $54,000,000 against our revolving credit facility. As of September 30, net debt was $817,000,000 and net leverage was 2.4 times. With our EBITDA growth and strong cash flow generation, we anticipate net leverage to fall under 2 times by the end of fiscal 2024. With respect to our share repurchases this quarter, we bought 200,000 shares at an average price of 39 dollars per share or $125,000,000 in total. Our remaining share repurchase authorization is 23,000,000 Turning to our outlook, we expect fiscal 2024 net sales of $1,830,000,000 to 1,910,000,000 and adjusted EBITDA of $360,000,000 to $390,000,000 Our guidance implies strong top line growth of 10% to 15% and adjusted EBITDA growth of 6% to 15% with healthy adjusted EBITDA margins of 20% at the midpoint. Speaker 300:16:54We expect dollar and percentage growth for both measures to be weighted to the first half of the year. From a brand perspective, we expect double digit sales growth for both Premier Protein and Dymatize driven primarily by volume gains and continued category tailwinds. Key drivers of Premier Protein's volume growth include increased promotional activity, distribution gains and the first half benefit of our relaunched flavors. Organic growth and distribution gains are the primary volume drivers for DYMETYZE. We expect fiscal 2024 adjusted EBITDA margins to largely in line with fiscal 2023 with increased gross margins offset by higher SG and A. Speaker 300:17:35Gross margins are expected to benefit from favorable input costs, notably in the first half of the year offset partially by higher promotional activity. Investments behind our brands including promotional marketing spend are expected to skew higher in both the second and fourth quarters. Turning to our first quarter forecast, low double digit net sales growth compared to a year ago. We expect strong growth from Dymatize as it has an easier prior year comparable Lapping a trade inventory de load in the international and domestic specialty channels. Premier Protein sales growth is expected to be in the high single digits as we lap a prior year trade inventory build, which we estimate to be a low double digit headwind to Premier's growth rate. Speaker 300:18:17As a result, we expect consumption growth to outpace net sales growth as we lap headwind. Consumption growth will also benefit from higher net pricing as price increases at retail lagged our October 22 price increase on shakes. We expect 1st quarter adjusted EBITDA margins to be similar to prior year as higher SG and A as a percentage of net sales is offset by higher gross margins. 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 encouraged with our strong performance in fiscal 2023. Speaker 300:18:51Our momentum continues to grow and we are excited about our prospects in fiscal 2024. I will now turn it over to the operator for questions. Operator00:19:00Thank Our first question comes from Andrew Lazar with Barclays. You may proceed. Speaker 500:19:20Great. Thanks so much. Darsha, on your Q3 earnings call, you provided initial 24 guidance to be at the high end of your long term algorithm on sales and EBITDA margins. And today you provided a range for guidance, which as you said at the midpoint correlates to that. There is a wider range, particularly on EBITDA that you provided. Speaker 500:19:40And I guess my question is just, does that indicate something has maybe changed in your confidence in the outlook? It doesn't seem that way from all the metrics you provided. But if so, maybe you could get into some of the key factors or maybe I'm just reading too much into the range that you provided? Speaker 200:19:56Yes. There's been no change in our confidence. I think that, yes, I wouldn't read too much into the slightly Banned range and EBITDA. Speaker 500:20:08Okay. And then, Paul, I think pricing, I think was expected to be somewhat lower year over year in shakes in 'twenty four just in light of the move in dairy protein costs. I guess what sort of magnitude should we expect around pricing in Premier Protein? And have you seen any shifts in sort of competitive behavior along these lines that may have impacted your initial thinking on the shape pricing will likely take in 2024? Thanks so much. Speaker 300:20:35Yes. We had planned in 2024 to get back to a more normal cadence of Promotion and so that would obviously drive a pricing headwind for the year. So we're calling for a low to mid single digit headwind on pricing to net sales growth. As far as competitive dynamic, I wouldn't say anything's dramatically changed. We've actually seen some competitors take pricing higher recently. Speaker 300:20:58Because keep in mind, it's not just protein costs. We have we're seeing those obviously we're expecting those to come down in fiscal 2024, but we're also seeing inflation across A lot of the other input costs including packaging and manufacturing costs, while net we expect to be partially somewhat favorable From an overall cost perspective, there are other things going the other direction. Speaker 500:21:21Great. Thank you so much. Speaker 300:21:24Thanks, Andrew. Operator00:21:26Thank you. One moment for questions. Our