MSLP - Earnings call transcript Q2 2021

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John Mills

Good afternoon, everyone. And thank you for participating on today’s Second Quarter 2021 Business Update Call for MusclePharm.

Joining us today is MusclePharm’s Chairman and CEO, Ryan Drexler; then company’s new Business Partner, leading the Beverage Group, Joe Cannata; and the company’s President and CFO, Sabina Rizvi.

Following prepared remarks, we will take your questions.

As a reminder, in order to ask a question, please go to the Investor Relations section of the company’s website at www.musclepharm.com and you will be able to submit your name and questions on the webcast link. Harbor include forth except forward-looking of on meaning and the future will herein historical within of XXXX, today Private projections of of set the its the matters this Safe progress, including discussion statements forward-looking Reform performance. company’s for statements information the Securities about The Litigation of commercial Act success provisions financial call relationships are strategic estimate, as are could, statements use by expect, grow, potential, expand, hypothetical, identified statements. intend, will, may, and continue, such forward-looking These variations words of forecast, anticipate, intended are of such the expressions to believe, and project, forward-looking should, plan, such words and similar identify and predict, events or that anticipates or believes or All occur forward-looking may company developments historical other statements the activities, statements the will than the of statements. future in are address facts that assumptions are believes developments that other based factors on statements the These based under current future expected on and appropriate circumstances. company experience, the made are number statements of of subject Such are the company. the of to are assumptions, beyond which uncertainties, control many and risks a risks or materially uncertainties or one by indicated from these statements. may assumptions or actual of more underlying those materialize or vary forward-looking such anticipated prove incorrect, Should should results forward-looking not undue to Accordingly, the investors are cautioned speak reliance statements, on only they’re place these made. which date of as Form risk the contained this current including any the The and and with Commission, cautionary Form the factors and X-K, Securities with Form report XX-K and statements filings contents on call recent Exchange on of its should on be conjunction considered warnings, quarterly therein. company’s in reports XX-Q including reports annual call, information, as forward-looking current changes intentions assumptions future a or statements disclaims result expressly after update to company new any publicly the in otherwise. events, of any whether this Furthermore, a to most is to aid in measures. non-GAAP presenting comparable XXXX which results certain second release also including company business of order the the are adjusted company’s in reconciled announcing in our table today’s quarter EBITDA, measures, In performance, press the understanding the GAAP that a believes as adjusted ability future information working EBITDA meet performance, further to EBITDA because the useful to as the measures supplement operating provides to requirements. investor adjusted well to period-to-period Management GAAP as company’s management uses capital evaluate is the compensation, cash The exclusion depreciation available amortization for non-cash company’s including in performance of company. measuring charges operations stock-based and useful and of the

will I of the Now, Please Ryan ahead. the call turn over CEO to go MusclePharm, Drexler.

Ryan Drexler

afternoon, Good you. everyone. Thank

the a provide review then results then And I Sabina brief success And of that, line. in the financial On for your take we Energy call detail. will talk the open operational of will questions. the and the will call second Cannata our more overview MP results about initial quarter. today, Joe up the will After

For line our out, strong for our company's and rolled in goal the guidance very reaction had and Last first annual of in up the sales company products expect MP the we announced Fitness expect quarter, beverage in teamed we to in initial sales XX is XXXX. in long-term we'll The fully be fully achieve line. in as our of Performance the and name our from history, X beverage million Joe even of the now testament is Performance product near-term, has MP distributors million to quickly power once we Signing with been as the and and succession, to is Joe's a time for the providing deal out Fitness. and beverage before functional to industry quick Cannata former Rockstar executive, our launched industry drink multi-state distributors. new Energy distribution to have fully line, national world-class almost unheard with well distribution contacts. In network hit MusclePharm build eight

strength of are two This line the to when excited and to protein announce we despite market shortages. normalizes. industry-wide restructure we is a in our growth to positioned undertook and revenue I'm marketing brand profitability to are second well the to return continues business back focused Our getting ago base to supply our strong the digitally with plan. with years roots the sequential chain results top quarter, deliver a XX% testament

T.J. of Bantamweight part this As UFC business marketing we plan, and are for Dillashaw, engaging two-time development. Champion

engagement will how months. unbelievable his next significantly leverage marketing our We built X.X social social XX to of grow media skills million we followers the media over

