BellRing Brands Q1 2025 Earnings Report

BellRing Brands EPS Results

• Actual EPS: $0.58
• Consensus EPS: $0.47
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: N/A

BellRing Brands Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

BellRing Brands Announcement Details

• Quarter: Q1 2025
• Date: 2/3/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, February 4, 2025
• Conference Call Time: 9:00AM ET

BellRing 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. BellRing Brands, Inc. was incorporated in 2019 and is headquartered in Saint Louis, Missouri.

BellRing Brands Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good day, and welcome to the Bellring Brands First Quarter Fiscal Year 2025 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 session. Instructions will be given at that time. As a reminder, this call is being recorded.

[Operator]

I would now like to turn the call over to Jennifer Meyer, Investor Relations for Bellring Brands. Please go ahead.

[Jennifer Meyer, Investor Relations at BellRing Brands]

Good morning, and thank you for joining us today for Bellring Brands' Q1 fiscal 2025 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 sections atbellring.com. In addition, the release and slides are also available on the SEC's website.

[Jennifer Meyer, Investor Relations at BellRing Brands]

Before we continue, I would like to remind you that this call will contain forward looking statements, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward looking statements are current as of the date of this call and management undertakes no obligation to update these statements. As a reminder, this call is being recorded, and an audio replay will be available on our website. And finally, this call will discuss certain non GAAP measures. For a reconciliation of these non GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website.

[Jennifer Meyer, Investor Relations at BellRing Brands]

With that, I will turn the call over to Darcy.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Thanks, Jennifer, and thank you all for joining us this morning. Last evening, we reported our Q1 results and posted a supplemental presentation to our website. I'm pleased to share that fiscal 2025 is off to a good start. The business accelerated as we layered in demand drivers and kicked off new campaigns on both brands. Our first quarter results were slightly ahead of our expectations on the top line with more favorability on the bottom line.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Both net sales and adjusted EBITDA grew approximately 25% driven by Premier Protein. Our EBITDA margins benefited from favorable gross margins and the timing of marketing spend. As you saw in yesterday's press release, we raised our outlook for the year. We now expect net sales to grow between 13% 17% over fiscal 2024 and adjusted EBITDA to grow between 7% 14%. Our strong Q1 performance along with confidence in demand drove our decision to raise our guidance.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Before reviewing the category and brand updates, I want to share that our supplemental presentation and corresponding metrics now reflect expanded coverage of the convenient nutrition category as well as our business. In the new database, the total convenient nutrition category is now reported as $19,000,000,000 up from $13,000,000,000 dollars a sizable increase in tracked coverage. The new database provides a more accurate picture of the category across channels and a better reflection of our strong market position. Now to category and brand updates. The community nutrition category grew 12% in Q1.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

As I mentioned last quarter, it is rapidly transforming into an everyday and sports nutrition category with those segments driving the most of the growth and making up 75% of sales. From a form perspective, ready to drink growth accelerated and continued to lead the category up 18% driven by strong consumer demand. RTDs were the 2nd fastest growing category in the entire store only behind eggs which had unique supply demand dynamics. Mainstream Everyday and Sports Nutrition RTD brands continue to bring new consumers into the category and were up 31%. Ready to mix grew 8% sustaining Q4's growth rate.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Overall, we see the total convenient nutrition category momentum increase in Q1 and I look forward to an even stronger growth during the Q2 New Year, New Year season. Turning to our brands. Premier shake consumption growth accelerated this quarter up 23%. Growth was strong in all channels driven by distribution expansion, accelerating velocities and incremental promotional activity. Expansion in form including bottles and pack size along with improved in stocks drove the distribution gains.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Our seasonal flavor wintermint chocolate has demonstrated high incrementality to the brand and was the number 2 RTD item at a major mass retailer this season. Consumption growth continued with January up 17%. Our brand metrics remain strong with Premier Protein reaching all time highs in TDPs and household penetration. The brand continues to gain new consumers reaching 20% of household this quarter. In calendar year 2024 Premier Protein grew household penetration 17%, a significant contributor to the overall RTD category growth.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

The brand's repeat and buy rate grew for the calendar year, demonstrating our category leading consumer loyalty. Premier Protein with RTD market share of 26% maintained its position as the number one brand in the RTD segment as well as the number one brand in the broader convenient nutrition category. All of this is especially encouraging because in a high growth category with low household penetration, we see plenty of room to continue to grow our brand and expand the overall category. Premier Protein Powder continued its strong trajectory with consumption up 24% in Q1, behind strong velocities and distribution gains. We remain encouraged by the growth potential of Premier Protein brand in this format.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Its household penetration reached 2% this quarter and during calendar year 2024 Premier Powder's household penetration grew 22%, the 2nd highest of any competitor in the powder category. We continue to believe Premier will be a contributor to mainstreaming the powder category in the same way that Premier did in ready to drink. We're thrilled to share that our Premier Protein national marketing campaign hit screens late in December, just ahead of the new year, new use season. It is a high energy spot that captures how Premier Protein brings joy to the health journey. Featuring the tagline sweeten the journey, it shows that healthy eating doesn't have to be hard, but can actually be enjoyable and fun.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