next question comes from David Palmer with Evercore. You may proceed. Speaker 600:21:36Thank you. Just a question on Some of the data that you're showing us here on Premier Protein ready to drink shakes. On slide 9, you talk about the Shipments being in line with consumption or roughly in line with consumption in the last couple of quarters, but the all channel consumption outpaced your shipped dollars by 8 points and 6 points respectively the last two quarters. I'm wondering maybe give us a sense of what's going on there. And do you expect that negative price mix gap to all channel consumption to Speaker 300:22:19Yes. There's a couple of things going on there. So for 1, As you go into fiscal 2024 particularly in Q1 and even into Q2, we did see and I mentioned this in So we're seeing a lag in retailers taking price on shelf. So we took a price increase on our shakes in October of 2022. So as we get Q1, we've now fully lapped pricing from a shipments perspective. Speaker 300:22:44But for the consumption growth, that's still benefiting from From a high single digit growth and kind of into the Q1 and we expect that to continue a bit into the 2nd quarter as some retailers just didn't fully reflect price until later. In the Q4 in particular, we are lapping a trade inventory build in Q4 last So that is part of the that is really the main reason between the difference between consumption outpacing shipment growth in Q4. But as we go into Q1 and Q2, it's more about The pricing element there. Speaker 600:23:18And then just on the capacity increase that Michaels is bringing on in December heading into calendar 2024, is that about 10% and do is all signs there that Consumption should go up with that capacity that basically retailers are buying everything they can get from you guys? And thank you. Speaker 200:23:43Yes. Ultimately from Michael's, yes, I mean it will be about 10%, but that's going to take Time to scale up. So, I mentioned that, December, we should Startup, but it won't be until the back half, that really it'll be More of a contributor to our sales, but you're absolutely right. Yes, we need that volume to Be able to feel comfortable to build our inventory and start marketing. We should be good. Speaker 200:24:19As I mentioned, We'll be starting promotion in Q2, and then looking at from a premier TETRA standpoint looking at starting marketing in Q4. Speaker 700:24:36Great. Thank you. Thank you. Operator00:24:40Thank you. Speaker 800:24:42One moment for questions. Operator00:24:45Our next question comes from Ken Goldman with JPMorgan. You may proceed. Speaker 900:24:50Hi, thank you very much. I just wanted to build on Andrew's Question if I could. And Darcy, you were quite clear that nothing's changed in your outlook or your confidence in the business. But Yes, the EBITDA dollar spread sort of from high to low in guidance is higher than what you've typically done in the past. And I didn't know if there was a Specific reason for that. Speaker 900:25:11And I guess kind of more importantly, maybe we could get a little bit of sense from you about what The key drivers would be that would lead that number to come in toward the upside or toward the downside. I mean, obviously, No one has a crystal ball, but just as you kind of think of what you're most excited about and what you're most concerned about, but what some of the risks might be that you think are more important to call out. I'm just curious what those might be for this year. Speaker 200:25:38Sure. Yes. So why don't I start just with net sales. So the biggest factor that and would force us to go to the high or the low side is really production. So it's the timing of our production scale up as you might expect. Speaker 200:25:56Other factors are response to promotion, competition, Also the overall economy, but the biggest one from a net sales perspective is the timing of the production scale up. When you think of EBITDA, obviously net sales, is a fact is the major factor and that would just flow through. And then protein mix and freight rates could also push us up or down. Paul, I don't know if you want to talk a little bit about Some of the fluctuations within protein, but again, I wouldn't I really wouldn't read too much into the Slightly expanded EBITDA range. Speaker 300:26:42Yes. From a protein perspective, we have good line of sight Really through the first half of the year into the third quarter. So I think it's still kind of wait and see how the Protein costs, there's been some fluctuations on the milk protein side. And then on whey protein, which is our primary input for our powder business, we have seen some tightness in that market recently, Which likely will start to affect our second half. The question there is if that's a temporary blip or if it stays at an elevated rate, We have seen some fluctuations there. Speaker 300:27:17But to Darcy's point, the wider range is just more of a reflection of our growth versus Really anything fundamentally changing from how we're thinking about fiscal 2024. Speaker 900:27:30I'll pass it on. Thank you. Operator00:27:33Thank you. One moment for questions. Our next question comes from Pamela Kaufman