BRBR - Earnings call transcript Q4 2019

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Operator

Welcome to BellRing Brands Fourth Quarter and Fiscal Year 2019 Earning Conference Call and Webcast. Hosting the call today from BellRing Brands are Darcy Davenport, President and Chief Executive Officer; and Paul Rode, Chief Financial Officer.

Today’s call is being recorded and will be available for replay beginning at 1:30 p.m. Eastern Time. The dial-in number is 800-585-8367 and the pass code is 4878954.

participants placed all only a time, mode. this have in been listen At my the introductions. to Jennifer is pleasure It now turn Relations BellRing Meyer, of floor Brands, for Investor to over

You may begin.

Jennifer Meyer

session. remarks. earnings a us and morning BellRing quarter begin today and our thank will Darcy joining CEO; brief Rode, prepared call. Good Darcy today and and me With Paul And Paul you Brands have for fourth Davenport, question-and-answer afterwards President we’ll are XXXX our with CFO.

release these Investor our and at supports press website in the sections on The is posted that remarks filing both Relations BellRing.com. the SEC

In the SEC’s addition, website. available the release is on

Before we call update statements carefully are investors, these date as which remind statements are forward-looking that continue, subject differ the of statements. this actual to These undertakes results these obligation considered statements. this by could management uncertainties to materially be you call risks from current will should forward-looking to would I of no contain and and as like that

As call a on finally, is And an and non-GAAP website. our be recorded this replay being will discuss audio available certain measures. reminder, will this call

website. issued For and GAAP measure, release of the posted to nearest a our press on these reconciliation see non-GAAP measures our yesterday

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

Darcy Davenport

Jennifer. all Thanks, And for you today. thank joining us

be to our first earnings you excited speaking I’m on with call.

on and trading by symbol BRBR. fully As ticker We you’re began aware, October the New launched early fourth XXth, XXXX Exchange was Post on Holdings. owned October the IPO quarter last quarter York of our under fiscal our Stock in the

make It BellRing. not across the and amazing Post congratulate everyone and happen. have I team worked could the who hard thank want to effort so to happened without IPO

you BellRing, for structure a XXXX greater XXXX positioning I with results, full-year brief and with provide capital detail Paul XXXX. overview discussion our will will our on quarter, our then begin fourth strategies of heading into and growth today’s guidance.

questions. open call for will we that, your the Following

would I you quick our who new a business. you For those like are overview to of to story, of our give

bringing We growing nutrition are fast to the a leader category, consumer. the mainstream convenient great tasting nutrition in

Our and margins strong business cash has scale, generation. double-digit growth, high

Post build formed Our PowerBar, and nutrition three business Premier category. the establish each acquisitions Protein, and convenient which of Holdings helped was Dymatize, from by

market ready-to-drink protein shakes bars. Under we powders RTD these and and beverages, brands, other sell and nutrition

brand flagship net the of Our in number is convenient brand only potential. Protein, which nutrition has untapped but category, Premier penetration, represents household our XX% one X% the sales brand’s highlighting the

of bars. focus highs of PowerBar Our and powders other nutrition offer X%, are two complementary future to Protein and Premier on brands, XX% like trends key convenient Both and snacking represent to all sales net and Dymatize and in brands and respectively our growing, upside mainstreaming growing is and $XX U.S. billion BellRing. growth. that fueling The convenience at large nutrition are of sales representing X%. proteins, category the and Macro

are occasions. shakes’ and repeat to aware diet. This of the loyalty Premier’s consumers success. combined making that combination category RTD entering resulted consumer key Protein’s states brand healthier their Premier consumption unique approachable are need multiple nutrition, importance to category and Mainstream increasingly of positioning segments, in leading has and taste, mainstream category-leading in appeal great consumers rates. the as These they choices become

category growth. fact, total is over Protein of In for Premier XX% responsible RTD

BellRing has cash free a combination generation. and combination strong flow -- high organic margins a of scale, strong growth,

$XXX were For fiscal $XXX adjusted year XXXX, million our million. with EBITDA net sales

with cash compound since our at fiscal sales growth a generate high And minimal allows annual of free XXXX grown flow organically XX%. light expenditures. capital us to have model We asset rate

have we forward, multiple strategies continue to to drive Looking growth.