This is our 1st nationwide campaign since 2021 and will reach TV, streaming and social media audiences. Although early, the campaign is generating significant increases in search and traffic to our website is up 80% versus year ago. From an innovation standpoint, we launched a new line of premier protein products, our indulgent line, which are available in 4 decadent shake flavors and 1 powder flavor. These items are richer and creamier targeting an incremental occasion consumption occasion, while still delivering on the nutritionals that our consumers expect from the Premier brand. The items are building distribution and although early are off to a promising start.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

More innovation is planned throughout fiscal 2025. In addition to exciting advertising and new products, we are updating our logo and redesigning our packaging for the first time in close to a decade. The refreshed design builds on our strong performing current design and brings a modern look that improves discoverability at the shelf. We expect the updated design will start to hit the shelves in the second half. Turning to DYMTIZE, the international business drove the global brand this quarter more than offsetting domestic headwinds.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Despite recent U. S. Trends, the brand remains strong holding the number 2 share position within sports nutrition powders, which represents about half of the overall powder category. While household penetration and overall distribution levels remain stable, we are starting to see some encouraging signs from both marketing from our marketing campaign as well as our new products. Our marketing campaign with San Francisco running back Christian McCaffrey exceeded our benchmarks and drove strong lift to our brand metrics.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

As a result, we've expanded our core team of diamond type athletes and influencers by partnering with tennis professional and Olympic medalist Tommy Paul, who is ranked number 9 in the world. On the innovation front, we launched 2 new platforms this quarter. We know that Diamatized consumers purchase both free workouts and RTD products. So in December, we launched RTD shakes with fruity and Cocoa Pebbles flavors as well as pre workout powder called Energize available in 3 flavors. Early results for both products are positive and we continue to be bullish on the sports nutrition category opportunity.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

In closing, our Q1 results position us well for another above algorithm year. Our organization has officially pivoted to demand driving. Strong macro tailwinds around protein are driving robust long term growth in our category with ready to drink and powder segments in the early stages of growth. Premier Protein is already the number one convenient nutrition brand and we are just starting to drive demand. Our innovation pipeline on both brands is rich, enabling us to bring excitement to consumers and our retail partners for years to come.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Last, we have a scalable, regionally diverse supply chain able to support our long term growth projections. Our confidence in the long term outlook for Bellring remains high. We look forward to sharing our progress next quarter. I will now turn the call over to Paul.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Thanks, Darcy, and good morning, everyone. As Darcy highlighted, we had a good start to fiscal 2025. Net sales for the quarter were $533,000,000 and adjusted EBITDA was $125,000,000 Net sales grew 24% over prior year and adjusted EBITDA increased 25%. Adjusted EBITDA margins were 23.5%, meaningfully exceeding our expectations. Starting with brand performance, Premier Protein net sales grew 26% behind strong volume growth for RTD shakes and powders.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Distribution gains, incremental promotions and organic growth drove the sales increase as well as a benefit from our price increase on shakes taken in Q4. Shipment dollar growth slightly outpaced consumption dollar growth. Diamatized net sales increased 13% this quarter on 12% higher volume. Similar to recent quarters, strength in the international business continued with double digit sales growth. This was partly offset by domestic headwinds.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Gross profit of $200,000,000 grew 35% with an increase in gross profit margin of 310 basis points to 37.5%. Our pricing actions offset modest input cost inflation in the quarter. We expect the rate of inflation to increase throughout the year. Compared to our expectations, 1st quarter gross margins benefited from $5,000,000 of non recurring cost favorability and $1,500,000 of unrealized mark to market gains on our commodity hedges, which combined drove margins higher by approximately 120 basis points. SG and A expenses were $80,000,000 an increase of 270 basis points as a percentage of net sales with higher spend for advertising and promotion and warehousing the main drivers.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Advertising promotion spend was 2.8% of net sales, up from 1.4% last year's Q1 as we kicked off new campaigns for both Mir Protein and Dymatize. However, we shifted roughly $4,000,000 of marketing spend from the Q1 to later in the year. This along with favorable gross margins contributed to adjusted EBITDA margins coming in above our expectations. Operating profit of $115,000,000 increased $42,000,000 compared to prior year and was positively impacted by lapping $17,000,000 of accelerated amortization last year. Before reviewing our outlook, I'd like to make a few comments on cash flow and liquidity.

[Paul Rode, Chief Financial Officer at BellRing Brands]

We generated $3,000,000 in cash flow from operations in the Q1. As anticipated, our working capital increased as we added Shake Supply to our inventory. Moving forward, we believe our inventory levels are largely normalized and accordingly our adjusted EBITDA to cash flow conversion will improve for the remainder of the year. We continue to expect our cash flow in fiscal 2025 to be in line with fiscal 2024 and weighted to the back half of the year. As of December 31, net debt was $790,000,000 and net leverage was 1.7 times.

