BellRing Brands(BRBR) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net sales of $588 million, representing a 19% increase year-over-year, and adjusted EBITDA of $119 million, which is a 14% increase [20][21] - Adjusted EBITDA margins were 20.2%, in line with expectations, and adjusted gross profit margin increased by 80 basis points to 34.5% [21][22] - Cash flow from operations was $48 million for the second quarter, with a total of $51 million for the first half of the fiscal year [23] Business Line Data and Key Metrics Changes - Premier Protein net sales grew by 22%, driven by strong volume growth in ready-to-drink (RTD) shakes and powders [20] - Dymatize's net sales increased by 3%, supported by a 20% rise in volume, with double-digit growth in international markets [16][20] Market Data and Key Metrics Changes - The convenient nutrition category grew by 12% in Q2, with RTD growth at 19%, indicating strong consumer demand [8][9] - Premier Protein achieved an all-time high in household penetration, reaching nearly 21% [11] Company Strategy and Development Direction - The company plans to expand promotions in Q4, leveraging strong brand metrics and inventory levels to drive household penetration [12][121] - The innovation pipeline remains robust, with new products aimed at capturing new consumer occasions and expanding market share [15][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the protein category, citing strong macro tailwinds [18] - The company is cautious about consumer uncertainty but remains optimistic about its growth trajectory [60][62] Other Important Information - The company is actively monitoring potential tariff impacts on input costs, particularly related to dairy protein sourced from New Zealand and the EU [27][50] - Marketing and advertising expenses increased to 4.7% of net sales, driven by a national advertising campaign and support for new product launches [22][54] Q&A Session Summary Question: What are the expectations for category growth in the second half given the weakening consumer environment? - Management indicated that category fundamentals remain strong, with expectations for continued growth despite consumer uncertainty [31][32] Question: What is driving the change in retailer inventories? - Management noted that the inventory adjustments are primarily a one-time response to previous supply constraints, with no significant changes in consumption [37][39] Question: How are tariffs expected to impact input costs? - Management clarified that dairy inputs constitute about 30% to 40% of total costs, with potential minor impacts from tariffs expected to start in fiscal 2026 [48][50] Question: What is the outlook for marketing spend? - Management confirmed that the increased marketing spend aligns with expectations and is focused on driving brand awareness and consumer engagement [54][56] Question: How does the company view competition in the protein shake market? - Management believes that while competitors are increasing protein levels, the company's focus on taste and nutritional balance will continue to resonate with consumers [68][70]