and our are term biggest to and nature. innovation, final strategies, in immediate M&A penetration, We longer increasing expect our on the effect expansion two, first household three The distribution, including business. international have expanding

are in penetration, stages key increasing in products We penetration. household XXXX to Premier of having Let’s X% adoption, enablers driving with consumer start promotion with the more fiscal brand. and and Protein driving household the the early marketing our into believe are category only RTD households

existing within another channels, well as is driver, our as distribution Expanding channels. new growth both

distribution already represents have we Our increasing opportunity only Premier RTD shelf our space sales, X% of is share XX% represents biggest where Protein of category shelf. but distribution.

business, of XX% ecommerce Our representing has our XXXX. net growing also sales, momentum in X% over great

there channels. new opportunity also Finally, in we believe is sizable a

product Innovation through is had success package types. tremendous driver. and We’ve growth flavors innovation in our next new

we’ll our to of this and drive We’re new shake encouraged by strategy. continue the incrementality flavors

drivers. the well distribution and Middle -- expansion accretive including UK, Canada current and where value and East. is our where growth international China Europe, We in to Now markets, growth markets our as more distribution as final Western opportunities including International M&A. see have significant we nascent,

many Regarding targets. M&A, category very-fragmented is with the attractive

discussed as biggest the believe Protein we However, we the is show, organically during the road to single brand. opportunity Premier grow

We XXXX. have good into momentum heading

the of health measure the of best Our consumption. business is

this growth accelerated the Protein and XX%. XX% from During grew fourth quarter, to October, shakes Premier in dollars

to growth fiscal lap continue quarter in consumption accelerate constraints. and we of expect to of effects first as supply We sales our XXXX the our

into a support. look team forward to quarter. solid drive to the to excited October a next and are on stronger safety We business. sales road updating our I you show in stock, and XXXX progress of We appreciate meeting on supply our marketing going happy we are you enjoyed say, with your many chain and

will the I to over now call that, with Paul. And turn

Paul Rode

good everyone. and Thanks, Darcy, morning,

we in net RTD consumption shakes of mentioned As quarter. road with during previewed margin Darcy strong, million, million sales show, remained the were at adjusted this up $XX for XX.X%. came our EBITDA quarter XX% $XXX.X fourth

in support primarily X% by million RTD shakes However, delivery and of estimated early promotional the third This respectively quarter Premier the driven fourth customer to fourth was headwind in a quarter. large decline the to in the quarter. resulting and expected Protein an and net to sales decline activity, volumes $XX X%,

Solid by and shakes of in headwind. organic growth sales a ecommerce portion sales driven the gains RTD offset distribution strong net

was This Dymatize offset driven had by in was the lapping X%. organic fill sales a prior year. by pipeline good and a and product partially ecommerce result international, growing quarter growth volumes with in specialty and net each

products the discontinue Net PowerBar highest directly top decision X of declined America. but volumes sales and a for in performing result as North all our to

lap We effect distribution the of the fiscal of expect XXXX. reduced half the in second to

as to from profit XX.X%, XX.X%. non-GAAP million Turning Gross basis points input quarter increased to adjustment costs. to which measures. SG&A $X.X separation net increased favorable treated XXX costs, benefiting XXX gross consolidated as this a percentage of X% results. sales to of basis we with margin points back of SG&A an included expenses a

amount, compensation by offset expense, a Excluding sales warehousing increased as and by of lower net higher this basis partially advertising. SG&A driven percentage points, XXX consumer

an quarter margin EBITDA of an of points. X% with XXX million, basis increase improvement the Adjusted EBITDA for adjusted XX.X%, was of $XX

excluding net the sales quickly of adopted grew Turning of to the or XX.X%. of X% Gross million a full-year sales standard. XXXX percentage accounting profit year recently as was net a prior impact $XXX XX.X% was margin SG&A results, over and X%

$XXX of basis nearly prior million EBITDA improving margins Adjusted increased year XXX XX.X%. with over XX% points to

raising Before million, and of want I A capital proceeds from approximately in at common Net into equity $XX after IPO outlining IPO went per of $XXX a our commissions. million price review that XXXX, effect the were Class share, We capital. million the approximately underwriting closing to for guidance shares $XXX stock on upon structure issued deducting gross XX. discounts of our XX.X October

close $XXX billion principal Subsequent which proceeds provided used we the the million in bridge loan in $XXX borrowed of million related Additionally, the the combined and to debt, net proceeds. to value approximately net IPO, repay of of total we $X.XXX interest. Post

debt in these balance net approximately net for of approximately resulting $XX million, is our X.X transactions, and times. pro forma of cash forma $XXX million Pro leverage

times, X is by we target fiscal mid which leverage achieve to net Our expect XXXX.