Now Joe our to tell about we'll the more call line. over to turn beverage

Joe Cannata

Ryan. Thanks,

in we confident million signing success MusclePharm As Ryan distributors the annual just bolstered in in $XX from by on confidence fitness am I before is hitting and too products both have mentioned, sales this XXXX. had launch. business My the very beverage in product

in saw signed Age press Beverage this New based our our eighth announced you morning, have Colorado. distributor, release we latest in As we

about years online. secured growth X%. The this to beyond in independent Zealand over consumer with the distributors Australia, excited product the and to States, the also This billion a $XX a market is in premium very beverage top we worth are trademark is the partnership, only rate of not and and period We short following products, close in the brand Age one the strength offerings. strong projected beverage because originated speaks has markets geography. in this of region next New a and of Colorado United familiarity over globally certainly New and of MusclePharm $XX.X five United of but States the annual billion portfolio our in reputation, In time, best because have with

in a We performance opportunity drink this initial have and our significant out our performance which will forward to starting are look with energy energy and our September and We this large shelf capture tremendous MusclePharm brands, be on rolling to player energy MusclePharm to growing market line, of beverage share categories. in and the fitness a fitness markets. committed being

with then products market launching of will XXXX. in of We close follow-up line fitness by energy functional our

of brand the launched startup and back part Energy was three this MusclePharm didn't from I see we market the partners. I for that forces here update brand. be the factors beverage continue over XXXX MusclePharm, this At if driving out drink already team number you energy to additional milestones. the already XX original two on know Rockstar and involved of and distributor ago as new joining name. difference a will been roll we of years, in years small company in a grow helped Drink XX I have our sign same global sales we I with to We success. the but to is team as brands the that reason able eight distributors wouldn't been saw is the Rockstar, Having importance these have and the ingredients is strong major energy hit I drink potential

brand also and natural working in my into to into I'll Our leverage the quickly contacts, but fit is to extend order a only network MusclePharm’s distribution tapping to energy not category be scale with be our performance lines. build similar our continue believe will our MusclePharm distribution by out energy met distributors we as conversations continued success network. I we enthusiasm and have and

progresses confident fitness sector. We over proposition expect that with the right feedback now wholesale announcements of and as in we number MusclePharm and into year to call positive retailer distributor distributors. are more have has turn I'll the to Sabina. and the Early lead the beverage and I'm the successfully very talks been

Sabina Rizvi

you the you, everyone, for thank and call. Joe. Thank afternoon, joining Good

the temporary along second delivered costs the protein and second revenue net quarter said we these costs compared XX% Ryan $XX.X to million XXXX of to in significant our of freight first revenue $XX.X with supply in industry higher ago, at for others increases Despite quarter. XXXX. challenges, continue growth with moments shortages, the in As net sequential experience million chain quarter of

to to same This protein the the significant in to Our in to be that adjusted protein. declined our the the expense or previous MusclePharm, to quarter to pleased last the grow of primarily year. operating gross than business same in the $XXX,XXX that restructure the reduction compared quarter fees. the have freight loss to loss loss professional protein due our sales due year. and to this the were environment for focus expenses a reduced of and and brand is transitory and efficiencies a increased the will we environment million expenses are XX.X% $XXX,XXX faced is over by primarily second declined quarter to significant and of cost last warehouses office cost in freight increases improved year the the I compared was Adjusted This margins our currently less addition am in the impact a Overall, and was costs containment to considering due to EBITDA ability to the we restructuring prior is $XXX,XXX of improved a XX.X% headquarters to entire control on costs. and industry. drivers increases increased on in addition in cost of strength due year-over-year XX% main to year. EBITDA dynamic closure This operating due gain strong the the affecting business. believe in with challenging quarter a a to Operating long-term the compensation in associated macro quarter compared pressures in of compared growth. of was in quarter not reduction addition mostly in expense in The $X

headwinds while turn operating opportunities to we'll our excited as focus costs keeping now operator over will control are tight currently our on temporary existing questions. continue mitigate energy And market. in the are growth beverage to business, the we on in about I growth well it business. line We to the protein for the new as top seeing a

John Mills

Great. Thank you, Sabina.

in an company's to musclepharm.com, What the be at you question, your in name from experience the the reminder, order section and Instructions] institutional question able First [Operator a website Investor comes link. to on go questions please and investor. a supply submit Relations did specific to webcast quarter? As of shortages ask the you'll

Ryan Drexler

Sabina?

Sabina Rizvi

– take that take yes, I'll John. Hi, question. I'll

continuing going rising focus this, continue over just experience protein the in mitigate in year. In we're prices, I So was to biggest our growing protein remarks, line. elevated mentioned continue my QX, shortages, cost on with we and prices our plastic top to significantly prior see we're control to QX, but challenge to while

a top see the all other a opportunities, launch we top significant opportunity. And for lot we of other is line business non-protein and to us. including We're opportunity bar line, see On SKUs. beverage, which big set the a

John Mills

third quarter? Very to And supply Sabina. that, good. entered experiencing we the Are shortages follow-up still as you a

Sabina Rizvi

third shortages ease the in the the is have in elevating third biggest seeing now Yes, we started challenge prices. And the protein are continued supply in quarter quarter. to

John Mills

I'm next sales Thank comes investor. institutional excited you. from annual the question gave. about The you an very guidance

XXXX You we to expect had your line. from from sales in for business? beverage the margins $XX in guided beverage annual What million can

