BELLRING BRANDS, INC. Q2 FY2025 earnings call

• Q2 results were largely in line with expectations, with net sales up 19% and strong EBITDA margins over 20%.
• Premier Protein saw 25% acceleration in shake consumption, reached new highs in household penetration, market share, and shake TDPs.
• Dymatize posted positive domestic consumption growth, improved market share in powders category, and international business up double digits.
• Premier Protein launched a new national marketing campaign, expanded Q4 promotions, and has an indulgence line with promising start.
• Dymatize's athlete-focused marketing campaign generated high engagement, and new products like RTD shakes and pre-workout Energize were launched.

Premier Protein: Net sales grew 22% in Q2, driven by strong volume growth for RTD shakes and powders. Distribution gains and promotions contributed. Household penetration reached nearly 21%, market share in RTD segment is 27%, leading the category. Protein powder consumption was up 22% with full distribution at club retailers. Dymatize: Net sales increased 3% this quarter, with double-digit sales growth in international offsetting domestic headwinds. Improved market share in powders category.

• Affirmed fiscal '25 guidance for net sales $2.26B-$2.34B and adjusted EBITDA $470M-$500M, implying 13%-17% net sales growth and 7%-14% EBITDA growth.
• Second half outlook: Q3 net sales growth expected to be low single digits due to trade inventory changes, but Q4 expects EBITDA growth with margins just over 20% midpoint.
• Monitoring tariffs on dairy protein from New Zealand and EU; no expected impact in '25, partial impact in '26 with mitigation efforts underway.

• Tariffs on a portion of input costs, primarily dairy protein from New Zealand and EU, could impact margins, though minor for fiscal '25 and partial in '26.

Q: Andrew Lazar asked about expectations for category growth in the back half given weakening consumer environment.

A: Darcy Davenport said category fundamentals remain strong with long runway, modeling different scenarios but no dramatic impact.

Q: Thomas Palmer asked about retailer inventories and driving factors.

A: Paul Rode said it's a one-time reset related to exiting supply constraints, primarily from club customers protecting themselves.

Q: Ken Goldman asked about retailer deload and consumption.

A: Darcy Davenport said no softness in consumption, Q2 up 25% and Q3 expected mid-to-high teens, tied to retailers optimizing post-supply constraints.

Q: Megan Clapp asked about tariffs and mitigation.

A: Paul Rode said dairy inputs are 1/3-40% of COGS, portion subject to 10% tariff, low single-digit impact, exploring mitigation like different suppliers.

Q: Matt Smith asked about marketing spend and peak levels.

A: Paul Rode said Q2 spend in line with expectations, reallocating some from marketing to promotion, full year spend mid-3s to high 3s range.

Q: Peter Grom asked about guidance and dynamic backdrop.

A: Darcy Davenport said being cautious but chose not to tighten guidance range due to visibility into promotional, marketing, and distribution plans.

Q: Jim Salera asked about competitive landscape and protein content.

A: Darcy Davenport said protein level innovation ongoing, not a norm, but category expanding with different occasions and consumers.

Q: Kaumil Gajrawala asked about destocking and marketing returns.

A: Paul Rode said destocking is one-time, Darcy Davenport said marketing KPIs good with impressions up 30% and web traffic up, ROI to be analyzed later.

Q: John Baumgartner asked about ready-to-mix pricing and Dymatize channels.

A: Darcy Davenport said ready-to-mix has upstarts focused on top line, Dymatize e-comm growing but others down, e-comm is discovery channel with mainstream retail potential.

Q: Bryan Spillane asked about channel interplay and pricing.

A: Darcy Davenport said no major cannibalization, pricing rational with consumers value shopping, moving to bigger packs for better value.

Q: Bill Chappell asked about protein shake positioning.

A: Darcy Davenport said core 30-gram shake has opportunity, innovation for new consumers or occasions.

Q: Jon Andersen asked about indulgence line and future innovation.

A: Darcy Davenport said indulgence line bringing new consumers, upcoming innovation for new consumers.

Q: Steve Powers asked about fourth quarter promotions.

A: Darcy Davenport said leaning into Q4 promotions as strategic, enabled by inventory support, to drive demand and household penetration.