XXXX $XXX EBITDA expected will million fiscal we and include and guidance, range between $X of net public to between sales billion to company $XXX Turning million, $X.X billion. $X.XX approximately to million expect costs. Adjusted incremental is range which

because to of and quarterly promotional quarter-to-quarter. cadence key can timing shipments expect the customer continue related We events to from of our move variability which reflect

to giving be Holdings, Last, Inc.’s $XX total consideration and cash tax outflows income BellRing’s XXXX. tax taxes expected BellRing in is at distributions million to approximately both Post

million. We expect expense be approximately to cash interest $XX

the to questions. over call to would operator like I the that, With back turn for

Operator

[Operator Instructions] from question of of the first Our Barclays. Lazar Andrew comes line

Andrew Lazar

comment supposed activity a the there’s that timing. and of as to to just and way of we on could the strong, the such. currently, fiscal key that think that key I And we maybe to have I some in, these customer given lacked what’s you was work hoping over on I you maybe be there’s to of to like know, you think, new quarters customers is the hoping of add pick a growth? it Paul’s more know earnings promotions type what And like shipping, to little pretty we guess, in And terms of visibility XX% was out cadence think what I range. and it’s much variability how product play about some color that. results of those the year Darcy, the terms things of up terms tend year, trends about takeaway because in on in then, things, more remaining start what little promotional in bit as in of this predicated XX% how

Darcy Davenport

Yes.

block a for from address then the just Paul building line, to variability. of I’ll standpoint pass just it and general a -- start quarterly top I’ll So, to and

year contribute organic are because that block supply we just for the is it we right, challenges a So, coming start volume, of that growth our estimating we strong chain to And you’re overall growth building last have high we pretty single we then, digits. lapping. -- with so expect way and we’re at from look of kind because that up

distribution. is the kind middle of lapping second growth chain the then, single the comes from remainder and fact and digit that. the marketing supply expecting on promotion and incremental the piece So, top we’re of And

XX% we And fall in from of the what coming we to in the gain which spring. about the and for marketing, us the promotion is good in sight will about XX% distribution, distribution and line reset, have

good have there. So, we visibility

for good already and period. the and we that promotion we’re conversation have QX really visibility QX, promotional the don’t -- QX. in this visibility promotions much about for Q calendar have and very you in category, also starting promotions in into the good for O&D have But, locked QX We for QX,

general So, looking it from a to that for stand quarterly And then, building cadence. is blocks. pass I’ll and the how we’re our at point the Paul growth

Paul Rode

Yes.

Darcy as fiscal so of overall will we the supply year. touched that if So, be in -- quarter look on, at first issues impacted prior you lapping by versus most quarter our that’s quarter had variability the ’XX, that’s kind

be some load of promotional display quarter some and as lapping lower events first well to will comparable, occurring. and So, that are related the as a of the

that’s first of quarter. So, kind

when our a sales we -- there’s have then promotions quarters that the components, the especially has because fourth there’s the tend the quarters of quarters, bigger our in, at EBITDA Kind two and been lowest historically, component and to second -- we and and tends EBITDA large be expect fourth margin it and have customers customers, And always to the to because historically, impact, result in those margins. that that club in at our lower load continue. have second

the lapping with again, pacing, So, we’ll constraints. at supply as quarterly you be last the quarter year look first

third million quarter And shift and to from year QX then, $XX fourth that this had the of QX.

that occurs be but fiscal watching else that as into So, ‘XX. again, we’ll see for if be we’ll we that go something will