[Paul Rode, Chief Financial Officer at BellRing Brands]

With our EBITDA growth and strong cash flow generation, we anticipate net leverage will remain below 2 times throughout fiscal 2025. With respect to our share repurchases this quarter, we bought 143,000 shares at an average price of $77.12 per share or $11,000,000 in total. In January, we repurchased about 550,000 shares at an average price of $72.79 per share or $40,000,000 As of January 31, our remaining share repurchase authorization is $124,000,000 Turning to our outlook, we raised our fiscal 2025 guidance for net sales to be $2,260,000,000 to $2,340,000,000 and adjusted EBITDA of $470,000,000 to 500,000,000 dollars Our guidance implies strong top line growth of 13% to 17% and adjusted EBITDA growth of 7% to 14% with healthy adjusted EBITDA margins of 21.1% at the midpoint. As Darcy mentioned, our better than expected Q1 performance drove our decision to raise our outlook. Before reviewing our 2nd quarter outlook, I want to give some perspective on our cadence throughout the year.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Overall, our quarterly sales phasing hasn't changed significantly from our November guide. Recall, we expect net we expect sales growth to be weighted to the first half of the year as the second half lapsed trade inventory loads in 2024, which we estimate to be a mid single digit headwind to our second half growth. Regarding adjusted EBITDA, we have made some modest changes to our quarterly phasing. Recall I mentioned we shifted marketing spend from the Q1 to the second half. Additionally, protein costs in the first half are trending slightly more favorable than expected and more unfavorable in the second half.

[Paul Rode, Chief Financial Officer at BellRing Brands]

The combination of these items in a stronger than expected first quarter has shifted EBITDA growth toward the first half. In addition, our guidance continues to include second half costs related to packaging redesign. As a result, we expect second half EBITDA margins to be modestly lower than the first half with the full year above our long term algorithm at 21%. Moving to our 2nd quarter forecast. We expect mid to high teens net sales growth with Premier Protein the main driver.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Dime Ties and all others expect to be flat to down year over year. We expect consumption dollar growth to be meaningfully exceed shipment dollar growth for Premier Shapes, which is typical in the 2nd quarter. We expect 2nd quarter adjusted EBITDA margins to decline modestly compared to year ago with significantly higher marketing spend more than offsetting higher gross margins. In closing, we are pleased with our strong start to fiscal 2025. Our Q1 results gives us greater confidence in our full year outlook and long term growth prospects.

[Paul Rode, Chief Financial Officer at BellRing Brands]

I will now turn it over to the operator for questions.

[Operator]

Thank Our first question comes from David Palmer with Evercore ISI. Your line is open.

[David Palmer, Senior Managing Director at Evercore]

Thanks. Good morning. I wanted to ask you about your growth, how you're growing this year you think in ways that are different than maybe last year And maybe the opportunities going forward, if you go through this transcript, you can get a lot of stuff, a lot of things are going on. You mentioned the indulgent types, the new pack types, PET versus the aseptic boxes. We saw some strong growth in e commerce.

[David Palmer, Senior Managing Director at Evercore]

So I'm just wondering how you would characterize the growth levers this year and what's coming in stronger or more importantly? And then maybe how this will play out even beyond 2025?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Sure. It's a great question. So first of all, I mean this year is fundamentally different from last year. I mean, we have ample capacity where we really can drive the business. I mean, I mentioned in my prepared remarks that the entire organization is now focused on demand driving.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Where you really see that is, this is the first time that we have started national advertising. We have not had national advertising on our main business, our shake business since 2021. So that's a big difference. And honestly, that is the one driver that can lift all channels. So incredibly important.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

The second piece is just around distribution. We expanded distribution like distribution and innovation I would say. So in past last year versus this year, we're really driving distribution and innovation. Whereas last year we were still having out of stocks on the shelf, especially in the food accounts. And then I would say the 3rd big one is promotion in food.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So last year we did not we kind of eased in promotion last year and we started in the club channel and then expanded from there. We now have promotion across and we started layering in promotion and display in the food channel. And I always like to repeat this because I think our business is different from many other businesses is it is less about the sense off for promotions. So it's not about deep discounting. All we want, we display is what moves our business.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And so we can do as little as we can from a sense off standpoint to get those displays in aisle. And so and we're really starting January, February, March are big is the big season for us where the most new consumers enter into the category. And so it's nice to see our big displays out there, like they have been in past years. So, so those I would say those are kind of the 3 big areas that are different this year than last year. So hopefully that answers your question.

[David Palmer, Senior Managing Director at Evercore]

Thanks. And if I a separate follow-up on DYMTIZE international really was super strong this quarter. We would estimate maybe up 40%. How do you see DYMETYZE playing out this year as a brand? Was that international strength sort of a one off for this quarter?