with Morgan Stanley. You may proceed. Speaker 1000:27:43Hi, good morning. Speaker 200:27:45Good morning. Good morning. Speaker 1000:27:47I have a follow-up question on your production And capacity, I think you previously indicated that it would be up around 20% year on year in fiscal 2024. Is that still fair? And then in addition to Michael's capacity, is there additional production that you're bringing online? And then what is the visibility into production expansion beyond this year? Speaker 200:28:12Yes, we feel good about the 20% plus And it the growth slightly skews to the second half and that's just a factor of the startup From Michael Foods. If you break down the production growth for 2024, about 40 Percent of it is coming from new co mans in 2024, so new adds that we're adding in 2024. About 40% of the growth is coming from lapping the 23 ads and then about 20% is coming from just Additional volume from our existing. So that gives you kind of a flavor for the growth that we're bringing on this year. I think you asked Pam what other Facilities or partners are coming on this year. Speaker 200:29:11So in addition to Michael Foods, We have 2 existing partners that are adding capacity. So some of our existing partners adding a line basically. And then your last question about looking forward on adding capacity, We have in our visibility. So currently because of how much Capacity we added this year last year and this year, we will get the benefit of kind of a full year and as they get up to Kind of their run rate, the expected run rate. So we actually we do long range planning, every Twice a year or if anything fundamentally changes, so our long range planning are 5 years out now. Speaker 200:30:06And currently we're looking that we think that we will need additional capacity in 2020 Bringing on late 'twenty five, 'twenty six and into 'twenty seven. So that's our current and so we are already talking to all of our partners and figuring out who we're going to partner with to expand the capacity. Speaker 1000:30:31Great. Thank you. And then also thanks for sharing your Thoughts on how you're thinking about the impact from GLP-1 drugs on the business and it's consistent with our research on the benefits to higher protein and weight management foods. But can you elaborate on your initiative to target these consumers and how do you plan to identify them? Speaker 200:30:54I mean as you know Pam it's still early. So I think in general we're very encouraged by the results of the drugs just For society but also for our category and our business. But we are in learning mode. So we did kind of our initial research, mining the data. We're now adding some additional research. Speaker 200:31:21We had already started we did a pretty thorough study around consumers and how they approach Kind of weight wellness, and now we're adding to that. So we're going to we need to better understand What these consumers needs and their journey, how they get information and then we're going to test media to determine the best way to reach these consumers. So Whether it's outreach to support communities to partner with etcetera. So I don't want to go into too much detail, but Suffice to say we are definitely digging in and better understanding and it'll be this year doing a lot of testing and learning and Further understanding kind of their health journey. Speaker 1000:32:12Thanks. I'll pass it on. Operator00:32:16Thank you. One moment for questions. Our next question comes from Matt Smith with Stifel. You may proceed. Speaker 1100:32:25Hi, good morning. I wanted to ask about promotional events timing through the year. Can you talk about the timing of your planned activity? You called out investments in 2Q and 4Q. And I guess when we think about the large promotional events to the extent that there will be timing differences between consumption and shipments beyond 1Q that would be helpful? Speaker 200:32:47Sure, Matt. Yes, so Q2 will be so remember Q1 is kind of a seasonally low period, so no promotions or Very few promotions in marketing. Q2 is where in the category most new users are entering into the category. So that's when we will have promotions on both Premier and Dymatize. We will also be launching for Dymatize a new media campaign In Q2 along with some media on Premier Powder. Speaker 200:33:23When you go to Q3, Extension of the media campaign on Dymatize and then in Q4, we will have Promotions on the premier protein full brand and our plan right now is to launch A national marketing campaign in Q4, again barring capacity. So that is kind of when you look at the marketing and promotional Calendar for 2024 as it sits today. In regards to where there will be Kind of low promotional loads. I think one encouraging piece is that We will I think in Q2 our major one of our major Club promotions is a little bit later in the quarter in Q2. So there won't There shouldn't be a massive difference between where you have a load in, in 1 quarter and consumption in the next. Speaker 200:34:32It will mostly be in the same quarter versus back in kind of 2021 when we are doing big promotions. I don't know Paul, is there anything