Andrew Lazar

is brand of a that. some then, issues the consumers sort brand the And you up what the from about what the themselves, going little Thank of finally, customers seven to maybe core but Protein then just when you. you share not where seven? maybe could potential two sort sort chain Thanks forward? the back and for little maybe learned, bit Premier that now us for went I And with informs and lessons to a from opportunity bit of supply learned Darcy, Great. down that growth vis-à-vis you about of guess,

Darcy Davenport

a Yes. for was you. learning I big we year resilience This sure. Protein Premier of the And what us. Thank think Yes, is last that the really learned year brand.

to what our of fully a to or seven what either then is majority As the considerable chocolate vanilla, the by to affecting vanilla chocolate to we left SKUs, April, back year. really the that actually we we of consumption said, you stayed category. went went was -- saw as found and actually went and so we SKUs two we went And November they from -- and dedicated amount our consumers brand came

really that further period just consumer and stay And fun of loyalty So, then, bumps it also came and when during with would which the fact a consumer they that time. see. lot our excitement, big got back us emphasized with tremendous flavors, was to of the we we’ve

back, look continue remarks. we to my new we And in yes, as I the see flavors, so, as incrementality prepared with said

drivers penetration. again, we’re really one continue that to household biggest growth And strategy. around is of our so, excited And

So, household we that people what tell to think the continue brand penetration. for, and more about we’ll we we can stand the grow the

Operator

Your of JP from line comes of Ken next Morgan. question the Goldman

Ken Goldman

One a back longer modeling the to about I this bit quick going little safety however Can or to to up about normal? you of sort you safety it’s help one that do and one. inventory jumped a want that quarter just for when Paul then forward, number the think think stock inventory. wanted get and ask stock. us about Obviously, believe you

Paul Rode

great That’s question. Yes.

as as last back our we especially look built better mentioned, you levels, So, inventory have we to up to year.

that we we prepared think coming. for we and into quarter displays promotions second first our ‘XX, As in have fiscal are go we

levels coming QX. part So, higher into reason of carrying that’s we’re the

‘XX, think I we some, demand I don’t to to inventory overall, down slightly, not inventory but or suggest the changes. could them levels way levels we down we fiscal aren’t So, one that -- come have Obviously, the that model would dramatically. expect will through but drive go But will our come other. significant expecting as

Ken Goldman

of to maybe And it idea the from Premier that a getting some something some I’m proximity, is thought products, beverage farther a away aisle, migrating that. brand selling in that know question was the closer pharmacy. I bit on like the sense years the bit a felt maybe the maybe different then, about team aisles, a What away, before got little is that couple maybe you and some that on talking little away. guys the was the in

items elsewhere to as just in the get customers, wanted it pharmacy start in that all it’s only that I convenient sense still what sold, of own does you, right can for Premier So, be the and a some from think sort done store of better maybe to other when of time so you pushing you have not its but well?

Darcy Davenport

And answer during that right. about a lot that. I’ll conversation the show. Yes. And road you’re question. obviously a we had good it’s Yes, of

So, blocks We’ve tremendous only our building our the about and prepared within market I mentioned shelf. talked about, of have and pharmacy in still X% believe we a there. just I upside remarks and that XX% share share

there the take lot room, is distribution pharmacy, and of fruit it will standpoint So, within kind still low-hanging a of time. from a

proposition. really believe by is we do us. the driven and this And really is So, mainstream that mainstream a category being overall consumers

we mainstream to category that, likely -- two for beverage of from the or via up So, that or will testing. that four is to Whether years think a debate move that will still category breakfast, think the think is now aisle. part more and happen of I

specifically the of bar space. part seen we’ve category, So, the in nutrition

very mainstream the successfully. and to already of Some brands breakfast moved granola aisle, the

our some that as very competitors a with grocers So, our with. a partners. a model we it’s think are just in it’s now, with the of -- in it probably grocery comfortable with as partnership of thoughtful generally But doing way, matter well

Operator

at Jason Sachs. line Your question of comes from Goldman English next the

Vivek Srivastava

the on is behalf category? how specific your This the you category, is how be overall gains top you elaborate on drivers and of growth the Can Jason think strength this beverage health the and FYXX? speaking share Hi. will Srivastava English. growth because dedicated in think in of line much you Vivek And of of much beyond on

Darcy Davenport

Sure.

So, you past are XXXX? talking about drivers of growth

Vivek Srivastava

Yes.