[David Palmer, Senior Managing Director at Evercore]

Any thoughts about DYMETYZE in 2025? Thanks.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

We expect the DYMETYZE international business to continue to be strong throughout the year and drive the overall business. In the U. S, so remember international business for is about 40% of the global brand. So and the U. S.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Business is pressured. We have a few years ago we took a lot of pricing and the category took a lot of pricing because of whey protein prices really accelerating. Well we're seeing those commodity prices continue to accelerate. So the P and L is pressured, specific I mean globally, but the consumer in the U. S.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Is much more pressured. So I think that as we look at the global brand, international will stay strong throughout the year and we are looking at basically like single digit growth for the global brand.

[David Palmer, Senior Managing Director at Evercore]

Thank you.

[Operator]

Thank you. Our next question comes from Andrew Lazar with Barclays. Your line is open.

[Andrew Lazar, Managing Director at Barclays]

Great. Thanks so much. Good morning. Darcy, last quarter, you talked about the learnings from several of the tests that you did of your advertising campaign behind Premier. That is now in full swing on a national basis.

[Andrew Lazar, Managing Director at Barclays]

I know this is the first one in many years. So I'm trying to get a sense of what sort of response knowing it's still early that you're seeing to the campaign based on whatever metrics that you use to sort of assess the lift or the payback?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So we just it just launched at the end of December, last week of December. So it's very, very new. But the early what we look at right now because it's too soon to really see lift in market. But we look at website traffic. We look at online search and those look really strong.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So we're getting consumers attention and they're acting and they're actually searching premier protein. So that's exactly what we want to see. I think that this was a well researched campaign. So I think I told you guys last quarter that we did we performed 3 test markets. We also did a fair amount of creative testing.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

We wanted to make sure we got it right because it was the first time that we have launched national media in several years. So all the test markets met or exceeded the lift expectations and we made a few we found a few areas from a creative standpoint that we could tweak and improve the spots. And so we were able to do that and we're really pleased with the early performance.

[Andrew Lazar, Managing Director at Barclays]

Thank you for that. And then, I think last quarter you mentioned sort of starting to have more top to top discussions with key customers now that you have sort of ample capacity and some more innovations to talk about that sort of warrant, right, talking about more incremental shelf space in the store. Would you expect this to lead to sort of material gains along these lines of this fiscal year? Or are those things and those sorts of decisions by retailers really sort of a longer burn sort of process? Thanks so much.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

I would say yes and yes. First of all I think that one of our main growth drivers is just around getting our fair share of the shelf. We're about a 25% market share player the number 1 in the category. So we should absolutely have a quarter of the shelf if not more because we're driving most of the new consumers into the category. So that is happening.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

We have capacity and you're starting to see some really strong increases in TDPs. You can track it in our supplemental presentation. But so that is happening, but then also these top to top, those conversations are more around the future of the convenient nutrition category. And how I mean there is it's a new category, 30 ish years old, and it's rapidly changing. And so if you go to you know shelf set in a food account looks very different from a mass account and looks very different from a club account And so there's a lot of opportunity to bring in consumer insights to help consumers around make sense of all the products and how they use the products and who they're for because right now it's very confusing.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So those conversations not only expanding the convenient nutrition category, expanding sports nutrition in everyday portion of the category which is now 3 quarters of it. So those kind of conversation and those bigger changes take time But in the meantime, we're also expanding just getting our kind of our fair share of the shelf.

[Andrew Lazar, Managing Director at Barclays]

Great. And just lastly, what would you put your share of shelf at versus your market share right now?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

It is so I don't have the exact number, but it's about half is where it should be.

[Andrew Lazar, Managing Director at Barclays]

Got it. Thanks so much.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Thanks.

[Operator]

Thank you. Our next question comes from Ken Goldman with JPMorgan. Your line is open.

[Kenneth Goldman, Managing Director at JP Morgan]

Hi, good morning. And thank you for the help in sort of framing the rest of the year in terms of cadence. I was wondering if I could ask a follow-up to that, which is

[Kenneth Goldman, Managing Director at JP Morgan]

how would you like us

[Kenneth Goldman, Managing Director at JP Morgan]

to think about Premier, mainly ready to drink consumption in tracked channels? Any sort of ups or downs or unusual trends we should think about just as we look ahead at the biweekly releases going forward?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And Ken, you're mostly talking about Q2?

[Kenneth Goldman, Managing Director at JP Morgan]

Yes and no yes, but I'll say yes and yes, just like you did, a little bit of both, whatever you can offer would be great.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Okay. So January I said was up 17%. We expect overall Q2 to be in the mid-20s. So we should be seeing acceleration as we go into Feb March. And that is really driven.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And again now I'm using MULO plus so we have a broader look at tracked channels. So that includes both Amazon and Costco. But yes, so we will so we should be seeing an acceleration into Q2 and then we should see strong consumption throughout the year.

[Kenneth Goldman, Managing Director at JP Morgan]

Got it. Thank you. And then as

[Kenneth Goldman, Managing Director at JP Morgan]

we think about the rate of

[Kenneth Goldman, Managing Director at JP Morgan]

the mix category in the U. S. I think there was some hope that might be that there might be a little bit of a rollback situation for lack of a better phrase in January with a large customer across a number of different manufacturers. I was just curious, A, is that correct that we were expecting that? And B, did that happen as planned?