else that we're going to see a big change between Shipments and consumption? Speaker 300:34:50No. If you look at consumption and shipment volumes, we're expecting those to be largely tracked Throughout the year, we're not to Darcy's point, we're not expecting any major loads, deloads. We are lapping in our Q1 a trade inventory deload, Which is or actually a load, I should say. So it's actually a headwind in the Q1. So that's I want to point that out, but that also we also had a deload in the Q2 last year, which also benefits our which should be a tailwind to our Q2. Speaker 300:35:21So those are the only two pieces. But from a True consumption volume versus shipment volume, we expect them to largely track in fiscal 2024 by quarter. Speaker 1100:35:30Thank you. And as a follow-up, if we take a step back and we think about the level of promotional activity behind Premier Protein Shakes and the rest of the business in fiscal 2024, is this still Just a step towards getting back to a full investment level or would you consider this year once you get through the Q1 kind of representative the level of promotional activity that you think you need behind the 2 brands? Speaker 200:35:56It will largely be on track, I would say. We have there isn't I think We've communicated this before, but back in 2021, I think we were a bit heavy on promotion. And so I mean I think we were doing up to kind of 3 major promotions a year. I think what we've learned over the last couple years is that we were probably subsidizing a fair amount of volume. So as we move forward in 2024 and beyond, I think we are getting back To the level that we think is appropriate for our business without yes subsidizing a lot of So I would say 24 is representative. Speaker 1100:36:49Thank you, Darcy. I'll pass it on. Operator00:36:53Thank you. Speaker 800:36:56One moment for questions. Operator00:36:59Our next question comes from Jim Zallaro with Stephens. You may proceed. Speaker 400:37:04Hi, guys. Thanks for taking our question. Josh, I wanted to ask, you had touched on The benefit from having some temporarily discontinued flavors come back online, could you just offer some color around Does that represent an opportunity to bring incremental households back to the brands that maybe are more focused on a specific flavor? And so if their flavor is not available, they don't shop premier? Or is it more represent just increased buy rate where a consumer is likely to buy both have their plain vanilla flavor and then their preferred flavor? Speaker 200:37:43Yes, Jim, it's really both. So you saw a bump up In household penetration in the supplemental presentation that we have on our website, you saw a bump up about a point in household penetration. It's a combination of We did start light promotion in the quarter and so that was part of it, but it's also partially Bringing back those paused flavors. So and those are people that they really like cinnamon roll for instance. And so they were waiting for it. Speaker 200:38:16So absolutely it's a combination and in addition So both buy rate as well as household time. Speaker 400:38:26And this might be too early for you guys to have an answer on this yet given that the national marketing campaign is towards the end of the year. But do Operator00:38:34you have a sense of kind of Speaker 400:38:35what the messaging is going to be there? Is it really to kind of communicate use occasions to consumers, so it's more like to grow the category or is it something specific for Premier? Speaker 200:38:49So I'll talk about so both. So we plan to have a new campaign on both of our brands. And since Dymatize starts in Q2, I have more information on that than I do on the Premier side of things. We're still Working on obviously we have our strategy. So first on Dymatize, very excited about the campaign. Speaker 200:39:13It's a stronger creative that really is going to differentiate Dymatizes versus the rest of the competitive set around its Premium positioning and science backed, aspect which is really why consumers pick Dymatize. It's because it is It's a super premium, high quality kind of the highest quality science backed brand. And so we're really hitting on that In our new campaign, on Premier, our strategy from a marketing standpoint Has always been to use our consumers to communicate We know why they love the brand so much. So it's super authentic. It's been very effective for the brand. Speaker 200:40:05So it's a combination of that as well as communicating the amazing taste. So I don't expect us To change from that overall strategy, but the teams are working hard to figure out what the right angle is To, for the Q4 campaign. Speaker 400:40:25Great. I'll hop back in the queue. Thank you. Speaker 100:40:28Thanks. Operator00:40:29Thank you. One moment for questions. Our next question comes from Matt McGinley with Needham. You may proceed. Speaker 400:40:39Thank you. So for the Speaker 1200:40:40higher marketing spend this year, I think you were targeting something like 3% or 4% this year versus the 2.5% of sales you spent last year. Is that 3% to 4% in marketing still the right range or do you have that tighter