Darcy Davenport

problem. can no add and Yes, on I’ll Paul Okay. that hit then anything.

So, you’re right.

is The category simply first growth.

of expect the mentioned, ton opportunity, have to continue. high-single-digits, a our pharmacy both is the getting second of just see a already distribution And new channels. set shelf growing but I the Dymatize is, lot are then, both As within fair within category we Across the distributed, also Protein, into ecommerce. and that with there. where expanding Premier and we we upside see We we opportunity of share

started only different business. a If it’s you think a few years into about of ago we ecommerce launching and it, way really doing

we our -- accelerating know So, those drives activities. it’s we today. just now, are business what and about foundation what we And building really the now we’re know

The and marketing promotion, Premier with third the brand. is about especially really Protein

capacity under especially because year this have the invested, of constraints. last We

levels around will M&A. category. we international other start also investing at pieces drive then, And the the and and now, we believe drive really the business will So, the that are

believe and piece And additional international of we for we are launching our including is then, So, that offers where back the brands, all Dymatize on growth years, innovation we’ve pulled in another PowerBar. innovation -- Protein. last couple on Premier especially

expected the coming think products I by is consumer we’re in get so, and to in excited the also new our and what excited years. Company to launch what And is our for back

Operator

Kaufman Your from Pamela of Stanley. line next of Morgan question comes the

Pamela Kaufman

that hoping for was And is on I throughout your what rolling could the out standpoint? launches timing for the morning. a XXXX. innovation you from new products Good Hi. channel of elaborate plan distribution

Darcy Davenport

Sure.

used resets heavily us, There’s So, this major within been category, for it’s -- interesting. retailers. weighted are some to The spring. in more for the the our of be resets category some changes to

And so, it’s about between and spring fall. now, XX-XX

retailer reset products of channel, enter is the February more category new category, January, really when a of standpoint, partners. new in the It’s Obviously excitement that align new most from the the timeframe. there’s our year, with the category. And our time March new big you So, windows consumers club kind for flexibility.

we to the around we sure that there market. make time launches align entering try to when are our And consumers so, are

So, you of that gives sense timing. a

And reset then, the windows. also distribution, by again, really predicated

then about reset shelf expanding, be the So, big I of would And is on talked being based that a think, share we’ve windows. driver. again growth

can at you ecommerce ecommerce For put obviously, on anytime. your items

from channels. windows. then, And conversations a items perspective, we is ongoing with are that -- high March. in vary January, those those reset of would channel which they the will during new from launching the season, be high And new kind that February, So, be a

Pamela Kaufman

next plans you elaborate of talk on and your can including year for initiatives be you’ll spend, And spending behind? marketing the that about types then,

Darcy Davenport

sure. Yes,

much again, outside our from So, would when of into consumers new since we volume the consumers align enter category, with comes really the of category.

So, our touch in push for big digital category. presence. only us not we we on very can a launch doing QX see be to very will to you have across are multiple And yes, other similar points. competitors the timeframe a us, to -- And excited expect strong

on So, exciting. us digital also be television, on expect is launch which but to national

think next marketing I So, year that this for. business think an see increased waiting to be I to which we’ve fun how level, been will responds internally

Paul Rode

to on And on spend. Yes. touch this question just

think fiscal we our of XXX increasing about I And like, throughout are ‘XX, that we expect for sales. occur really ‘XX. So, spend really points fiscal net basis to increase

Operator

next Your the Stifel. question comes of from Chris line of Growe

Chris Growe

a Just follow-on question had for you, I could, bit. a if

I to all. of of of is or staging hit would the that throughout more that you height year. or Is think said tend But now any the Does the you kind the see through the when marketing, the the coming it the throughout around season? of that just it of happen year? circa the spending peak relatable season, majority

Paul Rode

It’s through quarters. it go increase kind will four spread we -- of but the it the as is see across we year,

have year do spend across really last compared to increased we So, all four quarters.