[Kenneth Goldman, Managing Director at JP Morgan]

And I guess, C, what are you looking for in terms of overall category pricing there in light of some of the challenges at the higher end of the premium portion of the category as well as higher input costs going forward?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Okay. Ken, can you so you said that we were expecting a rollback?

[Kenneth Goldman, Managing Director at JP Morgan]

I'll simplify that, Darcy. I was under the impression no, I'll simplify it. I thought there might be and maybe I misheard this last quarter, there might be a hope that there might be a little bit of incremental promotions at a particular customer in January across ready to mix. But really broadly, I'm just trying to get a sense of what you're viewing or what you're expecting from pricing in that category, especially for the premium side, in light of some of the challenges and in light of at the same time some higher weight costs, if that makes sense?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yeah, it makes perfect sense. We're watching it very closely because yes like you said weight pricing is increasing and it's expected to continue to increase. Right now, promotion across the category is pretty stable. So we're not seeing a decrease in promotion to offset the increase in whey protein yet. I think that likely we still believe that we're going to see it.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

We haven't seen any pricing yet. So I think that we believe we just have to see it later in the year because that's where you really start seeing the increases in whey protein. But we haven't seen it yet. We haven't seen a dramatic shift in promotion plus or minus.

[Kenneth Goldman, Managing Director at JP Morgan]

Got it. Thank you.

[Operator]

Thank you. Our next question comes from Thomas Palmer with Citi. Your line is open.

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

Hey, thanks for the questions.

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

First, I just wanted to make sure I understood the timing of cost inflation and kind of what's driving it. You talked about mid single digit. Is that still the expectation? And then what's driving that uptick as we move into the back half? Is it really just looking at whey or kind of other items to call out?

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

Thanks.

[Paul Rode, Chief Financial Officer at BellRing Brands]

Yes. Our overall expectation hasn't changed. It's mid single digits. And really in my prepared remarks, the shifting from the shift of protein is for the full year, it's really neutral, but it's just a little bit more favorable first half, a little less favorable second half unfavorable in the second half for net. It's not that different.

[Paul Rode, Chief Financial Officer at BellRing Brands]

As far as what's driving, there's a little bit on whey protein, there's a little bit on milk protein. So again, we're talking about relatively small amounts, but a little bit of an uptick. And it's just market driven. Whey protein continues to remain fairly tight supply demand dynamics, so the cost there remain elevated. And then on milk proteins, which are the primary input for our shakes, it's just been a steady increase.

[Paul Rode, Chief Financial Officer at BellRing Brands]

The market for non fed dry milk has been bouncing up and down a bit. We're still not fully covered in the latter parts of the year. So we're obviously being cautious in watching that market. But again, we're talking about pretty small changes net. It's really no different than our expectation of mid single digits for the full year.

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

Great. Thanks for that. And then on DYMETYZE, you noted earlier

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

in

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

the call how pricing had run up quite a bit a couple of years ago. And I think last year was given some cost tailwinds rather promotional for the group as a whole. Maybe an update on the promotional intensity you're seeing now that costs are really starting to escalate? And are you seeing any outright price increases or at least a pullback in that promotional activity by the group? Thanks.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yes, we are not. So we haven't seen pricing yet. There are some rumors out there, but nothing we haven't seen anything at the shelf from a price increase standpoint. And there hasn't been a dramatic change of promotion. So pretty steady promotional levels.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So we expect that there is going to be a change later in the year as these higher protein costs start flowing through the P and Ls, but we haven't seen it yet.

[Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi]

Understood. Thank you.

[Operator]

Thank you. Our next question comes from Kamil Gharajwala with Jefferies. Your line is open.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

Hey, everyone. Good morning and congratulations. You're liberated from all the capacity constraints over recent years.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

There's a lot going on

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

in what you've laid out. I guess the big sort of question is what's the right pace of doing all these things between the marketing and the repackaging and the innovation? There's sometimes a risk of going too fast, especially because this is really your 1st year of having the ability to be a lot more demand focused. So how do you know you're sort of going at the right speed and not too fast?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

I love that question. So we have been if you think about the last year starting end of 2023 into 2024 and now 2025, I would say we have been pressing the accelerator kind of consistently. So we first layered in promotions in some channels. We did some light kind of light innovation more around flavors just to give consumers and retailers some flavor excitement. Then this year was now we are launching both innovation as well as doing advertising.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

But we're still not we've talked about wanting to get to 4% to 5% of spend on marketing. We're not there yet. We are slowly accelerating for the exact reason that you're talking about which is we don't want to get into a supply constrained situation and we don't need to. We want to try to figure out the right level of support for our business to consistently drive it year over year. So that is exact it's a fine line, but so far I think we've been doing it well and we'll continue to keep that in mind.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And just your question around packaging, we have been working on packaging for a while and I'm really excited about the new graphics. It's an evolution not a revolution, but it is going in the right direction. It will improve all of our testing. It's going to improve discoverability. It's a more modern look.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And we really haven't. We've done small changes to our packaging because it works well. But we haven't done kind of a logo redesign and package redesign, in about a decade. So it's pretty exciting. And that should roll in, toward the end of the year basically like the second half.