than that now? And is the critical decision point you made a couple of comments around How you would spend it? Is the critical decision point more around the production or is it more around the effectiveness of the Q2 advertising campaign that you would then kind of ramp the spend Into the Q4, if you really got good results from what happens earlier in the year? Speaker 300:41:14Yes, Darcy, I'll take the first question and you can take the second part of the question. Yes, we are modeling our marketing spend to be in kind of the 3% to 3 point 5 We don't think we'll get to 4%. That is more likely as we go forward with our full production capacity going, but We'll be in that 3%, 3.5% range is our expectation for 2024. Speaker 200:41:37Yes. And Your second part of the question, just want to be clear. So we are supporting fully supporting In marketing, the parts of the business where we have capacity. So think of we are fully supporting Dymatize, Premier Protein Powder, our premier bottles, what we are waiting on until From a marketing perspective until Q4 is really the Tetris side of the business on premier protein And that is purely a reflection of capacity. We just need to make sure that we have the capacity and we have The right level of inventory that we can support it from a marketing perspective and see the lift. Speaker 1200:42:31Got it. That makes sense. And with the debt repayments that you made on your revolver last year and into this one, you have a zero balance And I don't believe you can call your senior notes until a couple of years out. I think in the prepared remarks, it sounded like working capital would be more of an investment this year, but you'd You'd still probably be building cash over the course of this year. Do you expect share repurchase to become more of a priority this year? Speaker 1200:42:54Or does it make sense to sit on Larger cash balances this year, I guess, to have some dry powder if you see opportunities that present themselves? Speaker 300:43:03Yes. In 2024, we expect to continue to look at share repurchases as the primary use of our capital. I would say that in 2023, we actually we bought back 125,000,000 shares. I wouldn't say it was light in 2023 as well. But as we go into 20 24, to your point, we could build cash, but Share repurchases and being opportunistic there is the more likely use of our capital. Speaker 400:43:26Okay. Thank you. Operator00:43:29Thank you. One moment for questions. Our next question comes from Brian Spillane with Bank of America. You may proceed. Speaker 1300:43:38Hey, thanks operator. Good morning everyone. Speaker 200:43:41Good morning. Speaker 1300:43:41So I guess 2 kind of follow ups. 1, I think Matt asked earlier about Our promotion level this year kind of normalized. What about can you comment also on just marketing spend, Darcy? I guess I was thinking back, you've had capacity spend a limitation for a while on and off. And So you I think my impression is maybe restrained marketing spend a bit. Speaker 1300:44:06So now that you have more capacity and we're looking at this year, Is this the normal year or would you expect that you have more capacity again assuming demand continues to increase that marketing whether it's in absolute dollars or percentage of sales, How would that evolve with having more production? Speaker 200:44:24Yes. From a marketing perspective, it is not a normal year. So we would because we're really starting, like I said we are supporting the size of the business that we have capacity. So Normal year for Dymatize, Premier Protein Powder, bottles, but on the TETRA side of the business, which is really the bulk of the Premier Protein business, We are only marketing we are planning to only market in Q4. So getting into 2025, We would absolutely be spending and probably our biggest spend would be Q2. Speaker 200:45:01The reason why we're not doing Q2 this year Is capacity and we don't and the last thing we want to do and we were pushing promotion first And then marketing in the back half. So I think 2025 will be more of a normal marketing year For the entire business because we'll have all of our greenfields up to fully scaled up and we'll be able to really drive the business. Okay. Speaker 1300:45:29And then my second my follow-up is just to Pam's question around GLP-1s and I guess I was hearing it and listening to the prepared remarks. One question is just in terms of research, it sounds like what you're doing is a lot of Consumer research, but will you do any like product formulation research or anything that might be able to connect the efficacy of Premier Patients on GLP-1s and tied to that kind of like what we see in infant formula, is there the potential to market to doctors and nutritionists, right, to sort of promote the efficacy of the product and helping people on that weight loss journey? Speaker 200:46:12Yes. So first the exciting news is that we don't have to do much. I mean our products are very well formulated positioned And already resonating with GLP users I mean you can go on social media and you see our brand pop up kind of all on Reddit And Facebook feeds, etcetera. However, I think that and