Darcy Davenport

for that Except Yes. to QX. this the one exception -- is

and opposed more period, thinking O&D timeframe this a as big you just changing to people imagine, Thanksgiving holidays, the are for. as not And regimen. is concerned it’s, can health about it their with So, spending

Chris Growe

right. holidays them as seen, over guess, yes, a would lot but I the those certainly shakes benefit

how of products, I for do growth for add a especially revenue that’s regard you had penetration to So, to you customers, degree a example, new ‘XX. throughout And a to second to with think products And Premier, you hit On could. new I in some incremental how channels incrementality year, it fiscal have coming be? of that if ‘XX? out just the question planned just next much flavor, new and new fiscal can and which this expect has to

Darcy Davenport

Sure.

have we seen historically, of XX% about flavors represent So, new growth. our

incrementalality flavor X. But, a at depends So, incrementalality of going internally flavors, as -- obviously, continue flavors. to the to new more obviously, on to if have you’re be -- that many your that’s we fourth that is how surprised I third opposed X to think launching

through expand variety the we the flavor year this shelves. so, believe as we beyond continue, And and that especially will on

franchise, it channels and fall tremendous have get about see we new increasing household what’s we we’ve expand is, as XX% with but it’s it’s about people channels, the From think people expanded they we as in that penetration. And less more We customers, channels, love about repeat. shifting, products, into interesting growth. I the

packs, where stay they products are they because loyal, repeat, go consume to channels can where other it. oftentimes, and they products bigger So, then they they our buy everyday

every So, oftentimes breakfast day.

we when and customers, both we So, as of well standpoint, flavor we ton from incrementalality, franchise. launch into new then a see a bring into them as our new

Operator

from Chappell comes the question SunTrust. of next Bill line of Your

Bill Chappell

get and competitive you’re taking I ready-to-drink soon while -- kind Hey, Pure something another where talk doing to advertising just control of more is of XX -- convenience will somebody kind distribution be a about talked with I now channel, may you you that. little Milk lot wanted time pressures I and out -- do got more Darcy, advertising Protein to. just your may think, launches doing grams channel And or to like that about that. seems and shake. it they’ve more expanded on that when you’re be not you're think mean, road, Pure threw and distributions seeing. Pepsi of I that else the the to the Muscle on national with a

you late great? help feeling you would update or understand incremental So see path any be me the more are the are maybe just -- to game, you pressure is there

Darcy Davenport

Sure.

activity really competitive years. the increase So, we have for really seen last two the

really has competitive So, a overly of products And year hasn't last, it our seen launch over, a lot not -- affected. the nutritious brands, similar brands and we been like yes, half. brand again, saw

it are. goes how to consumers back loyal think, just our I

brand. what loyalty mean, the And the so, We goes it to back is I I requirements, kind metric. even year of learned which and have we last think, of a XX% question resilience around share a about of this

latest product entrance is other competition. a we've But, of the lot We are launch. of XX-gram always aware watching seen

again, far, have affected And not really our they growth. so

Bill Chappell

you I’ve forgotten, I then, follow-up, outlook, in, of it. before, commodity locked the your needs And are next just for us but Got you’ve of told this to protein largely terms kind locking in you but know for year? in a are

Paul Rode

Yes.

several coverage yes, good pretty have our tend commodities. deeply we cover But into visibility ahead like key good too strategy. on that So, quarters several we pretty visibility, we to don't I to out. want our out, quarters go have

So, for we feel ‘XX. good are pretty we about where fiscal

Operator

next Your question line of Montreal. Bank of Zaslow Ken from comes of

Ken Zaslow

As competed that Can products we’re analytics? with the like, talk you that? out share. have you The the competition, couple be on and new to see in as incremental. actually right, type really incremental much surprised put analytics your this is every products of much much you we conversation, of fun do of by marketing, How invested increased things haven't dollar this how listened hold going needed about in advertising how said much as and I it'll for on helps. you lift, of keep to you we much say, is where and And the how all type spend ours kind getting gives you’re that to

Darcy Davenport

Yes.

