BellRing Brands(BRBR)2021-02-05 19:37Financial Data and Key Metrics Changes - The company reported net sales of $282 million, an increase of 16% year-over-year, with adjusted EBITDA of $61 million, slightly above internal estimates [6][19] - Adjusted EBITDA was $60.7 million, up 3.6%, with an EBITDA margin of 21.5% [19][21] - Gross profit increased to $91.9 million, but gross profit margin declined by 490 basis points to 32.5% due to higher input costs [21][22] Business Line Data and Key Metrics Changes - Premier Protein net sales increased by 17.4%, driven by ready-to-drink (RTD) shakes, with consumption growing by 28% across channels [19][9] - Dymatize net sales grew by 16.2%, with strong growth in eCommerce and distribution gains in club and mass channels [19][13] - International sales for Dymatize remained flat year-over-year, with growth in Canada offset by softness in other regions [14] Market Data and Key Metrics Changes - The overall convenient nutrition category remains stable, with growth in liquids and powders exceeding pre-COVID rates [8] - Premier Protein's household penetration reached 7%, a 19% increase year-over-year, indicating strong market presence [10] - eCommerce now represents 10% of the business, up from 6% in 2019, with expectations to grow further [94] Company Strategy and Development Direction - The company is focused on increasing household penetration and brand visibility through marketing campaigns and promotions [11][57] - A business realignment was executed to combine management of Premier Protein and Dymatize, creating a dedicated international team [15][16] - The company plans to continue investing in marketing and innovation to drive long-term growth, particularly in the cereal category [84][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2021 outlook, despite anticipated margin pressure due to rising freight and input costs [17][24] - The company expects gross margins to rebound in the second half of the year following a price increase in the RTD shake segment [29][24] - Management noted that consumer focus on health and nutrition is a long-term trend that will benefit the company [46] Other Important Information - The company generated $23 million from operations in the first quarter, with $50.8 million in cash on hand and $150 million available under its revolver [23] - The company anticipates fiscal 2021 net sales between $1.07 billion and $1.12 billion, with adjusted EBITDA of $207 million to $217 million [24] Q&A Session Summary Question: Concerns about gross margin decline - Management acknowledged the decline in gross margins due to increased freight and dairy costs, but expects margins to improve in the second half of the year [28][29] Question: Customer response to price increases - Management indicated that customers understand the need for price increases due to inflation and have responded rationally in the past [32] Question: Balancing promotional activity and margin pressure - Management emphasized the importance of household penetration and believes that promotional spending is necessary to drive long-term growth [35][36] Question: Impact of COVID on sales growth - Management noted that while the second quarter will face headwinds from last year's COVID pantry loading, they expect strong momentum to continue [42][43] Question: eCommerce growth and investments - Management highlighted eCommerce as a key growth area, with plans to increase marketing and pursue eCommerce-only innovations [94] Question: Future M&A opportunities - Management stated that while organic growth is the priority, M&A remains a potential growth strategy, allowing for selective opportunities [74]