I would also say that We have experienced marketing to certain groups where certain specific kind of medical needs and we do it in a way that Doesn't change our brand overall brand positioning, but we do it in a very kind of Specific surgical way, which I think is how we would do this. And so we have some experience there. Speaker 200:47:14We just want to figure out the right place to communicate. Your last question around Would we go after doctors etcetera? We have some experience there and the answer is possibly. I think our experience would say that doctors really have no interest in communicating what products People use but some of the support groups or nurses or dietitians do. And so we'll see again this is a different It's a different product. Speaker 200:47:51It's a different kind of health journey. So we want to really understand it so we can do it the right way. And then from a last question around product formulation, Absolutely. It's part of what we're evaluating. Remember, this is early. Speaker 200:48:08So we want to better understand The nutrition that they're missing, we know that that when you are on these drugs that you do lose more muscle mass that we know protein is important. So kind of check that box. Tina is important. So kind of check that box. There are other areas if there's some micronutrients that are Potentially lost, those are things that we need to learn and we plan to. Speaker 1300:48:34All right. Thanks, Darcy. Happy Thanksgiving, everyone. Speaker 200:48:37Thank you. You too. Operator00:48:39Thank you. Speaker 800:48:42One moment for questions. Operator00:48:45Our next question comes from John Baumgartner with Mizuho Securities. You may proceed. Speaker 700:48:50Good morning. Thanks for the question. Speaker 200:48:52Good morning, John. Speaker 1300:48:54Darcy, first off, I wanted Speaker 700:48:55to ask about innovation. As the supply chain issues are being solved and advertising Promo is being turned back on. At what point do you think the model is ready and sort of capable of supporting innovation that's larger and more platform based in nature? You mentioned your long range planning. So how do we think about portfolio development from here, whether it's flavors, formats, differentiated products that we may even see in fiscal Speaker 200:49:232024? We dug into I think that we have some new learnings in this area, John. So we dug into our data over the last several months with an outside And I think that we have some exciting new learnings. I think the biggest piece is We have found we have much more upside with our existing products and what I'll just call Close in innovation, so think flavors, pack sizes, formats and so sort of Closer in innovation as well as just more distribution of our existing products. What I like about that is it is less risky, it's more efficient. Speaker 200:50:15However, We also have been spending the last two years, our R and I team, have been Working on new lines of products, especially on our premier protein, business. So we have a very full pipeline of new products, but my expectation is that we're going to focus on In 2024 more on the closer in innovation and then 2025 and beyond we'll be launching Some of those lines that we have developed and our goal is to launch a new line every 12 to 15 months on both Premier and Dymatize and focus on 25 and beyond. Speaker 700:51:04Okay. And then as a follow-up on marketing, You've also mentioned the TV campaigns obviously and the high ROI you're seeing from influencers in social media. But I'm curious, do other opportunities exist, whether it's Partnerships or brand sponsorships that can maybe amplify and complement that influencer breadth and accelerate brand awareness. What levers are still out there maybe that could be high impact but haven't been pulled yet given where the supply chain has been? Speaker 200:51:34I mean honestly a lot of lepers because we just haven't I mean so again I want to separate Diamatize and Premier. On Premier, we've been holding back. We have not had any significant marketing for 2 years. So other than kind of the basic Social media that what we call kind of every day keep the lights on marketing but we haven't had a big campaign since 2021. So absolutely a big opportunity on Dymatize and we use we have influencers. Speaker 200:52:05We call them our shaker program And they're basically every day that we have a bunch of criteria. They're still they're every day influencers But they actually have a lot of reach. So we have had a lot of success with the shaker program with In Premier now is there an opportunity to have a more high profile influencer possibly on Dymatize we actually have done that. So we've brought in a combination of just regular influencers which have Pretty high reach, but then we've also every year brought on some kind of higher profile influencers and we'll continue to do that Within the Dymatize business, even starting in 'twenty four. I'm not ready to tell you who our high profile influencers are, but we're absolutely using that lever. Speaker 700:52:59Okay. Well, I'm excited. Thanks, Darcy. Speaker 200:53:02Yes, awesome. Thanks. Operator00:53:04Thank