[Kaumil Gajrawala, Managing Director at Jefferies Financial Group]

That's good context. Thank you.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Thanks.

[Operator]

Thank you. Our next question comes from Jim Solera with Stephens. Your line is open.

[Jim Salera, Research Analyst at Stephens Inc]

Darcy, Paul, thanks for taking our questions. Darcy, I wanted to go back to something you mentioned earlier, which is that Premier is really driving most of your entrants into the category. If you

[Jim Salera, Research Analyst at Stephens Inc]

look at the scan data, it really seems

[Jim Salera, Research Analyst at Stephens Inc]

like Premier and maybe one of the brand are the ones that continue to gain share. Can you just give us some insights into why some of the other legacy brands aren't seeing the same level of engagement from these new consumers given that the category as a whole has kind of seen a lot of new people engaging with it?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yes. The growth is coming from mainstream, so basically the everyday nutrition and sports nutrition segments. And it's really the kind of modern brand. I think if you separate the category into how we look at it, which is adult nutrition, sports nutrition, everyday nutrition and weight management. You really start seeing a dynamic where it used to be that adult and weight really was most of the category.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

It's where the category began. And now you see those parts of the businesses really declining or just stagnant. And you see the sports nutrition and every day just kind of exponentially growing. I think it is because those part of the categories are more they're more positive, they're more proactive health messages as opposed to, the adult and the weight side of things are more about deprivation. And so I think that that is I think it's a changing consumer view of the entire category, going much more into that positive wellness side as opposed to what you want to change about your body.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So I think that is part of it.

[Jim Salera, Research Analyst at Stephens Inc]

Great. And then if I think about Premier in particular, is there

[Jim Salera, Research Analyst at Stephens Inc]

a way to split up the volume gains between frequency among existing households? So whether it's I used to have it once a week and now I have it 3 times a week versus just new households coming brand that haven't tried the product before?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

I don't know if I have that. We probably need to follow-up with that. I don't have that off. I don't want to give you the wrong number. All I would say is that, we're seeing and it shows in our supplemental presentation where you see that not only are we increasing households, but we're also increasing buy rate and repeat rate.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So it's rare that you see a business that is growing households as well as growing distribution, innovating, etcetera, but at the same time increasing buy rate and repeat rate. So it's definitely so I don't have the breakdown. I would say they're both contributing to our growth.

[Jim Salera, Research Analyst at Stephens Inc]

Okay, great. Appreciate the color.

[Paul Rode, Chief Financial Officer at BellRing Brands]

I'll hop back in the queue.

[Operator]

Thank you. Our next question comes from John Baumgartner with Mizuho Securities. Your line is open.

[John Baumgartner, Managing Director, Equity Research at Mizuho Securities]

Good morning. Thanks for the question.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Good morning.

[John Baumgartner, Managing Director, Equity Research at Mizuho Securities]

Darcy, on the shake side, it sounds as though you're gaining confidence that the depth of deal on promo for the consumer doesn't need to be as deep as it's historically been. And I'm curious to the extent to which that then enables you to recalibrate your budget and transfer more funding into slotting or other areas that open new opportunities for where in the store you can be displayed or increase the frequency of quality promo. Is there maybe a longer term benefit to be had here?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yes. I think that for us, the goal is display. And so, we know we do not think that we need to go as deep as perhaps we did a few years ago. However what I will say is that this doesn't have to do with just what we want. And so it is always a negotiation with our retail partners about what their rules are about the required depth to get display.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So if it was up to us we would only do you know we would have very little TPR if any we would just do display because we know that that's where you really you get the eyeballs you get the trial We bring people into the franchise and then our 50% repeat fuels it. But again, there are more stakeholders that we need to work with and they have different rules.

[John Baumgartner, Managing Director, Equity Research at Mizuho Securities]

Okay. Thanks for that. And then on the ready to mix side, coming back to this absence of more prominent price increases thus far, do you get the sense at all that the volume success of shakes is maybe forcing the powder segment to hold prices more so than usual and sort of accept some margin pressure to reinforce relative value there. I mean, I guess I'm curious if maybe there's more of a fundamental change in how powder is pricing, especially if there's some expectation or optimism for lower cost later this year?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Paul, do you want to talk a little bit about where we think pricing is going to go?

[Paul Rode, Chief Financial Officer at BellRing Brands]

From a protein cost perspective on whey? Yes. I think what we're seeing is that costs have remained elevated and we expect those to really go through our fiscal year. So I would not say that we've necessarily seen on whey powders relief yet. I think it's still a tight supply demand dynamic on whey powders and we expect that really to continue through our fiscal year, which I would say is in general, I think our perspective is it's hanging on longer than we expected.