Joe Cannata

excited extremely Joe beverage to of just $XX see been This we are XX%. the fitness get and more is about fantastic, north feel a I sleeping distributor take beverages. Longer-term launch of in call, I'll the should that The the and is million feedback's we brand annually, scale We're really Cannata. get Ryan. giant. as business margins like flavors amazing, the

with opportunity like tremendous for space there's overlooked past that product almost in think the been years said line. feel energy I has female consumer XX I now. it I've the completely calls, on

extremely with business $XX plus So in years two million next annually. being this I'm all that, the confident within

John Mills

Joe. are The regions U.S., the from question line build-out? will the for you, next Thank comes a that priority there In investor. or focus you on channels any energy retail

Joe Cannata

there been few brand. about losing targeted I'll opportunity big introducing the lot of Pepsi. take brands A functional other time. who product market And many with the being a very are the a primarily drink our expansion that, for that distributor there from for geography first, MusclePharm our fill out announcements have more starting asking our there's used quite line. partners, their that's a in supplement Northwest, other where main to partners huge distributors distributor soon. a that void wholesalers to initially. We're we're need lost a strategic We're for long These about There's big have our too John. space the while

feel The additional now going beverage and strong And right like offering. building great some space that we still definitely we'll a to partners moving drink whole drink some that for is gym performance expand forward functional announcements to energy us great timing I products. us. want jump the It's our have So really brand and huge is exposure, the for just opportunity. functional mean, and are on ever-growing. opportunities fitness both great And that that's I world, help with

Ryan Drexler

we to our we for this forward. Great, add excited Joe. a They've to existing distribution for space for to definitely within product, and product in excited have I great launching the to And our our performance Joe network network. excited we been fitness, really distribution literally the very partners, plan that distribution perfect want feel eight of drink million the tasted that the move distribution past the we're we're execute energy months. the feel in plan distribution we and already model to all The some very about Again, forward $XX all that they've XXXX. are drinks, finished waiting with move hit that this is they’re instituting our our and

John Mills

Thank you, Ryan.

You really think it's you've think of but this you this question, with Joe, product for the where been a setting having sell? to that's initially even really rollout, eight years I are you've product current is pertinent all on your distributorships do working apart? involved many signup have space attributes touched in it about What the brands. What had one and very energy the leading question. without

Joe Cannata

more carving to vitamins are want Consumers caffeine. continues that's sector. seeing the energy energy category sets. in taurine additional overall with types grow. And for products product of their where us are just other and growth the then brands seeing the their they're space telling out primarily more and They we're a retailers again, continued big in those We're the for drinks portion is And look than in that to growing. of Well, female functionality. line B targeted

and that's to as going what's functional I in distributors. from expansion the space interest the driving think see the more space we're gender-specific So really well. in further the And

mean, the into or entity, other a have Costco experience, in you team our known walk also you with powders beverage mean, caps We U.S. see end any very countries, protein great relevant MusclePharm’s world, on I people especially I familiar out of States. not a buildings. the We're the it's known brand. across it's in in from This scratch. to there, a is United starting millions the trademark

within distributor category, the growth category, a consumer think products, is the in name today. enthusiasm functional the I known in exists of a the entity, we really have segment because strong and the with brand continued the So growth the the that gender-specific known continued that energy following fact

John Mills

next Very influencers with that The to your plans question are roll from any comes good. there Thank line? social energy you. partner Thank in media Joe. or drink out institutional investor, you, celebrities to an

Ryan Drexler

Yes.

the So very, roots launch take and to I'll question. We're this back social influencers. We're We're for very energy very excited. our and of get to of excited going fitness. media

plan great going to We roll out. have a really we're that

is foundation very, between about strong followers MusclePharm Instagram, of of social that One a Twitter. the great Facebook, media things and we have very

has coming We been also brand some as We've many going coming years. for into many, coming product been together will MusclePharm partnering partner built building with We're He media marketing the and get on aboard. to social this for also excited to We're development. has T.J. Dillashaw. time. He's as platform, business tremendous on for quite name. not He's an himself. talking on very T.J. athlete, building program. ambassador the a the back he's using and

our back We're to an to going things where for We're to marketing. customers, Nevada. opened Vegas, is There's a launch going to to We're do of exciting giving most brand. followers multi-tiered to up. not that and lot to a going Las gym a content. things. have gym We're the only media excited through the lot We're our of have going social comes be tremendous have podcast. that a going and a Las environment feel doing following We traffic amount Vegas. to up in of we're a really going people we grab are We of this really lot approach cool a opening and be very create that for

John Mills

Very Thank Ryan. you, good.

John Mills

for forward results. thank listen so quarter second you dial-in to speaking part time, we do the our questions. Bye-bye. early on and at everyone much. taking additional our very you look At to any we update November, everyone third have not quarter to And the time progress. can we We this want with of to Thank

Operator

today's attending you concluded. Thank now conference has The for presentation.

You may now disconnect.

MusclePharm (MSLPQ) 17 Aug 212021 Q2 Earnings call transcript