you. Our next question comes from Bill Chappell with Truist Securities. You may proceed. Speaker 1400:53:20Yes. Thanks for squeezing me in and good morning. Speaker 200:53:23Good morning. Speaker 300:53:24I guess first maybe just Speaker 1400:53:26a little bit talk with Is it some of the additional capacity? Talk about kind of different distribution, both international opportunities, but also kind of single serve, It's C scores or stuff like that and kind of how that's progressing or if that will progress as we look at the next in the New Year? Speaker 200:53:44Yes. So, first of all international, actually I see both of those opportunities as More longer range. We have so much I mean I just said when I was talking to John is that From an innovation standpoint, this new learning around we have so much opportunity in the U. S. With our existing products, with kind of close in innovation, International is absolutely an opportunity, but it is, it takes a little longer to build And it is kind of it's a yes, it's a slower build. Speaker 200:54:26Right now international is about low teens about 10% to 12% of our business and it's growing very it's growing Strongly about the same rate as we're seeing in the U. S, but it's on a lower base. So we're going to continue. We have a dedicated team And that's focused. We have a nice sized business in Canada. Speaker 200:54:50We're growing in Mexico. We are growing through our global customers across the globe. We have a business in the EU and an office there. So I would say we are definitely investing and we see it as a future opportunity. It's just a slower build, especially when we have so much opportunity within the U. Speaker 200:55:11S. On the single serve question, the same thing again, we see that as an opportunity. It's a little more complicated because it requires a different route to market. So once again, we have this capacity. We are actually Expanding our bottle co man, which is exciting, which is also the format that we sell within e commerce. Speaker 200:55:38And we think that there is future opportunity with kind of bottles across channels. Speaker 1400:55:48Got it. Thanks so much. And then just a housekeeping, can you give us an idea of Interest expense and tax rate for fiscal 2024. Thanks so much. Speaker 300:55:58Yes. Our tax rate will be around 25 So 26% a little higher this year because of the accelerated amortization on PowerBar. What was your second question? It was cash interest? Speaker 1400:56:12Yes, yes, interest expense cash interest expense. Speaker 300:56:15Cash interest ought to be around 60,000,000 Speaker 1400:56:19Great. Thanks. Happy Thanksgiving. Speaker 400:56:21Thanks, Same to you. Speaker 200:56:21Thank you. You too, though. Operator00:56:24Thank you. One moment for Speaker 1300:56:30questions. Operator00:56:33Our next question comes from John Anderson with William Blair. You may proceed. Speaker 400:56:38Hey, good morning everybody. Thanks. Just one quick question on Premier Protein. From the slides, it looks like consumption growth for the brand has been running stronger in tracked channels relative to untracked channels, both on a 52 week and 13 week basis. John, assuming that's a function of where the new distribution or TDPs, the restoration of TDPs is hitting the market. Speaker 400:57:12Could you remind us of kind of for Premier Protein, how much of the consumption for that brand is tracked versus untracked. And as you look to 2024 and restarting promotions, etcetera. How do you expect that channel mix may evolve in 2024 from here? Thanks. Speaker 200:57:38So Jennifer might have to help me. I think it's about 60% of our business on Premier is in tracked. Jennifer, is that about right? Speaker 1000:57:48I believe so. Speaker 200:57:50Okay. So about 60% of the premier business is Tracked, you're absolutely right John that the reason why it's outpacing on track is Mainly that's where we're gaining a lot of distribution. It's a lot of food accounts, mass accounts where we're increasing distribution Quite a lot. And then sorry, your second question around Was it just your view? Speaker 400:58:22More around the focus of marketing in 2024 and will it have a kind of a channel orientation to it that might affect that mix in 2024? Thanks. Speaker 200:58:34No. So All of our marketing is really supporting the overall brand which should raise all channels kind of equally. We do Some channel specific marketing, but the bulk of it will be overall. I think that the biggest I do expect that I mean it depends it will be I would say the difference between tracked and untracked moving forward Well, we expect to continue to see increases in distribution more in tracked, But also on untracked we'll see promotion can really push untracked Quite high when we have these big promotions within the quarter. So that's something that we will see kind of Speaker 100:59:28like in Q2 and Q4. Speaker 400:59:32Makes sense. Thank you very much. Speaker 200:59:34Thank you. Operator00:59:37Thank you. We've reached the end of our Q and A session. This concludes today's conference call. 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