[Paul Rode, Chief Financial Officer at BellRing Brands]

So it may go beyond this fiscal year, but obviously that's still to be determined as we get further along. But yes, I'd say our view is that it seems to be sticking a little longer than expected.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

But there definitely is a different dynamic because milk protein concentrate is what the protein that we use in our shakes and then whey protein is what is in the powder business and there's definitely a different cost dynamic in both. They're both increasing but milk protein concentrate is kind of just more steady where you don't have the whey protein is a bit more volatile. And so and has increased very dramatically over time. So I think, yes, there's just a different P and L reality in both sides of the business.

[Operator]

Thank you. Our next question comes from Brian Holland with D. A. Davidson. Your line is open.

[Brian Holland, MD - Research Analyst at D.A. Davidson]

Thanks. Good morning. I was just curious, Darcy, if you could sort of discern for us between on some of these distribution gains, how much of that is capacity constraints easing versus kind of like new product launches that you've talked about? I guess it seems like you have a long tail of white space that you've referenced over the past year plus with respect to getting your products new forms, single serve, other channels, etcetera. So I'm just curious, as we think about the long term opportunity for how big this brand, how big this category can be, how broadly it can be distributed, where we are in that?

[Brian Holland, MD - Research Analyst at D.A. Davidson]

And the distribution gains that we're seeing specific to this quarter, how much of that is really just kind of core blocking and tackling as capacity constraints ease versus actually tapping into the long term white space?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Okay. So from an out of stock, let's just start with kind of the block and tackling out of stocks that we're lapping. We'll probably spin it we'll have lapped most of the out of stocks by Q I think they ended kind of Q2 trailed into Q3. By Q4 of last year, we had mostly full shelf. So if you think of that, so if you think of percentage of our growth, I think we would say kind of single digit part of our growth, maybe a quarter of our growth is coming from that in the first half.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So that's just kind of what now when you think about the long term opportunity of distribution, I would bucket it into two sides. I mentioned to Andrew that we were if you assume that your share of shelf should equal your market share, We basically should double our space. It varies dramatically from account to account. But at a macro level, we should about double our space given where our market share is. That's one piece.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

That's just share of shelf. But then when you think of when you're in a high growth category, fastest growing within one of the fastest growing within the store, the entire category should increase in space. And so I think that's where it gets really interesting and where the continued so once we kind of fix the shelf meaning that we get our fair share then we start talking about the overall increase in the category space and those are those top to top discussions and the ones that should win there obviously are the ones that are driving the new consumers into the shelf and there aren't that many of those brands and we're one of them.

[Brian Holland, MD - Research Analyst at D.A. Davidson]

Thanks. That's very helpful. And then maybe just on that last point, capacity constraints are easing, presumably not just for you, but for the category. We've seen little green shoots, some tinier brands, certain private label SKUs, having some nice growth here off of obviously low basis. Just curious how you're seeing the competitive landscape evolve around you as maybe more capacity becomes available?

[Brian Holland, MD - Research Analyst at D.A. Davidson]

And certainly, to your earlier point about the category being the 2nd strongest behind eggs right now from a growth standpoint. Clearly, that brings eyeballs from a competitor standpoint. So just curious what you're hearing and seeing with respect to competitive activity, innovation, etcetera, around the mode that you've built here with Premier Protein and ready to drink?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yes. From a competitive standpoint, I would say there aren't a ton of major changes since the last several quarters. The mainstream and sports nutrition brands are winning, and they're the ones bringing in new consumers into the category, gaining distribution both in aisle and out of aisle, which has been again the key because it's a low household penetration category, so people need to see the product. And that the smaller brands are honestly let I mean yes you always see some new plant products kind of come and go but really ones that make a difference and are making an impact and gaining a lot of shelf space. There just aren't that many within ready to drink very different within ready to mix ready to mix.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

You see upstarts all the time and I think that's the big difference between ready to drink and ready to mix and bars ready to mix and bars are much easier to formulate. You can get you know you can you can basically formulated in kind of a kitchen you know a commercial kitchen where it's the ready to drink category is just highly complex it's hard to formulate it takes you know 2 plus years to formulate these products. You have to make them in a very in a facility that is kind of wall to wall stainless steel aseptic very expensive. Usually you have to commit to long term volumes to get the space. So it's just a much different competitive moat I would say than in the other parts of the category.

[Operator]

Thank you. Our next question comes from Matt Smith with Stifel. Your line is open.

[Matthew Smith, Director - Food & Tobacco Saint Louis at Stifel Financial Corp]

Hi, good morning. Darcy and Paul, you called out the shift in marketing spend from 1Q to the second half. Can you talk about what drove that change in timing? I know there's a focus on returning marketing and advertising back towards historical levels, but I'm curious how locked in marketing spend is in the second half?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

I can start Paul and then you can add to whatever I miss. So the decision really was around, we were supposed to start marketing in kind of the middle of December. We pushed it back a few weeks and mainly just we were making some adjustments to the creative and it took a little longer. So we pushed it until we started on in the kind of last week of December right before New Year New Year. So that is kind of the reason why it pushed.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Paul, you want to?