So, you're exactly right.

as I -- that come we team. marketing data-driven my our comments really a especially very We're organization, maybe are I didn't way. across think, mentioned,

we're the to going at sales, a is points give sense be multiple to as to to of, at to sense a be our working So, assess advertising. to going at And just to you we're at data of traffic, at we're of going we well sales, data as look going us give -- to look we're points looking obviously we're online effectiveness forecasted. and looking multiple going working is look it have web it we're

is be doing we're affecting the just our CPR over, be vehicles, is, thing will The what after doing all which our mix what's business the advertising, promotional but called that -- discounts, most. of all be moves [ph] marketing analysis, our to assess including or vehicles, the other to we'll campaign going not of

our strategy, going XXXX, yes, we beyond. that's in also of So, guide analytics to going even the future ton in background a so later on but have

Ken Zaslow

of kind I'll any Are in XXXX sort you return algorithm capital about as that's I that of some way numbers there. XXXX, a kind there think as a willing think of you dollar invested of invest, proxy think leave others you or expect Thank growth of it you’re investing about that? return, think on to us about. to kind Because a to you. that give every marketing And

Darcy Davenport

Yes.

will be all those strategy. our to of metrics at looking guide So,

exactly those making it's effect on to where have business. the we're biggest are So, sure the ones, dollar that going spending the our

Ken Zaslow

metrics But return, that XX% you what about? don't any a like looking anything we you'll tell us XX% and at, you're that return have like of think that

Darcy Davenport

we Yes. I'm don't of kinds how our not guidance specifics. decisions. I'm you those comfortable make talking happy forum give about -- I on think this I'm in But, to

Ken Zaslow

Okay, you. fair enough. Thank

Darcy Davenport

Great. Thank you.

Operator

Your next David question comes from the line of Palmer of ISI. Evercore

Kevin Lehman

coastal done under-indexed of have you’re see Thanks how When might through you of a Premier center that that David. explaining loyalty in XXXX the gap? your Is and might of New country. going the penetration England, marketing talk do targeted U.S. initiatives areas should come the assume California, essentially to chunk to the more it big state, York, Protein's for New analytics team you of help. on going state distribution, growth lot more wider job that Darcy, capabilities Kevin brand a fair the by your forward the relative or help boost we you analytics specific significantly coastal plan forward? in on question. places or can fairly if like a about we even sales so, some and enjoys, that to talked for that Premier great Lehman some that closing can to analyze employ Hi, penetration the Protein innovation, strategies about from Thanks. you And of

Darcy Davenport

Yes.

household the X% to I -- of household have think think to penetration, The nutrition that overall have penetration, I we has going XX% mean, the number only of going bars just penetration. just category back to XX%. bars, RTD household back so has XX%, category

just there of regardless is So, state. opportunity tremendous

looking that is this So, a at large household that really not is penetration. that necessarily At that focus just increasing I so our point, we're state. think

we national We so state have much looking by to region. by necessarily We're have region that to go at luxury opportunity or state have the don't advertising.

And believe upside. there's to so, blanket that lot just increase X% a of and we're looking to we

Kevin Lehman

great. Okay, you. Thank

Darcy Davenport

you. Thank

Operator

Your comes Holland question next from of the line Davidson. of Brian D.A.

Brian Holland

term morning. out Good I could maybe of just Thanks. peak If longer here. kind

on you growth of brands? outsized year. You we out if rationalization wondering get that an primarily Protein? inflection also driven rate. mentioned PowerBar? sort the some you about Dymatize, XX-plus-percent grow of when would going think, are then, PowerBar you've how segmented I obviously, lapping to think wondering Premier targeting So, Is some I'm by key or XXXX. you're long-term it this year, that’s earlier expectation got about efforts guys of growth exclusively some Obviously, is your had distribution. this sort beyond the I'm And

the wondering, big long out growth So space what term? could we if of how just breaks kind is for start the that? So white picture that

Darcy Davenport

Yes. picture, I'll anything. if you give big add you Paul, want to and

of being bulk Dymatize growth from will Premier and contributors. think about the PowerBar the So, as coming I be Protein, long-term would

increase you seen -- saw the already in Dymatize. X% You've

gone with shifting -- to excited that We even continue very through. been and strategy expect the that Dymatize potentially channel we've has I've been grow. and pleased

And return so, we're seeing to brand already that growth.

we international. is standpoint, PowerBar the a From think opportunity

also spend of to be going that and Premier will on where still we're guys most that think bulk But, contributor. XXXX, Protein. be But would through you we term by would your lapping would think XXXX. a yes, be So, I probably the

Brian Holland

on just advertising maybe then, the side. And

be? on of color and by gave But, does You of where that's aspirations close And think maybe the your up that kind to that some will of to capacity in year, kind if me less if and about the relative was I'm there by so, is that. peer And channel the a you base, implied what's the that you of need step still but don't of obviously, spend, go But that function you mid-single-digit advertising. how impacted next spend beyond historically, term? maybe know club seems XXXX. needs phase range. be you may on back I require last understand peer that. about Even go staples, last that you about your sort sales were constraints. much XX% before correct group, I to do growth think certainly year, spending long advertising But, wrong to sort a sales Where of good be can how of year. exposure, of to

number that time? evolves where sort curious of over Thanks. to just So,

Darcy Davenport

Sure.