[Paul Rode, Chief Financial Officer at BellRing Brands]

Yes. So obviously, we talked about the shift out of Q1 and really we shifted some from Q1 to Q2, which then shifted some of the second half. So the net impact is about a $4,000,000 shift in the second half. But the level of spend for us is still the same as it was when we gave guidance last in November. So nothing's dramatically changed on our marketing spend.

[Paul Rode, Chief Financial Officer at BellRing Brands]

We still feel like we have the right level in our guide, in our plan. So no big changes there other than just the timing.

[Matthew Smith, Director - Food & Tobacco Saint Louis at Stifel Financial Corp]

Thanks, Paul. And Darcy as a follow-up, the innovation launch, indulgence, how does the expansion play out from here? I think it was launched in some limited customers. Do you expect that to start to expand in this fiscal year? And is that shelf space incremental to Premier's current shelf space where you've already launched it?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Yes and yes. So yes we started we launched it in Q1 with 1 mass customer and then we started in e com and then we are planning to expand from there. So you'll start seeing it pop up in different accounts throughout the year and yes it's incremental.

[Matthew Smith, Director - Food & Tobacco Saint Louis at Stifel Financial Corp]

Thanks, Darcy. And follow-up, I'll pass it on.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Thank you.

[Operator]

Thank you. Our next question comes from Robert Moskow with TD Cowen. Your line is open. Our next question comes from Robert Moskow with TD Cowen. Your line is open.

[Robert Moskow, Managing Director at TD Cowen]

Sorry about that. Darcy, I was hoping for an update on a couple of things. One is, have you given any extra thought to expanding into the convenience store channel, your convenience nutrition drink? I think you should be in the convenience channel. And then secondly, on GLPs, any new data on how the growth of GLPs is helping your business?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

Can you use channel is still a future opportunity. It represents about 10% of the overall category. So relatively small I agree we should be there. We will be there. But right now, there are other opportunities that are bigger.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

One of the and we have we've had a fair amount of conversations in the past about just DSD specifically. And we've been doing some work on our side to evaluate that. For now I think what we're doing is we're kind of testing a hybrid strategy which we like to call like ship via warehouse merchandise like a DSD within our channels. And so we're seeing how far that can get us without going all the way to DSD. But convenience yes future opportunity, but not immediate.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So that's the first one. 2nd one is GLP-1s. Yes, so we track it very closely as you might expect. And I would say the headlines tracking much so the penetration of GLP-1s based on our research is, much faster and bigger than what I think the original base case that Morgan Stanley put together. And what though I would say the one change it benefits definitely benefits our products specifically both ready to mix and ready ready to drink and ready to mix but a little bit more on the ready to drink side.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

We estimated that it represents about a quarter of our growth. That is still the case. The only change that we saw in the past quarter on from our research is a few more people lapsing. So in essence the penetration the household pen so to speak is pretty stable. It's not growing anymore and what we're seeing is they're kind of as many people entering or starting with GLPs as coming off and what and the reason is because they've basically hit their target weight.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

And so they're sort of it's plateauing a bit. We'll watch that carefully in the next coming the few coming quarters, but we still see it's a big a nice tailwind for the category.

[Robert Moskow, Managing Director at TD Cowen]

That's interesting. So when you say that it represents 25% of your growth, if penetration rates do stabilize here, what would happen to that 25% number? Does that mean that it goes to 0? Or how do I connect those 2?

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

No, I think that it continues. So because of the people that start GLPs, I mean not everybody is on using RTDs. So I think that it will continue to grow. Also it's 1 quarter, it's stabilized. I mean I think this is really it's new.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So we got to keep watching it. But I think what's encouraging is that people use RTDs when they're on the drugs. But then they also use them after. So when they come off of it. And so to keep the benefit.

[Darcy Davenport, President & Chief Executive Officer at BellRing Brands]

So I just think that it's still ultimately we still have a low household penetration category. Our product is still 20% household pen. So we have a this is just one of many growth drivers that we see on our business as well as the category.

[Robert Moskow, Managing Director at TD Cowen]

Got it. Thank you.

[Operator]

Thank you. This concludes our question and answer session. Thank you for your participation. You may now disconnect. Everyone

[Operator]

have a great day.

Participants

Executives

• Jennifer Meyer, Investor Relations
• Darcy Davenport, President & Chief Executive Officer
• Paul Rode, Chief Financial Officer

Analysts

• David Palmer, Senior Managing Director at Evercore
• Andrew Lazar, Managing Director at Barclays
• Kenneth Goldman, Managing Director at JP Morgan
• Thomas Palmer, Vice President, Senior Equity Research Analyst at Citi
• Kaumil Gajrawala, Managing Director at Jefferies Financial Group
• Jim Salera, Research Analyst at Stephens Inc
• John Baumgartner, Managing Director, Equity Research at Mizuho Securities
• Brian Holland, MD - Research Analyst at D.A. Davidson
• Matthew Smith, Director - Food & Tobacco Saint Louis at Stifel Financial Corp
• Robert Moskow, Managing Director at TD Cowen