I brand think was the interesting brand about word is what the Premier Protein marketing. So, mouth of is really built that on

telling ones loved their about product family and works for friends how this them. So,

been is really And brand. -- heavily -- so a brand has the have that never advertised we

of in -- spend, if we the will dollars, that followers more speak. of And take buck that for our and our believe the group when so that is increase so, kind by passionate then our that get extend single-digit we basically bang we it even will of because to

we're And thinking This to our really where going is. so, is make changes. that Obviously, that is dynamic.

be we'll advertising. adjust go. the to business we to how we'll then, So, watching And national see as responds more

Operator

Your next question comes Spillane of America. Bank the of from Bryan of line

Bryan Spillane

for ones quick me. Just two

competitors just availability capacity. to And about I earlier think, Bill of products -- capacity, market. Chappell guess, asked coming I new wanted tie the third-party to into some overall the just I that some First, new

coming remind to added of you that into the more more the access to just much kind concerned then, at increased more industry you support potentially competitors going as all have competitors how of can you market, to seeing to us are coming market? sort So, to there's be have new you're to capacity? the And capacity your

Darcy Davenport

Yes, sure.

really capacity feeling from So, good where standpoint. we we're a are about

confidence gives where of it I XXXX. think things into that we have a going couple me

first over our shift of you've XX it inventory. weeks The have we on X between on have chain delivering now stabilized time -- sheet, of and have really our and balance commitments. seen thing we now our is supply We every

some the manage So see increases. unexpected to those really the of increases that some our in us flexibility gives business flexibility to promotions, have the will maybe And changes.

-- just we then have long-term and a from standpoint, capacity And commitments.

able those volume like to of will arrangements we’ll be that. because feeling as are we well our commitments as what satisfy are, our handle So, additional that expectations flexibility some

again, that in think are the I So, good we very place. a capacity, now

constraint. And be that to don't so, we a expect

Bryan Spillane

maybe But, been and some fair list. or bit expanding your I the as necessarily the guess, doesn't aisles to priority maybe breakfast it immediate pharmacy, talked share second call store a then, into it’s the on about, store. it, distribution. the the consumption sound other And you like food a discussion getting listened And aisle within one, grocery serve in high I about there's single on is like or

to be is, of store? maybe I it's Just to getting route could it's or than maybe just guess, a if whether question challenging that's parts understand something structurally more my just market, maybe fit how package? different so, And having that's that trying is the other true, in and if in, there difficult to that more a structurally about

Darcy Davenport

Yes.

what So, of I is this think all opportunities. is business about unique the

didn’t actually, about So, I just it. talk

as have So, we as we bottle. have a single XX XX.X sizes, single do actually bottle ounce, we well ounce have an bottle, serve two a

have as moving grocery and into mass we the go as kind We grab sections we're of what successful stores. -- very in what stores, been well of call

executing. that is our that sales strategy an So, team active currently is

newer we are channels, those takes to that convenience takes And so, strategies it it just addition, thing also convenience that is would -- one and a say the is I we The kind what just are -- channel of some channel. fragmented the it a active call In of that while build. highly dollar executing and is on-the-go, on.

part of is we to an business part continue a is that strategy will will think So, But -- and be long-term that -- on. moving absolutely we long-term be important the strategy. of that that our we are

Operator

and for for earnings Ladies reached we conference in year you participating the call answers. allotted time thank have the webcast. and Brands XXXX quarter fiscal questions BellRing and and gentlemen, fourth We

day. disconnect have wonderful lines. now a may And your You

BellRing Brands (BRBR) 22 Nov 192019 Q4 Earnings call transcript